Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


$ in millions, except per share amounts	December 31, 2021		September 30, 2021
Assets:
Cash and cash equivalents	$	8,216	$	7,201
Assets segregated for regulatory purposes and restricted cash ($9,599 and $2,100 at fair value)	15,490		11,348
Collateralized agreements	347		480
Financial instruments, at fair value:
Trading assets ($292 and $326 pledged as collateral)	370		610
Available-for-sale securities ($19 and $20 pledged as collateral)	8,547		8,315
Derivative assets	214		255
Other investments ($22 and $22 pledged as collateral)	711		357
Brokerage client receivables, net	2,721		2,831
Other receivables, net	1,038		999
Bank loans, net	26,132		24,994
Loans to financial advisors, net	1,108		1,057
Deferred income taxes, net	305		305
Goodwill and identifiable intangible assets, net	874		882
Other assets	2,388		2,257
Total assets	$	68,461	$	61,891

Liabilities and shareholders’ equity:
Bank deposits	$	34,092	$	32,495
Collateralized financings	268		277
Financial instrument liabilities, at fair value:
Trading liabilities	171		176
Derivative liabilities	232		228
Brokerage client payables	19,201		13,991
Accrued compensation, commissions and benefits	1,428		1,825
Other payables	1,524		1,701
Other borrowings	856		858
Senior notes payable	2,037		2,037
Total liabilities	59,809		53,588
Commitments and contingencies (see Note 15)
Shareholders’ equity
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding	—		—
Common stock; $.01 par value; 350,000,000 shares authorized; 239,160,005 and 239,062,254 shares issued as of December 31, 2021 and September 30, 2021, respectively, and 207,465,632 and 205,738,821 shares outstanding as of December 31, 2021 and September 30, 2021, respectively	2		2
Additional paid-in capital	2,055		2,088
Retained earnings	8,003		7,633
Treasury stock, at cost; 31,694,373 and 33,323,433 common shares as of December 31, 2021 and September 30, 2021, respectively	(1,373)		(1,437)
Accumulated other comprehensive loss	(87)		(41)
Total equity attributable to Raymond James Financial, Inc.	8,600		8,245
Noncontrolling interests	52		58
Total shareholders’ equity	8,652		8,303
Total liabilities and shareholders’ equity	$	68,461	$	61,891

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)


	Three months ended December 31,
in millions, except per share amounts	2021		2020
Revenues:
Asset management and related administrative fees	$	1,382	$	1,067
Brokerage revenues:
Securities commissions	425		381
Principal transactions	133		147
Total brokerage revenues	558		528
Account and service fees	177		145
Investment banking	425		261
Interest income	225		203
Other	51		56
Total revenues	2,818		2,260
Interest expense	(37)		(38)
Net revenues	2,781		2,222
Non-interest expenses:
Compensation, commissions and benefits	1,884		1,500
Non-compensation expenses:
Communications and information processing	112		99
Occupancy and equipment	59		57
Business development	35		23
Investment sub-advisory fees	38		28
Professional fees	26		30
Bank loan provision/(benefit) for credit losses	(11)		14

Acquisition-related expenses	6		2

Other	74		70
Total non-compensation expenses	339		323
Total non-interest expenses	2,223		1,823
Pre-tax income	558		399
Provision for income taxes	112		87
Net income	$	446	$	312

Earnings per common share – basic	$	2.16	$	1.52
Earnings per common share – diluted	$	2.10	$	1.48
Weighted-average common shares outstanding – basic	206.3		205.2
Weighted-average common and common equivalent shares outstanding – diluted	212.4		209.6

Net income	$	446	$	312
Other comprehensive income/(loss), net of tax:
Available-for-sale securities	(55)		(17)
Currency translations, net of the impact of net investment hedges	—		18
Cash flow hedges	9		5
Total other comprehensive income/(loss), net of tax	(46)		6
Total comprehensive income	$	400	$	318

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


	Three months ended December 31,
$ in millions, except per share amounts	2021		2020
Common stock, par value $.01 per share:
Balance beginning of period	$	2	$	2
Share issuances	—		—
Balance end of period	2		2

Additional paid-in capital:
Balance beginning of period	2,088		2,007
Employee stock purchases	8		6
Vesting of restricted stock units and exercise of stock options, net of forfeitures	(105)		(59)
Restricted stock unit and stock option expense	64		42

Balance end of period	2,055		1,996

Retained earnings:
Balance beginning of period	7,633		6,484
Cumulative adjustments for changes in accounting principles	—		(35)
Net income attributable to Raymond James Financial, Inc.	446		312
Cash dividends declared (see Note 21)	(76)		(59)
Balance end of period	8,003		6,702

Treasury stock:
Balance beginning of period	(1,437)		(1,390)
Purchases/surrenders	(10)		(18)
Vesting of restricted stock units and exercise of stock options, net of forfeitures	74		54
Balance end of period	(1,373)		(1,354)

Accumulated other comprehensive income/(loss):
Balance beginning of period	(41)		11
Other comprehensive income/(loss), net of tax	(46)		6

Balance end of period	(87)		17
Total equity attributable to Raymond James Financial, Inc.	$	8,600	$	7,363

Noncontrolling interests:
Balance beginning of period	$	58	$	62
Net income attributable to noncontrolling interests	2		13

Other	(8)		—


Balance end of period	52		75
Total shareholders’ equity	$	8,652	$	7,438

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended December 31,
$ in millions	2021		2020
Cash flows from operating activities:
Net income	$	446	$	312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	35		32
Deferred income taxes	14		18
Premium and discount amortization on available-for-sale securities and net (gain)/loss on other investments	14		(1)
Provisions/(benefits) for credit losses and legal and regulatory proceedings	(8)		16
Share-based compensation expense	65		43
Unrealized gain on company-owned life insurance policies, net of expenses	(38)		(83)

Other	(1)		22
Net change in:
Assets segregated for regulatory purposes excluding cash and cash equivalents	(7,499)		(2,749)
Collateralized agreements, net of collateralized financings	125		(62)
Loans provided to financial advisors, net of repayments	(56)		5
Brokerage client receivables and other receivables, net	197		254
Trading instruments, net	209		22
Derivative instruments, net	58		(9)
Other assets	(431)		(530)
Brokerage client payables and other payables	5,021		4,970
Accrued compensation, commissions and benefits	(395)		(253)
Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale	(43)		(86)
Net cash provided by/(used in) operating activities	(2,287)		1,921

Cash flows from investing activities:
Increase in bank loans, net	(1,137)		(704)
Proceeds from sales of loans held for investment	75		16

Purchases of available-for-sale securities	(824)		(1,243)
Available-for-sale securities maturations, repayments and redemptions	501		544
Proceeds from sales of available-for-sale securities	—		519
Business acquisitions, net of cash acquired	—		(218)
Additions to property and equipment	(19)		(25)
Investment in note receivable	(125)		—
Other investing activities, net	(26)		(12)
Net cash used in investing activities	(1,555)		(1,123)

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



RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three months ended December 31,
$ in millions	2021		2020
Cash flows from financing activities:







Increase in bank deposits	1,597		989
Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements	(51)		(35)
Dividends on common stock	(60)		(55)
Exercise of stock options and employee stock purchases	17		18
Repayments of Federal Home Loan Bank advances and other borrowed funds	(1)		(26)
Other financing, net	(5)		—
Net cash provided by financing activities	1,497		891

Currency adjustment:
Effect of exchange rate changes on cash	3		73
Net increase/(decrease) in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash	(2,342)		1,762
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year	16,449		9,634
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period	$	14,107	$	11,396

Cash and cash equivalents	$	8,216	$	5,377
Cash and cash equivalents segregated for regulatory purposes and restricted cash	5,891		6,019
Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period	$	14,107	$	11,396

Supplemental disclosures of cash flow information:
Cash paid for interest	$	41	$	35
Cash paid for income taxes, net	$	12	$	67
Cash outflows for lease liabilities	$	25	$	27
Non-cash right-of-use assets recorded for new and modified leases	$	16	$	50

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 31, 2021

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 retail banking services, and trust services. For further information about our business segments, see Note 22 of this Form 10-Q. 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 unaudited condensed consolidated financial statements include the accounts of RJF and its consolidated subsidiaries that are generally controlled through a majority voting interest. We consolidate all of our 100%-owned 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 of our Annual Report on Form 10-K (“2021 Form 10-K”) for the year ended September 30, 2021, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and in Note 10 of this Form 10-Q. When we do not have a controlling interest in an entity, but we exert significant influence over the entity, we apply the equity method of accounting. All material intercompany balances and transactions have been eliminated in consolidation.

During our fiscal fourth quarter of 2021, our Board approved a three-for-two 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.

Accounting estimates and assumptions

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

The nature of our business is such that the results of any interim period are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in our 2021 Form 10-K. To prepare condensed consolidated financial statements in accordance with GAAP, we must make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements.

Reclassifications

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

NOTE 2 – UPDATE OF SIGNIFICANT ACCOUNTING POLICIES

A summary of our significant accounting policies is included in Note 2 of our 2021 Form 10-K. There have been no significant changes in our significant accounting policies since September 30, 2021.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 – ACQUISITIONS

Recent acquisition activities

Charles Stanley

On January 21, 2022, we completed our acquisition of all of the outstanding share capital of United Kingdom (“U.K.”)-based Charles Stanley Group PLC (“Charles Stanley”) at a price of £5.15 per share, or £274 million ($372 million as of January 21, 2022). As of December 31, 2021, we had segregated $385 million in cash to fund the acquisition on the closing date, which was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition. 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 Private Client Group (“PCG”) model in the U.S. and Canada. For purposes of certain acquisition-related financial reporting requirements, the Charles Stanley acquisition is not considered a material acquisition. Charles Stanley will be integrated into our PCG segment and its results of operations will be included in our results prospectively from the closing date of January 21, 2022.

