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MarketScreener Homepage  >  Equities  >  Nyse  >  Raymond James Financial    RJF

RAYMOND JAMES FINANCIAL

(RJF)
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RAYMOND JAMES FINANCIAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

11/24/2020 | 05:53pm EST
INDEX
                                                                              PAGE
 Introduction                                                                  37
 Executive overview                                                            37

Reconciliation of Non-GAAP financial measures to GAAP financial measures

   40
 Segments                                                                      42
 Net interest analysis                                                         43
 Results of Operations
 Private Client Group                                                          45
 Capital Markets                                                               48
 Asset Management                                                              50
 RJ Bank                                                                       52
 Other                                                                         56
 Certain statistical disclosures by bank holding companies                  

56

 Liquidity and capital resources                                            

57

 Statement of financial condition analysis                                     61
 Contractual obligations                                                       62
 Regulatory                                                                    62
 Critical accounting estimates                                              

62

 Recent accounting developments                                             

64

 Off-balance sheet arrangements                                                65
 Effects of inflation                                                          65
 Risk management                                                               65




                                       36

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

INTRODUCTION


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

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

EXECUTIVE OVERVIEW

Year ended September 30, 2020 compared with the year ended September 30, 2019


Net revenues of $7.99 billion for our fiscal year ended September 30, 2020
increased $250 million, or 3%. Pre-tax income of $1.05 billion decreased $323
million, or 23%, and our net income of $818 million decreased $216 million, or
21%. Our earnings per diluted share were $5.83, reflecting a 19% decrease. Our
return on equity ("ROE") was 11.9%, compared with 16.2% for the prior year, and
return on tangible common equity ("ROTCE") was 13.0%(1), compared with 17.8%(1)
for the prior year. Our financial results were significantly impacted by the
direct and indirect impacts of the COVID-19 pandemic.

The COVID-19 pandemic and related government-imposed and other measures intended
to control the spread of the disease, including restrictions on travel and the
conduct of business, such as stay-at-home orders, quarantines, travel bans,
border closings, business closures and other similar measures, had a significant
impact on global economic conditions and the environment in which we operated
during our 2020 fiscal year. In response to the pandemic, in March 2020 we
activated certain aspects of our business continuity plans endeavoring to
protect our associates and our clients. As a result, nearly all of our
associates transitioned to working remotely, while still maintaining our high
standards of client service. Although economies began to reopen during the
latter portion of our fiscal third quarter and continued to progress during our
fourth quarter, a substantial portion of our associates continued to work
remotely through the end of our fiscal year.

The COVID-19 pandemic had varied impacts across our businesses. While certain of
our businesses benefited from increased volatility and higher levels of client
activity caused by the pandemic, our results were significantly and negatively
affected by the significant reduction in interest rates implemented by The
Federal Reserve in March 2020. The economic impact and uncertainty attributable
to the pandemic also resulted in factors that contributed to an elevated bank
loan loss provision. Uncertainty carries over into our 2021 fiscal year with
regard to the extent and duration of the disruptions related to the pandemic, as
well as its continuing impacts on the global economy. The extent of such effects
will depend on future developments, which are highly uncertain.

As a result of the economic environment, in September 2020 we announced a
reduction in workforce and as a result recognized $46 million of related
expenses in our fiscal fourth quarter of 2020. Excluding these expenses and a $7
million loss related to the pending disposition of our interests in certain
entities in our Capital Markets segment that operate predominately in France,
adjusted net income was $858 million(1), a decrease of 20% compared with
adjusted net income of $1.07 billion(1) for the prior year. The prior year
included a $19 million goodwill impairment charge associated with our Canadian
Capital Markets business and a $15 million loss on the sale of our operations
related to research, sales and trading of European equities, which did not recur
in fiscal year 2020. Adjusted earnings per diluted share were $6.11(1), a 17%
decrease compared with adjusted earnings per diluted share of $7.40(1) for the
prior year. Our adjusted ROE was 12.5%(1), compared with 16.7%(1) for the prior
year, and adjusted ROTCE was 13.6%(1), compared with 18.4%(1) for the prior
year.



(1) "ROTCE," "Adjusted net income," "adjusted earnings per diluted share,"
"adjusted ROE" and "adjusted ROTCE" are each 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 our non-GAAP measures to the most
directly comparable GAAP measures and for other important disclosures.

                                       37

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

A $250 million increase in net revenues compared with the prior year was driven
by higher asset management and related administrative fees, primarily
attributable to higher PCG assets in fee-based accounts, as well as strong fixed
income brokerage revenues and investment banking revenues. Offsetting these
increases were the negative impacts of lower short-term interest rates on our
net interest income and RJBDP fees from third-party banks, and valuation losses
on private equity investments, a portion of which was attributable to
noncontrolling interests (reflected as an offset in other expenses).

Compensation, commissions and benefits expense increased $378 million, or 7%,
mostly due to an increase in revenues, which primarily include asset management
and related administrative fees, brokerage revenues and investment banking
revenues. Certain of our revenue streams, such as net interest income, do not
have a direct associated payout; therefore, changes in these revenue streams do
not directly impact our compensation-related expenses but do affect our ratio of
compensation, commissions and benefits expense to net revenues ("compensation
ratio"). Our compensation ratio increased to 68.4%, compared with 65.7% for the
prior year, primarily due to the negative impact of lower interest rates on
revenue streams that are not directly compensable, such as net interest income
and RJBDP fees from third-party banks.

Non-compensation expenses increased $195 million, or 15%, due to a $211 million
increase in the bank loan loss provision, which was $233 million in the current
year compared with $22 million in the prior year, and the aforementioned $46
million of reduction in workforce expenses. These increases were partially
offset by a significant decline in business development expenses, due to lower
travel and conference-related expenses during the second half of the fiscal year
as a result of the COVID-19 pandemic.

Our effective income tax rate was 22.2% for fiscal 2020, a decrease compared with the 24.8% effective tax rate for fiscal year 2019, primarily due to non-taxable gains on our corporate-owned life insurance portfolio.


We ended fiscal 2020 with capital ratios well in excess of regulatory
requirements and substantial liquidity, with over $2 billion(1) of cash at the
parent company, which included the proceeds of a $500 million 10-year senior
notes issuance at the end of our fiscal second quarter of 2020. Pursuant to our
Board of Directors' share repurchase authorization, we repurchased approximately
3.4 million shares of common stock during fiscal year 2020 for $263 million at
an average price of approximately $78.50 per share. Due to heightened market
uncertainty as a result of the COVID-19 pandemic, share repurchases were
suspended from mid-March through our fiscal third quarter but were resumed in
our fiscal fourth quarter to offset dilution related to our share-based
compensation. We expect to continue share repurchases in fiscal 2021 to offset
dilution and may make additional share repurchases, as appropriate. As of
September 30, 2020, we had $487 million of availability remaining under the
previously-announced authorization.

Certain of the impacts of the COVID-19 pandemic are likely to continue to affect
our results in fiscal 2021. Our net interest income and RJBDP fees from
third-party banks will likely reflect the full-year impact of the 150 basis
point reduction by the Federal Reserve of its benchmark short-term interest rate
in March 2020, as we do not anticipate short-term interest rates to recover to
the beginning of the fiscal year 2020 level during fiscal 2021. In Capital
Markets, market uncertainty during the pandemic may result in volatility of both
brokerage revenues and investment banking revenues. While our results during
fiscal 2020 were negatively impacted by elevated bank loan loss provisions,
including losses on certain corporate loans that were sold during the year,
further market deterioration could result in additional provisions in fiscal
2021. The timing and amount of the business development expenses we will incur
in fiscal 2021 will be heavily influenced by the progression of the COVID-19
pandemic. We continue to pursue opportunities to reduce costs and invest in and
implement efficiencies in our processes to remain well-positioned for future
growth and success.

A summary of our financial results by segment compared to the prior year is as follows:


•PCG segment net revenues of $5.55 billion increased 4%, while pre-tax income of
$539 million decreased 7%. The $193 million increase in net revenues was
primarily attributable to an increase in asset management and related
administrative fees due to higher average assets in fee-based accounts,
partially offset by decreases in RJBDP fees from third-party banks and net
interest income due to lower short-term interest rates. Non-interest expenses
increased $233 million, or 5%, primarily resulting from an increase in
compensation expenses largely due to the growth in compensable net revenues,
primarily asset management and related administrative fees.

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


                                       38

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

•Capital Markets net revenues of $1.29 billion increased 19% and pre-tax income
of $225 million increased 105%. The $208 million increase in net revenues was
primarily due to an increase in fixed income brokerage revenues, due to higher
client activity, as well as increases in equity and debt underwriting revenues.
These increases were partially offset by a decline in merger & acquisition
revenues. Non-interest expenses increased $93 million, or 10%, due to higher
compensation expenses, primarily attributable to the increase in revenues.

•Asset Management segment net revenues of $715 million increased 3% and pre-tax
income of $284 million increased 12%. The increase in net revenues was driven by
higher assets in fee-based programs offered to PCG clients and market
appreciation, which offset net outflows at Carillon Town Advisers.

•RJ Bank net revenues of $765 million decreased 10% and pre-tax income of $196
million decreased 62%. The $81 million decrease in net revenues reflected the
negative impact of lower short-term interest rates, which more than offset the
growth in interest-earning assets. Non-interest expenses increased $238 million,
or 72%, primarily due to a $211 million increase in the loan loss provision.

•Our Other segment reflected a pre-tax loss that was $110 million larger
compared to the prior year, primarily due to the aforementioned $46 million in
reduction in workforce expenses, private equity valuation losses, as compared to
gains in the prior year, lower interest income on corporate cash balances due to
lower short-term interest rates, and increased interest expense, due to the
issuance of $500 million of senior notes at the end of the fiscal second
quarter.

Year ended September 30, 2019 compared with the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.


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

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


We utilize certain non-GAAP financial measures as additional measures to aid in,
and enhance, the understanding of our financial results and related measures.
These non-GAAP financial measures include adjusted net income, adjusted earnings
per diluted share, adjusted return on equity, ROTCE, and adjusted ROTCE. We
believe certain of these non-GAAP financial measures provides useful information
to management and investors by excluding certain material items that may not be
indicative of our core operating results. We utilize these non-GAAP financial
measures in assessing the financial performance of the business, as they
facilitate a meaningful comparison of current- and prior-period results. We
believe that ROTCE is meaningful to investors as this measure facilitates
comparison of our results to the results of other companies. In the following
tables, the tax effect of non-GAAP adjustments reflects the statutory rate
associated with each non-GAAP item. These non-GAAP financial measures should be
considered in addition to, and not as a substitute for, measures of financial
performance prepared in accordance with GAAP. In addition, our non-GAAP
financial measures may not be comparable to similarly titled non-GAAP financial
measures of other companies. The following tables provide a reconciliation of
non-GAAP financial measures to the most directly comparable GAAP measures for
those periods which include non-GAAP adjustments.
                                                          Year ended September 30,
$ in millions, except per share amounts                      2020           

2019

Net income                                         $        818$ 1,034
Non-GAAP adjustments:
Acquisition and disposition-related expenses                  7             

15

Reduction in workforce expenses                              46             

-

Goodwill impairment                                           -             

19

Pre-tax impact of non-GAAP adjustments                       53             

34

Tax effect of non-GAAP adjustments                          (13)            

-


Total non-GAAP adjustments, net of tax                       40                      34
Adjusted net income                                $        858$ 1,068

Earnings per diluted share                         $       5.83$  7.17
Non-GAAP adjustments:
Acquisition and disposition-related expenses               0.05             

0.10

Reduction in workforce expenses                            0.32             

-

Goodwill impairment                                           -             

0.13

Pre-tax impact of non-GAAP adjustments                     0.37             

0.23

Tax effect of non-GAAP adjustments                        (0.09)            

-


Total non-GAAP adjustments, net of tax                     0.28             

0.23

Adjusted earnings per diluted share                $       6.11$  7.40




                                       40

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

                                                                                Year ended September 30,
$ in millions                                                                   2020                 2019

Return on equity
Average equity                                                             $     6,860$   6,392
Impact on average equity of non-GAAP adjustments:
Acquisition and disposition-related expenses                                         1                  12
Reduction in workforce expenses                                                      9                   -
Goodwill impairment                                                                  -                   4
Pre-tax impact of non-GAAP adjustments                                              10                  16
Tax effect of non-GAAP adjustments                                                  (2)                  -

Total non-GAAP adjustments, net of tax                                               8                  16
Adjusted average equity                                                    $     6,868$   6,408

Average equity                                                             $     6,860$   6,392
Less:
Average goodwill and identifiable intangible assets, net                           605                 630
Average deferred tax liabilities, net                                              (31)                (31)
Average tangible common equity                                             $     6,286$   5,793

Impact on average tangible common equity of non-GAAP adjustments: Acquisition and disposition-related expenses

                                         1                  12
Reduction in workforce expenses                                                      9                   -
Goodwill impairment                                                                  -                   4
Pre-tax impact of non-GAAP adjustments                                              10                  16
Tax effect of non-GAAP adjustments                                                  (2)                  -

Total non-GAAP adjustments, net of tax                                               8                  16
Adjusted average tangible common equity                                    $     6,294$   5,809

Return on equity                                                                  11.9   %            16.2  %
Adjusted return on equity                                                         12.5   %            16.7  %
Return on tangible common equity                                                  13.0   %            17.8  %
Adjusted return on tangible common equity                                         13.6   %            18.4  %



Average equity is computed by adding the total equity attributable to RJF as of
each quarter-end date during the indicated fiscal year to the beginning of the
year total and dividing by five, or in the case of average tangible common
equity, computed by adding tangible common equity as of each quarter-end date
during the indicated fiscal year to the beginning of year total, and dividing by
five. Adjusted average equity is computed by adjusting for the impact on average
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.

ROE is computed by dividing net income by average equity for each respective
period or, in the case of ROTCE, computed by dividing net income by average
tangible common equity for each respective period. Adjusted ROE is computed by
dividing adjusted net income by adjusted average equity for each respective
period, or in the case of adjusted ROTCE, computed by dividing adjusted net
income by adjusted average tangible common equity for each respective period.


                                       41

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

SEGMENTS

The following table presents our consolidated and segment net revenues and pre-tax income/(loss) for the years indicated.

                                        Year ended September 30,                         % change
 $ in millions                       2020           2019         2018        2020 vs. 2019      2019 vs. 2018
 Total company
 Net revenues                   $   7,990$ 7,740$ 7,274                 3  %               6  %
 Pre-tax income                 $   1,052$ 1,375$ 1,311               (23) %               5  %

 Private Client Group
 Net revenues                   $   5,552$ 5,359$ 5,093                 4  %               5  %
 Pre-tax income                 $     539$   579$   576                (7) %               1  %

 Capital Markets
 Net revenues                   $   1,291$ 1,083$   964                19  %              12  %
 Pre-tax income                 $     225$   110$    91               105  %              21  %

 Asset Management
 Net revenues                   $     715$   691$   654                 3  %               6  %
 Pre-tax income                 $     284$   253$   235                12  %               8  %

 RJ Bank
 Net revenues                   $     765$   846$   727               (10) %              16  %
 Pre-tax income                 $     196$   515$   492               (62) %               5  %

 Other
 Net revenues                   $     (82)$     5$   (15)                  NM                 NM
 Pre-tax loss                   $    (192)$   (82)$   (83)             (134) %               1  %

 Intersegment eliminations
 Net revenues                   $    (251)$  (244)$  (149)                  NM                 NM




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

NET INTEREST ANALYSIS


The following table presents the high, low and end of period target federal
funds rates for our fiscal years ended September 30, 2020, 2019 and 2018,
respectively.

