Wealth Management Advice, Products & Services Trust Services About the Trust Services Division Statement of Regulatory Capital and Related Risk RAYMOND JAMES TRUST (CANADA) FIDUCIE RAYMOND JAMES (CANADA) (The “Company”) Statement of Regulatory Capital and Related Risk Financial instruments Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. For the purposes of this disclosure, the Company separates market risk into three categories: fair value risk, interest rate risk and currency risk. Fair value risk: The fair value of marketable securities is determined directly by reference to published price quotations in an active market and are therefore included in Level 1 of the fair value hierarchy. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their fair value due to their short-term nature. Interest rate risk: Interest rate risk is the risk the value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Fluctuations in interest rates have a direct impact on the market valuation of the Company’s marketable securities. Generally, interest income will move with interest rates over the long-term. Short-term interest rate fluctuations will generally create unrealized gains or losses on marketable securities. The Company’s interest income will be reduced during sustained periods of lower interest rates as higher yielding fixed income securities are called, mature, or are sold and the proceeds are reinvested at lower rates, and will likely result in unrealized gains in the value of fixed income securities the Company continues to hold, as well as realized gains to the extent the relevant securities are sold. During periods of rising interest rates, the market value of the Company’s existing fixed income securities will generally decrease and gains on fixed income securities will likely be reduced or result in realized losses. Currency risk: Currency risk arises from the possibility that changes in the price of foreign currencies will result in losses. As at December 31, 2020, the Company’s financial assets and financial liabilities are primarily denominated in Canadian dollars. As a result, the Company is not significantly exposed to currency risk. Credit Risk Credit risk is the risk associated with the inability of a third party to fulfill its payment obligations. The Company is exposed to credit risk relating to its cash and accounts receivable. The Company’s maximum credit risk exposure correspond to the carrying value of these financial assets. All cash and marketable securities balances are held with financial institutions with credit ratings of A or above as rated by Standard & Poor’s. Liquidity Risk Liquidity risk is the risk that the Company will be unable to meet a demand for cash to fund its obligations as they come due. The Company’s management oversees the Company’s liquidity to ensure it has access to enough readily available funds to cover its financial obligations as they come due and sustain its normal operations and future growth. The contractual maturities of the Company’s financial liabilities are all due within one year. Regulatory Capital The Company is subject to the regulatory capital requirements imposed by the OSFI and has capital management policies, procedures and controls to ensure compliance with these capital requirements are maintained. The Company maintains a very low liquidity risk tolerance by keeping regulatory capital invested primarily in Government of Canada issues. The Company’s Tier 1 regulatory capital and capital ratios are published on the OSFI website and can be viewed at this link. The Company does not have Tier 2 or Tier 3 capital. As at, and for the year ended December 31, 2020, the Company was in compliance with the capital requirements which include the following: Minimum paid-in capital Under section 56(1) of the Trust and Loans Companies Act, the Company is required to maintain paid-in capital of at least $5,000,000. As at December 31, 2020, the Company has capital stock in the amount of $6,379,850. Capital Adequacy Requirements Under the Capital Adequacy Requirements (“CAR”) as issued by the OSFI, the Company is required to maintain certain capital ratios using an approach with risk-weighted assets and defined formulas for determining those ratios. For the 2020 period, the Company was required to maintain minimum Common equity tier 1 (“CET1”) ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a Total capital ratio of 10.5%. The Company’s capital ratios have been calculated as follows for the period ended December 31, 2020: 2020 2019 000s 000s Common Equity Tier 1 capital: Share capital $6,380 $5,880 Deficit (465) (161) Accumulated other comprehensive income - 31 Intangible asset (111) (111) Deferred tax asset (206) - 5,598 5,639 Risk-weighted assets: Credit risk 282 288 Market risk - - Operational risk 938 1,025 1,220 1,313 Capital ratios: Common Equity Tier 1 capital 458.9% 429.5% Tier 1 capital 458.9% 429.5% Total capital 458.9% 429.5% Leverage 86.4% n/a Frequency of disclosure As a smaller less complex institution with a stable risk profile, Raymond James Trust (Canada) (and formerly Oak Trust Company) reports these qualitative and quantitative disclosures annually, as at its fiscal year. About Us Careers News & Media Contact Us Accessibility Legal Privacy Policy Raymond James Ltd. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and of the Canadian Investor Protection Fund (CIPF). Customers’ accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca. 3Macs, MacDougall, MacDougall & MacTier and Raymond James Correspondent Services are divisions of Raymond James Ltd. Raymond James Ltd. is an integrated financial services firm. Its subsidiaries, Raymond James Investment Counsel Ltd., Raymond James Financial Planning Ltd., Raymond James Trust (Canada) and Raymond James Trust (Québec) Ltd. are not members of the IIROC or the CIPF. Please consult each subsidiary’s webpages for applicable corporate, regulatory or membership information. © 2021 Raymond James Ltd. All rights reserved.