RAYMOND JAMES FINANCIAL INC

Previous wording

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

Current wording

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

Previous wording

For our fiscal third quarter of 2024, we generated net revenues of $3.23 billion, an increase of 11% compared with the prior-year quarter, and pre-tax income of $644 million, an increase of 33% compared with the prior-year quarter. Our net income available to common shareholders of $491 million also increased 33%, and our earnings per diluted share were $2.31, reflecting an increase of 35%. Our annualized return on common equity (“ROCE”) for the quarter was 17.8%, compared with 14.9% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 21.2%(1), compared with 18.3%(1) for the prior-year quarter. Excluding the impact of $23 million of expenses related to acquisitions completed in prior years, such as compensation expenses related to retention awards and amortization of identifiable intangible assets, our adjusted net income available to common shareholders was $508 million(1)for the three months ended June 30, 2024, an increase of 27% compared with adjusted net income available to common shareholders for the prior-year quarter. Our adjusted earnings per diluted share were $2.39(1), an increase of 29% compared with the prior-year quarter. Adjusted annualized ROCE for the quarter was 18.4%(1) and adjusted annualized ROTCE was 21.9%(1)compared with adjusted annualized ROCE of 16.1%(1) and adjusted annualized ROTCE of 19.7%(1) for the prior-year quarter.

Current wording

For our fiscal first quarter of 2025, we generated net revenues of $3.54 billion, an increase of 17% compared with the prior-year quarter, and pre-tax income of $749 million, an increase of 19% compared with the prior-year quarter. Our net income available to common shareholders of $599 million also increased 21%, and our earnings per diluted share were $2.86, reflecting an increase of 23%. Our annualized return on common equity (“ROCE”) for the quarter was 20.4%, compared with 19.1% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 24.0%(1), compared with 23.0%(1) for the prior-year quarter. Excluding the impact of $20 million of expenses related to acquisitions completed in prior years, such as compensation expenses related to retention awards and amortization of identifiable intangible assets, our adjusted net income available to common shareholders was $614 million(1)for the three months ended December 31, 2024, an increase of 19% compared with adjusted net income available to common shareholders for the prior-year quarter. Our adjusted earnings per diluted share were $2.93(1), an increase of 22% compared with the prior-year quarter. Adjusted annualized ROCE for the quarter was 20.9%(1) and adjusted annualized ROTCE was 24.6%(1)compared with adjusted annualized ROCE of 19.7%(1) and adjusted annualized ROTCE of 23.8%(1) for the prior-year quarter.

Previous wording

The increase in net revenues compared with the prior-year period was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts at the beginning of each of the current-year billing periods compared with the prior-year billing periods. Brokerage revenues also increased compared with the prior-year period largely due to an increase in client activity in the PCG segment. Investment banking revenues increased primarily due to more favorable market conditions in the current-year period. Offsetting these increases was a decrease in combined net interest income and RJBDP fees from third-party banks, as the benefits of higher short-term interest rates and higher average interest-earning asset balances and RJBDP balances swept to third-party banks were more than offset by a significant increase in interest expense. The increase in interest expense was primarily due to a shift in the mix of deposit balances at our Bank segment, as RJBDP balances swept to the Bank segment declined compared with the prior-year period and a significant portion was replaced with higher-cost ESP balances, as well as an increase in certificate of deposit balances.

Current wording

The increase in net revenues compared with the prior-year quarter was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts due to equity market appreciation and net new assets to the firm since the prior-year period. Investment banking revenues also increased significantly compared with the prior-year quarter primarily due to more favorable market conditions in the current period, particularly for merger & acquisition activity. Offsetting these increases was a decrease in combined net interest income and RJBDP fees from third‑party banks of $25 million, or 4%, due to lower interest rates compared with the prior-year quarter, which more than offset the favorable impact from growth in interest-earning assets and RJBDP balances swept to third-party banks.

Previous wording

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

Current wording

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

Previous wording

Compensation, commissions and benefits expense increased 13%, primarily due to an increase in compensable revenues, as well as an increase in compensation costs to support our growth and annual salary increases. Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 64.7%, compared with 63.7% for the prior-year quarter. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 64.4%(1), compared with 62.7%(1) for the prior-year quarter. The increase in the compensation ratio primarily resulted from changes in our revenue mix due to increases in compensable revenues compared with the prior-year quarter, as well as a decrease in combined net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

Current wording

Compensation, commissions and benefits expense increased 18%, primarily due to an increase in compensable revenues, as well as an increase in compensation costs to support our growth and annual cost increases, including salaries. Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 64.2%, compared with 63.8% for the prior-year quarter. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 64.0%(1), compared with 63.4%(1) for the prior-year quarter.

