A N N U A L R E P O R T 2 0 2 0
O B S T A C L E A N D O P P O R T U N I T Y
A N N U A L R E P O R T 2 0 2 0
Challenging. Tumultuous.
Transformative. Defining.
2020 was a year that will stay with us.
C O N T E N T S
4
MESSAGE FROM
THE CHAIRMAN
AND CEO
10
OBSTACLE AND
OPPORTUNITY:
THE STORY
OF 2020
22
PRIVATE CLIENT
GROUP
24
26
CAPITAL MARKETS
ASSET MANAGEMENT
It took directions we’d planned for and turns we couldn’t have
anticipated. But through all of its unique upheaval – maybe because
of it – we found ways to stay connected and stay the course.
We also found ways forward – building on the long-term planning and
everyday ingenuity that has kept us steady throughout our history to
give us even more clarity in our vision for the firm’s future.
The path wasn’t easy or clear. But we walked it together. And we’re
walking it still, supporting clients, colleagues and communities,
putting people first – always.
27
RAYMOND JAMES
BANK
28
CORPORATE
LEADERSHIP
32
10-YEAR
FINANCIAL
SUMMARY
34
CORPORATE AND
SHAREHOLDER
INFORMATION
35
ANNUAL REPORT
ON FORM 10-K
M E S S A G E F R O M T H E C H A I R M A N A N D C E O
Fiscal year 2020 brought incredible challenges, including the COVID-19 pandemic,
economic uncertainty and social unrest across the nation. While the year was one of
the most difficult years in my career, in many ways it was also the most rewarding, as
the response of our associates and advisors during this time of crisis truly reinforced
our unique culture at Raymond James.
Our associates and advisors remained steadfast in their
focus on our core values, including long-term thinking
and always putting clients first, in order to continue
providing excellent service during these difficult times.
As a result of this focus, we generated record revenues
during the fiscal year – lifted by record revenues for
the Private Client Group, Capital Markets and Asset
Management segments – reinforcing the value of having
diverse and complementary businesses.
Record net revenues of $7.99 billion increased 3%, pre-tax
income of $1.05 billion decreased 23%, and net income
of $818 million decreased 21% compared to fiscal 2019.
Adjusted net income of $858 million,(1) which excludes $46
million associated with reduction in workforce expenses
and a $7 million loss associated with the disposition of
certain operations in France, decreased 20% compared to
the adjusted net income generated in fiscal 2019. Record
net revenues were driven by growth of client assets and
record brokerage and investment banking revenues;
however, lower short-term interest rates and higher loan
loss reserves caused net income to decline from the prior
year. Client assets under administration increased 11%
during the year to $930.1 billion, another record, lifted
by equity market appreciation and the net addition of
financial advisors in the Private Client Group segment. For
the fiscal year, we generated a return on equity of 11.9%
and an adjusted return on equity of 12.5%,(1) both strong
results, particularly given our robust capital position. We
ended the year with shareholders’ equity of $7.1 billion and
book value per share of $52.08, which increased 8% and
9%, respectively, over September 2019.
During the fiscal year, we increased our quarterly
dividend 9% to $0.37 per quarter from $0.34 per quarter.
Despite temporarily suspending share repurchases in
mid-March due to the significant economic uncertainty
surrounding the COVID-19 pandemic, we repurchased
3.35 million shares for $263 million, an average price
of $78.50 per share. In total, the firm returned total
capital of nearly $470 million to shareholders through
the combination of dividends and share repurchases.
Subsequent to the fiscal year-end, the board approved
a 5% increase of the cash dividend to $0.39 per quarter
and a share repurchase authorization of $750 million,
which replaces the previous authorization under which
$487 million remained available as of September 2020.
Our capital ratios remained well above regulatory
requirements, with a total capital ratio of 25.4%
and Tier 1 leverage ratio of 14.2% at the end of the
year, giving us the balance sheet capacity to not only
be defensive but also opportunistic during these
uncertain times.
Turning to our segment results, the Private Client Group
(PCG) generated record net revenues of $5.55 billion,
an increase of 4% over fiscal 2019, and pre-tax income
of $539 million, a 7% decrease compared to 2019.
Record net revenues were driven by strong growth in
assets in fee-based accounts and a solid net increase
in the number of financial advisors, partially offset by
the negative impact of lower short-term interest rates.
Fiscal 2020 concluded with records for PCG assets
under administration of $883.3 billion, up 11%, and
PCG assets in fee-based accounts of $475.3 billion,
up 16% over the end of fiscal 2019. The strong client
asset growth in the year was predominantly driven by
equity market appreciation and our continued success
recruiting and retaining financial advisors across all of
our affiliation options.
(1) “Adjusted net income” and “adjusted return on equity” are each non-GAAP financial measures. Please see the “Reconciliation of non-GAAP financial
measures to GAAP financial measures” on page 40 of Form 10-K for a reconciliation of our non-GAAP measures to the most directly comparable GAAP
measures, and for other important disclosures.
4
RAYMOND JAMES ANNUAL REPORT 2020 We ended the year with a record 8,239 financial advisors
affiliated with the firm, up a net 228 advisors. This was a solid
result, especially given delays in recruiting and onboarding of
advisors during the onset of the COVID-19 pandemic. During
the year, financial advisors with over $275 million of trailing
12-month production and over $40 billion of assets at their prior
firms affiliated with Raymond James domestically. Our financial
advisor recruiting pipeline is strong across all our affiliation
options, and a 7% sequential increase of assets in fee-based
accounts will be a tailwind to start fiscal 2021.
In the Capital Markets segment, record net revenues of $1.29
billion increased 19%, and record pre-tax income of $225 million
increased 105% over fiscal 2019. Results in the Capital Markets
segment were driven by record fixed income brokerage revenues
and record investment banking revenues due to broad-
based strength in underwriting and mergers and acquisitions
activity. Fixed income brokerage revenues benefited from a
high level of client activity, particularly with small- and mid-
sized depositories, as these clients are flush with deposits
while lending remains muted. These conditions have persisted
and should bolster fixed income brokerage revenues in early
fiscal 2021. If markets remain conducive, we remain cautiously
optimistic on investment banking results in the coming year as
activity levels remain strong, and we have continued to enhance
our platform by adding senior talent throughout the year.
The Asset Management segment drove record net revenues
of $715 million, which were up 3%, and record pre-tax income
of $284 million, which increased 12% over fiscal 2019. Record
net revenues were driven by growth in financial assets under
management, which rose 7% to $153.1 billion at the end of
the fiscal year. The annual growth in financial assets under
management was attributable to strong net inflows in fee-
based accounts in the Private Client Group and to equity market
appreciation, which more than offset net outflows for Carillon
Tower Advisers. Carillon Tower Advisers acquired Portfolio Risk
Insights and Solutions Management, an innovative financial
risk analytics platform, which will provide additional tools
to evaluate risk and enhance reporting and insights for our
partner affiliates and their autonomous investment teams.
Asset Management results should be positively impacted by
higher financial assets under management as long as the equity
markets remain resilient.
O U R V I S I O N
Our vision is to be a financial
services firm as unique as the
people we serve, transforming
lives, businesses and
communities through the power
of personal relationships and
professional advice.
O U R M I S S I O N
Our business is people and
their financial well-being.
We are committed to helping
individuals, corporations and
institutions achieve their unique
goals, while also developing
and supporting successful
professionals, and helping our
communities prosper.
O B S T A C L E A N D O P P O R T U N I T Y
5
RAYMOND JAMES ANNUAL REPORT 2020 Raymond James Bank net revenues of $765 million
decreased 10%, and pre-tax income of $196 million
decreased 62%, compared to fiscal 2019. Net loans grew
1% to end the fiscal year at $21.2 billion, as lending
to clients of PCG was partially offset by a decline in
corporate loans. This was largely due to the proactive
sales of nearly $700 million of loans in sectors we
believe are most vulnerable to the COVID-19 pandemic.
Net interest income declined, primarily due to the
decrease in short-term interest rates, which caused the
bank’s net interest margin to decline 69 basis points to
2.63% in fiscal 2020 from 3.32% in fiscal 2019. Despite
relatively low nonperforming assets of 0.10%, the
annual bank loan loss provision grew to $233 million
in response to the rapid and widespread economic
deterioration caused by COVID-19. Allowance for loan
losses as a percent of total loans increased to 1.65%
from 1.04% in fiscal 2019. Raymond James Bank should
continue to benefit from the attractive growth of
mortgages and securities-based loans to PCG clients.
Given the high degree of uncertainty, we will continue
to be conservative with adding to the corporate loan
portfolio, and we will be ready and willing to resume
more significant corporate loan growth when there is
greater confidence in the economic outlook.
Complementing the strong performance within our
businesses, we also achieved several other notable
accomplishments during the fiscal year:
• Giving back to our communities is an essential aspect
of our mission, and this commitment was all the
more apparent in the midst of the COVID-19 crisis.
Between associate contributions and a company
match, Raymond James raised nearly $6.5 million for
communities across the country through its annual
United Way campaign. Additionally, our associates
raised more than $540,000 for the American Heart
Association through the 2019 Heart Walk. While
the firm’s annual Raymond James Cares Month
volunteering looked different this year due to the
COVID-19 pandemic, it was no less impactful – more
than 2,200 advisors and associates volunteered over
4,600 hours to benefit 289 charitable organizations
across the United States, Canada and the United
Kingdom. Raymond James also donated $2.3 million –
including a firm pledge of $1.5 million and more than
$800,000 in associate gifts – to aid those impacted
by COVID-19 and $100,000 to the American Red Cross
to support relief efforts related to several natural
disasters. Also, throughout our operating regions
FISCAL YEAR FINANCIAL HIGHLIGHTS
in millions, except per share amounts
Net Revenues
Net Income
Earnings per Share (Diluted)
Shareholders’ Equity Attributable to RJF
Shares Outstanding
Book Value per Share
2020
$7,990
$818
$5.83
$7,114
137
$52.08
ALL DATA AS OF FISCAL YEAR ENDED SEPTEMBER 30, 2020
2019
CHANGE
$7,740
$1,034
$7.17
$6,581
138
$47.76
3%
(21)%
(19)%
8%
(1)%
9%
6
RAYMOND JAMES ANNUAL REPORT 2020
associates held food and supply donation drives to
benefit local food banks and nonprofit organizations.