TriState Capital

On October 20, 2021, we announced we had entered into a definitive agreement to acquire TriState Capital Holdings, Inc. (“TriState Capital”) in a combination cash and stock transaction, valued at approximately $1.1 billion. Under the terms of the agreement, TriState Capital common stockholders will receive $6.00 cash and 0.25 RJF shares for each share of TriState Capital common stock, which represents per share consideration of $31.09 based on the closing price of RJF common stock on October 19, 2021. We have entered into an agreement with the sole holder of the TriState Capital Series C Perpetual Non-Cumulative Convertible Non-Voting Preferred Stock (“Series C Convertible Preferred Stock”) pursuant to which the Series C Convertible Preferred Stock will be converted to common shares at the prescribed exchange ratio and cashed out at $30 per share. The TriState Capital Series A Non-Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) and Series B Non-Cumulative Perpetual Preferred Stock (“Series B Preferred Stock”) will remain outstanding and will be converted into equivalent preferred stock of RJF. The transaction, which is subject to customary closing conditions, including regulatory approvals and approval by TriState Capital shareholders, is expected to close later in fiscal 2022. We currently have the ability to utilize our cash on hand to fund the cash component of the acquisition. TriState Capital offers private banking, commercial banking, and investment management products and services. TriState Capital will continue to operate as a separately branded firm and as an independently-charted bank subsidiary upon closing of the acquisition.

On December 15, 2021, we loaned TriState Capital $125 million under an unsecured fixed-to-floating rate note (the “Note”). The Note matures on December 15, 2024 and bears interest at a fixed annual rate of 2.25% for the first year, and at a floating annual rate thereafter until maturity. The floating rate resets quarterly to a rate equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 2.11%. The Note is not redeemable prior to December 15, 2022. On and after December 15, 2022, the Note is redeemable on any interest payment date at 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. As of December 31, 2021, the outstanding Note balance of $125 million and the related accrued interest was included in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

Acquisition-related expenses

Certain acquisition and integration costs associated with these acquisitions and acquisitions completed in our prior fiscal year were included in “Acquisition-related expenses” on our Condensed Consolidated Statements of Income and Comprehensive Income. Such costs primarily included legal and other professional fees and amortization expense related to identifiable intangible assets with short useful lives associated with our fiscal 2021 acquisitions of Financo LLC (“Financo”) and Cebile Capital (“Cebile”). The following table details our acquisition-related expenses.


	Three months ended December 31,
$ in millions	2021		2020
Acquisition-related expenses:
Legal fees	$	2	$	1
Identifiable intangible asset amortization	4		—
Other professional fees	—		1
Total Acquisition-related expenses	$	6	$	2

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4 – FAIR VALUE

Our “Financial instruments” and “Financial instrument liabilities” on our Condensed Consolidated Statements of Financial Condition are recorded at fair value. For further information about such instruments and our significant accounting policies related to fair value, see Notes 2 and 4 of our 2021 Form 10-K. The following tables present assets and liabilities measured at fair value on a recurring basis. Netting adjustments represent the impact of counterparty and collateral netting on our derivative balances included on our Condensed Consolidated Statements of Financial Condition. See Note 6 for additional information.


$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of December 31, 2021
Assets at fair value on a recurring basis:
Assets segregated for regulatory purposes (1)	$	9,599	$	—	$	—	$	—	$	9,599
Trading assets:
Municipal and provincial obligations	—		91		—		—		91
Corporate obligations	11		40		—		—		51
Government and agency obligations	23		71		—		—		94
Agency mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMOs”) and asset-backed securities (“ABS”)	—		89		—		—		89
Non-agency CMOs and ABS	—		27		—		—		27
Total debt securities	34		318		—		—		352
Equity securities	10		1		—		—		11
Brokered certificates of deposit	—		5		—		—		5
Other	—		—		2		—		2
Total trading assets	44		324		2		—		370
Available-for-sale securities (2)	15		8,532		—		—		8,547
Derivative assets:
Interest rate - matched book	—		171		—		—		171
Interest rate - other	3		111		—		(72)		42

Other	—		—		1		—		1
Total derivative assets	3		282		1		(72)		214
Other investments - private equity - not measured at net asset value (“NAV”)	—		—		75		—		75
All other investments:
Government and agency obligations (3)	436		—		—		—		436
Other	93		2		23		—		118
Total all other investments	529		2		23		—		554
Subtotal	10,190		9,140		101		(72)		19,359
Other investments - private equity - measured at NAV									82
Total assets at fair value on a recurring basis	$	10,190	$	9,140	$	101	$	(72)	$	19,441

Liabilities at fair value on a recurring basis:
Trading liabilities:

Corporate obligations	$	—	$	11	$	—	$	—	$	11
Government and agency obligations	128		—		—		—		128


Total debt securities	128		11		—		—		139
Equity securities	32		—		—		—		32

Total trading liabilities	160		11		—		—		171
Derivative liabilities:
Interest rate - matched book	—		171		—		—		171
Interest rate - other	2		101		—		(74)		29
Foreign exchange	—		32		—		—		32

Total derivative liabilities	2		304		—		(74)		232
Total liabilities at fair value on a recurring basis	$	162	$	315	$	—	$	(74)	$	403

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of September 30, 2021
Assets at fair value on a recurring basis:
Assets segregated for regulatory purposes (1)	$	2,100	$	—	$	—	$	—	$	2,100
Trading assets:
Municipal and provincial obligations	—		155		—		—		155
Corporate obligations	16		63		—		—		79
Government and agency obligations	15		94		—		—		109
Agency MBS, CMOs and ABS	—		211		—		—		211
Non-agency CMOs and ABS	—		14		—		—		14
Total debt securities	31		537		—		—		568
Equity securities	8		4		—		—		12
Brokered certificates of deposit	—		16		—		—		16
Other	—		—		14		—		14
Total trading assets	39		557		14		—		610
Available-for-sale securities (2)	15		8,300		—		—		8,315
Derivative assets:
Interest rate - matched book	—		193		—		—		193
Interest rate - other	16		128		—		(87)		57
Foreign exchange	—		5		—		—		5
Total derivative assets	16		326		—		(87)		255
Other investments - private equity - not measured at NAV	—		—		75		—		75
All other investments:
Government and agency obligations (3)	86		—		—		—		86
Other	77		2		23		—		102
Total all other investments	163		2		23		—		188
Subtotal	2,333		9,185		112		(87)		11,543
Other investments - private equity - measured at NAV									94
Total assets at fair value on a recurring basis	$	2,333	$	9,185	$	112	$	(87)	$	11,637

Liabilities at fair value on a recurring basis:
Trading liabilities:
Municipal and provincial obligations	$	2	$	—	$	—	$	—	$	2
Corporate obligations	—		6		—		—		6
Government and agency obligations	137		—		—		—		137

Total debt securities	139		6		—		—		145
Equity securities	28		3		—		—		31

Total trading liabilities	167		9		—		—		176
Derivative liabilities:
Interest rate - matched book	—		193		—		—		193
Interest rate - other	16		106		—		(88)		34

Other	—		—		1		—		1
Total derivative liabilities	16		299		1		(88)		228
Total liabilities at fair value on a recurring basis	$	183	$	308	$	1	$	(88)	$	404

(1) These assets consist of U.S. Treasury securities (“U.S. Treasuries”) with maturities greater than 3 months as of our date of purchase.

(2) Substantially all of our available-for-sale securities consist of agency MBS and agency CMOs. See Note 5 for further information.

(3) These assets are comprised of U.S. Treasuries primarily purchased to meet certain deposit requirements with clearing organizations or to meet future broker-dealer customer reserve requirements.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 3 recurring fair value measurements

The following tables present the changes in fair value for Level 3 assets and liabilities measured at fair value on a recurring basis. The realized and unrealized gains and losses in the tables may include changes in fair value that were attributable to both observable and unobservable inputs. In the following tables, gains/(losses) on trading instruments are reported in “Principal transactions” and gains/(losses) on other investments are reported in “Other” revenues on our Condensed Consolidated Statements of Income and Comprehensive Income.


Three months ended December 31, 2021 Level 3 instruments at fair value
	Financial assets								Financial liabilities
	Trading assets		Derivative assets		Other investments				Derivative liabilities
$ in millions	Other		Other		Private equity investments		All other		Other
Fair value beginning of period	$	14	$	—	$	75	$	23	$	(1)
Total gains included in earnings	2		1		—		—		1
Purchases and contributions	25		—		—		—		—
Sales and distributions	(39)		—		—		—		—
Transfers:
Into Level 3	—		—		—		—		—
Out of Level 3	—		—		—		—		—
Fair value end of period	$	2	$	1	$	75	$	23	$	—
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	(1)	$	2	$	—	$	—	$	—


Three months ended December 31, 2020 Level 3 instruments at fair value
	Financial assets						Financial liabilities
	Trading assets		Other investments				Derivative liabilities
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	12	$	37	$	22	$	(5)
Total gains/(losses) included in earnings	2		15		—		4
Purchases and contributions	6		—		—		—
Sales and distributions	(17)		—		—		—
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	3	$	52	$	22	$	(1)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	3	$	15	$	—	$	3

As of December 31, 2021, 28% of our assets and less than 1% of our liabilities were measured at fair value on a recurring basis. In comparison, as of September 30, 2021, 19% of our assets and less than 1% of our liabilities were measured at fair value on a recurring basis. The increase in assets measured at fair value on a recurring basis as a percentage of total assets was primarily due to a significant increase in assets segregated for regulatory purposes, driven by a significant increase in client cash balances. As of both December 31, 2021 and September 30, 2021, Level 3 assets represented less than 1% of our assets measured at fair value on a recurring basis.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Quantitative information about level 3 fair value measurements

The following table presents the valuation techniques and significant unobservable inputs used in the valuation of certain of our private equity investments classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments. Weighted averages are calculated by weighting each input by the relative fair value of the related financial instrument. Certain investments are valued initially at transaction price and updated as other investment-specific events take place which indicate that a change in the carrying values of these investments is appropriate. Other investment-specific events include such events as our periodic review, significant transactions occur or new developments become known.