Previous wording

Non-compensation expenses decreased 3%, largely due to a significant decrease in expenses related to legal and regulatory matters, as the current-year period reflected net legal and regulatory matter reserve releases while the prior-year period included elevated provisions for legal and regulatory matters, as well as a decrease in the bank loan provision for credit losses. Partially offsetting these decreases in expenses, was the impact of higher communications and information processing expenses resulting from continued investments in technology to benefit our clients and advisors and to support our growth, a $32 million insurance settlement received in the prior-year period related to a previously-settled litigation matter that did not recur, higher non-interest expenses related to deposits, including an FDIC special assessment of $10 million, as well as higher investment sub-advisory fees resulting from growth in assets under management in sub-advised programs. Occupancy and equipment and business development expenses also increased compared with the prior-year period.

Current wording

Non-compensation expenses increased 12%, primarily due to higher communications and information processing expenses resulting from continued investments in technology to benefit our clients and advisors and to support our growth, and higher investment sub-advisory fees resulting from growth in assets under management in sub-advised programs. Expenses related to legal and regulatory matters also increased as the current quarter included provisions for legal and regulatory matters while the prior-year quarter reflected a net reserve release. Partially offsetting these increases in expenses, was a decrease in the bank loan provision for credit losses.

Previous wording

Our effective income tax rate was 23.6% for our fiscal third quarter of 2024, a decrease compared with the 24.1% effective income tax rate for the prior-year quarter, primarily due to a change in the amount of nondeductible fines and penalties compared with the prior-year quarter, partially offset by the impact of a lower tax benefit recognized related to nontaxable valuation gains associated with our company-owned life insurance policies.

Current wording

Our effective income tax rate was 19.9% for our fiscal first quarter of 2025, a decrease compared with the 21.0% effective income tax rate for the prior-year quarter, primarily due to the impact of a larger tax benefit recognized during the current quarter related to share-based compensation that vested during the period.

Previous wording

As of June 30, 2024, our Tier 1 leverage ratio of 12.7% and Total capital ratio of 23.6% were both significantly higher than the regulatory requirement to be considered well-capitalized. We also continue to have substantial liquidity with $2.1 billion(2) of cash at the parent as of June 30, 2024. We believe our capital and funding position provides us the opportunity to manage our balance sheet prudently and to continue to be opportunistic and invest in growth. During the three months ended June 30, 2024, we repurchased 2.0 million shares of our common stock for $243 million at an average price of $122 per share under the Board of Directors’ common stock repurchase authorization. We expect to continue to repurchase our common stock to offset dilution from share-based compensation and to be opportunistic with incremental repurchases. Given our capital and liquidity levels, we expect to accelerate our share repurchase activity; however, we will continue to monitor market conditions and other capital needs as we consider the magnitude and timing of these repurchases.

Current wording

As of December 31, 2024, our tier 1 leverage ratio was 13.0% and total capital ratio was 25.0% both well above regulatory capital requirements. We also continue to have substantial liquidity with $2.3 billion(2) of cash at the parent as of December 31, 2024. In December 2024, the Board of Directors increased the quarterly cash dividend on common shares 11% to $0.50 per share and authorized common stock repurchases of up to $1.5 billion, replacing the previous authorization. During the three months ended December 31, 2024, we repurchased 310 thousand shares of our common stock for $50 million at an average price of $161 per share under the Board’s common stock repurchase authorization, leaving $1.45 billion available under such authorization. We believe our capital and funding position provides us the opportunity to manage our balance sheet prudently and to continue to be opportunistic and invest in growth across our businesses. We expect to continue to repurchase our common stock to offset dilution from share-based compensation and to be opportunistic with incremental repurchases. However, we will continue to monitor market conditions and other capital needs as we consider the magnitude and timing of these repurchases.