• While we have always worked to ensure we have
policies and programs in place that seek to address
racial inequality, we recognize we can, and must,
do more. In addition to a financial commitment, we
released a pledge to the Black community, signed
by all members of our Executive Committee, our
Operating Committee and our Board of Directors, as
well as over 2,500 associates across the firm, in which
we commit to increase Black diversity throughout
the firm and increase programming to address racial
inequality. Our commitment to diversity and inclusion
made through this pledge earned recognition in
the social justice category in the 2020 MMI/Barron’s
Industry Awards.
• Raymond James was also recognized in other major lists
for diversity and for overall corporate reputation, and
the number of advisors who were named to industry
lists across various categories has grown significantly,
to almost 400 advisors. Meanwhile, for the eighth
consecutive year, Raymond James was recognized
with the Technology Innovation Award by BISA.
As part of the firm’s long-term succession plan, Jeff
Dowdle, chief administrative officer and president
of Asset Management, was named chief operating
officer. In addition to his new responsibilities, Jeff
will continue as head of Asset Management as well as
oversee several of the firm’s corporate administration
departments and other budgetary and administrative
duties. Additionally, the firm announced the promotion
of Erik Fruland to president and Al Caudullo to chief
operating officer of Asset Management Services. Chief
Audit Executive T.J. Haynes-Morgan was named to the
firm’s Operating Committee. With her 25-plus years of
experience in global financial services covering banking,
consumer finance, internal audit and compliance risk
management, T.J. will make a significant impact on
the committee’s contribution and vision.
These key leadership appointments continue to
highlight our longstanding focus on succession
planning throughout our businesses.
Looking back on the past year, I’m so proud of all
we have accomplished in the face of such adversity.
As we enter fiscal 2021, we will encounter continued
headwinds from a full year of lower short-term interest
rates, and there is still a high degree of uncertainty
given the COVID-19 pandemic and the transition to a
new administration. However, we start the year with
record client assets and a record number of Private
Client Group financial advisors, along with strong capital
ratios and tremendous balance sheet flexibility. I believe
we are positioned to navigate potential economic
challenges and also have significant opportunities for
growth as the outlook improves. I want to thank all of
our associates and advisors again for their invaluable
contributions during these trying times.
I’m incredibly proud of our accomplishments and the
tireless efforts to support each other and clients. We
have something special here at Raymond James, where
we have the scale and scope of services to compete with
the largest firms in the industry while at the same time
providing an advisor- and client-focused culture that is
increasingly difficult to find. As long as we preserve that
unique competitive advantage, I am confident in our
ability to generate attractive relative long-term returns
for our shareholders in any market environment.
Thank you for your continued trust and confidence in
Raymond James.
Paul C. Reilly
Chairman and Chief Executive Officer
Raymond James Financial
December 8, 2020
7
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY PRIVATE CLIENT GROUP
More than 8,200 financial advisors – affiliated as traditional
employees, independent contractors, independent registered
investment advisors or financial institution-based advisors –
provide financial planning, investment advisory and securities
transaction services.
CAPITAL MARKETS
The Capital Markets segment provides investment banking, sales
and trading, and research to corporate, institutional, nonprofit
and municipal clients throughout North America and Europe. In
addition, Raymond James Tax Credit Funds provides resources to
developers of affordable housing and facilitates tax-incentivized
investments in communities through fund offerings.
ASSET MANAGEMENT
The Asset Management segment provides portfolio management
and related administrative services to Private Client Group clients
through the Asset Management Services division and through
Raymond James Trust, N.A. The segment also provides asset
management services through Carillon Tower Advisers and
affiliates for certain individual accounts managed on behalf of
third-party institutions, institutional accounts or proprietary
mutual funds that we manage.
RAYMOND JAMES BANK
Raymond James Bank provides a comprehensive array of
personal and corporate banking services including residential,
securities-based and commercial lending products, as well as
FDIC-insured deposit accounts that serve as one of the primary
sweep options for client brokerage accounts.
OTHER
The Other segment includes the firm’s private equity investments,
interest income on certain corporate cash balances, and certain
corporate overhead costs of Raymond James Financial, including
the interest cost on our senior notes payable.
O U R V A L U E S
We put clients first.
If we do what’s right for our
clients, the firm will do well
and we’ll all benefit.
We act with integrity.
We put others above self, and
what’s right above what’s easy.
We believe doing well and doing
good aren’t mutually exclusive.
We value independence.
We respect autonomy, celebrate
individuality and welcome diverse
perspectives, while encouraging
collaboration and innovation.
We think long term.
We act responsibly, taking a
conservative approach that
translates into a strong, stable
firm for clients, advisors,
associates and shareholders.
8
2020 Segment Net Revenue Contribution*
in millions
PRIVATE CLIENT GROUP
CAPITAL MARKETS
ASSET MANAGEMENT
RAYMOND JAMES BANK
$5,552
$1,291
$715
$765
67%
15%
9%
9%
2020 Segment Pre-Tax Income Contribution*
in millions
PRIVATE CLIENT GROUP
CAPITAL MARKETS
ASSET MANAGEMENT
RAYMOND JAMES BANK
$539
$225
$284
$196
43%
18%
23%
16%
* These charts are intended to show the relative contributions of our four core business
segments and do not include the Other segment or intersegment eliminations.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN SEPTEMBER 2020
Assumes initial investment of $100 and reinvestment of dividends.
Prepared by Zacks Investment Research, Inc
$200
$150
$100
$50
2015
2016
2017
2018
2019
2020
Raymond James Financial, Inc.
S&P 500 Index
Dow Jones U.S. Investment Services Index
9
9
.
7
4
7
.
7 7
2
.
7
7
3
.
6
1
4
.
5
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
NET REVENUE
$Billions
4
3
0
,
1
7
5
8
8
1
8
6
3
6
9
2
5
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
NET INCOME
$Millions
2
.
6
1
4
.
4
1
2
.
2
1
3
.
1
1
9
.
1
1
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
RETURN ON EQUITY
%Percent
4
.
3
1
2
.
2
1
4
.
1
1
9
.
9
2
.
8
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
MARKET CAPITALIZATION
$Billions
9
OBSTACLE AND OPPORTUNITY
O B S T A C L E A N D O P P O R T U N I T Y
On December 31, 2019, we hit new highs across
nearly all of our key business metrics.
On September 30, 2020, we hit new highs across
nearly all of our key business metrics – from home.
forward. With the conservative, long-term focus that’s
always guided our decisions, we weighed the factors
ahead – trade concerns, predictions of more muted growth,
a major election – and planned for the possibility of a
slowdown and extended low interest rates.
As we moved into February, Raymond James was in many
ways having the year we’d predicted. Then came the year
we’d prepared for.
Planning – the practice at the heart of our
firm – came to the fore in possibly the most
powerful way in our firm’s history in 2020.
Planning meant we were ready to capitalize on the markets’
strength early in the year, even as we prepared for the
possibility of an economic slowdown.
Planning meant – when faced with a world-halting
challenge – we could help 95% of our associates across
the United States, Canada and the United Kingdom pivot
seamlessly to remote operations in less than two weeks.
Planning meant we could gain perspective amid uncertainty,
resetting and reinforcing our foundation where necessary to
ensure we could support our businesses and clients in this
new normal, and far beyond.
As the first quarter of 2020 drew to a close, the firm was
already seeing the impact of three reductions in short-term
interest rates on net revenues; however, the early strength
of the equity markets continued to drive robust growth of
client assets across the industry.
And our own growth was outpacing broader figures. As
other firms posted 18% to 23% year-over-year increases
in fee-based assets, at Raymond James, they grew by
31% year over year and 9% sequentially. While market
momentum played a key role, our industry-leading efforts
to attract and retain outstanding Private Client Group
financial advisors were also a critical advantage, setting the
firm apart and netting impressive results as we closed out
the first quarter of our fiscal year.
It would have been easy to continue to ride that wave, but
even as we posted strong performance, we were looking
1 0
RAYMOND JAMES ANNUAL REPORT 2020 The unpredictable plan
According to the World Health Organization, the first cases of a new coronavirus were reported
in December 2019. On January 20, 2020, the United States had its first reported case. By April 2,
there were one million cases worldwide.
With a cautious eye on the threat, the markets’ momentum –
and our own – continued into the second quarter. Then it
became clear that a global pandemic wasn’t a possibility to
be ready for, it was a reality that must be met with action.
So we acted.
The strength of our balance sheet has been a foundational
element of our long-term success, and we sought to further
that strength as the environment became increasingly
uncertain. In March, Raymond James issued a registered,
underwritten $500 million senior note public offering to
further reinforce and solidify our base – a base that has
long been bolstered by a strategic commitment to balance.
The diversity of our businesses has always been a moderating
force during volatility, allowing the firm to mitigate under-
performance in one area with outperformance in another.
In our Capital Markets group, record revenue and pre-tax
income for fiscal 2020 was the result of that approach.
