# EDGAR Filing Document

**Accession Number:** 0000720005
**File Stem:** 0000720005-23-000013
**Filing Date:** 2023-1
**Character Count:** 556566
**Document Hash:** c4fa40967674d32d3fd7e33fbbbd2740
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000720005-23-000013.hdr.sgml**: 20230111

**ACCESSION NUMBER**: 0000720005-23-000013

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20220930

**FILED AS OF DATE**: 20230111

**DATE AS OF CHANGE**: 20230111

**EFFECTIVENESS DATE**: 20230111

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** RAYMOND JAMES FINANCIAL INC
- **CENTRAL INDEX KEY:** 0000720005
- **STANDARD INDUSTRIAL CLASSIFICATION:** SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
- **IRS NUMBER:** 591517485
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-09109
- **FILM NUMBER:** 23523720

**BUSINESS ADDRESS:**
- **STREET 1:** 880 CARILLON PKWY
- **CITY:** ST PETERSBURG
- **STATE:** FL
- **ZIP:** 33716
- **BUSINESS PHONE:** 727-567-1000

**MAIL ADDRESS:**
- **STREET 1:** 880 CARILLON PKWY
- **CITY:** ST. PETERSBURG
- **STATE:** FL
- **ZIP:** 33716

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RJ FINANCIAL CORP/FL
- **DATE OF NAME CHANGE:** 19870303

### Attached PDF Documents

**Attachment 1:** `rjfarsglossy2022.pdf`

![img-0.jpeg](img-0.jpeg)

ANNUAL REPORT 2022

RAYMOND JAMES

ANNUAL REPORT 2022

# Source of strength

Our values - and our commitment to them - have always been our source of strength. The wellspring we tap to drive growth. The foundation that keeps us steady through challenge. The spark that spurs innovation.

Returning to that source has carried us forward for 60 years, helping us build upon the strength of our past to create more possibilities for the future of advisors, their clients and our firm.

![img-1.jpeg](img-1.jpeg)

## 1962

In 1962, Bob James set out to build a different kind of financial services firm. Our firm takes its first steps, incorporating as Robert A. James Investments.

## 1970

Tom James, the son of founder Bob James, was named CEO, and in 1973 Raymond James gained a seat on the New York Stock Exchange, helping to ensure the best execution for clients.

## 1985

The New York Stock Exchange approves Raymond James stock for listing under ticker symbol RJF.

## 1994

The firm publishes the Client Bill of Rights, penned by CEO Tom James, which sets the standard for our industry. Raymond James Network for Women Advisors makes official debut.

2

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

![img-4.jpeg](img-4.jpeg)

![img-5.jpeg](img-5.jpeg)

# CONTENTS

4

MESSAGE FROM THE
CHAIR AND CEO

12

INVESTING IN WHAT
MATTERS MOST

14

GROWING THE
RIGHT WAY

16

A FUTURE-FOCUSED
HOMECOMING

18

AN ADVISOR
GROWTH ENGINE

20

CORPORATE
LEADERSHIP

24

10-YEAR
FINANCIAL
SUMMARY

26

CORPORATE AND
SHAREHOLDER
INFORMATION

27

ANNUAL REPORT
ON FORM 10-K

2008

Raymond James survives
the recession without
financial assistance from
Congress, relying instead
on our own revenue, our
dedicated advisors and our
clients' continued trust.

2010

After 40 years as
CEO, Tom James is
succeeded by Paul
Reilly. Tom remains
chair of the board.

2012

Raymond James
celebrates 50 years
of caring for people
and their financial
well-being.

2020

Raymond James
surpasses
$1 trillion in client
assets under
administration.

2022

As the firm marks 60 years, our
commitment to augmenting organic
growth with key strategic acquisitions
continues as we welcome fixed income
market maker, SumRidge Partners;
banking and investment firm, TriState
Capital; and U.K.-based wealth
management firm, Charles Stanley.

3

ANNUAL REPORT 2022

# A message from our chair and chief executive officer

This year marks 60 years of business for Raymond James.

![img-6.jpeg](img-6.jpeg)

*Chair and Chief Executive Officer*

Over six decades we have experienced economic prosperity, technological advances, recessions and geopolitical instability, but through it all, we have remained rooted in our commitment to take care of advisors and their clients, make decisions for the long term and maintain a strong and flexible balance sheet. As we observed during the past two years, this approach positioned us to generate record results in two very different market environments - demonstrating the resilience of our business model and reinforcing the value of our diverse and complementary businesses.

In fiscal 2022, despite the challenging and volatile market environment, Raymond James achieved strong financial results driven by record net revenues in the Private Client Group (PCG), Asset Management and Bank segments and record pre-tax income in PCG. Record net revenues of $11 billion increased 13%, record pre-tax income of $2 billion increased 13%, and record net income available to common shareholders of $1.5 billion increased 7% compared to fiscal 2021. Adjusted net income available to common shareholders of $1.62$^{(1)}$ billion, which excludes $147 million of acquisition-related expenses, increased 5% compared to adjusted net income available to common shareholders in fiscal 2021.

The benefit of higher short-term interest rates, along with higher client assets for most of the fiscal year, drove record net revenues in fiscal 2022. Additionally, we generated a return on common equity of 17.0% and an adjusted return on tangible common equity of 21.1%$^{(1)}$, both strong results particularly given our robust capital position. We ended the year with common shareholders’ equity attributable to Raymond James Financial of $9.3 billion and book value per share of $43.41, which increased 13% and 8%, respectively, over September 2021. Our capital ratios remained well above regulatory requirements, with a total capital ratio of 20.4% and Tier 1 leverage ratio of 10.3% at the end of the year, giving us the balance sheet capacity to not only be defensive but also opportunistic during these uncertain times.

We made significant progress deploying capital throughout the year, maintaining our longstanding capital deployment priorities: investing in organic growth, which we believe delivers the best returns for our shareholders over time; selectively making acquisitions; paying an ongoing

(1) “Adjusted net income available to common shareholders” and “adjusted return on tangible common equity” are each non-GAAP financial measures. Please see the “Reconciliation of non-GAAP financial measures to GAAP financial measures” on page 41 of Form 10-K for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures.

4

A MESSAGE FROM OUR CHAIR AND CHIEF EXECUTIVE OFFICER

dividend and repurchasing our stock. During the fiscal year, we increased our quarterly dividend approximately 31% to $0.34 per quarter from $0.26 per quarter. We repurchased 1.74 million shares for $162 million, at an average price of approximately $94 per share. In total, through the combination of common stock dividends and share repurchases, the firm returned total capital of $437 million to shareholders. Subsequent to the fiscal year-end, the board approved a 24% increase of the quarterly common stock cash dividend to $0.42 per share and a share repurchase authorization of $1.5 billion, replacing the previous authorization under which approximately $800 million remained available.

As we have experienced throughout our history, our conservative and long-term approach not only positions us to be defensive, but also to act offensively when opportunities arise. This fiscal year, we were pleased to add three high-quality firms to the Raymond James family. Importantly, each firm met our criteria of providing a strong cultural alignment, offering a strategic fit and making financial sense for our shareholders.

- **Charles Stanley Group** - a U.K.-based wealth management firm, with its origin dating back to 1792, with nearly 200 wealth managers and £27.1 billion ($36 billion) in client assets, at the time of closing. We expect this combination will further accelerate the growth of Raymond James' U.K. wealth management franchise, and through Charles Stanley's multiple affiliation options, give us the ability to offer wealth management affiliation choices consistent with our model in the U.S. and Canada.

## EXPANDING THE RAYMOND JAMES FAMILY

CHARLES STANLEY

TRISTATE CAPITAL

![img-7.jpeg](img-7.jpeg)

## FISCAL YEAR FINANCIAL HIGHLIGHTS

in millions, except per share amounts

|  | 2022 | 2021 | % CHANGE |
| --- | --- | --- | --- |
| Net Revenues | $11,003 | $9,760 | 13% |
| Net Income Available to Common Shareholders | $1,505 | $1,403 | 7% |
| Earnings per Common Share (Diluted) | $6.98 | $6.63 | 5% |
| Total Common Equity Attributable to RJF | $9,338 | $8,245 | 13% |
| Shares Outstanding (1) | 215.1 | 205.7 | 4% |
| Book Value per Share | $43.41 | $40.08 | 8% |

ALL DATA AS OF FISCAL YEAR ENDED SEPTEMBER 30, 2022

(1) Excludes non-vested restricted stock units

5

ANNUAL REPORT 2022

![img-8.jpeg](img-8.jpeg)

FINANCIAL ADVISORS
PRIVATE CLIENT GROUP

![img-9.jpeg](img-9.jpeg)

CLIENT ASSETS
PRIVATE CLIENT GROUP
$Billions

![img-10.jpeg](img-10.jpeg)

TOTAL CAPITAL MARKETS
NET REVENUES
$Millions

- **TriState Capital Holdings** - a client-centric, technology-enabled franchise focusing on serving clients with premier private banking, commercial banking and niche investment management products and services. TriState Capital Bank operates a branchless bank model with total deposits of $12.6 billion and total loans of $11.5 billion, at the time of closing, including an industry leading securities based lending portfolio. The combination diversifies our funding sources, adds internal Federal Deposit Insurance Corporation (FDIC) insurance capacity through a second bank charter, and, with Raymond James' robust capital position, provides capital to fuel TriState Capital Bank's strong asset growth.
- **SumRidge Partners** - a technology-driven fixed income market maker specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional preferred securities. We believe SumRidge is a good complement to the existing fixed income trading business and will enhance our platform with an institutional market-making operation, as well as additional trading technologies and risk management tools.

These actions illustrate our continued focus on acquiring businesses that enhance our core operations, and those with technology that can help grow and position us for the future. Our focus on deploying capital to generate attractive returns for our shareholders - while maintaining ample liquidity and total capital and Tier 1 ratios well above the regulatory requirements to be considered well-capitalized - was evident in fiscal 2022.

Turning to our segment results, PCG, our largest segment, generated record net revenues of $7.7 billion, an increase of 17% over fiscal 2021, and record pre-tax income of $1.0 billion, a 38% increase over 2021. Record net revenues were driven by higher assets in fee-based accounts for most of the year and a robust net increase in the number of financial advisors, along with the benefit of higher short-term interest rates. Fiscal 2022 concluded with PCG assets under administration of $1.04 trillion and PCG assets in fee-based accounts of $586 billion, both down 7% compared to the end of fiscal 2021. Positive impacts of strong net inflows of client assets, which included robust domestic PCG net new assets of approximately $95 billion, or 9% of beginning of period assets, along with the Charles Stanley acquisition, were more than offset by the decline in market values with the S&P 500 declining 17% year-over-year.

We ended the year with approximately 8,680 financial advisors affiliated with the firm, a net increase of nearly 200 advisors. Excluding the impact of advisors transitioning to our RIA and Custody Services (RCS) division, where we typically retain the client assets but do not include the advisors in our firm count, the number of financial advisors increased approximately 420 in fiscal 2022. Despite a competitive environment, our regrettable attrition of advisors remained extremely low at approximately 1% in fiscal 2022. Meanwhile, financial advisors with approximately $320 million of trailing 12-month production and approximately $43 billion of assets at their prior firms joined Raymond James' domestic independent contractor and employee channels

6

A MESSAGE FROM OUR CHAIR AND CHIEF EXECUTIVE OFFICER

during the year. Our financial advisor recruiting pipeline is strong across all affiliation options as our client-first values and leading technology and product offerings continue to resonate with current and prospective advisors.

The Capital Markets segment had another strong year given the difficult market environment. Net revenues of $1.8 billion and pre-tax income of $415 million, decreased by 4% and 22%, respectively, compared to record results in fiscal 2021. The tailwind we experienced in investment banking activity in fiscal 2021 was replaced in fiscal 2022 with heightened market volatility and geopolitical concerns, reducing activity levels across the industry. Despite these challenges, we generated record merger and acquisition (M&A) revenues of $709 million, which partially offset lower equity and debt underwriting results. The strength in M&A results is a testament to our investments in niche businesses and additions of senior talent.

Fixed income brokerage revenues declined due to lower levels of client activity, particularly with small- and mid-sized depositories, as these clients are experiencing declines in deposits and have less cash available to invest in securities. This dynamic will lead to a challenging environment in fiscal 2023. While this headwind exists, we expect the recently acquired SumRidge Partners to enhance our current position in the rapidly evolving fixed income and trading technology marketplace.

The Asset Management segment generated record net revenues of $914 million, which increased 5%, and pre-tax income of $386 million, which decreased 1% compared to fiscal 2021. Record net revenues were driven by higher PCG assets in fee-based accounts for most of the year. However, financial assets under management ended the year at $174 billion, representing a 9% decline year-over-year, as strong net inflows in fee-based accounts in PCG were offset by fixed income and equity market declines, along with net outflows for Raymond James Investment Management. Financial assets under management started fiscal 2023 lower, however, we are confident that strong growth of assets in fee-based accounts in the PCG segment will drive long-term growth of financial assets under management.

Bank segment net revenues of $1.1 billion increased 61%, while pre-tax income of $382 million increased 4%, over fiscal 2021. Higher loan balances, including nearly $11.5 billion of loans acquired with TriState Capital Bank, and net interest margin (NIM) expansion during the year led to strong revenue growth. Despite strong revenue growth, pre-tax income growth was muted due primarily to a higher bank loan provision for credit losses in fiscal 2022 in contrast to the bank loan benefit for credit losses in the prior year, along with higher Raymond James Bank Deposit Program (RJBDP) fees paid to PCG largely due to rising interest rates. Net loans increased 73% to end the fiscal year at $43.2 billion driven by the loans acquired with TriState Capital Bank, along with the growth of loans to PCG clients and corporate loans at Raymond James Bank. Reflecting higher short-term interest rates and the relatively high concentration of floating-rate assets, the Bank segment's NIM increased 44 basis

![img-11.jpeg](img-11.jpeg)

FINANCIAL ASSETS UNDER MANAGEMENT

![img-12.jpeg](img-12.jpeg)

TOTAL BANK LOANS, NET

![img-13.jpeg](img-13.jpeg)

TOTAL BANK ASSETS

7

ANNUAL REPORT 2022

points during the fiscal year to 2.39%. The credit quality of the loan portfolio remained strong, with criticized loans as a percent of total loans held for investment ending the fiscal year at 1.14%, down from 3.27% at September 2021. Bank loan allowance for credit losses as a percent of total loans held for investment was 0.91%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 1.73%. The Bank segment is well positioned for a continued rise in short-term interest rates, and we have ample funding and capital to grow the balance sheet prudently.

Complementing the outstanding performance within our businesses, we also achieved several other notable accomplishments during the fiscal year:

- Our associates and advisors continue to give back and support the communities where we live and work. This year during Raymond James Cares Month, an annual tradition of month-long focused giving, more than 2,800 advisors and associates volunteered over 7,000 hours to benefit approximately 230 charitable organizations across the United States, Canada and the U.K. Additionally, between associate contributions and a company match, Raymond

James raised $7.2 million for communities across the United States through its 2021 United Way campaign and our associates raised nearly $450,000 for the American Heart Association through the 2021 Heart Walk. While it is incredible to see our associates and advisors step up year after year for these annual giving events, recently I was humbled by the resilience of our associates, advisors and the community impacted by Hurricane Ian, as well as by the extraordinary response across the firm to assist in the support and recovery for those in need. Associates collected two semi-trucks of supplies, which were sent to our Fort Myers branch system to be distributed by advisors and associates in the area. Additionally, the firm raised close to $1 million from corporate, executive leadership and associate donations to aid in relief efforts.

- In our 2020 pledge to the Black community, we committed to distribute $1.5 million over three years to support advancement of our Black communities, racial equality, financial literacy and empowerment, and volunteerism opportunities. To date, we have distributed $975,000 to 12 high-impact charitable organizations across 10 cities. The remaining funds are expected to be distributed

## Giving back in 2022

### RAYMOND JAMES CARES MONTH

![img-14.jpeg](img-14.jpeg)

United States, Canada and the United Kingdom

### CHARITABLE GIVING

![img-15.jpeg](img-15.jpeg)

8

A MESSAGE FROM OUR CHAIR AND CHIEF EXECUTIVE OFFICER

by June 2023, fulfilling the initial three-year commitment. I encourage you to review our 2022 Corporate Responsibility Report to learn more about these organizations. These partnerships are complements to our sustained relationships with national organizations, such as Junior Achievement and Habitat for Humanity, as well as local programs we have cultivated over many years in the Tampa Bay community, where we are headquartered.

- In addition to our six associate inclusion networks, and in partnership with business units across the firm, we have established 20 department-specific diversity & inclusion councils. Our goal across all inclusion networks and councils is to raise cultural awareness, develop leaders, build networks and be a valued resource to our businesses.
- Raymond James was also recognized in other major lists for overall corporate reputation and diversity and inclusion programs, and the number of advisors who were named to industry lists across various categories has grown significantly, approaching 530 advisors.

This year, we also are expressing our deep appreciation for Susan Story's tenure on the Raymond James Board of Directors. Since joining us in 2008 as a director and becoming our lead independent director in 2016, she's helped guide us not only to sustained growth and profitability, but also through the Great Recession, COVID-19 and today's complicated and challenging economic environment. As her time with us comes to an end, I join the other directors in expressing our appreciation for her counsel and contributions, leaving behind an excellent example for the incoming lead independent director Jeff Edwards.

While there are many uncertainties heading into fiscal 2023, I'm confident that with our strong capital and liquidity position, along with a flexible balance sheet, we are well positioned to drive growth across our businesses. In times like these it is even more important that we stay true to our culture - focusing on serving clients, remaining conservative and making decisions for the long term.

Our client-first culture is special - something that has been built day by day through the diligent efforts of our associates and advisors to support each other and clients over the past 60 years. I want to thank every associate and advisor for their unwavering dedication to serving clients, which results in long-term profitability through different market environments.

Thank you for your continued trust and confidence in Raymond James.

Paul C. Reilly
Chair and Chief Executive Officer
Raymond James Financial

December 21, 2022

## OUR CORE VALUES

Since the founding of Raymond James in 1962, our core values have guided our business, leading us to do what's right for clients, advisors, associates and our communities.

**We put**
clients first.

**We act with**
integrity.

**We think**
long term.

**We value**
independence.

9

ANNUAL REPORT 2022

## OUR VISION

Our vision is to be a financial services firm as unique as the people we serve, transforming lives, businesses and communities through the power of personal relationships and professional advice.

## OUR MISSION

Our business is people and their financial well-being.

We are committed to helping individuals, corporations and institutions achieve their unique goals, while also developing and supporting successful professionals, and helping our communities prosper.

## PRIVATE CLIENT GROUP

Within our PCG segment, we provide financial planning, investment advisory and securities transaction services to clients through financial advisors who affiliate with us as traditional employees or independent contractors, or as employees of independent third-party firms to which we provide services through our RIA and Custody Services division.

## CAPITAL MARKETS

Our Capital Markets segment conducts investment banking, institutional sales, securities trading and research throughout North America and Europe. In addition, we syndicate and manage investments in low-income housing funds and funds of a similar nature.

## ASSET MANAGEMENT

The Asset Management segment provides asset management, portfolio management and related administrative services to PCG clients through the Asset Management Services division and through Raymond James Trust, N.A. The segment also provides asset management services through Raymond James Investment Management, formerly referred to as Carillon Tower Advisers, for certain retail accounts managed on behalf of third-party institutions, institutional accounts and proprietary mutual funds that we manage generally using active portfolio management strategies.

## BANK

The Bank segment provides a comprehensive array of personal and corporate banking services, including securities based, corporate and residential lending products, as well as FDIC-insured deposit accounts that serve as one of the primary sweep options for client brokerage accounts, and other deposit and liquidity management products and services.

## OTHER

The Other segment includes our private equity investments, interest income on certain corporate cash balances, certain acquisition-related expenses, and certain corporate overhead costs of RJF, including the interest costs on our public debt and any losses on extinguishment of such debt.

10

A MESSAGE FROM OUR CHAIR AND CHIEF EXECUTIVE OFFICER

![img-0.jpeg](img-0.jpeg)

# 2022 Segment Net Revenues Contribution*
in millions

| PRIVATE CLIENT GROUP | $7,710 | 67% |
| --- | --- | --- |
| CAPITAL MARKETS | $1,809 | 16% |
| ASSET MANAGEMENT | $914 | 8% |
| BANK | $1,084 | 9% |

![img-1.jpeg](img-1.jpeg)

# 2022 Segment Pre-Tax Income Contribution*
in millions

| PRIVATE CLIENT GROUP | $1,030 | 47% |
| --- | --- | --- |
| CAPITAL MARKETS | $415 | 19% |
| ASSET MANAGEMENT | $386 | 17% |
| BANK | $382 | 17% |

*These charts are intended to show the relative contributions of our four core business segments and do not include the Other segment or intersegment eliminations.

# COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN SEPTEMBER 2022

Assumes initial investment of $100 and reinvestment of dividends.
Prepared by Zacks Investment Research.

![img-2.jpeg](img-2.jpeg)

● Raymond James Financial, Inc. ■ S&P 500 Index ▲ Dow Jones U.S. Investment Services Index

![img-3.jpeg](img-3.jpeg)

# NET REVENUES
$Billions

![img-4.jpeg](img-4.jpeg)

# NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS
$Billions

![img-5.jpeg](img-5.jpeg)

# RETURN ON COMMON EQUITY
%Percent

![img-6.jpeg](img-6.jpeg)

# MARKET CAPITALIZATION
$Billions

11

ANNUAL REPORT 2022

# Investing in what matters most

The story of ESG at Raymond James is one of who the firm has always been, and how we plan to meet the future by focusing on what matters most to us.

## “I can say with confidence that we’re different.”

This is how Heather Knable, chief administrative officer of finance and sustainability, sums up the approach to environmental, social and governance (ESG) opportunities at Raymond James.

“We think in terms of those three letters - E, S and G - but more importantly, we consider how they align to our values. There’s this idea that firms ask ‘How do we satisfy the outside world and tick the right boxes?’ and that’s the only reason we do ESG work. But that’s not where we start at Raymond James. We go back to our core values and ask ‘What enhances our commitment to these values?’ and that’s what gets our investment and energy.”

From the firm’s own giving, community involvement, and diversity, equity and inclusion efforts to focused equity research and investment products, the role of ESG at Raymond James is multifaceted and operates in balance with the firm’s full array of offerings. And it’s nothing new.

“These are things we have been and would still be prioritizing even without the emergence of ESG as a standard,” Heather said. “However, there are some areas where having more formal industry philosophies and expectations helps us think about things differently.”

The delineation of ESG as a discipline within the financial services space has naturally and necessarily led to the formalization of Raymond James’ own practices. The firm orients its efforts and tracks progress across four pillars: community, people, sustainability and governance.

A critical step forward was elevating Heather and other key leaders into internal oversight roles alongside a thoughtful reorganization. “We’ve come together and aligned our strategy for ESG, creating better transparency and awareness across that landscape,” Heather said. “Now we can validate the great work that was already being done and create the architecture that will keep it growing.”

In 2022, an internal evaluation led to a restructuring of the existing board committees - the Corporate Governance, Nominating and Compensation Committee divided to form two new committees: the Corporate Governance and ESG Committee and the Compensation and Talent Committee. These board committees provide oversight of a new management ESG committee comprised of senior executives and the leaders responsible for the firm’s ESG pillars.

Commitment to community - part of our DNA since Raymond James was founded - is where Andrea Masterson’s impact is felt. As a leader of our corporate responsibility efforts, Andrea works with Chair Emeritus Tom James to guide the ways the firm gives back, including our pledge to the Black community. In our second year of fulfilling that promise, we have put $975,000 of the pledged $1.5 million to work in targeted ways in communities across the U.S.

Pedro Suriel’s efforts fall primarily within the “people” column, where the senior vice president of diversity and inclusion works to further realize the firm’s vision of being a place where associates feel free to bring their whole selves to work. This year two new groups were added to the firm’s array of inclusion networks - the Veteran Financial Advisors Network and the Encore Inclusion Network for experienced professionals.

Considering sustainability within our business activities aligns with the firm’s core value of thinking long term. In her role as the Private Client Group’s head of sustainable investing, Samantha Trebesch works with investment specialists across Raymond James to support advisors as they manage assets according to their clients’ values and risk preferences - approximately $8 billion as of 2022. She also oversees capability developments with continual advisor input to ensure choice is preserved and celebrated.

And it’s all united under the aforementioned committees, whose collective oversight and collaboration Heather sees

12

INVESTING IN WHAT MATTERS MOST

![img-7.jpeg](img-7.jpeg)

Left to right: Andrea Masterson, vice president, corporate responsibility; Heather Knable, chief administrative officer of finance and sustainability; Pedro Suriel, senior vice president, diversity & inclusion; Samantha Trebesch, senior vice president, head of sustainable investing PCG

as the linchpin of our one-firm, enterprise-wide approach. “It’s a really good indicator to the outside world that we’re committed to doing this well and doing it intentionally. It’s easy to get caught up in ‘shiny new toys’ and outside influences, but one thing I’m proud of is that we decide what matters most to us and make that our North Star.”

“We’re not doing this to chase a trend or follow the crowd; we’re doing these things for us and what we believe is right - for our clients, colleagues and communities.”

#### FULFILLING OUR PROMISE

In 2020, Raymond James made a commitment to the Black community. That commitment included an initial monetary pledge.

**As of 2022, we have given $975,000 of the pledged $1.5 million to 12 organizations.**

And each gift has been made in partnership with the organizations themselves with support from associates and colleagues who were in these communities and already working with these organizations. The firm wasn’t seeking to just make donations, according to Andrea Masterson, “Instead we asked, ‘Where can we invest that’s going to improve your ability to do what’s on your road map?’”

13

ANNUAL REPORT 2022

![img-8.jpeg](img-8.jpeg)

## Growing the right way

Raymond James was TriState Capital’s largest depositor in 2019 when, in alignment with our corporate development strategy, the search for a firm that shares our values and provides excellent service to clients led us to a familiar place.

### **“It was a perfect cultural fit.”**

This is how Paul Shoukry, chief financial officer of Raymond James, describes the values alignment that formed the bedrock of the firm’s 2022 acquisition of TriState Capital Holdings Inc. In fact, it was a bit like looking in a mirror.

### **Entrepreneurial.**

### **Long-term oriented.**

### **Client first.**

The acquisition of TriState Capital Holdings, completed in June, is mutually beneficial. TriState Capital, a banking and asset management firm and a leading provider of securities based loans, will remain independent and leverage the strength of Raymond James’ balance sheet to fuel continued

growth. And Raymond James, by adding a new bank charter and a sophisticated national liquidity and treasury management business, is able to provide additional internal FDIC-insured deposit capacity to PCG clients as well as diversify our deposit-gathering capabilities.

Such efforts to enhance our offerings and better our firm always begin with careful consideration: A company must be a good fit culturally and make good business sense before any talk of valuation.

TriState checked every box.

“We admired their leading position in offering securities based lending through a scalable and robust technology platform,” Shoukry said. “But the way they treat advisors like clients and

14

GROWING THE RIGHT WAY

enable advisors to deepen their client relationships through lending capabilities is a perfect cultural fit. Culture was the most critical piece of this transaction.”

The notion that clients deserved a level of service large banks weren’t providing was a driving force in the founding of TriState Capital in 2006. Remaining as a separately chartered bank, TriState Capital continues to serve its clients with premier private banking, commercial lending and treasury management solutions.

“We founded TriState Capital because we saw an incredible opportunity to build a successful company built on a commitment to independence, a long-term perspective, integrity and putting clients squarely at the center of everything we do and every decision we make,” said Jim Getz, chairman and founder of TriState Capital. “Raymond James shares those values.”

TriState Capital operates as a stand-alone business and independently chartered bank subsidiary of Raymond James. As a leading provider of private banking solutions for independent and registered investment advisors across the country, TriState’s ability to continue to serve its advisors and clients was a critical element of the acquisition.

“It was important to find a partner that respected our client relationships, valued our team and allowed us to continue operating independently,” said Brian Fetterolf, TriState Capital president and CEO.

TriState Capital has grown rapidly - and that growth is expected to continue. The leadership team whose vision is reflected in TriState’s business model remains in place, as does a team of roughly 350 associates, many of whom were purposefully recruited from big banks and drawn to TriState’s personalized approach. Raymond James’ strong balance sheet will provide supplemental capital and liquidity to continue enabling its fast-growing and highly scalable business model to meet clients’ commercial and securities based lending needs.

TriState Capital is equally invested in our future - the majority of the acquisition consideration was in Raymond James Financial stock, a show of confidence that will allow TriState to share in the upside of the collective organization.

“TriState Capital has engaged and inspirational leaders who are committed for the long term,” Shoukry said. “From the start, we recognized the cultural alignment, from the conservative manner in which they manage their balance sheet to their focus on clients. And that cultural fit was only reinforced as we got to know them better.”

## EXPANDED ASSET MANAGEMENT OFFERINGS

In 2014, TriState Capital joined forces with Chartwell Investment Partners, a boutique asset management firm that allowed TriState to expand its capabilities and its income statement. Included in the acquisition, Chartwell maintains its independent management and branding while operating as a subsidiary of Raymond James Investment Management. With combined assets under management of approximately $64.2 billion as of September 30, 2022, Chartwell benefits from the ability to leverage Raymond James Investment Management’s multi-boutique structure to increase scale, drive distribution and realize operational and marketing synergies.

## CORPORATE DEVELOPMENT

Our intentional approach to capital management ensures we are consistently in a strong position to strategically deploy capital in pursuit of growth. Fiscal 2022 was an especially successful year. Along with TriState Capital, we acquired Charles Stanley Group and SumRidge Partners, each of which met our criteria of being a good cultural fit, providing strategic purpose and making finance sense for our shareholders:

- **Charles Stanley Group**, a wealth management firm based in the United Kingdom with nearly 200 wealth managers, will accelerate the growth in the U.K. while providing affiliation options consistent with our model in the United States and Canada.
- **SumRidge Partners**, a technology-driven, fixed income market maker specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional preferred securities.

15

ANNUAL REPORT 2022

## A future-focused homecoming

Helping advisors and associates return to the workspaces they call home was as much an exercise in coming back as it was in defining how we’ll move forward.

**“We were already beginning to reimagine what it looked like to work at Raymond James.”**

According to CEO Paul Reilly, responding to the early days of the COVID-19 pandemic hit fast-forward on those plans. The firm had been in the nascent stages of a long-range initiative to enhance employee mobility and create the Raymond James “office of the future.”

“We recognized the need to do something on the mobility front pre-pandemic,” Paul said, “but COVID-19 accelerated that thinking.”

When it came time to prepare for the opposite, however - to bring people back into the spaces they’d worked and collaborated in for years - the key to the plan was a willingness to hit pause.

“Throughout the return-to-office process, Paul felt very strongly about putting safety first, but also about listening to people,” said Chris Aisenbrey, chief human resources officer. “It was continually ‘People first. Give them time. Slow and steady.’ We recognized where we needed to go was a departure from where we’d been pre-COVID-19.

“I think the success of our return and the difference in our approach has been that top-down belief in letting people guide this process. Throughout it all, culture was at the fore.”

One of the central elements of Raymond James’ culture - listening and an enthusiastic openness to new ideas and perspectives - drove how the key teams involved approached planning the return.

Leaders from Risk Management, Human Resources, Legal, Technology, PCG and Facilities headed up the process, managing input from other critical areas of the firm and feedback from advisors and associates - whether they were

> “I think the success of our return and the difference in our approach has been that top-down belief in letting people guide this process. Throughout it all, culture was at the fore.”

![img-9.jpeg](img-9.jpeg)

![img-10.jpeg](img-10.jpeg)

16

A FUTURE-FOCUSED HOMECOMING

eager to be back or still cautious. The emphasis on patience and people resulted in a plan that was equal parts methodical and adaptable: aligning work style and mobility with job function and bringing people back in ways that made them feel heard and supported.

Ahead of the plan’s rollout, opportunities for remote and safe in-person connection were encouraged across the firm and included things like team caravans to food drives and Zoom happy hours. For the official return (moved in response to rising COVID-19 variants from September 2021 to December 2021, and to January 2022), the group had high hopes of creating a truly celebratory atmosphere - welcome-back meals, department-led events, a Bucs watch party for the Super Bowl. Then the omicron variant began its surge and the group hit pause and rethought, again.

Celebration took the safer form of welcome packages placed on desks - or sent by mail - to greet associates, and a hub of resources to help managers and teams continue fostering community while we eased into a time when larger events were safe.

As important as the ability to pause was to the process, pauses weren’t universal. Unique sets of circumstances across the country were carefully considered. There were areas where transmission was low and office environments that were open, well-ventilated and home to smaller teams. Even though the return plan prioritized the greater good, it was never one-size-fits-all. Leaders were empowered to make decisions specific to business needs coupled with associate preferences, always with safety as the North Star. That meant there were variances in how mobility looked for each branch and area of the firm - variability that will carry forward.

Having achieved what we set out to with the return, we’ve gone from fast-forward to pause and now we’re approaching something closer to the state of play originally envisioned for the mobility initiative back in 2019.

“The conversation is getting back to mobility not in reaction to circumstances beyond our control, but as an element of our vision for the future of the firm and flexibility for advisors and associates,” said Joe Weldon, head of organization and talent development. “We’re seeing the value of being together again alongside the benefits of that enhanced portability - now what? Do we need to rethink our corporate footprint? Do we need to reimagine physical spaces? That learning and planning is continuing.”

Joe and his team will launch a census survey in early 2023 to take the temperature of associates across the country and combine that data with everything we’ve learned since 2020.

Added Paul, “Now that we’ve proven we can be successful operating more remotely and still feel like Raymond James, the question becomes how do we continue to reinforce the resilience of that culture so we preserve who we are while growing into the future.”

![img-11.jpeg](img-11.jpeg)

2022 Relay for Life Kickoff

![img-12.jpeg](img-12.jpeg)

Southeastern Guide Dogs mental health break 2022

## SAFETY FIRST

Of the areas that led the planning for the return - Risk Management, Human Resources, Legal, Technology, PCG leadership and Facilities - one team’s work stood out as particularly heroic.

“Facilities did so much to ensure our workspaces were safe,” said Chief Human Resources Officer Chris Aisenbrey. “From completely reimagining our office cleaning procedures to meet protocols to coordinating the mailing of COVID-19 testing kits to associates ahead of the return; that team stepped up for all of us.”

17

ANNUAL REPORT 2022

## An advisor growth engine

As PCG kept its momentum through external growth factors in 2022, it also turned that energy inward to help financial advisors go further.

**“I think the most important growth story this year was how we invested even further - whether via complementary businesses or firm resources - in the things that help advisors grow their practices.”**

While Raymond James continued to generate strong recruitment results and net new assets in 2022, Kim Jenson, chief operating officer of PCG emphasized a special focus on thoughtful investments. “Our goal is to help advisors create engines for their own sustainable growth.”

Technology, an area that has played perhaps the most critical role in advisors’ operations over the past few years, made feedback-driven enhancements across its core applications. More specifically, priority was given to developing and refining tools like Opportunities, Proposal, Smart Forms and enhancements to Client Onboarding that give advisors broader insight into clients’ full wealth picture and increase the scope and ease with which they can support clients with substantial wealth.

That emphasis on generating opportunities for advisors to more deeply engage their most significant relationships echoed

across the firm, informing how we approached recruiting and enhanced the visibility of firm resources, including two key areas: Investment Banking and Private Wealth.

Raymond James’ private wealth services have long been a game-changing resource for advisors who serve high-net-worth and ultra-high-net-worth clients, and in 2022, the effort to heighten awareness of these capabilities and the people who support them started a renaissance.

The firm’s capabilities were elevated through an educational program, networking opportunities, and creating internal and external marketing resources that more effectively packaged Private Wealth and its integrated suite of offerings, and defined a unifying ethos to help advisors communicate Raymond James’ specialized approach and services to clients.

The highlight of Private Wealth’s resurgent year, however, was the rollout of a certification curriculum that will recognize already-qualified advisors and create the next generation of specialized professionals: the Private Wealth Advisor program. One of the program’s first graduates, Káon Nelson, called it a validation that he’s where he belongs.

![img-13.jpeg](img-13.jpeg)

Todd Kingsley alongside Ken Grider at IBex

“I think the most important growth story this year was how we invested even further - whether via complementary businesses or firm resources - in the things that help advisors grow their practices.”

18

AN ADVISOR GROWTH ENGINE

![img-14.jpeg](img-14.jpeg)

Several members of the Private Wealth Advisor program inaugural class. Left to right: Fernando S. Ereneta, CFP®, Angelo Oddo, CFP®, Káon Nelson, CFP®, CPWA®, AAMS®, Roger Veome, Justin Bickerstaff, CFP®, Ellenore Knight Baker, CFP®, Janet Nichols, CFP®, CLTC®, Bruce Cacho-Negrete, CFP®, Lisa Detanna, AIF®, MBA, WMS, John Petty III, AIF®, MBA, Vicky S. Campbell, CFP®, CPWA®, CPWA®

“Participating in the inaugural class was incredible,” Káon shared “I was there with people who’ve built really significant practices. And having conversations and idea exchanges with them, it showed me I can compete on this level. It was a really enlightening experience and one that validated that I’m where I need to be.”

Despite the fresh credit to add to his CFP®, CPWA® and AAMS® certifications, Káon wasn’t new to Private Wealth. “Over years of putting myself in front of the right people and cultivating relationships, I’d built a clientele of successful families, and that put me in touch with the Private Wealth folks.”

With the program complete and the support of the team behind him, Káon plans to explore how that engine of expertise can be put to optimal use for his clients and his business. “Now that I’m through the program, the next step is an audit of my practice. Knowing what Private Wealth brings to the table and knowing what I have a pretty high proficiency with - what blanks can my internal partners help me fill in? No one has ever achieved success alone; help is a wonderful thing, and I’m all for it.”

Investment Banking might not seem like an obvious advisor resource, but it’s another area of the firm - historically, one of our most successful - that has been a powerful source of growth for advisors and their business owner clients for years.

When Todd Kingsley joined the firm as part of the Alex. Brown acquisition in 2016, he brought along decades of experience working with investment banks on behalf of his clients.

“Investment Banking embraced me from the day I walked in,” Todd said. “Ken [Grider, managing director] and I spoke several times early on, and I told him about my relationships with business owners and CEOs, and that I was happy to help if I could.”

Those conversations resulted in Todd attending Investment Banking’s first Institute for Business Owner Excellence (IBex) conference, and Todd’s attendance at that conference resulted in his first official deal with the team.

Today, Todd says he and his colleagues are in regular contact with Ken and the rest of Investment Banking and have more deals in the pipeline.

“If you’re interested in offering clients investment banking support, I believe this is the best place in the business to do it - because no other firm appreciates the relationships advisors have with their clients more than this one. Raymond James sees us as collaborators, as partners.”

Partnering with advisors - and connecting them with business units and specialized teams that help them continually expand what they can offer clients - has been a hallmark of Raymond James since the firm’s inception. And 60 years later, investing in those partnerships with resources, innovation and a culture of community is still driving growth for all of us.

CFP Board owns the CFP® marks in the United States.

19

ANNUAL REPORT 2022

![img-15.jpeg](img-15.jpeg)

**Roderick C. McGeary**

Retired accounting executive

**Marlene Debel**

Executive Vice President
and Chief Risk Officer
MetLife, Inc.

**Benjamin Esty**

Professor of Business Administration
Harvard Graduate School of Business

**Anne Gates**

Retired, Former President
MGA Entertainment, Inc.

**Paul C. Reilly**

Chair and CEO
Raymond James Financial

**Thomas A. James**

Chair Emeritus
Raymond James Financial

20

BOARD OF DIRECTORS

![img-0.jpeg](img-0.jpeg)

**Susan N. Story**

Outgoing Lead Director,
Raymond James Financial
Retired, Former Director, President & CEO
American Water Works Company, Inc.

**Jeffrey N. Edwards**

Incoming Lead Director,
Raymond James Financial
Chief Operating Officer
New Vernon Advisers, LP

**Raj Seshadri**

President, Data & Services
Mastercard Incorporated

**Gordon Johnson**

President
Highway Safety Devices, Inc.

**Bob Dutkowsky**

Retired, Former Executive Chairman
Tech Data Corporation

21

ANNUAL REPORT 2022

![img-1.jpeg](img-1.jpeg)

**Jonathan N. Santelli***

Executive Vice President and
General Counsel
Raymond James Financial

**Bill Geis**

Private Client Banking Executive
Raymond James Bank

**Katie Larson**

Controller
Raymond James Financial

**Steve LaBarbera**

Chief Compliance Officer
Raymond James Financial

**Horace Carter***

President
Fixed Income

**Bella Loykhter Allaire***

Executive Vice President
Technology and Operations

**Jeffrey A. Dowdle***

Chief Operating Officer
Raymond James Financial

**Vicki Mazur**

Senior Vice President,
Head of Total Rewards
Human Resources

**David Allen**

Senior Vice President
Technology

**Patrick O'Connor**

Senior Vice President,
Division Director
Raymond James & Associates

**Mike White**

Chief Marketing Officer
Raymond James Financial

**TJ Haynes-Morgan**

Chief Audit Executive
Raymond James Financial

**Vin Campagnoli**

Chief Information Officer
Raymond James Financial

**Scott A. Curtis***

President
Private Client Group

**Steven M. Raney***

Chair and Chief Executive Officer
Raymond James Bank

*Member of the Executive Committee

22

SENIOR LEADERSHIP

![img-2.jpeg](img-2.jpeg)

**Calvin Sullivan**

Chief Strategy Officer
Fixed Income

**Shannon Reid**

Senior Vice President,
Division Director
Independent Contractors Division
Raymond James Financial Services

**James E. Bunn***

President
Global Equities and
Investment Banking

**George Catanese**

Chief Risk Officer
Raymond James Financial

**Doug Brigman**

President
Raymond James Insurance Group

**Paul C. Reilly***

Chair and CEO
Raymond James Financial

**Denise Samson**

Senior Vice President
Operations, Reporting &
Mutual Fund Administration

**Jodi Perry***

President
Independent Contractors Division
Raymond James Financial Services

**Bob Kendall**

President
Raymond James Investment
Management

**Paul Shoukry***

Chief Financial Officer
Raymond James Financial

**Tash Elwyn***

President and
Chief Executive Officer
Raymond James & Associates

**Gala Wan**

Senior Vice President
Risk Management

**Stephen Liverpool**

Associate General Counsel
Raymond James Financial

**Leslie Ann B. Curry**

Chief Experience Officer
Investment Banking

**Jamie Coulter***

Chief Executive Officer
Raymond James Ltd.

**Chris Aisenbrey***

Chief Human Resources Officer
Raymond James Financial

23

ANNUAL REPORT 2022

## 10-YEAR FINANCIAL SUMMARY YEAR ENDED SEPTEMBER 30

in millions, except per share amounts

|  |  | 2013 | 2014 | 2015 |
| --- | --- | --- | --- | --- |
| RESULTS | Net Revenues | $4,488 | $4,862 | $5,204 |
|  | Net Income | $367 | $480 | $502 |
|  | Earnings per Common Share |  |  |  |
|  | Basic | $1.76 | $2.27 | $2.34 |
|  | Diluted | $1.72 | $2.21 | $2.28 |
|  | Weighted Average Common Shares |  |  |  |
|  | Outstanding - Basic | 206.6 | 209.9 | 213.8 |
|  | Weighted Average Common and Common Equivalent Shares |  |  |  |
|  | Outstanding - Diluted | 210.8 | 215.4 | 218.9 |
|  | Cash Dividends Declared per Common Share | $0.37 | $0.43 | $0.48 |
| FINANCIAL CONDITION | Total Assets | $22,965 | $23,135 | $26,326 |
|  | Common Equity Attributable to RJF | $3,665 | $4,144 | $4,524 |
|  | Common Shares Outstanding | 208.2 | 211.2 | 214.2 |
|  | Book Value per Share | $17.61 | $19.61 | $21.13 |

Effective during our fiscal fourth quarter of 2021, the Board of Directors approved a 3-for-2 stock split, effected in the form of a 50% stock dividend paid on September 21, 2021. All share and per share information has been retroactively adjusted to reflect this stock split.

24

10-YEAR FINANCIAL SUMMARY

| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 10-Year CAGR |
| --- | --- | --- | --- | --- | --- | --- | --- |
| $5,405 | $6,371 | $7,274 | $7,740 | $7,990 | $9,760 | $11,003 | 11.2% |
| $529 | $636 | $857 | $1,034 | $818 | $1,403 | $1,505 | 17.7% |
| $2.48 | $2.95 | $3.93 | $4.88 | $3.96 | $6.81 | $7.16 | 17.1% |
| $2.44 | $2.89 | $3.84 | $4.78 | $3.88 | $6.63 | $6.98 | 16.9% |
| 212.7 | 215.0 | 218.0 | 211.5 | 206.4 | 205.7 | 209.9 | Not material |
| 216.8 | 219.9 | 223.2 | 216.0 | 210.3 | 211.2 | 215.3 | Not material |
| $0.53 | $0.59 | $0.73 | $0.91 | $0.99 | $1.04 | $1.36 | 14.5% |
| $31,487 | $34,883 | $37,413 | $38,830 | $47,482 | $61,891 | $80,951 | 14.4% |
| $4,917 | $5,582 | $6,369 | $6,581 | $7,114 | $8,245 | $9,338 | 11.1% |
| 212.3 | 216.2 | 218.4 | 206.7 | 204.9 | 205.7 | 215.1 | Not material |
| $23.15 | $25.83 | $29.15 | $31.84 | $34.72 | $40.08 | $43.41 | 10.5% |

25

ANNUAL REPORT 2022

# Corporate and shareholder information

## ANNUAL REPORT ON FORM 10-K; CERTIFICATIONS

A copy of the Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, is included in this document and is also available, without charge, at sec.gov. You may also obtain a copy via mail or email using the following information:

Corporate Secretary
Raymond James Financial, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
investorrelations@raymondjames.com

Raymond James has included, as exhibits to its 2022 Annual Report on Form 10-K, certifications of its chief executive officer and chief financial officer as to the quality of the company's public disclosure. Raymond James' chief executive officer has also submitted to the New York Stock Exchange a certification that he is not aware of any violations by the company of the NYSE company listing standards.