Recurring measurements $ in millions	Fair value at December 31, 2021		Valuation technique(s)	Unobservable input	Range (weighted-average)
Other investments - private equity investments (not measured at NAV)	$	75	Discounted cash flow, transaction price or other investment-specific events	Discount rate	25%
				Terminal earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiple	10.0x
				Terminal year	2023 - 2035 (2024)
	Fair value at September 30, 2021
Other investments - private equity investments (not measured at NAV)	$	75	Discounted cash flow, transaction price or other investment-specific events	Discount rate	25%
				Terminal EBITDA multiple	10.0x
				Terminal year	2023 - 2035 (2024)

Qualitative information about unobservable inputs

The significant unobservable inputs used in the fair value measurement of private equity investments generally relate to the financial performance of the investment entity and the market’s required return on investments from entities in industries in which we hold investments. Increases in the discount rate would have resulted in a lower fair value measurement. Increases in the terminal EBITDA multiple would have resulted in a higher fair value measurement. Increases in the terminal year are dependent upon each investment’s strategy, but generally result in a lower fair value measurement.

Investments in private equity measured at net asset value per share

As more fully described in Note 2 of our 2021 Form 10-K, as a practical expedient, we utilize NAV or its equivalent to determine the recorded value of a portion of our private equity investments portfolio. We utilize NAV when the fund investment does not have a readily determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.

Our private equity portfolio as of December 31, 2021 included various direct investments, as well as investments in third-party private equity funds. The portfolio is primarily invested in a broad range of strategies including leveraged buyouts, growth capital, distressed capital, venture capital and mezzanine capital. Due to the closed-end nature of certain of our fund investments, such investments cannot be redeemed directly with the funds. Our investment is monetized by distributions received through the liquidation of the underlying assets of those funds, the timing of which is uncertain.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the recorded value and unfunded commitments related to our private equity investments portfolio.


$ in millions	Recorded value		Unfunded commitment
December 31, 2021
Private equity investments measured at NAV	$	82	$	8
Private equity investments not measured at NAV	75
Total private equity investments	$	157

September 30, 2021
Private equity investments measured at NAV	$	94	$	8
Private equity investments not measured at NAV	75
Total private equity investments	$	169

Of the total private equity investments, the portions we owned were $115 million and $120 million as of December 31, 2021 and September 30, 2021, respectively. The portions of the private equity investments we did not own were $42 million and $49 million as of December 31, 2021 and September 30, 2021, respectively, and were included as a component of noncontrolling interests on our Condensed Consolidated Statements of Financial Condition.

As a financial holding company, we are subject to holding period limitations for our merchant banking activities. Additionally, many of our private equity fund investments meet the definition of prohibited covered funds as defined by the Volcker Rule enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). We have received approval from the Board of Governors of the Federal Reserve System (“the Fed”) to continue to hold the majority of our covered fund investments until July 2022. As a result of our holding period limitations, we have continued to exit or restructure certain of our private equity investments and will continue to do so during the remainder of fiscal 2022 in accordance with our regulatory deadlines.

Financial instruments measured at fair value on a nonrecurring basis

The following table presents assets measured at fair value on a nonrecurring basis along with the valuation techniques and significant unobservable inputs used in the valuation of the assets classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments. Weighted averages are calculated by weighting each input by the relative fair value of the related financial instrument.


$ in millions	Level 2		Level 3		Total fair value		Valuation technique(s)	Unobservable input	Range (weighted-average)
December 31, 2021
Bank loans:
Residential mortgage loans	$	3	$	10	$	13	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.5 yrs.)
Corporate loans	$	—	$	41	$	41	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)
Loans held for sale	$	161	$	—	$	161	N/A	N/A	N/A


September 30, 2021
Bank loans:
Residential mortgage loans	$	3	$	11	$	14	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.5 yrs.)
Corporate loans	$	—	$	49	$	49	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)
Loans held for sale	$	29	$	—	$	29	N/A	N/A	N/A

(1) The valuation techniques used to estimate the fair values are based on collateral value less selling costs for the collateral-dependent loans and discounted cash flows for loans that are not collateral-dependent.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial instruments not recorded at fair value

Many, but not all, of the financial instruments we hold were recorded at fair value on the Condensed Consolidated Statements of Financial Condition. The following table presents the estimated fair value and fair value hierarchy of financial assets and liabilities that are not recorded at fair value on the Condensed Consolidated Statements of Financial Condition at December 31, 2021 and September 30, 2021. This table excludes financial instruments that are carried at amounts which approximate fair value. Refer to Note 4 of our 2021 Form 10-K for a discussion of the fair value hierarchy classifications of our financial instruments that are not recorded at fair value.


$ in millions	Level 2		Level 3		Total estimated fair value		Carrying amount
December 31, 2021
Financial assets:
Bank loans, net	$	69	$	25,840	$	25,909	$	25,917
Financial liabilities:
Bank deposits - certificates of deposit	$	—	$	802	$	802	$	789
Senior notes payable	$	2,434	$	—	$	2,434	$	2,037

September 30, 2021
Financial assets:
Bank loans, net	$	116	$	24,839	$	24,955	$	24,902
Financial liabilities:
Bank deposits - certificates of deposit	$	—	$	898	$	898	$	878
Senior notes payable	$	2,459	$	—	$	2,459	$	2,037

NOTE 5 – AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities are primarily comprised of agency MBS and agency CMOs owned by Raymond James Bank. Refer to Note 2 of our 2021 Form 10-K for a discussion of our accounting policies applicable to our available-for-sale securities.

The following table details the amortized costs and fair values of our available-for-sale securities.


$ in millions	Cost basis		Gross unrealized gains		Gross unrealized losses		Fair value
December 31, 2021
Agency residential MBS	$	5,537	$	32	$	(49)	$	5,520
Agency commercial MBS	1,324		4		(37)		1,291
Agency CMOs	1,750		4		(33)		1,721
Other securities	15		—		—		15
Total available-for-sale securities	$	8,626	$	40	$	(119)	$	8,547

September 30, 2021
Agency residential MBS	$	5,168	$	46	$	(25)	$	5,189
Agency commercial MBS	1,285		7		(28)		1,264
Agency CMOs	1,854		9		(16)		1,847
Other securities	15		—		—		15
Total available-for-sale securities	$	8,322	$	62	$	(69)	$	8,315

The amortized costs and fair values in the preceding table exclude $14 million of accrued interest on available-for-sale securities as of both December 31, 2021 and September 30, 2021, which was included in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

See Note 4 for additional information regarding the fair value of available-for-sale securities.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table details the contractual maturities, amortized costs, carrying values and current yields for our available-for-sale securities. Since our MBS and CMO available-for-sale securities are backed by mortgages, actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. As a result, as of December 31, 2021, the weighted-average life of our available-for-sale securities portfolio was approximately four years.


	December 31, 2021
$ in millions	Within one year			After one but within five years			After five but within ten years			After ten years			Total
Agency residential MBS
Amortized cost	$	—		$	117		$	2,764		$	2,656		$	5,537
Carrying value	$	—		$	121		$	2,761		$	2,638		$	5,520
Agency commercial MBS
Amortized cost	$	33		$	315		$	892		$	84		$	1,324
Carrying value	$	33		$	313		$	862		$	83		$	1,291
Agency CMOs
Amortized cost	$	—		$	6		$	23		$	1,721		$	1,750
Carrying value	$	—		$	6		$	23		$	1,692		$	1,721
Other securities
Amortized cost	$	—		$	10		$	5		$	—		$	15
Carrying value	$	—		$	11		$	4		$	—		$	15
Total available-for-sale securities
Amortized cost	$	33		$	448		$	3,684		$	4,461		$	8,626
Carrying value	$	33		$	451		$	3,650		$	4,413		$	8,547
Weighted-average yield	2.08		%	1.67		%	1.11		%	1.08		%	1.13		%

The following table details the gross unrealized losses and fair values of securities that were in a loss position at the reporting period end, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.


	Less than 12 months				12 months or more				Total
$ in millions	Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses
December 31, 2021
Agency residential MBS	$	3,976	$	(40)	$	367	$	(9)	$	4,343	$	(49)
Agency commercial MBS	479		(11)		570		(26)		1,049		(37)
Agency CMOs	1,104		(22)		372		(11)		1,476		(33)
Other securities	4		—		—		—		4		—
Total	$	5,563	$	(73)	$	1,309	$	(46)	$	6,872	$	(119)
September 30, 2021
Agency residential MBS	$	3,155	$	(25)	$	18	$	—	$	3,173	$	(25)
Agency commercial MBS	645		(13)		353		(15)		998		(28)
Agency CMOs	918		(12)		231		(4)		1,149		(16)
Other securities	3		—		—		—		3		—
Total	$	4,721	$	(50)	$	602	$	(19)	$	5,323	$	(69)

The contractual cash flows of our available-for-sale securities are guaranteed by the U.S. government or its agencies. At December 31, 2021, of the 392 available-for-sale securities in an unrealized loss position, 315 were in a continuous unrealized loss position for less than 12 months and 77 securities were in a continuous unrealized loss position for greater than 12 months. We do not consider unrealized losses associated with these securities to be credit losses due to the guarantee of the full payment of principal and interest, and the fact that we have the ability and intent to hold these securities. In addition, unrealized losses related to these available-for-sale securities are generally due to changes in market interest rates. At December 31, 2021, based on our assessment of this portfolio, we did not recognize an allowance for credit losses on our available-for-sale securities. At December 31, 2021, debt securities we held in excess of ten percent of our equity included those issued by the Federal National Home Mortgage Association and Federal Home Loan Mortgage Corporation with amortized costs of $5.47 billion and $2.93 billion, respectively, which also approximated the fair values of the securities.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the three months ended December 31, 2021, there were no sales of available-for-sale securities. During the three months ended December 31, 2020, we received proceeds of $519 million, resulting in an insignificant gain, from the sales of agency MBS and agency CMO available-for-sale securities. The gain that resulted from the sales was included in “Other” revenues on our Condensed Consolidated Statements of Income and Comprehensive Income.

