INDEX


                                                                             PAGE
Factors affecting "forward-looking statements"                                57
Introduction                                                                  57
Executive overview                                                            58
Reconciliation of non-GAAP financial measures to GAAP financial measures      61
Segments                                                                      64
Net interest analysis                                                         65
Results of Operations
Private Client Group                                                          70
Capital Markets                                                               74
Asset Management                                                              75
Bank                                                                          78
Other                                                                         80
Certain statistical disclosures by bank holding companies                     81
Statement of financial condition analysis                                     81
Liquidity and capital resources                                               82
Regulatory                                                                    87
Critical accounting estimates                                                 87
Recent accounting developments                                                89
Risk management                                                               89



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

FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS"

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

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 condensed consolidated financial statements and accompanying notes to condensed 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.



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




EXECUTIVE OVERVIEW

Quarter ended June 30, 2022 compared with the quarter ended June 30, 2021

For our fiscal third quarter of 2022, we generated net revenues of $2.72 billion, an increase of 10% compared with the prior-year quarter, and pre-tax income of $415 million increased 8%. Our net income available to common shareholders of $299 million decreased 3%, and our earnings per diluted share were $1.38, reflecting a 5% decrease. Our annualized return on common equity ("ROCE") for the quarter was 13.3%, compared with 15.9% for the prior-year quarter, and our annualized return on tangible common equity ("ROTCE") was 15.6%(1), compared with 17.7%(1) for the prior-year quarter.

On June 1, 2022, we completed our acquisition of all the outstanding shares of TriState Capital, and its results of operations have been included in our results prospectively from the closing date of June 1, 2022. During the quarter, we incurred $65 million of expenses related to our TriState Capital acquisition and other current and prior-year acquisitions, comprised of acquisition-related compensation expenses largely related to retention awards, initial provisions for credit losses on acquired loans and unfunded lending commitments of $26 million and $5 million, respectively, amortization of identifiable intangible assets arising from acquisitions, and other costs incurred to effect our acquisitions, including legal expenses and other professional fees. Excluding these acquisition-related expenses, our adjusted net income available to common shareholders was $348 million(1), 13% lower than adjusted net income for the prior-year quarter, and our adjusted earnings per diluted share were $1.61(1), 14% lower than adjusted earnings per diluted share for the prior-year quarter. Adjusted annualized ROCE for the quarter was 15.4%(1) and adjusted annualized ROTCE was 18.1%(1), compared with adjusted annualized ROCE of 20.5%(1) and adjusted annualized ROTCE of 22.9%(1) for the prior-year quarter.

The increase in net revenues compared with the prior-year quarter was driven by the benefit of higher short-term interest rates on both RJBDP fees from third-party banks and net interest income and higher asset management and related administrative fees, largely attributable to strong growth in PCG assets in fee-based accounts compared with the prior-year quarter. In addition, the current-year quarter includes incremental revenues from our acquisitions of TriState Capital, which was completed on June 1, 2022, and Charles Stanley, which was completed on January 21, 2022. These increases more than offset the declines in investment banking and brokerage revenues resulting from the challenging market environment during the current quarter.

Compensation, commissions and benefits expense increased 10%, primarily resulting from higher revenues compared with the prior-year quarter and, to a lesser extent, incremental compensation expense due to the Charles Stanley and TriState Capital acquisitions, a special bonus payable to certain eligible associates to assist them with inflationary cost pressures, which aggregated to $13 million, as well as other increases in compensation costs to support our growth. Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 67.5%, compared with 67.2% for the prior-year quarter. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 66.8%(1), compared with 66.7%(1) for the prior-year quarter.

Non-compensation expenses increased 10%, primarily due to a $75 million increase in the bank loan provision for credit losses, resulting from a provision of $56 million for the current-year quarter compared with a benefit of $19 million for the prior-year quarter. The higher provision for credit losses in the current-year quarter was due to the aforementioned initial provision for credit losses on loans associated with our acquisition of TriState Capital Bank, as well as growth in bank loans at Raymond James Bank and a weaker macroeconomic outlook. Business development expenses also increased from the very low prior-year quarter level, primarily due to advisor recognition events and conferences, as well as an increase in business travel during the current period as travel restrictions have eased. Communications and information processing expenses increased as a result of incremental expenses of TriState Capital and Charles Stanley, as well as continued investments in technology to support our growth. Offsetting these increases, during the prior-year quarter we completed a $750 million, 30-year senior notes offering at 3.75%, and incurred $98 million of losses on extinguishment of debt from the early-redemption of certain of our senior notes which did not recur in the current period.

Our effective income tax rate was 27.5% for our fiscal third quarter of 2022, an increase compared with a 20.3% effective income tax rate for the prior-year quarter, primarily due to the unfavorable impact of nondeductible valuation losses associated with our company-owned life insurance portfolio during the current quarter compared with nontaxable valuation gains in the prior-year quarter.

(1) ROTCE, adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted annualized ROCE, adjusted annualized ROTCE, and adjusted compensation ratio are non-GAAP financial measures. Beginning with our fiscal third quarter of 2022, certain non-GAAP financial measures have been adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, such as those related to amortization of identifiable intangible assets arising from acquisitions and acquisition-related retention. Prior periods have been conformed to the current presentation. Please see the "Reconciliation of non-GAAP financial measures to GAAP financial measures" in this MD&A for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, and for other important disclosures.


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

As of June 30, 2022, our Tier 1 leverage ratio of 10.8% and Total capital ratio of 21.5% were both more than double the regulatory requirement to be considered well-capitalized. We also continue to have substantial liquidity with $2.0 billion(1) of cash at the parent as of June 30, 2022, which includes cash loaned to RJ&A. We believe our funding and capital position provide us the opportunity to continue to grow our balance sheet prudently and we expect to continue to be opportunistic in deploying our capital. Subsequent to the closing of TriState Capital in our fiscal third quarter of 2022, we repurchased 1.14 million shares of our common stock for $100 million at an average price of $88. After the effect of those repurchases, $900 million remained under our Board of Directors' share repurchase authorization.