## ANNUAL MEETING

The annual meeting of shareholders will be conducted via webcast as a virtual meeting, on February 23, 2023, at 4:30 p.m.

The meeting will be broadcast live on raymondjames.com under "Investor Relations - News and Events - Shareholders Meeting."

Notice of the annual meeting, proxy statement and proxy voting instructions accompany this report to shareholders. Additional information about Raymond James' results can be found at raymondjames.com/investor-relations.

## ELECTRONIC DELIVERY

If you are interested in electronic delivery of future copies of this report, please see the proxy voting instructions.

## NUMBER OF SHAREHOLDERS

At December 2, 2022, there were 346 holders of record of our common stock. Shares of our common stock are held by a substantially greater number of beneficial owners who hold their shares indirectly through banks, brokers and other financial institutions.

## TRANSFER AGENT AND REGISTRAR

Computershare
P.O. Box 43078
Providence, RI 02940-3078
800.837.7596
computershare.com/investor

## INDEPENDENT AUDITORS

KPMG LLP

## NEW YORK STOCK EXCHANGE SYMBOL

RJF, RJF PrA, RJF PrB

## COVERING ANALYSTS

Christian Bolu
Autonomous Research

Christopher Allen
Citi Research

Bill Katz
Credit Suisse

Alexander Blostein, CFA®
Goldman Sachs & Co.

Gerald O'Hara, CFA®
Jefferies

Devin Ryan
JMP Securities

Kyle Voigt
Keefe, Bruyette & Woods

Manan Gosalia
Morgan Stanley

James Mitchell
Seaport Research Partners

Brennan Hawken
UBS

Steven Chubak
Wolfe Research

## CREDIT RATINGS

Our issuer, senior long-term debt, and preferred stock ratings as of the most current report are as follows:

Fitch Ratings, Inc.(1):
Issuer and senior long-term debt: A-
Preferred stock: BB+
Outlook: Stable

Moody's Investors Service, Inc.(2):
Issuer and senior long-term debt: A3
Preferred stock: Baa3 (hyb)
Outlook: Stable

Standard & Poor's Rating Services(3):
Issuer and senior long-term debt: BBB+
Preferred stock: Not rated
Outlook: Positive

(1) Fitch Ratings, Inc. rated our preferred stock in August 2022.

(2) Moody's Investors Service, Inc. upgraded our senior debt and issuer rating in February 2022 and rated our preferred stock in August 2022.

(3) Standard & Poor's Ratings Services revised outlook to positive from stable in March 2022.

26

![img-3.jpeg](img-3.jpeg)

# **ANNUAL REPORT 2022**

ON FORM 10-K FOR FISCAL YEAR ENDED SEPTEMBER 30, 2022

**RAYMOND JAMES**

27

(THIS PAGE INTENTIONALLY LEFT BLANK)

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

# FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2022

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____
Commission file number 1-9109

# RAYMOND JAMES FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Florida
(State or other jurisdiction of
incorporation or organization)

59-1517485
(I.R.S. Employer
Identification No.)

880 Carillon Parkway
(Address of principal executive offices)

St. Petersburg

Florida

33716
(Zip Code)

(727) 567-1000

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Exchange Act:

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common Stock, $.01 par value | RJF | New York Stock Exchange |
| Depository Shares, Each Representing a 1/40th Interest in a Share of 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock | RJF PrA | New York Stock Exchange |
| Depository Shares, Each Representing a 1/40th Interest in a Share of 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock | RJF PrB | New York Stock Exchange |

Securities registered pursuant to Section 12(g) of the Exchange Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ 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 filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of March 31, 2022, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant computed by reference to the price at which the common stock was last sold was $20,595,928,727.

The number of shares outstanding of the registrant's common stock as of November 17, 2022 was 215,063,590.

# DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held February 23, 2023 are incorporated by reference into Part III.

(THIS PAGE INTENTIONALLY LEFT BLANK)

# **RAYMOND JAMES FINANCIAL, INC.**
**TABLE OF CONTENTS**

|  | PAGE |
| --- | --- |
| PART I. |  |
| Item 1. Business | 3 |
| Item 1A. Risk factors | 21 |
| Item 1B. Unresolved staff comments | 35 |
| Item 2. Properties | 35 |
| Item 3. Legal proceedings | 35 |
| Item 4. Mine safety disclosures | 36 |
| PART II. |  |
| Item 5. Market for registrant's common equity, related shareholder matters and issuer purchases of equity securities | 36 |
| Item 6. Reserved | 37 |
| Item 7. Management's discussion and analysis of financial condition and results of operations | 38 |
| Item 7A. Quantitative and qualitative disclosures about market risk | 78 |
| Item 8. Financial statements and supplementary data | 79 |
| Item 9. Changes in and disagreements with accountants on accounting and financial disclosure | 164 |
| Item 9A. Controls and procedures | 164 |
| Item 9B. Other information | 168 |
| Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections | 168 |
| PART III. |  |
| Item 10. Directors, executive officers and corporate governance | 168 |
| Item 11. Executive compensation | 168 |
| Item 12. Security ownership of certain beneficial owners and management and related shareholder matters | 168 |
| Item 13. Certain relationships and related transactions, and director independence | 168 |
| Item 14. Principal accountant fees and services | 168 |
| PART IV. |  |
| Item 15. Exhibits and financial statement schedules | 168 |
| Item 16. Form 10-K summary | 170 |
| Signatures | 171 |

2

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

# PART I

## ITEM 1. BUSINESS

Raymond James Financial, Inc. (“RJF” or the “firm”) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The firm, together with its subsidiaries, is engaged in various financial services 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. The firm also provides corporate and retail banking services, and trust services. The firm operates predominantly in the United States (“U.S.”) and, to a lesser extent, in Canada, the United Kingdom (“U.K.”), and other parts of Europe. As used herein, the terms “our,” “we,” or “us” refer to RJF and/or one or more of its subsidiaries.

Established in 1962 and public since 1983, RJF is listed on the New York Stock Exchange (the “NYSE”) under the symbol “RJF.” As a bank holding company (“BHC”) and financial holding company (“FHC”), RJF is subject to supervision, examination and regulation by the Board of Governors of the Federal Reserve System (“the Fed”).

Among the keys to our historical and continued success, our emphasis on putting the client first is at the core of our corporate values. We also believe in maintaining a conservative, long-term focus in our decision making. We believe that this disciplined decision-making approach translates to a strong, stable financial services firm for clients, associates, and shareholders.

## REPORTABLE SEGMENTS

We currently operate through the following five segments: Private Client Group (“PCG”); Capital Markets; Asset Management; Bank; and Other.

The following graph depicts the relative net revenue contribution of each of our business segments for the fiscal year ended September 30, 2022.

![img-0.jpeg](img-0.jpeg)

\* The preceding chart does not include intersegment eliminations or the Other segment.

3

**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

## Private Client Group

We provide financial planning, investment advisory and securities transaction services to clients through financial advisors. Total client assets under administration (“AUA”) in our PCG segment as of September 30, 2022 were $1.04 trillion, of which $586.0 billion related to fee-based accounts (“fee-based AUA”). We had 8,681 employee and independent contractor financial advisors affiliated with us as of September 30, 2022.

### Affiliation

We offer multiple affiliation options, which we refer to as AdvisorChoice. Financial advisors primarily affiliate with us directly as either employees or independent contractors, or as employees of the third-party Registered Investment Advisors (“RIAs”) and broker-dealers to which we provide services through our RIA and Custody Services (“RCS”) division.

#### Employee financial advisors

Employee financial advisors work in a traditional branch supported by local management and administrative staff. They provide services predominantly to retail clients. Compensation for these financial advisors primarily includes a payout on revenues they generate and such advisors also participate in the firm’s employee benefit plans.

#### Independent contractor financial advisors

Our financial advisors who are independent contractors are responsible for all of their direct costs and, accordingly, receive a higher payout percentage on the revenues they generate than employee financial advisors. Our independent contractor financial advisor options are designed to help our advisors build their businesses with as much or as little of our support as they determine they need. Independent contractor financial advisors may affiliate with us directly or through an affiliated bank or credit union in our Financial Institutions Division. With specific approval, and on a limited basis, they are permitted to conduct certain other approved business activities, such as offering insurance products, independent registered investment advisory services, and accounting and tax services.

#### RIA and Custody Services

Through our domestic RCS division, we offer third-party RIAs and broker-dealers a range of products and services including custodial services, trade execution, research and other support and services (including access to clients’ account information and the services of the Asset Management segment) for which we receive fees, which may be either transactional or based on AUA. Firms affiliated with us through RCS retain the fees they charge to their clients and are responsible for all of their direct costs. Financial advisors associated with firms in RCS are not included in our financial advisor counts, although their client assets are included in our AUA. AUA associated with firms in our RCS division totaled $108.5 billion as of September 30, 2022.

### Products and services

We offer a broad range of third-party and proprietary investment products and services to meet our clients’ various investment and financial needs. Revenues from this segment are typically driven by AUA and are generally either asset-based or transactional in nature.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

PCG segment net revenues for the fiscal year ended September 30, 2022 are presented in the following graph.

![img-1.jpeg](img-1.jpeg)

* Included in 'Brokerage revenues' on our Consolidated Statements of Income and Comprehensive Income.

We provide the following products and services through this segment:

- • Investment services for which we charge sales commissions or asset-based fees based on established schedules.
- • Portfolio management services for which we charge either a fee computed as a percentage of the assets in the client's account or a flat periodic fee.
- • Insurance and annuity products.
- • Mutual funds.
- • Support to third-party mutual fund and annuity companies, including sales and marketing support, distribution, and accounting and administrative services.
- • Administrative services to banks to which we sweep a portion of our clients' cash deposits as part of the Raymond James Bank Deposit Program ('RJBDP'), our multi-bank sweep program. Fees received from third-party banks for these services are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates relative to interest paid to clients by the third-party banks on balances in the RJBDP. PCG also earns fees from our Bank segment, which are based on the greater of a base servicing fee or net yield equivalent to the average yield that the firm would otherwise receive from third-party banks in the RJBDP. These fees are eliminated in consolidation.
- • Margin loans to clients that are collateralized by the securities purchased or by other securities owned by the client. Interest is charged to clients on the amount borrowed based on current interest rates.
- • Securities borrowing and lending activities with other broker-dealers, financial institutions and other counterparties. The net revenues of this business generally consist of the interest spreads generated on these activities.
- • Diversification strategies and alternative investment products to qualified clients of our affiliated financial advisors.
- • Custodial services, trade execution, research and other support and services to third-party RIAs and broker-dealers.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

# Capital Markets

Our Capital Markets segment conducts investment banking, institutional sales, securities trading, equity research, and the syndication and management of investments in low-income housing funds and funds of a similar nature, the majority of which qualify for tax credits (referred to as our “affordable housing investments” business).

Capital Markets segment net revenues for the fiscal year ended September 30, 2022 are presented in the following graph.

![img-2.jpeg](img-2.jpeg)

* Included in “Investment banking” on our Consolidated Statements of Income and Comprehensive Income.

We provide the following products and services through this segment.

# Investment banking

- **Merger & acquisition and advisory** - We provide a comprehensive range of strategic and financial advisory assignments, including with respect to mergers and acquisitions, divestitures and restructurings, across a number of industries throughout the U.S., Canada, and Europe.
- **Equity underwriting** - We provide public and private equity financing services, including the underwriting and placement of common and preferred stock and other equity securities, to corporate clients throughout the U.S., Canada, and Europe across a number of industries.
- **Debt underwriting** - Our services include public finance and debt underwriting activities where we serve as a placement agent or underwriter to various issuers, including private and public corporate entities, state and local government agencies (and their political subdivisions), and non-profit entities including healthcare and higher education institutions.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Brokerage*

- **Fixed income** - We earn revenues from institutional clients who purchase and sell both taxable and tax-exempt fixed income products, municipal, corporate, government agency and mortgage-backed bonds, and whole loans, as well as from our market-making activities in fixed income debt securities. We carry inventories of debt securities to facilitate such transactions.

We also enter into interest rate derivatives to facilitate client transactions or to actively manage risk exposures that arise from our client activity, including a portion of our trading inventory. In addition, we conduct a “matched book” derivatives business where we may enter into interest rate derivative transactions with clients. In this matched book business, for every derivative transaction we enter into with a client, we enter into an offsetting derivative transaction with a credit support provider that is a third-party financial institution.

- **Equity** - We earn brokerage revenues on the sale of equity products to institutional clients. Client activity is influenced by a combination of general market activity and our ability to identify attractive investment opportunities for our institutional clients. Revenues on equity transactions are generally based on trade size and the amount of business conducted annually with each institution.

Our global research department supports our institutional and retail sales efforts and publishes research on a wide variety of companies. This research primarily focuses on U.S. and Canadian companies across a multitude of industries. Research reports are made available to both institutional and retail clients.

### *Affordable housing investments business*

We act as the general partner or managing member in partnerships and limited liability companies that invest in real estate entities, the majority of which qualify for tax credits under Section 42 of the Internal Revenue Code and/or provide a mechanism for banks and other institutions to meet their Community Reinvestment Act (“CRA”) obligations throughout the U.S. We earn fees for the origination and sale of these investment products as well as for the oversight and management of the investments, including over the statutory tax credit compliance period when applicable.

### **Asset Management**

Our Asset Management segment earns asset management and related administrative fees for providing asset management, portfolio management and related administrative services to retail and institutional clients. This segment oversees a portion of our fee-based AUA for our PCG clients through our Asset Management Services division (“AMS”) and through Raymond James Trust, N.A. (“RJ Trust”). This segment also provides asset management services through our Raymond James Investment Management division (“Raymond James Investment Management,” formerly referred to as Carillon Tower Advisers), for certain retail accounts managed on behalf of third-party institutions, institutional accounts, and proprietary mutual funds that we manage, generally using active portfolio management strategies.

Management fees in this segment are generally calculated as a percentage of the value of our fee-billable financial assets under management (“AUM”) in both AMS, which includes the portion of fee-based AUA in PCG that is overseen by AMS, and Raymond James Investment Management, where investment decisions are made by in-house or third-party portfolio managers or investment committees. The fee rates applied are dependent upon various factors, including the distinct services provided and the level of assets within each client relationship. The fee rates applied in Raymond James Investment Management may also vary based on the account objective (i.e., equity, fixed income, or balanced). Our AUM 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. Fees are generally collected quarterly and are based on balances as of the beginning of the quarter (particularly in AMS) or the end of the quarter, or based on average daily balances throughout the quarter.

Our Asset Management segment also earns administrative fees on certain fee-based assets within PCG that are not overseen by our Asset Management segment, but for which the segment provides administrative support (e.g., record-keeping).

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Our AUM and our Raymond James Investment Management AUM by objective as of September 30, 2022 are presented in the following graphs.

Financial Assets Under Management - $173.8 billion

![img-3.jpeg](img-3.jpeg)

Raymond James Investment Management Financial Assets Under Management by Objective - $64.2 billion

![img-4.jpeg](img-4.jpeg)

# Bank

Our Bank segment reflects the results of our banking operations, including the results of Raymond James Bank, a Florida-chartered state bank and Fed member bank, and TriState Capital Bank, a Pennsylvania-chartered state bank, which was acquired on June 1, 2022 in our acquisition of TriState Capital Holdings, Inc. ("TriState Capital"). We provide various types of loans, including securities-based loans ("SBL"), corporate loans (commercial and industrial ("C&I"), commercial real estate ("CRE") and real estate investment trust ("REIT") loans), residential mortgage loans, and tax-exempt loans. Our Bank segment is active in corporate loan syndications and participations and lending directly to clients. We also provide Federal Deposit Insurance Corporation ("FDIC")-insured deposit accounts, including to clients of our broker-dealer subsidiaries, and other deposit and liquidity management products and services. The Bank segment generates net interest income principally through the interest income earned on loans and an investment portfolio of available-for-sale securities, which is offset by the interest expense it pays on client deposits and on its borrowings.

As of September 30, 2022, corporate and tax-exempt loans represented approximately 37% of the Bank segment's total assets, and 73% of such loans were U.S. and Canadian syndicated loans. Residential mortgage loans are originated or purchased and held for investment or sold in the secondary market. The Bank segment's investment portfolio is primarily comprised of agency mortgage-backed securities ("MBS") and agency collateralized mortgage obligations ("CMOs") and is classified as available-for-sale. The Bank segment's liabilities primarily consist of cash deposits, including those at Raymond James Bank that are primarily swept from the investment accounts of PCG clients through the RJBDP, as well as those at TriState Capital Bank, which are primarily money market and interest-bearing checking accounts. The Bank segment's liabilities also include borrowings from the Federal Home Loan Bank ("FHLB").

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

The following graph details the composition of our Bank segment's total assets as of September 30, 2022.

Bank Segment Total Assets - $56.74 billion

![img-5.jpeg](img-5.jpeg)

Other

Our Other segment includes our private equity investments, which predominantly consist of investments in third-party funds, interest income on certain corporate cash balances, certain acquisition-related expenses, primarily comprised of professional fees, and certain corporate overhead costs of RJF, including the interest costs on our public debt and any losses on extinguishment of such debt.

HUMAN CAPITAL

Our "associates" (which include our employee financial advisors and all of our other employees) and our independent contractor financial advisors (which we call our "independent advisors") are vital to our success in the financial services industry. As a human capital-intensive business, our ability to attract, develop, and retain exceptional and diverse associates and independent advisors is critical, not only in the current competitive labor market, but also to our long-term success. It is important to us to maintain a strong commitment to diversity and inclusion. To compete effectively, we must offer attractive compensation and health and wellness programs and workplace flexibility, as well as provide formal and informal opportunities for associates and advisors to develop their capabilities and reach their full potential. We also endeavor to foster and maintain our unique and long-standing values-based culture.

As of September 30, 2022, we had approximately 17,000 associates (including 3,638 employee financial advisors) and 5,043 independent advisors. The growth in the number of associates compared to the prior year was due in part to our acquisitions completed during fiscal 2022. Our associates are spread across four countries in North America and Europe. However, the vast majority of our associates are located in the U.S. Of our global associates, 44% self-identify as women, and among our U.S.-based associates, 19% self-identify as ethnically diverse.

Culture

We strive to attract individuals who are people-focused and share our values. Our values are memorialized in a document we refer to as our culture "blueprint" that is communicated to all associates. Our culture is people-focused and rooted in the values established at the firm's foundation. Our pledge to clients, to our advisors, and to all our other associates is that:

- we put clients first,
- we act with integrity,
- we think long term, and
- we value independence.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

One way in which we measure the health of our culture is through firmwide short and targeted surveys in which we routinely ask our associates about their experiences at the firm. Feedback provided through these surveys is also used to create and continually enhance programs that support our associates' needs.

# Diversity, equity, and inclusion

We are committed to maintaining a diverse workforce, and an inclusive work environment is a natural extension of our culture. We are committed to ensuring that all our associates feel welcomed, valued, respected, and heard, so that they can fully contribute their unique talents for the benefit of their careers, our clients, our firm, and our communities. Our diversity strategy is centered on three pillars: the workplace, the workforce, and the community. In our recruiting efforts, we seek to identify a diverse group of candidates for each role we seek to fill. To that end, we have built strong relationships with a variety of industry associations that represent diverse professionals, as well as with diversity groups at the colleges and universities where we recruit. We have firmwide and business unit-specific diversity and inclusion networks, which are open to all professionals at the firm and are designed to promote and advance inclusion, understanding, and belonging. These networks also host various events and conferences to educate and provide avenues for all associates and independent advisors to contribute to an inclusive work environment, and offer mentorship opportunities to our associates. In order to continue to promote and advance inclusion, we have recently launched or expanded certain programs, such as:

- the Pride Financial Advisor Network, which provides support and resources for LGBTQ+ advisors through educational programs, interactive networking and business development opportunities;
- the Encore Inclusion Network, which provides support and opportunities for the growing mature workforce; and
- the Veteran Financial Advisors Network, which is dedicated to supporting armed services veterans in the development of their careers as financial advisors.

We also invest in community-supporting organizations that are dedicated to improving the lives of diverse individuals. Our firmwide diversity, equity, and inclusion advisory council stewards the firm's efforts and provides guidance on priorities. This council is composed of associate representatives from all areas of our business and across geographic locations. In all of our diversity efforts, we strive to create opportunities for allies of diverse communities to participate, contribute, and grow. We believe that to truly achieve all of the benefits of having a diverse and inclusive workforce, all associates and advisors need to be engaged in these discussions.

# Recruitment, talent development, and retention

We seek to build a workforce that provides outstanding client service and helps clients achieve their financial goals. We have competitive programs dedicated to selecting new talent and enhancing the skills of our associates. Among other opportunities, we offer internships to selected college students, professionals returning to the workforce, and veterans, which may lead to permanent roles, and we offer pipeline programs which accelerate the progression from entry level positions for recent graduates across many areas of the firm. We are also committed to supporting associates in reaching their professional goals. We conduct a formal annual goal setting and performance review process for each employee, which includes touch points throughout the year. We also offer associates the opportunity to participate in a variety of professional development programs. Our extensive program catalog includes courses designed to expand our associates' industry, product, technical, professional, business development, and regulatory knowledge. The firm also provides leadership development programs that prepare our leaders for challenges they will face in new roles or with expanded responsibilities. To provide associates equal opportunity to compete for new positions, we require that all roles, with the exception of certain revenue-generating positions and certain senior-level roles, be posted on our internal online career platform. We conduct ongoing and robust succession planning for roles that are within two levels of our Executive Committee, and we strive to ensure we have a diverse pool of candidates for such roles. We discuss the results with executive leadership and the Board of Directors several times per year.

An important driver of our success is the continuous recruitment and retention of financial advisors. Our ability to attract high quality advisors is based on our values-based culture, our commitment to service, and the unique ways in which we provide services to our financial advisors. Individuals who want to become financial advisors can gain relevant branch experience through our Wealth Management Associate Program or move to our Advisor Mastery Program and begin building their client base. We have a department dedicated to providing practice education and management resources to our financial advisors. We also offer these advisors the opportunity to participate in conferences and workshops, and we offer resources and coaching at all levels to help them grow their businesses. These include separate national conferences for our employee and independent contractor financial advisor channels, each of which is attended by thousands of advisors each year.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

We also monitor and evaluate various turnover and attrition metrics. Our overarching commitment to the attraction, development, and retention of our associates results in a relatively low annualized voluntary turnover rate. Importantly, our financial advisor regrettable attrition rate for the fiscal year ending September 30, 2022, was approximately 1%.

## Compensation

We have designed a compensation structure, including an array of benefit plans and programs, that is intended to be attractive to current and prospective associates, while also reinforcing our core values and mitigating excessive risk taking. Our competitive pay packages include base salary, incentive bonus, and equity compensation programs. Additionally, the firm makes annual contributions to support the retirement goals of each associate through our employee stock ownership plan and our profit sharing plan, in addition to a matching contribution program for the 401(k) retirement savings plan. We also offer associates the opportunity to participate in an employee stock purchase plan that enables them to acquire our common stock at a discount, further increasing their ability to participate in the growth and success of the firm. As an additional retention tool, we may grant equity awards in connection with initial employment or under various retention programs for individuals who are responsible for contributing to our management, growth, and/or profitability. For certain employees who meet compensation, production, or other criteria, we also offer various non-qualified deferred compensation plans that provide a return to the participant, as well as a retention tool to the firm.

We strive to ensure that our programs are designed to promote equitable rewards for all associates. We have enhanced our compensation practices with the goal of achieving pay equity at all levels of the organization for female and ethnically diverse associates. Every year, we conduct pay equity studies in the U.S., U.K., and Canada and make adjustments in situations if there is a pay equity gap.

The physical, emotional, and financial well-being of our associates is a high priority of the firm. To that end, programs including healthcare insurance, health and flexible savings accounts, paid time off, family leave, flexible work schedules, tuition assistance, counseling services, as well as on-site services at our corporate offices in St. Petersburg, Florida and Memphis, Tennessee, which include health clinics and a fitness center. Additionally, following our return to office from the COVID-19 pandemic, we have offered more workplace flexibility to our associates as we continue to evaluate our long-term workplace strategy.

## OPERATIONS AND INFORMATION PROCESSING

We have operations personnel at various locations who are responsible for processing securities transactions, custody of client securities, support of client accounts, the receipt, identification and delivery of funds and securities, and compliance with regulatory and legal requirements for most of our securities brokerage operations.

The information technology department develops and supports the integrated solutions that provide a customized platform for our businesses. These include a platform for financial advisors designed to allow them to spend more time with their clients and enhance and grow their businesses; systems that support institutional and retail sales and trading activity from initiation to settlement and custody; and thorough security protocols to protect firm and client information. In the area of information security, we have developed and implemented a framework of principles, policies and technology to protect our own information and that of our clients. We apply numerous safeguards to maintain the confidentiality, integrity and availability of both client and firm information.

Our business continuity program has been developed to provide reasonable assurance that we will continue to operate in the event of disruptions at our critical facilities or other business disruptions. We have developed operational plans for such disruptions, and we have devoted significant resources to maintaining those plans. Our business continuity plan continues to be enhanced and tested to allow for continuous operations in the event of weather-related or other interruptions at our corporate headquarters in Florida, one of our operations processing or data center sites (located in Florida, Colorado, Tennessee or Michigan), and our branch and office locations throughout the U.S., Canada and Europe.

After successfully implementing business continuity protocols at the onset of the COVID-19 pandemic, and the following period of working remotely, we implemented our return to office strategy during our fiscal second quarter of 2022. We have offered more workplace flexibility to our associates as we continue to evaluate our long-term workplace strategy.

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

## COMPETITION

The financial services industry is intensely competitive. We compete with many other financial services firms, including a number of larger securities firms, most of which are affiliated with major financial services companies, insurance companies, banking institutions and other organizations. We also compete with companies that offer web-based financial services and discount brokerage services to individual clients, usually with lower levels of service, and, more recently, financial technology companies (“fintechs”). We compete principally on the basis of the quality of our associates, services, product selection, performance records, location and reputation in local markets.

Our ability to compete effectively is substantially dependent on our continuing ability to develop or attract, retain and motivate qualified financial advisors, investment bankers, trading professionals, portfolio managers and other revenue-producing or specialized personnel. Furthermore, the labor market continues to experience elevated levels of turnover in the aftermath of the pandemic and an extremely competitive labor market, including increased competition for talent across all areas of our business, as well as increased competition with non-traditional competitors, such as technology companies. Employers are increasingly offering guaranteed contracts, upfront payments, increased compensation and increased opportunities to work with greater flexibility, including remote work, on a permanent basis.

## REGULATION

The following summarizes the principal elements of the regulatory and supervisory framework applicable to us as a participant in the financial services industry. The framework includes extensive regulation under U.S. federal and state laws, as well as the applicable laws of the jurisdictions outside the U.S. in which we do business. While this framework is intended to protect our clients, the integrity of the financial markets, our depositors, and the Federal Deposit Insurance Fund, it is not intended to protect our creditors or shareholders. These rules and regulations limit our ability to engage in certain activities, as well as our ability to fund RJF from our regulated subsidiaries, which include our bank subsidiaries, Raymond James Bank and TriState Capital Bank, our broker-dealer subsidiaries, and our trust subsidiaries. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions that are referenced. A change in applicable statutes or regulations or in regulatory or supervisory policy may have a material effect on our business.

We continue to experience a period of notable changes in financial regulation and supervision. Changes in business regulations, as well as in both corporate and individual taxation, could have a significant impact on our business, financial condition, results of operations, and cash flows in the future; however, we cannot predict the exact changes or quantify their potential impacts (see “Item 1A - Risk Factors” of this Form 10-K for further discussion of the potential future impact on our operations).

### Banking supervision and regulation

RJF is a BHC under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), that has made an election to be a FHC and is subject to regulation, oversight and consolidated supervision, including periodic examination, by the Fed. Under the system of “functional regulation” established under the BHC Act, the primary regulators of our U.S. non-bank subsidiaries directly regulate the activities of those subsidiaries, with the Fed exercising a supervisory role. Such “functionally regulated” subsidiaries include our broker-dealers registered with the Securities and Exchange Commission (“SEC”), such as Raymond James & Associates, Inc. (“RJ&A”) and Raymond James Financial Services, Inc. (“RJFS”), and investment advisors registered with the SEC with respect to their investment advisory activities, among other subsidiaries.

We have two depository institutions, Raymond James Bank and TriState Capital Bank (collectively, “our bank subsidiaries”). Raymond James Bank is an FDIC-insured depository institution and a Florida-chartered state member bank of the Fed that is primarily supervised by both the Fed and the Florida Office of Financial Regulation (“OFR”). TriState Capital Bank is a FDIC-insured depository institution and a Pennsylvania-chartered state non-member bank that is primarily supervised by both the FDIC and the Pennsylvania Department of Banking and Securities (“PDBS”). Both Raymond James Bank and TriState Capital Bank are also subject to supervision by the Consumer Financial Protection Bureau (“CFPB”).

We also have two non-depository trust company subsidiaries: RJ Trust, which is regulated, supervised, and examined by the Office of the Comptroller of the Currency (“OCC”), and Raymond James Trust Company of New Hampshire (“RJTCNH”) which is regulated, supervised, and examined by the New Hampshire Banking Department (“NHBD”). RJTCNH provides Individual Retirement Account custodial services and trust services for our PCG clients.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Collectively, the rules and regulations of the Fed, the FDIC, the OFR, the PDBS, the CFPB, the OCC and the NHBD result in extensive regulation and supervision covering all aspects of our banking and trust businesses, including, for example, lending practices, the receipt of deposits, capital structure, transactions with affiliates, conduct and qualifications of personnel and, as discussed further in the following sections, capital requirements. This regulatory, supervisory and oversight framework is subject to significant changes that can affect the operating costs and permissible businesses of RJF and our subsidiaries. As a part of their supervisory functions, the Fed, the FDIC, the OFR, the PDBS, the CFPB, the OCC and the NHBD conduct extensive examinations of our operations and also have the power to bring enforcement actions for violations of law and, in the case of the Fed, the FDIC, the OFR, the PDBS, the OCC, and the NHBD for unsafe or unsound practices.

## *Basel III and U.S. capital rules*

RJF and Raymond James Bank are subject to the Fed's capital rules and TriState Capital Bank is subject to the FDIC's capital rules. These rules establish an integrated regulatory capital framework and implement, in the U.S., the Basel III capital framework developed by the Basel Committee on Banking Supervision and certain Dodd-Frank Wall Street Reform and Consumer Protection Act ('Dodd-Frank Act') and other capital provisions, and, for insured depository institutions, set the prompt corrective action framework discussed below to reflect the regulatory capital requirements (the 'U.S. Basel III Rules'). The U.S. Basel III Rules: (i) establish minimum requirements for both the quantity and quality of regulatory capital; (ii) set forth a capital conservation buffer; and (iii) define the calculation of risk-weighted assets. These capital requirements could restrict our ability to grow, including during favorable market conditions, and to return capital to shareholders, or require us to raise additional capital. As a result, our business, results of operations, financial condition and future prospects could be adversely affected. See 'Item 1A - Risk Factors' of this Form 10-K for more information. See Note 24 of the Notes to Consolidated Financial Statements of this Form 10-K for further information.

Failure to meet minimum capital requirements can trigger discretionary, and in certain cases, mandatory actions by regulators that could have a direct material effect on the financial results of RJF, Raymond James Bank, and TriState Capital Bank. In addition, failure to maintain the capital conservation buffer would result in constraints on distributions, including limitations on dividend payments and stock repurchases, and certain discretionary bonus payments based on the amount of the shortfall and eligible retained income. Under the capital adequacy rules, RJF, Raymond James Bank, and TriState Capital Bank must meet specific capital ratio requirements that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under the rules. The capital amounts and classification for RJF, Raymond James Bank, and TriState Capital Bank are also subject to the qualitative judgments of U.S. regulators based on components of capital, risk-weightings of assets, off-balance sheet transactions and other factors.

Under applicable capital rules, RJF would need to obtain prior approval from the Fed if its repurchases or redemptions of equity securities over a twelve-month period would reduce its net worth by ten percent or more and an exemption were not available. Guidance from the Fed also provides that RJF would need to inform the Fed in advance of repurchasing common stock in certain prescribed situations, such as if it were experiencing, or at risk of experiencing, financial weaknesses or considering expansion, either through acquisitions or other new activities, or if the repurchase would result in a net reduction in common equity over a quarter. Further, Fed guidance indicates that, pursuant to the Fed's general supervisory and enforcement authority, Fed supervisory staff should prevent a BHC from repurchasing its common stock if such action would be inconsistent with the BHC's prospective capital needs and safe and sound operation.

## *Source of strength*

The Fed requires that BHCs, such as RJF, serve as a source of financial strength for any of its subsidiary depository institutions. The term 'source of financial strength' is defined as the ability of a company to provide financial assistance to its insured depository institution subsidiaries in the event of financial distress at such subsidiaries. Under this requirement, RJF could be required to provide financial assistance to Raymond James Bank and TriState Capital Bank in the future should either bank experience financial distress.

## *Transactions between affiliates*

Transactions between (i) Raymond James Bank, TriState Capital Bank, RJ Trust, or their subsidiaries on the one hand and (ii) RJF or its other subsidiaries or affiliates on the other hand are subject to compliance with Sections 23A and 23B of the Federal Reserve Act and Regulation W issued by the Fed, which generally limit the types and amounts of such transactions that may take place and generally require those transactions to be on market terms. These laws generally do not apply to transactions between Raymond James Bank, TriState Capital Bank, RJ Trust, and any subsidiaries they may have.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

The Volcker Rule, a provision of the Dodd-Frank Act, generally prohibits certain transactions and imposes a market terms requirement on certain other transactions between (i) RJF or its affiliates on the one hand and (ii) covered funds for which RJF or its affiliates serve as the investment manager, investment advisor, commodity trading advisor or sponsor, or other covered funds organized and offered by RJF or its affiliates on the other hand. See “The Volcker Rule” in the following section.

## *Deposit insurance*

Raymond James Bank and TriState Capital Bank are subject to the Federal Deposit Insurance Act because they provide deposits covered by FDIC insurance, generally up to $250,000 per account ownership type. For banks with greater than $10 billion in assets, which includes Raymond James Bank and TriState Capital Bank, the FDIC’s current assessment rate calculation relies on a scorecard designed to measure a bank’s financial performance and ability to withstand stress, in addition to measuring the FDIC’s exposure should Raymond James Bank or TriState Capital Bank fail.

## *Prompt corrective action*

The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the U.S. federal bank regulatory agencies to take “prompt corrective action” with respect to depository institutions that do not meet specified capital requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as Raymond James Bank and TriState Capital Bank: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

An institution may be downgraded to, or deemed to be in, a capital category that is lower than the category indicated by its capital ratios if the institution is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, as the capital category of an institution declines. Failure to meet the capital requirements could also require a depository institution to raise capital. Ultimately, critically undercapitalized institutions are subject to the appointment of a receiver or conservator.

Although the prompt corrective action regulations do not apply to BHCs, such as RJF, the Fed is authorized to take appropriate action at the BHC level, based upon the undercapitalized status of the BHC’s depository institution subsidiaries. In certain instances related to an undercapitalized depository institution subsidiary, the BHC would be required to guarantee the performance of the undercapitalized subsidiary’s capital restoration plan and might be liable for civil money damages for failure to fulfill its commitments on that guarantee. Furthermore, in the event of the bankruptcy of the BHC, this guarantee would take priority over the BHC’s general unsecured creditors. As of September 30, 2022, Raymond James Bank and TriState Capital Bank were well-capitalized.

## *The Volcker Rule*

RJF is subject to the Volcker Rule, which generally prohibits BHCs and their subsidiaries and affiliates from engaging in proprietary trading, but permits underwriting, market making, and risk-mitigating hedging activities. The Volcker Rule also prohibits BHCs and their subsidiaries and affiliates from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with “covered funds” (as defined in the rule), including hedge funds and private equity funds, subject to certain exceptions.

## *Compensation practices*

Our compensation practices are subject to oversight by the Fed. Compensation regulation in the financial industry continues to evolve, and we expect these regulations to change over a number of years. The U.S. federal bank regulatory agencies have provided guidance designed to ensure incentive compensation policies do not encourage imprudent risk-taking and are consistent with safety and soundness. As required by SEC rules, we disclose in our proxy statements for each annual meeting of shareholders the relationship of our compensation policies and practices to risk management initiatives, to the extent that the risks arising from such policies and practices are reasonably likely to have a material adverse effect on the firm.

On August 25, 2022, the SEC adopted the final “pay-for-performance” rule mandated by the Dodd-Frank Act. Among other disclosure requirements, the rule requires companies to disclose the relationships among named executive officer compensation “actually paid,” total shareholder return and certain financial performance measures that the company uses to link compensation to company performance for its five most recent fiscal years. The rule will first apply to disclosures in our proxy statement for the 2024 annual shareholders meeting.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Community Reinvestment Act regulations*

Raymond James Bank and TriState Capital Bank are subject to the CRA, which is intended to encourage banks to help meet the credit needs of their communities, including low and moderate income neighborhoods, consistent with safe and sound bank operations. Under the CRA, federal banking regulators are required to periodically examine and assign to each bank a public CRA rating. If any insured depository institution subsidiary of a FHC fails to maintain at least a “satisfactory” rating under the CRA, the FHC would be subject to restrictions on certain new activities and acquisitions.

On May 5, 2022, federal banking regulators requested comment on a joint notice of proposed rulemaking on the CRA. Until the proposed rulemaking is final and effective, Raymond James Bank and TriState Capital Bank will continue to operate under the CRA regulations currently in effect. At this time, it is uncertain what effect the impending CRA regulations will have on Raymond James Bank, TriState Capital Bank, and other depositories with respect to their CRA activities.

### *Other restrictions*

FHCs, such as RJF, generally can engage in a broader range of financial and related activities than are otherwise permissible for BHCs as long as they continue to meet the eligibility requirements for FHCs. Among other things, the broader range of permissible activities for FHCs includes underwriting, dealing and making markets in securities and making investments in non-FHCs or merchant banking activities. We are required to obtain Fed approval before engaging in certain banking and other financial activities both within and outside the U.S.

The Fed, however, has the authority to limit an FHC’s ability to conduct activities that would otherwise be permissible, and will likely do so if the FHC does not satisfactorily meet certain requirements of the Fed. For example, if an FHC or any of its U.S. depository institution subsidiaries ceases to maintain its status as “well-capitalized” or “well-managed,” the Fed may impose corrective capital and/or managerial requirements, as well as additional limitations or conditions. If the deficiencies persist, the FHC may be required to divest its U.S. depository institution subsidiaries or to cease engaging in activities other than the business of banking and certain closely related activities.

### **Broker-dealer and securities regulation**

The SEC is the federal agency charged with administration of the federal securities laws in the U.S. Our U.S. broker-dealer subsidiaries are subject to SEC regulations relating to their business operations, including sales and trading practices, public offerings, publication of research reports, use and safekeeping of client funds and securities, capital structure, record-keeping, privacy requirements, and the conduct of directors, officers and employees. Financial services firms are also subject to regulation by state securities commissions in those states in which they conduct business. Our most significant U.S. broker-dealers, RJ&A, RJFS, and SumRidge Partners, LLC (“SumRidge Partners”), are currently registered as broker-dealers in all 50 states.

Financial services firms are also subject to regulation by various foreign governments, securities exchanges, central banks and regulatory bodies, particularly in those countries where they have established offices. Outside of the U.S., we have additional offices primarily in Canada, the U.K., and Germany and are subject to regulations in those areas. Much of the regulation of broker-dealers in the U.S. and Canada, however, has been delegated to self-regulatory organizations (“SROs”), such as the Financial Industry Regulatory Authority (“FINRA”) in the U.S., the Investment Industry Regulatory Organization of Canada (“IIROC”), and securities exchanges. These SROs adopt and amend rules for regulating the industry, subject to the approval of government agencies. These SROs also conduct periodic examinations of member broker-dealers. The single primary regulator with respect to our conduct of financial services in the U.K. is the Financial Conduct Authority (“FCA”), which operates on a statutory basis.

The SEC, SROs and state securities regulators may conduct administrative proceedings that can result in censure, fine, suspension or expulsion of a broker-dealer, its officers, employees or other associated persons. Such administrative proceedings, whether or not resulting in adverse findings, can require substantial expenditures and may adversely impact the reputation of a broker-dealer.

Our U.S. broker-dealer subsidiaries are subject to the Securities Investor Protection Act (“SIPA”) and are required by federal law to be members of the Securities Investors Protection Corporation (“SIPC”). The SIPC was established under SIPA, and oversees the liquidation of broker-dealers during liquidation or financial distress. The SIPC fund provides protection for cash and securities held in client accounts up to $500,000 per client, with a limitation of $250,000 on claims for cash balances.

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# *U.S. broker-dealer capital*

Our broker-dealer subsidiaries are subject to certain of the SEC’s financial stability rules, including the: (i) net capital rule; (ii) customer protection rule; (iii) record-keeping rules; and (iv) notification rules. Broker-dealers are required to maintain the minimum net capital deemed necessary to meet their continuing commitments to customers and others, and are required to keep their assets in relatively liquid form. These rules also limit the ability of broker-dealers to transfer capital to parent companies and other affiliates. See Note 24 of the Notes to Consolidated Financial Statements of this Form 10-K for further information pertaining to our broker-dealer regulatory minimum net capital requirements.

# *Standard of care*

Pursuant to the Dodd-Frank Act, the SEC was charged with considering whether broker-dealers should be subject to a standard of care similar to the fiduciary standard applicable to RIAs. In June 2019, the SEC adopted a package of rule-makings and interpretations related to the provision of advice by broker-dealers and investment advisers, including Regulation Best Interest and Form CRS. Among other things, Regulation Best Interest requires a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities. Form CRS requires that broker-dealers and investment advisers provide retail investors with a brief summary document containing simple, easy-to-understand information about the nature of the relationship between the parties. Our implementation of these regulations resulted in the review and modification of certain of our policies and procedures and associated supervisory and compliance controls, as well as the implementation of additional client disclosures, which included us providing related education and training to financial advisors.

Various states have also proposed, or adopted, laws and regulations seeking to impose new standards of conduct on broker-dealers that may differ from the SEC’s new regulations, which may lead to additional implementation costs. The Department of Labor (“DOL”) has also reinstated the historical “five-part test” for determining who is an investment advice “fiduciary” when dealing with certain retirement plans and accounts. In 2022, the DOL promulgated a new exemption that enables investment advice fiduciaries to receive transaction-based compensation and engage in certain otherwise prohibited transactions, subject to compliance with the exemption’s requirements. In addition, the DOL is expected to amend the five-part test by the end of 2023 so that the fiduciary standard would apply to a broader range of client relationships. Imposing such a new standard of care on additional client relationships could result in incremental costs for our business and we are evaluating how these regulatory changes may further impact our business.

# *Other non-U.S. regulation*

Raymond James Ltd. (“RJ Ltd.”) is currently registered as an investment dealer in all provinces and territories in Canada. The financial services industry in Canada is subject to comprehensive regulation under both federal and provincial laws. Securities commissions have been established in all provinces and territorial jurisdictions, which are charged with the administration of securities laws. Investment dealers in Canada are subject to regulation by IIROC, a SRO under the oversight of the securities commissions that make up the Canadian Securities Administrators. IIROC is responsible for the enforcement of, and conformity with, securities legislation for their members and has been granted the powers to prescribe their own rules of conduct and financial requirements of members, including RJ Ltd. IIROC also requires that RJ Ltd. be a member of the Canadian Investors Protection Fund, whose primary role is investor protection. This fund provides protection for securities and cash held in client accounts up to 1 million Canadian dollars (“CAD”) per client, with additional coverage of CAD 1 million for certain types of accounts.

Certain of our subsidiaries are registered in, and operate from, the U.K. which has a highly developed and comprehensive regulatory regime. These subsidiaries are authorized and regulated by the FCA and have limited permissions to carry out business in certain European Union (“E.U.”) countries as part of treaty arrangements. The FCA operates on a statutory basis and creates rules which are largely principles-based. These regulated U.K. subsidiaries and their senior managers are registered with the FCA, and wealth managers and certain other staff are subject to certification requirements. Certain of these subsidiaries operate in the retail sector, providing investment and financial planning services to high-net-worth individuals, while others provide brokerage and investment banking services to institutional clients. Retail clients of our U.K. subsidiaries benefit from the Financial Ombudsman Service, which settles complaints between consumers and business that provide financial services, as well as the Financial Services Compensation Scheme, which is the U.K.’s statutory deposit insurance and investors compensation scheme for customers of authorized financial services firms.

In Germany, our subsidiary Raymond James Corporate Finance GmbH is licensed by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or “BaFin”) to conduct the regulated activities of investment advice and investment brokerage. Among other requirements, BaFin requires Raymond James Corporate Finance

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GmbH, as a regulated entity, to comply with certain capital, liquidity, governance, and business conduct requirements, and has a range of supervisory and disciplinary powers which it is able to use in overseeing the activities of this subsidiary.

### **Investment management regulation**

Our investment advisory operations, including the mutual funds that we sponsor, are also subject to extensive regulation in the U.S. The majority of our asset managers are registered as investment advisers with the SEC under the Investment Advisers Act of 1940 as amended, and are also required to make notice filings in certain states. Virtually all aspects of our asset management business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended for the benefit of our clients.

### **Anti-money laundering, economic sanctions, and anti-bribery and corruption regulation**

The U.S. Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act of 2001 (“PATRIOT Act”), the Customer Due Diligence Rule, and the Anti-Money Laundering Act of 2020 (“AMLA”), contains anti-money laundering and financial transparency laws and mandates the implementation of various regulations applicable to all financial institutions, including standards for verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities. Through these and other provisions, the BSA, the PATRIOT Act, and AMLA seek to promote the identification of parties that may be involved in terrorism, money laundering or other suspicious activities. Anti-money laundering laws outside the U.S. contain some similar provisions.