Previous wording

As we look ahead to our fiscal fourth quarter of 2024, we believe we are well-positioned for long-term growth with our strong capital position, total client assets under administration of $1.48 trillion, and net bank loans of $45.1 billion. We expect our fiscal fourth quarter of 2024 results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 3% sequential increase in PCG fee-based assets and 1% sequential increase in financial assets under management as of June 30, 2024. In addition, our financial advisor recruiting activity remains robust, including a strong recruiting pipeline. While the timing of transaction closings remains heavily influenced by external factors, we have a healthy investment banking pipeline and we expect investment banking revenues to continue to improve over the next few quarters. We expect our combined net interest income and RJBDP fees from third-party banks for the remainder of the fiscal year to be relatively unchanged from our current quarter aggregate level, but such revenues are largely dependent on the level of short-term interest rates, client cash balances and other factors that may impact the current cash environment. In addition, although our current loan portfolio credit metrics are solid and we continue to proactively manage our credit risk in our loan portfolio, future economic deterioration or changes in the macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

Current wording

As we look ahead to the remainder of our fiscal 2025, we believe we are well-positioned for long-term growth with our strong capital position, total client assets under administration of $1.56 trillion, and net bank loans of $47.2 billion. Our PCG segment continues to benefit from growth in fee-based accounts and our financial advisor recruiting pipeline remains solid. Our fiscal second quarter of 2025 results will be negatively impacted by two fewer billable days which we expect to result in an approximate 2% decline in asset management and related administrative fees, as well as impacting our combined net interest income and RJBDP fees from third-party banks. Given our healthy pipeline and our investments in our platform and capabilities, we expect investment banking revenues to continue to benefit over the next few quarters as the market environment has become more conducive for transaction closings. Although the market is still challenging for our fixed income brokerage revenues, we expect to benefit from increased activity from depository institution clients resulting from changes in the outlook for short-term interest rates. With ample client cash balances and capital, we believe we are well-positioned to increase lending as new origination activity increases, which may increase provisions for credit losses in future periods. In addition, although our current loan portfolio credit metrics are solid and we continue to proactively manage our credit risk in our loan portfolio, future economic deterioration or changes in the macroeconomic outlook could also result in increased bank loan provisions for credit losses in future periods. While we maintain discipline in controlling our expenses, we continue to invest to support growth across our businesses which may increase expenses in future periods. Our fiscal second quarter of 2025 compensation expenses will also reflect our annual salary increases and the reset of payroll taxes on January 1, 2025.

Previous wording

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

Current wording

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

Previous wording

Tangible common equity is computed by subtracting goodwill and identifiable intangible assets, net, along with the associated deferred tax liabilities, from total common equity attributable to RJF. Average common equity is computed by adding the total common equity attributable to RJF as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. Average common equity for the year-to-date period is computed by adding the total common equity attributable to RJF as of each quarter-end date during the indicated year-to-date period to the beginning of year total, and dividing by four, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated year-to-date period to the beginning of year total, and dividing by four. Adjusted average common equity is computed by adjusting for the impact on average common equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period.

Current wording

Tangible common equity is computed by subtracting goodwill and identifiable intangible assets, net, along with the associated deferred tax liabilities, from total common equity attributable to RJF. Average common equity is computed by adding the total common equity attributable to RJF as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. Adjusted average common equity is computed by adjusting for the impact on average common equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period.

Previous wording

Largely in response to inflationary pressures since the beginning of fiscal year 2022, the Fed rapidly and consistently increased its benchmark short-term interest rates commencing in March 2022 and continuing throughout our fiscal year 2023. Since the beginning of our fiscal year 2023, the Fed increased the Fed funds target rate 225 basis points from a September 30, 2022 range of 3.00% to 3.25% to a June 30, 2024 range of 5.25% to 5.50%. While the Fed has left its benchmark rate unchanged in our fiscal year 2024 to-date, in its most recent meetings, it has indicated that it continues to closely monitor market conditions to determine whether it will continue to hold rates steady or initiate interest rate cuts later in our fiscal year 2024. The following table details the Fed’s short-term interest rate activity since the beginning of our fiscal year 2023.