While decreased mergers and acquisitions activity
impacted the equity side of the business, Fixed Income
was able to produce impressive brokerage results – driving
the segment’s revenues up 19% year over year – even
after significantly reducing its inventory to limit market
exposure during the extreme volatility. Meanwhile, higher
client activity and larger individual transactions resulted in
significantly increased underwriting, growing underwriting
revenues 72% over fiscal 2019.
Long-coming dues
The Whole Loan Trading Desk has been building
strength for nearly 30 years, quietly and capably
supporting bank and credit union clients. It’s a
niche business – helping depository institutions
package and sell loans – and not one that’s
typically in the spotlight. But when COVID-19
changed the landscape, the team – including
Managing Directors of Fixed Income Sales
Jason Farmer and Will Hudson, and Head of
Whole Loan Trading John Toohig – was in prime
position to shine.
They brought years of experience and business-
building to bear to help reposition clients for a
transformed credit environment – and posted
strong net revenues as a result.
O B S T A C L E A N D O P P O R T U N I T Y
1 1
RAYMOND JAMES ANNUAL REPORT 2020 Resilience reinforced
Our long-running annual investments in technology came to powerful fruition in 2020. The years
spent building robust infrastructure, developing mobile capabilities, refining our platform and
implementing continuity procedures across corporate locations all came together to allow us
to pivot at a critical moment.
While essential functions continued to be carried out with
an abundance of safety precautions across our campuses,
95% of our workforce in the United States, Canada and the
United Kingdom went virtual – a shift our technology teams
were able to accomplish in just two weeks. Technology
kept us going at every level and every function of the firm,
supporting our trading systems, keeping pace with trading
volumes and enabling each of our departments to serve
clients across locations.
The efficiency of the transition was certainly thanks to
the quick, skillful work of our professionals, led by Chief
Information Officer Vin Campagnoli and the IT team, but it
was also due in large part to work they’d already done. Most
of the technologies that came to define this new normal in
our operations were in place well before March 2020.
For advisors and clients, tools like Client Access, Advisor
Mobile, eSignature and more had been around – and
growing in adoption – for years; more recent additions
were already part of the firm’s digital architecture.
For example, Raymond James was Zoom-enabled well
before it became the world’s virtual conference room.
We introduced the teleconferencing software in early
2019 and outfitted “Zoom rooms” across our corporate
campuses. So, for many of our associates and advisors,
Thoughtful leadership
Vin Campagnoli, Chief Information Officer
navigating the ins and outs of the program (and knowing
how to unmute themselves) was natural.
And all along, as we’ve been working to make the most
of the technologies we have in place, we’ve also been
working to make them better. In 2020, new capabilities
were added to our portfolio management software, the
Advisor Mobile platform introduced texting capabilities,
and a number of enhancements helped advisors address
new regulatory standards. Meanwhile, our Canadian
Private Client Group introduced a new client management
onboarding platform with e-signature to support clients
through the pandemic and beyond.
Over the course of the year, leaders and experts from across the firm shared detailed insights on a wide
variety of topics, from market analysis and Washington updates to more holistic conversations about
maintaining physical, mental and financial health in uncertain times.
Experts including Chief Investment Officer Larry Adam, Washington Policy Analyst Ed Mills, Healthcare
Policy Analyst Chris Meekins and more provided timely, live-streamed updates for advisors and their clients.
1 2
RAYMOND JAMES ANNUAL REPORT 2020 Embracing another new normal
Many things came to a standstill in March 2020. While Raymond James was able to adapt quickly
to keep most areas functioning smoothly, we were not entirely immune to stalls and slowdowns.
Advisor recruiting and transitions, historically an area of
consistent momentum for the firm, had been on track
to outpace the prior year’s recruiting success in the first
half of the fiscal year, but slowed considerably – and
understandably – in the months of March, April and May.
However, diligent work and capitalizing on technology tools
already in place soon turned a lag into a resurgence. During
the year, financial advisors with over $275 million of trailing
12-month production and over $40 billion in assets at their
prior firms joined Raymond James domestically. The net
addition of 228 advisors brought our overall total advisor
count to a record 8,239 at the end of fiscal 2020.
One key factor was taking our popular – and productive –
Home Office Visit (HOV) program to the people when we
couldn’t bring the people to us. The program, which invites
advisors to our headquarters in St. Petersburg, Florida, to
tour departments and meet one-on-one with subject matter
experts and senior leaders, was reimagined as a digital
experience. The Virtual HOV launched in late March and by
August we had hosted more than 300 advisors, nearly half of
the 650 visits typically conducted each year.
As we moved further into the year, the challenge was no
longer about regenerating momentum, but about how to
help recruited advisors join the firm – a daunting task in the
best of times – in the midst of a global crisis. It proved to be
another challenge we were up to, as we transitioned several
13 investment strategy
webinars with
100,000+
views
VIRTUAL CLIENT VISITS
Financial advisors interested in joining Raymond
James weren’t the only ones who had the digital
welcome mat laid out for them. Our By Invitation
Only program for high-net-worth clients and
prospects also went virtual in the wake of
COVID-19, continuing to give clients a more
personal understanding of the support provided
to them and their advisors.
advisor teams to Raymond James during the initial height
of the pandemic and continued helping a growing number
of advisors make the move throughout the year. In Canada,
50% of the year’s new recruits joined Raymond James Ltd.
after their shift to remote operations.
Even as we welcomed new advisors against some
substantial odds, we were still sure to provide the
support our existing professionals needed to navigate
a transformed environment. Continuing to deliver our
outstanding service levels ensured we retained advisors
and allowed us to end the year with record assets.
Our Succession & Acquisition Planning group, headed
by Vice President of Succession & Acquisition Consulting
Robert Goff, continued its efforts to help advisors retire
on their own terms, working with them to develop
internal transition strategies or matching them with ideal
successors. Those efforts proved another boon for retaining
assets during an intensely volatile time.
Recruiting growth wasn’t limited to our Private Client Group,
however. Our Public Finance group continued to add to
its team, with key hires in the Midwest. The Investment
Banking team was also strategically growing, welcoming
more than 14 senior bankers across sectors. The group also
continued efforts to build out its mergers and acquisitions
discipline, particularly in Europe, with key hires in Germany
and the United Kingdom.
There were notable additions in Canada as well, including
the hire of Dion Degrand to lead the Calgary Investment
Banking team and deepen its energy sector expertise.
1 3
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY The human element
Even more critical than our business response
to COVID-19 was our human response. We are a
business defined by and in service of people, after
all. Who would be there to ease clients’ concerns
or keep our newly remote network connected if
we didn’t first prioritize the health and safety of
our associates and advisors?
In February, we began sending out regular firmwide
communications to offer updates on the latest information,
guidelines from the Centers for Disease Control and
Prevention and details about our own plans. We implemented
additional cleaning protocols across our corporate campuses,
increased the number of hands-free sanitizer dispensers,
and distributed masks and other supplies to associates who
continued to work onsite. And even before stay-at-home
orders were issued locally, and then nationwide, we were
encouraging associates who were able to work from home.
In addition to these practical steps, we also expanded benefits
for those directly affected by the virus, giving associates who
became ill or cared for an ill loved one an additional 14 days of
paid sick leave. For associates enrolled in our medical plans,
all payments for testing or health visits related to COVID-19
at approved locations were waived or reimbursed, as were
payments for antibody tests ordered by a physician.
Above: Women advisors from across the country took
part in our 26th annual – and first-ever virtual – Women’s
Symposium, setting an attendance record.
At the Summer Development Conference – traditionally
a family-friendly event for Raymond James & Associates
advisors – even the annual ice cream eating contest was
conducted on-screen.
1 4
RAYMOND JAMES ANNUAL REPORT 2020 The emotional impact of the pandemic – from fear of
illness to the stress of isolation – wasn’t lost on us either.
We made a range of mental health resources available to
associates, including access to eight free therapy sessions,
mobile apps offering on-demand support and clinical
coping techniques, and live virtual workout sessions.
Not long after the firm began operating largely from a
distance, the decision was made to cancel all in-person
conferences until at least May 2021. That meant our
biggest events of the year – including our national advisor
conferences – would now be virtual experiences.
Our independent advisor conference ELEVATE, originally
scheduled to take place in Orlando in April, was the first
to test the virtual conference waters. The result was a very
streamlined, but still engaging, event. And what we learned
there would help us create more robust experiences as we
moved further into the year.
The Summer Development Conference in July and the
Women’s Symposium, hosted by the Women Financial
Advisors Network, in late September debuted enhanced web
and video content. The Women’s Symposium in particular
was able to take advantage of the virtual format to boost
attendance 58% from 2019, featuring interactive elements
and conference kits mailed in advance to attendees.
Based on the success of these outings and the flexibility of
the format, we expect virtual options to be a key element
of future conferences.
People. Always.
When the pandemic struck, our core values and
management principles served us well. And the
mission that Raymond James was founded on –
serving people and their well-being – had never
seemed more relevant.
To give a voice to our commitment to people at
a pivotal moment, we launched an advertising
campaign called “People. Always.” It began with
the first words of our mission statement, “our
business is people,” and featured the simple but
compelling line art you see in this annual report.
Senior Vice President, Legal Michael Serbanos and Vice President,
Supervision Julia Rhue helped oversee the firm’s implementation
of Regulation Best Interest standards.
PUTTING CLIENTS’ BEST INTERESTS FIRST
Client service is a priority for Raymond James in
the best of times. When clients are facing once-in-
a-lifetime uncertainty, it’s crucial.
In 2020, we took steps across business units and
locations to ensure we continued to uphold our
commitment to service excellence from a distance
when we couldn’t deliver it in person. That
included embracing a new set of standards for
how we keep clients informed – and equipping
advisors to meet them.