The U.S. Treasury’s Office of Foreign Assets Control administers economic and trade sanctions programs and enforces sanctions regulations with which all U.S. persons must comply. The E.U. as well as various countries have also adopted economic sanctions programs targeted at countries, entities and individuals that are involved in terrorism, hostilities, embezzlement or human rights violations.

In addition, various countries have adopted laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, related to corrupt and illegal payments to, and hiring practices with regard to, government officials and others. The scope of the types of payments or other benefits covered by these laws is very broad and is subject to significant uncertainties that may be clarified only in the context of further regulatory guidance or enforcement proceedings.

RJF and its affiliates have implemented and maintain internal policies, procedures, and controls to meet the compliance obligations imposed by such U.S. and non-U.S. laws and regulations concerning anti-money laundering, economic sanctions, and anti-bribery and corruption. Failure to continue to meet the requirements of these regulations could result in supervisory action, including fines.

### **Privacy and data protection**

U.S. federal law establishes minimum federal standards for financial privacy by, among other provisions, requiring financial institutions to adopt and disclose privacy policies with respect to consumer information and setting forth certain limitations on disclosure to third parties of consumer information. U.S. state laws and regulations adopted under U.S. federal law impose obligations on RJF and its subsidiaries for protecting the confidentiality, integrity and availability of client information, and require notice of data breaches to certain U.S. regulators and to clients. The Fair Credit Reporting Act of 1970, as amended, mandates the development and implementation of a written identity theft prevention program that is designed to detect, prevent, and mitigate identity theft.

The California Privacy Rights Act amends the California Consumer Privacy Act of 2020 and is expected to be enforced beginning in July 2023. New regulations under the statute have not yet been published. The new regulations will update the existing privacy protections for the personal information of California residents, including by requiring companies to provide certain additional disclosures to California consumers, and provides for a number of specific additional data subject rights for California residents.

Similarly, the General Data Protection Regulation (“GDPR”) imposes requirements for companies that collect or store personal data of E.U. residents, as well as residents of the U.K. GDPR’s legal requirements extend to all foreign companies that solicit and process personal data of E.U. and U.K. residents, imposing a strict data protection compliance regime that includes consumer rights actions that must be responded to by organizations. Canadian data privacy laws contain many provisions similar to U.S. financial privacy laws and are currently undergoing legislative reform at a federal and provincial level. In September 2021, Quebec enacted Bill C-64, a comprehensive privacy law with extraterritorial application modeled after GDPR and which imposes fines for non-compliance. The law includes staggered implementation dates (running from September 2022

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through September 2024) for various provisions. The firm intends to implement Bill C-64 through its privacy program framework. We have implemented policies, processes, and training with regard to communicating to our clients and business partners required information relating to financial privacy and data security. We continue to monitor regulatory developments on both a domestic and international level to assess requirements and potential impacts on our global business operations.

The multitude of data privacy laws and regulations adds complexity and cost to managing compliance and data management capabilities and can result in potential litigation, regulatory fines and reputational harm. Data privacy requirements compel companies to track personal information use and provide greater transparency on data practices to consumers. In addition, technology advances in the areas of artificial intelligence, mobile applications, and remote connectivity solutions have increased the collection and processing of personal information as well as the risks associated with unauthorized disclosure and access to personal information.

#### **Alternative reference rate transition**

Central banks and regulators in the U.S. and other jurisdictions are working to implement the transition from the London Interbank Offered Rate (“LIBOR”) to replacement interest rate benchmarks. On March 5, 2021, the FCA, which regulates LIBOR, announced it would cease publication of the less commonly used tenors after December 31, 2021, while it would cease publication of the most commonly used U.S. dollar LIBOR tenors after June 30, 2023. As a result, U.S. federal banking agencies issued guidance strongly encouraging institutions to cease entering into contracts that reference LIBOR as soon as practicable, and no later than December 31, 2021. There have been several pronouncements released during our fiscal year ended September 30, 2022 that have provided additional guidance related to the transition away from LIBOR and reduced uncertainty across the industry, including the International Swaps and Derivatives Association (ISDA) Fallback Protocol, the Adjustable Interest Rate (LIBOR) Act, and a proposal released by the Fed.

Consistent with the preceding guidance, as of December 31, 2021, we phased out the use of LIBOR as a reference rate in new financial instruments and converted our FHLB borrowings and SBL from LIBOR-based interest rates to Secured Overnight Financing Rate-based interest rates, resulting in an insignificant impact on interest income, interest expense, and cash flows. We continue to make progress on the transition away from LIBOR, as coordinated by our enterprise-wide team established to facilitate the transition. We continue to focus on monitoring the impacts of LIBOR across our business operations and products, ensuring that legacy instruments contain appropriate fallback language, modifying instruments that require amendments, engaging with financial advisors and clients on the impact of the transition, and working through infrastructure enhancements (e.g., systems and models) to ensure operational readiness. We continue to evaluate the anticipated effect of the alternative reference rate transition and, at this time, we expect minimal financial impact.

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# **INFORMATION ABOUT OUR EXECUTIVE OFFICERS**

Executive officers of the registrant (which includes officers of certain significant subsidiaries) are as follows:

| Christopher S. Aisenbrey | 53 | Chief Human Resources Officer since October 2019; Senior Vice President, Organization and Talent Development - Raymond James & Associates, Inc., January 2019 - October 2019; Vice President, Organization and Talent Development - Raymond James & Associates, Inc., November 2014 - December 2018 |
| --- | --- | --- |
| James E. Bunn | 49 | President - Global Equities and Investment Banking - Raymond James & Associates, Inc. since December 2018 and Head of Investment Banking - Raymond James & Associates, Inc. since January 2014; Co-President - Global Equities and Investment Banking - Raymond James & Associates, Inc., October 2017 - December 2018 |
| Horace L. Carter | 51 | President - Fixed Income - Raymond James & Associates, Inc. since January 2022; President - SumRidge Partners, LLC since July 2022; Executive Vice President, Head of Fixed Income Capital Markets - Raymond James & Associates, Inc., October 2019 - December 2021; Managing Director, Co-Head of Fixed Income Capital Markets - Raymond James & Associates, Inc., January 2019 - September 2019; Managing Director, Head of Fixed Income Trading - Raymond James & Associates, Inc., April 2012 - December 2018 |
| George Catanese | 63 | Chief Risk Officer since February 2006 |
| James R. E. Coulter | 53 | Chief Executive Officer - Raymond James Ltd. since January 2022; Executive Vice President, Head of Wealth Management - Private Client Group - Raymond James Ltd., December 2019 - December 2021; Senior Vice President, Branch Manager - Private Client Group - Raymond James Ltd., October 2014 - December 2019 |
| Scott A. Curtis | 60 | President - Private Client Group since June 2018; President - Raymond James Financial Services, Inc. since January 2012 |
| Jeffrey A. Dowdle | 58 | Chief Operating Officer since October 2019 and President - Asset Management Group since May 2016; Chief Administrative Officer, August 2018 - October 2019 |
| Tashtego S. Elwyn | 51 | Chief Executive Officer and President - Raymond James & Associates, Inc. since June 2018; President - Private Client Group - Raymond James & Associates, Inc., January 2012 - June 2018 |
| Thomas A. James | 80 | Chair Emeritus since February 2017 |
| Bella Loykhter Allaire | 69 | Executive Vice President - Technology and Operations - Raymond James & Associates, Inc. since June 2011 |
| Jodi L. Perry | 51 | President - Independent Contractor Division - Raymond James Financial Services, Inc. since June 2018; Senior Vice President, National Director - ICD - Raymond James Financial Services, Inc., May 2018 - June 2018; Senior Vice President, ICD Regional Director - Raymond James Financial Services, Inc., June 2012 - May 2018 |
| Steven M. Raney | 57 | Chair - Raymond James Bank, since November 2020; President and CEO - Raymond James Bank since January 2006 |
| Paul C. Reilly | 68 | Chair since February 2017 and Chief Executive Officer since May 2010; Director since January 2006 |
| Jonathan N. Santelli | 51 | Executive Vice President, General Counsel and Secretary since May 2016 |
| Paul M. Shoukry | 39 | Chief Financial Officer since January 2020 and Treasurer since February 2018; Senior Vice President - Finance and Investor Relations, January 2017 - December 2019; Senior Vice President - Treasury, January 2017 - February 2018 |

Except where otherwise indicated, the executive officer has held his or her current position for more than five years.

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# **ADDITIONAL INFORMATION**

Our Internet address is www.raymondjames.com. We make available on our website, free of charge and in printer-friendly format including '.pdf' file extensions, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our reports and other information that we electronically file with the SEC are also available free of charge on the SEC's website at www.sec.gov.

# **FACTORS AFFECTING 'FORWARD-LOOKING STATEMENTS'**

Certain statements made in this Annual Report on Form 10-K 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, divestitures, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, words such as 'believes,' 'expects,' 'anticipates,' 'projects,' and future or conditional verbs such as 'will,' 'may,' 'could,' 'should,' and 'would,' as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in 'Item 1A - Risk Factors' of this report. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.

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## ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, including those described in the following sections, which could adversely affect our business, financial condition, results of operations, liquidity and the trading price of our common and preferred stock. The list of risk factors provided in the following sections is not exhaustive; there may be other factors that adversely impact our results of operations, harm our reputation or inhibit our ability to generate new business prospects. The following sections should be read in conjunction with “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and accompanying notes in “Item 8 - Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. In particular, see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources” for additional information on liquidity and how we manage our liquidity risk and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management” for additional information on our exposure and how we monitor and manage our market, credit, operational, compliance and certain other risks.

### RISKS RELATED TO OUR BUSINESS AND INDUSTRY

#### Damage to our reputation could damage our businesses.

Maintaining our reputation is critical to attracting and maintaining clients, investors, and associates. If we fail to address, or appear to fail to address, issues that may give rise to reputational risk, we could significantly harm our business prospects. These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money laundering, cybersecurity and privacy, record-keeping, sales and trading practices, and associate misconduct. In addition, the failure to either sell securities we have underwritten at anticipated price levels or to properly identify and communicate the risks inherent in the products and services we offer could also give rise to reputational risk. Failure to maintain appropriate service and quality standards or a failure or perceived failure to treat clients fairly can result in client dissatisfaction, litigation and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs and reputational harm. Negative publicity about us, whether or not true, may also harm our reputation. Further, failures at other large financial institutions or other market participants, regardless of whether they relate to our activities, could lead to a general loss of customer confidence in financial institutions that could negatively affect us, including harming the market perception of the financial system in general.

#### Any cyber-attack or other security breach of our technology systems, or those of our clients or other third-party vendors we rely on, could subject us to significant liability and harm our reputation.

Our operations rely heavily on the secure processing, storage and transmission of sensitive and confidential financial, personal and other information in our computer systems and networks. There have been several highly publicized cases involving financial services companies reporting the unauthorized disclosure of client or other confidential information in recent years, as well as cyber-attacks involving the theft, dissemination and destruction of corporate information or other assets, in some cases as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties. There have also been several highly publicized cases where hackers have requested “ransom” payments in exchange for not disclosing customer information or for restoring access to information or systems. Like other financial services firms, we experience malicious cyber activity directed at our computer systems, software, networks and its users on a daily basis. This malicious activity includes attempts at unauthorized access, implantation of computer viruses or malware, and denial-of-service attacks. We also experience large volumes of phishing and other forms of social engineering attempted for the purpose of perpetrating fraud against the firm, our associates, or our clients. Additionally, like many large enterprises, we have shifted to a more hybrid work environment which includes a combination of in-office and remote work for our associates. The increase in remote work over the past few years has introduced potential new vulnerabilities to cyber threats. We may also face increased cybersecurity risk for a period of time after acquisitions as we transition the acquired entity’s historical controls to our standards. We also face increased cybersecurity risk as we deploy additional mobile and cloud technologies. We seek to continuously monitor for and nimbly react to any and all such malicious cyber activity, and we develop our systems to protect our technology infrastructure and data from misuse, misappropriation or corruption. Senior management of our Information Technology department gives a quarterly update on cybersecurity to the Audit and Risk Committee of our Board of Directors and an annual update to our full Board of Directors.

Cyber-attacks can originate from a variety of sources, including third parties affiliated with foreign governments, organized crime or terrorist organizations. Third parties may also attempt to place individuals within our firm, or induce employees, clients or other users of our systems, to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent. Although cybersecurity incidents among financial services firms are on the rise, we have

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not experienced any material losses relating to cyber-attacks or other information security breaches. However, the techniques used in these attacks are increasingly sophisticated, change frequently and are often not recognized until launched. Although we seek to maintain a robust suite of authentication and layered information security controls, including our cyber threat analytics, data encryption and tokenization technologies, anti-malware defenses and vulnerability management programs, any one or combination of these controls could fail to detect, mitigate or remediate these risks in a timely manner. 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, equipment failure, natural disasters, power loss, spam attacks, unauthorized access, supply chain attacks, distributed denial of service attacks, computer viruses and other malicious code, and other events that could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our operations. In addition, although we maintain insurance coverage that may, subject to terms and conditions, cover certain aspects of cyber and information security risks, such insurance coverage may be insufficient to cover all losses, such as litigation costs or financial losses that exceed our policy limits or are not covered under any of our current insurance policies.

We also rely on numerous third-party service providers to conduct other aspects of our business operations, and we face similar risks relating to them. While we regularly conduct security assessments on these third-party vendors, we cannot be certain that their information security protocols are sufficient to withstand a cyber-attack or other security breach. We also cannot be certain that we will receive timely notification of such cyber-attacks or other security breaches. In addition, in order to access our products and services, our clients may use computers and other devices that are beyond our security control systems.

Notwithstanding the precautions we take, if a cyber-attack or other information security breach were to occur, this could jeopardize the information we confidentially maintain, or otherwise cause interruptions in our operations or those of our clients and counterparties, exposing us to liability. As attempted attacks continue to evolve in scope and sophistication, we may be required to expend substantial additional resources to modify or enhance our protective measures, to investigate and remediate vulnerabilities or other exposures or to communicate about cyber-attacks to our clients. A technological breakdown could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to potential disciplinary action by regulators. Further, successful cyber-attacks at other large financial institutions or other market participants, whether or not we are affected, could lead to a general loss of confidence in financial institutions that could negatively affect us, including harming the market perception of the effectiveness of our security measures or the financial system in general, which could result in reduced use of our financial products and services.

Further, in light of the high volume of transactions we process, use of remote work, the large number of our clients, partners and counterparties, and the increasing sophistication of malicious actors, a cyber-attack could occur. Moreover, any such cyber-attack may persist for an extended period of time without detection. We expect that any investigation of a cyber-attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such an attack.

We may also be subject to liability under various data protection laws. In providing services to clients, we manage, utilize and store sensitive or confidential client or employee data, including personal data. As a result, we are subject to numerous laws and regulations designed to protect this information, such as U.S. federal, state and international laws governing the protection of personally identifiable information. These laws and regulations are increasing in complexity and number. If any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and related revenue. Potential liability in the event of a security breach of client data could be significant. Depending on the circumstances giving rise to the breach, this liability may not be subject to a contractual limit or an exclusion of consequential or indirect damages.

# **We are affected by domestic and international macroeconomic conditions that impact the global financial markets.**

We are engaged in various financial services businesses. As such, we are affected by domestic and international macroeconomic and political conditions, as well as economic output levels, interest and inflation rates, employment levels, prices of commodities, consumer confidence levels and changes in consumer spending, international trade policy, and fiscal and monetary policy. For example, Fed policies determine, in large part, the cost of funds for lending and investing and the return earned on those loans and investments. The market impact from such policies can also decrease materially the value of certain of our financial assets, most notably debt securities, as well as our cash flows, such as those associated with client cash

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balances. Changes in tax law and regulation, or any market uncertainty caused by a change in the political environment, may negatively affect our business. Macroeconomic conditions may also be negatively impacted by domestic or international events, including natural disasters, political unrest, or public health epidemics and pandemics, as well as by a number of factors in the global financial markets that may be detrimental to our operating results.

If we were to experience a period of sustained downturn in the securities markets, credit market dislocations, reductions in the value of real estate, increases in mortgage and other loan delinquencies, or other negative market factors, our revenues could be adversely impacted. Market uncertainty could also cause clients to move their investments to lower margin products, or withdraw them, which could have an adverse impact on our profitability. We could also experience a material reduction in trading volume and lower asset prices in times of market uncertainty, which would result in lower brokerage revenues, including losses on firm inventory, as well as losses on certain of our investments. Conversely, periods of severe market volatility may result in a significantly higher level of transactions and other activity which may cause operational challenges that may result in losses. These can include, but are not limited to, trade errors, failed transaction settlements, late collateral calls to borrowers and counterparties, or interruptions to our system processing. Periods of reduced revenue and other losses could lead to reduced profitability because certain of our expenses, including our interest expense on debt, lease expenses, and salary expenses, are fixed, and our ability to reduce them over short time periods is limited.

U.S. markets may also be impacted by public health epidemics or pandemics, such as the COVID-19 pandemic, as well as by political and civil unrest occurring in other parts of the world. Our businesses and revenues derived from non-U.S. operations may also be subject to risk of loss from currency fluctuations, social or political instability, less established regulatory regimes, changes in governmental or central bank policies, downgrades in the credit ratings of sovereign countries, expropriation, nationalization, confiscation of assets and unfavorable legislative, economic and political developments.

## Lack of liquidity or access to capital could impair our business and financial condition.

Our inability to maintain adequate liquidity or to easily access credit and capital markets could have a significant negative effect on our financial condition. If liquidity from our brokerage or banking operations is inadequate or unavailable, we may be required to scale back or curtail our operations, such as limiting our recruiting of financial advisors, limiting lending, selling assets at unfavorable prices, and cutting or eliminating dividend payments. Our liquidity could be negatively affected by: the inability of our subsidiaries to generate cash to distribute to the parent company in the form of dividends from earnings; liquidity or capital requirements applicable to our subsidiaries that may prevent us from distributing cash to the parent company; limited or no accessibility to credit markets for secured and unsecured borrowings by our subsidiaries; diminished access to the capital markets for RJF; and other commitments or restrictions on capital as a result of adverse legal settlements, judgments, or regulatory sanctions. Furthermore, as a bank holding company, we may become subject to prohibitions or limitations on our ability to pay dividends to our shareholders and/or repurchase our stock. Certain of our regulators have the authority, and under certain circumstances, the duty, to prohibit or to limit dividend payments by regulated subsidiaries to their parent company.

The availability of financing, including access to the credit and capital markets, depends on various factors, such as conditions in the debt and equity markets, the general availability of credit, the volume of securities trading activity, the overall availability of credit to the financial services sector, and our credit ratings. Our cost of capital and the availability of funding may be adversely affected by illiquid credit markets and wider credit spreads. Additionally, lenders may from time to time curtail, or even cease to provide, funding to borrowers as a result of future concerns over the strength of specific counterparties, as well as the stability of markets generally.

## We are exposed to credit risk.

We are generally exposed to the risk that third parties that owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others. Credit risk may also be affected by the deterioration of strength in the U.S. economy or adverse changes in the financial performance or condition of our clients and counterparties. We actively buy and sell securities from and to clients and counterparties in the normal course of our broker-dealers' trading and underwriting activities, which exposes us to credit risk. Although generally collateralized by the underlying security to the transaction, we still face risk associated with changes in the market value of collateral through settlement date. We also hold certain securities, loans and derivatives as part of our trading operations. Deterioration in the actual or perceived credit quality of the underlying issuers of securities or loans or the non-performance of counterparties to certain derivatives could result in losses.

We borrow securities from, and lend securities to, other broker-dealers and may also enter into agreements to repurchase and/or resell securities as part of our financing activities. A sharp change in the market values of the securities utilized in these

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transactions may result in losses if counterparties to these transactions fail to honor their commitments. We manage the risk associated with these transactions by establishing and monitoring credit limits, as well as by evaluating collateral and transaction levels on a recurring basis. Significant deterioration in the credit quality of one of our counterparties could lead to widespread concerns about the credit quality of other counterparties in the same industry, thereby exacerbating our credit risk. In addition, we permit our clients to purchase securities on margin. During periods of steep declines in securities prices, the value of the collateral securing client margin loans may fall below the amount of the loan. If clients are unable to provide additional collateral for these margin loans, we may incur losses on those margin transactions. This may cause us to incur additional expenses defending or pursuing claims or litigation related to counterparty or client defaults.

We deposit our cash in depository institutions as a means of maintaining the liquidity necessary to meet our operating needs, and we also facilitate the deposit of cash awaiting investment in depository institutions on behalf of our clients. A failure of a depository institution to return these deposits could severely impact our operating liquidity, result in significant reputational damage, and adversely impact our financial performance.

We also incur credit risk by lending to businesses and individuals, including through offering SBL, C&I loans, CRE loans, REIT loans, residential mortgage loans, and tax-exempt loans. We also incur credit risk through certain of our investments. Our credit risk and credit losses can increase if our loans or investments are concentrated among borrowers or issuers engaged in the same or similar activities, industries, or geographies, or to borrowers or issuers who as a group may be uniquely or disproportionately affected by economic or market conditions. Declines in the real estate market or sustained economic downturns may cause us to experience credit losses or charge-offs related to our loans, sell loans at unattractive prices or foreclose on certain real estate properties. Furthermore, the deterioration of an individually large exposure, for example due to natural disasters, health emergencies or pandemics, acts of terrorism, severe weather events or other adverse economic events, could lead to additional credit loss provisions and/or charges-offs, and subsequently have a material impact on our net income and regulatory capital. In addition, TriState Capital Bank utilizes information provided by third-party organizations to monitor changes in the value of marketable securities that serve as collateral for a portion of its SBL. These third parties also provide control over cash and marketable securities for purposes of perfecting TriState Capital Bank's security interests and retaining the collateral in the applicable accounts. In the event that TriState Capital Bank would need to take control of collateral, it is dependent upon such third parties to follow contractual control agreements in order to mitigate any potential losses on its SBL.

# **We are exposed to market risk, including interest rate risk.**

Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions, which directly and indirectly affect us. Market conditions that change from time to time, thereby exposing us to market risk, include fluctuations in interest rates, equity prices, foreign exchange rates, and price deterioration or changes in value due to changes in market perception or actual credit quality of an issuer.

Market risk is inherent in financial instruments associated with our operations and activities, including loans, deposits, securities, short-term borrowings, long-term debt, trading assets and liabilities, derivatives and investments. For example, interest rate changes could adversely affect the value of our fixed income trading inventories, as well as our net interest spread, which is the difference between the yield we earn on our interest-earning assets and the interest rate we pay for deposits and other sources of funding, in turn impacting our net interest income and earnings. Interest rate changes could affect the interest earned on assets differently than interest paid on liabilities.

A rising interest rate environment generally results in our earning a larger net interest spread and an increase in servicing fees received on cash swept to third-party program banks as part of the RJBDP. Conversely, in those operations, a falling interest rate environment generally results in our earning a smaller net interest spread and lower RJBDP fees from third-party program banks. If we are unable to effectively manage our interest rate risk, changes in interest rates could have a material adverse effect on our profitability.

Our private equity fund investments are carried at fair value with unrealized gains and losses reflected in earnings. The value of our private equity portfolio can fluctuate and earnings from our investments can be volatile and difficult to predict. When, and if, we recognize gains can depend on a number of factors, including general economic conditions, the prospects of the companies in which the funds invest and whether these companies become subject to a monetization event.

In addition, disruptions in the liquidity or transparency of the financial markets may result in our inability to sell, syndicate or realize the value of security positions, thereby leading to increased concentrations. The inability to reduce our positions in specific securities may not only increase the market and credit risks associated with such positions, but also increase the level of risk-weighted assets on our balance sheet, thereby increasing our capital requirements, which could have an adverse effect on our business results, financial condition, and liquidity.

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

# **Significant volatility in our domestic clients' cash sweep balances could negatively impact our net revenues and/or our ability to fund our Bank segment's growth and may impact our regulatory ratios.**

The majority of our Bank segment's deposits are driven by the RJBDP. The RJBDP is a source of relatively low-cost, stable deposits and we rely heavily on the RJBDP to fund our Bank segment asset growth, particularly at Raymond James Bank. A significant reduction in PCG clients' cash balances, a change in the allocation of that cash between our Bank segment and third-party banks within the RJBDP, or a movement of cash away from the firm could significantly impact our ability to continue growing interest-earning assets and/or require our Bank segment to use higher-cost deposit sources to grow interest-earning assets. Rapidly rising rates, for example, have made and may continue to make investments in securities, such as fixed-income securities and money market funds, more attractive for investors, thereby reducing the cash they hold.

We also earn fees from third-party banks related to the deposits they receive through their participation in the RJBDP. If PCG clients' cash balances continue to decrease or third-party bank demand or capacity for RJBDP deposits decline from current levels our RJBDP fees from third-party banks could be adversely affected. In addition, our inability to deploy client cash to third-party banks through RJBDP would require us to retain more cash in our Bank segment or in our Client Interest Program ('CIP'), both of which may cause a significant increase in our assets. Such an increase in our assets may negatively impact certain of our regulatory ratios.

# **Our ability to attract and retain senior professionals, qualified financial advisors and other associates is critical to the continued success of our business.**

Our ability to recruit, serve and retain our clients depends on the reputation, judgment, leadership, business generation capabilities and client service skills of our client-serving professionals, members of our executive team, as well as employees who support revenue-generating professionals and their clients. To compete effectively we must attract, develop, and retain qualified professionals, including successful financial advisors, investment bankers, trading professionals, portfolio managers and other revenue-producing or specialized support personnel. Competitive pressures we experience could have an adverse effect on our business, results of operations, financial condition and liquidity.

The labor market continues to experience elevated levels of turnover in the aftermath of the COVID-19 pandemic and we have been impacted by an extremely competitive labor market, including increased competition for talent across all aspects of our business, as well as increased competition with non-traditional competitors, such as technology companies. Employers are offering increased compensation and opportunities to work with greater flexibility, including remote work, on a permanent basis. These can be important factors in a current associate's decision to leave us as well as in a prospective associate's decision to join us. As competition for skilled professionals remains intense, we may have to devote significant resources to attract and retain qualified personnel, which could negatively impact earnings.

Specifically within the financial industry, employers are increasingly offering guaranteed contracts, upfront payments, and increased compensation. Our financial results may be adversely affected by the costs we incur in connection with any loans or other incentives we may offer to newly recruited financial advisors and other key personnel. If we were to lose the services of any of our financial advisors, investment bankers, senior equity research, sales and trading professionals, asset managers, or executive officers to a competitor or otherwise, we may not be able to retain valuable relationships and some of our clients could choose to use the services of a competitor instead of our services. If we are unable to retain our senior professionals or recruit additional professionals, our reputation, business, results of operations and financial condition will be adversely affected. To the extent we have compensation targets, we may not be able to retain our associates, which could result in increased recruiting expense or result in our recruiting additional associates at compensation levels that are not within our target range. Further, new business initiatives and efforts to expand existing businesses generally require that we incur compensation and benefits expense before generating additional revenues.

Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices. We have been subject to several such claims and may be subject to additional claims in the future as we seek to hire qualified personnel, some of whom may work for our competitors. Some of these claims may result in material litigation. We could incur substantial costs in defending against these claims, regardless of their merits. Such claims could also discourage potential associates who work for our competitors from joining us. We participate, with limited exceptions, in the Protocol for Broker Recruiting ('Protocol'), a voluntary agreement among many firms in the industry that governs, among other things, the client information that financial advisors may take with them when they affiliate with a new firm. The ability to bring such customer data to a new broker-dealer generally means that the clients of the financial advisor are more likely to choose to open accounts at the advisor's new firm. Participation is voluntary and it is possible that certain of our competitors will withdraw from the Protocol. If the broker-dealers from whom we recruit new

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

financial advisors prevent, or significantly limit, the transfer of client data, our recruiting efforts may be adversely affected and we could continue to experience claims against us relating to our recruiting efforts.

### **Our business depends on fees generated from the distribution of financial products, fees earned from the management of client accounts, and other asset management fees.**

A large portion of our revenues are derived from fees generated from the distribution of financial products, such as mutual funds and variable annuities, and the various services we perform related to such products. Changes in the structure or amount of the fees paid by the sponsors of these products could directly affect our revenues, business and financial condition. In addition, if these products experience losses or increased investor redemptions, we may receive lower fees from the distribution and other services we provide on behalf of the mutual fund and annuity companies.

The asset management fees we are paid are dependent upon the value of client assets in fee-based accounts in our PCG segment, as well as AUM in our Asset Management segment. The value of our fee-based assets and AUM is impacted by market fluctuations and inflows or outflows of assets. As our PCG clients increasingly show a preference for fee-based accounts over transaction-based accounts, a larger portion of our client assets are more directly impacted by market movements. Therefore, in periods of declining market values, the values of fee-based accounts and AUM may resultantly decline, which would negatively impact our revenues. In addition, below-market investment performance by our funds, portfolio managers or financial advisors could result in reputational damage that might cause outflows or make it more difficult to attract new investors into our asset management products and thus, further impact our business and financial condition.

Our asset management fees may also decline over time due to factors such as increased competition and the renegotiation of contracts. Additionally, most of our clients may withdraw funds from under our management at their discretion at any time for any reason, including as a result of competition or poor performance of our products. In addition, the market environment in recent years has resulted in a shift to passive investment products, which generate lower fees than actively managed products. A continued trend toward passive investments or changes in market values or in the fee structure of asset management accounts would negatively affect our revenues, business and financial condition.

### **Our underwriting, market-making, trading, and other business activities place our capital at risk.**

We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we have underwritten at anticipated price levels. As an underwriter, we also are subject to heightened standards regarding liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings in which we are involved. From time to time as part of our underwriting processes, we may carry significant positions in securities of a single issuer or issuers engaged in a specific industry. Sudden changes in the value of these positions, despite our risk mitigation policies, could impact our financial results.

As a market maker, we take ownership of positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified. Despite risk mitigation policies, we may incur losses as a result of positions we hold in connection with these activities.

We have made and, to the limited extent permitted by applicable regulations, may continue to make principal investments in private equity funds and other illiquid investments. We may be unable to realize our investment objectives if we cannot sell or otherwise dispose of our interests at attractive prices or complete a desirable exit strategy. In particular, these risks could arise from changes in the financial condition or prospects of the portfolio companies in which investments are made, changes in economic conditions or changes in laws, regulations, fiscal policies or political conditions. It could take a substantial period of time to identify attractive investment opportunities and then to realize the cash value of such investments.

### **A continued interruption to our telecommunications or data processing systems, or the failure to effectively update the technology we utilize, could be materially adverse to our business.**

Our businesses rely extensively on data processing and communications systems. In addition to better serving clients, the effective use of technology increases efficiency and enables us to reduce costs. Adapting or developing our technology systems to meet new regulatory requirements, client needs, and competitive demands is critical for our business. Introduction of new technology presents challenges on a regular basis. There are significant technical and financial costs and risks in the development of new or enhanced applications, including the risk that we might be unable to effectively use new technologies or adapt our applications to emerging industry standards.

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

Our continued success depends, in part, upon our ability to: (i) successfully maintain and upgrade the capability of our technology systems on a regular basis; (ii) maintain the quality of the information contained in our data processing and communications systems; (iii) address the needs of our clients by using technology to provide products and services that satisfy their demands; and (iv) retain skilled information technology employees. Failure of our technology systems, which could result from events beyond our control, including a systems malfunction or cyber-attack, failure by a third-party service provider, or an inability to effectively upgrade those systems or implement new technology-driven products or services, could result in financial losses, liability to clients, violations of applicable privacy and other applicable laws and regulatory sanctions.

# **The soundness of other financial institutions and intermediaries affects us.**

We face the risk of operational failure, termination or capacity constraints of any of the clearing agents, exchanges, clearing houses or other financial intermediaries that we use to facilitate our securities and derivative transactions. As a result of regulatory changes and the consolidation over the years among clearing agents, exchanges and clearing houses, our exposure to certain financial intermediaries has increased and could affect our ability to find adequate and cost-effective alternatives should the need arise. Any failure, termination or constraint of these intermediaries could adversely affect our ability to execute transactions, service our clients and manage our exposure to risk.

Our ability to engage in routine trading and funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interdependent as a result of trading, clearing, funding, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients. Defaults by, or even rumors or questions about the financial condition of, one or more financial services institutions, or the financial services industry generally, have historically led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. Losses arising in connection with counterparty defaults may have a material adverse effect on our results of operations.

# **Our risk management and conflicts of interest policies and procedures may leave us exposed to unidentified or unanticipated risk.**

We seek to manage, monitor and control our market, credit, operational, liquidity and legal and regulatory compliance risk through operational and compliance reporting systems, internal controls, management review processes and other mechanisms; however, there can be no assurance that our procedures will be effective. While we use limits and other risk mitigation techniques, those techniques and the judgments that accompany their application cannot always anticipate unforeseen economic and financial outcomes or the specifics and timing of such outcomes. Our risk management methods may not predict future risk exposures effectively. In addition, some of our risk management methods are based on an evaluation of information regarding markets, clients and other matters that are based on assumptions that may no longer be accurate or may have limited predictive value. A failure to manage our growth adequately, including growth in the products or services we offer, or to manage our risk effectively, could materially and adversely affect our business and financial condition.

Financial services firms are subject to numerous actual or perceived conflicts of interest, which are routinely examined by regulators and SROs, such as FINRA, and are often used as the basis for claims for legal liability by plaintiffs in actions against us. Our risk management processes include addressing potential conflicts of interest that arise in our business. Management of potential conflicts of interest has become increasingly complex as we expand our business activities. A perceived or actual failure to address conflicts of interest adequately could affect our reputation, the willingness of clients to transact business with us or give rise to litigation or regulatory actions. Therefore, there can be no assurance that conflicts of interest will not arise in the future that could result in material harm to our business and financial condition.

# **We face intense competition and pricing pressures and may not be able to keep pace with technological change.**

We are engaged in intensely competitive businesses. We compete on the basis of a number of factors, including the quality of our associates, our products and services, pricing (such as execution pricing and fee levels), technology solutions, and location and reputation in relevant markets. Over time, there has been substantial consolidation and convergence among companies in the financial services industry, which has significantly increased the capital base and geographic reach of our competitors. See “Item 1 - Business - Competition” of this Form 10-K for additional information about our competitors.

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

We compete directly with other national full service broker-dealers, investment banking firms, commercial banks, and investment advisors, investment managers, and to a lesser extent, with discount brokers and dealers. We face competition from more recent entrants into the market, including fintechs, and increased use of alternative sales channels by other firms. Technology has lowered barriers to entry and made it possible for fintechs to compete with larger financial institutions in providing electronic, internet-based, and mobile phone-based financial solutions. This competition has grown significantly over recent years and is expected to intensify. In addition, commercial firms and other non-traditional competitors have applied for banking licenses or have entered into partnerships with banks to provide banking services. We also compete indirectly for investment assets with insurance companies, real estate firms and hedge funds, among others. Competition from other financial services firms to attract clients or trading volume, through direct-to-investor online financial services, or higher deposit rates to attract client cash balances, could result in pricing pressure or otherwise adversely impact our business and cause our business to suffer.

Our future success also depends in part on our ability to develop, maintain, and enhance our products and services, including factors such as customer experience, and the pricing and range of our offerings. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. If we are not able to develop new products and services, enhance existing offerings, effectively implement new technology-driven products and services, or successfully market these products and services to our customers, our business, financial condition or results of operations may be adversely affected. Furthermore, both financial institutions and their non-banking competitors face the risk that payments processing and other services could be significantly disrupted by technologies, such as cryptocurrencies, that require no intermediation. New technologies have required, and could require us in the future, to spend more to modify or adapt our products to attract and retain clients or to match products and services offered by our competitors, including technology companies.

We must monitor the pricing of our services and financial products in relation to competitors and periodically may need to adjust our fees, commissions, margins, or interest rates on deposits to remain competitive. In fixed income markets, regulatory requirements have resulted in greater price transparency, leading to price competition and decreased trading margins. Our trading margins have been further compressed by the shift from high- to low-touch services over time, which has created additional competitive pressure. We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including by reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions, or margins.

# **A downgrade in our credit ratings could have a material adverse effect on our operations, earnings and financial condition.**

If our credit ratings were downgraded, or if rating agencies indicate that a downgrade may occur, our business, financial position, and results of operations could be adversely affected, perceptions of our financial strength could be damaged, and as a result, adversely affect our client relationships. Such a change in our credit ratings could also adversely affect our liquidity and competitive position, increase our borrowing costs, limit our access to the capital markets, trigger obligations under certain financial agreements, or decrease the number of investors, clients and counterparties willing or permitted to do business with or lend to us, thereby curtailing our business operations and reducing profitability.

We may not be able to obtain additional outside financing to fund our operations on favorable terms, or at all. The impact of a credit rating downgrade to a level below investment grade would result in our breaching provisions in certain of our derivative instruments, and may result in a request for immediate payment and/or ongoing overnight collateralization on our derivative instruments in liability positions. A credit rating downgrade would also result in the firm incurring a higher facility fee on its $500 million unsecured revolving credit facility agreement (the “Credit Facility”), in addition to triggering a higher interest rate applicable to any borrowings outstanding on the line as of and subsequent to such downgrade (see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources” of this Form 10-K and Note 16 of the Notes to Consolidated Financial Statements of this Form 10-K for information on the Credit Facility).

# **Business growth, including through acquisitions, could increase costs and regulatory and integration risks.**

We continue to grow, including through acquisitions and through our recruiting efforts. Integrating acquired businesses, providing a platform for new businesses and partnering with other firms involve risks and present financial, managerial and operational challenges. While cultural fit is a requirement for both our recruiting and acquisition efforts, there can be no assurance that recruited talent and/or acquisition targets will ultimately assimilate into our firm in a manner which results in the expected financial benefits. We may incur significant expense, including in the areas of technology and cybersecurity, in connection with expanding our existing businesses, recruiting financial advisors or making strategic acquisitions or

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

investments. Our overall profitability would be negatively affected if investments and expenses associated with such growth are not matched or exceeded by the earnings derived from such investments or growth. Assumptions which underlie the basis of our acquisition decisions, such as the retention of key personnel, future revenue growth of an acquired business, cost efficiencies to be realized, or the value created through the application of specialized expertise we plan to bring to the acquired business, may not be fully realized post-acquisition, resulting in an adverse impact on the value of our investment and potential dilution of the value of our shares.

We may be unable to integrate an acquired business into our existing business successfully, or such integration may be materially delayed or become more costly or difficult than expected. Further, either company’s clients, suppliers, employees or other business partners may react negatively to the transaction. Such developments could have an adverse effect on our business, financial condition, and results of operations.

Expansion may also create a need for additional compliance, risk management and internal control procedures, and often involves hiring additional personnel to address these procedures. To the extent such procedures are not adequate or not adhered to with respect to our expanded business or any new business, we could be exposed to a material loss or regulatory sanction.

Moreover, to the extent we pursue acquisitions, or enter into acquisition commitments, a number of factors may prevent us from completing such acquisitions on acceptable terms. For example, regulators such as the Fed could fail to approve a proposed transaction or such approvals could result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction. The shareholders of a publicly-traded target company could fail to approve the transaction. Closing conditions in the transaction agreement could fail to be satisfied, or there could be an unexpected delay in closing. Other developments that may affect future results of an acquired company may occur, including changes in asset quality and credit risk, changes in interest rates and capital markets, inflation, and/or changes in customer borrowing, repayment, investment and deposit practices. Finally, an event, change, or other circumstance could occur that gives rise to the termination of the transaction agreement.

In addition, we may need to raise capital or borrow funds in order to finance an acquisition, which could result in dilution or increased leverage. We may not be able to obtain such financing on favorable terms or perhaps at all. Further, we may issue our shares as a component of some or all of the purchase consideration for an acquisition, which may result in dilution.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such lawsuits are without merit, defending against these claims could result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.

**Associate misconduct, which is difficult to detect and deter, could harm us by impairing our ability to attract and retain clients and subject us to significant legal liability and reputational harm.**

There is a risk that our associates could engage in misconduct that adversely affects our business. For example, our investment banking business often requires that we deal with confidential matters of great significance to our clients. Our associates interact with clients, customers and counterparties on an ongoing basis. All associates are expected to exhibit the behaviors and ethics that are reflected in our framework of principles, policies and technology to protect both our own information as well as that of our clients. If our associates improperly use or disclose confidential information provided by our clients, we could be subject to future regulatory sanctions and suffer serious harm to our reputation, financial position, current client relationships and ability to attract future clients. We are also subject to a number of obligations and standards arising from our asset management business and our authority over our assets under management. In addition, our financial advisors may act in a fiduciary capacity, providing financial planning, investment advice and discretionary asset management. The violation of these obligations and standards by any of our associates would adversely affect our clients and us. Associate conduct on non-business matters, such as social issues, could be inconsistent with our policies and ethics and result in reputational harm to our business as a result of their employment by us or affiliation with us. It is not always possible to deter or prevent every instance of associate misconduct, and the precautions we take to detect and prevent this activity may not be effective in all cases. If our associates engage in misconduct, our business would be adversely affected.

**We are exposed to litigation and regulatory investigations and proceedings, which could materially and adversely impact our business operations and prospects.**

The financial services industry faces significant litigation and regulatory risks. Many aspects of our business involve substantial risk of liability. We have been named as a defendant or co-defendant in lawsuits and arbitrations primarily involving claims for damages. The risks associated with potential litigation often may be difficult to assess or quantify and the

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**RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

existence and magnitude of potential claims often remain unknown for substantial periods of time. Unauthorized or illegal acts of our associates could also result in substantial liability. In addition, our business activities include providing custody, clearing, and back office support for certain non-affiliated, independent RIAs and broker-dealers. Even though these independent firms are exclusively responsible for their operations, supervision, compliance, and the suitability of their client's investment decisions, we have been, and may in the future be, named as defendants in litigation involving their clients. We are also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies.

In challenging market conditions, the volume of claims and amount of damages sought in litigation and regulatory proceedings against financial institutions have historically increased. Litigation risks include potential liability under securities laws or other laws for: alleged materially false or misleading statements made in connection with securities offerings and other transactions; issues related to our investment recommendations, including the suitability of such recommendations or potential concentration of investments; the inability to sell or redeem securities in a timely manner during adverse market conditions; contractual issues; employment claims; and potential liability for other advice we provide to participants in strategic transactions. Substantial legal liability could have a material adverse financial impact or cause us significant reputational harm, which in turn could seriously harm our business and future business prospects. In addition to the foregoing financial costs and risks associated with potential liability, the costs of defending individual litigation and claims continue to increase over time. The amount of attorneys' fees incurred in connection with the defense of litigation and claims could be substantial and might materially and adversely affect our results of operations. See 'Item 3 - Legal Proceedings' and Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for further information about legal matters.

**We are subject to risks relating to environmental, social, and governance ('ESG') matters that could adversely affect our reputation, business, financial condition, and results of operations, as well as the price of our common and preferred stock.**

We are subject to a variety of risks, including reputational risk, associated with ESG issues. The public holds diverse and often conflicting views on ESG topics. As a large financial institution, we have multiple stakeholders, including our shareholders, clients, associates, federal and state regulatory authorities, and the communities in which we operate, and these stakeholders will often have differing priorities and expectations regarding ESG issues. If we take action in conflict with one or another of those stakeholders' expectations, we could experience an increase in client complaints, a loss of business, or reputational harm. We could also face negative publicity or reputational harm based on the identity of those with whom we choose to do business. Any adverse publicity in connection with ESG issues could damage our reputation, ability to attract and retain clients and associates, compete effectively, and grow our business.

In addition, proxy advisory firms and certain institutional investors who manage investments in public companies are increasingly integrating ESG factors into their investment analysis. The consideration of ESG factors in making investment and voting decisions is relatively new. Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, vary considerably among the investment community, and will likely continue to evolve over time. Moreover, the subjective nature of methods used by various stakeholders to assess a company with respect to ESG criteria could result in erroneous perceptions or a misrepresentation of our actual ESG policies and practices. Organizations that provide ratings information to investors on ESG matters may also assign unfavorable ratings to RJF. Certain of our clients might also require that we implement additional ESG procedures or standards in order to continue to do business with them. If we fail to comply with specific ESG-related investor or client expectations and standards, or to provide the disclosure relating to ESG issues that any third parties may believe is necessary or appropriate (regardless of whether there is a legal requirement to do so), our reputation, business, financial condition, and/or results of operations, as well as the price of our common and preferred stock could be negatively impacted.

Moreover, there has been increased regulatory focus on ESG-related practices of investment managers. A growing interest on the part of investors and regulators in ESG factors, and increased demand for, and scrutiny of, ESG-related disclosures by asset managers, has likewise increased the risk that we could be perceived as, or accused of, making inaccurate or misleading statements regarding the investment strategies of our funds and exchange-traded funds ('ETFs'), or our and our funds' and ETFs' ESG efforts or initiatives, commonly referred to as 'greenwashing.' Such perceptions or accusations could damage our reputation, result in litigation or regulatory enforcement actions, and adversely affect our business.

**The preparation of the consolidated financial statements requires the use of estimates that may vary from actual results.**

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles ('GAAP') requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Such estimates and assumptions may require management to make difficult,

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

subjective and complex judgments about matters that are inherently uncertain. One of our most critical estimates is our allowance for credit losses. At any given point in time, conditions in real estate and credit markets may increase the complexity and uncertainty involved in estimating the losses inherent in our loan portfolio. The recorded amount of liabilities related to legal and regulatory matters is also subject to significant management judgement. For either of these estimates, if management's underlying assumptions and judgments prove to be inaccurate, our loss provisions could be insufficient to cover actual losses, and our financial condition, including our liquidity and capital, and results of operations could be materially and adversely impacted.

For further discussion of our significant accounting estimates, policies and standards, see 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical accounting estimates' of this Form 10-K and Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K.