NOTE 6 – 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 Condensed Consolidated Statements of Financial Condition. Cash flows related to our derivatives are included within operating activities on the Condensed Consolidated Statements of Cash Flows. The significant accounting policies governing our derivatives, including our methodologies for determining fair value, are described in Note 2 of our 2021 Form 10-K.

Derivative balances included on our financial statements

The following table presents the gross fair values and notional amounts of derivatives by product type, the amounts of counterparty and cash collateral netting on our Condensed Consolidated Statements of Financial Condition, as well as collateral posted and received under credit support agreements that do not meet the criteria for netting under GAAP.


	December 31, 2021						September 30, 2021
$ in millions	Derivative assets		Derivative liabilities		Notional amount		Derivative assets		Derivative liabilities		Notional amount
Derivatives not designated as hedging instruments
Interest rate - matched book	$	171	$	171	$	1,559	$	193	$	193	$	1,736
Interest rate - other (1)	114		103		12,356		144		122		15,087
Foreign exchange	—		14		867		3		—		826
Other	1		—		570		—		1		551
Subtotal	286		288		15,352		340		316		18,200
Derivatives designated as hedging instruments
Interest rate	—		—		850		—		—		850
Foreign exchange	—		18		936		2		—		939
Subtotal	—		18		1,786		2		—		1,789
Total gross fair value/notional amount	286		306		$	17,138	342		316		$	19,989
Offset on the Condensed Consolidated Statements of Financial Condition
Counterparty netting	(38)		(38)				(46)		(46)
Cash collateral netting	(34)		(36)				(41)		(42)
Total amounts offset	(72)		(74)				(87)		(88)
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	214		232				255		228
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
Financial instruments (2)	(181)		(171)				(205)		(193)
Total	$	33	$	61			$	50	$	35

(1) Substantially all relates to interest rate derivatives entered into as part of our fixed income business operations, including to-be-announced security contracts (“TBAs”) that are accounted for as derivatives.

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table details the gains/(losses) included in accumulated other comprehensive income/(loss) (“AOCI”), net of income taxes, on derivatives designated as hedging instruments. These gains/(losses) included any amounts reclassified from AOCI to net income during the period. See Note 16 for additional information.


	Three months ended December 31,
$ in millions	2021		2020
Interest rate (cash flow hedges)	$	9	$	5
Foreign exchange (net investment hedges)	(1)		(29)
Total gains/(losses) in AOCI, net of taxes	$	8	$	(24)

There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for each of the three months ended December 31, 2021 and 2020. We expect to reclassify $13 million of interest expense out of AOCI and into earnings within the next 12 months. The maximum length of time over which forecasted transactions are or will be hedged is 6 years.

The following table details the gains/(losses) on derivatives not designated as hedging instruments recognized on the Condensed Consolidated Statements of Income and Comprehensive Income.


$ in millions				Three months ended December 31,
	Location of gain/(loss)		2021			2020
Interest rate		Principal transactions/other revenues		$	3		$	4
Foreign exchange		Other revenues		$	(1)		$	(26)
Other		Principal transactions		$	3		$	4

Risks associated with our derivatives and related risk mitigation

Credit risk

We are exposed to credit losses in the event of nonperformance by the counterparties to derivatives that are not cleared through a clearing organization. Where we are subject to credit exposure, we perform a credit evaluation of counterparties prior to entering into derivative transactions and we continue to monitor their credit standings on an ongoing basis. We may require initial margin or collateral from counterparties in the form of cash or other marketable securities to support certain of these obligations as established by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties.

Our only exposure to credit risk on matched book derivatives is related to our uncollected derivative transaction fee revenues, which were insignificant as of both December 31, 2021 and September 30, 2021. We are not exposed to market risk on these derivatives due to the pass-through transaction structure described in Note 2 of our 2021 Form 10-K.

Interest rate and foreign exchange risk

We are exposed to interest rate risk related to certain of our interest rate derivatives. We are also exposed to foreign exchange risk related to our forward foreign exchange derivatives. On a daily basis, we monitor our risk exposure on our derivatives based on established limits with respect to a number of factors, including interest rate, foreign exchange spot and forward rates, spread, ratio, basis and volatility risks, both for the total portfolio and by maturity period.

Derivatives with credit-risk-related contingent features

Certain of our derivative contracts contain provisions that require our debt to maintain an investment-grade rating from one or more of the major credit rating agencies. If our debt were to fall below investment-grade, the counterparties to the derivative instruments could terminate the derivative and request immediate payment, or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position was $14 million as of December 31, 2021 and was insignificant as of September 30, 2021.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 7 – COLLATERALIZED AGREEMENTS AND FINANCINGS

Collateralized agreements are comprised of securities purchased under agreements to resell (“reverse repurchase agreements”) and securities borrowed. Collateralized financings are comprised of securities sold under agreements to repurchase (“repurchase agreements”) and securities loaned. We enter into these transactions in order to facilitate client activities, acquire securities to cover short positions and finance certain firm activities. The significant accounting policies governing our collateralized agreements and financings are described in Note 2 of our 2021 Form 10-K.

Our reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions are governed by master agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the parties to the transaction. For financial statement purposes, we do not offset our reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned because the conditions for netting as specified by GAAP are not met. Although not offset on the Condensed Consolidated Statements of Financial Condition, these transactions are included in the following table.


	Collateralized agreements						Collateralized financings
$ in millions	Reverse repurchase agreements		Securities borrowed		Total		Repurchase agreements		Securities loaned		Total
December 31, 2021
Gross amounts of recognized assets/liabilities	$	204	$	143	$	347	$	203	$	65	$	268
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	204		143		347		203		65		268
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(204)		(139)		(343)		(203)		(62)		(265)
Net amounts	$	—	$	4	$	4	$	—	$	3	$	3
September 30, 2021
Gross amounts of recognized assets/liabilities	$	279	$	201	$	480	$	205	$	72	$	277
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	279		201		480		205		72		277
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(279)		(195)		(474)		(205)		(68)		(273)
Net amounts	$	—	$	6	$	6	$	—	$	4	$	4

The total amount of collateral received under reverse repurchase agreements and the total amount of collateral posted under repurchase agreements exceeds the carrying value of these agreements on our Condensed Consolidated Statements of Financial Condition.

Collateral received and pledged

We receive cash and securities as collateral, primarily in connection with reverse repurchase agreements, securities borrowing agreements, derivative transactions and client margin loans. The collateral we receive reduces our credit exposure to individual counterparties.

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents financial instruments at fair value that we received as collateral, were not included on our Condensed Consolidated Statements of Financial Condition, and that were available to be delivered or repledged, along with the balances of such instruments that were delivered or repledged, to satisfy one of our purposes previously described.


$ in millions	December 31, 2021		September 30, 2021
Collateral we received that was available to be delivered or repledged	$	3,548	$	3,429
Collateral that we delivered or repledged	$	821	$	830

Encumbered assets

We pledge certain of our assets to collateralize either repurchase agreements or other secured borrowings, maintain lines of credit, or to satisfy our collateral or settlement requirements with counterparties or clearing organizations who may or may not have the right to deliver or repledge such instruments. The following table presents information about our assets that have been pledged for one of the purposes previously described.


$ in millions	December 31, 2021		September 30, 2021
Had the right to deliver or repledge	$	333	$	368
Did not have the right to deliver or repledge	$	65	$	65
Bank loans, net pledged at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta	$	5,747	$	5,716

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

The following table presents the remaining contractual maturity of repurchase agreements and securities lending transactions accounted for as secured borrowings.


$ in millions	Overnight and continuous		Up to 30 days		30-90 days		Greater than 90 days		Total
December 31, 2021
Repurchase agreements:
Government and agency obligations	$	102	$	—	$	—	$	—	$	102
Agency MBS and agency CMOs	101		—		—		—		101
Total repurchase agreements	203		—		—		—		203
Securities loaned:
Equity securities	65		—		—		—		65
Total collateralized financings	$	268	$	—	$	—	$	—	$	268
September 30, 2021
Repurchase agreements:
Government and agency obligations	$	122	$	—	$	—	$	—	$	122
Agency MBS and agency CMOs	83		—		—		—		83
Total repurchase agreements	205		—		—		—		205
Securities loaned:
Equity securities	72		—		—		—		72
Total collateralized financings	$	277	$	—	$	—	$	—	$	277

As of both December 31, 2021 and September 30, 2021, we did not have any “repurchase-to-maturity” agreements, which are repurchase agreements where a security is transferred under an agreement to repurchase and the maturity date of the repurchase agreement matches the maturity date of the underlying security.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 – BANK LOANS, NET

Bank client receivables are comprised of loans originated or purchased by Raymond James Bank and include commercial and industrial (“C&I”) loans, real estate investment trust (“REIT”) loans, tax-exempt loans, commercial and residential real estate loans, and securities-based loans (“SBL”) and other loans. These receivables are collateralized by first and, to a lesser extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue, securities or are unsecured. We segregate our loan portfolio into six loan portfolio segments: C&I, commercial real estate (“CRE”), REIT, tax-exempt, residential mortgage, and SBL and other. See Note 2 of our 2021 Form 10-K for a discussion of our October 1, 2020 adoption of new accounting guidance related to the measurement of credit losses on financial instruments and our accounting policies related to bank loans and the allowance for credit losses.

Loan balances in the following tables are presented at amortized cost (outstanding principal balance net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs), except for certain held for sale loans recorded at fair value. Bank loans are presented on our Condensed Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for credit losses.

The following table presents the balances for both the held for sale and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in Raymond James Bank’s total loan portfolio.