                                            Target federal funds rate
Twelve months ended:                  Low                  High        End of period
September 30, 2020                            0.00  %     1.75  %       0% - 0.25%
September 30, 2019                            1.75  %     2.50  %      1.75% - 2.00%
September 30, 2018                            1.00  %     2.25  %      2.00% - 2.25%



In response to macroeconomic concerns resulting from the COVID-19 pandemic, the
Federal Reserve decreased its benchmark short-term interest rate in March 2020
to a range of 0-0.25%, a decrease of 150 basis points. This decrease, as well as
the interest rate cuts implemented in calendar 2019 (225 basis points in total)
have had a negative impact on our fiscal year 2020 results, as we have certain
assets and liabilities, primarily held in our PCG, RJ Bank and Other segments,
which are sensitive to changes in interest rates. Fees we earn from third-party
banks on client cash balances swept to such banks as part of the RJBDP are also
sensitive to changes in interest rates. The negative impact of the decline in
short-term interest rates outweighed the growth in interest-earning assets and
RJBDP balances swept to third-party banks compared with the prior year. Although
our results for fiscal 2020 were impacted by the March rate cuts for a portion
of the year, if interest rates remain at the September 2020 levels throughout
fiscal 2021, we expect our financial results in fiscal 2021 will include a full
twelve-month impact of the interest rate cuts.

Given the relationship between our interest-sensitive assets and liabilities
held in each of these segments and the nature of fees we earn from third-party
banks on the RJBDP, decreases in short-term interest rates generally result in
an overall decrease in our net earnings, although the magnitude of the impact to
our net interest margin depends on the yields on interest-earning assets
relative to the cost of interest-bearing liabilities, including deposit rates
paid to clients on their cash balances. Conversely, any increases in short-term
interest rates and/or decreases in the deposit rates paid to clients generally
have a positive impact on our earnings.

Refer to the discussion of the specific components of our net interest income
within the "Management's Discussion and Analysis - Results of Operations" of our
PCG, RJ Bank, and Other segments. Also refer to "Management's Discussion and
Analysis - Results of Operations - Private Client Group - Clients' domestic cash
sweep balances" for further information on the RJBDP.



                                       43

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

The following table presents our consolidated average interest-earning asset and
interest-bearing liability balances, interest income and expense and the related
yields and rates. Average balances are calculated on a daily basis, with the
exception of Loans to financial advisors, net and Corporate cash and all other,
which are calculated based on the average of the end-of-month balances for each
month within the period.

                                                                                                                            Year ended September 30,
                                                                        2020                                                          2019                                                          2018
                                                 Average           Interest               Average              Average           Interest               Average              Average           Interest               Average
$ in millions                                    balance           inc./exp.            yield/cost             balance           inc./exp.            yield/cost             balance           inc./exp.            

yield/cost

Interest-earning assets:
Assets segregated pursuant to
regulations                                    $  3,040$       28                    0.91  %       $  2,399$       59                    2.47  %       $  3,011$       53                    1.76  %
Trading instruments                                    545               20                    3.65  %            733                  26                    3.56  %            693                  23                    3.32  %
Available-for-sale securities                        4,250               83                    1.94  %          2,872                  69                    2.39  %          2,531                  52                    2.07  %
Margin loans                                         2,206               84                    3.82  %          2,584                 122                    4.73  %          2,590                 107                    4.14  %
Bank loans, net of unearned income and
deferred expenses:
Loans held for investment:
C&I loans                                         7,885                 275                    3.43  %          8,070                 378                    4.62  %          7,619                 326                    4.22  %
CRE construction loans                              209                   9                    4.10  %            221                  12                    5.51  %            166                   8                    5.08  %
CRE loans                                         3,688                 120                    3.21  %          3,451                 159                    4.53  %          3,231                 133                    4.06  %
Tax-exempt loans                                  1,246                  33                    3.35  %          1,284                  35                    3.36  %          1,146                  30                    3.42  %
Residential mortgage loans                        4,874                 148                    3.04  %          4,091                 135                    3.30  %          3,448                 109                    3.16  %
SBL and other                                     3,559                 112                    3.10  %          3,139                 145                    4.57  %          2,690                 111                    4.09  %
Loans held for sale                                 130                   5                    3.70  %            151                   7                    4.73  %            126                   5                    4.01  %
Total bank loans, net                            21,591                 702                    3.25  %         20,407                 871                    4.26  %         18,426                 722                    3.93  %
Loans to financial advisors, net                    978                  20                    2.01  %            916                  18                    2.01  %            882                  15                    1.71  %
Corporate cash and all other                      6,077                  63                    1.05  %          4,658                 116                    2.48  %          4,007                  72                    1.79  %
Total interest-earning assets                  $ 38,687$    1,000                    3.45  %       $ 34,569$    1,281                    3.71  %       $ 32,140$    1,044                    3.25  %

Interest-bearing liabilities:
Bank deposits:
Savings, money market and Negotiable
Order of Withdrawal ("NOW") accounts           $ 23,629$       21                    0.09  %       $ 20,889$      120                    0.58  %       $ 18,473$       60                    0.32  %
Certificates of deposit                           1,006                  20                    2.03  %            536                  12                    2.24  %            372                   6                    1.67  %
Trading instrument liabilities                      192                   3                    1.58  %            292                   7                    2.50  %            278                   7                    2.64  %
Brokerage client payables                         3,922                  11                    0.29  %          3,326                  21                    0.62  %          4,147                  15                    0.37  %
Other borrowings                                    891                  20                    2.25  %            926                  21                    2.30  %            914                  22                    2.41  %
Senior notes payable                              1,798                  85                    4.73  %          1,550                  73                    4.70  %          1,549                  73                    4.69  %
Other                                               406                  18                    3.04  %            738                  29                    3.91  %            599                  19                    3.10  %
Total interest-bearing liabilities             $ 31,844$      178                    0.54  %       $ 28,257$      283                    1.00  %       $ 26,332$      202                    0.77  %
Net interest income                                              $      822$      998$      842



Nonaccrual loans are included in the average loan balances in the preceding
table. Any payments received for corporate nonaccrual loans are applied entirely
to principal. Income on residential mortgage nonaccrual loans is recognized on a
cash basis.

Fee income on bank loans included in interest income for the years ended September 30, 2020, 2019 and 2018 was $11 million, $18 million and $24 million, respectively.

The yield on tax-exempt loans in the preceding table is presented on a tax-equivalent basis utilizing the applicable federal statutory rates for each of the years presented.



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

RESULTS OF OPERATIONS - PRIVATE CLIENT GROUP


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

We also earn certain servicing fees, such as omnibus and education and marketing
support fees, from mutual fund and annuity companies whose products we
distribute. Servicing fees earned from mutual fund and annuity companies are
based on the level of assets, a flat fee or number of positions in such
programs. We also earn fees from banks to which we sweep clients' cash in the
RJBDP, including both third-party banks and RJ Bank. Such fees are included in
"Account and service fees." See "Clients' domestic cash sweep balances" in the
"Selected key metrics" section for further information about fees earned from
the RJBDP.

Net interest income in the PCG segment is primarily generated by interest
earnings on margin loans provided to clients and on assets segregated pursuant
to regulations, less interest paid on client cash balances in the Client
Interest Program ("CIP"). Higher client cash balances generally lead to
increased interest income, depending on spreads realized in the CIP. For more
information on client cash balances, see "Clients' domestic cash sweep balances"
in the "Selected key metrics" section.

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





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

Operating results
                                                                    Year ended September 30,                               % change
$ in millions                                                2020               2019             2018          2020 vs. 2019       2019 vs. 2018
Revenues:

Asset management and related administrative fees $ 3,162

  $ 2,820$ 2,517                  12  %               12  %
Brokerage revenues:
Mutual and other fund products                                567                599              703                  (5) %              (15) %
Insurance and annuity products                                397                412              414                  (4) %                -
Equities, ETFs and fixed income products                      419                378              432                  11  %              (13) %
Total brokerage revenues                                    1,383              1,389            1,549                   -                 (10) %
Account and service fees:
Mutual fund and annuity service fees                          348                334              332                   4  %                1  %
RJBDP fees:
Third-party banks                                             150                280              262                 (46) %                7  %
RJ Bank                                                       180                173               92                   4  %               88  %
Client account and other fees                                 129                122              111                   6  %               10  %
Total account and service fees                                807                909              797                 (11) %               14  %
Investment banking                                             41                 32               35                  28  %               (9) %
Interest income                                               155                225              193                 (31) %               17  %
All other                                                      27                 26               30                   4  %              (13) %
Total revenues                                              5,575              5,401            5,121                   3  %                5  %
Interest expense                                              (23)               (42)             (28)                (45) %               50  %
Net revenues                                                5,552              5,359            5,093                   4  %                5  %
Non-interest expenses:
Financial advisor compensation and benefits                 3,428              3,190            3,051                   7  %                5  %
Administrative compensation and benefits                      971                933              835                   4  %               12  %
Total compensation, commissions and benefits                4,399              4,123            3,886                   7  %                6  %
Non-compensation expenses:
Communications and information processing                     251                235              220                   7  %                7  %
Occupancy and equipment                                       175                168              154                   4  %                9  %
Business development                                           79                124              115                 (36) %                8  %
Professional fees                                              33                 33               46                   -                 (28) %
All other                                                      76                 97               96                 (22) %                1  %
Total non-compensation expenses                               614                657              631                  (7) %                4  %
Total non-interest expenses                                 5,013              4,780            4,517                   5  %                6  %
Pre-tax income                                          $     539$   579$   576                  (7) %                1  %



Selected key metrics

PCG client asset balances
                                                    As of September 30,
$ in billions                                2020          2019          2018
AUA                                       $ 883.3$ 798.4$ 755.7

Assets in fee-based accounts (1) $ 475.3$ 409.1$ 366.3 Percent of AUA in fee-based accounts 53.8 % 51.2 % 48.5 %




(1)A portion of our "Assets in fee-based accounts" is invested in "managed
programs" overseen by our Asset Management segment, specifically 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."

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

                                       46

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

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

The vast majority of the revenues we earn from fee-based accounts are recorded
in "Asset management and related administrative fees" on our Consolidated
Statements of Income and Comprehensive Income. Fees received from such accounts
are based on the value of client assets in fee-based accounts and vary based on
the specific account types in which the client participates and the level of
assets in the client relationship. As fees for substantially all of such
accounts are billed based on balances as of the beginning of the quarter,
revenues from fee-based accounts may not be immediately affected by changes in
asset values, but rather the impacts are seen in the following quarter.

PCG assets under administration increased compared to the prior year due to
equity market appreciation and the net addition of financial advisors. In
addition, PCG assets in fee-based accounts continued to increase as a percentage
of overall PCG assets under administration due to clients' increased preference
for fee-based alternatives versus transaction-based accounts. As a result of the
shift to fee-based accounts over the past several years, a larger portion of our
PCG revenues are more directly impacted by market movements.

Financial advisors
                                           September 30,
                                2020            2019            2018
Employees                      3,404           3,301           3,167
Independent contractors        4,835           4,710           4,646
Total advisors                 8,239           8,011           7,813



The number of financial advisors increased from prior years due to successful
financial advisor recruiting (despite disruptions and delays in recruiting and
transitions of financial advisors during the onset of the COVID-19 pandemic) and
high levels of retention. While the financial advisor recruiting pipeline was
strong as of the end of our fiscal year, the impact of the COVID-19 pandemic on
future recruiting and the timing of transitions remains uncertain.

Clients' domestic cash sweep balances

                                                           As of September 30,
$ in millions                                        2020          2019          2018
RJBDP
RJ Bank                                           $ 25,599$ 21,649$ 19,446
Third-party banks                                   25,998        14,043        15,564
Subtotal RJBDP                                      51,597        35,692        35,010
Money market funds (1)                                   -             -         3,240
CIP                                                  3,999         2,022         2,807

Total clients' domestic cash sweep balances $ 55,596$ 37,714

$ 41,057




(1)  Money market funds were discontinued as a sweep option in June 2019.
Balances in those funds were converted to the RJBDP or reinvested by the client.

                                                         Year ended September 30,
                                                          2020                 2019              2018
Average yield on RJBDP - third-party banks                        0.77  %     1.88  %           1.41  %



A significant portion of our clients' cash is included in the RJBDP, a
multi-bank sweep program in which clients' cash deposits in their accounts are
swept into interest-bearing deposit accounts at RJ Bank and various third-party
banks. We earn servicing fees for the administrative services we provide related
to our clients' deposits that are swept to such banks as part of the RJBDP. The
amounts from third-party banks are variable in nature and fluctuate based on
client cash balances in the program, as well as the level of short-term interest
rates and the interest paid to clients by the third-party banks on balances in
the RJBDP. The "Average yield on RJBDP - third party banks" in the preceding
table is computed by dividing RJBDP fees from third-party banks, which are net
of the interest expense paid to clients by the third-party banks, by the average
daily RJBDP

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

balance at third-party banks. The PCG segment also earns RJBDP servicing fees
from RJ Bank, which are based on the number of accounts that are swept to RJ
Bank. The fees from RJ Bank are eliminated in consolidation.

RJBDP fees from third-party banks and the average yield on RJBDP (third-party
banks) were negatively impacted by the significant decrease in short-term
interest rates. The Federal Reserve decreased its benchmark short-term interest
rate twice toward the end of our fiscal second quarter, to a current range of
0-0.25%, a decrease of 150 basis points. These decreases were in addition to the
three rate cuts implemented during calendar 2019 (225 basis points in total). We
expect the average yield on RJBDP (third-party banks) to be approximately 0.30%
in fiscal 2021, consistent with average yields for our fiscal third and fourth
quarters of 2020. However, any additional decreases in short-term interest
rates, lower spreads earned from third-party banks, increases in deposit rates
paid to clients, and/or a significant decline in our clients' cash balances will
have a negative impact on our earnings. Further, PCG segment results are
impacted by changes in the allocation of client cash balances in the RJBDP
between RJ Bank and third-party banks.

Client cash balances were elevated as of September 30, 2020 as a result of the market uncertainty caused primarily by the COVID-19 pandemic.

Year ended September 30, 2020 compared with the year ended September 30, 2019

Net revenues of $5.55 billion increased $193 million, or 4%, while pre-tax income of $539 million decreased $40 million, or 7%, largely due to the impact of lower short-term interest rates.


Asset management and related administrative fees increased $342 million, or 12%,
primarily due to higher assets in fee-based accounts at the beginning of each of
the current-year quarterly billing periods compared with the prior-year
quarterly billing periods. As assets in these accounts are billed primarily on
balances as of the beginning of a quarter, the increase in fee-based accounts as
of September 30, 2020 will positively impact asset management fees in our fiscal
first quarter of 2021.

Brokerage revenues were essentially flat as the impact of increased trading
activity, resulting from higher levels of market volatility during the current
year, was offset by a decrease in mutual fund trails and lower revenues from
annuity products.

Account and service fees decreased $102 million, or 11%, due to a decline in
RJBDP fees from third-party banks, as a result of lower short-term interest
rates, which more than offset the impact of the increase in cash balances swept
to such banks. Partially offsetting this decrease was an increase in mutual fund
service fees.