## Our operations could be adversely affected by serious weather conditions.

Certain of our principal operations are located in St. Petersburg, Florida. While we have a business continuity plan that provides for significant operations to be conducted out of remote locations, as well as our Southfield, Michigan and Memphis, Tennessee corporate offices and our U.S. information systems processing to be conducted out of our information technology data center in the Denver, Colorado area, our operations could be adversely affected by hurricanes or other serious weather conditions, including extreme weather events caused by climate change, that could affect the processing of transactions, communications, and the ability of our associates to get to our offices, or work remotely. In addition, our operations are dependent on our associates' ability to relocate to a secondary location in the event of a power outage or other disruption in their primary remote work location. Additionally, such weather events may also have a negative impact on the financial condition of our clients, which may decrease revenues from those clients and increase the credit risk associated with loans and other credit exposures to those clients.

## We are exposed to risks related to our insurance programs.

Our operations and financial results are subject to risks and uncertainties related to our use of a combination of insurance, self-insured retention and self-insurance for a number of risks. To a large extent, we have elected to self-insure our errors and omissions liability and our employee-related health care benefit plans. We have self-insured retention risk related to several exposures, including our property and casualty, workers compensation and general liability benefit plans.

While we endeavor to purchase insurance coverage appropriate to our risk assessment, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages. Our business may be negatively affected if our insurance proves to be inadequate or unavailable. In addition, claims associated with risks we have retained either through our self-insurance retention or by self-insuring may exceed our recorded liabilities which could negatively impact future earnings. Insurance claims may divert management resources away from operating our business.

## RISKS RELATED TO OUR REGULATORY ENVIRONMENT

### Financial services firms are highly regulated and are currently subject to a number of new and proposed regulations, all of which may increase our risk of financial liability and reputational harm resulting from adverse regulatory actions.

Financial services firms, such as us, operate in an evolving regulatory environment and are subject to extensive supervision and regulation. The laws and regulations governing financial services firms are intended primarily for the protection of our depositors, our customers, the financial system, and the FDIC insurance fund, not our shareholders or creditors. The financial services industry has experienced an extended period of significant change in laws and regulations, as well as a high degree of scrutiny from various regulators, including the SEC, the Fed, the FDIC, the OCC and the CFPB, in addition to stock exchanges, FINRA, and governmental authorities such as state attorneys general. Currently, the SEC has proposed or adopted a number of new rules after significantly abbreviated periods for public comments, and these new or proposed rules involve sweeping changes that could require significant shifts in industry operations and practices, thereby increasing uncertainty for markets and investors. Penalties and fines imposed by regulatory and other governmental authorities have also been substantial and growing in recent years. We may be adversely affected by the adoption of new rules and by changes in the interpretation or enforcement of existing laws, rules and regulations. Existing and new laws and regulations could negatively affect our revenue, limit our ability to pursue business opportunities, impact the value of our assets, require us to alter our business practices, impose additional compliance costs, and otherwise adversely affect our businesses.

Additionally, our international business operations are subject to laws, regulations, and standards in the countries in which we operate. In many cases, our activities have been and may continue to be subject to overlapping and divergent regulation in

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

different jurisdictions. As our international operations continue to grow, we may need to comply with additional laws, rules, and regulations which could require us to alter our business practices and/or result in additional compliance costs. Any violations of these laws, regulations or standards could subject us to a range of potential regulatory events or outcomes that could have a material adverse effect on our business, financial condition and prospects including potential adverse impacts on continued operations in the relevant international jurisdiction.

We are also required to comply with the Volcker Rule's provisions. Although we have not historically engaged in significant levels of proprietary trading, or private fund investment or sponsorship, we continue to incur costs to ensure compliance with the Volcker Rule. Any changes to regulations or changes to the supervisory approach may also result in increased compliance costs to the extent we are required to modify our existing compliance policies, procedures and practices.

Broker-dealers and investment advisors are subject to regulations covering all aspects of the securities business, including, but not limited to: sales and trading methods; trade practices among broker-dealers; use and safekeeping of clients' funds and securities; capital structure of securities firms; anti-money laundering efforts; recordkeeping; and the conduct of directors, officers and employees. Any violation of these laws or regulations could subject us to the following events, any of which could have a material adverse effect on our business, financial condition, reputation, and prospects: civil and criminal liability for us or our employees or affiliated financial advisors; sanctions, which could include the revocation of our subsidiaries' registrations as investment advisors or broker-dealers; the revocation of the licenses of our financial advisors; censures; fines; conditions or limitations on our business activities, including higher capital requirements; or a temporary suspension or permanent bar from conducting business. The firm is currently cooperating 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 financial institutions.

The majority of our affiliated financial advisors are independent contractors. Legislative or regulatory action that redefines the criteria for determining whether a person is an employee or an independent contractor could materially impact our relationships with our advisors and our business, resulting in an adverse effect on our results of operations.

Raymond James Bank and TriState Capital Bank are subject to the CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other U.S. federal fair lending laws and regulations that impose nondiscriminatory lending requirements on financial institutions. The U.S. Department of Justice and other federal agencies, including the CFPB, are responsible for enforcing these laws and regulations. An unfavorable CRA rating or a successful challenge to an institution's performance under the fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil monetary penalties, injunctive relief, and the imposition of restrictions on mergers, acquisitions and expansion activity. Private parties may also have the ability to challenge a financial institution's performance under fair lending laws by bringing private class action litigation.

As discussed in 'Item 1 - Business - Regulation' of this Form 10-K, on May 5, 2022, federal banking regulators requested comment on a joint notice of proposed rulemaking on the CRA. These developments create uncertainty in planning our CRA activities. Any revisions to the CRA regulations may negatively impact our business, including through increased costs related to compliance.

The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength for its subsidiary banks. The Federal Reserve could require RJF to commit resources to Raymond James Bank and TriState Capital Bank when doing so is not otherwise in the interests of RJF or its shareholders or creditors.

Regulatory actions brought against us may result in judgments, settlements, fines, penalties or other results, any of which could have a material adverse effect on our business, financial condition, reputation, or results of operations. In particular, the banking agencies have broad enforcement power over bank holding companies and banks, including with respect to unsafe or unsound practices or violations of law. There is no assurance that regulators will be satisfied with the policies and procedures implemented by RJF and its subsidiaries. In addition, from time to time, RJF and its subsidiaries may become subject to additional findings with respect to supervisory, compliance or other regulatory deficiencies, which could subject us to additional liability, including penalties and restrictions on our business activities. Among other things, these restrictions could limit our ability to make investments, complete acquisitions, expand into new business lines, pay dividends on our common and preferred stock and/or engage in share repurchases. Changes to the regulatory landscape governing the fees the firm earns on client assets, including cash sweep balances, could negatively impact our earnings. See 'Item 1 - Business - Regulation' of this Form 10-K for additional information regarding our regulatory environment.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

**Continued asset growth may result in changes to our status with respect to existing regulations as well as increased oversight, which will result in additional capital and other financial requirements and may increase our compliance costs.**

We will incur increased regulatory scrutiny (and related compliance costs) as we continue to grow and surpass certain consolidated asset thresholds, which have the effect of imposing enhanced standards and requirements on larger financial institutions. These include the potential application of enhanced prudential standards to us if our average total consolidated assets for four consecutive calendar quarters exceed $100 billion and we are therefore classified as a category IV bank holding company. Under such enhanced prudential standards, category IV bank holding companies are subject to greater regulation and supervision, including, but not limited to: certain capital planning and stress capital buffer requirements; supervisory capital stress testing conducted by the Fed biennially; and certain liquidity risk management and liquidity stress testing and buffer requirements. The application of enhanced prudential standards to RJF could adversely affect our results of operations and financial performance through additional capital and liquidity requirements and increased compliance costs.

**Changes in requirements relating to the standard of conduct for broker-dealers applicable under federal and state law have increased, and may continue to increase, our costs.**

The SEC's Regulation Best Interest requires, among other things, a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities. The regulation imposes heightened standards on broker-dealers, and we have incurred substantial costs in order to review and modify our policies and procedures, including associated supervisory and compliance controls. We anticipate that we will continue to incur costs in the future to comply with the standard.

In addition to the SEC, various states have adopted, or are considering adopting, laws and regulations seeking to impose new standards of conduct on broker-dealers that, as written, differ from the SEC's new regulations and may lead to additional implementation costs. Implementation of the new SEC regulations, as well as any new state rules that are adopted addressing similar matters, has resulted in (and may continue to result in) increased costs related to compliance, legal, operations and information technology.

The DOL has also reinstated the historical 'five-part test' for determining who is an investment advice 'fiduciary' when dealing with certain retirement plans and accounts and promulgated a new exemption that enables investment advice fiduciaries to receive transaction-based compensation and engage in certain otherwise prohibited transactions, subject to compliance with the exemption's requirements. In addition, the DOL is expected to amend the five-part test by the end of 2023 so that the fiduciary standard would apply to a broader range of client relationships. Imposing such a new standard of care on additional client relationships could lead to incremental costs for our business.

**Numerous regulatory changes and enhanced regulatory and enforcement activity relating to our investment management activities may increase our compliance and legal costs and otherwise adversely affect our business.**

As some of our wholly-owned subsidiaries are registered as investment advisors with the SEC, increased regulatory scrutiny and rulemaking initiatives may result in additional operational and compliance costs or the assessment of significant fines or penalties against our asset management business, and may otherwise limit our ability to engage in certain activities. While it is not possible to determine the extent of the long-term impact of any new laws or regulations that have been promulgated, or initiatives that have been or may be proposed, even the short-term impact of preparing for or implementing changes to our infrastructure and processes could negatively impact the ways we conduct business and increase our compliance and legal costs. Conformance with any new law or regulations could also make compliance more difficult and expensive and affect our product and service offerings. The SEC's new Marketing Rule will affect the marketing of our advisory products, including referrals and solicitations, and may impact our asset management business and result in increased costs.

New regulations regarding the management of hedge funds and the use of certain investment products, including additional recordkeeping and disclosure requirements, may also impact our asset management business and result in increased costs.

**Failure to comply with regulatory capital requirements primarily applicable to RJF, Raymond James Bank, TriState Capital Bank or our broker-dealer subsidiaries would significantly harm our business.**

As discussed in 'Item 1 - Business - Regulation' of this Form 10-K, RJF, Raymond James Bank and TriState Capital Bank are subject to capital requirements administered by various federal regulators in the U.S. and, accordingly, must meet specific capital guidelines that involve quantitative measures of RJF's, Raymond James Bank's, and TriState Capital Bank's assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidelines. Failure to meet minimum capital

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

requirements can trigger certain mandatory (and potentially discretionary) actions by regulators that, if undertaken, could harm either RJF's, Raymond James Bank's, or TriState Capital Bank's operations and financial condition. Further, we are subject to the SEC's Uniform Net Capital Rule (Rule 15c3-1) and FINRA's net capital rule, which may limit our ability to make withdrawals of capital from our broker-dealer subsidiaries. RJ Ltd. is subject to similar limitations under applicable regulations in Canada by IIROC. Regulatory capital requirements applicable to some of our significant subsidiaries may impede access to funds that RJF may need to make payments on any of its obligations. See Note 24 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulatory capital requirements.

## The Basel III regulatory capital standards impose capital and other requirements on us that could negatively impact our profitability.

The Fed and other federal banking regulators have implemented the global regulatory capital requirements of Basel III and certain requirements implemented by the Dodd-Frank Act. The U.S. Basel III Rules establish the quantity and quality of regulatory capital, set forth a capital conservation buffer and define the calculation of risk-weighted assets. The capital requirements stipulated under the U.S. Basel III Rules could restrict our ability to grow during favorable market conditions or require us to raise additional capital. Revisions to the Basel III Rules, including in connection with the implementation of the standards released by the Basel Committee in December 2017 could, when implemented in the United States, negatively impact our regulatory capital ratio calculations or subject us to higher and more stringent capital and other regulatory requirements. As a result, our business, results of operations, financial condition and prospects could be adversely affected. See 'Item 1 - Business - Regulation' of this Form 10-K for further information on the Basel III regulatory capital standards.

## As a financial holding company, RJF's liquidity depends on payments from its subsidiaries, which may be subject to regulatory restrictions.

RJF as a financial holding company depends on dividends, distributions and other payments from its subsidiaries in order to meet its obligations, including its debt service obligations and to fund dividend payments and share repurchases. RJF's subsidiaries are subject to laws and regulations that restrict dividend payments or authorize regulatory bodies to prevent or reduce the flow of funds from those subsidiaries to RJF. If RJF's subsidiaries are unable to make dividend payments to us and sufficient cash or liquidity is not otherwise available, RJF may not be able to make dividend payments to its shareholders, repurchase its shares, or make principal and interest payments on its outstanding debt. RJF's broker-dealers and bank subsidiaries are limited in their ability to lend or transact with affiliates, are subject to minimum regulatory capital and other requirements, and, in the case of our broker-dealer subsidiaries, limitations on their ability to use funds deposited with them in brokerage accounts to fund their businesses. These requirements and limitations may hinder RJF's ability to access funds from its subsidiaries. Federal regulators, including the Fed and the SEC (through FINRA), have the authority and under certain circumstances, the obligation, to limit or prohibit dividend payments and stock repurchases by the banking organizations they supervise, including RJF and its bank subsidiaries. In addition, RJF's right to participate in a distribution of assets upon a subsidiary's liquidation or reorganization is subject to the prior claims of creditors of that subsidiary, except to the extent that any of RJF's claims as a creditor of such subsidiary may be recognized. As a result, shares of RJF's capital stock are effectively subordinated to all existing and future liabilities and obligations of its subsidiaries.

## RISKS RELATED TO AN INVESTMENT IN OUR PREFERRED AND COMMON STOCK

### The rights of holders of our common stock are generally subordinate to the rights of holders of our outstanding, and any future issuances of, debt securities and preferred stock.

Our Board of Directors has the authority to issue debt securities as well as an aggregate of up to 10 million shares of preferred stock on the terms it determines appropriate without shareholder approval. In connection with our acquisition of TriState Capital on June 1, 2022, we issued 40,250 shares of 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, par value $0.10 per share ('Series A Preferred Stock'), in the form of 1.61 million depository shares, each representing a 1/40th interest in a share of Series A Preferred Stock, and 80,500 shares of 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock, par value $0.10 per share ('Series B Preferred Stock') in the form of 3.22 million depository shares, each representing a 1/40th interest in a share of Series B Preferred Stock. Such preferred stock is senior to our common stock. Any debt or shares of preferred stock that we may issue in the future will also be senior to our common stock. Because our decision to issue debt or equity securities or incur other borrowings in the future will depend on market conditions and other factors beyond our control, the amount, timing, nature or success of our future capital raising efforts is uncertain. Thus, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings may negatively affect the market price of our common stock.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

The depositary shares representing our preferred stock are thinly traded and have limited voting rights.

The depositary shares representing interests in our preferred stock are listed on the NYSE, but an active, liquid trading market for such securities may not be sustained. A public trading market having depth, liquidity and orderliness depends upon the presence in the marketplace and independent decisions of willing buyers and sellers of our preferred stock, over which we have no control. Without an active, liquid trading market, holders of our depositary shares may not be able to sell their shares at the volume, prices, or times desired. In addition, holders of our preferred stock (and, accordingly, holders of the depositary shares representing such stock), will have no voting rights with respect to matters that generally require the approval of our voting common shareholders. Holders of preferred stock have voting rights that are generally limited to, with respect to the particular series of preferred stock held: (i) authorizing, creating or issuing any capital stock ranking senior to such preferred stock as to dividends or the distribution of assets upon liquidation, and (ii) amending, altering or repealing any provision of our Articles of Incorporation so as to adversely affect the powers, preferences or special rights of such series of preferred stock.

# ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

# ITEM 2. PROPERTIES

We operate our business from our principal location in St. Petersburg, Florida in 1.25 million square feet of office space that we own in the Carillon Office Park. We conduct certain operations from our owned facility in Southfield, Michigan, comprising approximately 90,000 square feet, and operate a 40,000 square foot information technology data center on land we own in the Denver, Colorado area. Our owned locations and principal leases, identified below, support more than one of our business segments.

We lease the premises we occupy in other U.S. and foreign locations, including employee-based branch office operations. Leases for branch offices for independent contractors are the responsibility of the respective independent contractor financial advisors and are not included in the amounts listed below. Our leases contain various expiration dates through fiscal year 2036. Our principal leases are in the following locations:

- We occupy leased space of approximately 250,000 square feet in Memphis, along with approximately 185,000 square feet in New York City, 70,000 square feet in Pittsburgh, 70,000 square feet in Chicago, and 30,000 square feet in Denver, with other office and branch locations throughout the U.S.;
- We occupy leased space of approximately 80,000 and 85,000 square feet in Vancouver and Toronto, respectively, along with other office and branch locations throughout Canada;
- We occupy leased space of approximately 75,000 square feet in London, along with other office locations in Germany.

Additionally, we own approximately 65 acres of land located in Pasco County, Florida for potential development, as needed. We regularly monitor the facilities we own or occupy to ensure that they suit our needs, particularly as we introduce more flexibility in work location for our associates. To the extent that they do not meet our needs, we will expand, contract or relocate, as necessary. See Note 2 and Note 14 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our lease obligations.

# ITEM 3. LEGAL PROCEEDINGS

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.

RJF and certain of its subsidiaries are 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 SROs institute investigations from time to time, among other things, into industry practices, which can also result in the imposition of such sanctions.

We may contest liability and/or the amount of damages, as appropriate, in each pending matter. The level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies in the financial services industry

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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 are not yet determined to be material.

For 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). Subject to the foregoing, after consultation with counsel, 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.

See Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information regarding legal and regulatory matter contingencies, and refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical accounting estimates' in the section 'Loss provisions for legal and regulatory matters' and Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K for information on our criteria for establishing accruals.

## ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

### PART II

## ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NYSE under the symbol 'RJF.' As of November 17, 2022, we had 346 holders of record of our common stock. Shares of our common stock are held by a substantially greater number of beneficial owners, whose shares are held of record by banks, brokers, and other financial institutions.

See Note 20 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our intentions for paying cash dividends and the related capital restrictions.

Information related to our compensation plans under which equity securities are authorized for issuance is presented in Note 23 of the Notes to Consolidated Financial Statements and Part III, Item 12 of this Form 10-K.

We did not have any sales of unregistered securities for the fiscal years ended September 30, 2022, 2021 or 2020.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

We purchase our own stock from time to time in conjunction with a number of activities, each of which is described in the following paragraphs. The following table presents information on our purchases of our own stock, on a monthly basis, for the twelve months ended September 30, 2022.

|  | 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 millions) at each month-end, of securities that may yet be purchased under the plans or programs |
| --- | --- | --- | --- | --- |
| October 1, 2021 - October 31, 2021 | 1,305 | $94.47 | - | $632 |
| November 1, 2021 - November 30, 2021 | 94,824 | $98.82 | - | $632 |
| December 1, 2021 - December 31, 2021 | 145 | $98.90 | - | $1,000 |
| First quarter | 96,274 | $98.76 | - |  |
| January 1, 2022 - January 31, 2022 | 787 | $109.57 | - | $1,000 |
| February 1, 2022 - February 28, 2022 | 3,391 | $109.67 | - | $1,000 |
| March 1, 2022 - March 31, 2022 | - | $ - | - | $1,000 |
| Second quarter | 4,178 | $109.65 | - |  |
| April 1, 2022 - April 30, 2022 | - | $ - | - | $1,000 |
| May 1, 2022 - May 31, 2022 | - | $ - | - | $1,000 |
| June 1, 2022 - June 30, 2022 | 1,137,660 | $88.01 | 1,136,347 | $900 |
| Third quarter | 1,137,660 | $88.01 | 1,136,347 |  |
| July 1, 2022 - July 31, 2022 | 8,407 | $90.18 | - | $900 |
| August 1, 2022 - August 31, 2022 | 298 | $106.45 | - | $900 |
| September 1, 2022 - September 30, 2022 | 600,421 | $104.06 | 600,000 | $838 |
| Fourth quarter | 609,126 | $103.87 | 600,000 |  |
| Fiscal year total | 1,847,238 | $93.85 | 1,736,347 |  |

In December 2021, the Board of Directors authorized repurchase of our common stock in an aggregate amount of up to $1 billion, which replaced the previous authorization.

In the preceding table, the total number of shares purchased includes shares purchased pursuant to the Restricted Stock Trust Fund, which was established to acquire our common stock in the open market and used to settle restricted stock units (“RSUs”) granted as a retention vehicle for certain employees of our wholly-owned Canadian subsidiaries. For more information on this trust fund, see Note 2 and Note 10 of the Notes to Consolidated Financial Statements of this Form 10-K. These activities do not utilize the repurchase authorization presented in the preceding table.

The total number of shares purchased also includes shares repurchased as a result of employees surrendering shares as payment for option exercises or withholding taxes. These activities do not utilize the repurchase authorization presented in the preceding table.

## ITEM 6. RESERVED

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

# ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# INDEX

|  | PAGE |
| --- | --- |
| Introduction | 39 |
| Executive overview | 39 |
| Reconciliation of non-GAAP financial measures to GAAP financial measures | 41 |
| Net interest analysis | 44 |
| Results of Operations |  |
| Private Client Group | 47 |
| Capital Markets | 51 |
| Asset Management | 53 |
| Bank | 56 |
| Other | 57 |
| Statement of financial condition analysis | 58 |
| Liquidity and capital resources | 59 |
| Regulatory | 65 |
| Critical accounting estimates | 65 |
| Recent accounting developments | 67 |
| Risk management | 67 |

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## *Management's Discussion and Analysis*

### INTRODUCTION

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 consolidated financial statements and accompanying notes to 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 bank holding company. Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S. equity and fixed income markets, changes in interest rates, market volatility, corporate and mortgage lending markets and commercial and residential credit trends. Overall market conditions, economic, political and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These factors affect the financial decisions made by market participants, including investors, borrowers, and competitors, impacting their level of participation in the financial markets. These factors also impact the level of investment banking activity and asset valuations, which ultimately affect our business results.

### EXECUTIVE OVERVIEW

#### Year ended September 30, 2022 compared with the year ended September 30, 2021

For the year ended September 30, 2022, we generated net revenues of $11.00 billion and pre-tax income of $2.02 billion, both 13% higher compared with the prior year. Our net income available to common shareholders of $1.51 billion was 7% higher than the prior year and our earnings per diluted share of $6.98 reflected a 5% increase. Our return on common equity ('ROCE') was 17.0%, compared with 18.4% for the prior year.

In fiscal 2022, we completed the acquisitions of Charles Stanley Group PLC ('Charles Stanley'), TriState Capital, and SumRidge Partners, which resulted in incremental revenues and expenses during the year. During the year we also incurred acquisition-related expenses, such as compensation largely related to retention awards, initial provisions for credit losses on acquired loans and unfunded lending commitments, amortization of identifiable intangible assets, and other costs incurred to effect our acquisitions, such as legal expenses and other professional fees. These expenses totaled $147 million this fiscal year, an increase of $65 million over the prior year. Excluding these acquisition-related expenses, our adjusted net income available to common shareholders was $1.62 billion$^{(1)}$, an increase of 5% compared with the prior year, and our adjusted earnings per diluted share were $7.49$^{(1)}$, an increase of 3%. Adjusted ROCE for the year was 18.2%$^{(1)}$, compared with 20.0%$^{(1)}$ in the prior year, and adjusted return on tangible common equity ('ROCE') was 21.1%$^{(1)}$, compared with 22.2%$^{(1)}$ in the prior year.

The increase in net revenues compared with the prior year was driven by the impact of higher PCG client assets in fee-based accounts for most of the current fiscal year, which positively impacted our asset management and related administrative fees, the benefit of higher short-term interest rates on both net interest income and RJBDP fees from third-party banks, and incremental revenues from our acquisitions of TriState Capital, Charles Stanley, and SumRidge Partners. Brokerage revenues and investment banking revenues each declined compared with a strong prior year, primarily as a result of market uncertainty during the current year.

Compensation, commissions and benefits expense increased 11%, primarily attributable to the growth in revenues and pre-tax income compared with the prior year, as well as the aforementioned acquisitions. Our compensation ratio was 66.6%, compared with 67.5% for the prior year. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 66.1%$^{(1)}$, compared with 67.0%$^{(1)}$ for the prior year. 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.

(1) Adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted ROCE, adjusted ROTCE, and adjusted compensation ratio are non-GAAP financial measures. In fiscal 2022, certain non-GAAP financial measures were 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 confirmed to the current presentation. 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.

39

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

Non-compensation expenses increased 19%, due to incremental expenses from the aforementioned acquisitions, as well as increases in the bank loan provision for credit losses, business development expenses and communications and information processing expenses. The bank loan provision for credit losses increased $132 million to a provision of $100 million in the current year, compared with a benefit of $32 million for the prior year; however, $26 million of this increase related solely to the initial provision recorded on loans acquired as part of the TriState Capital acquisition. Partially offsetting these increases, we incurred $98 million of losses on extinguishment of debt from the early-redemption of certain of our senior notes during the prior year, which did not recur in the current year.

Our effective income tax rate was 25.4% for fiscal 2022, an increase from 21.7% for the prior year. The increase in the effective tax rate from the prior year was primarily due to the negative impact of nondeductible valuation losses associated with our company-owned life insurance portfolio during the current year compared with nontaxable valuation gains for the prior year.

As of September 30, 2022, our tier 1 leverage ratio of 10.3% and total capital ratio of 20.4% were both well above the regulatory requirement to be considered well-capitalized. We also continued to have substantial liquidity with $1.91 billion(1) of cash at the parent company as of September 30, 2022, which includes parent cash loaned to RJ&A. We believe our funding and capital position provide us the opportunity to continue to grow our balance sheet prudently and we expect to continue to be opportunistic in deploying our capital. Subsequent to the closing of TriState Capital, for the period June 1, 2022 through September 30, 2022, we repurchased 1.74 million shares and subsequent to that date repurchased an additional 354 thousand shares, for a cumulative repurchase through November 17, 2022 of approximately 2.1 million shares of our common stock for $200 million or approximately $96 per share. After the effect of those repurchases, $800 million remained under our Board of Directors' share repurchase authorization. We currently expect to continue to repurchase our common stock in fiscal 2023 to offset the impact of shares issued with the acquisition of TriState Capital as well as to offset dilution from share-based compensation; however, we will continue to monitor market conditions and other capital needs as we consider these repurchases. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, establishes a 1% excise tax on net repurchases of shares by domestic corporations whose stock is traded on an established securities market. The excise tax will be imposed on repurchases that occur after December 31, 2022 and will be recorded directly to equity as part of the repurchase transaction, rather than as a component of our provision for income taxes. The act also introduces a corporate alternative minimum tax which we do not expect to have an impact on our results of operations or cash flows in the future.

We believe we remain well-positioned entering fiscal 2023. We expect fiscal 2023 results to be further positively impacted by a full year's impact of the combined 300-basis point increase in the Fed's short-term benchmark interest rate during our fiscal 2022, as well as the 75-basis point increase in November 2022. With clients' domestic cash sweep balances of $67.1 billion as of September 30, 2022 and our high concentration of floating-rate assets, we also believe we are well-positioned for any further increases in short-term interest rates, which we expect to positively impact our net interest income and our RJBDP fees from third-party banks, although we expect further declines in client cash balances in fiscal 2023 as we expect clients to continue to shift their cash to higher-yielding investment products. We also 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 experience volatility in asset management fees and brokerage revenues, as well as investment banking revenues, despite our strong investment banking pipelines. In addition, asset management and related administrative fees will be negatively impacted in our fiscal first quarter of 2023 by the 3% sequential decrease in PCG fee-based assets as of September 30, 2022 and lower financial assets under management; however, our recruiting pipelines remain strong and we continue to see solid retention of existing advisors. Net loan growth should result in additional provisions for credit losses and future economic deterioration could result in increased bank loan provisions for credit losses in future periods. In addition, although we remain focused on the management of expenses, we expect that expenses will continue to increase in part as a result of inflationary pressures on our costs, as business and event-related travel occur throughout the entire fiscal year 2023, and as we continue to make investments in our people and technology to support our growth.

### **Year ended September 30, 2021 compared with the year ended September 30, 2020**

Refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations' of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

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

40

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

# **RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES**

We utilize certain non-GAAP financial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures. We believe certain of these non-GAAP financial measures provide useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a meaningful comparison of current- and prior-period results. In fiscal 2022, certain of our non-GAAP financial measures were adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, including acquisition-related retention, amortization of identifiable intangible assets arising from acquisitions, and the initial provision for credit losses on loans acquired and lending commitments assumed as a result of the TriState Capital acquisition. Prior periods, where applicable, have been conformed to the current period presentation. We believe that ROTCE is meaningful to investors as this measure facilitates comparison of our results to the results 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 measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies. The following tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures for the periods indicated.

| $ in millions | Year ended September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Net income available to common shareholders | $1,505 | $1,403 |
| Non-GAAP adjustments: |  |  |
| Expenses directly related to acquisitions included in the following financial statement line items: |  |  |
| Compensation, commissions and benefits: |  |  |
| Acquisition-related retention | 58 | 48 |
| Other acquisition-related compensation | 2 | 1 |
| Total “Compensation, commissions and benefits” expense | 60 | 49 |
| Professional fees | 12 | 10 |
| Bank loan provision/(benefit) for credit losses - Initial provision for credit losses on acquired loans | 26 | - |
| Other: |  |  |
| Amortization of identifiable intangible assets | 33 | 21 |
| Initial provision for credit losses on acquired lending commitments | 5 | - |
| All other acquisition-related expenses | 11 | 2 |
| Total “Other” expense | 49 | 23 |
| Total expenses related to acquisitions | 147 | 82 |
| Losses on extinguishment of debt | - | 98 |
| Pre-tax impact of non-GAAP adjustments | 147 | 180 |
| Tax effect of non-GAAP adjustments | (37) | (43) |
| Total non-GAAP adjustments, net of tax | 110 | 137 |
| Adjusted net income available to common shareholders | $1,615 | $1,540 |
| Compensation, commissions and benefits expense | $7,329 | $6,584 |
| Less: Total compensation-related acquisition expenses (as detailed above) | 60 | 49 |
| Adjusted “Compensation, commissions and benefits” expense | $7,269 | $6,535 |
| Total compensation ratio | 66.6% | 67.5% |
| Less the impact of non-GAAP adjustments on compensation ratio: |  |  |
| Acquisition-related retention | 0.5% | 0.5% |
| Other acquisition-related compensation | - % | - % |
| Total “Compensation, commissions and benefits” expenses related to acquisitions | 0.5% | 0.5% |
| Adjusted total compensation ratio | 66.1% | 67.0% |

41

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

|  | Year ended September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Diluted earnings per common share | $6.98 | $6.63 |
| Impact of non-GAAP adjustments on diluted earnings per common share: |  |  |
| Compensation, commissions and benefits: |  |  |
| Acquisition-related retention | 0.27 | 0.23 |
| Other acquisition-related compensation | 0.01 | - |
| Total “Compensation, commissions and benefits” expense | 0.28 | 0.23 |
| Professional fees | 0.06 | 0.05 |
| Bank loan provision/(benefit) for credit losses - Initial provision for credit losses on acquired loans | 0.12 | - |
| Other: |  |  |
| Amortization of identifiable intangible assets | 0.15 | 0.10 |
| Initial provision for credit losses on acquired lending commitments | 0.02 | - |
| All other acquisition-related expenses | 0.05 | 0.01 |
| Total “Other” expense | 0.22 | 0.11 |
| Total expenses related to acquisitions | 0.68 | 0.39 |
| Losses on extinguishment of debt | - | 0.46 |
| Tax effect of non-GAAP adjustments | (0.17) | (0.20) |
| Total non-GAAP adjustments, net of tax | 0.51 | 0.65 |
| Adjusted diluted earnings per common share | $7.49 | $7.28 |

|  | As of |  |
| --- | --- | --- |
|  | September 30, 2022 | September 30, 2021 |
| $ in millions |  |  |
| Total common equity attributable to Raymond James Financial, Inc. | $9,338 | $8,245 |
| Less non-GAAP adjustments: |  |  |
| Goodwill and identifiable intangible assets, net | 1,931 | 882 |
| Deferred tax liabilities related to goodwill and identifiable intangible assets, net | (126) | (64) |
| Tangible common equity attributable to Raymond James Financial, Inc. | $7,533 | $7,427 |

|  | Year ended September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| $ in millions |  |  |
| Average common equity | $8,836 | $7,635 |
| Impact of non-GAAP adjustments on average common equity: |  |  |
| Compensation, commissions and benefits: |  |  |
| Acquisition-related retention | 27 | 23 |
| Other acquisition-related compensation | 1 | - |
| Total “Compensation, commissions and benefits” expense | 28 | 23 |
| Professional fees | 6 | 4 |
| Bank loan provision/(benefit) for credit losses - Initial provision for credit losses on acquired loans | 10 | - |
| Other: |  |  |
| Amortization of identifiable intangible assets | 16 | 9 |
| Initial provision for credit losses on acquired lending commitments | 2 | - |
| All other acquisition-related expenses | 6 | 1 |
| Total “Other” expense | 24 | 10 |
| Total expenses related to acquisitions | 68 | 37 |
| Losses on extinguishment of debt | - | 39 |
| Tax effect of non-GAAP adjustments | (17) | (18) |
| Total non-GAAP adjustments, net of tax | 51 | 58 |
| Adjusted average common equity | $8,887 | $7,693 |

42

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

| $ in millions | Year ended September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Average common equity | $8,836 | $7,635 |
| Less: |  |  |
| Average goodwill and identifiable intangible assets, net | 1,322 | 809 |
| Deferred tax liabilities related to goodwill and identifiable intangible assets, net | (94) | (53) |
| Average tangible common equity | $7,608 | $6,879 |
| Impact of non-GAAP adjustments on average tangible common equity: |  |  |
| Compensation, commissions and benefits: |  |  |
| Acquisition-related retention | 27 | 23 |
| Other acquisition-related compensation | 1 | - |
| Total “Compensation, commissions and benefits” expense | 28 | 23 |
| Professional fees | 6 | 4 |
| Bank loan provision/(benefit) for credit losses - Initial provision for credit losses on acquired loans | 10 | - |
| Other: |  |  |
| Amortization of identifiable intangible assets | 16 | 9 |
| Initial provision for credit losses on acquired lending commitments | 2 | - |
| All other acquisition-related expenses | 6 | 1 |
| Total “Other” expense | 24 | 10 |
| Total expenses related to acquisitions | 68 | 37 |
| Losses on extinguishment of debt | - | 39 |
| Tax effect of non-GAAP adjustments | (17) | (18) |
| Total non-GAAP adjustments, net of tax | 51 | 58 |
| Adjusted average tangible common equity | $7,659 | $6,937 |
| Return on common equity | 17.0% | 18.4% |
| Adjusted return on common equity | 18.2% | 20.0% |
| Return on tangible common equity | 19.8% | 20.4% |
| Adjusted return on tangible common equity | 21.1% | 22.2% |

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 each quarter-end date during the indicated fiscal year to the beginning of the year total, and dividing by five, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated fiscal year to the beginning of the year total, and dividing by five. 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 net income available to common shareholders by average common equity for each respective period or, in the case of ROTCE, computed by dividing net income available to common shareholders by average tangible common equity for each respective period. Adjusted ROCE is computed by dividing 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 adjusted net income available to common shareholders by adjusted average tangible common equity for each respective period.

43

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

# **NET INTEREST ANALYSIS**

Largely in response to inflationary pressures, the Fed has rapidly increased its benchmark short-term interest rates, from the near-zero interest rates that existed starting in fiscal 2020 and continuing throughout fiscal 2021 through February 2022, to gradual increases commencing in March 2022, ending at a range of 3.00% to 3.25% as of September 30, 2022. The Fed indicated that it intends to closely monitor short-term interest rates into our fiscal 2023, and in fact, enacted an additional 75-basis point increase in November 2022. The following table details the Fed’s short-term interest rate activity since fiscal 2020.

| RJF fiscal quarter ended | Date of interest rate action | Increase/(decrease) in interest rates (in basis points) | Fed funds target rate |
| --- | --- | --- | --- |
| March 31, 2020 | March 16, 2020 | (100) | 0.00% - 0.25% |
| March 31, 2022 | March 17, 2022 | 25 | 0.25% - 0.50% |
| June 30, 2022 | May 5, 2022 | 50 | 0.75% - 1.00% |
| June 30, 2022 | June 16, 2022 | 75 | 1.50% - 1.75% |
| September 30, 2022 | July 28, 2022 | 75 | 2.25% - 2.50% |
| September 30, 2022 | September 22, 2022 | 75 | 3.00% - 3.25% |
| Rate changes subsequent to September 30, 2022 |  |  |  |
| December 31, 2022 | November 3, 2022 | 75 | 3.75% - 4.00% |

Increases in short-term interest rates positively impacted our net interest income during our fiscal 2022, as well as the fee income we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees), which are also sensitive to changes in interest rates.

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Bank, and Other segments) and the nature of fees we earn from third-party banks in the RJBDP, increases in short-term interest rates generally result in an increase in our net earnings, although the magnitude of the impact to our net interest margin depends on the yields on interest-earning assets relative to the cost of interest-bearing liabilities, including deposit rates paid to clients on their cash balances. Changes to the regulatory landscape governing the fees the firm earns on client assets, including cash sweep balances, could negatively impact our earnings. In addition, our pace of loan growth may fluctuate over time in response to changes in interest rates. As a result of our diverse funding sources, strong loan growth and high concentration of floating-rate assets, we benefited from the increases in short-term interest rates in fiscal 2022 and believe we are well-positioned for our net interest earnings and RJBDP fees to continue to be favorably impacted by the fiscal year 2022, as well as any fiscal 2023, increases in short-term rates. However, we also expect the benefit to our RJBDP fees to be partially offset by a decline in domestic client sweep balances as a portion of this cash gets invested in higher-yielding investments.

Refer to the discussion of our net interest income within the “Management’s Discussion and Analysis - Results of Operations” of our PCG, Bank, and Other segments, where applicable. Also refer to “Management’s Discussion and Analysis - Results of Operations - Private Client Group - Clients’ domestic cash sweep balances” for further information on the RJBDP.

44

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

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

| $ in millions | Year ended September 30, |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  |  | 2021 |  |  | 2020 |  |  |
|  | Average balance | Interest | Average rate | Average balance | Interest | Average rate | Average balance | Interest | Average rate |
| Interest-earning assets: |  |  |  |  |  |  |  |  |  |
| Bank segment: |  |  |  |  |  |  |  |  |  |
| Cash and cash equivalents | $1,884 | $18 | 0.98% | $1,612 | $2 | 0.14% | $1,981 | $11 | 0.55% |
| Available-for-sale securities | 9,651 | 136 | 1.40% | 7,950 | 85 | 1.07% | 4,250 | 83 | 1.94% |
| Loans held for sale and investment: (1)(2) |  |  |  |  |  |  |  |  |  |
| Loans held for investment: |  |  |  |  |  |  |  |  |  |
| SBL | 9,561 | 324 | 3.34% | 4,989 | 112 | 2.22% | 3,559 | 112 | 3.10% |
| C&I loans | 9,493 | 313 | 3.25% | 7,828 | 201 | 2.54% | 7,860 | 274 | 3.43% |
| CRE loans | 4,205 | 158 | 3.70% | 2,703 | 70 | 2.56% | 2,589 | 88 | 3.34% |
| REIT loans | 1,339 | 44 | 3.28% | 1,273 | 32 | 2.48% | 1,333 | 42 | 3.09% |
| Residential mortgage loans | 6,170 | 170 | 2.76% | 5,110 | 140 | 2.72% | 4,874 | 148 | 3.04% |
| Tax-exempt loans (3) | 1,355 | 35 | 3.15% | 1,270 | 34 | 3.31% | 1,246 | 33 | 3.35% |
| Loans held for sale | 229 | 7 | 3.24% | 163 | 4 | 2.55% | 130 | 5 | 3.70% |
| Total loans held for sale and investment | 32,352 | 1,051 | 3.24% | 23,336 | 593 | 2.55% | 21,591 | 702 | 3.25% |
| All other interest-earning assets | 124 | 4 | 3.29% | 182 | 4 | 1.50% | 223 | 4 | 2.04% |
| Interest-earning assets - Bank segment | $44,011 | $1,209 | 2.74% | $33,080 | $684 | 2.07% | $28,045 | $800 | 2.85% |
| All other segments: |  |  |  |  |  |  |  |  |  |
| Cash and cash equivalents | $4,114 | $30 | 0.73% | $3,949 | $10 | 0.25% | $3,192 | $30 | 0.94% |
| Assets segregated for regulatory purposes and restricted cash | 14,826 | 96 | 0.65% | 8,735 | 15 | 0.17% | 3,042 | 28 | 0.94% |
| Trading assets - debt securities | 621 | 27 | 4.38% | 475 | 13 | 2.67% | 493 | 18 | 3.56% |
| Brokerage client receivables | 2,529 | 100 | 3.94% | 2,280 | 77 | 3.37% | 2,232 | 84 | 3.77% |
| All other interest-earning assets | 1,944 | 46 | 2.33% | 1,594 | 24 | 1.54% | 1,573 | 40 | 2.54% |
| Interest-earning assets - all other segments | $24,034 | $299 | 1.24% | $17,033 | $139 | 0.82% | $10,532 | $200 | 1.90% |
| Total interest-earning assets | $68,045 | $1,508 | 2.22% | $50,113 | $823 | 1.64% | $38,577 | $1,000 | 2.59% |
| Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
| Bank segment: |  |  |  |  |  |  |  |  |  |
| Bank deposits: |  |  |  |  |  |  |  |  |  |
| Money market and savings accounts | $36,693 | $81 | 0.22% | $28,389 | $3 | 0.01% | $23,714 | $20 | 0.09% |
| Interest-bearing checking accounts | 2,061 | 39 | 1.88% | 162 | 3 | 1.86% | 92 | 2 | 1.86% |
| Certificates of deposit | 870 | 15 | 1.68% | 904 | 17 | 1.90% | 1,006 | 20 | 2.03% |
| Total bank deposits (4) | 39,624 | 135 | 0.34% | 29,455 | 23 | 0.08% | 24,812 | 42 | 0.17% |
| FHLB advances and all other interest-bearing liabilities | 1,001 | 21 | 2.15% | 864 | 19 | 2.12% | 889 | 20 | 2.21% |
| Interest-bearing liabilities - Bank segment | $40,625 | $156 | 0.38% | $30,319 | $42 | 0.14% | $25,701 | $62 | 0.24% |
| All other segments: |  |  |  |  |  |  |  |  |  |
| Trading liabilities - debt securities | $325 | $12 | 3.64% | $150 | $2 | 1.39% | $165 | $3 | 1.83% |
| Brokerage client payables | 15,530 | 24 | 0.15% | 10,180 | 3 | 0.03% | 4,179 | 11 | 0.28% |
| Senior notes payable | 2,037 | 93 | 4.44% | 2,078 | 96 | 4.58% | 1,800 | 85 | 4.72% |
| All other interest-bearing liabilities | 257 | 20 | 2.76% | 241 | 7 | 1.14% | 456 | 17 | 2.24% |
| Interest-bearing liabilities - all other segments | $18,149 | $149 | 0.82% | $12,649 | $108 | 0.85% | $6,600 | $116 | 1.76% |
| Total interest-bearing liabilities | $58,774 | $305 | 0.52% | $42,968 | $150 | 0.34% | $32,301 | $178 | 0.54% |
| Firmwide net interest income |  | $1,203 |  |  | $673 |  |  | $822 |  |
| Net interest margin (net yield on interest-earning assets) |  |  |  |  |  |  |  |  |  |
| Bank segment |  |  | 2.39% |  |  | 1.95% |  |  | 2.63% |
| Firmwide |  |  | 1.77% |  |  | 1.35% |  |  | 2.14% |

(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'.