	December 31, 2021				September 30, 2021
$ in millions	Balance		%		Balance		%
C&I loans	$	8,608	33	%	$	8,440	33	%
CRE loans	2,992		11	%	2,872		11	%
REIT loans	1,189		4	%	1,112		5	%
Tax-exempt loans	1,290		5	%	1,321		5	%
Residential mortgage loans	5,568		21	%	5,318		21	%
SBL and other	6,563		25	%	6,106		24	%
Total loans held for investment	26,210		99	%	25,169		99	%
Held for sale loans	230		1	%	145		1	%
Total loans held for sale and investment	26,440		100	%	25,314		100	%
Allowance for credit losses	(308)				(320)
Bank loans, net	$	26,132			$	24,994
Accrued interest receivable on bank loans	$	51			$	48

The allowance for credit losses was 1.18% and 1.27% of the held for investment loan portfolio as of December 31, 2021 and September 30, 2021, respectively. Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

At December 31, 2021, the FHLB had a blanket lien on Raymond James Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. See Note 16 of our 2021 Form 10-K for more information regarding borrowings from the FHLB.

Held for sale loans

Raymond James Bank originated or purchased $968 million and $582 million of loans held for sale during the three months ended December 31, 2021 and 2020, respectively. The majority of these loans were purchases of the guaranteed portions of Small Business Administration (“SBA”) loans intended for resale in the secondary market as individual SBA loans or as securitized pools of SBA loans. Proceeds from the sales of these held for sale loans amounted to $338 million and $188 million during the three months ended December 31, 2021 and 2020, respectively. Net gains resulting from such sales were insignificant for each of the three months ended December 31, 2021 and 2020.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Purchases and sales of loans held for investment

The following table presents purchases and sales of loans held for investment by portfolio segment.


$ in millions	C&I loans		Residential mortgage loans		Total
Three months ended December 31, 2021
Purchases	$	339	$	184	$	523
Sales	$	51	$	—	$	51



Three months ended December 31, 2020
Purchases	$	122	$	46	$	168
Sales	$	5	$	—	$	5

Sales in the preceding table represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period. As more fully described in Note 2 of our 2021 Form 10-K, corporate loan sales generally occur as part of our credit management activities.

Aging analysis of loans held for investment

The following table presents information on delinquency status of our loans held for investment.


$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual with allowance		Nonaccrual with no allowance		Current and accruing		Total loans held for investment
December 31, 2021
C&I loans	$	—	$	—	$	—	$	38	$	—	$	8,570	$	8,608
CRE loans	—		—		—		—		20		2,972		2,992
REIT loans	—		—		—		—		—		1,189		1,189
Tax-exempt loans	—		—		—		—		—		1,290		1,290
Residential mortgage loans	1		—		1		1		14		5,552		5,568
SBL and other	—		—		—		—		—		6,563		6,563
Total loans held for investment	$	1	$	—	$	1	$	39	$	34	$	26,136	$	26,210

September 30, 2021
C&I loans	$	—	$	—	$	—	$	39	$	—	$	8,401	$	8,440
CRE loans	—		—		—		—		20		2,852		2,872
REIT loans	—		—		—		—		—		1,112		1,112
Tax-exempt loans	—		—		—		—		—		1,321		1,321
Residential mortgage loans	2		—		2		2		13		5,301		5,318
SBL and other	—		—		—		—		—		6,106		6,106
Total loans held for investment	$	2	$	—	$	2	$	41	$	33	$	25,093	$	25,169

The preceding table includes $59 million and $61 million at December 31, 2021 and September 30, 2021, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes troubled debt restructurings (“TDRs”) of $12 million for CRE loans and $13 million for residential first mortgage loans at both December 31, 2021 and September 30, 2021.

Other real estate owned, included in “Other assets” on our Condensed Consolidated Statements of Financial Condition, was insignificant at both December 31, 2021 and September 30, 2021.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Collateral-dependent loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the underlying collateral. We had $20 million of collateral-dependent CRE loans at both December 31, 2021 and September 30, 2021, which were fully collateralized by retail and industrial real estate. We had $7 million and $5 million of collateral-dependent residential loans at December 31, 2021 and September 30, 2021, respectively, which were fully collateralized by single family homes. Collateral-dependent loans do not include loans to borrowers who have been granted forbearance as result of the COVID-19 pandemic or loans for which the borrower had requested a loan modification, where the request had been initiated but had not been approved or completed as of December 31, 2021. Such loans may be considered collateral-dependent after the forbearance period expires. The recorded investment in mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was $4 million at both December 31, 2021 and September 30, 2021.

Credit quality indicators

The credit quality of our bank loan portfolio is summarized monthly by management using internal risk ratings, which align with the standard asset classification system utilized by bank regulators. These classifications are divided into three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss). These terms are defined as follows:

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

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

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

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

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present our held for investment bank loan portfolio by credit quality indicator.


	December 31, 2021
	Loans by origination fiscal year
$ in millions	2022		2021		2020		2019		2018		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	293	$	1,042	$	1,316	$	1,108	$	1,382	$	2,260	$	993	$	8,394
Special mention	—		—		—		40		—		76		4		120
Substandard	—		—		—		24		39		17		—		80
Doubtful	—		—		—		14		—		—		—		14
Total C&I loans	$	293	$	1,042	$	1,316	$	1,186	$	1,421	$	2,353	$	997	$	8,608



CRE loans
Risk rating:
Pass	$	154	$	615	$	397	$	431	$	642	$	380	$	76	$	2,695
Special mention	—		—		45		43		36		—		—		124
Substandard	—		—		—		48		80		45		—		173
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	154	$	615	$	442	$	522	$	758	$	425	$	76	$	2,992



REIT loans
Risk rating:
Pass	$	—	$	239	$	96	$	65	$	25	$	140	$	429	$	994
Special mention	—		—		—		13		11		138		6		168
Substandard	—		—		—		21		—		4		2		27
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	—	$	239	$	96	$	99	$	36	$	282	$	437	$	1,189



Tax-exempt loans
Risk rating:
Pass	$	—	$	158	$	57	$	118	$	200	$	757	$	—	$	1,290
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	—	$	158	$	57	$	118	$	200	$	757	$	—	$	1,290



Residential mortgage loans
Risk rating:
Pass	$	562	$	1,822	$	1,182	$	581	$	349	$	1,023	$	20	$	5,539
Special mention	—		—		—		2		—		5		—		7
Substandard	—		—		—		—		—		22		—		22
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	562	$	1,822	$	1,182	$	583	$	349	$	1,050	$	20	$	5,568



SBL and other
Risk rating:
Pass	$	—	$	6	$	45	$	12	$	—	$	—	$	6,500	$	6,563
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	—	$	6	$	45	$	12	$	—	$	—	$	6,500	$	6,563

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	September 30, 2021
	Loans by origination fiscal year
$ in millions	2021		2020		2019		2018		2017		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	999	$	1,273	$	1,180	$	1,408	$	935	$	1,633	$	739	$	8,167
Special mention	—		—		41		—		26		54		1		122
Substandard	—		—		24		84		—		28		—		136
Doubtful	—		—		15		—		—		—		—		15
Total C&I loans	$	999	$	1,273	$	1,260	$	1,492	$	961	$	1,715	$	740	$	8,440



CRE loans
Risk rating:
Pass	$	533	$	459	$	442	$	652	$	223	$	174	$	62	$	2,545
Special mention	—		45		58		36		—		—		—		139
Substandard	—		—		32		98		8		50		—		188
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	533	$	504	$	532	$	786	$	231	$	224	$	62	$	2,872



REIT loans
Risk rating:
Pass	$	235	$	95	$	75	$	60	$	46	$	167	$	237	$	915
Special mention	—		—		13		11		33		106		6		169
Substandard	—		—		21		—		4		—		3		28
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	235	$	95	$	109	$	71	$	83	$	273	$	246	$	1,112



Tax-exempt loans
Risk rating:
Pass	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321



Residential mortgage loans
Risk rating:
Pass	$	1,861	$	1,266	$	640	$	386	$	451	$	666	$	20	$	5,290
Special mention	—		—		—		—		—		5		—		5
Substandard	—		—		—		1		2		20		—		23
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	1,861	$	1,266	$	640	$	387	$	453	$	691	$	20	$	5,318



SBL and other
Risk rating:
Pass	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106

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

We also monitor the credit quality of the residential mortgage loan portfolio utilizing Fair Isaac Corporation (“FICO”) scores and loan-to-value (“LTV”) ratios. A FICO score measures a borrower’s creditworthiness by considering factors such as payment and credit history. LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the held for investment residential mortgage loan portfolio by FICO score and by LTV ratio at origination.


$ in millions	December 31, 2021		September 30, 2021
FICO score:
Below 600	$	67	$	67
600 - 699	431		416
700 - 799	3,982		3,772
800 +	1,082		1,058
FICO score not available	6		5
Total	$	5,568	$	5,318

LTV ratio:
Below 80%	$	4,348	$	4,123
80%+	1,220		1,195
Total	$	5,568	$	5,318

Allowance for credit losses

The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment.


$ in millions	C&I loans		CRE loans		REIT loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended December 31, 2021
Balance at beginning of period	$	191	$	66	$	22	$	2	$	35	$	4	$	320

Provision/(benefit) for credit losses	(10)		6		—		—		(6)		(1)		(11)
Net (charge-offs)/recoveries:
Charge-offs	(2)		—		—		—		—		—		(2)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(2)		—		—		—		1		—		(1)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	179	$	72	$	22	$	2	$	30	$	3	$	308












Three months ended December 31, 2020
Balance at beginning of period	$	200	$	81	$	36	$	14	$	18	$	5	$	354
Impact of current expected credit loss (“CECL”) adoption	19		(11)		(9)		(12)		24		(2)		9
Provision/(benefit) for credit losses	(22)		42		3		—		(9)		—		14
Net (charge-offs)/recoveries:
Charge-offs	—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	—		—		—		—		—		—		—
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	198	$	112	$	30	$	2	$	33	$	3	$	378

The allowance for credit losses on held for investment bank loans decreased $12 million to $308 million during three months ended December 31, 2021, largely attributable to improvement in credit quality in the C&I bank loan portfolio and continued improvement in macroeconomic inputs to our CECL model, which positively impacted most loan portfolios, partially offset by provisions for credit losses related to loan growth.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $12 million and $13 million at December 31, 2021 and September 30, 2021, respectively.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 9 – LOANS TO FINANCIAL ADVISORS, NET

Loans to financial advisors are primarily comprised of loans originated as a part of our recruiting activities. See Note 2 of our 2021 Form 10-K for a discussion of our accounting policies related to loans to financial advisors and the related allowance for credit losses. The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.