On June 30, Regulation Best Interest (Reg BI)
imposed new requirements on the recommendations
financial advisors and their firms make to clients
and prospective clients. From the depth of the due
diligence an advisor must undertake to addressing
conflicts of interest, Reg BI’s implementation
represented a sweeping change in the industry –
a change we took as an opportunity.
More than a regulatory change, we saw it as a
chance for advisors to reaffirm and enhance their
value to clients, and we made sure our advisors
had the tools they needed to operate within the
new environment.
Before and after the implementation, Raymond
James offered education and training that not only
focused on how to implement the new obligations,
but also how to seamlessly integrate and improve
existing business processes. This included a
digital education hub, a resource site, a readiness
assessment, and a robust video series that included
Q&As, conference calls and best practices from peers.
1 5
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY Challenged to change
By late spring, 2020 was already a year unlike
any in recent memory. Then a health crisis was
compounded by the resurgence of a social one.
With the killings of George Floyd, Breonna Taylor, Ahmaud
Arbery and others, calls for justice and racial equality
that have echoed for decades were reignited. Black
Lives Matter, a movement that began after the deaths of
Trayvon Martin in 2012 and Michael Brown and Eric Garner
in 2014, saw its protests spread first across the country
and then the world.
In the face of this injustice, we reckoned with our
industry’s shortcomings in representation and reflected
on our own efforts to foster change. While we have always
worked to ensure our policies and programs promote
equality, we recognized we can – we must – do more.
In July, the members of our Executive Committee,
Operating Committee and Board of Directors came
together with other senior leaders and thousands
of Raymond James associates to sign a pledge that
detailed an expanded commitment to increase Black
representation at every level of the firm. It also outlined
Head of Private Client Group Advisor Inclusion Networks
Renée Baker and Vice President of Diversity and Inclusion Pedro
Suriel; in June, the rainbow flag was raised at Raymond James’
St. Petersburg, Florida, headquarters to recognize Pride Month.
new mentoring and training initiatives, an initial targeted
investment of $1.5 million for organizations that support
the Black community, and more.
This expanded initiative is part of a larger longtime
diversity and inclusion movement at the firm centered on
building a workforce with broad backgrounds, cultivating
a workplace that embraces unique perspectives and
bettering our communities at large through our efforts.
Our inclusion networks, currently comprising eight
active groups created to offer community, collaboration
and development for associates and advisors, are a key
element of our commitment.
The newest of those networks, the Pride Financial
Advisors Network, launched in June and will host the
first Business of Pride Symposium in June 2021. It
joined the Black Financial Advisors Network and the
Women Financial Advisors Network, which recently
celebrated its 26th anniversary, in supporting greater
diversity and greater business success for populations
that have traditionally been underrepresented in wealth
management. In 2020, all three networks, under the
leadership of Renée Baker, continued a revitalization
effort that began the previous year.
1 6
RAYMOND JAMES ANNUAL REPORT 2020 Commitment recognized
Raymond James, like companies and individuals throughout the country, reevaluated our efforts to
support racial equality in 2020. One outcome was a pledge signed by all members of our Executive
Committee, Operating Committee and Board of Directors, along with thousands of Raymond James
associates. In addition to making our commitment public and serving as a guide for our actions,
the pledge was recognized with a 2020 MMI/Barron’s Industry Award in the social justice category.
O B S T A C L E A N D O P P O R T U N I T Y
1 7
RAYMOND JAMES ANNUAL REPORT 2020Since the beginning, our business has been people and their well-being. It is evident in good times and crucial when circumstances become difficult.After months of suffering and uncertainty caused by the COVID-19 pandemic, the tragic killings of George Floyd, Ahmaud Arbery and Breonna Taylor, and the countless others before them and more since, have compounded the country’s collective despair by highlighting the continued racial injustice afflicting the Black community.While we have always worked to ensure we have policies and programs in place that seek to address racial inequality, we recognize we can – we must – do more. To that end, the leadership team at Raymond James is making the following pledge:Expand Black representation among our associates, advisors and corporate leadership through recruitment, investment in college pipeline programs, and mandated candidate pool diversity at the leadership level.Establish explicit goals and implement transparent reporting to strengthen leadership accountability for hiring and retention of Black associates and advisors.Launch a mentoring initiative to support the professional development and business growth of our Black associates and advisors.Develop and deliver a training curriculum and resource portal that will include required courses on a variety of topics including unconscious bias training for every Raymond James associate and advisor.Pledge an initial $1.5 million to support advancement of our Black communities, racial equality, financial literacy and empowerment, and volunteerism opportunities – in addition to declaring Juneteenth a firmwide day of service and education to ensure we continue the dialogue on racial equality and support our Black communities. Raymond James must do more to attract and develop Black professionals, and we are committed to being leaders in changing this longstanding shortcoming in our industry.Fulfilling this pledge will require the focus of all of our leaders, associates and advisors, both internally as well as in our communities. We are dedicated to this intention, not only because it is the right thing to do, but it will make Raymond James an even better firm.Our continued emphasis on people – our associates, advisors, clients and communities – gives us purpose, strength and a way forward. Today and always, we strive to be a financial services firm as unique as the people we serve.Signed by Raymond James leadership including members of the Board of Directors, Executive Committee, Operating Committee, and the Diversity and Inclusion Advisory Council:Tammy J. MercierVice President of Asset Management Services TradingMatthew McDonoughSenior Vice President of Human Resources Talent AcquisitionLaetitia BoyleSenior Vice PresidentHead of Internal Sales & ConsultingRaymond James BankGeorge CataneseChief Risk OfficerVin CampagnoliChief Information OfficerMatthew JohnsonVice President of Strategy and Product DevelopmentAsset Management GroupBob DutkowskyBoard of DirectorsAmanda StevensExecutive Vice PresidentChief Operating OfficerRaymond James BankKristine BerginDirector of RJFS Advisory RelationshipsFrancis S. GodboldVice ChairmanRose FloresSenior Vice PresidentCorporate Banking Chief Administrative OfficerRaymond James BankCharles von ArentschildtBoard of DirectorsAsilah Patterson Senior Advisor of Diversity and InclusionChristopher S. AisenbreyChief Human Resources OfficerJennifer C. AckartSenior Vice PresidentControllerChief Accounting OfficerHaig AriyanHead of Global Wealth SolutionsPresident of Alex. BrownRenée BakerHead of Advisor Inclusion NetworksEmma BredinSenior Vice PresidentChief Compliance OfficerJeff DowdleChief Operating OfficerTracey BustamanteSenior Vice President of Corporate CommunicationsJohn Q. CarsonPresidentTash ElwynPresident and Chief Executive OfficerRaymond James & AssociatesKim JensonSenior Vice PresidentChief Operating OfficerPrivate Client GroupJeff P. JulienExecutive Vice President of FinanceMichelle LynchVice President Division Sales ManagerRaymond James & AssociatesChris MajeskiSenior Vice PresidentHead of PCG SupervisionRobert A. Miller IIIChief Operating OfficerSenior Managing DirectorGlobal Equities and Investment BankingJodi PerryPresidentIndependent Contractors Division - RJFSPaul C. ReillyChairman and Chief Executive OfficerSteven M. RaneyPresident and Chief Executive OfficerRaymond James BankPaul M. ShoukryChief Financial OfficerJonathan SantelliExecutive Vice President and General CounselMarta ShenSenior Vice President of Wealth ManagementSpring Street Financial of Raymond JamesPeter MooresChief Executive OfficerRaymond James Investment ServicesJim SicklingSenior Managing DirectorChief Operating OfficerFixed IncomePedro SurielVice President of Diversity and InclusionMike WhiteChief Marketing OfficerScott ZebraSenior Vice President of Operations & AdministrationRaymond James Financial ServicesAndy C. ZolperSenior Vice PresidentChief IT Security OfficerAndrea S. MastersonDirector of Corporate ResponsibilityKim van DoornSenior Vice President of Associate Activities ComplianceBella AllaireExecutive Vice President of Technology and OperationsHeather KnableSenior Vice President of Finance Operations and StrategyMary F. TurnbullManaging Director of Corporate AccessRaymond James & AssociatesMartha J. WyattSenior Vice President of Human Resources Organization & Talent DevelopmentTony BarrettSenior Vice President of InvestmentsComplex ManagerDelaware ValleySteven M. EricksonSenior Vice President of Risk ManagementMaryShannon BuchananVice President of Service Delivery and SupportGordon JohnsonBoard of DirectorsJeffrey N. EdwardsBoard of DirectorsStephen A. LiverpoolSenior Vice Presidentand General CounselRaymond James BankThomas A. JamesChairman EmeritusBenjamin C. EtsyBoard of DirectorsRoderick McGearyBoard of DirectorsRaj SeshadriBoard of DirectorsSusan N. StoryLead DirectorAnne GatesBoard of DirectorsTarek HelalChief Risk OfficerPrivate Client Group and Asset ManagementErik FrulandPresidentAsset Management ServicesJim BunnPresidentGlobal Equities and Investment BankingScott CurtisPresidentPrivate Client GroupPaul AllisonChairman and Chief Executive OfficerRaymond James Ltd.K. Greg RustSenior Vice President of OperationsOUR COMMITMENT TO THE BLACK COMMUNITY Associates across the United States, as well
as in Canada and the United Kingdom, gave
back in a variety of ways during Raymond
James Cares Month and throughout the year.
A continuing commitment to care
2020 might not be a year many of us look back on fondly, but often, it’s the bad times that have a
unique ability to reveal even more good in the people around us.
Despite difficulties of distance and global uncertainty, the charitable commitment of the firm, our advisors and our
associates was more pronounced than ever.