45

# 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 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.

| $ in millions | Year ended September 30, |  |  | 2022 compared to 2021 |  |  | 2021 compared to 2020 |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Increase/(decrease) due to |  |  | Increase/(decrease) due to |  |  |  |  |  |
|  | Volume | Rate | Total | Volume | Rate | Total | Volume | Rate | Total |
| Interest-earning assets: |  |  |  |  |  |  |  |  |  |
| Bank segment: |  |  |  |  |  |  |  |  |  |
| Cash and cash equivalents | $ - | $16 | $16 | $(2) | $(7) | $(9) |  |  |  |
| Available-for-sale securities | 21 | 30 | 51 | 71 | (69) | 2 |  |  |  |
| Loans held for sale and investment: |  |  |  |  |  |  |  |  |  |
| Loans held for investment: |  |  |  |  |  |  |  |  |  |
| SBL | 137 | 75 | 212 | 45 | (45) | - |  |  |  |
| C&I loans | 48 | 64 | 112 | (1) | (72) | (73) |  |  |  |
| CRE loans | 49 | 39 | 88 | 4 | (22) | (18) |  |  |  |
| REIT loans | 2 | 10 | 12 | (2) | (8) | (10) |  |  |  |
| Residential mortgage loans | 28 | 2 | 30 | 8 | (16) | (8) |  |  |  |
| Tax-exempt loans | 3 | (2) | 1 | 2 | (1) | 1 |  |  |  |
| Loans held for sale | 2 | 1 | 3 | 1 | (2) | (1) |  |  |  |
| Total loans held for sale and investment | 269 | 189 | 458 | 57 | (166) | (109) |  |  |  |
| All other interest-earning assets | (2) | 2 | - | - | - | - |  |  |  |
| Interest-earning assets - Bank segment | $288 | $237 | $525 | $126 | $(242) | $(116) |  |  |  |
| All other segments: |  |  |  |  |  |  |  |  |  |
| Cash and cash equivalents | $ - | $20 | $20 | $5 | $(25) | $(20) |  |  |  |
| Assets segregated for regulatory purposes and restricted cash | 16 | 65 | 81 | 54 | (67) | (13) |  |  |  |
| Trading assets - debt securities | 5 | 9 | 14 | (1) | (4) | (5) |  |  |  |
| Brokerage client receivables | 9 | 14 | 23 | 2 | (9) | (7) |  |  |  |
| All other interest-earning assets | 6 | 16 | 22 | - | (16) | (16) |  |  |  |
| Interest-earning assets - all other segments | $36 | $124 | $160 | $60 | $(121) | $(61) |  |  |  |
| Total interest-earning assets | $324 | $361 | $685 | $186 | $(363) | $(177) |  |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
| Bank segment: |  |  |  |  |  |  |  |  |  |
| Interest expense |  |  |  |  |  |  |  |  |  |
| Bank deposits: |  |  |  |  |  |  |  |  |  |
| Money market and savings accounts | $1 | $77 | $78 | $3 | $(20) | $(17) |  |  |  |
| Interest-bearing checking accounts | 36 | - | 36 | 1 | - | 1 |  |  |  |
| Certificates of deposit | (1) | (1) | (2) | (2) | (1) | (3) |  |  |  |
| Total bank deposits | 36 | 76 | 112 | 2 | (21) | (19) |  |  |  |
| FHLB advances and all other interest-bearing liabilities | 2 | - | 2 | - | (1) | (1) |  |  |  |
| Interest-bearing liabilities - Bank segment | $38 | $76 | $114 | $2 | $(22) | $(20) |  |  |  |
| All other segments: |  |  |  |  |  |  |  |  |  |
| Trading liabilities - debt securities | 5 | 5 | 10 | - | (1) | (1) |  |  |  |
| Brokerage client payables | 3 | 18 | 21 | 17 | (25) | (8) |  |  |  |
| Senior notes payable | (1) | (2) | (3) | 13 | (2) | 11 |  |  |  |
| All other interest-bearing liabilities | 1 | 12 | 13 | (10) | - | (10) |  |  |  |
| Interest-bearing liabilities - all other segments | $8 | $33 | $41 | $20 | $(28) | $(8) |  |  |  |
| Total interest-bearing liabilities | $46 | $109 | $155 | $22 | $(50) | $(28) |  |  |  |
| Change in firmwide net interest income | $278 | $252 | $530 | $164 | $(313) | $(149) |  |  |  |

46

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

# **RESULTS OF OPERATIONS - PRIVATE CLIENT GROUP**

Through our PCG segment, we provide financial planning, investment advisory and securities transaction services for which we generally charge either asset-based fees (presented in “Asset management and related administrative fees”) or sales commissions (presented in “Brokerage revenues”). We also earn revenues for distribution and related support services performed primarily related to mutual funds, fixed and variable annuities and insurance products. Asset management and related administrative fees and brokerage revenues in this segment are typically correlated with the level of PCG client AUA, including those in fee-based accounts, as well as the overall U.S. equity markets. In periods where equity markets improve, AUA and client activity generally increase, thereby having a favorable impact on net revenues.

We also earn servicing fees, such as omnibus and education and marketing support fees, from mutual fund and annuity companies whose products we distribute. Servicing fees earned from mutual fund and annuity companies are based on the level of assets, a flat fee or number of positions in such programs. Our PCG segment also earns fees from banks to which we sweep clients’ cash in the RJBDP, including both third-party banks and our Bank segment. Such fees, which generally fluctuate based on average balances in the program and short-term interest rates, are included in “Account and service fees.” See “Clients’ domestic cash sweep balances” in the “Selected key metrics” section for further information about fees earned from the RJBDP.

Net interest income in the PCG segment is primarily generated by interest earnings on assets segregated for regulatory purposes and on margin loans provided to clients, less interest paid on client cash balances in the CIP. Amounts are impacted by client cash balances in the CIP and short-term interest rates. Higher client cash balances generally lead to increased net interest income, depending on interest rate spreads realized in the CIP (i.e., between interest received on assets segregated for regulatory purposes and interest paid on CIP balances). For more information on client cash balances, see “Clients’ domestic cash sweep balances” in the “Selected key metrics” section.

For an overview of our PCG segment operations, refer to the information presented in “Item 1 - Business” of this Form 10-K.

47

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

# *Management's Discussion and Analysis*

# **Operating results**

| $ in millions | Year ended September 30, |  |  | % change |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 vs. 2021 | 2021 vs. 2020 |
| Revenues: |  |  |  |  |  |
| Asset management and related administrative fees | $4,710 | $4,056 | $3,162 | 16% | 28% |
| Brokerage revenues: |  |  |  |  |  |
| Mutual and other fund products | 620 | 670 | 567 | (7)% | 18% |
| Insurance and annuity products | 438 | 438 | 397 | - % | 10% |
| Equities, ETFs and fixed income products | 458 | 438 | 419 | 5% | 5% |
| Total brokerage revenues | 1,516 | 1,546 | 1,383 | (2)% | 12% |
| Account and service fees: |  |  |  |  |  |
| Mutual fund and annuity service fees | 428 | 408 | 348 | 5% | 17% |
| RJBDP fees: |  |  |  |  |  |
| Bank segment | 357 | 183 | 180 | 95% | 2% |
| Third-party banks | 202 | 76 | 150 | 166% | (49)% |
| Client account and other fees | 220 | 157 | 129 | 40% | 22% |
| Total account and service fees | 1,207 | 824 | 807 | 46% | 2% |
| Investment banking | 38 | 47 | 41 | (19)% | 15% |
| Interest income | 249 | 123 | 155 | 102% | (21)% |
| All other | 32 | 25 | 27 | 28% | (7)% |
| Total revenues | 7,752 | 6,621 | 5,575 | 17% | 19% |
| Interest expense | (42) | (10) | (23) | 320% | (57)% |
| Net revenues | 7,710 | 6,611 | 5,552 | 17% | 19% |
| Non-interest expenses: |  |  |  |  |  |
| Financial advisor compensation and benefits | 4,696 | 4,204 | 3,428 | 12% | 23% |
| Administrative compensation and benefits | 1,199 | 1,015 | 971 | 18% | 5% |
| Total compensation, commissions and benefits | 5,895 | 5,219 | 4,399 | 13% | 19% |
| Non-compensation expenses: |  |  |  |  |  |
| Communications and information processing | 332 | 275 | 251 | 21% | 10% |
| Occupancy and equipment | 198 | 179 | 175 | 11% | 2% |
| Business development | 126 | 71 | 79 | 77% | (10)% |
| Professional fees | 56 | 46 | 33 | 22% | 39% |
| All other | 73 | 72 | 76 | 1% | (5)% |
| Total non-compensation expenses | 785 | 643 | 614 | 22% | 5% |
| Total non-interest expenses | 6,680 | 5,862 | 5,013 | 14% | 17% |
| Pre-tax income | $1,030 | $749 | $539 | 38% | 39% |

48

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

### Selected key metrics

#### PCG client asset balances

| $ in billions | As of September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| AUA (1) | $1,039.0 | $1,115.4 | $883.3 |
| Assets in fee-based accounts (1)(2) | $586.0 | $627.1 | $475.3 |
| Percent of AUA in fee-based accounts | 56.4% | 56.2% | 53.8% |

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

(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 RI&A ('AMS'). These assets are included in our financial assets under management as disclosed in the 'Selected key metrics' section of our 'Management's Discussion and Analysis - Results of Operations - Asset Management.'

PCG AUA and PCG assets in fee-based accounts each decreased 7% compared with the prior year, as the positive impacts of strong net inflows of client assets and the Charles Stanley acquisition were more than offset by a decline in market values. 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 non-managed programs, as it is performing portfolio management services in addition to administrative services.

The vast majority of the revenues we earn from fee-based accounts is recorded in 'Asset management and related administrative fees' on our 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. Assets in fee-based accounts in this segment decreased 3% as of September 30, 2022 compared with June 30, 2022, which we expect will have an unfavorable impact on our related revenues in our fiscal first quarter of 2023.

PCG AUA included assets associated with firms affiliated with us through our RCS division of $108.5 billion as of September 30, 2022, $92.7 billion as of September 30, 2021, and $59.7 billion as of September 30, 2020, of which $89.9 billion, $77.2 billion, and $47.4 billion as of September 30, 2022, 2021, and 2020, respectively, 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 services fees.'

#### Financial advisors

|  | As of September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Employees | 3,638 | 3,461 | 3,404 |
| Independent contractors | 5,043 | 5,021 | 4,835 |
| Total advisors | 8,681 | 8,482 | 8,239 |

49

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

The number of financial advisors as of September 30, 2022 increased compared to the prior year due to strong recruiting and retention of existing advisors and the addition of nearly 200 financial advisors with the Charles Stanley acquisition in January 2022, partially offset by the transfer of 222 advisors previously affiliated primarily as independent contractors to our RCS division (including one firm with 166 financial advisors). We expect to continue to experience transfers of financial advisors 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 count metric although their client assets are included in PCG AUA. The recruiting pipeline remains robust across our affiliation options; however, the timing of financial advisors joining the firm may be impacted by market uncertainty.

# **Clients' domestic cash sweep balances**

| $ in millions | As of September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| RJBDP: |  |  |  |
| Bank segment | $38,705 | $31,410 | $25,599 |
| Third-party banks | 21,964 | 24,496 | 25,998 |
| Subtotal RJBDP | 60,669 | 55,906 | 51,597 |
| CIP | 6,445 | 10,762 | 3,999 |
| Total clients' domestic cash sweep balances | $67,114 | $66,668 | $55,596 |

|  | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Average yield on RJBDP - third-party banks | 0.82% | 0.30% | 0.77% |

A significant portion of our domestic clients' cash is included in the RJBDP, a multi-bank sweep program in which clients' cash deposits in their accounts are swept into interest-bearing deposit accounts at either Raymond James Bank or TriState Capital Bank, which are included in our Bank segment, or various third-party banks. 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 current 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. This is a different intersegment policy than that which was in place in prior years, during the last interest rate cycle. The result of this change is that the PCG segment revenues will reflect increased fee revenues as the yield from third-party banks in the program continues to rise and the Bank segment RJBDP servicing costs reflect the market rate. 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 the computation of our consolidated results.

The 'Average yield on RJBDP - third-party banks' in the preceding table is computed by dividing RJBDP fees from third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balance at third-party banks. The average yield on RJBDP - third-party banks increased from the prior year as a result of the combined 300-basis point increase in the Fed's short-term benchmark interest rate during our fiscal 2022, as compared to the prior year, which reflected a full year of near-zero short-term interest rates. We expect our fiscal 2023 results will benefit from a full-year's impact of the Fed's short-term rate increases enacted toward the end of fiscal 2022, as well as the rate increase in November 2022, with our average yield on RJBDP - third-party banks expected to approximate 2.5% for our fiscal first quarter of 2023.

Although client cash balances remained elevated for the majority of fiscal 2022, cash balances declined at the end of the year, resulting in only a 1% increase as of September 30, 2022 compared with September 30, 2021. We expect this recent trend to continue into fiscal 2023, as clients continue to move cash from lower-yielding bank deposits to higher-yielding investment products. PCG segment results can be impacted not only by changes in the level of client cash balances, but also by the allocation of client cash balances between RJBDP and our CIP, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

# **Year ended September 30, 2022 compared with the year ended September 30, 2021**

Net revenues of $7.71 billion increased 17% and pre-tax income of $1.03 billion increased 38%.

50

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

Asset management and related administrative fees increased $654 million, or 16%, primarily due to higher assets in fee-based accounts at the beginning of most of the current-year quarterly billing periods compared with the prior-year quarterly billing periods and, to a lesser extent, incremental revenues arising from our acquisition of Charles Stanley.

Brokerage revenues decreased $30 million, or 2%, primarily due to lower trailing placement fees from mutual and other fund products and annuity products, resulting from lower asset values for products for which we receive trails, partially offset by incremental revenues from our acquisition of Charles Stanley.

Account and service fees increased $383 million, or 46%, primarily due to an increase in RJBDP fees from both third-party banks and our Bank segment due to the increase in short-term rates during the current year, as well as higher client cash balances in the RJBDP. Client account and other fees also increased, resulting from incremental revenues from our acquisitions of NWPS Holdings Inc. at the end of our fiscal first quarter of 2021 and Charles Stanley in our fiscal second quarter of 2022, as well as higher account maintenance fees resulting from an increase in the fee per account effective during the current fiscal year. Mutual fund service fees increased due to higher average mutual fund assets.

Net interest income increased $94 million, or 83%, due to both the increase in short-term interest rates and higher average balances of interest-earning assets such as assets segregated for regulatory purposes, which benefited from higher average CIP balances during the current year. Although client cash balances remained elevated for the majority of fiscal 2022, cash balances declined at the end of the year. We expect this recent trend to continue into fiscal 2023, as clients continue to move cash to higher-yielding investments.

Compensation-related expenses increased $676 million, or 13%, primarily due to higher asset management fee revenues, as well as incremental expenses resulting from our acquisition of Charles Stanley and an increase in compensation costs to support our growth.

Non-compensation expenses increased $142 million, or 22%, driven by incremental expenses resulting from our acquisition of Charles Stanley, increases in travel and event-related expenses compared with the low levels incurred in the prior year, higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, and increasing real estate rent costs.

### **Year ended September 30, 2021 compared with the year ended September 30, 2020**

Refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations' of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

### **RESULTS OF OPERATIONS - CAPITAL MARKETS**

Our Capital Markets segment conducts investment banking, institutional sales, securities trading, equity research, and the syndication and management of investments in low-income housing funds and funds of a similar nature, the majority of which qualify for tax credits.

We provide various investment banking services, including merger & acquisition advisory, and other advisory services, underwriting or advisory services on public and private equity and debt financing for corporate clients, and public financing activities. Revenues from investment banking activities are driven principally by our role in the transaction and the number and sizes of the transactions with which we are involved.

We earn brokerage revenues for the sale of both equity and fixed income products to institutional clients, as well as from our market-making activities in fixed income debt securities. Client activity is influenced by a combination of general market activity and our Capital Markets group's ability to find attractive investment opportunities for clients. In certain cases, we transact on a principal basis, which involves the purchase of securities from, and the sale of securities to, our clients as well as other dealers who may be purchasing or selling securities for their own account or acting on behalf of their clients. Profits and losses related to this activity are primarily derived from the spreads between bid and ask prices, as well as market trends for the individual securities during the period we hold them. To facilitate such transactions, we carry inventories of financial instruments. In our fixed income businesses, we also enter into interest rate swaps and futures contracts to facilitate client transactions or to actively manage risk exposures.

For an overview of our Capital Markets segment operations, refer to the information presented in 'Item 1 - Business' of this Form 10-K.

51

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

# **Operating results**

| $ in millions | Year ended September 30, |  |  | % change |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 vs. 2021 | 2021 vs. 2020 |
| Revenues: |  |  |  |  |  |
| Brokerage revenues: |  |  |  |  |  |
| Fixed income | $448 | $515 | $421 | (13)% | 22% |
| Equity | 142 | 145 | 150 | (2)% | (3)% |
| Total brokerage revenues | 590 | 660 | 571 | (11)% | 16% |
| Investment banking: |  |  |  |  |  |
| Merger & acquisition and advisory | 709 | 639 | 290 | 11% | 120% |
| Equity underwriting | 210 | 285 | 185 | (26)% | 54% |
| Debt underwriting | 143 | 172 | 133 | (17)% | 29% |
| Total investment banking | 1,062 | 1,096 | 608 | (3)% | 80% |
| Interest income | 36 | 16 | 25 | 125% | (36)% |
| Affordable housing investments business revenues | 127 | 105 | 83 | 21% | 27% |
| All other | 21 | 18 | 20 | 17% | (10)% |
| Total revenues | 1,836 | 1,895 | 1,307 | (3)% | 45% |
| Interest expense | (27) | (10) | (16) | 170% | (38)% |
| Net revenues | 1,809 | 1,885 | 1,291 | (4)% | 46% |
| Non-interest expenses: |  |  |  |  |  |
| Compensation, commissions and benefits | 1,065 | 1,055 | 774 | 1% | 36% |
| Non-compensation expenses: |  |  |  |  |  |
| Communications and information processing | 89 | 83 | 77 | 7% | 8% |
| Occupancy and equipment | 38 | 37 | 36 | 3% | 3% |
| Business development | 45 | 34 | 47 | 32% | (28)% |
| Professional fees | 47 | 54 | 48 | (13)% | 13% |
| All other | 110 | 90 | 84 | 22% | 7% |
| Total non-compensation expenses | 329 | 298 | 292 | 10% | 2% |
| Total non-interest expenses | 1,394 | 1,353 | 1,066 | 3% | 27% |
| Pre-tax income | $415 | $532 | $225 | (22)% | 136% |

# **Year ended September 30, 2022 compared with the year ended September 30, 2021**

Net revenues of $1.81 billion decreased 4% and pre-tax income of $415 million decreased 22%.

Investment banking revenues decreased $34 million, or 3%, due to a significant decline in both equity and debt underwriting activity, resulting from the impact of market uncertainty during the current year. Merger & acquisition and advisory revenues increased, reflecting high levels of client activity, as well as a full year of revenues related to our fiscal 2021 acquisitions of Financo and Cebile. Our investment banking pipeline remains strong, reflecting 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 in fiscal 2023.

Brokerage revenues decreased $70 million, or 11%, due to a significant decrease in fixed income brokerage revenues, which remained solid but were lower than the prior year as a result of a challenging and uncertain interest rate environment compared with the prior year, partially offset by incremental revenues from SumRidge Partners, which was acquired on July 1, 2022. We expect fixed income brokerage revenues to continue to be negatively impacted by market uncertainty and a decline in cash balances at our depository institution clients during fiscal 2023; however, we expect some amount of offsetting benefit to our results from a full year of revenues from SumRidge Partners.

Affordable housing investment business revenues increased $22 million, or 21%, primarily reflecting continued strong business activity levels as well as gains on the sales of certain properties during the current year.

Compensation-related expenses increased $10 million, or 1%, due to higher share-based compensation amortization and salaries, primarily due to our acquisition of SumRidge Partners and a full year of our prior year acquisitions of Financo and Cebile, inflationary and market compensation pressures, and to support our growth, partially offset by a decrease resulting from lower compensable revenues.

52

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

Non-compensation expenses increased $31 million, or 10%, primarily due to increased travel and event-related expenses, as well as an increase in expenses associated with our acquisition of SumRidge Partners and to support our growth, partially offset by lower investment banking deal expenses due to lower underwriting revenues compared with the prior year.

# **Year ended September 30, 2021 compared with the year ended September 30, 2020**

Refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

# **RESULTS OF OPERATIONS - ASSET MANAGEMENT**

Our Asset Management segment earns asset management and related administrative fees for providing asset management, portfolio management and related administrative services to retail and institutional clients. This segment oversees the portion of our fee-based AUA invested in “managed programs” for our PCG clients through AMS and through RJ Trust. This segment also provides asset management services through Raymond James Investment Management for certain retail accounts managed on behalf of third-party institutions, institutional accounts, and proprietary mutual funds that we manage, generally utilizing active portfolio management strategies. Asset management fees are based on fee-billable assets under management, which are impacted by market fluctuations and net inflows or outflows of assets. Rising equity markets have historically had a positive impact on revenues as existing accounts increase in value. Conversely, declining markets typically have a negative impact on revenue levels.

Our Asset Management segment also earns administrative fees on certain fee-based assets within PCG that are not overseen by our Asset Management segment, but for which the segment provides administrative support (e.g., record-keeping). These administrative fees are based on asset balances, which are impacted by market fluctuations and net inflows or outflows of assets. For an overview of our Asset Management segment operations, refer to the information presented in “Item 1 - Business” of this Form 10-K.

# **Operating results**

| $ in millions | Year ended September 30, |  |  | % change |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 vs. 2021 | 2021 vs. 2020 |
| Revenues: |  |  |  |  |  |
| Asset management and related administrative fees: |  |  |  |  |  |
| Managed programs | $585 | $570 | $481 | 3% | 19% |
| Administration and other | 297 | 267 | 207 | 11% | 29% |
| Total asset management and related administrative fees | 882 | 837 | 688 | 5% | 22% |
| Account and service fees | 22 | 18 | 16 | 22% | 13% |
| All other | 10 | 12 | 11 | (17)% | 9% |
| Net revenues | 914 | 867 | 715 | 5% | 21% |
| Non-interest expenses: |  |  |  |  |  |
| Compensation, commissions and benefits | 194 | 182 | 177 | 7% | 3% |
| Non-compensation expenses: |  |  |  |  |  |
| Communications and information processing | 53 | 47 | 45 | 13% | 4% |
| Investment sub-advisory fees | 149 | 127 | 99 | 17% | 28% |
| All other | 132 | 122 | 110 | 8% | 11% |
| Total non-compensation expenses | 334 | 296 | 254 | 13% | 17% |
| Total non-interest expenses | 528 | 478 | 431 | 10% | 11% |
| Pre-tax income | $386 | $389 | $284 | (1)% | 37% |

53

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

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

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.

#### Financial assets under management

| $ in billions | As of September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| AMS (1) | $119.8 | $134.4 | $102.2 |
| Raymond James Investment Management | 64.2 | 67.8 | 59.5 |
| Subtotal financial assets under management | 184.0 | 202.2 | 161.7 |
| Less: Assets managed for affiliated entities | (10.2) | (10.3) | (8.6) |
| Total financial assets under management | $173.8 | $191.9 | $153.1 |

(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)

| $ in billions | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Financial assets under management at beginning of year | $202.2 | $161.7 | $150.3 |
| Raymond James Investment Management: |  |  |  |
| Acquisition of Chartwell Investment Partners (1) | 9.8 | - | - |
| Other - net outflows | (1.5) | (0.5) | (5.4) |
| AMS - net inflows | 9.7 | 13.5 | 6.1 |
| Net market appreciation/(depreciation) in asset values | (36.2) | 27.5 | 10.7 |
| Financial assets under management at end of year | $184.0 | $202.2 | $161.7 |

(1) Represents June 1, 2022 assets under management of Chartwell Investment Partners, a registered investment advisor acquired as part of the TriState Capital acquisition. See Note 3 of the Notes to Consolidated Financial Statements of this Form 10-K for further information about this acquisition.

#### 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.

54

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

### 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.

| $ in billions | As of September 30, 2022 |  |
| --- | --- | --- |
|  | AUM | Average fee rate |
| Equity | $23.1 | 0.56% |
| Fixed income | 33.5 | 0.20% |
| Balanced | 7.6 | 0.33% |
| Total financial assets under management | $64.2 | 0.35% |

### 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').

| $ in billions | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Total assets | $329.2 | $365.3 | $280.6 |

The decrease in assets compared to the prior year was largely due to a decline in market values during the year. Administrative fees associated with these programs are predominantly based on balances at the beginning of each quarterly billing period.

### RJ Trust

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

| $ in billions | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Total assets | $7.3 | $8.1 | $7.1 |

### Year ended September 30, 2022 compared with the year ended September 30, 2021

Net revenues of $914 million increased 5% and pre-tax income of $386 million decreased 1%.

Asset management and related administrative fees increased $45 million, or 5%, driven by higher financial assets under management and higher assets in non-discretionary asset-based programs at the beginning of most of our current-year quarterly billing periods compared with the prior-year quarterly billing periods. We expect the declines in financial assets under management and assets in non-discretionary asset-based programs during our fiscal fourth quarter of 2022, which occurred due to the decline in market values, to negatively affect our fiscal first quarter of 2023 revenues, as the majority of our asset management and related administrative fees are billed based on balances as of the beginning of the quarter.

Compensation expenses increased $12 million, or 7%, due to an increase in salaries due to labor market pressures and to support our growth, as well as incremental compensation expenses related to Chartwell. Non-compensation expenses increased $38 million, or 13%, largely due to higher investment sub-advisory fees, resulting from higher assets under management in sub-advised programs for most of the current fiscal year, as well as incremental expenses due to the acquisition of Chartwell.

### Year ended September 30, 2021 compared to the year ended September 30, 2020

Refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations' of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

55

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

### RESULTS OF OPERATIONS - BANK

The Bank segment provides various types of loans, including SBL, corporate loans, residential mortgage loans, and tax-exempt loans. Our Bank segment is active in corporate loan syndications and participations and lending directly to clients. We also provide FDIC-insured deposit accounts, including to clients of our broker-dealer subsidiaries, as well as other deposit and liquidity management products and services. Our Bank segment generates net interest income principally through the interest income earned on loans and an investment portfolio of available-for-sale securities, which is offset by the interest expense it pays on client deposits and on its borrowings. Our Bank segment's net interest income is affected by the levels of interest rates, interest-earning assets and interest-bearing liabilities. Higher interest-earning asset balances and higher interest rates generally lead to increased net interest income, depending upon spreads realized on interest-bearing liabilities. For more information on average interest-earning asset and interest-bearing liability balances and the related interest income and expense, see the following discussion in this MD&A. For an overview of our Bank segment operations, refer to the information presented in 'Item 1 - Business' of this Form 10-K. Our Bank segment results include the results of TriState Capital Bank since the acquisition date of June 1, 2022. See Note 3 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding this acquisition.

#### Operating results

| $ in millions | Year ended September 30, |  |  | % change |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 vs. 2021 | 2021 vs. 2020 |
| Revenues: |  |  |  |  |  |
| Interest income | $1,209 | $684 | $800 | 77% | (15)% |
| Interest expense | (156) | (42) | (62) | 271% | (32)% |
| Net interest income | 1,053 | 642 | 738 | 64% | (13)% |
| All other | 31 | 30 | 27 | 3% | 11% |
| Net revenues | 1,084 | 672 | 765 | 61% | (12)% |
| Non-interest expenses: |  |  |  |  |  |
| Compensation and benefits | 84 | 51 | 51 | 65% | - % |
| Non-compensation expenses: |  |  |  |  |  |
| Bank loan provision/(benefit) for credit losses | 100 | (32) | 233 | NM | NM |
| RJBDP fees to PCG | 357 | 183 | 180 | 95% | 2% |
| All other | 161 | 103 | 105 | 56% | (2)% |
| Total non-compensation expenses | 618 | 254 | 518 | 143% | (51)% |
| Total non-interest expenses | 702 | 305 | 569 | 130% | (46)% |
| Pre-tax income | $382 | $367 | $196 | 4% | 87% |

#### Year ended September 30, 2022 compared with the year ended September 30, 2021

Net revenues of $1.08 billion increased 61% and pre-tax income of $382 million increased 4%.

Net interest income increased $411 million, or 64%, due to the increase in short-term interest rates, higher average interest-earning assets, as well as incremental net interest income from the acquisition of TriState Capital Bank on June 1, 2022. The increase in average interest-earning assets was primarily driven by significant growth in SBL and residential mortgage loans, as well as higher average corporate loans and available-for-sale securities. The Bank segment net interest margin increased to 2.39% from 1.95% for the prior year. As part of our acquisition of TriState Capital, we recorded fair value adjustments of $145 million related to loans and $118 million related to available-for-sale securities, which will generally accrete into net interest income over 4 years and 7 years, respectively, exclusive of the impact of prepayments. We anticipate the Bank segment's net interest income in our fiscal 2023 will benefit from a full year's impact of TriState Capital Bank's results and the Fed's short-term interest rate increases enacted toward the end of fiscal 2022 and in November 2022, and expect the Bank segment net interest margin to approximate 3.15% for the fiscal first quarter of 2023. In addition, given that a significant portion of our interest-earning assets are sensitive to changes in short-term interest rates, we expect our net interest income to also be favorably impacted by any additional increases in short-term interest rates that may occur.

The bank loan provision for credit losses was $100 million for the current year, compared with a benefit for credit losses of $32 million for the prior year. The current-year provision included the impacts of loan growth at Raymond James Bank and a weaker macroeconomic outlook, as well as an initial provision for credit losses of $26 million recorded on loans acquired as part of the TriState Capital acquisition. The prior year benefit largely reflected improved economic forecasts used in our

56

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

current expected credit losses ('CECL') model at that time, as well as improved credit ratings within our corporate loan portfolio, partially offset by the impact of loan growth. We expect to continue to grow our bank loan portfolio. Net loan growth should result in additional provisions for credit losses and future economic deterioration could result in elevated bank loan provisions for credit losses in future periods.

Compensation expenses increased $33 million, or 65%, primarily reflecting incremental compensation expenses of TriState Capital Bank.

Non-compensation expenses, excluding the bank loan provision/(benefit) for credit losses, increased $232 million, or 81%, primarily due to an increase in RJBDP and other fees paid to PCG, incremental expenses associated with TriState Capital Bank (including a $5 million initial provision for credit losses on TriState Capital Bank's unfunded lending commitments and amortization of intangible assets), and a provision for credit losses on unfunded lending commitments unrelated to the acquisition compared with a benefit for the prior year. RJBDP fees to PCG increased $174 million, or 95%, due to an increase in short-term interest rates as well as an increase in client cash swept to Raymond James Bank as part of the RJBDP. As described in 'Management's Discussion and Analysis - Results of Operations - Private Client Group', our Bank segment pays servicing fees to 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 program continues to rise, the RJBDP servicing costs paid by our Bank segment to our PCG segment will also increase to reflect the market rate. These fees to PCG are eliminated in the computation of our consolidated results.

### Year ended September 30, 2021 compared to the year ended September 30, 2020

Refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations' of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

## RESULTS OF OPERATIONS - OTHER

This segment includes our private equity investments, which predominantly consist of investments in third-party funds, interest income on certain corporate cash balances, certain acquisition-related expenses, primarily comprised of professional fees, and certain corporate overhead costs of RJF that are not allocated to other segments, including the interest costs on our public debt and any losses on extinguishment of such debt. The Other segment also includes the reduction in workforce expenses that occurred in fiscal 2020 in response to the economic environment at that time. For an overview of our Other segment operations, refer to the information presented in 'Item 1 - Business' of this Form 10-K.

### Operating results

| $ in millions | Year ended September 30, |  |  | % change |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 vs. 2021 | 2021 vs. 2020 |
| Revenues: |  |  |  |  |  |
| Interest income | $25 | $8 | $30 | 213% | (73)% |
| Gains/(losses) on private equity investments | 9 | 74 | (28) | (88)% | NM |
| All other | 9 | 6 | 4 | 50% | 50% |
| Total revenues | 43 | 88 | 6 | (51)% | 1,367% |
| Interest expense | (93) | (96) | (88) | (3)% | 9% |
| Net revenues | (50) | (8) | (82) | (525)% | 90% |
| Non-interest expenses: |  |  |  |  |  |
| Compensation and all other | 141 | 140 | 64 | 1% | 119% |
| Losses on extinguishment of debt | - | 98 | - | (100)% | NM |
| Reduction in workforce expenses | - | - | 46 | - % | (100)% |
| Total non-interest expenses | 141 | 238 | 110 | (41)% | 116% |
| Pre-tax loss | $(191) | $(246) | $(192) | 22% | (28)% |

### Year ended September 30, 2022 compared to the year ended September 30, 2021

The pre-tax loss of $191 million was $55 million lower than the loss in the prior year.

57

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

Net revenues decreased $42 million, primarily due to lower private equity gains compared with the prior year. Private equity gains in fiscal 2022 totaled $9 million, of which an insignificant amount was attributable to noncontrolling interests. The prior year included $74 million of private equity valuation gains, of which $25 million were attributable to noncontrolling interests and were offset within other expenses. Offsetting the negative impact of the lower private equity gains, interest income increased compared with the prior year, largely due to the increase in short-term interest rates, and interest expense decreased due to lower interest expense on senior notes payable compared with the prior year, as a result of refinancing such notes at a lower interest rate.

Non-interest expenses decreased $97 million, or 41%, primarily due to losses on extinguishment of debt in the prior year related to the early-redemption our $250 million of 5.625% senior notes due 2024 and our $500 million of 3.625% senior notes due 2026, as well as the aforementioned decrease in amounts attributable to noncontrolling interests. These decreases were partially offset by an increase in professional fees associated with acquisition activities, primarily associated with our current-year acquisitions of Charles Stanley, TriState Capital, and SumRidge Partners, as well as higher executive compensation expenses due to the increase in earnings.

### **Year ended September 30, 2021 compared to the year ended September 30, 2020**

Refer to 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations' of our 2021 Form 10-K for a discussion of our fiscal 2021 results compared to fiscal 2020.

### **STATEMENT OF FINANCIAL CONDITION ANALYSIS**

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

Total assets of $80.95 billion as of September 30, 2022 were $19.06 billion, or 31%, greater than our total assets as of September 30, 2021. Our acquisition of TriState Capital during fiscal year 2022 brought significant amounts of assets and liabilities onto our balance sheet, including, as of September 30, 2022, $12.13 billion of bank loans, net, $1.55 billion of available-for-sale securities, and $721 million in goodwill and identifiable intangible assets, net. Bank loans, net also increased due to $6.12 billion in loan growth unrelated to the acquisition of TriState Capital, consisting of increases in corporate, residential, and securities-based loans. The acquisition of Charles Stanley during fiscal year 2022 contributed, as of September 30, 2022, $2.14 billion in assets segregated for regulatory purposes, as well as $201 million in goodwill and identifiable intangible assets, net. Our acquisition of SumRidge Partners contributed, as of September 30, 2022, $715 million in trading assets, $277 million in other receivables, net, and $152 million in goodwill and identifiable intangible assets, net. Deferred tax assets, net increased $325 million as a result of the decline in fair value of our available-for-sale securities portfolio primarily due to market conditions. Offsetting these increases were decreases in assets segregated for regulatory purposes and restricted cash, primarily due to a shift in client cash balances from our CIP, which is held at RJ&A and impacts our segregated assets, to our Bank segment through the RJBDP. Cash and cash equivalents decreased $1.02 billion primarily due to acquisition, dividend, and share repurchase activities. See Note 3 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information on our acquisitions.

As of September 30, 2022, our total liabilities of $71.52 billion were $17.93 billion, or 33%, greater than our total liabilities as of September 30, 2021. The increase in total liabilities was primarily due to an increase in bank deposits of $18.86 billion, which includes $13.17 billion as a result of our acquisition of TriState Capital, as well as an increase in bank deposits unrelated to the acquisition of $5.69 billion, largely due to growth in RJBDP cash balances swept to Raymond James Bank. Trading liabilities increased $660 million, primarily due to our acquisition of SumRidge Partners. Other borrowings increased $433 million, primarily reflecting the additional FHLB borrowings and subordinated note of TriState Capital. Offsetting these increases was a decrease in brokerage client payables related to the aforementioned shift in client cash balances from our CIP (included in brokerage client payables) to our Bank segment through the RJBDP (included in bank deposits), partially offset by an increase in brokerage client payables of $2.30 billion as a result of our acquisition of Charles Stanley.

58

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

*Management's Discussion and Analysis*

## LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital are essential to our business. The primary goal of our liquidity management activities is to ensure adequate funding to conduct our business over a range of economic and market environments. 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 frameworks. 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. The liquidity management framework includes senior management's review of short- and long-term cash flow forecasts, review of capital expenditures, monitoring of the availability of alternative sources of financing, and daily monitoring of liquidity in our significant subsidiaries. Our decisions on the allocation of resources to our business units consider, among other factors, projected profitability, cash flow, risk, and future liquidity needs. Our treasury department assists in evaluating, monitoring and controlling the impact that our business activities have on our financial condition and liquidity, and also maintains our relationships with various lenders. The objective of our liquidity management framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

Our capital planning and capital risk management processes are governed by the Capital Planning Committee ('CPC'), a senior management committee that provides oversight on our capital planning and ensures that our strategic planning and risk management processes are integrated into the capital planning process. 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 Directors, such as declaring dividends, repurchasing securities, and raising capital. To ensure that we have sufficient capital to absorb unanticipated losses, the firm adheres to capital risk appetite statements and tolerances set in excess of regulatory minimums, which are established by the CPC and approved by the Board of Directors. We conduct enterprise-wide capital stress testing to ensure that we maintain adequate capital to adhere to our established tolerances under multiple scenarios, including 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 the absorption of losses on an ongoing basis and for the conservation of resources during stress periods, as it provides RJF with discretion on the amount and timing of dividends and other capital actions. Information about our common equity is included in the Consolidated Statements of Financial Condition, the Consolidated Statements of Changes in Shareholders' Equity, and Note 20 of this Form 10-K.

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, common equity tier 1 ('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 24 for further information about our regulatory capital and related capital ratios.

59

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

# *Management's Discussion and Analysis*

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

| $ in millions | September 30, 2022 |
| --- | --- |
| Common equity tier 1 capital/Tier 1 capital |  |
| Common stock and related additional paid-in capital | $2,989 |
| Retained earnings | 8,843 |
| Treasury stock | (1,512) |
| Accumulated other comprehensive loss | (982) |
| Less: Goodwill and other intangibles, net of related deferred tax liabilities | (1,805) |
| Other adjustments | 847 |
| Common equity tier 1 capital | 8,380 |
| Additional tier 1 capital (preferred equity of $120, net $20 of other items) | 100 |
| Tier 1 capital | 8,480 |
| Tier 2 capital |  |
| Tier 2 capital instruments plus related surplus | 100 |
| Qualifying allowances for credit losses | 451 |
| Tier 2 capital | 551 |
| Total capital | $9,031 |

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

| $ in millions | September 30, 2022 |
| --- | --- |
| On-balance sheet assets: |  |
| Corporate exposures | $20,147 |
| Exposures to sovereign and government-sponsored entities (1) | 2,002 |
| Exposures to depository institutions, foreign banks, and credit unions | 3,003 |
| Exposures to public-sector entities | 696 |
| Residential mortgage exposures | 3,732 |
| Statutory multifamily mortgage exposures | 71 |
| High volatility commercial real estate exposures | 128 |
| Past due loans | 110 |
| Equity exposures | 445 |
| Securitization exposures | 129 |
| Other assets | 7,325 |
| Off-balance sheet: |  |
| Standby letters of credit | 62 |
| Commitments with original maturity of 1 year or less | 98 |
| Commitments with original maturity greater than 1 year | 2,437 |
| Over-the-counter derivatives | 305 |
| Other off-balance sheet items | 423 |
| Market risk-weighted assets | 3,063 |
| Total standardized risk-weighted assets | $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) decreased $1.02 billion to $6.18 billion during the year ended September 30, 2022, primarily due to investments in bank loans and available-for-sale securities. In addition, we completed our acquisitions of Charles Stanley, TriState Capital, and SumRidge Partners for total cash consideration of $1.17 billion (including a $125 million note issued to TriState Capital prior to the acquisition) during the year ended September 30, 2022. Offsetting these cash outflows were the impacts of an increase in bank deposits, cash received from the sale of U.S. Treasury securities ('U.S. Treasuries') previously segregated for regulatory purposes, as well as positive net income during the period.

60

# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## *Management's Discussion and Analysis*

### Sources of liquidity

Approximately $1.91 billion of our total September 30, 2022 cash and cash equivalents included cash held at RJF, the parent company, which included cash loaned to RJ&A. These amounts include the impact of significant dividends from RJ&A during the year ended September 30, 2022, as well as dividends from other RJF subsidiaries. As of September 30, 2022, RJF had loaned $1.30 billion to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities.

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

| $ in millions | September 30, 2022 |
| --- | --- |
| RJF | $629 |
| RJ&A | 2,151 |
| Raymond James Bank | 1,205 |
| RJ Ltd. | 714 |
| TriState Capital Bank | 532 |
| Raymond James Capital Services, LLC | 243 |
| RJFS | 151 |
| Charles Stanley Group Limited | 104 |
| Raymond James Investment Management | 87 |
| Other subsidiaries | 362 |
| Total cash and cash equivalents | $6,178 |

RJF maintained depository accounts at Raymond James Bank with a balance of $260 million as of September 30, 2022. The portion of this total that was available on demand without restrictions, which amounted to $230 million as of September 30, 2022, 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 September 30, 2022 was held to meet regulatory requirements and was not available for use by the parent.

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

### Liquidity available from subsidiaries

Liquidity is principally available to RJF from RJ&A and Raymond James Bank.

Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities and Exchange Act of 1934. As a member firm of FINRA, RJ&A is subject to FINRA's capital requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1 provides for an 'alternative net capital requirement,' which RJ&A has elected. Regulations require that minimum net capital, as defined, be equal to the greater of $1.5 million or 2% of aggregate debit items arising from client balances. In addition, covenants in RJ&A's committed financing facilities require its net capital to be a minimum of 10% of aggregate debit items. At September 30, 2022, RJ&A significantly exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances, despite significant dividends to RJF during the year ended September 30, 2022. FINRA may impose certain restrictions, such as restricting withdrawals of equity capital, if a member firm were to fall below a certain threshold or fail to meet minimum net capital requirements which may result in RJ&A limiting dividends it would otherwise remit to RJF. We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of liquidity available to RJF from RJ&A.

Raymond James Bank may pay dividends to RJF without prior approval of its regulator as long as the dividends do not exceed the sum of its current calendar year and the previous two calendar years' retained net income, and it maintains its targeted regulatory capital ratios. Dividends may be limited to the extent that capital is needed to support balance sheet growth.

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

61

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

# *Management's Discussion and Analysis*

# **Borrowings and financing arrangements**

# *Committed financing arrangements*

Our ability to borrow is dependent upon compliance with the conditions in our various loan agreements and, in the case of secured borrowings, collateral eligibility requirements. Our committed financing arrangements primarily consist of a tri-party repurchase agreement (i.e., securities sold under agreements to repurchase) and, in the case of our $500 million revolving credit facility agreement (the 'Credit Facility'), an unsecured line of credit. The required market value of the collateral associated with the tri-party repurchase agreement ranges from 105% to 125% of the amount financed.

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

| $ in millions | September 30, 2022 |  |  |  | Total number of arrangements |
| --- | --- | --- | --- | --- | --- |
|  | RJ&A | RJF | Total |  |  |
| Financing arrangement: |  |  |  |  |  |
| Committed secured | $100 | $ - | $100 |  | 1 |
| Committed unsecured | 200 | 300 | 500 |  | 1 |
| Total committed financing arrangements | $300 | $300 | $600 |  | 2 |
| Outstanding borrowing amount: |  |  |  |  |  |
| Committed secured | $ - | $ - | $ - |  |  |
| Committed unsecured | - | - | - |  |  |
| Total outstanding borrowing amount | $ - | $ - | $ - |  |  |

Our committed unsecured financing arrangement in the preceding table represents our Credit Facility, which provides for maximum borrowings of up to $500 million, with a sublimit of $300 million for RJF. RJ&A may borrow up to $500 million under the Credit Facility, depending on the amount of outstanding borrowings by RJF. The variable rate facility fee on our Credit Facility, which is applied to the committed amount, decreased to 0.150% per annum as of September 30, 2022 from 0.175% per annum as of September 30, 2021, as a result of Moody's Investor Services ('Moody's') upgrade of our credit ratings in February 2022. For additional details on our issuer and senior long-term debt ratings see our credit ratings table within this section below. For additional details on our committed unsecured financing arrangement, see our discussion of the Credit Facility in Note 16 of the Notes to Consolidated Financial Statements of this Form 10-K.

# *Uncommitted financing arrangements*

Our uncommitted financing arrangements are in the form of secured lines of credit, secured bilateral or tri-party repurchase agreements, or unsecured lines of credit. Our arrangements with third-party lenders are generally utilized to finance a portion of our fixed income securities held by RJ&A or for cash management purposes. Our uncommitted secured financing arrangements generally require us to post collateral in excess of the amount borrowed and are generally collateralized by RJ&A-owned securities or by securities that we have received as collateral under reverse repurchase agreements (i.e., securities purchased under agreements to resell). As of September 30, 2022, we had outstanding borrowings under four uncommitted secured borrowing arrangements out of a total of 12 uncommitted financing arrangements (eight uncommitted secured and four uncommitted unsecured). However, lenders are under no contractual obligation to lend to us under uncommitted credit facilities.

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

| $ in millions | September 30, 2022 |
| --- | --- |
| Outstanding borrowing amount: |  |
| Uncommitted secured | $294 |
| Uncommitted unsecured | - |
| Total outstanding borrowing amount | $294 |

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

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.

| For the quarter ended: ($ in millions) | Repurchase transactions |  |  | Reverse repurchase transactions |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 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 |
| 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 |
| December 31, 2021 | $247 | $258 | $203 | $306 | $305 | $204 |
| September 30, 2021 | $220 | $234 | $205 | $269 | $286 | $279 |

### Other borrowings and collateralized financings

We had $1.19 billion in FHLB borrowings outstanding at September 30, 2022, comprised of floating-rate and fixed-rate advances. We use interest rate swaps to manage the risk of increases in interest rates associated with the majority of these advances. See Note 16 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information regarding these borrowings. At September 30, 2022, we had pledged $6.58 billion of residential mortgage loans and $1.43 billion of CRE loans with the FHLB as security for the repayment of these borrowings and had an additional $5.22 billion in immediate credit available based on collateral pledged. As of September 30, 2022, with a pledge of additional collateral, we would have additional credit available from certain FHLB member banks.

A portion of our fixed income transactions are cleared and executed through a third-party clearing organization, which provides financing for the purchase of trading instruments to support such transactions. 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, which are collateralized by a portion of our trading inventory and accrue interest based on market rates, are included in 'Other payables' in our Consolidated Statements of Financial Condition. While we had borrowings outstanding as of September 30, 2022, the clearing organization is under no contractual obligation to lend to us under this arrangement.

We are eligible to participate in the Federal Reserve's discount window program; however, we do not view borrowings from the Federal Reserve as a primary source of funding. The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the Federal Reserve, and is secured by certain pledged C&I loans.

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. The subordinated notes incur interest at a fixed rate of 5.75% until May 2025 and thereafter at a variable interest rate based on LIBOR, or an appropriate alternative reference rate at the time that LIBOR ceases to be published. We may redeem these subordinated notes beginning in August 2025 at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to the redemption date. See Note 16 of the Notes to Consolidated Financial Statements of this 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 clients or the firm. We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $172 million as of September 30, 2022 related to the securities loaned included in 'Collateralized financings' on our Consolidated Statements of Financial Condition of this Form 10-K. See Notes 2 and 7 of the Notes to Consolidated Financial Statements of this Form 10-K for more information on our collateralized agreements and financings.