Net interest income decreased $51 million, or 28%, primarily driven by a decline
in short-term interest rates, reducing the interest income earned on assets
segregated pursuant to regulations and client margin loans. Partially offsetting
the decrease in interest income, interest expense also decreased, primarily due
to the impact of lower deposit rates paid on client cash balances in CIP.

Compensation-related expenses increased $276 million, or 7%, primarily due to higher compensable net revenues.


Non-compensation expenses decreased $43 million, or 7%, primarily due to
decreases in conference and travel-related expenses, as a result of the COVID-19
pandemic, and lower legal reserves. Partially offsetting these decreases were
increases in technology and occupancy costs to support our growth.

Year ended September 30, 2019 compared with the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.

RESULTS OF OPERATIONS - CAPITAL MARKETS

Our Capital Markets segment conducts institutional sales, securities trading, equity research, investment banking and the syndication and management of investments that qualify for tax credits.


We earn brokerage revenues for the sale of both equity and fixed income products
to institutional clients. Client activity is influenced by a combination of
general market activity and our Capital Markets group's ability to find
attractive investment opportunities for clients.  In certain cases, we transact
on a principal basis, which involves the purchase of securities from, and the
sale of securities to, our clients as well as other dealers who may be
purchasing or selling securities for their own account or acting on behalf of
their clients. Profits and losses related to this activity are primarily derived
from the spreads between bid

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

and ask prices, as well as market trends for the individual securities during
the period we hold them. To facilitate such transactions, we carry inventories
of financial instruments. In our fixed income businesses, we also enter into
interest rate swaps and futures contracts to facilitate client transactions or
to actively manage risk exposures.

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

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

Operating results
                                                                      Year ended September 30,                              % change
                                                                                                                                      2019 vs.
$ in millions                                                   2020              2019            2018          2020 vs. 2019           2018
Revenues:
Brokerage revenues:
Fixed income                                                $     421$   283$  245                  49  %              16  %
Equity                                                            150              131             156                  15  %             (16) %
Total brokerage revenues                                          571              414             401                  38  %               3  %
Investment banking:
Merger & acquisition and advisory                                 290              379             312                 (23) %              21  %
Equity underwriting                                               185              100              93                  85  %               8  %
Debt underwriting                                                 133               85              61                  56  %              39  %
Total investment banking                                          608              564             466                   8  %              21  %
Interest income                                                    25               38              32                 (34) %              19  %
Tax credit fund revenues                                           83               86              79                  (3) %               9  %
All other                                                          20               15              14                  33  %               7  %
Total revenues                                                  1,307            1,117             992                  17  %              13  %
Interest expense                                                  (16)             (34)            (28)                (53) %              21  %
Net revenues                                                    1,291            1,083             964                  19  %              12  %
Non-interest expenses:
Compensation, commissions and benefits                            774              665             635                  16  %               5  %
Non-compensation expenses:
Communications and information processing                          77               75              73                   3  %               3  %
Occupancy and equipment                                            36               35              34                   3  %               3  %
Business development                                               47               48              45                  (2) %               7  %
Professional fees                                                  48               45              14                   7  %             221  %
Acquisition and disposition-related expenses                        7               15               -                 (53) %                 NM
Goodwill impairment                                                 -               19               -                (100) %                 NM
All other                                                          77               71              72                   8  %              (1) %
Total non-compensation expenses                                   292              308             238                  (5) %              29  %
Total non-interest expenses                                     1,066              973             873                  10  %              11  %
Pre-tax income                                              $     225$   110$   91                 105  %              21  %


Year ended September 30, 2020 compared with the year ended September 30, 2019

Net revenues of $1.29 billion increased $208 million, or 19%, and pre-tax income of $225 million increased $115 million, or 105%.


Brokerage revenues increased $157 million, or 38%, primarily due to a
significant increase in fixed income brokerage revenues, as well as an increase
in equity brokerage revenues. The increase in fixed income brokerage revenues
was primarily due to a higher level of client activity during the current year,
particularly with depository clients. The increase in equity brokerage revenues
was primarily due to strong client activity during our fiscal second and third
quarters, driven by market volatility resulting from the COVID-19 pandemic.


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

Investment banking revenues increased $44 million, or 8%, due to a significant
increase in both equity and debt underwriting revenues, resulting from an
increase in the number of transactions, as well as larger individual
transactions compared to the prior year. Merger & acquisition revenues decreased
compared with a strong prior year, as activity during the current year was
negatively impacted by uncertainty caused by the COVID-19 pandemic, although
activity improved during our fiscal fourth quarter. While our investment banking
pipelines are solid, closings may be negatively affected if economic conditions
deteriorate.

Compensation-related expenses increased $109 million, or 16%, primarily due to the increase in revenues.


Non-compensation expenses decreased $16 million, or 5%, compared with the prior
year, as the prior year included a $19 million goodwill impairment charge
associated with our Canadian Capital Market business that did not recur in the
current year. The current year included a $7 million loss related to the pending
disposition of our interests in certain entities that operate predominately in
France, whereas the prior year included a $15 million loss associated with the
sale of our operations related to research, sales and trading of European
equities.

Year ended September 30, 2019 compared with the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.

RESULTS OF OPERATIONS - ASSET MANAGEMENT


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

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

Operating results
                                                                   Year ended September 30,                            % change
                                                                                                              2020 vs.          2019 vs.
$ in millions                                                2020             2019            2018              2019              2018
Revenues:
Asset management and related administrative fees:
Managed programs                                         $     481$  467$  454                  3  %              3  %
Administration and other                                       207             178             156                 16  %             14  %
Total asset management and related administrative
fees                                                           688             645             610                  7  %              6  %
Account and service fees                                        16              31              28                (48) %             11  %
All other                                                       11              15              16                (27) %             (6) %

Net revenues                                                   715             691             654                  3  %              6  %
Non-interest expenses:
Compensation, commissions and benefits                         177             179             170                 (1) %              5  %
Non-compensation expenses:
Communications and information processing                       45              44              38                  2  %             16  %
Investment sub-advisory fees                                    99              93              90                  6  %              3  %
All other                                                      110             122             121                (10) %              1  %
Total non-compensation expenses                                254             259             249                 (2) %              4  %
Total non-interest expenses                                    431             438             419                 (2) %              5  %
Pre-tax income                                           $     284$  253$  235                 12  %              8  %



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

Selected key metrics

Managed programs


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

Revenues related to fee-based AUA in our PCG segment are shared by the PCG and
Asset Management segments, the amount of which depends on whether clients are
invested in assets that are in managed programs overseen by our Asset Management
segment and the administrative services provided (see our "Management's
Discussion and Analysis - Results of Operations - Private Client Group" for more
information). Our AUM in AMS are impacted by market fluctuations and net inflows
or outflows of assets, including transfers between fee-based accounts and
transaction-based accounts within our PCG segment.

Revenues earned by Carillon Tower Advisers 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 Carillon
Tower Advisers are impacted by market and investment performance and net inflows
or outflows of assets.

Fees for our managed programs are generally collected quarterly. Approximately 65% of these fees are based on balances as of the beginning of the quarter, approximately 10% are based on balances as of the end of the quarter, and approximately 25% are based on average daily balances throughout the quarter.

Financial assets under management

                                                             September 30,
$ in billions                                       2020         2019         2018
AMS (1)                                           $ 102.2$  91.8$  83.3
Carillon Tower Advisers                              59.5         58.5         63.3

Subtotal financial assets under management 161.7 150.3

146.6

Less: Assets managed for affiliated entities (8.6) (7.2)

(5.7)

Total financial assets under management           $ 153.1$ 143.1

$ 140.9

(1)Represents the portion of our PCG segment fee-based AUA (as disclosed in "Assets in fee-based accounts" in the "Selected key metrics - PCG client asset balances" section of our "Management's Discussion and Analysis - Results of Operations - Private Client Group") that is invested in managed programs overseen by the Asset Management segment.

Activity (including activity in assets managed for affiliated entities)

                                                                         Year ended September 30,
$ in billions                                                  2020                 2019               2018
Financial assets under management at beginning of
year                                                      $    150.3$   146.6$    101.8Carillon Tower Advisers:
Scout Group acquisition                                            -                    -                27.1
Other - net outflows                                            (5.4)                (5.8)               (0.1)
AMS - net inflows                                                6.1                  6.0                 9.3
Net market appreciation in asset values                         10.7                  3.5                 8.5

Financial assets under management at end of year $ 161.7

    $   150.3$    146.6



AMS division of RJ&A

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

Carillon Tower Advisers

Assets managed by Carillon Tower Advisers include assets managed by its subsidiaries and affiliates: Eagle Asset Management, the Scout Group, ClariVest Asset Management and Cougar Global Investments. The following table presents


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

Carillon Tower Advisers' 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 for the fiscal year ended September 30, 2020.

$ in billions                                 September 30, 2020       Average fee rate
Equity                                       $             25.5             0.54%
Fixed income                                               28.8             0.18%
Balanced                                                    5.2             0.37%
Total financial assets under management      $             59.5             

0.35%

Non-discretionary asset-based programs


The following table includes assets held in certain non-discretionary
asset-based programs for which the Asset Management segment does not exercise
discretion but provides administrative support (including for affiliated
entities). The vast majority of these assets are also included in our PCG
segment fee-based AUA (as disclosed in "Assets in fee-based accounts" in the
"Selected key metrics - PCG client asset balances" section of our "Management's
Discussion and Analysis - Results of Operations - Private Client Group").
                             Year ended September 30,
$ in billions             2020           2019         2018
Total assets         $   280.6$ 229.7$ 200.1



The increase in assets over the prior-year level was primarily due to clients
moving to fee-based accounts from transaction-based accounts, equity market
appreciation, and successful financial advisor recruiting and retention.
Administrative fees associated with these programs are predominantly based on
balances at the beginning of the quarter.

RJ Trust

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

                              Year ended September 30,
$ in billions                2020             2019       2018
Total assets         $     7.1$ 6.6$ 6.1

Year ended September 30, 2020 compared with the year ended September 30, 2019

Net revenues of $715 million increased $24 million, or 3%, and pre-tax income of $284 million increased $31 million, or 12%.


Asset management and related administrative fees increased $43 million, or 7%,
driven by higher assets in non-discretionary asset-based programs compared with
the prior year, as well as higher average financial assets under management
during the current year. The increase in average financial assets under
management reflected equity market appreciation and net inflows at AMS,
partially offset by net outflows at Carillon Tower Advisers. The net outflows at
Carillon Tower Advisers were negatively impacted by the industry shift from
actively managed investment strategies to passive investment strategies. If this
trend continues, our AUM and asset management fees would continue to be
negatively affected.

Account and service fees declined $15 million, or 48%, primarily due to a
decline in servicing fees related to the money market sweep program, which was
discontinued in June 2019. A significant portion of these fees were paid to PCG,
resulting in a corresponding decline in other expenses compared with the prior
year. Non-compensation expenses decreased $5 million, or 2%, primarily due to
the aforementioned decline in other expenses, partially offset by an increase in
investment sub-advisory fees resulting from an increase in assets under
management in sub-advised programs.

Year ended September 30, 2019 compared to the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.

RESULTS OF OPERATIONS - RJ BANK


RJ Bank provides various types of loans, including corporate loans, tax-exempt
loans, residential loans, SBL and other loans. RJ Bank is active in corporate
loan syndications and participations and also provides FDIC-insured deposit
accounts, including

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

to clients of our broker-dealer subsidiaries. RJ Bank generates net interest
income principally through the interest income earned on loans and an investment
portfolio of securities, which is offset by the interest expense it pays on
client deposits and on its borrowings. RJ Bank's net interest income is affected
by the levels of interest rates, interest-earning assets and interest-bearing
liabilities. Higher interest-earning asset balances and higher interest rates
generally lead to increased net interest income, depending upon spreads realized
on interest-bearing liabilities. For more information on average
interest-earning asset and interest-bearing liability balances and the related
interest income and expense, see the following discussion in this MD&A. For an
overview of our RJ Bank segment operations, refer to the information presented
in "Item 1- Business" of this Form 10-K.

Operating results
                                                                   Year ended September 30,                            % change
                                                                                                              2020 vs.          2019 vs.
$ in millions                                                2020             2019            2018              2019              2018
Revenues:
Interest income                                          $     800$  975$  793                (18) %             23  %
Interest expense                                               (62)           (155)            (89)               (60) %             74  %
Net interest income                                            738             820             704                (10) %             16  %
All other                                                       27              26              23                  4  %             13  %
Net revenues                                                   765             846             727                (10) %             16  %
Non-interest expenses:
Compensation and benefits                                       51              49              41                  4  %             20  %
Non-compensation expenses:
Loan loss provision                                            233              22              20                959  %             10  %
RJBDP fees to PCG                                              180             173              92                  4  %             88  %
All other                                                      105              87              82                 21  %              6  %
Total non-compensation expenses                                518             282             194                 84  %             45  %
Total non-interest expenses                                    569             331             235                 72  %             41  %
Pre-tax income                                           $     196$  515$  492                (62) %              5  %


Year ended September 30, 2020 compared with the year ended September 30, 2019

Net revenues of $765 million decreased $81 million, or 10%, and pre-tax income of $196 million decreased $319 million, or 62%.


Net interest income decreased $82 million, or 10%, as the negative impact from
lower short-term interest rates more than offset the $3.36 billion increase in
average interest-earning assets. The increase in average interest-earning assets
was primarily driven by growth in average available-for-sale securities of $1.38
billion, average loans of $1.18 billion, and average cash balances of $742
million. The net interest margin for the current year decreased to 2.63% from
3.32% for the prior year, primarily due to the significant decline in short-term
interest rates and the corresponding decline in LIBOR, as well as a higher
concentration of agency-backed available-for-sale securities, which have a lower
yield than loans, on average. Based on current rates, we expect our net interest
margin to be approximately 2% in fiscal 2021.

The loan loss provision was $233 million, compared to $22 million in the prior
year. The increase in the provision in the current year was primarily
attributable to the economic impacts of the COVID-19 pandemic during the current
year and included charge-offs on certain corporate loans sold during the year.

Compensation and benefits expenses increased $2 million. Non-compensation expenses (excluding the provision for loan losses) increased $25 million, including a $7 million, or 4%, increase in fees for the RJBDP paid to PCG, primarily driven by an increase in the number of accounts, as well as an increase in reserves for unfunded lending commitments and higher FDIC insurance premiums. The RJBDP fees paid to PCG are eliminated in the consolidation.

Year ended September 30, 2019 compared to the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.


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

The following table presents average balances, interest income and expense, the related yields and rates, and interest spreads and margins for RJ Bank.