$ in millions	December 31, 2021			September 30, 2021
Currently affiliated with the firm (1)	$	1,128		$	1,074
No longer affiliated with the firm (2)	9			10
Total loans to financial advisors	1,137			1,084
Allowance for credit losses	(29)			(27)
Loans to financial advisors, net	$	1,108		$	1,057
Accrued interest receivable on loans to financial advisors	$	4		$	4
Allowance for credit losses as a percent of the loan portfolio	2.55		%	2.49		%

(1) These loans were predominantly current.

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

Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on the Condensed Consolidated Statements of Financial Condition.

NOTE 10 – VARIABLE INTEREST ENTITIES

A VIE requires consolidation by the entity’s primary beneficiary. We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary. Refer to Note 2 of our 2021 Form 10-K for a discussion of our principal involvement with VIEs and the accounting policies regarding determination of whether we are deemed to be the primary beneficiary of VIEs.

VIEs where we are the primary beneficiary

Of the VIEs in which we hold an interest, we have determined that certain limited partnerships which are part of our private equity portfolio (“Private Equity Interests”), certain Low-Income Housing Tax Credit (“LIHTC”) funds and the trust we utilize in connection with restricted stock unit (“RSU”) awards granted to certain employees of one of our Canadian subsidiaries (the “Restricted Stock Trust Fund”) require consolidation in our financial statements, as we are deemed the primary beneficiary of such VIEs. The aggregate assets and liabilities of the VIEs we consolidate are provided in the following table. Aggregate assets and aggregate liabilities may differ from the consolidated carrying value of assets and liabilities due to the elimination of intercompany assets and liabilities held by the consolidated VIE.


$ in millions	Aggregate assets		Aggregate liabilities
December 31, 2021
Private Equity Interests	$	48	$	4
LIHTC funds	119		52
Restricted Stock Trust Fund	24		24
Total	$	191	$	80

September 30, 2021
Private Equity Interests	$	66	$	4
LIHTC funds	111		52
Restricted Stock Trust Fund	15		15
Total	$	192	$	71

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents information about the carrying value of the assets and liabilities of the VIEs which we consolidate and which are included on our Condensed Consolidated Statements of Financial Condition. Intercompany balances are eliminated in consolidation and not reflected in the following table.


$ in millions	December 31, 2021		September 30, 2021
Assets:
Cash and cash equivalents and assets segregated for regulatory purposes and restricted cash	$	7	$	10
Other investments	47		63

Other assets	114		105
Total assets	$	168	$	178
Liabilities:
Other payables	$	44	$	45
Total liabilities	$	44	$	45
Noncontrolling interests	$	51	$	58

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

As discussed in Note 2 of our 2021 Form 10-K, we have concluded that for certain VIEs we are not the primary beneficiary and therefore do not consolidate these VIEs. Such VIEs include certain Private Equity Interests, certain LIHTC funds, and other limited partnerships. Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these VIEs.

Aggregate assets, liabilities and risk of loss

The aggregate assets, liabilities, and our exposure to loss from those VIEs in which we hold a variable interest, but as to which we have concluded we are not the primary beneficiary, are provided in the following table.


	December 31, 2021						September 30, 2021
$ in millions	Aggregate assets		Aggregate liabilities		Our risk of loss		Aggregate assets		Aggregate liabilities		Our risk of loss
Private Equity Interests	$	7,163	$	88	$	86	$	7,318	$	47	$	82
LIHTC funds	7,374		2,465		14		7,032		2,280		71
Other	714		176		11		519		155		10
Total	$	15,251	$	2,729	$	111	$	14,869	$	2,482	$	163

NOTE 11 - OTHER ASSETS

The following table details the components of other assets. See Note 2 of our 2021 Form 10-K for a discussion of the accounting polices related to certain of these components.



$ in millions	December 31, 2021		September 30, 2021
Investments in company-owned life insurance policies	$	1,013	$	952
Property and equipment, net	491		499
Lease right-of-use (“ROU”) asset	439		446
Prepaid expenses	134		127

Investments in FHLB and Federal Reserve Bank stock	72		72

All other	239		161
Total other assets	$	2,388	$	2,257

See Note 13 of our 2021 Form 10-K for further information regarding our property and equipment and Note 12 of this Form 10-Q and Note 14 of our 2021 Form 10-K for further information regarding our leases.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 12 – LEASES

The following table presents the balances related to our leases on our Condensed Consolidated Statements of Financial Condition. See Note 2 and 14 of our 2021 Form 10-K for additional information related to our leases, including a discussion of our accounting policies.


$ in millions	December 31, 2021		September 30, 2021
ROU assets (included in Other assets)	$	439	$	446
Lease liabilities (included in Other payables)	$	445	$	450

Lease liabilities as of December 31, 2021 excluded $34 million of minimum lease payments related to lease arrangements that were signed but not yet commenced. These leases are estimated to commence between fiscal year 2022 and 2023 with lease terms ranging from four to 11 years.

Lease expense

The following table details the components of lease expense, which is included in “Occupancy and equipment” expense on our Condensed Consolidated Statements of Income and Comprehensive Income.


	Three months ended December 31,
$ in millions	2021		2020
Lease costs	$	28	27
Variable lease costs	$	7	6

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

NOTE 13 – BANK DEPOSITS

Bank deposits include savings and money market accounts, certificates of deposit with Raymond James Bank, Negotiable Order of Withdrawal (“NOW”) accounts and demand deposits. The following table presents a summary of bank deposits, as well as the weighted-average interest rates on such deposits. The calculation of the weighted-average rates were based on the actual deposit balances and rates at each respective period end.


	December 31, 2021				September 30, 2021
$ in millions	Balance		Weighted-average rate		Balance		Weighted-average rate
Savings and money market accounts	$	33,103	0.01	%	$	31,415	0.01	%
Certificates of deposit	789		1.89	%	878		1.87	%
NOW accounts	164		1.84	%	164		1.84	%
Demand deposits (non-interest-bearing)	36		—		38		—
Total bank deposits	$	34,092	0.06	%	$	32,495	0.07	%

Total bank deposits in the preceding table exclude affiliate deposits of $302 million and $301 million at December 31, 2021 and September 30, 2021, respectively. As of December 31, 2021, these affiliate deposits included $229 million and $73 million held in deposit accounts at Raymond James Bank on behalf of RJF and Raymond James Trust Company of New Hampshire, respectively.

Savings and money market accounts in the preceding table consist primarily of deposits that are cash balances swept to Raymond James Bank from the client investment accounts maintained at Raymond James & Associates, Inc. (“RJ&A”). These balances are held in Federal Deposit Insurance Corporation (“FDIC”)-insured bank accounts through the Raymond James Bank Deposit Program (“RJBDP”). The aggregate amount of individual time deposit account balances that exceeded the FDIC insurance limit at December 31, 2021 was approximately $43 million.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the scheduled maturities of certificates of deposit.


	December 31, 2021				September 30, 2021
$ in millions	Denominations greater than or equal to $100,000		Denominations less than $100,000		Denominations greater than or equal to $100,000		Denominations less than $100,000
Three months or less	$	28	$	78	$	22	$	87
Over three through six months	20		30		21		76
Over six through twelve months	36		112		32		54
Over one through two years	95		171		93		170
Over two through three years	18		160		37		166
Over three through four years	6		18		6		99
Over four through five years	10		7		9		6
Total certificates of deposit	$	213	$	576	$	220	$	658

Interest expense on deposits, excluding interest expense related to affiliate deposits, is summarized in the following table.


	Three months ended December 31,
$ in millions	2021		2020
Savings, money market, and NOW accounts	$	2	$	1
Certificates of deposit	4		5
Total interest expense on deposits	$	6	$	6

NOTE 14 – INCOME TAXES

The income tax provision for interim periods is comprised of tax on ordinary income provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items. We estimate the annual effective tax rate quarterly based on the forecasted pre-tax results of our U.S. and non-U.S. operations. Items unrelated to current year ordinary income are recognized entirely in the period identified as a discrete item of tax. These discrete items generally relate to changes in tax laws, adjustments to the actual liability determined upon filing tax returns, excess tax benefits related to share-based compensation and adjustments to previously recorded reserves for uncertain tax positions. For discussion of income tax accounting policies and other income tax related information, see Notes 2 and 18 of our 2021 Form 10-K.

Effective tax rate

Our effective income tax rate of 20.1% for the three months ended December 31, 2021 was lower than the 21.7% effective tax rate for fiscal 2021. The decrease in the effective income tax rate was primarily due to a large tax benefit recognized during the fiscal first quarter related to share-based compensation that vested during the period, partially offset by lower valuation gains associated with our company-owned life insurance policies which are not subject to tax.

Uncertain tax positions

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

NOTE 15 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and contingencies

Underwriting commitments

In the normal course of business, we enter into commitments for debt and equity underwritings. As of December 31, 2021, we had no open underwriting commitments.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Lending commitments and other credit-related financial instruments

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

The following table presents Raymond James Bank’s commitments to extend credit and other credit-related off-balance sheet financial instruments outstanding.