### Senior notes payable

At September 30, 2022, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051. At September 30, 2022, estimated future contractual interest payments on our senior notes were approximately $2 billion, of which $91 million is payable in fiscal 2023,

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## *Management's Discussion and Analysis*

with the remainder extending through 2051.

### *Credit ratings*

Our issuer, senior long-term debt, and preferred stock credit ratings as of the most current report are detailed in the following table.

| Rating Agency | Credit Rating |  |  |
| --- | --- | --- | --- |
|  | Fitch Ratings, Inc. | Moody's | Standard & Poor's Ratings Services |
| Issuer and senior long term debt | A- | A3 | BBB+ |
| Preferred Stock | BB+ | Baa3 (hyb) | Not rated |
| Outlook | Stable | Stable | Positive |

Our current credit ratings depend upon a number of factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trends and volatility, balance sheet composition, liquidity and liquidity management, capital structure, overall risk management, business diversification and market share, and competitive position in the markets in which we operate. Deterioration in any of these factors could impact our credit ratings. 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. A credit downgrade could damage our reputation and result in certain counterparties limiting their business with us, result in negative comments by analysts, potentially negatively impact investors' and/or clients' perception of us, and cause a decline in our stock price. None of our borrowing arrangements contains a condition or event of default related to our credit ratings. However, a credit downgrade would result in the firm incurring a higher facility fee on the 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 facility fee, as well as the interest rate applicable to any borrowings on such line.

### **Other sources and uses of liquidity**

We have company-owned life insurance 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 employee-directed while others are company-directed. Of the company-owned life insurance policies which fund these plans, certain policies could be used as a source of liquidity for the firm. Those policies against which we could readily borrow had a cash surrender value of $733 million as of September 30, 2022, comprised of $467 million related to employee-directed plans and $266 million related to company-directed plans, and we were able to borrow up to 90%, or $660 million, of the September 30, 2022 total without restriction. To effect any such borrowing, the underlying investments would be converted to money market investments, therefore requiring us to take market risk related to the employee-directed plans. There were no borrowings outstanding against any of these policies as of September 30, 2022.

On May 12, 2021, we filed a 'universal' shelf registration statement with the SEC pursuant to which we can issue debt, equity and other capital instruments if and when necessary or perceived by us to be opportune. Subject to certain conditions, this registration statement will be effective through May 12, 2024.

As part of our ongoing operations, we also enter into contractual arrangements that may require future cash payments, including certificates of deposit, lease obligations and other contractual arrangements, such as for software and various services. See Notes 14 and 15 of the Notes to the Consolidated Financial Statements of this Form 10-K for information regarding our lease obligations and certificates of deposit, respectively. We have entered into investment commitments, lending commitments and other commitments to extend credit for which we are unable to reasonably predict the timing of future payments. See Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for further information.

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# **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 in 'Item 1 - Business - Regulation' of this Form 10-K.

RJF and many of its subsidiaries are each subject to various regulatory capital requirements. As of September 30, 2022, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. In addition, RJF, Raymond James Bank, and TriState Capital Bank were categorized as 'well-capitalized' as of September 30, 2022. The maintenance of certain risk-based and other regulatory capital levels could influence various capital allocation decisions impacting one or more of our businesses. However, due to the current capital position of RJF and its regulated subsidiaries, we do not anticipate these capital requirements will have a negative impact on our future business activities. See Note 24 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulatory capital requirements.

# **CRITICAL ACCOUNTING ESTIMATES**

The consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during any reporting period in our consolidated financial statements. 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 Consolidated Financial Statements of this Form 10-K.

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 our reported results of operations and financial position. We believe that of our accounting estimates and assumptions, those described in the following sections involve a high degree of judgment and complexity.

# **Loss provisions**

# ***Loss provisions for 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 this Form 10-K. In addition, refer to Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding legal and regulatory matter contingencies as of September 30, 2022.

# ***Allowance for credit losses***

We evaluate certain of our financial assets, including bank loans, to estimate an allowance for credit losses based on expected credit losses over a financial asset's lifetime. The remaining life of our financial assets is determined by considering contractual terms and expected prepayments, among other factors. We use multiple methodologies in estimating an allowance for credit losses and our approaches differ by type of financial asset and the risk characteristics within each financial asset type. Our estimates are based on ongoing evaluations of our financial assets, the related credit risk characteristics, and the overall economic and environmental conditions affecting the financial assets. Our process for determining the allowance for credit losses includes a complex analysis of several quantitative and qualitative factors requiring 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 credit 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.

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.

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

To demonstrate the sensitivity of credit loss estimates on our bank loan portfolio to macroeconomic forecasts, we compared our modeled estimates under the base case economic scenario used to estimate the allowance for credit losses as of September 30, 2022, to what our estimate would have been under a downside case scenario and an upside scenario, without considering any offsetting effects in the qualitative component of our allowance for credit losses as of September 30, 2022. As of September 30, 2022, use of the downside case scenario would have resulted in an increase of approximately $135 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 $25 million in the quantitative portion of our allowance for credit losses on bank loans at September 30, 2022. These hypothetical outcomes reflect the relative sensitivity of the modeled portion of our allowance estimate to macroeconomic forecasted scenarios but do not consider any potential impact qualitative adjustments could have on the allowance for credit losses in such environments. 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 hypothetical sensitivity analysis assumes a moderate recession. To the extent macroeconomic conditions worsen beyond those assumed in this downside case scenario, we could incur provisions for credit losses significantly in excess of those estimated in this analysis.

See Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our allowance for credit losses related to bank loans as of September 30, 2022.

# **Business combinations**

We generally account for our acquisitions as business combinations under GAAP, using the acquisition method of accounting, whereby the assets acquired, including separately identifiable intangible assets, and liabilities assumed are recorded at their acquisition-date estimated fair values. Any excess purchase consideration over the acquisition-date fair values of the net assets acquired is recorded as goodwill. The acquisition method requires us to make significant estimates and assumptions in determining the fair value of assets acquired and liabilities assumed. Significant judgment is also required in estimating the fair value of identifiable intangible assets and in assigning the useful lives of the definite-lived identifiable intangible assets, which impact the periods over which amortization of those assets is recognized. Accordingly, we typically obtain the assistance of third-party valuation specialists. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain as they pertain to forward-looking views of our businesses, client behavior, and market conditions. We consider the income, market and cost approaches and place reliance on the approach or approaches deemed most appropriate to estimate the fair value of intangible assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability) and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur that could affect the accuracy or validity of the estimates and assumptions.

During the year ended September 30, 2022, our acquisitions of Charles Stanley, TriState Capital, and SumRidge Partners required us to make estimates and assumptions in determining the fair values of assets acquired and liabilities assumed, the most significant being related to the valuation of bank loans and the core deposit intangible asset in the TriState Capital acquisition and the customer relationship asset in the Charles Stanley acquisition. In determining the estimated fair value of bank loans acquired as part of the TriState Capital acquisition, management used a discounted cash flow methodology that considered loan type and related collateral, credit loss expectations, classification status, market interest rates and other market factors from the perspective of a market participant. Loans were segregated into specific pools according to similar characteristics, including risk, interest rate type (i.e., fixed or floating), underlying benchmark rate, and payment type and were treated in the aggregate when determining the fair value of each pool. The discount rates were derived using a build-up method inclusive of the weighted average cost of funding, estimated servicing costs and an adjustment for liquidity and then compared to current origination rates and other relevant market data. The fair value of the core deposit intangible asset was estimated using a discounted cash flow approach, specifically the favorable source of funds method, that considered the servicing and interest costs of the acquired deposit base, an estimate of the cost associated with alternative funding sources, expected client attrition rates, deposit growth rates, and a discount rate. The fair values of customer relationships were estimated using a multi-period excess earnings approach that considered future period post-tax earnings, as well as a discount rate.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

Refer to Note 3 of the Notes to Consolidated Financial Statements of this Form 10-K for more information on our valuation methods and the results of applying the acquisition method of accounting, including the estimated fair values of the assets acquired and liabilities assumed and, where relevant, the estimated remaining useful lives.

## RECENT ACCOUNTING DEVELOPMENTS

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

## RISK MANAGEMENT

Risks are an inherent part of our business and activities. Management of risk 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 principal risks related to our business activities are market, credit, liquidity, operational, model, and compliance.

### Governance

Our Board of Directors, including its Audit and Risk Committee, oversees the firm's management and mitigation of risk, reinforcing a culture that encourages ethical conduct and risk management throughout the firm. 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, derivatives, and investment positions. We have exposure to market risk primarily through our broker-dealer trading operations and our banking operations. Through our broker-dealer subsidiaries we trade debt obligations and equity securities and maintain trading inventories to ensure availability of securities and to facilitate client transactions. Inventory levels may fluctuate daily as a result of client demand. We also hold investments 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 Notes 2, 4, 5 and 6 of the Notes to Consolidated Financial Statements of this Form 10-K 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.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

The Market Risk Management department is responsible for measuring, monitoring, and reporting market risks associated with the firm's trading and derivative portfolios. 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 inventory (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 interest rate risk arising from our fixed income trading inventory through the use of hedging strategies utilizing U.S. Treasuries, futures contracts, liquid spread products and derivatives.

Our primary method for controlling risks within trading inventories is through the use of dollar-based and exposure-based limits. A hierarchy of limits exists at multiple levels, including firm, business unit, desk (e.g., for equities, corporate bonds, municipal bonds), product sub-type (e.g., below-investment-grade positions) and, at times, at the individual position. For derivative positions, which are primarily comprised of interest rate swaps, we have established limits based on a number of factors, including interest rate, foreign exchange spot and forward rates, spread, ratio, basis, and volatility risk. 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.

We monitor Value-at-Risk ('VaR') for all of our trading portfolios on a daily basis for risk management purposes and as a result of applying the Fed's Market Risk Rule ('MRR') for the purpose of calculating our capital ratios. The MRR, also known as the 'Risk-Based Capital Guidelines: Market Risk' rule released by the Fed, the OCC and the FDIC, requires us to calculate VaR 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 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 the 'Model risk' section that follows 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.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

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

| $ in millions | Year ended September 30, 2022 |  | Period-end VaR |  | $ in millions | For the year ended September 30, |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | High | Low | September 30, 2022 | September 30, 2021 |  | 2022 | 2021 |
| Daily VaR | $3 | $1 | $3 | $1 | Average daily VaR | $1 | $4 |

Average daily VaR was lower during the year ended September 30, 2022 compared with the year ended September 30, 2021 due to the impact of scenarios of elevated volatility as a result of the COVID-19 pandemic (which commenced in March 2020) on our VaR model during the prior year. Period-end VaR increased as of September 30, 2022 as a result of increased market volatility in September 2022, as well as the addition of the SumRidge Partners trading inventory.

The Fed's MRR requires us to perform daily back-testing procedures for our VaR model, whereby we compare each day's projected VaR to its regulatory-defined daily trading losses, which exclude fees, commissions, reserves, net interest income and intraday trading. 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' 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 year ended September 30, 2022, our regulatory-defined daily losses in our trading portfolios exceeded our predicted VaR on ten occasions primarily due to the volatility and market uncertainty related to the Fed's short-term interest rate increases.

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

### Banking operations

Our Bank segment maintains an interest-earning asset portfolio that is comprised of cash, SBL, C&I loans, commercial and residential real estate loans, REIT loans, and tax-exempt loans, as well as securities held in the available-for-sale securities portfolio. These interest-earning assets are primarily funded by client deposits. Based on the current asset portfolio, our banking operations are subject to interest rate risk. We 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 across a range of interest rate scenarios.

One of the objectives of the Asset and Liability Committee is to manage the sensitivity of net interest income to changes in market interest rates. This committee uses several measures to monitor and limit interest rate risk in our banking operations, including scenario analysis and economic value of equity. We utilize a hedging strategy using interest rate swaps in our banking operations as a result of our asset and liability management process. For further information regarding this hedging strategy, see Notes 2 and 16 of the Notes to Consolidated Financial Statements of this Form 10-K.

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, 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 our banking operations' estimated net interest income over a 12-month period based on instantaneous shifts in interest rates (expressed in basis points) using our previously described asset/liability model, which assumes a dynamic balance sheet and that interest rates do not decline below zero. 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 | $1,904 | 1% |
| +100 | $1,891 | -% |
| 0 | $1,882 | -% |
| -100 | $1,754 | (7)% |
| -200 | $1,618 | (14)% |

(1) Our 0-basis point scenario was based on interest rates as of September 30, 2022 and did not include the impact of the Fed's November 2022 increase in short-term interest rates.

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

The following table shows the maturities of our bank loan portfolio at September 30, 2022, 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 include any estimates of prepayments, which could shorten the average loan lives and cause the actual timing of the loan repayments to differ significantly from those shown in the table.

| $ in millions | Due in |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | One year or less | > One year - five years | > Five years - fifteen years | > Fifteen years | Total |
| SBL | $15,025 | $184 | $87 | $1 | $15,297 |
| C&I loans | 905 | 7,108 | 3,122 | 38 | 11,173 |
| CRE loans | 772 | 3,966 | 1,788 | 23 | 6,549 |
| REIT loans | 92 | 1,419 | 81 | - | 1,592 |
| Residential mortgage loans | 17 | 27 | 220 | 7,122 | 7,386 |
| Tax-exempt loans | 1 | 245 | 1,255 | - | 1,501 |
| Total loans held for investment | 16,812 | 12,949 | 6,553 | 7,184 | 43,498 |
| Held for sale loans | - | - | 37 | 100 | 137 |
| Total loans held for sale and investment | $16,812 | $12,949 | $6,590 | $7,284 | $43,635 |

The following table shows the distribution of the recorded investment of those bank loans that mature in more than one year between fixed and adjustable interest rate loans at September 30, 2022.

| $ in millions | Interest rate type |  |  |
| --- | --- | --- | --- |
|  | Fixed | Adjustable | Total |
| SBL | $1 | $271 | $272 |
| C&I loans | 700 | 9,568 | 10,268 |
| CRE loans | 320 | 5,457 | 5,777 |
| REIT loans | - | 1,500 | 1,500 |
| Residential mortgage loans | 232 | 7,137 | 7,369 |
| Tax-exempt loans | 1,500 | - | 1,500 |
| Total loans held for investment | 2,753 | 23,933 | 26,686 |
| Held for sale loans | 2 | 135 | 137 |
| Total loans held for sale and investment | $2,755 | $24,068 | $26,823 |

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

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

respective loan. See the discussion within the 'Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk - Risk monitoring process' section of this Form 10-K for additional information regarding our interest-only residential mortgage loan portfolio.

In our available-for-sale securities portfolio, we hold primarily fixed-rate agency-backed MBS and agency-backed CMOs which are carried at fair value on our Consolidated Statements of Financial Condition, with changes in the fair value of the portfolio recorded through OCI on our Consolidated Statements of Income and Comprehensive Income. At September 30, 2022, our available-for-sale securities portfolio had a fair value of $9.89 billion with a weighted-average yield of 1.84%. The effective duration of our available-for-sale securities portfolio as of September 30, 2022 was approximately 3.86, where duration is defined as the approximate percentage change in price for a 100-basis point change in rates. See Note 5 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information on our available-for-sale securities portfolio.

## *Equity price risk*

We are exposed to equity price risk as a result of our capital markets activities. Our broker-dealer activities are generally client-driven, and we carry equity securities as part of our trading inventory to facilitate such activities, although the amounts are not as significant as our fixed income trading inventory. We attempt to reduce the risk of loss inherent in our inventory of equity securities by monitoring those security positions each day and establishing position limits. Equity securities held in our trading inventory are generally included in VaR.

In addition, we have a private equity portfolio, included in 'Other investments' on our Consolidated Statements of Financial Condition, which is primarily comprised of investments in third-party funds. See Note 4 of the Notes to Consolidated Financial Statements of this Form 10-K 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 $1.51 billion and $1.29 billion at September 30, 2022 and 2021, 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

Raymond James Bank has an investment in a Canadian subsidiary, resulting in foreign exchange risk. To mitigate its foreign exchange risk, Raymond James Bank utilizes short-term, forward foreign exchange contracts. These derivatives are primarily accounted for as net investment hedges in the consolidated financial statements. See Notes 2 and 6 of the Notes to Consolidated Financial Statements of this Form 10-K for further information regarding these derivatives.

At September 30, 2022, we had foreign exchange risk in our investment in RJ Ltd. of CAD 381 million and in our investment in Charles Stanley of £272 million, which were not hedged. All of our other investments in subsidiaries located in Europe are not hedged and we do not believe we had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of September 30, 2022. Foreign exchange gains/losses related to our foreign investments are primarily reflected in OCI on our Consolidated Statements of Income and Comprehensive Income. See Note 20 of the Notes to Consolidated Financial Statements of this Form 10-K 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-related gains/losses arising from these foreign currency denominated balances are reflected in 'Other' revenues in our 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 are included in 'Other' revenues in our Consolidated Statements of Income and Comprehensive Income. See Note 6 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our derivatives.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

## 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-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.

## 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 Notes 2, 6, and 7 of the Notes to Consolidated Financial Statements of this Form 10-K 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 Consolidated Financial Statements of this 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 Notes 2 and 9 of the Notes to Consolidated Financial Statements of this Form 10-K for further information about our loans to financial advisors.

## Banking activities

Our Bank segment has a substantial loan portfolio. Our strategy for credit risk management related to bank loans includes well-defined credit policies, uniform underwriting criteria, and ongoing risk monitoring and review processes for all 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 loans 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 performance, 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 we have a concentration will generally result in large provisions for credit losses and/or charge-offs. We determine the allowance required for specific loan pools based on relative risk characteristics of the loan portfolio. On an ongoing basis, we evaluate our methods for determining the allowance for each class of loans and make enhancements we consider appropriate. Our allowance for credit losses methodology is described in Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K. As our bank loan portfolio is segregated into six portfolio segments,

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

likewise, the allowance for credit losses is segregated by these same segments. The risk characteristics relevant to each portfolio segment are as follows.

**SBL:** Loans in this segment are primarily collateralized by the borrower's marketable securities at advance rates consistent with industry standards and, to a lesser extent, the cash surrender value of life insurance policies issued by an investment-grade insurance company. Substantially all SBL are monitored daily for adherence to loan-to-value ('LTV') guidelines and when a loan exceeds the required LTV, a collateral call is issued. Past due loans are minimal as any past due amounts result in a notice to the client for payment or the potential sale of the collateral which will bring the loan to a current status. The vast majority of our SBL qualify for the practical expedient allowed under the CECL guidance whereby we estimate zero credit losses to the extent the fair value of the collateral securing the loan equals or exceeds the related carrying value of the loan. SBL also generally qualify for lower capital requirements under regulatory capital rules.

**C&I:** Loans in this segment are made to businesses and are generally secured by all assets of the business. Repayment is expected from the cash flows of the respective business. Unfavorable economic and political conditions, including the resultant decrease in consumer or business spending, may have an adverse effect on the credit quality of loans in this segment.

**CRE:** Loans in this segment are primarily secured by income-producing properties. For owner-occupied properties, the cash flows are derived from the operations of the business, and the underlying cash flows may be adversely affected by the deterioration in the financial condition of the operating business. The underlying cash flows generated by non-owner-occupied properties may be adversely affected by increased vacancy and rental rates, which are monitored on an ongoing basis. This portfolio segment includes CRE construction loans which involve risks such as project budget overruns, performance variables related to the contractor and subcontractors, or the inability to sell the project or secure permanent financing once the project is completed. With respect to commercial construction of residential developments, there is also the risk that the builder has a geographical concentration of developments. Adverse information arising from any of these factors may have a negative effect on the credit quality of loans in this segment.

**REIT:** Loans in this segment are made to businesses that own or finance income-producing real estate across various property sectors. This portfolio segment may include extensions of credit to companies that engage in real estate development. Repayment of these loans is dependent on income generated from real estate properties or the sale of real estate. A portion of this segment may consist of loans secured by residential product types (single-family residential, including condominiums and land held for residential development) within a range of markets. Deterioration in the financial condition of the operating business, reductions in the value of real estate, as well as increased vacancy and rental rates may all adversely affect the loans in this segment.

**Residential mortgage (includes home equity loans/lines):** All of our residential mortgage loans adhere to stringent underwriting parameters pertaining to credit score and credit history, debt-to-income ratio of the borrower, LTV, and combined LTV (including second mortgage/home equity loans). We do not originate or purchase adjustable rate mortgage ('ARM') loans with negative amortization, reverse mortgages, or loans to subprime borrowers. Loans with deeply discounted teaser rates are also not originated or purchased. All loans in this segment are collateralized by residential real estate and repayment is primarily dependent on the credit quality of the individual borrower. A decline in the strength of the economy, particularly unemployment rates and housing prices, among other factors, could have a significant effect on the credit quality of loans in this segment.

**Tax-exempt:** Loans in this segment are made to governmental and nonprofit entities and are generally secured by a pledge of revenue and, in some cases, by a security interest in or a mortgage on the asset being financed. For loans to governmental entities, repayment is expected from a pledge of certain revenues or taxes. For nonprofit entities, repayment is expected from revenues which may include fundraising proceeds. These loans are subject to demographic risk, therefore much of the credit assessment of tax-exempt loans is driven by the entity's revenue base and the general economic environment. Adverse developments in either of these areas may have a negative effect on the credit quality of loans in this segment.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

The level of charge-off activity is a factor that is considered in evaluating the potential severity of future credit losses. The following table presents net loan (charge-offs)/recoveries and the percentage of net loan (charge-offs)/recoveries to the average outstanding loan balances by loan portfolio segment.

| $ in millions | Year ended September 30, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  | 2020 |  |
|  | Net loan (charge-off)/recovery amount (1) | % of avg. outstanding loans | Net loan (charge-off)/recovery amount (1) | % of avg. outstanding loans | Net loan (charge-off)/recovery amount (1) | % of avg. outstanding loans |
| C&I loans | $(28) | 0.29% | $(4) | 0.05% | $(96) | 1.22% |
| CRE loans | 1 | 0.02% | (10) | 0.37% | (2) | 0.08% |
| REIT loans | - | - % | - | - % | (2) | 0.15% |
| Residential mortgage loans | 1 | 0.02% | 1 | 0.02% | 2 | 0.04% |
| Total loans held for sale and investment | $(26) | 0.08% | $(13) | 0.06% | $(98) | 0.45% |

$^{(1)}$ Charge-offs related to loan sales amounted to $4 million, $4 million, and $87 million for the years ended September 30, 2022, 2021, and 2020, respectively.

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

| $ in millions | September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Nonperforming loans (1) | $74 | $74 |
| Nonperforming assets | $74 | $74 |
| Nonperforming loans as a % of total loans held for sale and investment | 0.17% | 0.29% |
| Allowance for credit losses as a % of nonperforming loans | 535% | 432% |
| Nonperforming assets as a % of Bank segment total assets | 0.13% | 0.20% |

$^{(1)}$ Nonperforming loans at September 30, 2022 and September 30, 2021 included $63 million and $61 million of loans, respectively, which were current pursuant to their contractual terms.

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

Although our nonperforming assets as a percentage of our Bank segment's assets remained low as of September 30, 2022, any prolonged period of market deterioration could result in an increase in our nonperforming assets, an increase in our allowance for credit losses and/or an increase in net charge-offs in future periods, although the extent would depend on future developments that are highly uncertain.

See further explanation of our bank loan portfolio segments, allowance for credit losses, and the credit loss provision in Notes 2 and 8 of the Notes to Consolidated Financial Statements of this Form 10-K and 'Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Bank' of this Form 10-K.

### Loan underwriting policies

A component of our Bank segment's credit risk management strategy is conservative, well-defined policies and procedures. Our Bank segment's underwriting policies for the major types of loans are described in the following sections.

#### *SBL and residential mortgage loan portfolios*

Our residential mortgage loan portfolio largely consists of first mortgage loans originated by us via referrals from our PCG financial advisors and the general public, as well as first mortgage loans purchased by us. Substantially all of our residential mortgage loans adhere to strict underwriting parameters pertaining to credit score and credit history, debt-to-income ratio of the borrower, LTV and combined LTV (including second mortgage/home equity loans). As of September 30, 2022, approximately 95% of the residential mortgage loan portfolio consisted of owner-occupant borrowers (approximately 75% for their primary residences and 20% for second home residences). Approximately 35% of the first lien residential mortgage loans were ARM

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

loans, which receive interest-only payments based on a fixed rate for an initial period of the loan and then become fully amortizing, subject to annual and lifetime interest rate caps. A significant portion of our originated 15 or 30-year fixed-rate residential mortgage loans are sold in the secondary market.

Our SBL portfolio is primarily comprised of loans fully collateralized by client's marketable securities and represented 35% of our total loans held for sale and investment as of September 30, 2022. The underwriting policy for the SBL portfolio primarily includes a review of collateral, including LTV, and a review of repayment history.

### *Corporate and tax-exempt loan portfolios*

*Raymond James Bank:* Raymond James Bank's corporate and tax-exempt loan portfolios were comprised of approximately 500 borrowers, the majority of which are underwritten, managed, and reviewed at our Raymond James Bank corporate headquarters location, which facilitates close monitoring of the portfolio by credit risk personnel, relationship officers and senior bank executives. Approximately half of Raymond James Bank's corporate borrowers are public companies. A large portion of Raymond James Bank's corporate loan portfolio is diversified among a number of industries in the U.S and Canada and a large portion of these loans are to borrowers in industries in which we have expertise through coverage provided by our Capital Markets research analysts. Raymond James Bank's corporate loan portfolio is comprised of project finance real estate loans, commercial lines of credit, and term loans, the majority of which are participations in Shared National Credit ('SNC') or other large syndicated loans. Raymond James Bank is typically either involved in the syndication loans at inception or purchases loans in secondary trading markets. The remainder of the corporate loan portfolio is comprised of smaller participations and direct loans. There are no subordinated loans or mezzanine financings in the corporate loan portfolio. Raymond James Bank's tax-exempt loans are long-term loans to governmental and non-profit entities. These loans generally have lower overall credit risk, but are subject to other risks that are not usually present with corporate clients, including the risk associated with the constituency served by a local government and the risk in ensuring an obligation has appropriate tax treatment.

*TriState Capital Bank:* TriState Capital Bank's corporate loan portfolio was comprised of 900 borrowers, all of which are underwritten, managed, and reviewed by credit risk personnel, relationship officers, and senior bank executives. All corporate loans are approved by a committee of senior executives. TriState Capital Bank primarily targets middle-market businesses with revenues between $5 million and $300 million located within the primary markets of Pennsylvania, Ohio, New Jersey, and New York. Each representative office is led by an experienced regional president to understand the unique borrowing needs of the middle-market businesses in the area. They are supported by highly experienced relationship managers who target middle-market business customers and maintain strong credit quality within their loan portfolios. TriState Capital Bank's loan portfolio is diversified by geography, loan type, and industry and is primarily comprised of project finance real estate loans, commercial lines of credit, and term loans, the majority of which are direct originations.

Regardless of the source, all corporate and tax-exempt loans are independently underwritten to our credit policies, are subject to approval by a loan committee, and credit quality is monitored on an ongoing basis by our lending staff. Our credit policies include criteria related to LTV limits based upon property type, single borrower loan limits, loan term and structure parameters (including guidance on leverage, debt service coverage ratios and debt repayment ability), industry concentration limits, secondary sources of repayment, municipality demographics, and other criteria. Our corporate loans are generally secured by all assets of the borrower and in some instances are secured by mortgages on specific real estate. Tax-exempt loans are generally secured by a pledge of revenue. In a limited number of transactions, loans in the portfolio are extended on an unsecured basis. In addition, corporate and tax-exempt loans are subject to regulatory review.

### Risk monitoring process

Another component of credit risk strategy for our bank loan portfolio is the ongoing risk monitoring and review processes, including our internal loan review process, 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.

### *SBL and residential mortgage loan portfolios*

Substantially all collateral securing our 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 our loans are adequately secured, resulting in minimizing our credit risk. Collateral calls have been minimal relative to our SBL portfolio with no losses incurred to date.

We track and review many factors to monitor credit risk in our residential mortgage loan portfolio. The factors include, but are not limited to: loan performance trends, loan product parameters and qualification requirements, borrower credit scores, level of

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## Management's Discussion and Analysis

documentation, loan purpose, geographic concentrations, average loan size, risk rating, and LTV ratios. See Note 8 in the Notes to Consolidated Financial Statements of this Form 10-K for additional information.

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

| $ in millions | Amount of delinquent residential mortgage loans |  |  | Delinquent residential mortgage loans as a percentage of outstanding residential mortgage loan balances |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 30-89 days | 90 days or more | Total | 30-89 days | 90 days or more | Total |
| September 30, 2022 | $6 | $6 | $12 | 0.08% | 0.08% | 0.16% |
| September 30, 2021 | $4 | $6 | $10 | 0.08% | 0.11% | 0.19% |

Our September 30, 2022 percentage compares favorably to the national average for over 30 day delinquencies of 2.09%, as most recently reported by the Fed.

To manage and limit credit losses, we maintain a rigorous process to manage our loan delinquencies. Substantially all of our residential first mortgages are serviced by a third party whereby the primary collection effort resides with the servicer. Our personnel direct and actively monitor the servicers' efforts through extensive communications regarding individual loan status changes and through requirements of timely and appropriate collection of property management actions and reporting, including management of third parties used in the collection process (e.g., appraisers, attorneys, etc.). Residential mortgage loans over 60 days past due are generally reviewed by our personnel monthly and documented in a written report detailing delinquency information, balances, collection status, appraised value, and other data points. Our senior management meets quarterly to discuss the status, collection strategy and charge-off recommendations on substantially all residential mortgage loan over 60 days past due. Updated collateral valuations are generally obtained for loans over 90 days past due and charge-offs are typically taken on individual loans based on these valuations.

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 our one-to-four family residential mortgage loans.

|  | September 30, 2022 |  |
| --- | --- | --- |
|  | 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 |
| CA | 26% | 4% |
| FL | 17% | 3% |
| TX | 8% | 1% |
| NY | 8% | 1% |
| CO | 4% | 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 in such states and therefore negatively impact our net income and regulatory capital in any given period.

Loans where borrowers may be subject to payment increases include ARM 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 September 30, 2022 and 2021, these loans totaled $2.55 billion and $1.97 billion, respectively, or approximately 35% and 37% of the residential mortgage portfolio, respectively. The weighted-average number of years before the remainder of the loans, which were still in their interest-only period at September 30, 2022, begins amortizing is 6.6 years.

### Corporate and tax-exempt loans

Credit risk in our corporate and tax-exempt loan portfolios is monitored on an individual loan basis for trends in borrower operating performance, payment history, credit ratings, collateral performance, loan covenant compliance, semi-annual SNC exam results, where applicable, municipality demographics and other factors including industry performance and concentrations. As part of the credit review process, the loan rating is reviewed on an ongoing basis to confirm the appropriate risk rating for each credit. The individual loan ratings resulting from the SNC exams are incorporated in our internal loan ratings when the ratings are received. If the SNC rating is lower on an individual loan than our internal rating, the loan is downgraded. While we consider historical SNC exam results in our loan ratings methodology, differences between the SNC exam and internal ratings on individual loans typically arise due to subjectivity of the loan classification process. Downgrades

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

## *Management's Discussion and Analysis*

resulting from these differences may result in additional provisions for credit losses in periods when SNC exam results are received. The majority of our tax-exempt loan portfolio is comprised of loans to investment-grade borrowers. See Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information on our allowance for credit losses policies.

Credit risk is managed by diversifying the corporate bank loan portfolio. Our corporate bank loan portfolio does not contain a significant concentration in any single industry. The following table details the industry concentrations (top five categories) of our corporate bank loans.

|  | September 30, 2022 |  |
| --- | --- | --- |
|  | 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-family | 10% | 5% |
| Industrial warehouse | 8% | 4% |
| Office real estate | 7% | 3% |
| Loan fund | 6% | 3% |
| Consumer products and services | 5% | 2% |

Certain sectors continue to be impacted by supply chain disruptions and changes in consumer behavior. In addition, macroeconomic uncertainty and the Ukraine conflict have further exacerbated supply chain stresses and inflation concerns. In addition, the Fed's measures to control inflation, including through increases in short-term interest rates, have had an impact on consumer behavior and are likely to continue to do so in the near-term. These and related factors could negatively impact our borrowers, particularly those in consumer-facing or supply-dependent industries. In addition, we continue to monitor our exposure to office real estate where trends have changed as a result of the COVID-19 pandemic.

### Liquidity risk

See 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources' of this Form 10-K 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 cybersecurity incidents (see 'Item 1A - Risk Factors' of this Form 10-K for a discussion of certain cybersecurity risks). These risks are less direct than credit and market risk, but managing them is critical, particularly in a rapidly changing environment with increasing transaction volumes and complexity. We operate different businesses in diverse markets and are reliant on the ability of our employees and systems to process a large number of transactions. In the event of a breakdown or improper operation of systems or improper action by employees, we could suffer financial loss, regulatory sanctions and damage to our reputation. In order to mitigate and control operational risk, we have developed and continue to enhance specific policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization and within such departments as Finance, Operations, Information Technology, Legal, Compliance, Risk Management and Internal Audit. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our various businesses are operating within established corporate policies and limits. In addition, we have created business continuity plans for critical systems, and redundancies are built into the systems as deemed appropriate.

We have an Operational Risk Management Committee comprised of members of senior management, which reviews and addresses operational risks across our businesses. The committee establishes risk appetite levels for major operational risks, monitors operating unit performance for adherence to defined risk tolerances, and establishes policies for risk management at the enterprise level.

Periods of severe market volatility can result in a significantly higher level of transactions on specific days, which may present operational challenges from time to time that may result in losses. These losses can result from, but are not limited to, trade errors, failed transaction settlements, late collateral calls to borrowers and counterparties, or interruptions to our system processing. We did not incur any significant losses related to such operational challenges during the year ended September 30, 2022.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Management's Discussion and Analysis*

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

## Model risk

Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models. Models are used throughout the firm for a variety of purposes such as the valuation of financial instruments, the calculation of our allowance for credit losses, assessing risk, stress testing, and to assist in making certain business decisions. Model risk includes the potential risk that management makes incorrect decisions based upon either incorrect model results or incorrect understanding and use of model results. Model risk may also occur when model outputs differ from the expected result. Model errors or misuse could result in significant financial loss, inaccurate financial or regulatory reporting, misaligned business strategies or damage to our reputation.

Model Risk Management is a separate department within our Risk Management department and is independent of model owners, users, and developers. Our model risk management framework consists primarily of model governance, maintaining the firmwide model inventory, validating and approving models used across the firm, and ongoing monitoring. Results of validations and issues identified are reported to the Enterprise Risk Management Committee and the Audit and Risk Committee of the Board of Directors. Model Risk Management assumes responsibility for the independent and effective challenge of model completeness, integrity and design based on intended use.

## 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.

We have established a framework to oversee, manage, and mitigate compliance risk throughout the firm, both within and across businesses, functions, legal entities, and jurisdictions. The framework includes roles and responsibilities for the Board of Directors, senior management, and all three lines of risk management. This framework also includes programs and processes through which the firm identifies, assesses, controls, measures, monitors, and reports on compliance risk and provides compliance-related training throughout the firm. The Compliance department plays a key leadership role in the oversight, management, and mitigation of compliance risk throughout the firm. It does this by conducting an annual compliance risk assessment, carrying out compliance monitoring and testing activities, implementing compliance policies, training associates on compliance-related topics, and reporting compliance risk-related issues and metrics to the Board of Directors and senior management, among other activities.

## ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See 'Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk management' of this Form 10-K for our quantitative and qualitative disclosures about market risk.

78

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

# ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

# Table of Contents

|  | PAGE |
| --- | --- |
| Report of Independent Registered Public Accounting Firm (PCAOB ID No. 185) | 80 |
| Consolidated Statements of Financial Condition | 83 |
| Consolidated Statements of Income and Comprehensive Income | 84 |
| Consolidated Statements of Changes in Shareholders' Equity | 85 |
| Consolidated Statements of Cash Flows | 86 |
| Notes to Consolidated Financial Statements |  |
| Note 1 - Organization and basis of presentation | 88 |
| Note 2 - Summary of significant accounting policies | 88 |
| Note 3 - Acquisitions | 107 |
| Note 4 - Fair value | 113 |
| Note 5 - Available-for-sale securities | 118 |
| Note 6 - Derivative assets and derivative liabilities | 121 |
| Note 7 - Collateralized agreements and financings | 123 |
| Note 8 - Bank loans, net | 125 |
| Note 9 - Loans to financial advisors, net | 132 |
| Note 10 - Variable interest entities | 132 |
| Note 11 - Goodwill and identifiable intangible assets, net | 134 |
| Note 12 - Other assets | 136 |
| Note 13 - Property and equipment, net | 136 |
| Note 14 - Leases | 137 |
| Note 15 - Bank deposits | 138 |
| Note 16 - Other borrowings | 139 |
| Note 17 - Senior notes payable | 140 |
| Note 18 - Income taxes | 141 |
| Note 19 - Commitments, contingencies and guarantees | 143 |
| Note 20 - Shareholders' equity | 146 |
| Note 21 - Revenues | 149 |
| Note 22 - Interest income and interest expense | 152 |
| Note 23 - Share-based and other compensation | 152 |
| Note 24 - Regulatory capital requirements | 155 |
| Note 25 - Earnings per share | 157 |
| Note 26 - Segment information | 158 |
| Note 27 - Condensed financial information (parent company only) | 161 |

79

# Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

## *Opinion on the Consolidated Financial Statements*

We have audited the accompanying consolidated statements of financial condition of Raymond James Financial, Inc. and subsidiaries (the Company) as of September 30, 2022 and 2021, the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended September 30, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 22, 2022 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

## *Basis for Opinion*

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

## *Critical Audit Matters*

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

*Assessment of the allowance for credit losses related to the commercial and industrial (C&I), real estate investment trust (REIT) and the commercial real estate (CRE) portfolio segments that are collectively evaluated for impairment*

As discussed in Note 2 and Note 8 to the consolidated financial statements, the Company's allowance for credit losses on loans was $396 million as of September 30, 2022, a portion of which related to the Raymond James Bank allowance for credit losses (ACL) on C&I, REIT and CRE portfolio segments evaluated on a collective basis (the collective ACL). The Company estimates the collective ACL using a current expected credit losses methodology which is based on relevant information about historical losses, current conditions, and reasonable and supportable forecasts of economic conditions that affect the collectability of loan balances. The collective ACL is a product of multiplying the Company's estimates of probability of default (PD), loss given default (LGD) and exposure at default. The Company uses third-party historical information combined with macroeconomic variables over the reasonable and supportable forecast periods based on a single economic forecast scenario to estimate the PDs and LGDs. After the reasonable and supportable forecast periods, for C&I and REIT portfolio segments, the Company reverts to historical loss information over a one-year period using a

80

straight-line reversion approach. For the CRE portfolio segment, the Company incorporates a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the assets. The estimated PDs and LGDs are applied to estimated exposure at default considering the contractual loan term adjusted for expected prepayments to estimate expected losses. Adjustments are made to the collective ACL to reflect certain qualitative factors that are not incorporated into the quantitative models and related estimate.

We identified the assessment of the September 30, 2022 collective ACL on Raymond James Bank loans related to the C&I, REIT and CRE portfolio segments as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the September 30, 2022 collective ACL methodology, including the methods and models used to estimate the PDs and LGDs and their significant assumptions. Such significant assumptions included portfolio segmentation, risk ratings, the selection of the single economic forecast scenario and macroeconomic variables, the reasonable and supportable forecast periods and the reversion periods, and third-party historical information. The assessment also included the evaluation of the qualitative factors by portfolio segment. The assessment also included an evaluation of the conceptual soundness and performance of the PD and LGD models. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's measurement of the September 30, 2022 collective ACL estimate on Raymond James Bank loans related to the C&I, REIT and CRE portfolio segments, including controls over the:

- development of the collective ACL methodology on Bank loans related to the C&I, REIT and CRE portfolio segments
- development of the PD and LGD models
- identification and determination of the significant assumptions used in the PD and LGD models
- development of the qualitative methodology and factors
- performance monitoring of the PD and LGD models
- analysis of the collective ACL on Bank loans related to the C&I, REIT and CRE portfolio segments results, trends, and ratios.

We evaluated the Company's process to develop the September 30, 2022 collective ACL estimate on Bank loans related to the C&I, REIT and CRE portfolio segments by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:

- evaluating the Company's collective ACL methodology for compliance with U.S. generally accepted accounting principles
- evaluating judgments made by the company relative to the development and performance testing of the PD and LGD models by comparing them to relevant Company-specific metrics and trends and the applicable industry and regulatory practices
- assessing the conceptual soundness and performance of the PD and LGD models by inspecting the model documentation to determine whether the models are suitable for the intended use
- evaluating the selection of the economic forecast scenario and underlying macroeconomic variables by comparing it to the Company's business environment and relevant industry practices
- evaluating the length of the reasonable and supportable forecast periods and the reversion periods by comparing them to specific portfolio segment risk characteristics and trends
- determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company's business environment and relevant industry practices
- evaluating the relevance of third-party historical information by comparing to specific portfolio segment risk characteristics
- performing credit file reviews on a selection of loans to assess loan characteristics or risk ratings by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral and
- evaluating the methodology used to develop the qualitative factors and the effect of those factors on the allowance for credit losses on Bank loans compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying quantitative models.

We also assessed the sufficiency of the audit evidence obtained related to the September 30, 2022 collective ACL estimate on Bank loans related to the C&I, REIT and CRE portfolio segments by evaluating the:

- cumulative results of the audit procedures
- qualitative aspects of the Company's accounting practices and
- potential bias in the accounting estimate.

81

# *The fair value measurement of a customer relationship intangible asset, bank loans, and core deposit intangible asset acquired in business combinations*

As discussed in Note 3 to the consolidated financial statements, on January 21, 2022, the Company completed the acquisition of Charles Stanley Group, PLC (Charles Stanley), and on June 1, 2022, the Company completed the acquisition of TriState Capital Holdings, Inc. (TriState Capital) and its wholly owned subsidiaries. The Company accounted for these transactions as business combinations. Accordingly, the purchase price attributable to these respective acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values. In the Charles Stanley acquisition, the Company acquired a customer relationship intangible asset at a fair value of $65 million. The fair value of the customer relationship intangible asset was based on a multi-period excess earnings approach that considered future period post-tax earnings and a discount rate. In the TriState Capital acquisition, the Company acquired bank loans at a fair value of $11.5 billion, and a core deposit intangible asset at a fair value of $89 million. The fair value of the bank loans was based on a discounted cash flow methodology that considered loan type and related collateral, credit loss expectations, classification status, market interest rates and other market factors from the perspective of a market participant using key assumptions of credit loss expectations and discount rate. The fair value of the core deposit intangible asset was based on the discounted cash flow approach, specifically the favorable source of funds method, that considered the servicing and interest costs of the acquired deposit base, an estimate of the cost associated with alternative funding sources, expected client attrition rates, deposit growth rates, and discount rate.

We identified the evaluation of the fair value measurements of the customer relationship intangible asset, bank loans, and core deposit intangible asset as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the fair value measurements due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the (1) fair value measurement methodologies, and (2) customer relationship intangible asset fair value measurement key assumptions, including future period post-tax earnings and a discount rate; bank loans fair value measurement key assumptions, including the credit loss expectations and discount rate; and core deposit intangible asset fair value measurement key assumptions, including servicing and interest cost of the acquired deposit base, cost associated with alternative funding sources, expected client attrition rates, deposit growth rates, and discount rate.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's fair value measurements of the customer relationship intangible asset, bank loans, and core deposit intangible asset including controls over the (1) development of the overall fair value measurement methodologies, and (2) determination of the key assumptions used in the fair value estimates.

We evaluated the Company's process to develop the fair value measurements of the customer relationship intangible asset, bank loans and core deposit intangible asset by testing certain sources of data, inputs, and assumptions that the Company used, and considered the relevance and reliability of such data, inputs, and assumptions. We involved valuation professionals with specialized skills and knowledge, who assisted in:

- evaluating the fair value measurement methodology for compliance with U.S. generally accepted accounting principles
- reviewing the underlying methodologies for the development of the key assumptions as compared to commonly applied industry valuation techniques as well as internal and external data
- evaluating the historical data for the future period post-tax earnings by comparing to internal data, and the discount rate by comparing to internal and publicly available data for the customer relationship intangible asset
- evaluating the credit loss expectations and discount rate by comparing to internal and publicly available data for the bank loans and
- evaluating the servicing cost, interest cost, and discount rate, by comparing to internal and publicly available data; the costs of alternative funding and client attrition rates by comparing to internal data, and the deposit growth rates by comparing to publicly available data for the core deposit intangible asset.

/s/ KPMG LLP

We have served as the Company's auditor since 2001.