Current wording

The Fed funds target rate began our fiscal 2024 at a range of 5.25% to 5.50% and remained throughout most of our fiscal 2024. In late September 2024, the Fed decreased the Fed funds target rate by 50 basis points, followed by two additional 25‑basis-point reductions during our fiscal first quarter of 2025 to end the quarter at a range of 4.25% to 4.50%. The Fed has indicated that it intends to closely monitor market conditions to determine whether it will consider making additional adjustments to short-term interest rates during the remainder of our fiscal 2025. The following table details the Fed’s short-term interest rate activity since the beginning of our fiscal year 2024.

Previous wording

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Bank, and Other segments) and the nature of fees we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees), our financial results are sensitive to changes in interest rates. Increases in short-term interest rates have historically resulted in an increase in our net earnings and, notwithstanding potential offsetting favorable impacts in other areas of our business, we expect decreases in short-term interest rates to generally reduce our net earnings. As it relates to our net interest income, the magnitude of the effect of a decrease in interest rates depends on a number of factors impacting balances, asset yields, and the cost of funding. The magnitude of the impact to our net interest margin depends on the yields on interest-earning assets relative to the cost of interest-bearing liabilities, including deposit rates paid to clients on their cash balances. Decreases in short-term interest rates generally also result in a decrease to our RJBDP fees earned from third-party banks, although the magnitude of the impact may also be impacted by demand for cash balances by third-party banks and the rate paid to clients on their cash sweep balances. Rates paid to clients on their cash balances are generally impacted by the level of short-term interest rates, as well as competitive industry dynamics impacting rates paid to clients and the demand for client cash. Additionally, any future changes to regulatory rules or interpretations governing the fees the firm earns on cash sweep balances could also impact the rates we pay to clients on cash balances. In recent fiscal years, we have sought to continue to meet client needs for higher yields on cash balances in a relatively higher interest rate environment without sacrificing the benefits of FDIC insurance on such balances by introducing new products leveraging our bank subsidiaries or through initiatives offered within the RJBDP. Such programs include our ESP which was introduced to our clients in fiscal year 2023 where such deposits are held by Raymond James Bank and offer enhanced rates and FDIC coverage of up to $50 million for certain accounts, as well as initiatives offered from time-to-time within the RJBDP program which may offer enhanced rates to clients on certain balances within the program. These programs, while meeting client needs and diversifying our funding sources, have a higher relative cost than other alternatives therefore reducing our net interest margin and yields on RJBDP balances.

Current wording

Decreases in short-term interest rates generally also result in a decrease to our RJBDP fees earned from third-party banks, although the magnitude of the impact may also be impacted by demand for cash balances by third-party banks and the rate paid to clients on their cash sweep balances. Rates paid to clients on their cash balances are generally impacted by the level of short-term interest rates, as well as competitive industry dynamics and the demand for client cash. Additionally, any future changes to regulatory rules or interpretations governing the fees the firm earns on cash sweep balances could also impact the rates we pay to clients on cash balances. In recent fiscal years, we have sought to continue to meet client demand for higher yields on cash balances, without sacrificing the benefits of FDIC insurance on such balances, by introducing new deposit products leveraging our bank subsidiaries or through initiatives offered within the RJBDP. Such programs include our ESP introduced to our clients in fiscal 2023 where such deposits are held by Raymond James Bank, offer enhanced rates, and offer FDIC coverage of up to $50 million for certain accounts, as well as initiatives offered from time to time within the RJBDP program which may offer enhanced rates to clients on certain balances within the program. These programs, while meeting client needs and diversifying our funding sources, have a higher relative cost than other alternatives therefore reducing our net interest margin and yields on RJBDP balances.

Previous wording

The increase in net revenues compared with the prior-year quarter was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter. Brokerage revenues also increased compared with the prior-year quarter primarily due to an increase in client activity in the PCG segment. Investment banking revenues increased compared with the prior-year quarter largely due to higher debt and equity underwriting revenues. Combined net interest income and RJBDP fees from third-party banks declined compared with the prior-year quarter, as the benefits of higher short-term interest rates and higher average interest-earning asset balances and RJBDP balances swept to third-party banks were more than offset by a significant increase in interest expense. The increase in interest expense was primarily due to a shift in the mix of deposit balances in our Bank segment, as RJBDP balances swept to the Bank segment declined and a significant portion was replaced by higher-cost ESP balances, which was introduced to PCG clients in March 2023.