$ in millions	December 31, 2021		September 30, 2021
Open-end consumer lines of credit (primarily SBL)	$	18,980	$	17,515
Commercial lines of credit	$	1,919	$	2,075
Unfunded lending commitments	$	513	$	548
Standby letters of credit	$	23	$	22

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

Because many of Raymond James Bank’s lending commitments expire without being funded in whole or in part, the contractual amounts are not estimates of our actual future credit exposure or future liquidity requirements. The allowance for credit losses calculated under CECL provides for potential losses related to the unfunded lending commitments. See Note 2 of our 2021 Form 10-K and Note 8 of this Form 10-Q for further discussion of this allowance for credit losses related to unfunded lending commitments.

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

We offer loans to prospective financial advisors for recruiting and retention purposes (see Note 2 of our 2021 Form 10-K and Note 9 of this Form 10-Q for further discussion of our loans to financial advisors). These offers are contingent upon certain events occurring, including the individuals joining us and meeting certain other conditions outlined in their offer.

Investment commitments

We had unfunded commitments to various investments, including private equity investments and certain Raymond James Bank investments, of $25 million as of December 31, 2021.

Other commitments

Raymond James Affordable Housing Investments, Inc. (“RJAHI”), formerly known as Raymond James Tax Credit Funds, Inc., sells investments in project partnerships to various LIHTC funds, which have third-party investors, and for which RJAHI serves as the managing member or general partner. RJAHI typically sells investments in project partnerships to LIHTC funds within 90 days of their acquisition. Until such investments are sold to LIHTC funds, RJAHI is responsible for funding investment commitments to such partnerships. As of December 31, 2021, RJAHI had committed approximately $97 million to project partnerships that had not yet been sold to LIHTC funds. Because we expect to sell these project partnerships to LIHTC funds and the equity funding events arise over future periods, the contractual commitments are not expected to materially impact our future liquidity requirements. RJAHI may also make short-term loans or advances to project partnerships and LIHTC funds.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

As a part of our fixed income public finance operations, we enter into forward commitments to purchase agency MBS. At December 31, 2021, we had $140 million of principal amount of outstanding forward MBS purchase commitments, which were expected to be purchased within 90 days following commitment. In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the commitment and the date of sale of the MBS, we enter into TBAs with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future. We may be subject to loss if the timing of, or the actual amount of, the MBS differs significantly from the term and notional amount of the TBAs to which we entered. These TBAs and related purchase commitments are accounted for at fair value. As of December 31, 2021, the fair value of the TBAs and the estimated fair value of the purchase commitments were insignificant.

For information regarding our acquisition commitments associated with our recent purchase of Charles Stanley and intended acquisition of TriState Capital, see Note 3 of this Form 10-Q. For information regarding our lease commitments, see Note 12 of this Form 10-Q and for information on the maturities of our lease liabilities, see Note 14 of our 2021 Form 10-K.

Guarantees

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

Legal and regulatory matter contingencies

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 self-regulatory organizations institute investigations from time to time, among other things, into industry practices, which can also result in the imposition of such sanctions.

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 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.

There are certain matters for which we are unable to estimate the upper end of the range of reasonably possible loss. With respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss as of December 31, 2021, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately $90 million in excess of the aggregate accruals for such matters. Refer to Note 2 of our 2021 Form 10-K for a discussion of our criteria for recognizing liabilities for contingencies.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 16 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

All of the components of other comprehensive income/(loss) (“OCI”), net of tax, were attributable to RJF. The following table presents the net change in AOCI as well as the changes, and the related tax effects, of each component of AOCI.


$ in millions	Net investment hedges		Currency translations		Subtotal: net investment hedges and currency translations		Available- for-sale securities		Cash flow hedges		Total
Three months ended December 31, 2021
AOCI as of beginning of period	$	81	$	(90)	$	(9)	$	(5)	$	(27)	$	(41)
OCI:
OCI before reclassifications and taxes	(2)		1		(1)		(72)		8		(65)
Amounts reclassified from AOCI, before tax	—		—		—		—		4		4
Pre-tax net OCI	(2)		1		(1)		(72)		12		(61)
Income tax effect	1		—		1		17		(3)		15
OCI for the period, net of tax	(1)		1		—		(55)		9		(46)
AOCI as of end of period	$	80	$	(89)	$	(9)	$	(60)	$	(18)	$	(87)





















Three months ended December 31, 2020
AOCI as of beginning of period	$	115	$	(140)	$	(25)	$	89	$	(53)	$	11
OCI:
OCI before reclassifications and taxes	(38)		45		7		(18)		3		(8)
Amounts reclassified from AOCI, before tax	—		2		2		(5)		4		1
Pre-tax net OCI	(38)		47		9		(23)		7		(7)
Income tax effect	9		—		9		6		(2)		13
OCI for the period, net of tax	(29)		47		18		(17)		5		6
AOCI as of end of period	$	86	$	(93)	$	(7)	$	72	$	(48)	$	17

Reclassifications from AOCI to net income, excluding taxes, for the three months ended December 31, 2021 were recorded in “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income. Reclassifications from AOCI to net income, excluding taxes, for the three months ended December 31, 2020 were primarily recorded in “Other” revenue and “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income.

Our net investment hedges and cash flow hedges relate to our derivatives associated with Raymond James Bank’s business operations. For further information about our significant accounting policies related to derivatives, see Note 2 of our 2021 Form 10-K. In addition, see Note 6 of this Form 10-Q for additional information on these derivatives.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 17 – REVENUES

The following tables present our sources of revenues by segment. For further information about our significant accounting policies related to revenue recognition, see Note 2 of our 2021 Form 10-K. See Note 22 of this Form 10-Q for additional information on our segment results.


	Three months ended December 31, 2021
$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	1,162	$	1	$	227	$	—	$	(8)	$	1,382
Brokerage revenues:
Securities commissions:
Mutual and other fund products	171		2		2		—		—		175
Insurance and annuity products	111		—		—		—		—		111
Equities, exchange-traded funds (“ETFs”) and fixed income products	104		35		—		—		—		139
Subtotal securities commissions	386		37		2		—		—		425
Principal transactions (1)	11		122		—		—		—		133
Total brokerage revenues	397		159		2		—		—		558
Account and service fees:
Mutual fund and annuity service fees	114		—		—		—		(1)		113
RJBDP fees	67		—		—		—		(50)		17
Client account and other fees	49		2		6		—		(10)		47
Total account and service fees	230		2		6		—		(61)		177
Investment banking:
Merger & acquisition and advisory	—		271		—		—		—		271
Equity underwriting	13		97		—		—		—		110
Debt underwriting	—		44		—		—		—		44
Total investment banking	13		412		—		—		—		425
Other:
Tax credit fund revenues	—		35		—		—		—		35
All other (1)	7		2		1		6		—		16
Total other	7		37		1		6		—		51
Total non-interest revenues	1,809		611		236		6		(69)		2,593
Interest income (1)	33		5		—		187		—		225
Total revenues	1,842		616		236		193		(69)		2,818
Interest expense	(3)		(2)		—		(10)		(22)		(37)
Net revenues	$	1,839	$	614	$	236	$	183	$	(91)	$	2,781

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Three months ended December 31, 2020
$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	885	$	2	$	188	$	—	$	(8)	$	1,067
Brokerage revenues:
Securities commissions:
Mutual and other fund products	148		2		2		—		(1)		151
Insurance and annuity products	98		—		—		—		—		98
Equities, ETFs and fixed income products	95		37		—		—		—		132
Subtotal securities commissions	341		39		2		—		(1)		381
Principal transactions (1)	12		134		—		1		—		147
Total brokerage revenues	353		173		2		1		(1)		528
Account and service fees:
Mutual fund and annuity service fees	94		—		—		—		—		94
RJBDP fees	64		—		—		—		(43)		21
Client account and other fees	32		2		4		—		(8)		30
Total account and service fees	190		2		4		—		(51)		145
Investment banking:
Merger & acquisition and advisory	—		149		—		—		—		149
Equity underwriting	6		60		—		—		—		66
Debt underwriting	—		46		—		—		—		46
Total investment banking	6		255		—		—		—		261
Other:
Tax credit fund revenues	—		16		—		—		—		16
All other (1)	5		3		1		9		22		40
Total other	5		19		1		9		22		56
Total non-interest revenues	1,439		451		195		10		(38)		2,057
Interest income (1)	30		3		—		168		2		203
Total revenues	1,469		454		195		178		(36)		2,260
Interest expense	(2)		(2)		—		(11)		(23)		(38)
Net revenues	$	1,467	$	452	$	195	$	167	$	(59)	$	2,222

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

At December 31, 2021 and September 30, 2021, net receivables related to contracts with customers were $343 million and $416 million, respectively.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 18 – INTEREST INCOME AND INTEREST EXPENSE

The following table details the components of interest income and interest expense.


	Three months ended December 31,
$ in millions	2021		2020
Interest income:
Cash and cash equivalents	$	3	$	4
Assets segregated for regulatory purposes and restricted cash	4		3
Available-for-sale securities	22		23
Brokerage client receivables	21		18
Bank loans, net of unearned income and deferred expenses	164		145
All other	11		10
Total interest income	$	225	$	203
Interest expense:
Bank deposits	$	6	$	6
Brokerage client payables	1		1
Other borrowings	5		5
Senior notes payable	23		24
All other	2		2
Total interest expense	37		38
Net interest income	188		165
Bank loan (provision)/benefit for credit losses	11		(14)
Net interest income after bank loan (provision)/benefit for credit losses	$	199	$	151

Interest expense related to bank deposits in the preceding table excludes interest expense associated with affiliate deposits, which has been eliminated in consolidation.