We remain well-positioned entering our fiscal fourth quarter. We expect our fiscal fourth quarter results to be further positively impacted by the full quarter's impact of the 50-basis point and 75-basis point increases in the Fed's short-term benchmark interest rate enacted in May and June 2022, respectively, as well as two months' impact of the 75-basis point increase enacted at the end of July 2022. With clients' domestic cash sweep balances of $75.8 billion as of June 30, 2022 and our high concentration of floating-rate assets, we also believe we are well-positioned for any further increases in short-term interest rates, which we expect to positively impact our net interest income and our RJBDP fees from third-party banks. In addition, we expect our fiscal fourth quarter results to be positively impacted by two incremental months of TriState Capital's results as well as the results of SumRidge Partners, which was acquired on July 1, 2022. However, we also expect to continue to face macroeconomic uncertainties which may continue to have a negative impact on equity and fixed income markets. As a result, we may experience volatility in asset management fees and brokerage revenues, as well as investment banking revenues, despite our robust investment banking pipelines. In addition, asset management and related administrative fees will be negatively impacted by the 11% decrease in PCG fee-based assets as of June 30, 2022 and lower financial assets under management; however, our recruiting pipelines remain strong and we continue to see solid retention of existing advisors. Net loan growth should result in additional provisions for credit losses and future market deterioration could result in increased bank loan provisions in future periods. In addition, although we remain focused on the management of expenses, we expect that expenses will continue to increase in part as a result of inflationary pressures on our costs, as business and event-related travel restrictions have eased, and as we continue to make investments in our people and technology to support our growth.

Nine months ended June 30, 2022 compared with the nine months ended June 30, 2021

For the nine months ended June 30, 2022, we generated net revenues of $8.17 billion, an increase of 16% compared with the prior-year period, and pre-tax income of $1.41 billion, an increase of 14%. Our net income available to common shareholders of $1.07 billion was 10% higher than the prior-year period and our earnings per diluted share were $4.99, reflecting an 8% increase. Our annualized ROCE was 16.3%, compared with 17.4% for the prior-year period, and our annualized ROTCE was 18.7%(2), compared with 19.3%(2) for the prior-year period.

Excluding $117 million of expenses related to acquisitions, our adjusted net income available to common shareholders was $1.16 billion(2), an increase of 6% compared with the prior-year period, and our adjusted earnings per diluted share were $5.41(2), an increase of 5%. Adjusted annualized ROCE for the year-to-date period was 17.6%(2), compared with 19.3%(2) in the prior-year period, and adjusted annualized ROTCE was 20.1%(2), compared with 21.4%(2) in the prior-year period.

The significant increase in net revenues compared with the prior-year period was primarily driven by higher asset management and related administrative fees, primarily attributable to higher PCG client assets in fee-based accounts and incremental revenues from our Charles Stanley acquisition, the benefit of higher short-term interest rates on both RJBDP fees from third-party banks and net interest income, strong investment banking revenues, particularly in our fiscal first quarter, and one month of incremental revenues from our acquisition of TriState Capital.

Compensation, commissions and benefits expense increased 16%, primarily attributable to the growth in revenues and pre-tax income compared with the prior-year period, as well as our current-year acquisitions of Charles Stanley and TriState Capital. Our compensation ratio was 68.2%, compared with 68.1% for the prior-year period. Excluding $43 million of acquisition-related compensation expenses, our adjusted compensation ratio was 67.6%(2), flat compared with the adjusted compensation ratio for the prior-year period.

(1) For additional information, please see the "Liquidity and capital resources - Sources of liquidity" section in this MD&A. (2) ROTCE, adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted annualized ROCE, adjusted annualized ROTCE, and adjusted compensation ratio are non-GAAP financial measures. Beginning with our fiscal third quarter of 2022, certain non-GAAP financial measures have been adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, such as those related to amortization of identifiable intangible assets arising from acquisitions and acquisition-related retention. Prior periods have been conformed to the current presentation. Please see the "Reconciliation of non-GAAP financial measures to GAAP financial measures" in this MD&A for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, and for other important disclosures.


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

Non-compensation expenses increased 17%, primarily due to increases in the bank loan provision for credit losses, business development and communications and information processing expenses, as well as higher investment sub-advisory fees. In addition, the current-year period included incremental expenses from our acquisitions of Charles Stanley and TriState Capital. The bank loan provision for credit losses increased $103 million to a provision of $66 million for the current-year period, compared with a benefit of $37 million for the prior-year period. Offsetting these increases was the aforementioned $98 million decrease in losses on extinguishment of debt.

Our effective income tax rate was 23.9% for the nine months ended June 30, 2022, an increase from 20.9% for the prior-year period. The increase in the effective tax rate from the prior-year period was primarily due to the negative impact of nondeductible valuation losses associated with our company-owned life insurance portfolio during the current-year period compared with nontaxable valuation gains for the prior-year period, partially offset by a larger tax benefit recognized during the current-year period related to share-based compensation that vested during the period.




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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. We believe certain of these non-GAAP financial measures provide useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a meaningful comparison of current- and prior-period results. Certain of our non-GAAP financial measures have been adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, such as those related to amortization of identifiable intangible assets arising from acquisitions and acquisition-related retention. Prior periods have been conformed to the current period presentation. We believe that ROTCE is meaningful to investors as this measure facilitates comparison of our results to the results of other companies. In the following tables, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies. The following tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures for the periods indicated.

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