                                                                                                                           Year ended September 30,
                                                                          2020                                                       2019                                                       2018
                                                                                           Average                                                    Average                                                    Average
                                                    Average           Interest              yield/             Average           Interest              yield/             Average           Interest              yield/
$ in millions                                       balance           inc./exp.              cost              balance           inc./exp.              cost              balance           inc./exp.              cost
Interest-earning assets:
Cash                                              $  1,981$       11                 0.55  %       $  1,239$       28                 2.29  %       $    957$       15                 1.57  %
Available-for-sale securities                        4,250                  83                 1.94  %          2,872                  69                 2.39  %          2,430                  50                 2.04  %
Bank, net of unearned income and deferred
expenses:
Loans held for investment:
C&I loans                                            7,885                 275                 3.43  %          8,070                 378                 4.62  %          7,619                 326                 4.22  %
CRE construction loans                                 209                   9                 4.10  %            221                  12                 5.51  %            166                   8                 5.08  %
CRE loans                                            3,688                 120                 3.21  %          3,451                 159                 4.53  %          3,231                 133                 4.06  %
Tax-exempt loans                                     1,246                  33                 3.35  %          1,284                  35                 3.36  %          1,146                  30                 3.42  %
Residential mortgage loans                           4,874                 148                 3.04  %          4,091                 135                 3.30  %          3,448                 109                 3.16  %
SBL and other                                        3,559                 112                 3.10  %          3,139                 145                 4.57  %          2,690                 111                 4.09  %
Loans held for sale                                    130                   5                 3.70  %            151                   7                 4.73  %            126                   5                 4.01  %
Total loans, net                                    21,591                 702                 3.25  %         20,407                 871                 4.26  %         18,426                 722                 3.93  %
FHLB stock, Federal Reserve Bank ("FRB")
stock and other                                        223                   4                 2.04  %            172                   7                 4.01  %            138                   6                 4.33  %
Total interest-earning assets                       28,045          $      800                 2.85  %         24,690          $      975                 3.95  %         21,951          $      793                 3.62  %
Non-interest-earning assets:
Unrealized gain/(loss) on
available-for-sale securities                           80                                                        (22)                                                       (44)
Allowance for loan losses                             (271)                                                      (214)                                                      (193)
Other assets                                           392                                                        394                                                        379
Total non-interest-earning assets                      201                                                        158                                                        142
Total assets                                      $ 28,246$ 24,848$ 22,093
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts            $ 23,806$       22                 0.09  %       $ 21,058$      124                 0.59  %       $ 18,694$       63                 0.34  %
Certificates of deposit                              1,006                  20                 2.03  %            536                  12                 2.24  %            372                   6                 1.67  %
FHLB advances and other                                889                  20                 2.21  %            911                  19                 2.08  %            917                  20                 2.13  %
Total interest-bearing liabilities                  25,701          $       62                 0.24  %         22,505          $      155                 0.69  %         19,983          $       89                 0.44  %
Non-interest-bearing liabilities                       246                                                        200                                                        195
Total liabilities                                   25,947                                                     22,705                                                     20,178
Total shareholder's equity                           2,299                                                      2,143                                                      1,915
Total liabilities and shareholder's equity        $ 28,246$ 24,848$ 22,093
Excess of interest-earning assets over
interest-bearing liabilities/net interest
income                                            $  2,344$      738$  2,185$      820$  1,968$      704
Bank net interest:
Spread                                                                                         2.61  %                                                    3.26  %                                                    3.18  %
Margin (net yield on interest-earning
assets)                                                                                        2.63  %                                                    3.32  %                                                    3.22  %
Ratio of interest-earning assets to
interest-bearing liabilities                                                                 109.12  %                                                  109.71  %                                                  109.85  %


Nonaccrual loans are included in the average loan balances in the preceding table. Any payments received for corporate nonaccrual loans are applied to principal. Interest income on residential mortgage nonaccrual loans is recognized on a cash basis.

Fee income on bank loans included in interest income for the years ended September 30, 2020, 2019 and 2018 was $11 million, $18 million, and $24 million, respectively.



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

The yield on tax-exempt loans in the preceding table is presented on a tax-equivalent basis utilizing the applicable federal statutory rates for each of the years presented.


Increases and decreases in interest income and interest expense result from
changes in average balances (volume) of interest-earning assets and
interest-bearing liabilities, as well as changes in average interest rates. The
following table shows the effect that these factors had on the interest earned
on our interest-earning assets and the interest incurred on our interest-bearing
liabilities. The effect of changes in volume is determined by multiplying the
change in volume by the previous year's average yield/cost. Similarly, the
effect of rate changes is calculated by multiplying the change in average
yield/cost by the previous year's volume. Changes attributable to both volume
and rate have been allocated proportionately.
                                                                                                Year ended September 30,
                                                                    2020 compared to 2019                                    2019 compared to 2018
                                                                  Increase/(decrease) due to                              Increase/(decrease) due to
$ in millions                                               Volume              Rate            Total               Volume                Rate            Total
Interest income:
Interest-earning assets:
Cash                                                   $     17$  (34)$  (17)$       4$    9$   13
Available-for-sale securities                                33                  (19)         $   14                  9                     10          

19

Bank loans, net of unearned income and deferred
expenses:
Loans held for investment:
C&I loans                                                    (9)                 (94)           (103)                19                     33              52
CRE construction loans                                       (1)                  (2)             (3)                 3                      1               4
CRE loans                                                    11                  (50)            (39)                 9                     17              26
Tax-exempt loans                                             (2)                   -              (2)                 4                      1               5
Residential mortgage loans                                   26                  (13)             13                 20                      6              26
SBL and other                                                19                  (52)            (33)                19                     15              34
Loans held for sale                                          (1)                  (1)             (2)                 1                      1               2
Total bank loans, net                                        43                 (212)           (169)                75                     74             149
FHLB stock, FRB stock and other                               3                   (6)             (3)                 2                     (1)         

1

Total interest-earning assets                          $     96$ (271)$ (175)$      90$   92$  182
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts                 $     16$ (118)$ (102)$       8$   53$   61
Certificates of deposit                                      10                   (2)              8                  3                      3               6
FHLB advances and other                                      (1)                   2               1                  -                     (1)             (1)
Total interest-bearing liabilities                           25                 (118)            (93)                11                     55              66
Change in net interest income                          $     71$ (153)$  (82)$      79$   37$  116




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

RESULTS OF OPERATIONS - OTHER


This segment includes our private equity investments, interest income on certain
corporate cash balances, and certain corporate overhead costs of RJF that are
not allocated to other segments, including the interest costs on our public
debt. The Other segment also includes reduction in workforce expenses associated
with certain position eliminations that occurred in our fiscal fourth quarter of
2020 in response to the economic environment. For an overview of our Other
segment operations, refer to the information presented in "Item 1 - Business" of
this Form 10-K.

Operating results
                                                                        Year ended September 30,                              % change
$ in millions                                                     2020              2019            2018          2020 vs. 2019       2019 vs. 2018
Revenues:
Interest income                                               $       30$   63$   42                 (52) %               50  %
Gains/(losses) on private equity investments                         (28)             14               9                     NM               56  %
All other                                                              4               3               9                  33  %              (67) %
Total revenues                                                         6              80              60                 (93) %               33  %
Interest expense                                                     (88)            (75)            (75)                 17  %                -
Net revenues                                                         (82)              5             (15)                    NM                  NM
Non-interest expenses:
Compensation and all other                                            64              87              64                 (26) %               36  %
Reduction in workforce expenses                                       46               -               -                     NM                -
Acquisition-related expenses                                           -               -               4                   -                (100) %
Total non-interest expenses                                          110              87              68                  26  %               28  %
Pre-tax loss                                                  $     (192)$  (82)$  (83)               (134) %                1  %


Year ended September 30, 2020 compared to the year ended September 30, 2019

The pre-tax loss of $192 million was $110 million larger than the loss generated in the prior year.


Net revenues decreased $87 million as income of $5 million in the prior year
declined to a loss of $82 million. Interest income earned on corporate cash
balances decreased due to lower short-term interest rates, partially offset by
the impact of higher average balances, and interest expense increased as a
result of the issuance of $500 million of senior notes. In addition, the current
year included $28 million of private equity valuation losses, compared with
gains of $14 million in the prior year. In the current year, $20 million of the
losses on private equity investments were attributable to noncontrolling
interests, which are reflected as an offset within other expenses. These
valuation losses were primarily the result of the negative impact of the
COVID-19 pandemic on certain of our investments.

Non-interest expenses increased $23 million, or 26%, primarily due to $46 million of reduction in workforce expenses in the current year, partially offset by the aforementioned $20 million offset of private equity valuation losses attributable to noncontrolling interests.

Year ended September 30, 2019 compared to the year ended September 30, 2018


Refer to "Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal
2019 results compared to fiscal 2018.

CERTAIN STATISTICAL DISCLOSURES BY BANK HOLDING COMPANIES


We are required to provide certain statistical disclosures as a bank holding
company under the SEC's Industry Guide 3. The following table provides certain
of those disclosures.
                                               Year ended September 30,
                                        2020              2019             2018
Return on assets                        1.9%              2.7%             2.4%
Return on equity                       11.9%             16.2%             14.4%
Average equity to average assets       15.5%             16.7%             16.5%
Dividend payout ratio                  25.4%             19.0%             19.1%




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

Return on assets is computed by dividing net income for the year indicated by
average assets for each respective fiscal year. Average assets is computed by
adding total assets as of each quarter-end date during the indicated fiscal year
to the beginning of the year total and dividing by five.

Return on equity is computed by dividing net income for the year indicated by
average equity for each respective fiscal year. Average equity is computed by
adding the total equity attributable to RJF as of each quarter-end date during
the indicated fiscal year to the beginning of the year total and dividing by
five.

Average equity to average assets is computed by dividing average equity by average assets as calculated in accordance with the previous explanations.

Dividend payout ratio is computed by dividing dividends declared per common share for the year indicated by earnings per diluted common share for the year indicated.

Refer to the "Results of Operations - RJ Bank" and "Risk management - Credit risk" sections of this MD&A and to the Notes to Consolidated Financial Statements of this Form 10-K for the other required disclosures.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is essential to our business. The primary goal of our liquidity management activities is to ensure adequate funding to conduct our business over a range of economic and market environments.


Senior management establishes our liquidity and capital management framework.
This framework includes senior management's review of short- and long-term cash
flow forecasts, review of monthly capital expenditures, monitoring of the
availability of alternative sources of financing, and daily monitoring of
liquidity in our significant subsidiaries. Our decisions on the allocation of
capital to our business units consider, among other factors, projected
profitability, cash flow, risk, and future liquidity needs. Our treasury
department assists in evaluating, monitoring and controlling the impact that our
business activities have on our financial condition, liquidity and capital
structure, and maintains our relationships with various lenders. The objective
of this framework is to support the successful execution of our business
strategies while ensuring ongoing and sufficient liquidity.

Liquidity is provided primarily through our business operations and financing
activities. Financing activities could include bank borrowings, collateralized
financing arrangements or additional capital raising activities under our
"universal" shelf registration statement.

Cash and cash equivalents increased $1.43 billion to $5.39 billion during the
year ended September 30, 2020, primarily due to $4.59 billion of cash provided
by financing activities and $4.05 billion of cash provided by operating
activities, offset by cash used in investing activities of $4.99 billion and an
increase in the amount of cash required to be segregated pursuant to regulations
of $2.23 billion. Cash provided by financing activities primarily related to an
increase in bank deposits, as client cash balances increased due to the market
uncertainty resulting from the COVID-19 pandemic, and proceeds from our senior
notes issuance in March 2020, partially offset by our open-market share
repurchases and dividends on our common stock. Cash used in investing activities
primarily related to a net increase in our available-for-sale securities
portfolio due to our growth strategy for this portfolio, and a net increase in
bank loans.

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.



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

Sources of liquidity

Over $2 billion of our total September 30, 2020 cash and cash equivalents included cash on hand at the parent, as well as parent cash loaned to RJ&A.

The

following table presents our holdings of cash and cash equivalents.
$ in millions                           September 30, 2020
RJF                                    $               478
RJ&A                                                 2,748
RJ Bank                                              1,072
RJ Ltd.                                                705
RJFS                                                   120
Carillon Tower Advisers                                 78
Other subsidiaries                                     189
Total cash and cash equivalents        $             5,390



RJF maintained depository accounts at RJ Bank with a balance of $185 million as
of September 30, 2020. The portion of this total that was available on demand
without restrictions, which amounted to $108 million as of September 30, 2020,
is reflected in the RJF total (and is excluded from the RJ Bank cash balance in
the preceding table).

RJF had loaned $1.70 billion to RJ&A as of September 30, 2020 (such amount is
included in the RJ&A cash balance in the preceding table), which RJ&A has
invested on behalf of RJF in cash and cash equivalents or otherwise deployed in
its normal business activities.

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

Liquidity available from subsidiaries

Liquidity is principally available to RJF, the parent company, from RJ&A and RJ Bank.


Certain of our broker-dealer subsidiaries are subject to the requirements of the
Uniform Net Capital Rule (Rule 15c3-1) under the Securities and Exchange Act of
1934. As a member firm of FINRA, RJ&A is subject to FINRA's capital
requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1
provides for an "alternative net capital requirement," which RJ&A has elected.
Regulations require that minimum net capital, as defined, be equal to the
greater of $1.5 million or 2% of aggregate debit items arising from client
transactions. In addition, covenants in RJ&A's committed financing facilities
require its net capital to be a minimum of 10% of aggregate debit items. At
September 30, 2020, RJ&A significantly exceeded the minimum regulatory
requirements, the covenants in its financing arrangements pertaining to net
capital, as well as its internally-targeted net capital tolerances. FINRA may
impose certain restrictions, such as restricting withdrawals of equity capital,
if a member firm were to fall below a certain threshold or fail to meet minimum
net capital requirements.

RJ&A, as a nonbank custodian of IRAs, must also satisfy certain IRS regulations
in order to accept new IRA and qualified plans and retain the accounts for which
it serves as nonbank custodian. With growth in the value of client assets in
such accounts, the capital of RJ&A may need to grow to continue to satisfy this
requirement. As a result, RJ&A may limit dividends it would otherwise remit to
RJF. We evaluate regulatory requirements, loan covenants and certain internal
tolerances when determining the amount of liquidity available to RJF from RJ&A.

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

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



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

Borrowings and financing arrangements

Committed financing arrangements


Our ability to borrow is dependent upon compliance with the conditions in our
various loan agreements and, in the case of secured borrowings, collateral
eligibility requirements. Our committed financing arrangements consist of a
tri-party repurchase agreement (i.e., securities sold under agreements to
repurchase) and, in the case of the Credit Facility, an unsecured line of
credit. The required market value of the collateral associated with the
tri-party repurchase agreement ranges from 105% to 125% of the amount financed.
The following table presents our committed financing arrangements with
third-party lenders, which we generally utilize to finance a portion of our
fixed income trading instruments, and the outstanding balances related thereto.
                                                                         September 30, 2020
                                                                                                                       Total number of
$ in millions                                              RJ&A                      RJF              Total              arrangements
Financing arrangement:
Committed secured                                     $     100                  $      -          $    100                       1
Committed unsecured (1)                                     200                       300               500                       1
Total committed financing arrangements                $     300$    300$    600                       2

Outstanding borrowing amount:
Committed secured                                     $       -                  $      -          $      -
Committed unsecured                                           -                         -                 -
Total outstanding borrowing amount                    $       -             

$ - $ -




(1)The Credit Facility provides for maximum borrowings of up to $500 million,
with a sublimit of $300 million for RJF. RJ&A may borrow up to $500 million
under the Credit Facility, depending on the amount of outstanding borrowings by
RJF. For additional details on our committed unsecured financing arrangement,
see our discussion of the Credit Facility in Note 14 of the Notes to
Consolidated Financial Statements of this Form 10-K.

Uncommitted financing arrangements


Our uncommitted financing arrangements are in the form of secured lines of
credit, secured bilateral or tri-party repurchase agreements, or unsecured lines
of credit. Our arrangements with third-party lenders are generally utilized to
finance a portion of our fixed income securities or for cash management
purposes. Our uncommitted secured financing arrangements generally require us to
post collateral in excess of the amount borrowed and are generally
collateralized by non-customer, RJ&A-owned securities or by securities that we
have received as collateral under reverse repurchase agreements (i.e.,
securities purchased under agreements to resell). As of September 30, 2020, we
had outstanding borrowings under one uncommitted secured borrowing arrangement
out of a total of 11 uncommitted financing arrangements (seven uncommitted
secured and four uncommitted unsecured). However, lenders are under no
contractual obligation to lend to us under uncommitted credit facilities.