We continued to break giving records in our perennial partnerships with United Way and the American Heart Association,
for whom associates raised $6.47 million and $540,000 in the 2019 calendar year, respectively. And our annual Raymond
James Cares Month, which saw a move from May to August and creative alternatives to in-person volunteering, raised a
record-breaking $283,000 in the United States, Canada and the United Kingdom.
We also took steps to give back in ways that met the immediate, unprecedented needs of our communities, hosting food
drives across our corporate campuses and giving targeted donations in the wake of natural disasters like the storms that
swept through the Midwestern United States and into Canada in August and Hurricane Dorian, which devastated the
Bahamas and went on to impact Canada’s Atlantic provinces. We also pledged $2.3 million for COVID-19 relief, a figure
which includes personal donations from firm leaders and associates.
1 8
RAYMOND JAMES ANNUAL REPORT 2020 Giving Back 2020
RAYMOND JAMES CARES MONTH
CHARITABLE GIVING
2,254
Associate volunteers
4,612
Volunteer hours
41,554 lbs.
Of food donated
$283,000
Raised
#4 Fundraiser
In the nation for the American
Heart Association
$6.47 million
Raised for the United Way
United States, Canada and the United Kingdom
United States only
COVID-19 RELIEF
$2.3 million
Donated
10,000 lbs.
Of food collected in St. Petersburg
2,000+
Meals distributed in Memphis
$170,000
Raised for the Mid-South Food Bank in Memphis
$200,000
Raised for more than 30 food banks and homeless
shelters across Canada
₤35,000
Raised for FareShare and FeedNHS
in the United Kingdom
1 9
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY The plan ahead
While the year required a number of pivots, our history of planning ensured we could make those
critical shifts and still pursue our long-term plans. Our commitment to ongoing growth kept us
looking toward the future, which in some cases started with taking a hard look at the present.
And that present included an extreme swing in interest rate
spreads and the impacts of a global recession. We were well-
positioned to weather even these severe circumstances,
but they did prompt us to take action to improve efficiency,
including a difficult decision to reduce our workforce to
ensure nimble operations, and firmwide targeted cost
controls to bolster our ability to respond to opportunities.
of proving how well-equipped and adaptable we already
were. From here, Willem and his team will continue making
refinements to the platform and developing infrastructure –
aided by all we’ve learned this year – that will take us into 2021
and beyond. They plan to develop mobility profiles for each
of the firm’s business units with the overall goal of creating a
mobile workforce and mobile-workforce-enabled workplaces.
And, despite struggles and hard choices, opportunities
abound.
For example, Willem Van Dooijeweert joined the firm in
March as senior vice president and head of corporate real
estate. He was originally charged with taking two years
to evaluate the firm’s current footprint and capabilities
and create a plan to ensure Raymond James can meet the
needs – for technological utility and physical flexibility –
of the modern employee.
Mobility is only one aspect of the vision for the future of
our firm’s real estate. In 2020, we also began work on the
“branch of the future,” an initiative that aims to create more
engaging, client-friendly and efficient spaces. The corporate
real estate team conducted interviews with more than 100
financial advisors, branch managers and support staff
and sent surveys to every Raymond James & Associates
branch. The result is a menu of advisor-driven design and
organization options that prioritize the client experience
and maximize flexibility.
Then two years became two weeks. While the process
was instantly accelerated, it had the fortunate side effect
Similarly, listening to advisors’ requests over the past
several years to be able to meet their clients anywhere and
Principled profitability
Raymond James’ commitment to sustainable
investing is especially apparent in our Asset
Management business, where Carillon Tower
Advisers – a family of boutique investment
managers – is helping to lead the charge.
The firm hired Joy Facos as the new head of
responsible investing and is expanding its already
strong commitment to analyzing the key factors in
sustainable and responsible investments. Among
the recent initiatives: Carillon Tower Advisers and
its affiliates each became a signatory of the United
Nations-supported Principles for Responsible
Investment, and Carillon Tower overall is now
Joy Facos, Carillon Tower Advisers’ Head of Responsible Investing,
and Sheila King, Fixed Income Portfolio Co-Manager for Eagle
Asset Management
2 0
RAYMOND JAMES ANNUAL REPORT 2020 One way that has manifested in our businesses is a
deepening commitment to sustainability. Guided by senior
leaders and a sustainability committee, as well as insight
and input from an interested and active group of financial
advisors, the firm has made this principle a more significant
element of our future plans. This is true both in our
business operations – for example, our Public Finance team
is ranked eighth for fixed income securities designed to
support specific climate-related or environmental projects
(commonly referred to as green bonds) – and, most notably,
in our support of sustainable investing.
2020 was a formidable year.
But it was also a year that
reinforced what we already
knew about the resilience of
the firm and the people who
give it life.
Raymond James met the year’s challenges
and tumult with the strength that has
long defined us, as well as a willingness to
transform ... to turn obstacle into opportunity.
This was a year that will stay with all of us –
one we will use as a foundation for the future,
as we build toward brighter, more innovative,
more inclusive tomorrows.
with all of their information at hand drove our investments
in mobile technology strategy – investments that paid off
with our pandemic response. Now, with the rate of adoption
for digital tools accelerated, we have an even stronger
base to build on, and will continue to invest in operational
modernization and technology to improve efficiency and
service while lowering costs over time.
Another area of future focus is corporate responsibility – a
duty we’ve taken seriously since our founding, but that has
been evolving as an idea and growing in importance in the
public consciousness in recent years. That evolution led
us to appoint a new director of corporate responsibility in
2019, and apply a critical lens to what we have done, what
we are doing and where there are opportunities for the firm
to grow as a corporate citizen.
At Raymond James, our corporate responsibility platform
includes our commitment to:
• Cultivating a people-first workplace for associates
and advisors
• Giving back to the communities in which we live
and work
• Making sustainable business and operational decisions
• Maintaining our longstanding commitment to strong
corporate governance
a member of the US | SIF Forum for Sustainable
and Responsible Investment and the Ceres Investor
Network on Climate Risk and Sustainability.
Meanwhile, Eagle Asset Management, one of
Carillon Tower Advisers’ affiliates, is growing its
sustainable investing efforts, most notably with
the January 2020 launch of its ESG-Focused Fixed
Income portfolio. Sheila King , CFA®, who has been
a long-time advocate for sustainable investing at
Raymond James, conceived of and co-manages the
portfolio, which currently stands at approximately
$31 million. She expects it to grow as the team
educates investors, clients and the many
corporations and municipalities they consider
investing in about how “doing the right thing can
transform into doing the profitable thing.”
2 1
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY P R I V A T E C L I E N T G R O U P
Strong retention of current advisors, continued recruiting success despite the largely virtual
environment and productivity gains bolstered by positive equity markets combined to drive
Private Client Group client assets under administration up 11% to a record $883.3 billion as
of the end of fiscal year 2020.
$5.55 billion
NET REVENUES
$539 million
PRE-TAX INCOME
$883 billion
TOTAL PCG ASSETS
UNDER ADMINISTRATION
KEY PERFORMANCE DRIVERS
• Strong retention and recruiting of advisors
• Strong technology infrastructure to support
remote work environment
• Positive equity market performance
HEADWINDS
• Low interest rate environment
• Evolving regulatory landscape
and expectations
• Industry trends contributing to
price compression
2 2
2020 Initiatives and Responses
Growth of advisors
Strong retention and recruitment of financial advisors
across our affiliation options reflected the strength of our
values-driven culture combined with our commitment to
supporting advisors and their clients with industry-leading
tools and resources. While recruited advisor transitions
were initially disrupted by the pandemic – particularly
those scheduled for our employee affiliation as offices were
closed – recruiting activity quickly regained momentum
facilitated by significant technology investments during
the past several years. Regretted advisor attrition remained
below 1%, while U.S.-based advisors managing client
relationships totaling over $40 billion of assets affiliated
with Raymond James, resulting in a record 8,239 advisors
at the end of fiscal 2020. Anticipating the significant number
of advisors likely to retire in the next several years, the firm
continued its efforts to attract and develop future advisors.
The latest initiatives include the Wealth Management
Associate Program, which provides a foundational
experience in a branch environment as a prelude to
participating in the firm’s advisor training program and
becoming a financial advisor.
Seamless transition to remote work
When COVID-19 mitigation efforts abruptly changed
the ways we live and work, many of the firm’s financial
advisors, branch associates and nearly all associates at
corporate locations began working remotely – without
interruption. Raymond James’ technology and security
tools performed well under heavy demand, allowing for
continued delivery of high service levels to advisors and
their clients. The concierge By Invitation Only program
transitioned to a virtual format, allowing advisors to
RAYMOND JAMES ANNUAL REPORT 2020 accompany their clients to meet with topic specialists
and firm executives, as did the Home Office Visit
program for prospective advisors. National advisor
educational conferences such as ELEVATE, the Summer
Development Conference and the Women’s Symposium
also successfully pivoted to virtual formats. The Advisor
Mastery Program, a holistic training program for
advisors new to the profession, created an interactive
experience to keep learning on schedule. Innovations in
communication, educational content delivery and other
touchpoints resulted in lower business development and
travel expenses for fiscal 2020, and likely will remain as
convenient and efficient alternatives in the future.
Completed implementation of new regulatory standards
The financial services industry implemented a uniform
standard of care for all clients with the SEC’s Regulation
Best Interest, which went into effect in June 2020.
The new standard requires advisors to act in the best
interests of their clients when making investment
recommendations, an approach that aligns with the firm’s
client-first philosophy and, therefore, reinforces the way
we do business. Great care was taken to understand the
regulation’s details and make updates to processes, as
well as provide detailed educational materials, webinars,
client materials and a readiness assessment for advisors,
all with the goal of helping advisors seamlessly integrate
best practices and satisfy evolving requirements.