Tampa, Florida
November 22, 2022

82

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 **CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION**

| $ in millions, except per share amounts | September 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Assets: |  |  |
| Cash and cash equivalents | $6,178 | $7,201 |
| Assets segregated for regulatory purposes and restricted cash | 8,481 | 11,348 |
| Collateralized agreements | 704 | 480 |
| Financial instruments, at fair value: |  |  |
| Trading assets ($1,188 and $326 pledged as collateral) | 1,270 | 610 |
| Available-for-sale securities ($74 and $20 pledged as collateral) | 9,885 | 8,315 |
| Derivative assets | 188 | 255 |
| Other investments ($14 and $22 pledged as collateral) | 292 | 357 |
| Brokerage client receivables, net | 2,934 | 2,831 |
| Other receivables, net | 1,615 | 999 |
| Bank loans, net | 43,239 | 24,994 |
| Loans to financial advisors, net | 1,152 | 1,057 |
| Deferred income taxes, net | 630 | 305 |
| Goodwill and identifiable intangible assets, net | 1,931 | 882 |
| Other assets | 2,452 | 2,257 |
| Total assets | $80,951 | $61,891 |
| Liabilities and shareholders’ equity: |  |  |
| Bank deposits | $51,357 | $32,495 |
| Collateralized financings | 466 | 277 |
| Financial instrument liabilities, at fair value: |  |  |
| Trading liabilities | 836 | 176 |
| Derivative liabilities | 530 | 228 |
| Brokerage client payables | 11,446 | 13,991 |
| Accrued compensation, commissions and benefits | 1,787 | 1,825 |
| Other payables | 1,768 | 1,701 |
| Other borrowings | 1,291 | 858 |
| Senior notes payable | 2,038 | 2,037 |
| Total liabilities | 71,519 | 53,588 |
| Commitments and contingencies (see Note 19) |  |  |
| Shareholders’ equity |  |  |
| Preferred stock | 120 | - |
| Common stock: $.01 par value; 650,000,000 shares authorized, 248,018,564 shares issued, and 215,122,523 shares outstanding as of September 30, 2022; 350,000,000 shares authorized, 239,062,254 shares issued, and 205,738,821 shares outstanding as of September 30, 2021 | 2 | 2 |
| Additional paid-in capital | 2,987 | 2,088 |
| Retained earnings | 8,843 | 7,633 |
| Treasury stock, at cost; 32,896,041 and 33,323,433 common shares as of September 30, 2022 and 2021, respectively | (1,512) | (1,437) |
| Accumulated other comprehensive loss | (982) | (41) |
| Total equity attributable to Raymond James Financial, Inc. | 9,458 | 8,245 |
| Noncontrolling interests | (26) | 58 |
| Total shareholders’ equity | 9,432 | 8,303 |
| Total liabilities and shareholders’ equity | $80,951 | $61,891 |

See accompanying Notes to Consolidated Financial Statements.

83

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 **CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

| $ in millions, except per share amounts | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Revenues: |  |  |  |
| Asset management and related administrative fees | $5,563 | $4,868 | $3,834 |
| Brokerage revenues: |  |  |  |
| Securities commissions | 1,589 | 1,651 | 1,468 |
| Principal transactions | 527 | 561 | 488 |
| Total brokerage revenues | 2,116 | 2,212 | 1,956 |
| Account and service fees | 833 | 635 | 624 |
| Investment banking | 1,100 | 1,143 | 650 |
| Interest income | 1,508 | 823 | 1,000 |
| Other | 188 | 229 | 104 |
| Total revenues | 11,308 | 9,910 | 8,168 |
| Interest expense | (305) | (150) | (178) |
| Net revenues | 11,003 | 9,760 | 7,990 |
| Non-interest expenses: |  |  |  |
| Compensation, commissions and benefits | 7,329 | 6,584 | 5,465 |
| Non-compensation expenses: |  |  |  |
| Communications and information processing | 506 | 429 | 393 |
| Occupancy and equipment | 252 | 232 | 225 |
| Business development | 186 | 111 | 134 |
| Investment sub-advisory fees | 152 | 130 | 101 |
| Professional fees | 131 | 122 | 91 |
| Bank loan provision/(benefit) for credit losses | 100 | (32) | 233 |
| Losses on extinguishment of debt | - | 98 | - |
| Reduction in workforce expenses | - | - | 46 |
| Other | 325 | 295 | 250 |
| Total non-compensation expenses | 1,652 | 1,385 | 1,473 |
| Total non-interest expenses | 8,981 | 7,969 | 6,938 |
| Pre-tax income | 2,022 | 1,791 | 1,052 |
| Provision for income taxes | 513 | 388 | 234 |
| Net income | 1,509 | 1,403 | 818 |
| Preferred stock dividends | 4 | - | - |
| Net income available to common shareholders | $1,505 | $1,403 | $818 |
| Earnings per common share - basic | $7.16 | $6.81 | $3.96 |
| Earnings per common share - diluted | $6.98 | $6.63 | $3.88 |
| Weighted-average common shares outstanding - basic | 209.9 | 205.7 | 206.4 |
| Weighted-average common and common equivalent shares outstanding - diluted | 215.3 | 211.2 | 210.3 |
| Net income | $1,509 | $1,403 | $818 |
| Other comprehensive income/(loss), net of tax: |  |  |  |
| Available-for-sale securities | (897) | (94) | 68 |
| Currency translations, net of the impact of net investment hedges | (114) | 16 | - |
| Cash flow hedges | 70 | 26 | (34) |
| Total other comprehensive income/(loss), net of tax | (941) | (52) | 34 |
| Total comprehensive income | $568 | $1,351 | $852 |

See accompanying Notes to Consolidated Financial Statements.

84

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 **CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

|  | Year ended September 30, |  |  |
| --- | --- | --- | --- |
| $ in millions, except per share amounts | 2022 | 2021 | 2020 |
| Preferred stock: |  |  |  |
| Balance beginning of year | $ - | $ - | $ - |
| Preferred stock issued for TriState Capital Holdings, Inc. (“TriState Capital”) acquisition | 120 | - | - |
| Balance end of year | 120 | - | - |
| Common stock, par value $.01 per share: |  |  |  |
| Balance beginning of year | 2 | 2 | 2 |
| Issuance of shares for stock split | - | 1 | - |
| Other | - | (1) | - |
| Balance end of year | 2 | 2 | 2 |
| Additional paid-in capital: |  |  |  |
| Balance beginning of year | 2,088 | 2,007 | 1,938 |
| Common stock issued for TriState Capital acquisition | 778 | - | - |
| Restricted stock awards issued for TriState Capital acquisition | 28 | - | - |
| Employee stock purchases | 42 | 32 | 36 |
| Distributions due to vesting of restricted stock units and exercise of stock options, net of forfeitures | (135) | (77) | (80) |
| Share-based compensation amortization | 186 | 126 | 113 |
| Issuance of shares for stock split | - | (1) | - |
| Other | - | 1 | - |
| Balance end of year | 2,987 | 2,088 | 2,007 |
| Retained earnings: |  |  |  |
| Balance beginning of year | 7,633 | 6,484 | 5,874 |
| Net income attributable to Raymond James Financial, Inc. | 1,509 | 1,403 | 818 |
| Common and preferred stock cash dividends declared (see Note 20) | (299) | (219) | (208) |
| Cumulative adjustments for changes in accounting principles | - | (35) | - |
| Balance end of year | 8,843 | 7,633 | 6,484 |
| Treasury stock: |  |  |  |
| Balance beginning of year | (1,437) | (1,390) | (1,210) |
| Purchases/surrenders | (173) | (128) | (273) |
| Reissuances due to vesting of restricted stock units and exercise of stock options | 98 | 81 | 93 |
| Balance end of year | (1,512) | (1,437) | (1,390) |
| Accumulated other comprehensive income/(loss): |  |  |  |
| Balance beginning of year | (41) | 11 | (23) |
| Other comprehensive income/(loss), net of tax | (941) | (52) | 34 |
| Balance end of year | (982) | (41) | 11 |
| Total equity attributable to Raymond James Financial, Inc. | $9,458 | $8,245 | $7,114 |
| Noncontrolling interests: |  |  |  |
| Balance beginning of year | $58 | $62 | $62 |
| Net income/(loss) attributable to noncontrolling interests | (1) | 23 | (26) |
| Deconsolidations and sales | (83) | (27) | 26 |
| Balance end of year | (26) | 58 | 62 |
| Total shareholders’ equity | $9,432 | $8,303 | $7,176 |

See accompanying Notes to Consolidated Financial Statements.

85

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**

| $ in millions | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Cash flows from operating activities: |  |  |  |
| Net income | $1,509 | $1,403 | $818 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Depreciation and amortization | 145 | 134 | 119 |
| Deferred income taxes, net | (16) | (37) | (39) |
| Premium and discount amortization on available-for-sale securities and bank loans and net unrealized gain/loss on other investments | 23 | 15 | 57 |
| Provisions/(benefits) for credit losses and legal and regulatory proceedings | 111 | (20) | 257 |
| Share-based compensation expense | 192 | 132 | 120 |
| Unrealized (gain)/loss on company-owned life insurance policies, net of expenses | 174 | (150) | (46) |
| Losses on extinguishment of debt | - | 98 | - |
| Other | 49 | 66 | 92 |
| Net change in: |  |  |  |
| Assets segregated for regulatory purposes excluding cash and cash equivalents | 2,100 | (2,100) | - |
| Collateralized agreements, net of collateralized financings | (37) | (29) | (55) |
| Loans provided to financial advisors, net of repayments | (120) | (90) | (49) |
| Brokerage client receivables and other receivables, net | (203) | (420) | 127 |
| Trading instruments, net | 48 | (141) | 150 |
| Derivative instruments, net | 479 | 53 | (51) |
| Other assets | (126) | 16 | (13) |
| Brokerage client payables and other payables | (4,213) | 7,306 | 2,505 |
| Accrued compensation, commissions and benefits | (76) | 416 | 70 |
| Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale | 33 | (5) | 11 |
| Net cash provided by operating activities | 72 | 6,647 | 4,073 |
| Cash flows from investing activities: |  |  |  |
| Increase in bank loans, net | (7,235) | (4,027) | (1,136) |
| Proceeds from sales of loans held for investment | 213 | 287 | 634 |
| Purchases of available-for-sale securities | (3,069) | (4,218) | (5,710) |
| Available-for-sale securities maturities, repayments and redemptions | 1,712 | 2,181 | 1,188 |
| Proceeds from sales of available-for-sale securities | 52 | 969 | 222 |
| Cash and cash equivalents acquired in business acquisitions, including those segregated for regulatory purposes, net of cash paid for acquisitions | 1,461 | (266) | (5) |
| Additions to property and equipment | (91) | (74) | (124) |
| Investment in note receivable | (125) | - | - |
| (Purchases)/sales of other investments, net | 24 | 27 | 5 |
| Other investing activities, net | (93) | (19) | (59) |
| Net cash used in investing activities | (7,151) | (5,140) | (4,985) |

See accompanying Notes to Consolidated Financial Statements.

86

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**

| $ in millions | Year ended September 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Cash flows from financing activities: |  |  |  |
| Proceeds from senior notes issuances, net of debt issuance costs paid | - | 737 | 494 |
| Extinguishment of senior notes payable | - | (844) | - |
| Increase in bank deposits | 6,269 | 5,694 | 4,520 |
| Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements | (216) | (150) | (291) |
| Dividends on preferred and common stock | (277) | (218) | (205) |
| Exercise of stock options and employee stock purchases | 52 | 53 | 62 |
| Proceeds from Federal Home Loan Bank advances | 1,025 | - | 850 |
| Repayments of Federal Home Loan Bank advances and other borrowed funds | (967) | (31) | (855) |
| Other financing, net | (7) | (9) | (1) |
| Net cash provided by financing activities | 5,879 | 5,232 | 4,574 |
| Currency adjustment: |  |  |  |
| Effect of exchange rate changes on cash and cash equivalents, including those segregated for regulatory purposes | (590) | 76 | 1 |
| Net increase/(decrease) in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash | (1,790) | 6,815 | 3,663 |
| Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year | 16,449 | 9,634 | 5,971 |
| Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of year | $14,659 | $16,449 | $9,634 |
| Cash and cash equivalents | $6,178 | $7,201 | $5,390 |
| Cash and cash equivalents segregated for regulatory purposes and restricted cash | 8,481 | 9,248 | 4,244 |
| Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of year | $14,659 | $16,449 | $9,634 |
| Supplemental disclosures of cash flow information: |  |  |  |
| Cash paid for interest | $323 | $145 | $164 |
| Cash paid for income taxes, net | $524 | $437 | $246 |
| Cash outflows for lease liabilities | $111 | $110 | $101 |
| Non-cash right-of-use assets recorded for new and modified leases | $68 | $168 | $74 |
| Common stock issued as consideration for TriState Capital acquisition | $778 | $ - | $ - |
| Restricted stock awards issued as consideration for TriState Capital acquisition | $28 | $ - | $ - |
| Preferred stock issued as consideration for TriState Capital acquisition | $120 | $ - | $ - |
| Effective settlement of note receivable for TriState Capital acquisition | $123 | $ - | $ - |

See accompanying Notes to Consolidated Financial Statements.

87

# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**  
**September 30, 2022**

# **NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION**

# **Organization**

Raymond James Financial, Inc. (“RJF” or the “firm”) is a financial holding company which, together with its subsidiaries, is engaged in various financial services 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. The firm also provides corporate and consumer banking services, and trust services. For further information about our business segments, see Note 26 of this Form 10-K. As used herein, the terms “our,” “we,” or “us” refer to RJF and/or one or more of its subsidiaries.

# **Basis of presentation**

The accompanying 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 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 in Note 10 of this Form 10-K. 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***

The preparation of consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires us to 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 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 consolidated financial statements.

# ***Reclassifications***

We reclassified acquisition and disposition-related expenses which in prior years were reported separately as “Acquisition and disposition-related expenses” on our Consolidated Statements of Income and Comprehensive Income to the respective income statement line items that align with the nature of the expenses, including reclassifications to “Compensation, commissions, and benefits,” “Professional fees,” or “Other” expenses, as appropriate. Prior years have been conformed to the current presentation.

In addition to the reclassifications discussed above, certain other prior period amounts have been reclassified to conform to the current period’s presentation.

# **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

# **Recognition of non-interest revenues**

Revenue from contracts with customers is recognized when promised services are delivered to our customers in an amount we expect to receive in exchange for those services (i.e., the transaction price). Contracts with customers can include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct. Our performance obligations to our customers are generally satisfied when we transfer the promised service to our customer, either at a point in time or over time. Revenue from a performance obligation transferred at a point in time is recognized at the time that the customer obtains control over the promised service. Revenue from our performance obligations satisfied over time is recognized in a manner that depicts our performance in transferring control of the service, which is generally measured based on time elapsed, as our customers receive the benefit of our services as they are provided.

Payment for the majority of our services is considered to be variable consideration, as the amount of revenue we expect to receive is subject to factors outside of our control, including market conditions. Variable consideration is only included in

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

revenue when amounts are not subject to significant reversal, which is generally when uncertainty around the amount of revenue to be received is resolved. We record deferred revenue from contracts with customers when payment is received prior to the performance of our obligation to the customer.

We involve third parties in providing services to the customer for certain of our contracts with customers. We are generally deemed to control the promised services before they are transferred to the customer. Accordingly, we present the related revenues gross of the related costs.

We have elected the practical expedient allowed by the accounting guidance to not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. See Note 21 for additional information on our revenues.

### *Asset management and related administrative fees*

We earn asset management and related administrative fees for performing asset management, portfolio management and related administrative services to retail and institutional clients. Such fees are generally calculated as a percentage of the value of client assets in fee-based accounts in our Private Client Group (“PCG”) segment or on the net asset value of assets managed by our Raymond James Investment Management division (“Raymond James Investment Management,” formerly Carillon Tower Advisers) in our Asset Management segment. The value of these assets is impacted by market fluctuations and net inflows or outflows of assets. Fees are generally collected quarterly and are based on balances either at the beginning of the quarter or the end of the quarter, or average balances throughout the quarter. Asset management and related administrative fees are recognized on a monthly basis (i.e., over time) as the services are performed.

Revenues related to fee-based accounts under administration in PCG are shared by the PCG and Asset Management segments, the amount of which depends on whether clients are invested in “managed programs” that are overseen by our Asset Management segment (i.e., included in financial assets under management (“AUM”) in the Asset Management segment) and the administrative services provided. Asset management revenues earned by Raymond James Investment Management for retail accounts managed on behalf of third-party institutions, institutional accounts and proprietary mutual funds that we manage are recorded entirely in the Asset Management segment.

### *Brokerage revenues*

#### Securities commissions

##### *Mutual and other fund products and insurance and annuity products*

We earn revenues for distribution and related support services performed related to mutual and other funds, fixed and variable annuities and insurance products. Depending on the product sold, we may receive an upfront fee for our services, a trailing commission, or some combination thereof. Upfront commissions received are generally based on a fixed rate applied, as a percentage, to amounts invested or the value of the contract at the time of sale and are generally recognized at the time of sale. Trailing commissions are generally based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. Trailing commissions on eligible products are generally received monthly or quarterly in periods while our client holds the investment or holds the contract. As these trailing commissions are based on factors outside of our control, including market movements and client behavior (i.e., how long clients hold their investment, insurance policy or annuity contract), such revenue is recognized when it is probable that a significant reversal will not occur.

##### *Equities, ETFs and fixed income products*

We earn commissions for executing and clearing transactions for customers, primarily in listed and over-the-counter equity securities, including exchange-traded funds (“ETFs”), and options. Such revenues primarily arise from transactions for retail clients in our PCG segment, as well as services related to sales and trading activities transacted on an agency basis in our Capital Markets segment. Commissions are recognized on trade date, generally received from the customer on settlement date, and we record a receivable between the trade date and the date collected from the customer.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

## Principal transactions

Principal transactions include revenues from clients' purchases and sales of financial instruments, including fixed income and equity securities and derivatives, in which we transact on a principal basis. We make markets in certain fixed income securities and we carry inventories of financial instruments to facilitate such transactions. The gains and losses on such inventories, both realized and unrealized, are reported as principal transactions revenues.

## *Account and service fees*

### Mutual fund and annuity service fees

We earn servicing fees for providing sales and marketing support to third-party financial entities and for supporting the availability and distribution of their products on our platforms. We also earn servicing fees for accounting and administrative services provided to such parties. These fees, which are received monthly or quarterly, are generally based on the market value of the related assets, a fixed annual fee or, in certain cases, the number of positions in such programs, and are recognized over time as the services are performed.

### Raymond James Bank Deposit Program fees

We earn servicing fees from various banks for administrative services we provide related to our clients' deposits that are swept to such banks as part of the Raymond James Bank Deposit Program ('RJBDP'), our multi-bank sweep program. The amounts received from third-party banks 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 by the third-party banks on balances in the RJBDP. The fees are earned over time as the related administrative services are performed and are received monthly. Our PCG segment also earns servicing fees from our Bank segment, which is calculated as 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. These intercompany fees, and the offsetting intercompany expense in the Bank segment, are eliminated in consolidation.

## *Investment banking*

We earn revenue from investment banking transactions, including public and private equity and debt financing, merger & acquisition advisory services, and other advisory services. Underwriting revenues, which are typically deducted from the proceeds remitted to the issuer, are recognized on trade date if there is no uncertainty or contingency related to the amount to be received. Fees from merger & acquisition and advisory assignments are generally recognized at the time the services related to the transaction are completed under the terms of the engagement. Fees for merger & acquisition and advisory services are typically received upfront, as non-refundable retainer fees, and/or upon completion of a transaction as a success fee. Expenses related to investment banking transactions are generally deferred until the related revenue is recognized or the assignment is otherwise concluded. Such expenses are included in 'Professional fees' on our Consolidated Statements of Income and Comprehensive Income.

## **Cash and cash equivalents**

Our cash equivalents include money market funds or highly liquid investments with maturities of 3 months or less as of our date of purchase, other than those held for trading purposes.

## **Assets segregated for regulatory purposes and restricted cash**

Our broker-dealers carrying client accounts are generally subject to requirements to maintain cash or qualified securities on deposit in a segregated reserve account for the exclusive benefit of their clients. Such amounts are included in 'Assets segregated for regulatory purposes and restricted cash' on our Consolidated Statements of Financial Condition as of each respective period end. These amounts include cash and cash equivalents, which represent highly liquid investments with maturities of 3 months or less as of our date of purchase, and highly liquid securities, such as U.S. Treasury securities ('U.S. Treasuries'), which have maturities of greater than 3 months as of our date of purchase and are carried at fair value on our Consolidated Statements of Financial Condition.

We may also from time-to-time be required to restrict cash for other corporate purposes. In addition, Raymond James Ltd. ('RJ Ltd.') holds client Registered Retirement Savings Plan funds in trust in accordance with Canadian retirement plan regulations.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

## Collateralized agreements and financings

### *Securities purchased under agreements to resell and securities sold under agreements to repurchase*

We purchase securities under short-term agreements to resell (“reverse repurchase agreements”). Additionally, we sell securities under agreements to repurchase (“repurchase agreements”). Reverse repurchase agreements and repurchase agreements are accounted for as collateralized agreements and collateralized financings, respectively, and are carried at contractual amounts plus accrued interest. We receive collateral with a fair value that is typically equal to or in excess of the principal amount loaned under reverse repurchase agreements to mitigate credit exposure. To ensure that the market value of the underlying collateral remains sufficient, collateral values are evaluated on a daily basis, and collateral is obtained from or returned to the counterparty when contractually required. Under repurchase agreements, we are required to post collateral in an amount that typically exceeds the carrying value of these agreements. In the event that the market value of the securities we pledge as collateral declines, we may have to post additional collateral or reduce borrowing amounts. Reverse repurchase agreements and repurchase agreements are included in “Collateralized agreements” and “Collateralized financings,” respectively, on our Consolidated Statements of Financial Condition. See Note 7 for additional information regarding collateralized agreements and financings.

### *Securities borrowed and securities loaned*

We may act as an intermediary between broker-dealers and other financial institutions whereby we borrow securities from one broker-dealer and then either lend them to another broker-dealer or use them in our broker-dealer operations to cover short positions. Where permitted, we have also loaned, to broker-dealers and other financial institutions, securities owned by the firm or our clients or others we have received as collateral. Securities borrowed and securities loaned transactions are accounted for as collateralized agreements and collateralized financings, respectively, and are recorded at the amount of cash advanced or received. In securities borrowed transactions, we are required to deposit cash with the lender in an amount which is generally in excess of the market value of securities borrowed. With respect to securities loaned, we generally receive cash in an amount in excess of the market value of securities loaned. We evaluate the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary. Securities borrowed and securities loaned are included in “Collateralized agreements” and “Collateralized financings,” respectively, on our Consolidated Statements of Financial Condition. See Note 7 for additional information regarding collateralized agreements and financings.

## Financial instruments, financial instrument liabilities, at fair value

“Financial instruments” and “Financial instrument liabilities” are recorded at fair value. Fair value is defined by GAAP as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability.

In determining the fair value of our financial instruments in accordance with GAAP, we use various valuation approaches, including market and/or income approaches. Fair value is a market-based measurement considered from the perspective of a market participant. As such, our fair value measurements reflect assumptions that we believe market participants would use in pricing the asset or liability at the measurement date. GAAP provides for the following three levels to be used to classify our fair value measurements.

Level 1 - Financial instruments included in Level 1 are highly liquid instruments valued using unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 - Financial instruments reported in Level 2 include those that have pricing inputs that are other than unadjusted quoted prices in active markets, but which are either directly or indirectly observable as of the reporting date (i.e., prices for similar instruments).

Level 3 - Financial instruments reported in Level 3 have little, if any, market activity and are measured using one or more inputs that are significant to the fair value measurement and unobservable. These valuations require judgment or estimation. These instruments are generally valued using discounted cash flow techniques or market multiples.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

GAAP requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when performing our fair value measurements. The availability of observable inputs can vary from instrument to instrument and, in certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement of an instrument requires judgment and consideration of factors specific to the instrument.

## *Valuation techniques and inputs*

The fair values for certain of our financial instruments are derived using pricing models and other valuation techniques that involve management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of our financial instruments. Financial instruments which are actively traded will generally have a higher degree of price transparency than financial instruments that are less frequently traded. In accordance with GAAP, the criteria used to determine whether the market for a financial instrument is active or inactive is based on the particular asset or liability. For equity securities, our definition of actively traded is based on average daily trading volume. We have determined the market for certain other types of financial instruments to be uncertain or inactive as of both September 30, 2022 and 2021. As a result, the valuation of these financial instruments included management judgment in determining the relevance and reliability of market information available.

The level within the fair value hierarchy, specific valuation techniques, and other significant accounting policies pertaining to financial instruments at fair value on our Consolidated Statements of Financial Condition are described as follows.

## *Trading assets and trading liabilities*

Trading assets and trading liabilities are comprised primarily of the financial instruments held by our broker-dealer subsidiaries and include debt securities, equity securities, brokered certificates of deposit, and other financial instruments. Trading assets and trading liabilities are recorded at fair value with realized and unrealized gains and losses reflected in 'Principal transactions' in current period net income.

When available, we use quoted prices in active markets to determine the fair value of our trading assets and trading liabilities. Such instruments are classified within Level 1 of the fair value hierarchy.

When trading instruments are traded in secondary markets and quoted market prices for identical instruments do not exist, we utilize valuation techniques, including matrix pricing, to estimate fair value. Matrix pricing generally utilizes spread-based models periodically re-calibrated to observable inputs such as market trades or to dealer price bids in similar securities in order to derive the fair value of the instruments. Valuation techniques may also rely on other observable inputs such as yield curves, interest rates and expected principal prepayments and default probabilities. We utilize prices from third-party pricing services to corroborate our estimates of fair value. Depending upon the type of security, the pricing service may provide a listed price, a matrix price or use other methods. Securities valued using these techniques are classified within Level 2 of the fair value hierarchy.

Within each broker-dealer subsidiary, we offset our long and short positions for identical securities recorded at fair value as part of our trading assets (long positions) and trading liabilities (short positions).

## *Available-for-sale securities*

Available-for-sale securities are classified at the date of purchase. They are comprised primarily of agency mortgage-backed securities ('MBS'), agency collateralized mortgage obligations ('CMOs'), and other securities which are guaranteed by the U.S. government or its agencies. Available-for-sale securities are used as part of our interest rate risk and liquidity management strategies and may be sold in response to changes in interest rates, changes in prepayment risks, or other factors.

The fair values of our available-for-sale securities are determined by obtaining prices from third-party pricing services, which are primarily based on valuation models. The third-party pricing services provide comparable price evaluations utilizing observable market data for similar securities. Such observable market data is comprised of benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data (including market research publications), and loan performance experience. We utilize other third-party pricing services to corroborate the pricing information obtained from the primary pricing service. Available-for-sale securities are valued using valuation techniques that rely on observable market data. Substantially all available-for-sale securities are classified within Level 2 of the fair value hierarchy; however, certain available-sale-securities are classified within Level 1 of the fair value hierarchy.

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# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
*Notes to Consolidated Financial Statements*

Interest on available-for-sale securities is recognized in interest income on an accrual basis, with the related accrued interest not yet received reflected in “Other receivables” on our Consolidated Statements of Financial Condition. Discounts are accreted and premiums are amortized as an adjustment to yield over the estimated average life of the security. Realized gains and losses on sales of available-for-sale securities are recognized using the specific identification method and are reflected in “Other” revenue in the period sold. Unrealized gains or losses due to market factors on available-for-sale securities are recorded through other comprehensive income/(loss) (“OCI”), net of applicable taxes, and are thereafter presented in equity as a component of accumulated other comprehensive income (“AOCI”) on our Consolidated Statements of Financial Condition.

# ***Derivative assets and derivative liabilities***

Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative liabilities” on our Consolidated Statements of Financial Condition. 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 within the same subsidiary. 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. Generally the collateral we accept is in the form of either cash or other marketable securities. Where permitted, we elect to net-by-counterparty certain derivatives entered into under a legally enforceable master netting agreement and, therefore, the fair value of those derivatives are netted by counterparty and subsidiary on our Consolidated Statements of Financial Condition. As we elect to net-by-counterparty the fair value of such derivatives, we also net-by-counterparty and subsidiary cash collateral exchanged as part of those derivative agreements. We may also require certain counterparties to make a cash deposit at the inception of a derivative agreement, referred to as “initial margin.” This initial margin is included in “Cash and cash equivalents” and “Other payables” on our Consolidated Statements of Financial Condition.

We are also required to maintain deposits with the clearing organizations we utilize to clear certain of our interest rate derivatives, for which we have posted securities as collateral. This initial margin is included as a component of “Other investments” and “Available-for-sale securities” on our 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.

# ***Interest rate derivatives***

We enter into interest rate derivatives as part of our trading activities in 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. In addition, we enter into interest rate derivatives with clients of our Bank segment, including clients with whom we have entered into loans or other lending arrangements, to facilitate their respective interest rate risk management strategies. 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. Realized and unrealized gains or losses on such derivatives are recorded in “Principal transactions” on our Consolidated Statements of Income and Comprehensive Income. The fair values of these interest rate derivatives are obtained from internal or third-party pricing models that consider current market trading levels and the contractual prices for the underlying financial instruments, as well as time value, yield curve and other volatility factors underlying the positions. Since these model inputs can be observed in liquid markets and the models do not require significant judgment, such derivatives are classified within Level 2 of the fair value hierarchy. We corroborate the output of our internal pricing models by preparing an independent calculation using a third-party model. Our fixed income business also holds to-be-announced security contracts (“TBAs”) that are accounted for as derivatives, which are classified within Level 1 of the fair value hierarchy.

We also facilitate matched book derivative transactions in which we enter into interest rate derivatives with clients. For every matched book derivative we enter into with a client, we also enter 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 matched book derivatives is administered directly between the client and the third-party financial institution. Due to this pass-through transaction structure, we have completely mitigated the market and credit risk on these matched book derivatives. As a result, matched book derivatives for which the fair value is in an asset position have an equal and offsetting derivative liability. Fair value is determined using an internal pricing model which includes inputs from independent pricing sources to project future cash flows under each underlying derivative. Since any changes in fair value are completely offset by a change in fair value of the offsetting derivative, there is no net impact on our Consolidated Statements of Income and Comprehensive Income from changes in the fair value of these derivatives. We recognize revenue on these matched book derivatives on the transaction date, computed as the present value of the expected cash flows we expect to receive from the third-party financial institution over the life of the derivative. The difference between the present value of these cash flows at

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

the date of inception and the gross amount potentially received is accreted to revenue over the term of the contract. The revenue from these transactions is included within “Other” revenues on our Consolidated Statements of Income and Comprehensive Income.

We enter into primarily floating-rate advances from the Federal Home Loan Bank (“FHLB”) to, in part, fund lending and investing activities in our Bank segment and then enter into interest rate contracts which swap variable interest payments on such borrowings for fixed interest payments. These interest rate swaps are designated as cash flow hedges and effectively fix a portion of our Bank segment’s cost of funds and mitigate a portion of the market risk associated with its lending and investing activities. The gain or loss on our Bank segment’s cash flow hedges is recorded, net of tax, in shareholders’ equity as part of the cash flow hedge component of AOCI and subsequently reclassified to earnings when the hedged transaction affects earnings, specifically upon the incurrence of interest expense on the hedged borrowings. Hedge effectiveness is assessed at inception and at each reporting period utilizing regression analysis. As the key terms of the hedging instrument and hedged transaction match at inception, management expects the hedges to be effective while they are outstanding. The fair value of these interest rate swaps is determined by obtaining valuations from a third-party pricing service. These third-party valuations are based on observable inputs such as time value and yield curves. We validate these observable inputs by preparing an independent calculation using a secondary model. Cash flows from hedging activities are included in the same category as the items being hedged. Cash flows from derivative instruments used to manage interest rates are classified as operating activities. We classify these derivatives within Level 2 of the fair value hierarchy.

### *Foreign-exchange derivatives*

We enter into three-month forward foreign exchange contracts primarily to hedge the risks related to Raymond James Bank’s investment in its Canadian subsidiary, as well as its 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 gain or loss related to these designated net investment hedges is recorded, net of tax, in shareholders’ equity as part of the cumulative translation adjustment component of AOCI with such balance impacting “Other” revenues in the event the net investment is sold or substantially liquidated. Gains and losses on undesignated derivative instruments are recorded in “Other” revenues on our Consolidated Statements of Income and Comprehensive Income. Hedge effectiveness is assessed at each reporting period using a method that is based on changes in forward rates and measured using the hypothetical derivatives method. As the terms of the hedging instrument and hypothetical derivative generally match at inception, the hedge is expected to be highly effective.

The fair values of our forward foreign exchange contracts are determined by obtaining valuations from a third-party pricing service or model. These valuations are based on observable inputs such as spot rates, forward foreign exchange rates and both U.S. and foreign interest rate curves. We validate the observable inputs utilized in the third-party valuation model by preparing an independent calculation using a secondary valuation model. These forward foreign exchange contracts are classified within Level 2 of the fair value hierarchy.

### *Other investments*

Other investments consist primarily of private equity investments, securities pledged as collateral with clearing organizations, and term deposits with Canadian financial institutions. Our securities pledged as collateral with clearing organizations, which primarily include U.S. Treasuries, and term deposits are categorized within Level 1 of the fair value hierarchy.

Private equity investments consist primarily of investments in third-party private equity funds. The private equity funds in which we invest are primarily closed-end funds in which our investments are generally not eligible for redemption. We receive distributions from these funds as the underlying assets are liquidated or distributed. These investments are measured at fair value with any gains or losses recognized in “Other” revenues on our Consolidated Statements of Income and Comprehensive Income. The fair value of substantially all of our private equity investments are determined utilizing the net asset value (“NAV”) of the fund as a practical expedient with the remainder utilizing Level 3 valuation techniques.

### *Fractional shares*

Within our broker-dealer subsidiaries, when dividend reinvestment programs or other corporate action events result in clients receiving a share quantity that is not a whole number, we transact in the fractional shares on a principal basis. We include these fractional shares in “Other assets” in our Consolidated Statements of Financial Condition and record an associated liability to the client in “Other payables” as we must fulfill our clients’ future fractional share redemptions. We account for the fractional share assets and the liability to the client at fair value. The fair values of the fractional share assets and liabilities are determined based on quoted prices in active markets and are classified within Level 1 of the fair value hierarchy.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

#### **Brokerage client receivables, net**

Brokerage client receivables include receivables from the clients of our broker-dealer subsidiaries and are principally for amounts due on cash and margin transactions. Such receivables are generally collateralized by securities owned by the clients. Brokerage client receivables are reported at their outstanding principal balance, net of any allowance for credit losses. See the “Allowance for credit losses” section below for a discussion of our application of the practical expedient under the current expected credit losses (“CECL”) guidance for financial assets secured by collateral.

Securities beneficially owned by clients, including those that collateralize margin or other similar transactions, are not reflected on our Consolidated Statements of Financial Condition (see Note 7 for additional information regarding this collateral).

#### **Other receivables, net**

Other receivables primarily include receivables from brokers, dealers and clearing organizations, accrued fees from product sponsors, and accrued interest receivables. Receivables from brokers, dealers and clearing organizations primarily consist of cash deposits placed with clearing organizations, which includes cash deposited as initial margin, as well as receivables related to sales of securities which have traded but not yet settled including amounts receivable for securities failed to deliver.

We present “Other receivables, net” on our Consolidated Statements of Financial Condition, net of any allowance for credit losses. However, these receivables generally have minimal credit risk due to the low probability of clearing organization default and the short-term nature of receivables related to securities settlements and therefore, the allowance for credit losses on such receivables is not significant. Any allowance for credit losses for other receivables is estimated using assumptions based on historical experience, current facts and other factors. We update these estimates through periodic evaluations against actual trends experienced.

We include accrued interest receivables related to our financial assets in “Other receivables, net” on the Consolidated Statements of Financial Condition. We reverse any uncollectible accrued interest against interest income when the related financial asset is moved to nonaccrual status. Given that we write off uncollectible amounts in a timely manner, we do not recognize an allowance for credit losses against accrued interest receivable.

#### **Bank loans, net**

##### *Loans held for investment*

Bank loans are comprised of loans originated or purchased by our Bank segment and include securities-based loans (“SBL”), commercial and industrial (“C&I”) loans, real estate investment trust (“REIT”) loans, tax-exempt loans, and commercial and residential real estate loans. Other than the loans acquired in the TriState Capital acquisition which were recorded at acquisition-date fair value (see Note 3 for additional information), the loans which we have the intent and the ability to hold until maturity or payoff are recorded at their unpaid principal balance plus any premium paid in connection with the purchase of the loan or less any discounts received in connection with the purchase of the loan, less the allowance for credit losses and net of deferred fees and costs on originated loans. Loan origination fees and direct costs, as well as premiums and discounts on loans that are not revolving, are capitalized and recognized in interest income using the effective interest method, taking into consideration scheduled payments and prepayments. Loan discounts include fair value adjustments associated with our acquisition of TriState Capital Bank totaled $145 million as of June 1, 2022 and will be accreted into interest income over the weighted-average life of the underlying loans, estimated to approximate 4 years as of the acquisition date, which may vary based on prepayments. For revolving loans, the straight-line method is used based on the contractual term. Syndicated loans purchased in the secondary market are recorded on the trade date. Interest income is recorded on an accrual basis.

We segregate our loan portfolio into six loan portfolio segments: SBL, C&I, commercial real estate (“CRE”) (primarily loans that are secured by income-producing properties and CRE construction loans), REIT (loans made to businesses that own or finance income-producing real estate), residential mortgage, and tax-exempt. Loans in our SBL portfolio segment are primarily collateralized by the borrower’s marketable securities at advance rates consistent with industry standards and, to a lesser extent, the cash surrender value of any applicable life insurance policies. These portfolio segments also serve as the portfolio loan classes for purposes of credit analysis. See the “Allowance for credit losses” section below for information on our allowance policies.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

#### *Loans held for sale*

Certain residential mortgage loans originated and intended for sale in the secondary market due to their fixed interest rate terms, as well as Small Business Administration (“SBA”) loans which we may purchase with intent to sell in the secondary market, as part of a securitization as discussed below, but have not yet been aggregated for securitization into pools, are each carried at the lower of cost or estimated fair value. The fair values of the residential mortgage loans held for sale are estimated using observable prices obtained from counterparties for similar loans. These nonrecurring fair value measurements are classified within Level 2 of the fair value hierarchy.

We purchase the guaranteed portions of SBA loans and account for these loans in accordance with the policy for loans held for sale. We then aggregate SBA loans with similar characteristics into pools for securitization and sell these pools in the secondary market. Individual SBA loans may be sold prior to securitization. The fair values of the SBA loans are determined based upon their committed sales price, third-party price quotes, or are determined using a third-party pricing service.

Once the SBA loans are securitized into a pool, the respective securities are classified as trading instruments based on our intention to sell the securitizations and are carried at fair value. Sales of the securitizations are accounted for as of settlement date, which is the date we have surrendered control over the transferred assets. We do not retain any interest in the securitizations once they are sold.

Corporate loans, which include C&I, CRE and REIT loans, as well as tax-exempt loans are designated as held for investment upon inception and recorded in loans receivable. If we subsequently designate a corporate or tax-exempt loan as held for sale, which generally occurs as part of our credit management activities, we then write down the carrying value of the loan with a partial charge-off, if necessary, to carry it at the lower of cost or estimated fair value.

Gains and losses on sales of residential mortgage loans held for sale, SBA loans that are not part of a securitized pool, and corporate loans transferred from the held for investment portfolio, are included as a component of “Other” revenues on our Consolidated Statements of Income and Comprehensive Income, while interest collected on these assets is included in “Interest income.” Net unrealized losses are a component of “Other” revenues on our Consolidated Statements of Income and Comprehensive Income.

#### *Unfunded lending commitments*

We have outstanding at any time a significant number of commitments to extend credit and other credit-related off-balance-sheet financial instruments such as revolving lines of credit, standby letters of credit and loan purchases. Our policy is generally to require customers to provide collateral at the time of closing. The amount of collateral obtained, if it is deemed necessary upon extension of credit, is based on our credit evaluation of the borrower. Collateral held varies but may include assets such as marketable securities, accounts receivable, inventory, real estate, and income-producing commercial properties.

In the normal course of business, we issue or participate in the issuance of standby letters of credit whereby we provide an irrevocable guarantee of payment in the event the letter of credit is drawn down by the beneficiary. These standby letters of credit generally expire in one year or less. In the event that a letter of credit is drawn down, we would pursue repayment from the party under the existing borrowing relationship or would liquidate collateral, or both. The proceeds from repayment or liquidation of collateral are expected to satisfy the amounts drawn down under the existing letters of credit.

The allowance for potential credit losses associated with these unfunded lending commitments is included in “Other payables” on our Consolidated Statements of Financial Condition. Refer to the “Allowance for credit losses” section that follows for a discussion of the reserve calculation methodology and Note 19 for further information about these commitments.

We recognize the revenue associated with corporate syndicated standby letters of credit, which is generally received quarterly, on a cash basis, the effect of which does not differ significantly from recognizing the revenue in the period the fee is earned. Unused corporate line of credit fees are accounted for on an accrual basis.

#### *Nonperforming assets*

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. Loans which have been restructured in a manner that grants a concession that would not normally be granted to a borrower experiencing financial difficulties are deemed to be troubled debt restructurings (“TDRs”). Loans structured as TDRs which are placed on nonaccrual status are considered nonperforming loans.

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Loans of all classes are generally placed on nonaccrual status when we determine that full payment of all contractual principal and interest is in doubt or the loan is past due 90 days or more as to contractual interest or principal unless the loan, in our opinion, is well-secured and in the process of collection. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is written-off against interest income and accretion of the net deferred loan origination fees ceases. Interest is recognized using the cash method for SBL and substantially all residential mortgage loans, and the cost recovery method for corporate and tax-exempt loans thereafter until the loan qualifies for return to accrual status. Most loans (including residential mortgage TDRs) are returned to an accrual status when the loans have been brought contractually current with the original or amended terms and have been maintained on a current basis for a reasonable period, generally six months. However, corporate loan TDRs have generally been partially charged off and therefore remain on nonaccrual status until the loan is fully repaid or sold.

Other real estate acquired in the settlement of loans, including through, or in lieu of, loan foreclosure, is initially recorded at the lower of cost or fair value less estimated selling costs through a charge to the allowance for credit losses, thus establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed and the assets are carried at the lower of the carrying amount or fair value, as determined by a current appraisal or discounted cash flow valuation less estimated costs to sell, and are included in 'Other assets' on our Consolidated Statements of Financial Condition. These nonrecurring fair value measurements are classified within Level 2 of the fair value hierarchy.

### *Bank loan charge-off policies*

Corporate and tax-exempt loans are monitored on an individual basis, and loan grades are reviewed at least quarterly to ensure they reflect the loan's current credit risk. When we determine that it is likely that a corporate or tax-exempt loan will not be collected in full, the loan is evaluated for a potential write down of the carrying value. After consideration of a number of factors, including the borrower's ability to restructure the loan, alternative sources of repayment, and other factors affecting the borrower's ability to repay the debt, the portion of the loan deemed to be a confirmed loss, if any, is charged-off. For collateral-dependent loans secured by real estate, the amount of the loan considered a confirmed loss and charged-off is generally equal to the difference between the recorded investment in the loan and the collateral's appraised value less estimated costs to sell. For C&I and tax-exempt loans, we evaluate all sources of repayment to arrive at the amount considered to be a loss and charged-off. Corporate banking and credit risk managers also meet regularly to review criticized loans (i.e., loans that are rated special mention or worse as defined by bank regulators). Additional charge-offs are taken when the value of the collateral changes or there is an adverse change in the expected cash flows.

A portion of our corporate loan portfolio is comprised of participations in either Shared National Credits ('SNCs') or other large syndicated loans in the U.S. and Canada. The SNCs are U.S. loan syndications totaling over $100 million that are shared between three or more regulated institutions. The agent bank's regulator reviews a portion of SNC loans on a semi-annual basis and provides a synopsis of each loan's regulatory classification, including loans that are designated for nonaccrual status and directed charge-offs. We are at least as critical with our nonaccrual designations, directed charge-offs, and classifications, potentially impacting our allowance for credit losses and charge-offs. Corporate loans are subject to our internal review procedures and regulatory review by either the Florida Office of Financial Regulation ('OFR') and the Board of Governors of the Federal Reserve System ('the Fed') or the Federal Deposit Insurance Corporation ('FDIC') and the Pennsylvania Department of Banking and Securities ('PDBS') as part of our respective banks' regulatory examinations.

Substantially all residential mortgage loans over 60 days past due are reviewed to determine loan status, collection strategy and charge-off recommendations. Charge-offs are typically considered on residential mortgage loans once the loans are delinquent 90 days or more and then generally taken before the loan is 120 days past due. A charge-off is taken against the allowance for credit losses for the difference between the loan amount and the amount that we estimate will ultimately be collected, based on the value of the underlying collateral less estimated costs to sell. We predominantly use broker price opinions for these valuations. If a loan remains in pre-foreclosure status for more than nine months, an updated valuation is obtained to determine if further charge-offs are necessary.

### **Loans to financial advisors, net**

We offer loans to financial advisors for recruiting and retention purposes. The decision to extend credit to a financial advisor is generally based on their ability to generate future revenues. Loans offered are generally repaid over a five to ten year period, with interest recognized as earned, and are contingent upon continued affiliation with us. These loans are not assignable by the financial advisor and may only be assigned by us to a successor in interest. There is no fee income associated with these loans. In the event that the financial advisor is no longer affiliated with us, any unpaid balance of such loan becomes immediately due and payable to us and generally does not continue to accrue interest. Based upon the nature of these financing receivables,

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### *Notes to Consolidated Financial Statements*

affiliation status (i.e., whether the advisor is actively affiliated with us or has terminated affiliation with us) is the primary credit risk factor within this portfolio. We present the outstanding balance of loans to financial advisors on our Consolidated Statements of Financial Condition, net of the allowance for credit losses. Refer to the allowance for credit losses section that follows for further information related to our allowance for credit losses on our loans to financial advisors. See Note 9 for additional information on our loans to financial advisors.

Loans to financial advisors who are actively affiliated with us are considered past due once they are 30 days or more delinquent as to the payment of contractual interest or principal. Such loans are placed on nonaccrual status when we determine that full payment of contractual principal and interest is in doubt, or the loan is past due 180 days or more as to contractual interest or principal. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is written-off against interest income. Interest is recognized using the cash method for these loans thereafter until the loan qualifies for return to accrual status. Loans are returned to an accrual status when the loans have been brought contractually current with the original terms and have been maintained on a current basis for a reasonable period, generally six months.

When we determine that it is likely a loan will not be collected in full, the loan is evaluated for a potential write down of the carrying value. After consideration of the borrower's ability to restructure the loan, sources of repayment, and other factors affecting the borrower's ability to repay the debt, the portion of the loan deemed a confirmed loss, if any, is charged-off. A charge-off is taken against the allowance for credit losses for the difference between the amortized cost and the amount we estimate will ultimately be collected. Additional charge-offs are taken if there is an adverse change in the expected cash flows.