The following table presents our borrowings on uncommitted financing
arrangements, all of which were in the form of repurchase agreements in RJ&A and
were included in "Collateralized financings" on our Consolidated Statements of
Financial Condition.
$ in millions                            September 30, 2020
Outstanding borrowing amount:
Uncommitted secured                     $               165
Uncommitted unsecured                                     -
Total outstanding borrowing amount      $               165





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

The average daily balance outstanding during the five most recent quarters, the maximum month-end balance outstanding during the quarter and the period-end balances for repurchase agreements and reverse repurchase agreements are detailed in the following table.

                                                  Repurchase transactions                                          Reverse repurchase transactions
                                                         Maximum                                                              Maximum
                                                        month-end                                                            month-end
                                                         balance                                                              balance
                                Average daily          outstanding            End of period          Average daily          outstanding            End of period
For the quarter ended:             balance              during the               balance                balance              during the               balance
($ in millions)                  outstanding             quarter               outstanding            outstanding             quarter               outstanding
September 30, 2020             $        140          $         165          $          165          $        199          $         260          $          207
June 30, 2020                  $        222          $         278          $          228          $        168          $         193          $          193
March 31, 2020                 $        218          $         238          $          215          $        283          $         388          $          130
December 31, 2019              $        184          $         200          $          200          $        355          $         351          $          326
September 30, 2019             $        170          $         158          $          150          $        334          $         343          $          343


Other borrowings and collateralized financings


RJ Bank had $875 million in FHLB borrowings outstanding at September 30, 2020,
comprised of floating-rate advances totaling $850 million and a $25 million
fixed-rate advance, all of which were secured by a blanket lien on RJ Bank's
residential mortgage loan portfolio (see Note 14 of the Notes to Consolidated
Financial Statements of this Form 10-K for additional information regarding
these borrowings). RJ Bank had an additional $3.04 billion in immediate credit
available from the FHLB as of September 30, 2020 and, with the pledge of
additional eligible collateral to the FHLB, total available credit of 30% of
total assets.

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

We act as an intermediary between broker-dealers and other financial
institutions whereby we borrow securities from one broker-dealer and then lend
them to another.  Where permitted, we have also loaned, to broker-dealers and
other financial institutions, securities owned by clients or the firm.  We
account for each of these types of transactions as collateralized agreements and
financings, with the outstanding balance of $85 million as of September 30, 2020
related to the securities loaned included in "Collateralized financings" on our
Consolidated Statements of Financial Condition of this Form 10-K. See Notes 2
and 6 of the Notes to Consolidated Financial Statements of this Form 10-K for
more information on our collateralized agreements and financings.

At September 30, 2020, in addition to the financing arrangements previously described, we had $13 million outstanding on a mortgage loan for our St. Petersburg, Florida home-office complex that is included in "Other borrowings" on our Consolidated Statements of Financial Condition of this Form 10-K.

Senior notes payable


At September 30, 2020, we had aggregate outstanding senior notes payable of
$2.05 billion. Our senior notes payable, exclusive of any unaccreted premiums or
discounts and debt issuance costs, was comprised of $250 million par 5.625%
senior notes due 2024, $500 million par 3.625% senior notes due 2026, $500
million par 4.65% senior notes due 2030, which were issued during our fiscal
second quarter of 2020, and $800 million par 4.95% senior notes due 2046. See
Note 15 of the Notes to Consolidated Financial Statements of this Form 10-K for
additional information.

Credit ratings

Our issuer and senior long-term debt ratings as of the most current report are
detailed in the following table.
Rating Agency                              Rating       Outlook

Standard & Poor's Ratings Services BBB+ Stable Moody's Investors Services

                  Baa1        Stable



Our current long-term debt ratings depend upon a number of factors, including
industry dynamics, operating and economic environment, operating results,
operating margins, earnings trends and volatility, balance sheet composition,
liquidity and

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

liquidity management, capital structure, overall risk management, business
diversification and market share, and competitive position in the markets in
which we operate. Deteriorations in any of these factors could impact our credit
ratings. Any rating downgrades could increase our costs in the event we were to
obtain additional financing.

Should our credit rating be downgraded prior to a public debt offering, it is
probable that we would have to offer a higher rate of interest to bond
holders. A downgrade to below investment grade may make a public debt offering
difficult to execute on terms we would consider to be favorable. A downgrade
below investment grade could result in the termination of certain derivative
contracts and the counterparties to the derivative instruments could request
immediate payment or demand immediate and ongoing overnight collateralization on
our derivative instruments in liability positions (see Note 5 of the Notes to
Consolidated Financial Statements of this Form 10-K for additional information).
A credit downgrade could damage our reputation and result in certain
counterparties limiting their business with us, result in negative comments by
analysts, potentially negatively impact investors' and/or clients' perception of
us, and cause a decline in our stock price. None of our borrowing arrangements
contains a condition or event of default related to our credit ratings. However,
a credit downgrade would result in the firm incurring a higher facility fee on
the $500 million Credit Facility, in addition to triggering a higher interest
rate applicable to any borrowings outstanding on that line as of and subsequent
to such downgrade. Conversely, an improvement in RJF's current credit rating
could have a favorable impact on the facility fee, as well as the interest rate
applicable to any borrowings on such line.

Other sources and uses of liquidity


We have company-owned life insurance policies which are utilized to fund certain
non-qualified deferred compensation plans and other employee benefit plans.
Certain of our non-qualified deferred compensation plans and other employee
benefit plans are employee-directed while others are company-directed. Certain
policies which we could readily borrow against had a cash surrender value of
$657 million as of September 30, 2020, comprised of $399 million related to
employee-directed plans and $258 million related to company-directed plans, and
we were able to borrow up to 90%, or $591 million, of the September 30, 2020
total without restriction. To effect any such borrowing, the underlying
investments would be converted to money market investments, therefore requiring
us to take market risk related to the employee-directed plans. There were no
borrowings outstanding against any of these policies as of September 30, 2020.

On May 18, 2018, we filed a "universal" shelf registration statement with the
SEC pursuant to which we can issue debt, equity and other capital instruments if
and when necessary or perceived by us to be opportune. Subject to certain
conditions, this registration statement will be effective through May 18, 2021.

See the Contractual obligations section of this MD&A for information regarding our contractual obligations.

STATEMENT OF FINANCIAL CONDITION ANALYSIS


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

Total assets of $47.48 billion as of September 30, 2020 were $8.65 billion, or
22%, greater than our total assets as of September 30, 2019. The increase in
assets was primarily due to a $4.56 billion increase in available-for-sale
securities, in line with our growth strategy for this portfolio, and a $3.66
billion increase in cash and cash and cash equivalents (including amounts
segregated pursuant to regulations). The increase in cash was primarily due to a
significant increase in client cash balances as clients reacted to the market
uncertainty resulting from the COVID-19 pandemic, as well as proceeds from our
$500 million senior notes issuance in March 2020. In addition, other assets
increased $505 million, primarily due to right-of-use assets ("ROU assets")
recorded as a result of the adoption of new guidance related to the accounting
for leases.

As of September 30, 2020, our total liabilities of $40.31 billion were $8.12
billion, or 25%, greater than our total liabilities as of September 30, 2019.
The increase in total liabilities was primarily related to the significant
increase in client cash balances and was comprised of a $4.52 billion increase
in bank deposits, reflecting higher RJBDP balances held at RJ Bank and
certificate of deposit issuances during the year, and a $2.43 billion increase
in brokerage client payables, primarily due to an increase in client cash held
in our CIP as of September 30, 2020. In addition, other payables increased $766
million, primarily due to lease liabilities recorded as a result of the adoption
of new guidance related to the accounting for leases and an increase in payables
arising from our brokerage operations. In addition, senior notes payable
increased due to the issuance of $500 million of 4.65% senior notes due April
2030.


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

See Notes 2 and 12 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on our adoption of the new leasing guidance.

CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations and payments due thereunder by fiscal year.

                                                                                       Year ended September 30,
$ in millions                        Total            2021            2022             2023            2024            2025            Thereafter
Long-term debt obligations:
Senior notes payable -
principal                          $ 2,050          $    -          $    -  

$ - $ 250 $ - $ 1,800 Other borrowings

                       863               5               6              852               -               -                    -
Total long-term debt
obligations                          2,913               5               6              852             250               -                1,800
Contractual interest
payments                             1,452             114             100               96              95              81                  966
Certificates of deposit
(including interest)                 1,060             241             262              246             206             105                    -
Lease obligations                      583             101              98               85              68              54                  177
Purchase obligations and
other                                  428             200             101               57              37              15                   18
Total contractual
obligations                        $ 6,436$  661$  567$ 1,336$  656$  255$     2,961



Contractual interest payments represent estimated future interest payments
related to our senior notes, mortgage notes payable, FHLB advances, and
unsecured borrowings with original maturities greater than one year based on
applicable interest rates at September 30, 2020. Estimated future interest
payments for FHLB advances include the effect of the related interest rate
hedges, which swap variable interest rate payments to fixed interest payments.
Lease obligations are comprised of minimum payments under lease obligations, as
well as legally binding minimum lease payments for leases executed but not yet
commenced. See Notes 12, 14 and 15 of the Notes to Consolidated Financial
Statements of this Form 10-K for information regarding our leases, other
borrowings and senior notes payable, respectively.

In the normal course of our business, we enter into contractual arrangements
whereby we commit to future purchases of products or services from unaffiliated
parties. Purchase obligations for purposes of this table include amounts
associated with agreements to purchase goods or services that are enforceable
and legally binding and that specify all significant terms including: minimum
quantities to be purchased, fixed, minimum or variable price provisions, and the
approximate timing of the transaction. Our most significant purchase obligations
are vendor contracts for data services, communication services, processing
services, computer software contracts and our stadium naming rights contract
which has a term through 2027. Most of our contracts have provisions for early
termination. For purposes of this table, we have assumed we would not pursue
early termination of such contracts.

We have entered into investment commitments, lending commitments and other
commitments to extend credit for which we are unable to reasonably predict the
timing of future payments. See Note 17 of the Notes to Consolidated Financial
Statements of this Form 10-K for further information.

REGULATORY

Refer to the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in "Item 1 - Business - Regulation" of this Form 10-K.


RJF and many of its subsidiaries are each subject to various regulatory capital
requirements. As of September 30, 2020, all of our active regulated domestic and
international subsidiaries had net capital in excess of minimum requirements. In
addition, RJF and RJ Bank were categorized as "well-capitalized" as of
September 30, 2020. The maintenance of certain risk-based and other regulatory
capital levels could influence various capital allocation decisions impacting
one or more of our businesses. However, due to the current capital position of
RJF and its regulated subsidiaries, we do not anticipate these capital
requirements will have a negative impact on our future business activities.

See Note 22 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulatory capital requirements.

CRITICAL ACCOUNTING ESTIMATES

The consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during


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any reporting period in our consolidated financial statements. Management has established detailed policies and control procedures intended to ensure the appropriateness of such estimates and assumptions and their consistent application from period to period. For a description of our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K.


Due to their nature, estimates involve judgment based upon available
information. Actual results or amounts could differ from estimates and the
difference could have a material impact on the consolidated financial
statements. Therefore, understanding these critical accounting estimates is
important in understanding our reported results of operations and financial
position. We believe that of our accounting estimates and assumptions, those
described in the following sections involve a high degree of judgment and
complexity. Recent market disruptions as a result of the COVID-19 pandemic have
made it more challenging for us to determine the amount of our allowance for
loan losses and the fair value of certain of our assets, particularly our
private equity investments. The current circumstances have required a greater
reliance on judgment than in recent periods in determining these amounts as of
September 30, 2020.

Valuation of financial instruments


The use of fair value to measure financial instruments, with related gains or
losses recognized on our Consolidated Statements of Income and Comprehensive
Income, is fundamental to our financial statements and our risk management
processes. "Financial instruments owned" and "Financial instrument liabilities"
are reflected on the Consolidated Statements of Financial Condition at fair
value. Unrealized gains and losses related to these financial instruments are
reflected in our net income or our other comprehensive income/(loss) ("OCI"),
depending on the underlying purpose of the instrument.

We measure the fair value of our financial instruments in accordance with GAAP,
which defines fair value, establishes a framework that we use to measure fair
value, and provides for certain disclosures in our financial statements. Fair
value is defined by GAAP as the price that would be received to sell an asset or
paid to transfer a liability (an exit price) in an orderly transaction between
market participants at the measurement date in the principal or most
advantageous market for the asset or liability.

In determining the fair value of our financial instruments, we use various
valuation approaches, including market and/or income approaches. Fair value is a
market-based measurement considered from the perspective of a market
participant. As such, our fair value measurements reflect assumptions that we
believe market participants would use in pricing the asset or liability at the
measurement date. A hierarchy for inputs is used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the relevant observable inputs be used when available.
The hierarchy is broken down into three levels: Level 1 represents unadjusted
quoted prices in active markets for identical instruments; Level 2 represents
valuations based on inputs other than unadjusted quoted prices in active
markets, but for which all significant inputs are observable; and Level 3
consists of valuation techniques that incorporate significant unobservable
inputs and, therefore, requires the greatest use of judgment. The availability
of observable inputs can vary from instrument to instrument and, in certain
cases, the inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, an instrument's level within the fair
value hierarchy is based on the lowest level of input that is significant to the
fair value measurement. Our assessment of the significance of a particular input
to the fair value measurement of an instrument requires judgment and
consideration of factors specific to the instrument.

The fair values for certain of our financial instruments are derived using
pricing models and other valuation techniques that involve management judgment.
The price transparency of financial instruments is a key determinant of the
degree of judgment involved in determining the fair value of our financial
instruments. Financial instruments which are actively traded will generally have
a higher degree of price transparency than financial instruments that are less
frequently traded. As a result, the valuation of certain financial instruments
included management judgment in determining the relevance and reliability of
market information available. These instruments are classified in Level 3 of the
fair value hierarchy.

See Notes 2 and 3 of the Notes to Consolidated Financial Statements of this Form
10-K for further information about the level within the fair value hierarchy,
specific valuation techniques and inputs, and other significant accounting
policies pertaining to financial instruments at fair value.

Loss provisions

Loss provisions for legal and regulatory matters


The recorded amount of liabilities related to legal and regulatory matters is
subject to significant management judgment. For a description of the significant
estimates and judgments associated with establishing such accruals, see the
"Contingent

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

liabilities" section of Note 2 of the Notes to Consolidated Financial Statements
of this Form 10-K. In addition, refer to Note 17 of the Notes to the
Consolidated Financial Statements of this Form 10-K for information regarding
legal and regulatory matter contingencies as of September 30, 2020.

Loan loss provisions arising from operations of RJ Bank


We provide an allowance for loan losses which reflects our ongoing evaluation of
the probable losses inherent in RJ Bank's loan portfolio. See the discussion
regarding our methodology in estimating the allowance for loan losses in Note 2
of the Notes to Consolidated Financial Statements of this Form 10-K. See Note 7
of the Notes to Consolidated Financial Statements of this Form 10-K for
additional information on our bank loans.

At September 30, 2020, the amortized cost of all RJ Bank loans was $21.55 billion and the allowance for loan losses was $354 million, which was 1.65% of the held for investment loan portfolio.