FINANCIAL ADVISORS
PRIVATE CLIENT GROUP
2016
2017
2018
2019
2020
CLIENT ASSETS
PRIVATE CLIENT GROUP
$Billions
2016
2017
2018
2019
2020
7,146
7,346
7,813
8,011
8,239
574
660
756
798
883
LOOKING AHEAD – The success of the remote work environment induced by the pandemic reflects the potential of efforts
previously underway. We will continue leveraging rapidly evolving technological capabilities for increased flexibility and
mobility, enhanced client meeting experiences, and more efficient use of space as we develop the “branch of the future.”
Leveraging a combination of technology applications as the core of our robust advisor platform, the firm will continue
expanding tools and resources to support advisor-client relationships against the backdrop of changing demographics,
evolving communication preferences and the need to combat pricing pressures with services that reinforce and underscore
the value of professional advice. We will also remain focused on supporting advisors, increasing the representation of diverse
communities in the financial advice profession, and responding to industry trends, such as the migration toward exclusively
fee-based practices. In response to the latter, we announced late in fiscal 2020 the consolidation of the Investment Advisors
division and Custody & Clearing division into a new Registered Investment Advisor & Custody Services division to provide a
more comprehensive and efficient platform for independent RIAs and broker/dealer clients. Finally, the market volatility of
the past year is expected to continue through what could be prolonged economic uncertainty as nations worldwide seek to
control the spread of COVID-19 and its societal and economic impact. The Private Client Group will continue its client-first
approach and long-term focus consistent with the firm’s guiding values that served us well during the challenges of 2020.
2 3
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY C A P I T A L M A R K E T S
Driven by heightened market volatility and high trading volumes, most notably in Fixed Income, as
well as increased demand for both equity and debt underwriting, Capital Markets produced record
net revenues of $1.29 billion and record pre-tax income of $225 million in fiscal year 2020, up 19%
and 105%, respectively, over fiscal 2019, despite reduced mergers and acquisitions (M&A) activity.
$1.29 billion
NET REVENUES
$225 million
PRE-TAX INCOME
KEY PERFORMANCE DRIVERS
• Elevated market volatility that resulted in
a 38% increase in brokerage revenues
• Higher client activity and larger individual
transactions drove record underwriting
revenues of $318 million, an increase of
72% over fiscal 2019
• Contributions from the targeted addition of
experienced investment banking, sales and
trading, and public finance professionals
HEADWINDS
• COVID-19-related travel restrictions and
market uncertainty that contributed to
reduced M&A activity
• Market and political uncertainty
• Continued trend of unbundling research
and execution
2 4
FIXED INCOME AND PUBLIC FINANCE
2020 INITIATIVES AND RESPONSES
Focused risk management
When economic conditions worsened, Fixed Income held
true to its long-term approach to risk mitigation. Seeking
to protect shareholder capital against uncertainty, the
firm lessened its market exposure by reducing fixed
income inventory significantly early in the pandemic. Even
so, increased trading activity contributed to record Fixed
Income sales and trading, generating record brokerage
revenues in fiscal 2020, up 49% from the prior year. The
same diligent approach was applied to providing in-depth
support for clients, especially depository institutions, to
help them manage risk and steady their balance sheets in
an extremely challenging lending environment.
Accelerated debt underwriting
Capitalizing on an investment that began in 2016, Fixed
Income saw a marked increase in debt originations,
including new-issue corporate debt and preferred
securities. In addition, an increase in revenue from
structured finance securitizations reflected the firm’s
capacity to serve the complex financing needs of
institutional clients.
TOTAL CAPITAL MARKETS NET REVENUES
$Millions
2016
2017
2018
2019
2020
1,002
1,014
964
1,083
1,291
RAYMOND JAMES ANNUAL REPORT 2020 Expanded Public Finance reach
In Public Finance, the low interest rate environment spurred
capital-raising activity nationwide. This was especially
true for educational institutions and state and local
municipalities seeking to access the capital markets during
the COVID-19 pandemic. Driven by an ever-expanding
coast-to-coast presence, including newly hired bankers
in Indiana, Kansas, Michigan and Missouri, public finance
activities increased significantly from the prior year, with
broad-based contributions both geographically and across
national specialty sectors. Taxable refinancings produced
significant growth, as historically low interest rates allowed
our clients to refinance tax-exempt debt, saving millions of
dollars in interest at a time when many municipal budgets
are stretched by the pandemic. The team also positioned
itself as a stronger presence in the green bond market,
which is gaining popularity as investors increasingly seek
to align their financial goals with environmental, social and
governance (ESG) principles.
GLOBAL EQUITIES AND INVESTMENT BANKING
2020 INITIATIVES AND RESPONSES
Strategic M&A development
The Investment Banking division continued its focus on
strategic growth through the recruitment of respected
bankers in the United States, Canada and Europe. In
addition, a measured expansion in Europe that began
in 2016 contributed to record M&A revenues in Europe
despite COVID-19 and Brexit uncertainty.
Increased underwriting
Significant contributions from the real estate, healthcare
and financials investment banking groups, including
preferred offerings and equity transactions completed
via private placements, drove equity underwriting fees up
by 85%. In addition, a collaborative effort by bankers in
the United States and Canada resulted in a cross-border
deal where Raymond James served for the first time as
managing underwriter in the special purpose acquisition
corporation (SPAC) space.
TOP
3
In the 2020 Greenwich Associates U.S. Equity Small/
Mid-Cap Fund Survey, Raymond James achieved
a top three ranking in Quality of Analyst Service,
Intensity of Coverage, Best Information & Insights,
Best Thematic Research, Most Knowledgeable
of Companies & Industries, and Most Useful
Conferences & Seminars.
Expanded sales and trading program
Expanding on the prior-year launch of an enhanced global
low-touch trading platform – Raymond James Electronic
Trading (RJET) – the equities team augmented revenue
through expanded offerings such as program and liquidity
trading, as well as opportunistic hires, resulting in overall
growth in market share in both high- and low-touch products.
LOOKING AHEAD – In Global Equities and Investment Banking, we will continue to focus on core strategic growth initiatives.
These include adding personnel in Investment Banking and Sales and Trading while expanding the productivity of the current
team and analyzing potential acquisitions in complementary business lines and sectors. We also look to grow sales and
trading market share with investments in complementary alternatives to traditional high-touch trading. The M&A pipeline
remains healthy, with activity expected to grow as people become increasingly more comfortable meeting and closing deals
in a virtual environment. Meanwhile, underwriting pipelines also appear to be building, but will be subject to economic and
political stability. Public Finance will continue to leverage taxable municipal debt opportunities, including the refinancing of
debt issued when interest rates were higher, while Fixed Income will continue to build on the strong relationships it has in
the depository institutions space and beyond. Though continued economic uncertainty may present headwinds for future
performance, the Capital Markets group remains confident in its commitment to strong relationships in the middle-market
space and collaborative efforts with Raymond James’ extensive financial advisor network.
2 5
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY A S S E T M A N A G E M E N T
Asset Management comprises Asset Management Services (AMS), which provides fee-based managed accounts
and platforms for Raymond James advisors; a global asset management firm made up of independent
boutiques, known collectively as Carillon Tower Advisers; and Raymond James Trust. The segment produced
record net revenues and pre-tax income in 2020, up 3% and 12%, respectively, year over year.
$715 million
NET REVENUES
$284 million
PRE-TAX INCOME
KEY PERFORMANCE DRIVERS
• Equity and fixed income market appreciation
• Ongoing migration to fee-based relationships
• Overall net inflows of new assets, as well
as flows to environmental, social and
governance (ESG) portfolios
HEADWINDS
• Market volatility
• Heightened fee pressures for active
management
2020 Initiatives and Responses
Responding to regulatory change
With the recent trend toward fee-based relationships accelerated by the June
2020 implementation of the SEC’s Regulation Best Interest (Reg BI), fee-based
relationships now account for nearly 54% of Private Client Group (PCG) assets
under management. As part of the implementation of Reg BI, AMS provided
targeted resources for financial advisors to not only help them ensure compliance,
but use the opportunity to deepen relationships with their clients.
Ongoing support for Private Client Group financial advisors
AMS continued to respond to investment trends and client needs with the launch
or expansion of product offerings that experienced positive asset flows. For
example, a suite of managed ESG investment portfolios offered by AMS reached
$855 million in assets under management (AUM) and our array of managed
portfolios invested entirely in U.S. securities reached $1.4 billion in AUM. The
group also created timely client communications regarding quickly shifting
market environments, including managing risk during heightened volatility,
opportunities for capital appreciation, and strategies for generating income at a
time when the fixed income market may not meet the needs of clients near or in
retirement. Such resources became even more valuable when the decade-long
bull market came to an abrupt end in March.
• Pandemic-induced challenges to sales and
Investment in Carillon Tower Advisers
institutional search activity
FINANCIAL ASSETS UNDER MANAGEMENT
$Billions
2016
2017
2018
2019
2020
77.0
96.4
140.9
143.1
153.1
In recognition of heightened interest in sustainable investing and the potential
for growth in this area, Carillon Tower Advisers enhanced its strong commitment
to sustainable investing, including hiring industry veteran Joy Facos as head of
responsible investing and launching a suite of fixed income portfolios integrating
ESG considerations. All Carillon Tower affiliates are signatories of the United
Nations-supported Principles for Responsible Investment, an independent body
that works to encourage responsible investing and understand its implications.