Current wording

Net interest income and RJBDP fees from third-party banks

Previous wording

(2)A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset Management segment, specifically our Asset Management Services division of RJ&A (“AMS”). These assets are included in our financial assets under management as disclosed in the “Selected key metrics” section of our “Management’s Discussion and Analysis - Results of Operations - Asset Management.”

Current wording

(1)A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset Management segment, specifically our Asset Management Services division of RJ&A (“AMS”). These assets are included in our financial assets under management as disclosed in the “Selected key metrics” section of our “Management’s Discussion and Analysis - Results of Operations - Asset Management.”

Previous wording

(1)Represents assets associated with firms affiliated with us through our RCS division, which are included in AUA and assets in fee-based accounts. Based on the nature of the services provided to such firms, revenues related to these assets are included in “Account and service fees.”

Current wording

As of December 31, 2024, September 30, 2024, and December 31, 2023 PCG AUA included assets associated with firms affiliated with us through our RCS division of $188.2 billion, $180.7 billion, and $146.9 billion, respectively, of which $160.2 billion, $153.1 billion, and $122.8 billion, respectively, were assets in fee-based accounts. Based on the nature of the services provided to such firms, revenues related to these assets are included in “Account and services fees.” The growth in RCS client assets is partially due to transfers into RCS from our other financial advisor channels. We may continue to experience transfers to our RCS division; however, consistent with our experience in recent fiscal years, we would not expect these financial advisor transfers to significantly impact our results of operations.

Previous wording

(1)Domestic Private Client Group net new assets represents domestic Private Client Group client inflows, including dividends and interest, less domestic Private Client Group client outflows, including commissions, advisory fees and other fees. This metric for the three and nine months ended June 30, 2023 includes the impact of the departure of approximately $5 billion of assets under administration, representing the portion of advisors previously associated through a single relationship in the firm’s independent contractors division whose affiliation with the firm ended in the fiscal third quarter of 2023.

Current wording

(1)Domestic PCG net new assets represents domestic PCG client inflows, including dividends and interest, less domestic PCG client outflows, including commissions, advisory fees and other fees.

Previous wording

(2)The Domestic Private Client Group net new asset growth - annualized percentage is based on the beginning Domestic Private Client Group AUA balance for the indicated period.

Current wording

(2)The Domestic PCG net new asset growth - annualized percentage is based on the beginning Domestic PCG AUA balance for the indicated period.

Previous wording

PCG AUA and PCG assets in fee-based accounts as of June 30, 2024 increased 2% and 3%, respectively, compared with March 31, 2024, and increased 15% and 18%, respectively, compared with June 30, 2023, due to equity market appreciation and net new assets, due to the favorable impact of our advisor retention and recruiting. PCG assets in fee-based accounts continued to be a significant percentage of overall PCG AUA due to many clients’ preference for fee-based alternatives versus transaction-based accounts and, as a result, a significant portion of our PCG revenues is more directly impacted by market movements.

Current wording

PCG AUA as of December 31, 2024 decreased 1% compared with September 30, 2024 and were negatively impacted by changes in foreign exchange rates, as well as the departure of primarily one large branch in our independent contractor division which also negatively impacted our PCG assets in fee-based accounts and our domestic PCG net new assets growth. PCG assets in fee-based accounts were $876.6 billion as of December 31, 2024, a slight increase compared with September 30, 2024. PCG assets in fee-based accounts continued to be a significant percentage of overall PCG AUA due to many clients’ preference for fee-based alternatives versus transaction-based accounts and, as a result, a significant portion of our PCG revenues is more directly impacted by market movements.

Previous wording

A significant portion of our domestic clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at either of our bank subsidiaries, which are included in our Bank segment, or various third-party banks. Balances swept to third-party banks are not reflected on our Condensed Consolidated Statements of Financial Condition. Our PCG segment earns servicing fees for the administrative services we provide related to our clients’ deposits that are swept to banks as part of the RJBDP. These servicing fees are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates and the interest paid to clients on balances in the RJBDP. Under our intersegment policies, the PCG segment receives from our Bank segment the greater of a base servicing fee or a net yield equivalent to the average yield that the firm would otherwise receive from third-party banks in the RJBDP. In the current interest-rate environment, the PCG segment RJBDP fee revenues are derived from the yield from third-party banks in the program and the Bank segment RJBDP servicing costs reflect such market rate for the deposits. The fees that the PCG segment earns from the Bank segment, as well as the servicing costs incurred on the deposits in the Bank segment, are eliminated in consolidation. See “Management’s Discussion and Analysis - Net interest analysis” for further information regarding factors impacting the servicing fees we receive related to the RJBDP, as well as the interest paid to clients on their cash balances.