NOTE 19 – SHARE-BASED COMPENSATION

We have one share-based compensation plan, The Amended and Restated 2012 Stock Incentive Plan (“the Plan”), for our employees, Board of Directors and independent contractor financial advisors. Generally, we reissue our treasury shares under the Plan; however, we are also permitted to issue new shares. Annual share-based compensation awards are primarily issued during our fiscal first quarter of each year. Our share-based compensation accounting policies are described in Note 2 of our 2021 Form 10-K. Other information related to our share-based awards is presented in Note 23 of our 2021 Form 10-K.

During the three months ended December 31, 2021, we granted approximately 2.3 million RSUs with a weighted-average grant-date fair value of $96.99, compared with approximately 2.0 million RSUs granted during the three months ended December 31, 2020 with a weighted-average grant-date fair value of $60.85 (as adjusted for the September 21, 2021 three-for-two stock split). For the three months ended December 31, 2021, total compensation expense related to RSUs was $63 million, compared with $41 million for the three months ended December 31, 2020.

As of December 31, 2021, there were $336 million of total pre-tax compensation costs not yet recognized (net of estimated forfeitures) related to RSUs, including those granted during the three months ended December 31, 2021. These costs are expected to be recognized over a weighted-average period of 3.2 years.

NOTE 20 – REGULATORY CAPITAL REQUIREMENTS

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Under these rules, minimum requirements are established for both the quantity and quality of capital held by banking organizations. RJF and Raymond James Bank are required to maintain minimum ratios of common equity tier 1 (“CET1”), tier 1 capital and total capital to risk-weighted assets, as well as minimum leverage ratios (defined as tier 1 capital divided by adjusted average 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. RJF and Raymond James Bank each calculate these ratios in order to assess compliance with both regulatory requirements and their 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. As of December 31, 2021, both RJF’s and Raymond James Bank’s capital levels exceeded the capital conservation buffer requirement and were each categorized as “well-capitalized.”

For further discussion of regulatory capital requirements applicable to certain of our businesses and subsidiaries, see Note 24 of our 2021 Form 10-K.

To meet requirements for capital adequacy or to be categorized as “well-capitalized,” RJF must maintain minimum CET1, Tier 1 capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the following table.


	Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions
$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
RJF as of December 31, 2021:
CET1	$	7,842	25.9	%	$	1,365	4.5	%	$	1,972	6.5	%
Tier 1 capital	$	7,842	25.9	%	$	1,820	6.0	%	$	2,427	8.0	%
Total capital	$	8,197	27.0	%	$	2,427	8.0	%	$	3,034	10.0	%
Tier 1 leverage	$	7,842	12.1	%	$	2,593	4.0	%	$	3,242	5.0	%

RJF as of September 30, 2021:
CET1	$	7,428	25.0	%	$	1,337	4.5	%	$	1,932	6.5	%
Tier 1 capital	$	7,428	25.0	%	$	1,783	6.0	%	$	2,377	8.0	%
Total capital	$	7,780	26.2	%	$	2,377	8.0	%	$	2,972	10.0	%
Tier 1 leverage	$	7,428	12.6	%	$	2,363	4.0	%	$	2,954	5.0	%

As of December 31, 2021, RJF’s regulatory capital increase compared to September 30, 2021 was driven by positive earnings, net of dividends paid during our fiscal first quarter. RJF’s Tier 1 and Total capital ratios increased compared to September 30, 2021, resulting from the increase in regulatory capital, partially offset by an increase in risk-weighted assets driven by increases in our loan portfolio and cash and cash equivalents. RJF’s Tier 1 leverage ratio at December 31, 2021 decreased compared to September 30, 2021 due to increased average assets, driven by higher assets segregated for regulatory purposes and cash and cash equivalents, primarily resulting from an increase in client cash in the Client Interest Program (“CIP”), as well as growth in available-for-sale securities and loans. The increase in average assets was partially offset by the increase in regulatory capital.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

To meet the requirements for capital adequacy or to be categorized as “well-capitalized,” Raymond James Bank must maintain CET1, Tier 1 capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the following table.


	Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions
$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
Raymond James Bank as of December 31, 2021:
CET1	$	2,675	13.3	%	$	905	4.5	%	$	1,307	6.5	%
Tier 1 capital	$	2,675	13.3	%	$	1,206	6.0	%	$	1,608	8.0	%
Total capital	$	2,927	14.6	%	$	1,608	8.0	%	$	2,010	10.0	%
Tier 1 leverage	$	2,675	7.2	%	$	1,477	4.0	%	$	1,846	5.0	%

Raymond James Bank as of September 30, 2021:
CET1	$	2,626	13.4	%	$	883	4.5	%	$	1,275	6.5	%
Tier 1 capital	$	2,626	13.4	%	$	1,177	6.0	%	$	1,569	8.0	%
Total capital	$	2,873	14.6	%	$	1,569	8.0	%	$	1,962	10.0	%
Tier 1 leverage	$	2,626	7.4	%	$	1,411	4.0	%	$	1,763	5.0	%

As of December 31, 2021, Raymond James Bank’s Tier 1 capital and Total capital ratios decreased compared to September 30, 2021, due to higher risk-weighted assets, primarily due to increased loans and available-for-sale securities, which were funded by increased client cash balances in the RJBDP swept to Raymond James Bank. The increase in risk-weighted assets was partially offset by higher regulatory capital. Raymond James Bank’s Tier 1 leverage ratio at December 31, 2021 decreased compared to September 30, 2021, due to increased average assets, driven by growth in loans, cash and available-for-sale securities.

Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. The following table presents the net capital position of RJ&A.


$ in millions	December 31, 2021			September 30, 2021
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items	65.5		%	72.1		%
Net capital	$	1,928		$	2,035
Less: required net capital	(59)			(56)
Excess net capital	$	1,869		$	1,979

As of December 31, 2021, all of our other active regulated domestic and international subsidiaries were in compliance with and exceeded all applicable capital requirements.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 21 – EARNINGS PER SHARE

During our fiscal fourth quarter of 2021 the Board of Directors approved a three-for-two 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.

The following table presents the computation of basic and diluted earnings per common share.


	Three months ended December 31,
in millions, except per share amounts	2021		2020
Income for basic earnings per common share:
Net income	$	446	$	312
Less allocation of earnings and dividends to participating securities	(1)		(1)
Net income attributable to RJF common shareholders	$	445	$	311
Income for diluted earnings per common share:
Net income	$	446	$	312
Less allocation of earnings and dividends to participating securities	(1)		(1)
Net income attributable to RJF common shareholders	$	445	$	311
Common shares:
Average common shares in basic computation	206.3		205.2
Dilutive effect of outstanding stock options and certain RSUs	6.1		4.4
Average common and common equivalent shares used in diluted computation	212.4		209.6
Earnings per common share:
Basic	$	2.16	$	1.52
Diluted	$	2.10	$	1.48
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive	—		2.1

The allocation of earnings and dividends to participating securities in the preceding table represents dividends paid during the period to participating securities, consisting of certain RSUs, plus an allocation of undistributed earnings to such participating securities. Participating securities and related dividends paid on these participating securities were insignificant for each of the three months ended December 31, 2021 and 2020. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

Dividends per common share declared and paid are detailed in the following table for each respective period.


	Three months ended December 31,
	2021		2020
Dividends per common share - declared	$	0.34	$	0.26
Dividends per common share - paid	$	0.26	$	0.25

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 22 – SEGMENT INFORMATION

We currently operate through the following five segments: PCG; Capital Markets; Asset Management; Raymond James Bank; and Other.

The segments are determined based upon factors such as the services provided and the distribution channels served and are consistent with how we assess performance and determine how to allocate our resources. For a further discussion of our segments, see Note 26 of our 2021 Form 10-K.

The following table presents information concerning operations in these segments.


	Three months ended December 31,
$ in millions	2021		2020
Net revenues:
Private Client Group	$	1,839	$	1,467
Capital Markets	614		452
Asset Management	236		195
Raymond James Bank	183		167
Other	(15)		4
Intersegment eliminations	(76)		(63)
Total net revenues	$	2,781	$	2,222
Pre-tax income/(loss):
Private Client Group	$	195	$	140
Capital Markets	201		129
Asset Management	107		83
Raymond James Bank	102		71
Other	(47)		(24)
Total pre-tax income	$	558	$	399

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

The following table presents our net interest income on a segment basis.


	Three months ended December 31,
$ in millions	2021		2020
Net interest income/(expense):
Private Client Group	$	30	$	28
Capital Markets	3		1

Raymond James Bank	177		157
Other	(22)		(21)
Net interest income	$	188	$	165

The following table presents our total assets on a segment basis.


$ in millions	December 31, 2021		September 30, 2021
Total assets:
Private Client Group	$	25,431	$	20,270
Capital Markets	2,027		2,457
Asset Management	482		476
Raymond James Bank	37,789		36,154
Other	2,732		2,534
Total	$	68,461	$	61,891

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents goodwill, which was included in our total assets, on a segment basis.


$ in millions	December 31, 2021		September 30, 2021
Goodwill:
Private Client Group	$	417	$	417
Capital Markets	174		174
Asset Management	69		69
Total	$	660	$	660

We have operations in the U.S., Canada and Europe. Substantially all long-lived assets are located in the U.S. The following table presents our net revenues and pre-tax income classified by major geographic area in which they were earned.


	Three months ended December 31,
$ in millions	2021		2020
Net revenues:
U.S.	$	2,589	$	2,079
Canada	137		105
Europe	55		38
Total	$	2,781	$	2,222
Pre-tax income:
U.S.	$	531	$	396
Canada	17		1
Europe	10		2
Total	$	558	$	399

The following table presents our total assets by major geographic area in which they were held.


$ in millions	December 31, 2021		September 30, 2021
Total assets:
U.S.	$	64,589	$	57,952
Canada	3,670		3,724
Europe	202		215
Total	$	68,461	$	61,891

The following table presents goodwill, which was included in our total assets, classified by major geographic area in which it was held.


$ in millions	December 31, 2021		September 30, 2021
Goodwill:
U.S.	$	619	$	619
Canada	25		25
Europe	16		16
Total	$	660	$	660

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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