Our process of evaluating probable loan losses includes a complex analysis of
several quantitative and qualitative factors, requiring management judgment. As
a result, the allowance for loan losses could be insufficient to cover actual
losses. In such an event, any losses in excess of our allowance would result in
a decrease in our net income, as well as a decrease in the level of regulatory
capital.

RECENT ACCOUNTING DEVELOPMENTS


The FASB has issued certain accounting updates that apply to us. Accounting
updates not listed in the following section were assessed and either determined
to be not applicable or are not expected to have a significant impact on our
financial statements.

Accounting guidance not yet adopted as of September 30, 2020


Credit losses - In June 2016, the FASB issued new guidance related to the
measurement of credit losses on financial instruments (ASU 2016-13), which
replaces the existing incurred credit loss and other models with the Current
Expected Credit Losses ("CECL") model. The guidance involves several aspects of
the accounting for credit losses related to certain financial instruments,
including assets measured at amortized cost, available-for-sale debt securities
and certain off-balance sheet commitments. The new guidance, and subsequent
updates, broadens the information that an entity must consider in developing its
estimated credit losses expected to occur over the remaining life of financial
assets. The measurement of expected credit losses includes historical
experience, current conditions and reasonable and supportable forecasts. The new
guidance also expands the disclosure requirements regarding an entity's
assumptions, models, and methods for estimating credit losses and requires new
disclosures of the amortized cost balances for each class of financial asset by
credit quality indicator, disaggregated by the year of origination.

This new guidance was effective for our fiscal year beginning on October 1, 2020
and was adopted under a modified retrospective approach. We have determined that
certain portfolios qualify under the practical expedient outlined in the
accounting guidance based on collateral maintenance provisions (e.g., margin
loans, securities-based loans and collateralized agreements) and therefore, our
expected credit losses are not expected to be significant. In addition, we have
a zero loss expectation for certain financial assets based on the credit quality
of the borrower or issuer, such as government and agency loans and debt
securities. The impact of adoption of this new standard resulted in an increase
in our allowances for credit losses, including reserves for unfunded lending
commitments, of approximately $40 to $50 million and a corresponding reduction
in retained earnings of approximately $30 to $40 million, net of tax. The
increases in our allowances for credit losses were primarily attributable to
loans to financial advisors and, to a lesser extent, bank loans. Prior-period
amounts will not be restated.

Internal use software (cloud computing) - In August 2018, the FASB issued
guidance on the accounting for implementation costs incurred by customers in
cloud computing arrangements (ASU 2018-15). This guidance requires
implementation costs incurred by customers in cloud computing arrangements that
are service contracts to be deferred and recognized over the non-cancelable term
of the service contract plus any optional renewal periods (1) that are
reasonably certain to be exercised by the customer or (2) for which exercise of
the renewal option is controlled by the cloud service provider. We adopted this
new guidance on October 1, 2020 using a prospective approach as of the adoption
date. The impact of this amended guidance is dependent on implementation costs
incurred subsequent to adoption. The adoption did not have an impact on our
financial position, results of operations, or cash flows.

Consolidation (decision making fees) - In October 2018, the FASB issued guidance
on how all entities evaluate decision-making fees under the VIE guidance (ASU
2018-17). Under the new guidance, to determine whether decision-making fees

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

represent a variable interest, an entity considers indirect interests held
through related parties under common control on a proportionate basis, rather
than in their entirety. We adopted this new guidance on October 1, 2020. The
adoption of this new guidance did not have a material impact on our financial
position, results of operations, or cash flows.

OFF-BALANCE SHEET ARRANGEMENTS

For information regarding our off-balance sheet arrangements, see Notes 2 and 17 of the Notes to Consolidated Financial Statements of this Form 10-K.

EFFECTS OF INFLATION


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

RISK MANAGEMENT


Risks are an inherent part of our business and activities. Management of risk is
critical to our fiscal soundness and profitability. Our risk management
processes are multi-faceted and require communication, judgment and knowledge of
financial products and markets. We have a formal Enterprise Risk Management
("ERM") program to assess and review aggregate risks across the firm. Our
management takes an active role in the ERM process, which requires specific
administrative and business functions to participate in the identification,
assessment, monitoring and control of various risks.

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

Governance


Our Board of Directors oversees the firm's management and mitigation of risk,
reinforcing a culture that encourages ethical conduct and risk management
throughout the firm.  Senior management communicates and reinforces this culture
through three lines of risk management and a number of senior-level management
committees.  Our first line of risk management, which includes all of our
businesses, owns its risks and is responsible for helping to identify, escalate,
and mitigate risks arising from its day-to-day activities.  The second line of
risk management, which includes the Compliance, Legal, and Risk Management
departments, supports and provides guidance and oversight to client-facing
businesses and other first-line risk management functions in identifying and
mitigating risk. The second line of risk management also tests and monitors the
effectiveness of controls, escalates risks when appropriate, and reports on
these risks.  The third line of risk management, Internal Audit, independently
reviews activities conducted by the previous lines of risk management to assess
their management and mitigation of risk, providing additional assurance to the
Board of Directors and senior management, with a view toward enhancing our
oversight, management, and mitigation of risk.

Market risk


Market risk is our risk of loss resulting from the impact of changes in market
prices on our trading inventory, derivatives and investment positions. We have
exposure to market risk primarily through our broker-dealer trading operations
and, to a lesser extent, through our banking operations. Our broker-dealer
subsidiaries, primarily RJ&A, act as market makers in equity and debt securities
and maintain inventories in order to ensure availability of securities and to
facilitate client transactions. We also hold investments in agency MBS and
agency CMOs within RJ Bank's available-for-sale securities portfolio, and from
time-to-time may hold SBA loan securitizations not yet transferred.

See Notes 2, 3, 4 and 5 of the Notes to Consolidated Financial Statements of this Form 10-K for fair value and other information regarding our trading inventories, available-for-sale securities and derivative instruments.


Changes in value of our trading inventory may result from fluctuations in
interest rates, credit spreads, equity prices, macroeconomic factors and asset
liquidity, as well as relationships among these factors. We manage our trading
inventory by product type and have established trading desks with responsibility
for particular product types. Our primary method of controlling risk in our
trading inventory is through the establishment and monitoring of risk-based
limits and limits on the dollar amount of positions held overnight in inventory.
A hierarchy of limits exists at multiple levels including firm, division,
trading desk (e.g., for over-the-counter ("OTC") equities, corporate bonds,
municipal bonds), product sub-type (e.g., below-investment-grade positions) and
individual trader. Position limits in trading inventory accounts are monitored
on a daily basis. Consolidated position and exposure reports are prepared and
distributed daily to senior management. Trading positions are

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

carefully monitored for potential limit violations. Management likewise monitors
inventory levels and trading results, as well as inventory aging, pricing,
concentration and securities ratings. For our derivatives positions, which are
composed primarily of interest rate swaps, but also include futures contracts
and forward foreign exchange contracts, we monitor daily exposure against
established limits with respect to a number of factors, including interest
rates, foreign exchange spot and forward rates, spread, ratio, basis and
volatility risk, both for the total portfolio and by maturity period.

In the normal course of business, we enter into underwriting commitments. RJ&A
and RJ Ltd., as a lead or co-lead manager or syndicate member in underwritings,
may be subject to market risk on any unsold shares issued in offerings to which
we are committed. Risk exposure is controlled by limiting participation, the
deal size or through the syndication process.

Interest rate risk

Trading activities


We are exposed to interest rate risk as a result of our trading inventory
(primarily comprised of fixed income instruments) in our Capital Markets
segment. We actively manage the interest rate risk arising from our fixed income
trading securities through the use of hedging strategies that involve U.S.Treasury securities, futures contracts, liquid spread products and derivatives.
In response to the significant market uncertainty caused by the COVID-19
pandemic, we took steps to proactively manage our market risk exposures,
including enhanced review and monitoring of exposures and risk mitigation
initiatives.

We monitor the Value-at-Risk ("VaR") for all of our trading portfolios on a
daily basis. VaR is an appropriate statistical technique for estimating
potential losses in trading portfolios due to typical adverse market movements
over a specified time horizon with a suitable confidence level. We apply the
Fed's Market Risk Rule ("MRR") for the purpose of calculating our capital
ratios. The MRR, also known as the "Risk-Based Capital Guidelines: Market Risk"
rule released by the Fed, the OCC and FDIC, requires us to calculate VaR for all
of our trading portfolios (including derivatives), including fixed income,
equity, and foreign exchange instruments.

To calculate VaR, we use historical simulation. This approach assumes that
historical changes in market conditions, such as in interest rates and equity
prices, are representative of future changes. Simulation is based on daily
market data for the previous twelve months. VaR is reported at a 99% confidence
level for a one-day time horizon. Assuming that future market conditions change
as they have in the past twelve months, we would expect to incur losses greater
than those predicted by our one-day VaR estimates about once every 100 trading
days, or about three times per year on average. For regulatory capital
calculation purposes, we also report VaR numbers for a ten-day time horizon.

The Fed's MRR requires us to perform daily back-testing procedures of our VaR
model, whereby we compare each day's projected VaR to its regulatory-defined
daily trading losses, which exclude fees, commissions, reserves, net interest
income and intraday trading. Regulatory-defined daily trading losses are used to
evaluate the performance of our VaR model and are not comparable to our actual
daily net revenues. Based on these daily "ex ante" versus "ex post" comparisons,
we determine whether the number of times that regulatory-defined daily trading
losses exceed VaR is consistent with our expectations at a 99% confidence level.
During the year ended September 30, 2020, our regulatory-defined daily loss in
our trading portfolios exceeded our predicted VaR on 11 occasions due to
significantly higher levels of market volatility during our fiscal second
quarter as a result of the COVID-19 pandemic.

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

                                 Year ended September 30, 2020                         Period-end VaR                                                   

For the year ended September 30,

                                                                            September 30,            September 30,
$ in millions                        High                  Low                  2020                     2019              $ in millions                        2020                   2019
Daily VaR                    $             9            $     1$       8                 $            1          Average daily VaR           $               3            $      1



Our period-end VaR increased to $9 million as of September 2020 from $1 million
as of September 2019, primarily due to the impact of increased volatility from
the COVID-19 pandemic on our VaR model.

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

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

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

Should markets suddenly become more volatile, as they did in our fiscal second
quarter of 2020, actual trading losses may exceed VaR results presented on a
single day and might accumulate over a longer time horizon, such as a number of
consecutive trading days. Accordingly, management applies additional controls
including position limits, a daily review of trading results, review of the
status of aged inventory, independent controls on pricing, monitoring of
concentration risk, review of issuer ratings and stress testing. We utilize
stress testing to complement our VaR analysis so as to measure risk under
historical and hypothetical adverse scenarios. During volatile markets, we may
choose to pare our trading inventories to reduce risk, as we did during our
fiscal second quarter of 2020.

Banking operations


RJ Bank maintains an interest-earning asset portfolio that is comprised of cash,
C&I loans, tax-exempt loans, commercial and residential real estate loans, SBL
and other loans, as well as agency MBS and agency CMOs (held in the
available-for-sale securities portfolio), SBA loan securitizations and a trading
portfolio of corporate loans. These interest-earning assets are primarily funded
by client deposits. Based on its current asset portfolio, RJ Bank is subject to
interest rate risk.  RJ Bank analyzes interest rate risk based on forecasted net
interest income, which is the net amount of interest received and interest paid,
and the net portfolio valuation, both across a range of interest rate scenarios.

One of the objectives of RJ Bank's Asset Liability Management Committee is to manage the sensitivity of net interest income to changes in market interest rates. This committee uses several measures to monitor and limit RJ Bank's interest rate risk, including scenario analysis and economic value of equity.


RJ Bank uses simulation models and estimation techniques to assess the
sensitivity of net interest income to movements in interest rates. To ensure
that RJ Bank remains within its tolerances established for net interest income,
a sensitivity analysis of net interest income to interest rate conditions is
estimated under a variety of scenarios. The model estimates the sensitivity by
calculating interest income and interest expense in a dynamic balance sheet
environment using current repricing, prepayment, and reinvestment of cash flow
assumptions over a twelve month time horizon. Various interest rate scenarios
are modeled in order to determine the effect those scenarios may have on net
interest income. Scenarios presented include instantaneous interest rate shocks
of up 100 and 200 basis points and down 100 basis points. While not presented,
additional rate scenarios are performed, including interest rate ramps and yield
curve shifts that may more realistically mimic the speed of potential interest
rate movements. RJ Bank also performs simulations on time horizons of up to five
years to assess longer term impacts to various interest rate scenarios. On a
quarterly basis, RJ Bank tests expected model results to actual performance.
Additionally, any changes made to key assumptions in the model are documented
and approved by RJ Bank's Asset Liability Management Committee.

We utilize a hedging strategy using interest rate swaps as a result of RJ Bank's asset and liability management process previously described. For further information regarding this hedging strategy, see Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K.


The following table is an analysis of RJ Bank's estimated net interest income
over a 12-month period based on instantaneous shifts in interest rates
(expressed in basis points) using RJ Bank's own asset/liability model, which
assumes that interest rates do not decline below zero.
                                      Net interest income        Projected 

change in

 Instantaneous changes in rate          ($ in millions)          net interest income
              +200                           $851                       33.4%
              +100                           $804                       26.0%
               0                             $638                         -
              -100                           $607                      (4.9)%


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




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The following table shows the contractual maturities of RJ Bank's loan portfolio
at September 30, 2020, including contractual principal repayments. This table
does not include any estimates of prepayments, which could shorten the average
loan lives and cause the actual timing of the loan repayments to differ
significantly from those shown in the table. Loan amounts in the table exclude
unearned income and deferred expenses.
                                                                                     Due in
                                                                         > One year -
                                                    One year or              five
$ in millions                                           less                years              > 5 years             Total
Loans held for investment:
C&I loans                                          $       117$     4,369$    2,964$    7,450
CRE construction loans                                      26                  149                   2                 177
CRE loans                                                  638                2,264                 632               3,534
Tax-exempt loans                                             1                   73               1,185               1,259
Residential mortgage loans                                   -                    5               4,942               4,947
SBL and other                                            4,050                   35                   -               4,085
Total loans held for investment                          4,832                6,895               9,725              21,452
Loans held for sale                                          -                    1                 101                 102
Total loans                                        $     4,832$     6,896$    9,826$   21,554



The following table shows the distribution of the recorded investment of those
RJ Bank loans that mature in more than one year between fixed and adjustable
interest rate loans at September 30, 2020. Loan amounts in the table exclude
unearned income and deferred expenses.
                                                Interest rate type
$ in millions                          Fixed       Adjustable        Total
Loans held for investment:
C&I loans                            $   226$     7,107$  7,333
CRE construction loans                     2              149           151
CRE loans                                104            2,792         2,896
Tax-exempt loans                       1,258                -         1,258
Residential mortgage loans               197            4,750         4,947
SBL and other                              -               35            35
Total loans held for investment        1,787           14,833        16,620
Loans held for sale                        4               98           102
Total loans                          $ 1,791$    14,931$ 16,722



Contractual loan terms for C&I, CRE, CRE construction and residential mortgage
loans may include an interest rate floor, cap and/or fixed interest rates for a
certain period of time, which would impact the timing of the interest rate reset
for the respective loan. See the discussion within the "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Risk management
- Credit risk - Risk monitoring process" section of this Form 10-K for
additional information regarding RJ Bank's interest-only residential mortgage
loan portfolio.