Current wording

A portion of our domestic clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at either of our bank subsidiaries, which are included in our Bank segment, or various third-party banks. Balances swept to third-party banks are not reflected on our Condensed Consolidated Statements of Financial Condition. Our PCG segment earns servicing fees for the administrative services we provide related to our clients’ deposits that are swept to banks as part of the RJBDP. These servicing fees are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates and the interest paid to clients on balances in the RJBDP. Under our intersegment policies, the PCG segment receives from our Bank segment the greater of a base servicing fee or a net yield equivalent to the average yield that the firm would otherwise receive from third-party banks in the RJBDP. In the current interest-rate environment the PCG segment RJBDP fee revenues are derived from the yield from third-party banks in the program and the Bank segment RJBDP servicing costs reflect such market rate for the deposits. The fees that the PCG segment earns from the Bank segment, as well as the servicing costs incurred on the deposits in the Bank segment, are eliminated in consolidation. See “Management’s Discussion and Analysis - Net interest analysis” for further information regarding factors impacting the servicing fees we receive related to the RJBDP, as well as the interest paid to clients on their cash balances.

Previous wording

The “Average yield on RJBDP - third-party banks” in the preceding table is computed by dividing annualized RJBDP fees from third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balances at third-party banks. The average yield on RJBDP - third-party banks for the three and nine months ended June 30, 2024 increased from the prior year largely as a result of the increases in the Fed’s short-term benchmark interest rate; however, the average yield on RJBDP - third-party banks for the three months ended June 30, 2024 decreased 18 basis points compared with the preceding quarter as a result of an increase in certain balances in the RJBDP program which offered a higher yield. See “Management’s Discussion and Analysis - Net interest analysis” for further information.

Current wording

The “Average yield on RJBDP - third-party banks” in the preceding table is computed by dividing annualized RJBDP fees from third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balances at third-party banks. The average yield on RJBDP - third-party banks for the three months ended December 31, 2024 decreased from the prior-year quarter largely as a result of the 50-basis-point decrease in short-term interest rates enacted by the Fed late in the preceding quarter, as well as the two 25-basis-point rate cuts enacted during the current quarter. See “Management’s Discussion and Analysis - Net interest analysis” for further information.

Previous wording

Total clients’ domestic cash sweep and ESP balances decreased 3% compared with March 31, 2024, with decreases in both RJBDP balances and the ESP, which was introduced to clients in March 2023. Total clients’ domestic cash sweep and ESP balances also decreased 3% compared with June 30, 2023, where a decline in client cash sweep balances was largely offset by growth in the ESP. PCG segment results can be impacted by not only changes in the level of client cash balances, but also by the allocation of client cash balances between the RJBDP, the CIP, and the ESP, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors. For example, the ESP has provided us the flexibility to sweep more RJBDP balances to third-party banks and reduce the amount of RJBDP balances held in our Bank segment.

Current wording

Total clients’ domestic cash sweep and ESP balances increased 3% compared with September 30, 2024, primarily due to increases in RJBDP balances. PCG segment results can be impacted by not only changes in the level of client cash balances, but also by the allocation of client cash balances between the RJBDP, the CIP, and the ESP, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

Previous wording

Asset management and related administrative fees increased $200 million, or 17%, primarily due to higher assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter resulting from market appreciation, as well as growth primarily from advisor recruiting.

Current wording

Asset management and related administrative fees increased $285 million, or 24%, primarily due to higher assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter resulting from market appreciation and net new assets, due to the favorable impact of our advisor recruiting and retention.

Previous wording

Brokerage revenues increased $60 million, or 17%, primarily due to higher client activity in the current quarter.

Current wording

Brokerage revenues increased $51 million, or 13%, primarily due to higher client activity in the current quarter.