Also, Carillon enhanced its risk-monitoring capabilities by acquiring an
innovative financial risk analytics platform, Portfolio Risk Insights and Solutions
Management (PRISM), and hiring industry veteran Steve Singleton as head of
a new in-house risk team. The team will use PRISM to provide Carillon Tower
Advisers’ autonomous investment teams with additional tools to evaluate risk in
their portfolios while enhancing reporting and insights for clients.
LOOKING AHEAD – Even as active management faces fee pressures throughout the industry, continued growth of fee-based assets is
expected, driven partially by alignment of fee-based business with regulatory requirements. Entering what could be a period of prolonged
economic uncertainty, the need to be responsive to trends while remaining focused on long-term success for advisors and their clients will
be imperative. We remain committed to offering a full range of solutions for investors seeking active portfolio management and supporting
advisors as they transition to fee-based relationships. Development continues for an advisor-driven unified managed account (UMA) offering,
called Portfolio Select UMA, that will be introduced in 2021 and provide increased flexibility in asset allocation and investment selection.
2 6
RAYMOND JAMES ANNUAL REPORT 2020 R A Y M O N D J A M E S B A N K
An unfavorable interest rate environment, as well as economic uncertainty that necessitated a substantial
increase in allowance for loan losses, contributed to a significant disparity in Raymond James Bank net revenues
and pre-tax income in fiscal year 2020, which saw declines of 10% and 62%, respectively, over the previous year.
$765 million
NET REVENUES
$196 million
PRE-TAX INCOME
2020 Initiatives and Responses
De-risking of the balance sheet
In keeping with the bank’s disciplined approach to risk across its
balance sheet, diversification within the loan portfolio set the
foundation for risk-mitigation efforts that occurred amid economic
uncertainty in the latter half of fiscal 2020. Nearly $700 million in
corporate loans were opportunistically sold, contributing to net
charge-offs of $87 million for the year. The loans identified for sale
were primarily in industries believed to be most vulnerable to the
COVID-19 crisis as the focus on credit quality intensified.
Growth of mortgage and SBL lending programs
Reflecting a continued emphasis on providing personalized service
and competitive lending solutions for PCG clients, Raymond James
Bank saw loan growth of 11% in the residential mortgage program
and 22% in the securities-based lending program in fiscal 2020.
Our commitment to client satisfaction in the high-net-worth space
contributed to average-loan growth, despite increased refinancing
volume driven by low interest rates.
KEY PERFORMANCE DRIVERS
• Continued collaboration across Raymond James’
other businesses
• Strong growth of residential mortgage and
securities-backed loans to PCG clients
• Increased average interest-earning assets, driven
by growth in average available-for-sale securities,
average loans and average cash balances
HEADWINDS
• Sharply declining interest rates, resulting in a
year-over-year reduction of 69 basis points in net
interest margin (NIM)
• Elevated loan loss provisions of $233 million for
the year, primarily in the corporate portfolio
• Elevated client cash balances during market
volatility, with limited attractive short-term
investment options
TOTAL BANK LOANS
$Billions
2016
2017
2018
2019
2020
15.2
17.0
19.5
20.9
21.2
LOOKING AHEAD – Given the U.S. Federal Reserve’s stated intention
to hold interest rates low for the coming years, we anticipate our net
interest margin (NIM) to remain challenged. As liquidity continues
to grow, we anticipate diversifying the balance sheet through the
thoughtful purchase of securities in keeping with the firm’s disciplined
approach to risk. Continued market and economic uncertainty may
call for additional loan loss provisions, primarily within the corporate
portfolio. Collaboration with PCG will remain at the forefront of
the mortgage and securities-based lending programs, which are
positioned for growth in a lower-for-longer interest rate environment.
TOTAL BANK ASSETS (1)
$Billions
2016
2017
2018
2019
2020
(1) Includes affiliate deposits
17.0
20.9
23.2
25.7
30.6
2 7
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY E X E C U T I V E C O M M I T T E E
Paul D. Allison
Chairman and Chief Executive Officer
Raymond James Ltd.
Bella Loykhter Allaire
Executive Vice President
of Technology and Operations
Tash Elwyn
President and Chief Executive Officer
Raymond James & Associates
Scott A. Curtis
President
Private Client Group
Jeffrey A. Dowdle
Chief Operating Officer
John C. Carson Jr.
President
James E. Bunn
President
Global Equities and Investment Banking
2 8
RAYMOND JAMES ANNUAL REPORT 2020 Jeffrey P. Julien
Executive Vice President of Finance
Jodi Perry
President
Independent Contractors Division
Raymond James Financial Services
Steven M. Raney
President and Chief Executive Officer
Raymond James Bank
Jonathan N. Santelli
Executive Vice President
General Counsel
Paul C. Reilly
Chairman and Chief Executive Officer
Paul Shoukry
Chief Financial Officer
2 9
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY B O A R D O F D I R E C T O R S
Charles G. von Arentschildt
Retired
Former Chairman and CEO,
Global Markets, North America
Deutsche Bank Securities Inc.
Bob Dutkowsky
Retired
Former Executive Chairman
Tech Data Corporation
Jeffrey N. Edwards
Chief Operating Officer
New Vernon Advisers, LP
Benjamin C. Esty
Professor of Business Administration
Harvard Graduate School of
Business Administration
Anne Gates
Retired
Former President
MGA Entertainment, Inc.
Francis S. Godbold
Vice Chairman
Raymond James Financial
Thomas A. James
Chairman Emeritus
Raymond James Financial
Gordon L. Johnson
President
Highway Safety Devices, Inc.
Roderick C. McGeary
Retired accounting executive
Paul C. Reilly
Chairman and Chief Executive Officer
Raymond James Financial
Raj Seshadri
President, Data & Services
Mastercard Incorporated
Susan N. Story
Lead Director, Raymond James Financial
Retired, Former Director, President and CEO
American Water Works Company, Inc.
3 0
RAYMOND JAMES ANNUAL REPORT 2020 O P E R A T I N G C O M M I T T E E
Chris Aisenbrey
Chief Human
Resources Officer
Haig Ariyan
Head of Global Wealth Solutions
President
Alex. Brown
Emma Bredin
Chief Compliance Officer
Senior Vice President
Compliance
Tracey Bustamante
Senior Vice President
Corporate Communications
Erik Fruland
President
Asset Management Services
T.J. Haynes-Morgan
Chief Audit Executive
Tarek Helal
Chief Risk Officer
Private Client Group and
Asset Management
Kim Jenson
Chief Operating Officer
Senior Vice President
Private Client Group
Heather Knable
Senior Vice President
Finance Operations
and Strategy
Chris Majeski
Senior Vice President
Head of PCG Supervision
Robert Miller
Chief Operating Officer
Senior Managing Director
Global Equities and
Investment Banking
Greg Rust
Senior Vice President
Operations
Jim Sickling
Senior Managing Director
Chief Operating Officer
Fixed Income
Amanda Stevens
Chief Operating Officer
Executive Vice President
Raymond James Bank
Scott Zebra
Senior Vice President
Operations & Administration
Raymond James
Financial Services
Andy Zolper
Chief IT Security Officer
Senior Vice President
Technology
3 1
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY 1 0 - Y E A R F I N A N C I A L S U M M A R Y
YEAR ENDED SEPTEMBER 30
in millions, except per share amounts
2011
2012
2013
RESULTS
Net Revenues
$ 3,334
$ 3,807
Net Income
Earnings per common share
Basic
Diluted
Weighted Average Common Shares
Outstanding – Basic
Weighted Average Common and Common Equivalent Shares
Outstanding – Diluted
Cash Dividends Declared per Common Share
FINANCIAL
CONDITION
Total Assets
Equity Attributable to RJF
Shares Outstanding
Book Value per Share
278
2.20
2.19
296
2.22
2.20
$ 4,488
367
2.64
2.58
122.4
130.8
137.7
122.8
0.52
18,003
2,588
123.3
20.99
131.8
0.52
21,145
3,269
136.1
24.02
140.5
0.56
22,965
3,665
138.8
26.42
Certain prior period amounts have been restated from amounts previously presented due to the subsequent adoption of new accounting guidance.
3 2
RAYMOND JAMES ANNUAL REPORT 2020
YEAR ENDED SEPTEMBER 30
2014
2015
2016
2017
2018
2019
2020
$ 4,862
$ 5,204
$ 5,405
$ 6,371
480
3.41
3.32
502
3.51
3.43
529
3.72
3.65
636
4.43
4.33
$ 7,274
857
5.89
5.75
$ 7,740
1,034
7.32
7.17
$ 7,990
818
5.94
5.83
139.9
142.5
141.8
143.3
145.3
141.0
137.6
143.6
0.64
23,135
4,144
140.8
29.42
145.9
0.72
26,326
4,524
142.8
31.69
144.5
0.80
146.6
0.88
31,487
34,883
4,917
141.5
34.73
5,582
144.1
38.74
148.8
1.10
37,413
6,368
145.6
43.73
144.0
1.36
140.2
1.48
38,830
47,482
6,581
137.8
47.76
7,114
136.6
52.08
3 3
RAYMOND JAMES ANNUAL REPORT 2020OBSTACLE AND OPPORTUNITY
C O R P O R A T E A N D S H A R E H O L D E R I N F O R M A T I O N
NUMBER OF SHAREHOLDERS
At December 3, 2020, there were 323 holders
ELECTRONIC DELIVERY
If you are interested in electronic delivery of
PRINCIPAL SUBSIDIARIES
Raymond James & Associates, Inc.
of record of our common stock. Shares of our
future copies of this report, please see the
Securities broker/dealer
common stock are held by a substantially
proxy voting instructions.
greater number of beneficial owners who
hold their shares indirectly through banks,
brokers and other financial institutions.