In our RJ Bank available-for-sale securities portfolio, we hold primarily
fixed-rate agency MBS and agency CMOs which are carried at fair value on our
Consolidated Statements of Financial Condition, with changes in the fair value
of the portfolio recorded through OCI in our Consolidated Statements of Income
and Comprehensive Income. At September 30, 2020, our RJ Bank available-for-sale
securities portfolio had a fair value of $7.65 billion with a weighted-average
yield of 1.51% and average expected duration of three years. See Note 4 of the
Notes to Consolidated Financial Statements of this Form 10-K for additional
information.

Equity price risk


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

In addition, we have a private equity portfolio, included in "Other investments"
on our Consolidated Statements of Financial Condition, which is comprised of
various direct investments, as well as investments in third-party private equity
funds and various legacy private equity funds which we sponsor. Of the total
private equity investments at September 30, 2020 of $116

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million, the portion we owned was $90 million. See Note 3 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information on this portfolio.


Foreign exchange risk

We are subject to foreign exchange risk due to our investments in foreign
subsidiaries, as well as transactions and resulting balances denominated in a
currency other than the U.S. dollar. For example, a portion of our bank loan
portfolio includes loans which are denominated in Canadian dollars, totaling
$1.06 billion and $1.10 billion at September 30, 2020 and 2019, respectively,
when converted to the U.S. dollar. A portion of such loans are held by RJ Bank's
Canadian subsidiary, which is discussed in the following sections.

Investments in foreign subsidiaries


RJ Bank has an investment in a Canadian subsidiary, resulting in foreign
exchange risk. To mitigate its foreign exchange risk, RJ Bank utilizes
short-term, forward foreign exchange contracts. These derivatives are primarily
accounted for as net investment hedges in the consolidated financial statements.
See Notes 2 and 5 of the Notes to Consolidated Financial Statements of this Form
10-K for further information regarding these derivatives.

We had foreign exchange risk in our investment in RJ Ltd. of CAD 353 million at
September 30, 2020, which was not hedged. Foreign exchange gains/losses related
to this investment are primarily reflected in OCI on our Consolidated Statements
of Income and Comprehensive Income. See Note 18 of the Notes to Consolidated
Financial Statements of this Form 10-K for further information regarding our
components of OCI.

We also have foreign exchange risk associated with our investments in
subsidiaries located in Europe. These investments are not hedged and we do not
believe we have material foreign exchange risk either individually, or in the
aggregate, pertaining to these subsidiaries.

Transactions and resulting balances denominated in a currency other than the U.S. dollar


We are subject to foreign exchange risk due to our holdings of cash and certain
other assets and liabilities resulting from transactions denominated in a
currency other than the U.S. dollar. Any currency-related gains/losses arising
from these foreign currency denominated balances are reflected in "Other"
revenues in our Consolidated Statements of Income and Comprehensive Income. The
foreign exchange risk associated with a portion of such transactions and
balances denominated in foreign currency are mitigated utilizing short-term,
forward foreign exchange contracts. Such derivatives are not designated hedges
and therefore, the related gains/losses associated with these contracts are
included in "Other" revenues in our Consolidated Statements of Income and
Comprehensive Income. See Note 5 of the Notes to Consolidated Financial
Statements of this Form 10-K for information regarding our derivatives.

Credit risk


Credit risk is the risk of loss due to adverse changes in a borrower's, issuer's
or counterparty's ability to meet its financial obligations under contractual or
agreed-upon terms. The nature and amount of credit risk depends on the type of
transaction, the structure and duration of that transaction, and the parties
involved. Credit risk is an integral component of the profit assessment of
lending and other financing activities. We are exposed to credit risk through
our brokerage activities, as well as our lending activities, primarily in RJ
Bank.

The decline in economic activity as a result of COVID-19 has caused increased
credit risk in general and particularly with regard to companies in sectors that
have been most significantly impacted by the economic disruption, including
energy, airlines, entertainment and leisure, restaurants and gaming. Given the
stresses on certain of our clients' liquidity, we have enhanced our credit
monitoring activities, with an increased focus on monitoring our credit
exposures and counterparty credit risk. Since the onset of the pandemic, RJ Bank
has enacted risk mitigation strategies including, but not limited to, the sale
of loans in those sectors with a high likelihood of adverse impact arising from
the pandemic. We have also required collateral to be posted across our credit
risk exposures in accordance with agreements with our borrowers and
counterparties.

We are subject to concentration risk if we hold large positions, extend large
loans to, or have large commitments with a single counterparty, borrower, or
group of similar counterparties or borrowers (e.g., in the same industry).
Repurchase agreements consist primarily of securities issued by the U.S.
government or its agencies. Receivables from and payables to clients and
securities borrowing and lending activities are conducted with a large number of
clients and counterparties and potential concentration is carefully monitored.
Inventory and investment positions taken and commitments made, including

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

underwritings, may involve exposure to individual issuers and businesses. We
seek to mitigate this risk through careful review of the underlying business and
the use of limits established by senior management, taking into consideration
factors including the financial strength of the counterparty, the size of the
position or commitment, the expected duration of the position or commitment and
other positions or commitments outstanding.

Brokerage activities


We are engaged in various trading and brokerage activities in which our
counterparties primarily include broker-dealers, banks and other financial
institutions. We are exposed to risk that these counterparties may not fulfill
their obligations. The risk of default depends on the creditworthiness of the
counterparty and/or the issuer of the instrument. We manage this risk by
imposing and monitoring individual and aggregate position limits within each
business segment for each counterparty, conducting regular credit reviews of
financial counterparties, reviewing security and loan concentrations, holding
and calculating the fair value of collateral on certain transactions and
conducting business through clearing organizations, which may guarantee
performance.

Our client activities involve the execution, settlement, and financing of
various transactions on behalf of our clients. Client activities are transacted
on either a cash or margin basis. Credit exposure results from client margin
loans, which are monitored daily and are collateralized by the securities in the
clients' accounts. We monitor exposure to industry sectors and individual
securities and perform analysis on a daily basis in connection with our margin
lending activities. We adjust our margin requirements if we believe our risk
exposure is not appropriate based on market conditions. In addition, when
clients execute a purchase, we are at some risk that the client will default on
their financial obligation associated with the trade. If this occurs, we may
have to liquidate the position at a loss.

We offer loans to financial advisors and certain other key revenue producers
primarily for recruiting, transitional cost assistance and retention purposes.
We have credit risk and may incur a loss primarily in the event that such
borrower is no longer affiliated with us.

Banking activities


RJ Bank has a substantial loan portfolio. While RJ Bank's loan portfolio is
diversified, a significant downturn in the overall economy, such as that
experienced in fiscal 2020 as a result of the COVID-19 pandemic, deterioration
in real estate values or a significant issue within any sector or sectors where
RJ Bank has a concentration will generally result in large provisions for loan
losses and/or charge-offs. RJ Bank determines the allowance that is required for
specific loan grades based on relative risk characteristics of the loan
portfolio. On an ongoing basis, RJ Bank evaluates its methods for determining
the allowance for each class of loans and makes enhancements it considers
appropriate.

RJ Bank's strategy for credit risk management includes well-defined credit
policies, uniform underwriting criteria, and ongoing risk monitoring and review
processes for all corporate, tax-exempt, residential, SBL and other credit
exposures. The strategy also includes diversification on a geographic, industry
and customer level, regular credit examinations and management reviews of all
corporate and tax-exempt loans as well as individual delinquent residential
loans. The credit risk management process also includes an annual independent
review of the credit risk monitoring process that performs assessments of
compliance with credit policies, risk ratings, and other critical credit
information. RJ Bank seeks to identify potential problem loans early, record any
necessary risk rating changes and charge-offs promptly, and maintain appropriate
reserve levels for probable inherent losses. RJ Bank utilizes a comprehensive
credit risk rating system to measure the credit quality of individual corporate
and tax-exempt loans and related unfunded lending commitments, including the
probability of default and/or loss given default of each corporate and
tax-exempt loan and commitment outstanding. For its SBL and residential mortgage
loans, RJ Bank utilizes the credit risk rating system used by bank regulators in
measuring the credit quality of each homogeneous class of loans.

RJ Bank's allowance for loan losses methodology is described in Note 2 of the
Notes to Consolidated Financial Statements of this Form 10-K. As RJ Bank's loan
portfolio is segregated into six portfolio segments, likewise, the allowance for
loan losses is segregated by these same segments.  The risk characteristics
relevant to each portfolio segment are as follows.

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

CRE: Loans in this segment are primarily secured by income-producing properties. For owner-occupied properties, the cash flows are derived from the operations of the business, and the underlying cash flows may be adversely affected by the


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

deterioration in the financial condition of the operating business.  The
underlying cash flows generated by non-owner-occupied properties may be
adversely affected by increased vacancy and rental rates, which are monitored on
a quarterly basis.  Adverse developments in either of these areas may have a
negative effect on the credit quality of loans in this segment.

CRE construction: Loans in this segment have similar risk characteristics of
loans in the CRE segment as previously described. In addition, project budget
overruns and performance variables related to the contractor and subcontractors
may affect the credit quality of loans in this segment. With respect to
commercial construction of residential developments, there is also the risk that
the builder has a geographical concentration of developments.  Adverse
developments in all of these areas may significantly affect the credit quality
of the loans in this segment.

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

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

SBL and other: Loans in this segment are collateralized generally by the
borrower's marketable securities at advance rates consistent with industry
standards. These loans are monitored daily for adherence to LTV guidelines and
when a loan exceeds the required LTV, a collateral call is issued. Past due
loans are minimal as any past due amounts result in a notice to the client for
payment or the potential sale of the collateral which will bring the loan to a
current status.

In evaluating credit risk, RJ Bank considers trends in loan performance, the
level of allowance coverage relative to similar banking institutions, industry
or customer concentrations, the loan portfolio composition and macroeconomic
factors. These factors have a potentially negative impact on loan performance
and net charge-offs. However, during fiscal year 2020, corporate borrowers have
continued to access the markets for new equity and debt.

Several factors were taken into consideration in evaluating the allowance for
loan losses at September 30, 2020, including the risk profile of the portfolios,
net charge-offs during the period, the level of nonperforming loans, delinquency
ratios and the impact of the COVID-19 pandemic. RJ Bank also considered the
uncertainty related to certain industry sectors and the extent of credit
exposure to specific borrowers within the portfolio. Finally, RJ Bank considered
current economic conditions that might impact the portfolio. In response to the
COVID-19 pandemic, we performed a portfolio-wide assessment of our loan
portfolio. As a result, we downgraded loans in certain impacted industries,
which gave rise to elevated loan loss provisions during fiscal 2020. In
addition, we sold approximately $695 million (before charge-offs and discounts
or premiums) of corporate loans during the fiscal year in industries that we
believe to be most vulnerable to the COVID-19 pandemic. We will continue to
assess the impact of COVID-19 and, as more information becomes available
regarding the financial repercussions to our borrowers, the risk ratings for
individual loans will be updated and the allowance will be adjusted accordingly.


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

The following table presents RJ Bank's changes in the allowance for loan losses.
                                                                              Year ended September 30,
$ in millions                                         2020             2019             2018             2017             2016

Allowance for loan losses beginning of year $ 218$ 203

$ 190$ 197$ 172 Provision for loan losses

                              233               22               20               13               28
Charge-offs:
C&I loans                                              (96)              (2)             (10)             (26)              (3)

CRE loans                                               (4)              (5)               -                -                -

Residential mortgage loans                               -               (1)               -               (1)              (1)

Total charge-offs                                     (100)              (8)             (10)             (27)              (4)
Recoveries:

CRE loans                                                -                -                -                5                -

Residential mortgage loans                               2                2                2                1                1

Total recoveries                                         2                2                2                6                1
Net charge-offs                                        (98)              (6)              (8)             (21)              (3)
Foreign exchange translation adjustment                  1               (1)               1                1                -
Allowance for loan losses end of year              $   354$   218$   203$   190$   197
Allowance for loan losses to loans held for
investment                                            1.65  %          1.04  %          1.04  %          1.11  %          1.30  %


See further explanation of the loan loss provision in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - RJ Bank" of this Form 10-K.


The level of charge-off activity is a factor that is considered in evaluating
the potential severity of future credit losses. The following tables present net
loan (charge-offs)/recoveries and the percentage of net loan
(charge-offs)/recoveries to the average outstanding loan balances by loan
portfolio segment. Of the $98 million of charge-offs in fiscal 2020, the
majority was associated with loans we sold as part of our risk mitigation
strategies.

                                                                                                                          Year ended September 30,
                                                                      2020                                                          2019                                                          2018
                                                     Net loan                       % of avg.                      Net loan                       % of avg.                      Net loan                       % of avg.
                                               (charge-off)/recovery               outstanding               (charge-off)/recovery               outstanding               (charge-off)/recovery               outstanding
$ in millions                                       amount (1)                        loans                       amount (1)                        loans                       amount (1)                        loans
C&I loans                                    $                  (96)                         1.22  %       $                   (2)                         0.02  %       $                  (10)                         0.13  %
CRE loans                                                        (4)                         0.11  %                           (5)                         0.14  %                            -                             -
Residential mortgage loans                                        2                          0.04  %                            1                          0.02  %                            2                          0.06  %
Total                                        $                  (98)                         0.45  %       $                   (6)                         0.04  %       $                   (8)                         0.04  %


                                                                                                    Year ended September 30,
                                                                                 2017                                                       2016
                                                                 Net loan                     % of avg.                     Net loan                     % of avg.
                                                           (charge-off)/recovery             outstanding              (charge-off)/recovery             outstanding
$ in millions                                                   amount (1)                      loans                      amount (1)                      loans
C&I loans                                                $                  (26)                      0.35  %       $                   (3)                      0.04  %
CRE loans                                                                     5                       0.18  %                            -                          -

Total                                                    $                  (21)                      0.13  %       $                   (3)                      0.02  %


(1) Charge-offs related to loan sales amounted to $87 million, $2 million, $9 million, $26 million and $3 million for the years ended September 30, 2020, 2019, 2018, 2017, and 2016, respectively.



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

The level of nonperforming loans is another indicator of potential future credit
losses. The following tables present the nonperforming loans balance and total
allowance for loan losses balance for the periods presented.
                                                                                                               September 30,
                                                             2020                                                  2019                                                  2018
                                          Nonperforming loan         Allowance for loan         Nonperforming loan         Allowance for loan         Nonperforming loan         Allowance for loan
$ in millions                                  balance                 losses balance                balance                 losses balance                balance                 losses balance
Loans held for investment:
C&I loans                               $            2               $           200          $           19               $           139          $            2               $           123
CRE construction loans                               -                             3                       -                             3                       -                             3
CRE loans                                           14                           114                       8                            46                       -                            47
Tax-exempt loans                                     -                            14                       -                             9                       -                             9
Residential mortgage loans                          14                            18                      16                            16                      23                            17
SBL and other                                        -                             5                       -                             5                       -                             4
Total                                   $           30               $           354          $           43               $           218          $           25               $           203
Total nonperforming loans as a %
of RJ Bank total loans                            0.14       %                                          0.21       %                                          0.12       %


                                                                                                     September 30,
                                                                              2017                                                  2016
                                                           Nonperforming

loan Allowance for loan Nonperforming loan Allowance for loan $ in millions

                                                   balance                 losses balance                balance                 losses 

balance

Loans held for investment:
C&I loans                                                $            5               $           120          $           35               $           

138

CRE construction loans                                                -                             1                       -                             1
CRE loans                                                             -                            42                       4                            36
Tax-exempt loans                                                      -                             6                       -                             4
Residential mortgage loans                                           34                            17                      42                            13
SBL and other                                                         -                             4                       -                             5
Total                                                    $           39               $           190          $           81               $           197
Total nonperforming loans as a % of RJ Bank total
loans                                                              0.23       %                                          0.53       %



Included in nonperforming residential mortgage loans as of September 30, 2020,
were $7 million in loans for which $3 million in charge-offs were previously
recorded, resulting in less exposure within the remaining balance. See Note 7 in
the Notes to the Consolidated Financial Statements of this Form 10-K for loan
categories as a percentage of total loans receivable.