Previous wording

Account and service fees decreased $59 million, or 4%, primarily due to a decrease in RJBDP fees resulting from lower client cash sweep balances. RJBDP fees paid to PCG from our Bank segment decreased due to a decline in balances allocated to our Bank segment which more than offset the impact of higher short-term interest rates, while RJBDP fees from third-party banks increased due to the aforementioned increase in short-term interest rates, as well as higher average balances swept to such banks. Partially offsetting the decline in total RJBDP fees, mutual fund service fees increased, primarily from higher average mutual fund assets, and client account and other fees increased primarily due to business growth.

Current wording

Account and service fees decreased $19 million, or 3%, primarily due to a decrease in RJBDP fees. RJBDP fees paid to PCG from our Bank segment decreased due to the impact of lower short-term interest rates and, to a lesser extent, a decline in average balances allocated to our Bank segment, while RJBDP fees from third-party banks decreased due to lower short-term interest rates, partially offset by higher average balances swept to such banks. Partially offsetting the decline in total RJBDP fees, mutual fund service fees increased, primarily from higher average mutual fund assets.

Previous wording

Compensation-related expenses increased $210 million, or 14%, primarily due to higher commission expense resulting from higher compensable revenues, including asset management and related administrative fees and brokerage revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

Current wording

Compensation-related expenses increased $262 million, or 17%, primarily due to higher commission expense resulting from higher compensable revenues, including asset management and related administrative fees and brokerage revenues, as well as an increase in compensation costs to support our growth and annual cost increases, including salaries.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Fees for our managed programs are generally collected quarterly. Approximately 70% of these fees are based on balances as of the beginning of the quarter (primarily in AMS), approximately 15% are based on balances as of the end of the quarter, and approximately 15% are based on average daily balances throughout the quarter.

Current wording

Fees for our managed programs are generally collected quarterly. Approximately 75% of these fees are based on balances as of the beginning of the quarter (primarily in AMS), approximately 10% are based on balances as of the end of the quarter, and approximately 15% are based on average daily balances throughout the quarter.

Previous wording

(2)Represents the portion of the AMS AUM that is managed by RJIM and, as a result, is included in both AMS and RJIM in the preceding table. This amount is removed in the calculation of “Total financial assets under management.”

Current wording

(2)Represents the portion of the AMS AUM that is managed by Raymond James Investment Management and, as a result, is included in both AMS and Raymond James Investment Management in the preceding table. This amount is removed in the calculation of “Total financial assets under management.”

Previous wording

Assets managed by RJIM include assets managed by our subsidiaries: Eagle Asset Management, Scout Investments, Reams Asset Management (a division of Scout Investments), ClariVest Asset Management, Cougar Global Investments, and Chartwell Investment Partners. The following table presents RJIM’s AUM by objective, excluding assets for which it does not exercise discretion, as well as the approximate average client fee rate earned on such assets.

Current wording

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

Previous wording

The following table includes assets held in certain non-discretionary asset-based programs for which the Asset Management segment does not exercise discretion but provides other services such as administrative support (including for affiliated entities) and investment advice. The vast majority of these assets are also included in our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”).

Current wording

The following table includes assets held in certain non-discretionary asset-based programs for which the Asset Management segment does not exercise discretion but provides other services such as administrative support (including for affiliated entities) and investment advice. The vast majority of these assets are also included in our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”). Administrative fees associated with these programs are predominantly based on balances at the beginning of the quarter.

Previous wording

Asset management and related administrative fees increased $37 million, or 17%, driven by higher beginning balances of financial assets under management and assets in non-discretionary asset-based programs at AMS, primarily due to market-driven appreciation in asset values and net inflows to PCG fee-based accounts.

Current wording

Asset management and related administrative fees increased $58 million, or 26%, driven by higher financial assets under management and assets in non-discretionary asset-based programs at AMS, primarily due to market-driven appreciation in asset values and net inflows to PCG fee-based accounts.

Previous wording

Compensation expenses increased $17 million, or 11%, primarily due to higher revenues, as well as an increase in compensation costs to support our growth and annual cost increases, including salaries. Non-compensation expenses increased $32 million, or 13%, largely due to higher investment sub-advisory fees, resulting from the increase in assets under management in sub-advised programs, as well as higher communications and information processing expenses.

Current wording

Compensation expenses increased $5 million, or 9%, primarily due to higher revenues, as well as an increase in compensation costs to support our growth and annual cost increases, including salaries. Non-compensation expenses increased $22 million, or 25%, largely due to higher investment sub-advisory fees, resulting from the increase in assets under management in sub-advised programs, as well as higher communications and information processing expenses.