## Allowance for credit losses

We evaluate our held for investment bank loans, unfunded lending commitments, loans to financial advisors and certain other financial assets to estimate an allowance for credit losses ('ACL') over the remaining life of the financial instrument. The remaining life of our financial assets is determined by considering contractual terms and expected prepayments, among other factors.

We use multiple methodologies in estimating an allowance for credit losses and our approaches may differ by the subsidiary which holds the asset, the type of financial asset and the risk characteristics within each financial asset type. Our estimates are based on ongoing evaluations of the portfolio, the related credit risk characteristics, and the overall economic and environmental conditions affecting the financial assets. For certain of our financial assets with collateral maintenance provisions (e.g., SBL, collateralized agreements, and margin loans), we apply the practical expedient allowed under the CECL guidance in estimating an allowance for credit losses. We reasonably expect that borrowers (or counterparties, as applicable) will replenish the collateral as required. As a result, we estimate zero credit losses to the extent that the fair value equals or exceeds the related carrying value of the financial asset. When the fair value of the collateral securing the financial asset is less than the carrying value, qualitative factors such as historical experience (adjusted for current risk characteristics and economic conditions) as well as reasonable and supportable forecasts are considered in estimating the allowance for credit losses on the unsecured portion of the financial asset.

Credit losses are charged-off against the allowance when we believe the uncollectibility of the financial asset is confirmed. Subsequent recoveries, if any, are credited to the allowance once received. A credit loss expense, or benefit, is recorded in earnings in an amount necessary to adjust the allowance for credit losses to our estimate as of the end of each reporting period. Our provision or benefit for credit losses for outstanding bank loans is included in 'Bank loan provision/(benefit) for credit losses' on our Consolidated Statements of Income and Comprehensive Income and our provision or benefit for credit losses for all other financing receivables, including loans to financial advisors, and unfunded lending commitments, is included in 'Other' expense.

## Loans

We generally estimate the allowance for credit losses on our loan portfolios 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 such model. Our forecasts incorporate assumptions related to macroeconomic indicators including, but not limited to, U.S. gross domestic product ('GDP'), equity market indices, unemployment rates, and commercial real estate and residential home price indices. At the conclusion of our reasonable and supportable forecast period, which currently ranges from two to four years depending on the model and macroeconomic variables, we generally use a straight-line reversion approach over a one-year period, where applicable, to revert to historical loss information for C&I, REIT and tax-exempt loans. For CRE and residential mortgage loans, we incorporate a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the assets. The development of the forecast used for CRE and

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### *Notes to Consolidated Financial Statements*

residential mortgage loans incorporates an assumption that each macroeconomic variable will revert to a long-term expectation starting in years two to four of the forecast and largely completing within the first five years of the forecast. We assess the length of the reasonable and supportable forecast period and the reversion period, our reversion approach, our economic forecasts and our methodology for estimating the historical loss information on a quarterly basis.

The allowance for credit losses on loans is generally evaluated and measured on a collective basis, based on the subsidiary which holds the asset, and then typically by loan portfolio segment, due to similar risk characteristics. When a loan does not share similar risk characteristics with other loans, the loan is evaluated for credit losses on an individual basis. Various risk characteristics are considered when determining whether the loan should be collectively evaluated including, but not limited to, financial asset type, internal risk ratings, collateral type, industry of the borrower, and historical or expected credit loss patterns.

The allowance for credit losses on collectively evaluated loans for each respective bank is comprised of two components: (a) a quantitative allowance; and (b) a qualitative allowance, which is based on an analysis of model limitations and other factors not considered by the quantitative models. There are several factors considered in estimating the quantitative allowance for credit losses on collectively evaluated loans which generally include, but are not limited to, the internal risk rating, historical loss experience (including adjustments due to current risk characteristics and economic conditions), prepayments, borrower-controlled extensions, and expected recoveries. We use third-party data for historical information on collectively evaluated corporate loans (C&I, CRE and REIT loans) and residential mortgage loans.

The qualitative portion of our allowance for credit losses includes certain factors that are not incorporated into the quantitative estimate and would generally require adjustments to the allowance for credit losses. These qualitative factors are intended to address developing trends related to each portfolio segment and would generally include, but are not limited to: changes in lending policies and procedures, including changes in underwriting standards and collection; our loan review process; volume and severity of delinquent loans; changes in the seasoning of the loan portfolio and the nature, volume and terms of loans; loan diversification and credit concentrations; changes in the value of underlying collateral; changes in legal and regulatory environments; local, regional, national and international economic conditions, or recent catastrophic events not already reflected in the quantitative estimate; and the routine time delay between when economic data is gathered, analyzed and distributed by our service providers and current macroeconomic developments.

## Held for investment bank loans

*Raymond James Bank:* The allowance for credit losses for the C&I, CRE, REIT, residential mortgage, and tax-exempt portfolio segments is estimated using credit risk models that project a probability of default ('PD'), which is then multiplied by the loss given default ('LGD') and the estimated exposure at default ('EAD') at the loan-level for every period remaining in the loan's expected life, including the maturity period. Historical information, combined with macroeconomic variables, are used in estimating the PD, LGD and EAD. Our credit risk models consider several factors when estimating the expected credit losses which may include, but are not limited to, financial performance and position, estimated prepayments, geographic location, industry or sector type, debt type, loan size, capital structure, initial risk levels and the economic outlook. Additional factors considered by the residential mortgage model include Fair Isaac Corporation ('FICO') scores and loan-to-value ('LTV') ratios.

*TriState Capital Bank:* The allowance for credit losses utilizes a lifetime or cumulative loss rate methodology, which identifies macroeconomic factors and asset-specific characteristics correlated with credit loss experience including loan age, loan type, and leverage. The lifetime loss rate is applied to the amortized cost of the loan and builds on default and recovery probabilities by utilizing pool-specific historical loss rates. These pool-specific historical loss rates may be adjusted for forecasted macroeconomic variables and other factors such as differences in underwriting standards, portfolio mix, or when historical asset terms do not reflect the contractual terms of the financial assets. Each quarter, the relevancy of historical loss information is assessed and management considers any necessary adjustments. Loss rates are based on historical averages for each loan pool, adjusted to reflect the impact of a single, forward-looking forecast of certain macroeconomic variables such as GDP, unemployment rates, corporate bond credit spreads and commercial property values, which management considers to be both reasonable and supportable.

See Note 8 for further information about our bank loans, including credit quality indicators considered in developing the allowance for credit losses.

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### *Notes to Consolidated Financial Statements*

## Unfunded lending commitments

We estimate credit losses on unfunded lending commitments using a methodology consistent with that used in the corresponding bank loan portfolio segment and also based on the expected funding probabilities for fully binding commitments. As a result, the allowance for credit losses for unfunded lending commitments will vary depending upon the mix of lending commitments and future funding expectations. All classes of individually evaluated unfunded lending commitments are analyzed in conjunction with the specific allowance process previously described.

## Loans to financial advisors

The allowance for credit losses on loans to financial advisors is estimated using credit risk models that incorporate average annual loan-level loss rates and estimated prepayments based on historical data. The qualitative component of our estimate considers internal and external factors that are not incorporated into the quantitative estimate such as the reasonable and supportable forecast period. In estimating an allowance for credit losses on our individually-evaluated loans to financial advisors, we generally take into account the affiliation status of the financial advisor (i.e., whether the advisor is actively affiliated with us or has terminated affiliation with us), the borrower's ability to restructure the loan, sources of repayment, and other factors affecting the borrower's ability to repay the debt.

## *Available-for-sale securities*

Credit losses on available-for-sale securities are limited to the difference between the security's amortized cost basis, or for the securities acquired in the TriState Capital acquisition, the fair value of such securities on the acquisition date, and its fair value on the reporting date. Credit losses, if any, are recognized through an allowance for credit losses rather than as a direct reduction in amortized cost basis or the acquisition date fair value, as applicable. We expect zero credit losses on the portion of our available-for-sale securities portfolio that is comprised of U.S. government and government agency-backed securities and the related accrued interest receivable for which payments of both principal and interest are guaranteed, and for which we have not historically experienced any credit losses. In addition, we have the ability and intent to hold these securities and unrealized losses related to these available-for-sale securities are generally due to changes in market interest rates. On a quarterly basis, we reassess our expectation of zero credit losses on such securities, giving consideration to any relevant changes in the securities or the issuer.

On a quarterly basis, we also evaluate non-agency-backed available-for-sale securities in an unrealized loss position for expected credit losses. We first determine whether it is more likely than not that we will sell the impaired securities, giving consideration to current and forecasted liquidity requirements, regulatory and capital requirements, and our securities portfolio management. If it is more likely than not that we will sell an available-for-sale security with a fair value below amortized cost before recovery, the security's book basis is written down to fair value through earnings. For available-for-sale debt securities that it is more likely than not that we will not sell before recovery, a provision for credit losses is recorded through earnings for the amount of the valuation decline below book basis that is attributable to credit losses. We consider the extent to which fair value is less than amortized cost, credit ratings and other factors related to the security in assessing whether a credit loss exists, and we measure the credit loss by comparing the present value of cash flows expected to be collected to the book basis of the security limited by the amount that the fair value is less than the book basis. The remaining difference between the security's fair value and its book basis (that is, the decline in fair value not attributable to credit losses) is recognized in other comprehensive income on an after-tax basis. Changes in the allowance for credit losses are recorded as provisions for credit losses. Losses are charged against the allowance when we believe the security is uncollectible or we intend to sell the security. At September 30, 2022, based on our assessment of those securities not guaranteed by the U.S government or its agencies, we recognized an insignificant allowance for credit losses.

## Identifiable intangible assets, net

Certain identifiable intangible assets we acquire such as those related to customer relationships, core deposits, developed technology, trade names and non-compete agreements, are amortized over their estimated useful lives on a straight-line basis and are evaluated for potential impairment whenever events or changes in circumstances suggest that the carrying value of an asset or asset group may not be fully recoverable. Amortization expense related to our identifiable intangible assets is included in 'Other' expenses on our Consolidated Statements of Income and Comprehensive Income. See Note 3 for further information on our intangible assets resulting from recent acquisitions.

We also hold indefinite-lived identifiable intangible assets, which are not amortized. 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 between annual impairment evaluation dates, if events or circumstances indicate there may be impairment. In the

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### *Notes to Consolidated Financial Statements*

course of our evaluation of the potential impairment of such indefinite-lived assets, we may elect 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, we are not required to perform a quantitative impairment analysis. However, if we conclude otherwise, we then perform a quantitative impairment analysis. We have elected January 1 as our annual impairment evaluation date, evaluating balances as of December 31. See Note 11 for additional information regarding the outcome of our impairment assessment.

## Goodwill

Goodwill represents the cost of acquired businesses in excess of the fair value of the related net assets acquired. Indefinite-lived intangible assets such as goodwill are not amortized, but rather evaluated for impairment at least annually, or between annual impairment evaluation dates whenever events or circumstances indicate potential impairment exists. Impairment exists when the carrying value of a reporting unit, which is generally at the level of or one level below our business segments, exceeds its respective fair value.

In the course of our evaluation of a potential impairment to goodwill, we may elect either a qualitative or a quantitative assessment. Our qualitative assessments consider macroeconomic indicators, such as trends in equity and fixed income markets, GDP, labor markets, interest rates, and housing markets. We also consider regulatory changes, reporting unit specific results, and changes in 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. We assess these, and other, qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative impairment analysis is not required. However, if we conclude otherwise, we then perform a quantitative impairment analysis. Alternatively, if we elect not to perform a qualitative assessment, we perform a quantitative evaluation.

In the event of a quantitative assessment, we estimate the fair value of the reporting unit with which the goodwill is associated and compare it to the carrying value. We estimate the fair value of our reporting units using an income approach based on a discounted cash flow model that includes significant assumptions about future operating results and cash flows and, if appropriate, a market approach. If the carrying value of a reporting unit is greater than the estimated fair value, an impairment charge is recognized for the excess.

We have elected January 1 as our annual goodwill impairment evaluation date, evaluating balances as of December 31. See Note 11 for additional information regarding the outcome of our goodwill impairment assessments.

## Other assets

Other assets is primarily comprised of investments in company-owned life insurance, property and equipment, net, right-of-use assets ('ROU assets') associated with leases, prepaid expenses, FHLB stock, Federal Reserve Bank ('FRB') stock, investments in real estate partnerships held by consolidated VIEs, and certain investments held in our Bank segment. See Note 12 for further information. Other assets also includes client fractional shares for which we act in a principal capacity. See our fractional shares policy above for further information.

We maintain investments in company-owned life insurance policies utilized to indirectly fund certain non-qualified deferred compensation plans and other employee benefit plans (see Note 23 for information on the non-qualified deferred compensation plans). These life insurance policies are recorded at cash surrender value as determined by the insurer.

Ownership of FHLB and FRB stock is a requirement for all banks seeking membership into and access to the services provided by these banking systems. These investments are carried at cost.

Raymond James Affordable Housing Investments, Inc. ('RJAHI') (formerly Raymond James Tax Credit Funds, Inc.) a wholly-owned subsidiary of RJF, or one of its affiliates, acts as the managing member or general partner in Low-Income Housing Tax Credit ('LIHTC') funds and other funds of a similar nature, some of which require consolidation. These funds invest in housing project limited partnerships or limited liability companies ('LLCs') which purchase and develop affordable housing properties generally qualifying for federal and state low-income housing tax credits and/or provide a mechanism for banks and other institutions to meet certain regulatory obligations. The investments in project partnerships of all of the LIHTC fund VIEs which require consolidation are included in 'Other assets' on our Consolidated Statements of Financial Condition.

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### *Notes to Consolidated Financial Statements*

Our Bank segment holds investments which deliver tax benefits, including in LIHTC funds, some of which are managed by RJAHI. We have determined that LIHTC funds managed by RJAHI are VIEs. See additional discussion in this Note 2 regarding our evaluation and conclusions around consolidation of such VIEs. These investments are included in “Other assets” on our Consolidated Statements of Financial Condition. See the “Income taxes” section of this Note 2 for a discussion of our accounting for investments which qualify for tax credits.

## Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and software amortization. Property and equipment primarily consists of software, buildings, certain leasehold improvements, and furniture. Software includes both purchased software and internally developed software that has been placed in service, including certain software projects where development is in progress. Buildings primarily consists of owned facilities. Leasehold improvements are generally costs associated with lessee-owned interior office space improvements. Equipment primarily consists of communications and technology hardware. Depreciation of assets (other than land) is primarily calculated using the straight-line method over the estimated useful lives of the assets, within ranges outlined in the following table.

| Asset type | Estimated useful life |
| --- | --- |
| Buildings, building components and land improvements | 15 to 40 years |
| Furniture, fixtures and equipment | 3 to 5 years |
| Software | 2 to 10 years |
| Leasehold improvements (lessee-owned) | Lesser of useful life or lease term |

Costs for significant internally developed software projects are capitalized when the costs relate to development of new applications or modification of existing internal-use software that results in additional functionality. Internally developed software project costs related to preliminary-project and post-project activities are expensed as incurred.

Additions, improvements and expenditures that extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance, as well as all maintenance costs associated with software applications, are expensed in the period incurred. Depreciation expense associated with property and equipment is included in “Occupancy and equipment” expense on our Consolidated Statements of Income and Comprehensive Income. Amortization expense associated with computer software is included in “Communications and information processing” expense on our Consolidated Statements of Income and Comprehensive Income. Gains and losses on disposals of property and equipment are included in “Other” revenues on our Consolidated Statements of Income and Comprehensive Income in the period of disposal. See Note 13 for additional information regarding our property and equipment.

## Leases

We have operating leases for the premises we occupy in many of our U.S. and foreign locations, including our employee-based branch office operations. At inception, we determine if an arrangement to utilize a building or piece of equipment is a lease and, if so, the appropriate lease classification. Substantially all of our leases are operating leases. If the arrangement is determined to be a lease, we recognize a ROU asset in “Other assets” and a corresponding lease liability in “Other payables” on our Consolidated Statements of Financial Condition. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. We elected the practical expedient, where leases with an initial or acquired term of 12 months or less are not recorded as an ROU asset or lease liability. Our lease terms include any noncancelable periods and may reflect periods covered by options to extend or terminate when it is reasonably certain that we will exercise those options.

We record our lease ROU assets at the amount of the lease liability plus any prepaid rent, amounts paid for lessor-owned leasehold improvements, and initial direct costs, less any lease incentives and accrued rent. We record lease liabilities at commencement date (or acquisition date, for leases assumed through acquisitions) based on the present value of lease payments over the lease term, which is discounted using our commencement date or acquisition date incremental borrowing rate, or at the imputed rate within the lease, as appropriate. Our incremental borrowing rate considers the weighted-average yields on our senior notes payable, adjusted for collateralization and tenor. Payments that vary because of changes in facts or circumstances occurring after the commencement date, such as operating expense payments under a real estate lease, are considered variable and are expensed in the period incurred. For our real estate leases, we elected the practical expedient to account for the lease and non-lease components as a single lease. Lease expense for our lease payments is recognized on a straight-line basis over the lease term if the ROU asset has not been impaired or abandoned. See Note 14 for additional information on our leases.

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### *Notes to Consolidated Financial Statements*

## Bank deposits

Bank deposits include money market accounts, savings accounts, interest-bearing and non-interest-bearing checking accounts, and certificates of deposit held at Raymond James Bank and TriState Capital Bank. Raymond James Bank deposits are substantially comprised of deposits that are swept from the investment accounts of PCG clients through the RJBDP. TriState Capital Bank's deposits are generally comprised of money market and savings accounts and interest-bearing checking accounts. Deposits are stated at the principal amount outstanding. Interest on deposits is accrued and charged to interest expense daily and is paid or credited in accordance with the terms of the respective accounts. The interest rates on the vast majority of our deposits are determined based on market rates and, in certain cases, may be linked to an index, such as the effective federal funds rate. For additional detail regarding deposits, see Note 15.

## Contingent liabilities

We recognize liabilities for contingencies when there is an exposure that, when fully analyzed, indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Whether a loss is probable, and if so, the estimated range of possible loss, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and uncertainties. When a loss is probable and a range of possible loss can be estimated, we accrue the most likely amount within that range; if the most likely amount of possible loss within that range is not determinable, the minimum amount in the range of loss is accrued. No liability is recognized for those matters which, in management's judgment, the determination of a reasonable estimate of loss is not possible, or for which a loss is not determined to be probable.

We record liabilities related to legal and regulatory proceedings in 'Other payables' on our Consolidated Statements of Financial Condition. The determination of these liability amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client's account; the basis and validity of the claim; the possibility of wrongdoing on the part of one of our employees or financial advisors; previous results in similar cases; and legal precedents and case law. Each legal proceeding or significant regulatory matter is reviewed in each accounting period and the liability balance is adjusted as deemed appropriate by management. Any change in the liability amount is recorded through 'Other' expense on our Consolidated Statements of Income and Comprehensive Income in that period. The actual costs of resolving legal matters or regulatory proceedings may be substantially higher or lower than the recorded liability amounts for such matters. Our costs of defense related to such matters are expensed in the period they are incurred. Such defense costs are primarily related to external legal fees which are included within 'Professional fees' on our Consolidated Statements of Income and Comprehensive Income. See Note 19 for additional information.

## Share-based compensation

We account for the compensation cost related to share-based payment awards made to employees, directors, and independent contractors based on the estimated fair values of the awards on the date of grant. The compensation cost of our share-based awards, net of estimated forfeitures, is amortized over the requisite service period of the awards. Share-based compensation amortization is included in 'Compensation, commissions and benefits' expense on our Consolidated Statements of Income and Comprehensive Income. See Note 23 for additional information on our share-based compensation plan.

## Deferred compensation plans

We maintain various deferred compensation plans for the benefit of certain employees and independent contractors that provide a return to the participant based upon the performance of various referenced investments. For the Voluntary Deferred Compensation Plan ('VDCP'), Long-Term Incentive Plan ('LTIP'), and certain other plans, we purchase and hold company-owned life insurance policies on the lives of certain current and former participants to earn a competitive rate of return for participants and to provide a source of funds available to satisfy our obligations under the plan. See Note 12 for information regarding the carrying value of such policies. Compensation expense is recognized for all awards made under such plans with future service requirements over the requisite service period using the straight-line method. Changes in the value of the company-owned life insurance policies, as well as the expenses associated with the related deferred compensation plans, are recorded in 'Compensation, commissions and benefits' expense on our Consolidated Statements of Income and Comprehensive Income. See Note 23 for additional information.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

## Foreign currency translation

The statements of financial condition of the foreign subsidiaries we consolidate are translated at exchange rates as of the period-end. The statements of income are translated either at an average exchange rate for the period or, in certain cases, at the exchange rate in effect on the date which transactions occur. The gains or losses resulting from translating foreign currency financial statements into U.S. dollars are included in OCI and are thereafter presented in equity as a component of AOCI. Gains and losses relating to transactions in currencies other than the respective subsidiaries' functional currency are reported in 'Other' revenues in our Consolidated Statements of Income and Comprehensive Income.

## Income taxes

The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year. We utilize the asset and liability method to provide for income taxes on all transactions recorded in our consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the tax rates that we expect to be in effect when the underlying items of income and expense are realized. Our net deferred tax assets and net deferred tax liabilities presented on the financial statements are based upon the jurisdictional footprint of the firm. We consider our major jurisdictions for disclosure purposes to be federal, state, Canada, and the United Kingdom ('U.K.'). Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns, including the repatriation of undistributed earnings of foreign subsidiaries. Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of operations, or liquidity. See Note 18 for further information on our income taxes.

We hold investments in certain LIHTC and other funds which deliver tax benefits. For those investments in LIHTC funds that qualify for application of the proportional amortization method, we apply such method. Under the proportional amortization method, the LIHTC investment is amortized in proportion to the allocation of tax credits received in each period, and the investment amortization and the tax credits are presented on a net basis within 'Provision for income taxes' in our Consolidated Statements of Income and Comprehensive Income. Where our LIHTC investments do not qualify for such treatment, we account for such LIHTC and other fund investments under the equity method, with any losses recorded in 'Other' expenses. The federal tax credits that result from these investments reduce our provision for income taxes in the year the investment's activity is included in our taxable income. As a result, inclusion of these credits may not align to the period in which we recognize the losses on the related investments in our financial statements.

## Earnings per share ('EPS')

Basic EPS is calculated by dividing earnings attributable to common shareholders by the weighted-average common shares outstanding. Earnings attributable to common shareholders represents net income reduced by preferred stock dividends as well as the allocation of earnings and dividends to participating securities. Diluted EPS is similar to basic EPS, but adjusts for the dilutive effect of outstanding stock options, restricted stock awards ('RSAs'), and certain restricted stock units ('RSUs') by application of the treasury stock method.

## Evaluation of VIEs to determine whether consolidation is required

A VIE requires consolidation by the entity's primary beneficiary. Examples of entities that may be VIEs include certain legal entities structured as corporations, partnerships or LLCs.

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. We hold variable interests primarily in the following VIEs: certain private equity investments, a trust fund established for employee retention purposes ('Restricted Stock Trust Fund') and certain LIHTC funds or funds of a similar nature. See Note 10 for further information on our VIEs.

## *Determination of the primary beneficiary of a VIE*

We consolidate VIEs that are subject to assessment when we are deemed to be the primary beneficiary of the VIE. The process for determining whether we are the primary beneficiary of the VIE is to conclude whether we are a party to the VIE holding a variable interest that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE.

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

#### *LIHTC funds*

RJAHI is the managing member or general partner in a number of LIHTC funds having one or more investor members or limited partners. These LIHTC funds are organized as LLCs or limited partnerships for the purpose of investing in a number of project partnerships, which are limited partnerships or LLCs that purchase and develop, or hold, low-income housing properties qualifying for tax credits and/or provide a mechanism for banks and other institutions to meet their Community Reinvestment Act obligations throughout the U.S.

Our determination of the primary beneficiary of each fund in which RJAHI has a variable interest requires judgment and is based on an analysis of all relevant facts and circumstances, including: (1) an assessment of the characteristics of RJAHI's variable interest and other involvement it has with the fund, including involvement of related parties and any de facto agents, as well as the involvement of other variable interest holders, namely, limited partners or investor members, and (2) the fund's purpose and design, including the risks that the fund was designed to create and pass through to its variable interest holders. In the design of most tax credit fund VIEs, the investor members invest solely for tax attributes associated with the portfolio of low-income housing properties held by the fund. However, certain fund VIEs which invest and hold project partnerships that have already delivered most of the tax credits to their investors hold the projects to monetize anticipated future tax benefits for which the project may ultimately qualify. In both instances, RJAHI, as the managing member or general partner of the fund, is responsible for overseeing the fund's operations.

RJAHI sponsors two general types of tax credit funds designed to deliver tax benefits to the investors. Generally, neither type meets the VIE consolidation criteria. These types of funds include single investor funds and multi-investor funds. RJAHI does not typically provide guarantees related to the delivery or funding of tax credits or other tax attributes to the investor members or limited partners of tax credit funds. The investor member(s) or limited partner(s) of the VIEs bear the risk of loss on their investment. Additionally, under the tax credit funds' designed structure, the investor member(s) or limited partner(s) receive nearly all of the tax credits and tax-deductible loss benefits designed to be delivered by the fund entity, as well as a majority of any proceeds upon a sale of a project partnership held by a tax credit fund (fund level residuals). RJAHI earns fees from the fund for its services in organizing the fund, identifying and acquiring the project partnership investments and ongoing asset management, and receives a share of any residuals arising from sale of project partnerships upon the termination of the fund.

In single investor funds that deliver tax benefits, RJAHI has concluded that the one single investor member or limited partner in such funds, in nearly all instances, has significant participating rights over the activities that most significantly impact the economics of the fund. Therefore RJAHI, as managing member or general partner of such funds, is not the one party with power over such activities and resultantly is not deemed to be the primary beneficiary of such single investor funds and, in nearly all cases, these funds are not consolidated.

In multi-investor funds that deliver tax benefits, RJAHI has concluded that since the participating rights over the activities that most significantly impact the economics of the fund are not held by one single investor member or limited partner, RJAHI is deemed to have the power over such activities. RJAHI then assesses whether its projected benefits to be received from the multi-investor funds, primarily its share of any residuals upon the termination of the fund, are potentially significant to the fund. As such residuals received upon termination are not expected to be significant to the funds, in nearly all cases, these funds are not consolidated.

RJAHI may also sponsor other funds designed to hold projects to monetize future tax benefits for which the projects may qualify in either single investor or multi-investor form. In single investor form, the limited partner has significant participating rights over the activities that most significantly impact the economics of the fund, and therefore RJAHI is not the primary beneficiary of such funds and such funds are not consolidated. In multi-investor form, we have concluded that we meet the power criteria since participating rights are not held by any one single investor and thus RJAHI is deemed to have the power over such activities; however, we have concluded that we do not meet the benefits criteria given we do not expect the benefits to be potentially significant and therefore we are not the primary beneficiary and we do not consolidate the funds.

#### *Direct investments in LIHTC project partnerships*

Raymond James Bank and TriState Capital Bank are the investor members of LIHTC funds that deliver tax benefits which we have determined to be VIEs, and in which RJAHI, or its subsidiary, is the managing member. For Raymond James Bank, we have determined that it is the primary beneficiary of this VIE and therefore, we consolidate the fund. TriState Capital Bank also holds investments in other LIHTC funds for which we have determined that we are not the primary beneficiary. LIHTC funds which we consolidate are investor members in certain LIHTC project partnerships. Since unrelated third parties are the managing members of the investee project partnerships, we have determined that consolidation of these project partnerships is not required and the funds account for their project partnership investments under the equity method. The carrying values of

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

### *Notes to Consolidated Financial Statements*

the funds' project partnership investments are included in 'Other assets' on our Consolidated Statements of Financial Condition. Any losses on such equity method investments are included in 'Other' expenses on our Consolidated Statements of Income and Comprehensive Income. See 'Income taxes' section of this Note 2 for a discussion of our accounting for the tax benefits related to such investments.

## *Private Equity Interests*

As part of our private equity investments, at one time we held interests in a number of limited partnerships (our 'Private Equity Interests'). We concluded that the Private Equity Interests are VIEs, primarily as a result of the treatment of limited partner kick-out and participation rights as a simple majority of the limited partners cannot initiate an action to kick-out the general partner without cause and the limited partners with equity at-risk lack substantive participating rights.

In our analysis of the criteria to determine whether we were the primary beneficiary of the Private Equity Interests VIEs, we analyzed the power and benefits criteria. As of September 30, 2021, we had concluded that we were the primary beneficiary in certain of these entities as we met the power and benefits criteria. In such instances, we consolidated the Private Equity Interests VIE. However, as of September 30, 2022 we had sold or restructured such investments such that we were no longer deemed the primary beneficiary and therefore did not consolidate these entities. In our remaining Private Equity Interests, we are a passive limited partner investor, and thus, we do not have the power to make decisions that most significantly affect the economic performance of such VIEs. Accordingly, in such circumstances, we have determined we are not the primary beneficiary and therefore we do not consolidate the VIE.

## *Restricted Stock Trust Fund*

We utilize a trust in connection with certain of our RSU awards. This trust fund was established and funded for the purpose of acquiring our common stock in the open market to be used to settle RSUs granted as a retention vehicle for certain employees of our Canadian subsidiaries. We are deemed to be the primary beneficiary and, accordingly, consolidate this trust fund.

## **Acquisitions**

Our financial statements include the operations of acquired businesses starting from the completion of the acquisition. Acquisitions are generally recorded as business combinations, whereby the assets acquired and liabilities assumed are recorded on the date of acquisition at their respective estimated fair values, including any identifiable intangible assets. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

Significant judgment is required in estimating the fair value of certain acquired assets and liabilities. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain as they pertain to forward-looking views of our businesses, client behavior, and market conditions. We consider the income, market and cost approaches and place reliance on the approach or approaches deemed most appropriate to estimate the fair value of intangible assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability) and the discount rate applied to the cash flows.

Determining the useful life of an intangible asset also requires judgment. With the exception of certain customer relationships, the majority of our acquired intangible assets (e.g., customer relationships, trade names and non-compete agreements) are expected to have determinable useful lives. We estimate the useful lives of these intangible assets based on a number of factors including competitive environment, market share, trademark, brand history, underlying demand, and operating plans. Finite-lived intangible assets are amortized over their estimated useful life. Refer to Note 3 and our goodwill and intangible assets policies above for additional information.

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# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
*Notes to Consolidated Financial Statements*

# **NOTE 3 - ACQUISITIONS**

# ***TriState Capital***

On June 1, 2022, we completed our acquisition of all the outstanding shares of TriState Capital, including its wholly-owned subsidiaries, TriState Capital Bank and Chartwell Investment Partners, LLC (“Chartwell”), in a cash and stock transaction valued at $1.4 billion. TriState Capital Bank serves the commercial banking needs of middle-market businesses and financial services providers and focused private banking needs of high-net-worth individuals. Chartwell, a registered investment adviser, provides investment management services primarily to institutional investors, mutual funds, and individual investors. TriState Capital Bank will continue to operate as a separately branded firm and as an independently-chartered bank. TriState Capital Bank and Chartwell have been integrated into our Bank and Asset Management segments, respectively, and their results of operations have been included in our results prospectively from the closing date of June 1, 2022.

Under the terms of the acquisition agreement, TriState Capital common stockholders received $6.00 cash and 0.25 shares of RJF common stock for each share of TriState Capital common stock. Additionally, the TriState Capital Series C Perpetual Non-Cumulative Convertible Non-Voting Preferred Stock (“Series C Convertible Preferred Stock”) was converted to common shares at the prescribed exchange ratio and cashed out at $30 per share and each share of TriState Capital’s 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock and TriState Capital’s 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock was converted, respectively, into the right to receive one share of a newly created series A and series B preferred stock of RJF. The fair values of these newly created RJF series A and series B preferred stock were estimated as of the June 1, 2022 acquisition date based on quoted market prices for the instruments. See Note 20 for further details on these new classes of preferred stock.

Furthermore, as a component of our total purchase consideration for TriState Capital on June 1, 2022, in accordance with the terms of the acquisition agreement, 551 thousand RJF RSAs were issued at terms that mirrored RSAs of TriState Capital which were outstanding as of the acquisition date. In accordance with the terms of the acquisition agreement, the TriState Capital RSAs were converted to RJF RSAs using an exchange ratio that considered the RJF volume weighted average price for 10 trading days ending on the third business day prior to the closing of the acquisition. The fair value of the RSAs upon completion of the transaction was calculated as of the June 1, 2022 acquisition date based on the June 1, 2022 closing share price of our common stock and was allocated between the pre-acquisition service period ($28 million treated as purchase consideration) and the post-acquisition requisite service period, over which we will recognize share-based compensation amortization. See Note 23 for further details on these RSAs.

On December 15, 2021, during the period between announcement of the intent to acquire TriState Capital and the acquisition closing date, we had loaned TriState Capital $125 million under an unsecured fixed-to-floating rate note (the “Note”). The Note was set to mature on December 15, 2024 and bore interest at a fixed annual rate of 2.25%. Upon acquisition, the Note reverted to an intercompany instrument and subsequent to the closing date, the Note was forgiven. In accordance with GAAP, as of the acquisition date the Note was considered to have been effectively settled and the acquisition-date fair value of $123 million was treated as purchase consideration and included in the purchase price. The fair value of the Note on the acquisition date was determined using a discounted cash flow analysis based on the incremental borrowing rates for similar types of instruments at the acquisition date.

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# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**

# *Notes to Consolidated Financial Statements*

We accounted for our completed acquisition of TriState Capital as a business combination in accordance with GAAP. Accordingly, the purchase price attributable to this acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The following table summarizes the purchase consideration, fair value estimates of the assets acquired and liabilities assumed, and resulting goodwill as of the June 1, 2022 acquisition date.

| $ in millions, except share and per share amounts | TriState Capital June 1, 2022 |
| --- | --- |
| Fair value of consideration transferred: |  |
| Fair value of common stock issued: |  |
| Shares of RJF common stock issued | 7,861,189 |
| RJF share price as of June 1, 2022 | $97.74 |
| Fair value of RJF common stock issued for TriState Capital common stock | $768 |
| Other common stock consideration | 10 |
| Total fair value of common stock issued | 778 |
| Cash consideration (1) | 359 |
| Effective settlement of the Note | 123 |
| Preferred stock issued | 120 |
| RSAs issued | 28 |
| Total purchase price | $1,408 |
| Fair value of assets acquired: |  |
| Cash and cash equivalents | $457 |
| Available-for-sale securities | 1,524 |
| Derivative assets | 51 |
| Bank loans, net | 11,549 |
| Deferred income taxes, net | 26 |
| Identifiable intangible assets | 197 |
| Other assets | 226 |
| All other assets acquired | 59 |
| Total assets acquired | $14,089 |
| Fair value of liabilities assumed: |  |
| Bank deposits | $12,593 |
| Derivative liabilities | 125 |
| Other borrowings | 375 |
| All other liabilities assumed | 117 |
| Total liabilities assumed | $13,210 |
| Fair value of net identifiable assets acquired | $879 |
| Goodwill (2) | $529 |

(1) Cash consideration includes $6 per TriState Capital common share outstanding (for a total of $189 million) and $30 per TriState Capital Series C Convertible Preferred Stock outstanding (for a total of $154 million), as well as other cash amounts paid to settle TriState Capital warrants and options outstanding as of the closing and cash paid in lieu of fractional shares. We utilized our cash on hand to fund the cash component of the purchase consideration.

(2) The goodwill associated with this acquisition, which has been allocated to our Bank segment and primarily represents synergies from combining TriState Capital with our existing businesses, is not deductible for tax purposes.

Our Consolidated Statements of Income and Comprehensive Income included net revenues and pre-tax income attributable to TriState Capital of $141 million and $38 million, respectively, for the year ended September 30, 2022. The pre-tax income included an initial provision for credit losses on loans and lending commitments acquired as part of the acquisition of $26 million (included in “Bank loan provision/(benefit) for credit losses”) and $5 million (included in “Other” expense), respectively. These provisions were required under GAAP to be recorded in earnings in the reporting period following the acquisition date.

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# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 *Notes to Consolidated Financial Statements*

# **All other acquisitions**

On January 21, 2022, we completed our acquisition of U.K.-based Charles Stanley Group PLC (“Charles Stanley”) using cash on hand as of the acquisition date. The acquisition enables us to accelerate our financial planning, investment advisory and securities transaction services growth in the U.K. and, through Charles Stanley’s multiple affiliation options, gives us the ability to offer wealth management affiliation choices to financial advisors in the U.K. consistent with our PCG model in the U.S. and Canada. Charles Stanley has been integrated into our PCG segment and its results of operations have been included in our results prospectively from the closing date of January 21, 2022.

On July 1, 2022, we completed our acquisition of SumRidge Partners, LLC (“SumRidge Partners”) using cash on hand as of the acquisition date. SumRidge Partners is a technology-driven fixed income market maker specializing in investment-grade and high-yield corporate bonds, municipal bonds, and institutional preferred securities. The acquisition of SumRidge Partners added an institutional market-making operation, as well as additional trading technologies and risk management tools to our existing fixed income operations. SumRidge Partners has been integrated into our Capital Markets segment and its results of operations have been included in our results prospectively from the closing date of July 1, 2022.

We accounted for our completed acquisitions of Charles Stanley and SumRidge Partners as business combinations in accordance with GAAP. Accordingly, the aggregate purchase price attributable to each acquisition was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values. The following table summarizes the aggregate purchase consideration, fair value estimates of the assets acquired and liabilities assumed, and resulting goodwill as of their respective acquisition dates.

| $ in millions | Charles Stanley (1) and SumRidge Partners |
| --- | --- |
| Aggregate purchase consideration | $686 |
| Fair value of assets acquired: |  |
| Cash and cash equivalents | $156 |
| Assets segregated for regulatory purposes | 1,890 |
| Trading assets | 631 |
| Brokerage client receivables | 91 |
| Other receivables | 440 |
| Identifiable intangible assets | 137 |
| All other assets acquired | 38 |
| Total assets acquired | $3,383 |
| Fair value of liabilities assumed: |  |
| Trading liabilities | $552 |
| Brokerage client payables | 2,064 |
| All other liabilities assumed | 347 |
| Total liabilities assumed | $2,963 |
| Fair value of net identifiable assets acquired | $420 |
| Goodwill | $266 |
| Goodwill by segment: |  |
| PCG (2) | $164 |
| Capital Markets (3) | 102 |
| Total goodwill | $266 |

(1) The fair values of assets acquired and liabilities assumed associated with the Charles Stanley acquisition were denominated in British pounds sterling (“GBP”) and converted to U.S. dollars using the spot rate of 1.3554 as of January 21, 2022.

(2) The goodwill associated with the Charles Stanley acquisition, which has been allocated to our PCG segment, primarily represents synergies from combining Charles Stanley with our existing businesses and is not deductible for tax purposes.

(3) The goodwill associated with the SumRidge Partners acquisition, which has been allocated to our Capital Markets segment, primarily represents synergies from combining SumRidge Partners with our existing businesses and is deductible for tax purposes over 15 years.

Our Consolidated Statements of Income and Comprehensive Income included combined net revenues attributable to Charles Stanley and SumRidge Partners of $187 million and an insignificant amount of pre-tax income for the year ended September 30, 2022.

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# **RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES**  
 *Notes to Consolidated Financial Statements*

# **Determination of fair value**

The following is a description of the methods used to determine the fair values of significant assets and liabilities acquired:

*Cash and cash equivalents; Assets segregated for regulatory purposes; Brokerage client receivables; Other receivables; and Brokerage client payables:* The pre-close carrying amount of these assets and liabilities was a reasonable estimate of fair value based on the short-term nature of these assets and liabilities.

*Trading assets and liabilities:* The pre-close carrying amount of trading assets and liabilities as of the acquisition date were used as reasonable estimates of fair value. We utilized prices from third-party pricing services to corroborate these estimates of fair value.

*Available-for-sale securities:* The fair values of available-for-sale securities were based on quoted market prices for the same or similar securities, recently executed transactions or third-party pricing models.

*Derivatives assets and liabilities:* The pre-close carrying amount of derivative assets and liabilities, which utilized valuations from third-party pricing services, were used as reasonable estimates of fair value.

*Bank loans:* Fair values for bank loans were determined using a discounted cash flow methodology that considered loan type and related collateral, credit loss expectations, classification status, market interest rates and other market factors from the perspective of a market participant. Loans were segregated into specific pools according to similar characteristics, including risk, interest rate type (i.e., fixed or floating), underlying benchmark rate, and payment type and were treated in the aggregate when determining the fair value of each pool. The discount rates were derived using a build-up method inclusive of the weighted average cost of funding, estimated servicing costs and an adjustment for liquidity and then compared to current origination rates and other relevant market data.

Purchased loans were evaluated and classified as either purchased credit deteriorated (“PCD”), which indicates that the loan has experienced more than insignificant credit deterioration since origination, or non-PCD loans. For PCD loans, the sum of the loan’s purchase price and allowance for credit losses, which was determined as of the acquisition date using the same allowance methodology applied to the TriState Capital Bank loan portfolio as of September 30, 2022, became its initial amortized cost basis. The initial allowance for credit losses on PCD loans is established in purchase accounting, with a corresponding offset to goodwill (i.e., is not recorded in earnings). As required under GAAP, an initial allowance for credit losses on non-PCD loans is required to be established through a provision for credit losses (i.e., recorded in earnings) in the first reporting period following the acquisition. Subsequent changes in the allowance for credit losses for PCD and non-PCD loans are recognized in the bank loan provision/(benefit) for credit losses. For non-PCD loans, the difference between the fair value and the unpaid principal balance was considered the fair value mark. The non-credit discount or premium related to PCD loans and the fair value mark on non-PCD loans will be accreted or amortized into interest income over the weighted average life of the underlying loans, which may vary based on prepayments.

Of the total bank loans acquired in the TriState Capital acquisition with an unpaid principal balance of $11.70 billion, $11.36 billion were considered non-PCD loans and $337 million were considered PCD loans. The following table reconciles the difference between the unpaid principal balance and purchase price of PCD loans at acquisition.

| $ in millions | June 1, 2022 |
| --- | --- |
| Unpaid principal balance of PCD loans | $337 |
| Allowance for credit losses on PCD loans | (3) |
| Non-credit discount on PCD loans | (10) |
| Purchase price of PCD loans | $324 |

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# RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

# Notes to Consolidated Financial Statements

Identifiable intangible assets: The fair values of the significant identifiable intangible assets were estimated using the following income approaches.

- Customer relationships - The fair values of customer relationships were estimated using a multi-period excess earnings approach that considered future period post-tax earnings, as well as a discount rate.
- Trade names - The fair values of trade names were estimated using a relief from royalty approach which was based on a forecast of the after-tax royalties we would save by ownership of the intangible assets rather than licensing the use of those assets.
- Core deposit intangible (“CDI”) - The fair value of the CDI asset was estimated using a discounted cash flow approach, specifically the favorable source of funds method, that considered the servicing and interest costs of the acquired deposit base, an estimate of the cost associated with alternative funding sources, expected client attrition rates, deposit growth rates, and a discount rate.
- Developed technology - The fair value of developed technology was estimated primarily using a multi-period excess earnings approach which was based on a forecast of the expected future net cash flows attributable to the assets over the estimated remaining lives of the assets.

These cash flow forecasts were then adjusted to present value by applying appropriate discount rates based on current market rates that reflect the risks associated with the cash flow streams.

The following table summarizes the fair value and weighted average estimated useful life of identifiable intangibles assets acquired as of the respective acquisition dates.

| $ in millions | TriState Capital |  | Charles Stanley and SumRidge Partners |  |
| --- | --- | --- | --- | --- |
|  | Estimated fair value | Weighted average estimated useful life | Estimated fair value | Weighted average estimated useful life |
| Fair value of identifiable intangible assets acquired: |  |  |  |  |
| Core deposit intangible | $89 | 10 years | $ - | - |
| Customer relationships | 54 | 17 years | 80 | 12 years |
| Trade names | 33 | 20 years | 17 | 9 years |
| Developed technology | 16 | 10 years | 40 | 8 years |
| Non-amortizing customer relationships | 5 | N/A | - | N/A |
| Total identifiable intangibles assets acquired | $197 |  | $137 |  |

Other assets: Other assets primarily include company-owned life insurance policies, ROU assets, investments in FHLB stock, and investments in LIHTC funds. The pre-close historical carrying values of company-owned life insurance policies, investments in FHLB stock and investments in LIHTC funds were used as a reasonable estimate of fair value. ROU lease assets were measured at the same amount as the lease liability, as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms (see “Other payables” section below for additional details regarding acquired lease liabilities).

Bank deposits: The fair values used for demand and savings deposits equaled the amounts payable on demand at the acquisition date. The fair values for time deposits were estimated by applying a discounted cash flow method to discount the principal and interest payments from maturity at the yields offered by similar banks as of the acquisition date.

Other borrowings: Other borrowings was comprised of 5.75% fixed-to-floating subordinated notes due 2030 and short-term FHLB advances (see Note 16 for further details on these borrowings). The fair value of the subordinated note was estimated based on quoted market prices as of the valuation date. The carrying amount of the FHLB advances was a reasonable estimate of fair value based on the short-term nature of these instruments and that the vast majority are floating-rate advances.

All other liabilities assumed: All other liabilities assumed primarily included payables to brokers, dealers, and clearing organizations, lease liabilities, accrued compensation, commissions, and benefits, and the fair value of unfunded lending commitments. The pre-close historical carrying amount of payables to brokers, dealers, and clearing organizations and accrued compensation, commissions, and benefits was a reasonable estimate of fair value based on the short-term nature of these liabilities. Lease liabilities were measured at the present value of the remaining lease payments determined using a discounted cash flow method based on our cost of borrowing, as if the acquired lease were a new lease at the acquisition date. The fair value of unfunded lending commitments was estimated using a discounted cash flow approach.

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