The nonperforming loan balances in the preceding table exclude $10 million, $12
million, $12 million, $14 million and $14 million as of September 30, 2020,
2019, 2018, 2017, and 2016, respectively, of residential TDRs which were
returned to accrual status in accordance with our policy. Total nonperforming
assets, including the nonperforming loans in the preceding table and other real
estate acquired in the settlement of residential mortgages, amounted to $32
million, $46 million, $28 million, $44 million and $86 million as of
September 30, 2020, 2019, 2018, 2017, and 2016, respectively. Total
nonperforming assets as a percentage of RJ Bank total assets were 0.10%, 0.18%,
0.12%, 0.21% and 0.50% as of September 30, 2020, 2019, 2018, 2017, and 2016
respectively. Although our nonperforming assets as a percentage of RJ Bank
assets remained low as of September 30, 2020, prolonged or further market
deterioration could result in an increase in our nonperforming assets, an
increase in our allowance for loan losses and/or an increase in net charge-offs
in future periods, although the extent will depend on future developments that
are highly uncertain.

We have received requests from certain borrowers for forbearance, or deferral of
their loan payments to us, driven or exacerbated by the economic impacts of the
COVID-19 pandemic. Certain borrowers have also requested modifications of
covenant terms. In accordance with the CARES Act, we have elected to not apply
TDR classification to any COVID-19 related loan modifications that were
performed after March 1, 2020 to borrowers who were current as of December 31,
2019. Based on the outstanding principal balance as of the end of September 30,
2020, we have active short-term payment deferrals on approximately $189 million
and $77 million of our corporate and residential loans, respectively. Such
deferrals could delay the recognition of net charge-offs, delinquencies, and
nonaccrual status for those borrowers who would have otherwise moved into past
due or nonaccrual status.


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

Loan underwriting policies

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

Residential mortgage and SBL and other loan portfolios


RJ Bank's residential mortgage loan portfolio consists of first mortgage loans
originated by RJ Bank via referrals from our PCG financial advisors and the
general public, as well as first mortgage loans purchased by RJ Bank. All of RJ
Bank's residential mortgage loans adhere to strict underwriting parameters
pertaining to credit score and credit history, debt-to-income ratio of the
borrower, LTV and combined LTV (including second mortgage/home equity loans). As
of September 30, 2020, approximately 65% of the residential loans were fully
documented loans to industry standards and 96% of the residential mortgage loan
portfolio consisted of owner-occupant borrowers (77% for their primary
residences and 19% for second home residences). Approximately 35% of the first
lien residential mortgage loans were ARM loans, which receive interest-only
payments based on a fixed rate for an initial period of the loan and then become
fully amortizing, subject to annual and lifetime interest rate caps. A
significant portion of our originated 15 or 30-year fixed-rate mortgage loans
are sold in the secondary market.

RJ Bank's SBL and other portfolio is comprised primarily of loans fully collateralized by client's marketable securities and represented 19% of RJ Bank's total loan portfolio as of September 30, 2020. The underwriting policy for the SBL and other portfolio primarily includes a review of collateral, including LTV, with a limited review of repayment history.


While RJ Bank has chosen not to participate in any government-sponsored loan
modification programs, its loan modification policy does take into consideration
some of the programs' parameters and supports every effort to assist borrowers
within the guidelines of safety and soundness. In general, RJ Bank considers the
qualification terms outlined in the government-sponsored programs as well as the
affordability test and other factors. RJ Bank retains flexibility to determine
the appropriate modification structure and required documentation to support the
borrower's current financial situation before approving a modification. Short
sales are also used by RJ Bank to mitigate credit losses.

Corporate and tax-exempt loan portfolios


RJ Bank's corporate and tax-exempt loan portfolios were comprised of
approximately 500 borrowers, the majority of which are underwritten, managed and
reviewed at our corporate headquarters location, which facilitates close
monitoring of the portfolio by credit risk personnel, relationship officers and
senior RJ Bank executives. RJ Bank's corporate loan portfolio is diversified
among a number of industries in both the U.S. and Canada and is comprised of
project finance real estate loans, commercial lines of credit and term loans,
the majority of which are participations in Shared National Credit ("SNC") or
other large syndicated loans, and tax-exempt loans. RJ Bank is sometimes
involved in the syndication of the loan at inception and some of these loans
have been purchased in the secondary trading markets. The remainder of the
corporate loan portfolio is comprised of smaller participations and direct
loans. There are no subordinated loans or mezzanine financings in the corporate
loan portfolio. RJ Bank's tax-exempt loans are long-term loans to governmental
and nonprofit entities. These loans generally have lower overall credit risk,
but are subject to other risks that are not usually present with corporate
clients, including the risk associated with the constituency served by a local
government and the risk in ensuring an obligation has appropriate tax treatment.

Regardless of the source, all corporate and tax-exempt loans are independently
underwritten to RJ Bank credit policies and are subject to approval by a loan
committee, and credit quality is monitored on an on-going basis by RJ Bank's
lending staff. RJ Bank credit policies include criteria related to LTV limits
based upon property type, single borrower loan limits, loan term and structure
parameters (including guidance on leverage, debt service coverage ratios and
debt repayment ability), industry concentration limits, secondary sources of
repayment, municipality demographics, and other criteria. A large portion of RJ
Bank's corporate loans are to borrowers in industries in which we have
expertise, through coverage provided by our Capital Markets research analysts.
More than half of RJ Bank's corporate borrowers are public companies. RJ Bank's
corporate loans are generally secured by all assets of the borrower, in some
instances are secured by mortgages on specific real estate, and with respect to
tax-exempt loans, are generally secured by a pledge of revenue. In a limited
number of transactions, loans in the portfolio are extended on an unsecured
basis. In addition, all corporate and tax-exempt loans are subject to RJ Bank's
regulatory review.


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

Risk monitoring process


Another component of the credit risk strategy at RJ Bank is the ongoing risk
monitoring and review processes for all residential, SBL, corporate and
tax-exempt credit exposures, as well as our rigorous processes to manage and
limit credit losses arising from loan delinquencies. There are various other
factors included in these processes, depending on the loan portfolio.

Residential mortgage and SBL and other loan portfolios


The collateral securing RJ Bank's SBL and other portfolio is monitored on a
recurring basis, with marketable collateral monitored on a daily basis.
Collateral adjustments are made by the borrower as necessary to ensure RJ Bank's
loans are adequately secured, resulting in minimizing its credit risk.
Collateral calls have been minimal relative to our SBL and other portfolio with
no losses incurred to date.

We track and review many factors to monitor credit risk in RJ Bank's residential
mortgage loan portfolio. The factors include, but are not limited to: loan
performance trends, loan product parameters and qualification requirements,
borrower credit scores, level of documentation, loan purpose, geographic
concentrations, average loan size and LTV ratios. These measures, while
considered and reviewed in establishing the allowance for loan losses, have not
resulted in any material adjustments to RJ Bank's historical loss rates.

The following table presents a summary of delinquent residential mortgage loans,
the vast majority of which are first mortgage loans, which are comprised of
loans which are two or more payments past due as well as loans in the process of
foreclosure. Amounts in the following table do not include residential loans to
borrowers who have been granted forbearance as a result of the COVID-19 pandemic
and whose loans were not considered delinquent prior to the forbearance. Such
loans may be considered delinquent after the forbearance period, depending on
their payment status. As a result, the amount of residential loans considered
delinquent may increase significantly in fiscal 2021 as the forbearance periods
expire.
                                                                                                  Delinquent residential loans as a percentage of outstanding
                                         Amount of delinquent residential loans                                          loan balances
$ in millions                    30-89 days           90 days or more            Total               30-89 days           90 days or more            Total
September 30, 2020             $         3          $              7          $      10                     0.06  %               0.14  %               0.20  %
September 30, 2019             $         2          $             10          $      12                     0.04  %               0.22  %               0.26  %



Our September 30, 2020 percentage continues to compare favorably to the national
average for over 30 day delinquencies of 2.68%, as most recently reported by the
Fed.

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

Credit risk is also managed by diversifying the residential mortgage portfolio.
Most of the loans in our residential loan portfolio are to Private Client Group
clients across the country. The following table details the geographic
concentrations (top five states) of RJ Bank's one-to-four family residential
mortgage loans.
                                                    September 30, 2020
              Loans outstanding as a % of RJ Bank total             Loans 

outstanding as a % of RJ Bank total

                      residential mortgage loans                                      loans
  CA                            25.1%                                                 5.8%
  FL                            16.5%                                                 3.8%
  TX                             8.8%                                                 2.0%
  NY                             6.9%                                                 1.6%
  CO                             4.2%                                                 1.0%




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

Loans where borrowers may be subject to payment increases include ARM loans with
terms that initially require payment of interest only. Payments may increase
significantly when the interest-only period ends and the loan principal begins
to amortize. At September 30, 2020 and 2019, these loans totaled $1.67 billion
and $1.29 billion, respectively, or approximately 34% and 30% of the residential
mortgage portfolio, respectively. The weighted-average number of years before
the remainder of the loans, which were still in their interest-only period at
September 30, 2020, begins amortizing is 6 years.

A component of credit risk management for the residential portfolio is the LTV
ratio and borrower credit score at origination or purchase. The weighted-average
LTV ratios and FICO scores at origination of RJ Bank's residential first
mortgage loan portfolio were 65% and 762, respectively.

Corporate and tax-exempt loans


Credit risk in RJ Bank's corporate and tax-exempt loan portfolios is monitored
on an individual loan basis for trends in borrower operating performance,
payment history, credit ratings, collateral performance, loan covenant
compliance, semi-annual SNC exam results, municipality demographics and other
factors including industry performance and concentrations. As part of the credit
review process, the loan grade is reviewed at least quarterly to confirm the
appropriate risk rating for each credit. The individual loan ratings resulting
from the SNC exams are incorporated in RJ Bank's internal loan ratings when the
ratings are received and if the SNC rating is lower on an individual loan than
RJ Bank's internal rating, the loan is downgraded. While RJ Bank considers
historical SNC exam results in its loan ratings methodology, differences between
the SNC exam and internal ratings on individual loans typically arise due to
subjectivity of the loan classification process. These differences may result in
additional provision for loan losses in periods when SNC exam results are
received. The majority of RJ Bank's tax-exempt loan portfolio is comprised of
loans to investment-grade borrowers. See Note 2 of the Notes to Consolidated
Financial Statements of this Form 10-K, specifically the "Bank loans, net"
section, for additional information on RJ Bank's allowance for loan loss
policies.

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

September 30, 2020

                                            Loans outstanding as a % of RJ Bank            Loans outstanding as a % of RJ Bank
                                                   total corporate loans                               total loans
Office real estate                                         7.5%                                            3.9%
Automotive/transportation                                  6.7%                                            3.5%
Hospitality                                                6.5%                                            3.4%
Business systems and services                              6.3%                                            3.2%
Multi-family                                               5.6%                                            2.9%



The COVID-19 pandemic has negatively impacted our corporate loan portfolio and
could continue to do so in the future. Although we have reduced our exposure to
sectors that we believe to be most vulnerable to the COVID-19 pandemic, such as
the energy, airlines, entertainment and leisure, restaurant and gaming sectors,
we may experience further losses on our remaining loans to borrowers in these
sectors, particularly if economic conditions deteriorate. In addition, we
continue to monitor our exposure to office real estate, where trends are
changing rapidly and possibly permanently as a result of the COVID-19 pandemic,
and may experience additional losses on loans in this sector in the future. We
may also experience further losses on corporate loans in other industries as a
direct or indirect result of the pandemic, including on our CRE loans secured by
retail and hospitality properties.

Although we saw deterioration in oil prices during the current fiscal year, our
energy portfolio primarily consists of loans to midstream distribution companies
and convenience stores, with no loans to exploration and production enterprises.
As a result, the portfolio has minimal direct commodity price exposure. However,
if we continue to see a significant deterioration in oil prices, our borrowers,
and as a result our loans to such clients, could be negatively impacted in the
future.

Liquidity risk

See the section "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and capital resources" of this Form 10-K for
information regarding our liquidity and how we manage liquidity risk.


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

Operational risk


Operational risk generally refers to the risk of loss resulting from our
operations, including, but not limited to, business disruptions, improper or
unauthorized execution and processing of transactions, deficiencies in our
technology or financial operating systems and inadequacies or breaches in our
control processes including cybersecurity incidents. See "Item 1A - Risk
Factors" of this Form 10-K for a discussion of certain cybersecurity risks. We
operate different businesses in diverse markets and are reliant on the ability
of our employees and systems to process a large number of transactions. These
risks are less direct than credit and market risk, but managing them is
critical, particularly in a rapidly changing environment with increasing
transaction volumes and complexity. In the event of a breakdown or improper
operation of systems or improper action by employees, we could suffer financial
loss, regulatory sanctions and damage to our reputation. In order to mitigate
and control operational risk, we have developed and continue to enhance specific
policies and procedures that are designed to identify and manage operational
risk at appropriate levels throughout the organization and within such
departments as Finance, Operations, Information Technology, Legal, Compliance,
Risk Management and Internal Audit. These control mechanisms attempt to ensure
that operational policies and procedures are being followed and that our various
businesses are operating within established corporate policies and limits.
Business continuity plans exist for critical systems, and redundancies are built
into the systems as deemed appropriate.

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

In response to the COVID-19 pandemic, we activated and successfully executed on
our business continuity protocols and continue to monitor the COVID-19 pandemic
under such protocols. We have endeavored to protect our associates and our
clients and to ensure continuity of business operations for our clients. As a
result, a substantial portion of our associates are working remotely. Periods of
severe market volatility, such as those that arose in response to the COVID-19
pandemic, can result in a significantly higher level of transactions on specific
days and other activity which may cause operational challenges from time to time
that may result in losses. These losses can result from, but are not limited to,
trade errors, failed transaction settlements, late collateral calls to borrowers
and counterparties, or interruptions to our system processing. We did not incur
any significant losses related to our operations during the year ended
September 30, 2020. The firm continues to monitor conditions and has developed a
phased approach to reopening our offices based on regional indicators of
infection positivity rates, and has and will continue to operate in compliance
with all applicable laws and regulations. As of September 30, 2020, we have
reopened certain of our offices in a limited capacity and are operating under
strict public health and safety protocols in such locations.

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

Model risk


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

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


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

Compliance risk

Compliance risk is the risk of legal or regulatory sanctions, financial loss, or reputational damage that the firm may suffer from a failure to comply with applicable laws, external standards, or internal requirements.


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

We continue to devote resources to support the firm's compliance risk management
framework, including the enhancement of processes and controls to help the firm
meet its obligations to oversee, manage, and mitigate compliance risk. We also
continue to invest in technology to improve our associates' ability to monitor
and detect compliance risk.

© Edgar Online, source Glimpses

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