Previous wording

The bank loan provision for credit losses was $23 million for the current-year period, compared with $96 million for the prior-year period. The bank loan provision for credit losses for the current-year period primarily reflected the impacts of loan growth, specific reserves, loan downgrades, and charge-offs in our C&I and CRE loan portfolios, partially offset by the favorable impacts of an improved economic forecast, loan repayments, and loan sales. The bank loan provision for credit losses for the prior-year period primarily reflected the impacts of a weakened macroeconomic outlook for certain loan portfolios, including the impact of a weaker economic outlook for the CRE portfolio as reflected in Moody’s CRE Price Index utilized in our CECL model, as well as loan downgrades during the prior-year period, partially offset by the impact of loan repayments and sales, which had a larger impact than provisions on new loans during the prior-year period.

Current wording

The bank loan provision for credit losses decreased $12 million compared with the prior-year quarter. The bank loan provision for credit losses for the current quarter primarily reflected the impacts of an improved macroeconomic forecast and loan repayments on criticized loans, offset by provisions on new loans, loan downgrades, primarily in the CRE and C&I loan portfolios, and charge-offs of certain loans. The bank loan provision for credit losses for the prior-year quarter primarily reflected the impacts of specific reserves in our C&I and CRE portfolios, loan downgrades, and charge-offs, partially offset by the favorable impact of loan repayments and sales, which had a larger impact than provisions on new loans.

Previous wording

Non-compensation expenses, excluding the bank loan provision for credit losses, decreased $78 million, or 23%, primarily due to a decrease in RJBDP fees paid to PCG resulting from the aforementioned decline in RJBDP balances swept to the Bank segment, partially offset by the impact of higher rates applicable to such balances. These Bank segment fees and the related revenues earned by the PCG segment are eliminated in consolidation (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Private Client Group” for further information about these servicing fees).

Current wording

Compensation expenses increased $3 million, or 7%. Non-compensation expenses, excluding the bank loan provision for credit losses, decreased $33 million, or 11%, primarily due to a decrease in RJBDP fees paid to PCG. RJBDP fees paid to PCG decreased $36 million, or 16%, primarily due to the impact of the aforementioned decreases in short-term interest rates, as well as lower average RJBDP balances swept to the Bank segment. These Bank segment fees and the related revenues earned by the PCG segment are eliminated in consolidation (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Private Client Group” for further information about these servicing fees). Additionally, non-compensation expenses decreased as the prior-year quarter included the impact of the FDIC special assessment during that quarter which did not reoccur in the current quarter. These decreases in expenses were partially offset by higher communications and information processing expenses.

Previous wording

Liquidity and capital resources are provided primarily through our business operations and financing activities. Our business operations generate substantially all of their own liquidity and funding needs. We have a contingency funding plan which would guide our actions if one or more of our businesses were to experience disruptions from normal funding and liquidity sources. These actions include reallocating client cash balances in the RJBDP from third-party banks to our bank subsidiaries thereby bringing those deposits onto our Condensed Consolidated Statements of Financial Condition, increasing our FHLB borrowings at our bank subsidiaries, accessing committed and uncommitted lines of credit at the parent or certain operating subsidiaries, accessing capital markets, or borrowing from the Federal Reserve’s discount window. We also have the ability to create additional sources of funding by developing new products to meet the financial needs of our clients, such as the ESP deposit offering which was introduced to PCG clients in fiscal 2023, and, from time to time offering enhanced rates on certain RJBDP deposits. With each of our deposit offerings, we work to obtain sufficient liquidity to support our business operations while also maintaining a high level of FDIC insurance coverage for our clients.

Current wording

Liquidity and capital resources are provided primarily through our business operations and financing activities. Our business operations generate substantially all of their own liquidity and funding needs. We have a contingency funding plan which would guide our actions if one or more of our businesses were to experience disruptions from normal funding and liquidity sources. These actions include reallocating client cash balances in the RJBDP from third-party banks to our bank subsidiaries thereby bringing those deposits onto our Condensed Consolidated Statements of Financial Condition, increasing our FHLB borrowings or borrowing from the Federal Reserve’s discount window at our bank subsidiaries, accessing committed and uncommitted lines of credit at the parent or certain operating subsidiaries, or accessing capital markets.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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