ANNUAL REPORT ON FORM 10-K;
CERTIFICATIONS
A copy of the Annual Report on Form 10-K,
as filed with the Securities and Exchange
Commission, is included in this document and
is also available, without charge, at
sec.gov, upon request in writing to Corporate
Secretary, Raymond James Financial, Inc.,
880 Carillon Parkway, St. Petersburg, Florida
33716, or by emailing investorrelations@
raymondjames.com.
Raymond James has included, as exhibits
Member New York Stock Exchange
Member Financial Industry Regulatory
TRANSFER AGENT AND REGISTRAR
Computershare Inc.
Authority
P.O. Box 505000
Louisville, KY 40233-5000
800.837.7596
Raymond James Financial Services, Inc.
Securities broker/dealer
Member Financial Industry Regulatory
computershare.com/investor
Authority
INDEPENDENT AUDITORS
KPMG LLP
NEW YORK STOCK EXCHANGE SYMBOL
RJF
COVERING ANALYSTS
Christian Bolu
Autonomous Research
Raymond James Financial Services
Advisors, Inc.
Registered Investment Advisor
Raymond James Ltd.
Canadian securities broker/dealer
Member Toronto Stock Exchange
Carillon Tower Advisers, Inc.
Asset and mutual fund management
Raymond James Bank, N.A.
Member Federal Deposit Insurance
Corporation
to its 2020 Annual Report on Form 10-K,
William R. Katz
certifications of its chief executive officer and
Citigroup Research
chief financial officer as to the quality of the
company’s public disclosure. Raymond
James’ chief executive officer has also
Chris Allen
Compass Point
submitted to the New York Stock Exchange
Craig Siegenthaler, CFA
a certification that he is not aware of any
Credit Suisse
violations by the company of the NYSE
company listing standards.
ANNUAL MEETING
The annual meeting of shareholders will be
conducted via webcast as a virtual meeting,
Alexander Blostein, CFA
Goldman Sachs & Co.
Devin Ryan
JMP Securities
on February 18, 2021, at 4:30 p.m.
Kyle Voigt
The meeting will be broadcast live via
streaming audio on raymondjames.com
under “Investor Relations – News and
Events – Shareholders’ Meeting.”
Notice of the annual meeting, proxy
statement and proxy voting instructions
accompany this report to shareholders.
Additional information about Raymond
James’ results can be found at
raymondjames.com/investor-relations.
Keefe, Bruyette & Woods
Manan Gosalia
Morgan Stanley
James Mitchell
Seaport Global Securities
Christopher Harris
Wells Fargo Corporate and
Investment Banking
Steven Chubak
Wolfe Research
Images within this report were taken while adhering to CDC guidelines for a COVID-19-safe work environment.
3 4
RAYMOND JAMES ANNUAL REPORT 2020 A N N U A L R E P O R T 2 0 2 0
O N F O R M 1 0 - K
F O R F I S C A L Y E A R E N D E D
S E P T E M B E R 3 0 , 2 0 2 0
3 5
(THIS PAGE INTENTIONALLY LEFT BLANK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
Or
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9109
RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
880 Carillon Parkway
St. Petersburg
Florida
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act:
(727) 567-1000
Registrant’s telephone number, including area code
59-1517485
(I.R.S. Employer
Identification No.)
33716
(Zip Code)
Title of each class
Common Stock, $.01 par value
Trading Symbol(s)
Name of each exchange on which registered
RJF
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (Section 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of March 31, 2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant computed by reference to the price at
which the common stock was last sold was $7,731,304,538.
The number of shares outstanding of the registrant’s common stock as of November 19, 2020 was 136,932,217.
Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held February 18, 2021
are incorporated by reference into Part III.
DOCUMENTS INCORPORATED BY REFERENCE
(THIS PAGE INTENTIONALLY LEFT BLANK)
RAYMOND JAMES FINANCIAL, INC.
TABLE OF CONTENTS
PART I.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II.
Business
Risk factors
Unresolved staff comments
Properties
Legal proceedings
Mine safety disclosures
Item 5.
Market for registrant’s common equity, related shareholder matters and issuer purchases of equity
securities
Selected financial data
Management’s discussion and analysis of financial condition and results of operations
Quantitative and qualitative disclosures about market risk
Financial statements and supplementary data
Changes in and disagreements with accountants on accounting and financial disclosure
Controls and procedures
Other information
Directors, executive officers and corporate governance
Executive compensation
Security ownership of certain beneficial owners and management and related shareholder matters
Certain relationships and related transactions, and director independence
Principal accountant fees and services
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV.
Item 15.
Exhibits and financial statement schedules
Signatures
PAGE
3
19
32
33
33
34
34
35
36
78
79
150
150
153
153
153
153
153
153
153
156
2
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 1. BUSINESS
PART I
Raymond James Financial, Inc. (“RJF,” the “firm” or the “Company”) is a leading diversified financial services company
providing private client group, capital markets, asset management, banking and other services to individuals, corporations and
municipalities. The firm, together with its subsidiaries, is engaged in various financial services activities, including providing
investment management services to retail and institutional clients, the underwriting, distribution, trading and brokerage of
equity and debt securities, and the sale of mutual funds and other investment products. The firm also provides corporate and
retail banking services, and trust services. We operate predominately in the United States (“U.S.”) and, to a lesser extent, in
Canada, the United Kingdom (“U.K.”), and other parts of Europe.
Established in 1962 and public since 1983, RJF is listed on the New York Stock Exchange (the “NYSE”) under the symbol
“RJF.” As a bank holding company and financial holding company, RJF is subject to supervision, examination and regulation
by the Board of Governors of the Federal Reserve System (the “Fed”).
Among the keys to our historical and continued success, our emphasis on putting the client first is at the core of our corporate
values. We also believe in maintaining a conservative, long-term focus in our decision making. We believe that this
disciplined decision-making approach translates to a strong, stable financial services firm for clients, associates, and
shareholders.
REPORTABLE SEGMENTS
We currently operate through five segments. Our business segments are Private Client Group (“PCG”), Capital Markets, Asset
Management and Raymond James Bank (“RJ Bank”). Our Other 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 our business
segments, including the interest costs on our public debt.
The following graph depicts the relative net revenue contribution of each of our business segments for the fiscal year ended
September 30, 2020.
* The preceding chart does not include intersegment eliminations or the Other segment.
Private Client Group
We provide financial planning, investment advisory and securities transaction services through a branch office network.
Financial advisors have multiple affiliation options, which we refer to as AdvisorChoice. Our two primary affiliation options
for financial advisors are the employee option and the independent contractor option.
We recruit experienced financial advisors from a wide variety of competitors. As a part of their agreement to join us, we may
make loans to financial advisors and certain key revenue producers primarily for recruiting, transitional cost assistance, and
retention purposes.
3
Net Revenues *Private Client Group67%Capital Markets15%Asset Management9%RJ Bank9% RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Total client assets under administration (“AUA”) in our PCG segment as of September 30, 2020 were $883.3 billion, of which
$475.3 billion related to fee-based accounts (“fee-based AUA”). We had 8,239 financial advisors affiliated with us as of
September 30, 2020.
Employee financial advisors
Employee financial advisors work in a traditional branch setting supported by local management and administrative staff. They
provide services predominately to retail clients. Compensation for these financial advisors primarily includes commission
payments and participation in the firm’s benefit plans.
Independent contractor financial advisors
Our financial advisors who are independent contractors are responsible for all of their direct costs and, accordingly, receive a
higher payout percentage on the revenues they generate than employee financial advisors. Our independent contractor financial
advisor option is designed to help our advisors build their businesses with as much or as little of our support as they determine
they need. With specific approval, and on a limited basis, they are permitted to conduct certain other approved business
activities, such as offering insurance products, independent registered investment advisory services, and accounting and tax
services.
Products and services
Irrespective of the affiliation choice, our financial advisors offer a broad range of investment products and services, including
both third-party and proprietary products, and a variety of financial planning services. Revenues from this segment are
typically driven by AUA and are generally either asset-based or transactional in nature. The proportion of our brokerage
revenues originating from the employee versus independent contractor affiliation models is relatively balanced.
PCG segment net revenues for the fiscal year ended September 30, 2020 are presented in the following graph.
* Included in “Brokerage revenues” on our Consolidated Statements of Income and Comprehensive Income.
We provide the following products and services through this segment:
•
•
•
•
Investment services for which we charge sales commissions or asset-based fees based on established schedules.
Portfolio management services for which we charge either a fee computed as a percentage of the assets in the client’s
account or a flat periodic fee.
Insurance and annuity products.
Professionally managed mutual funds.
4
Net RevenuesAsset managementand relatedadministrative fees57%Mutual and other fundproducts *10%Insurance and annuityproducts *7%Equities, ETFs andfixed incomeproducts *8%Account and servicefees15%Net interest2%All other1% RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
•
•
Support to third-party product partners, including sales and marketing support, product availability and distribution, and
accounting and administrative services.
Administrative services to banks to which we sweep a portion of our clients’ cash deposits as part of the Raymond James
Bank Deposit Program (“RJBDP”), our multi-bank sweep program. Fees received from third-party banks for these
services are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term
interest rates relative to interest paid to clients by the third-party banks on balances in the RJBDP. PCG also earns
servicing fees from RJ Bank, which are based on the number of accounts that are swept to RJ Bank. These fees are
eliminated in consolidation.
• Margin loans to clients that are collateralized by the securities purchased or by other securities owned by the client.
Interest is charged to clients on the amount borrowed based on current interest rates.
•
•
•
Custodial services, trading, research and other support and services (including access to clients’ account information and
the services of the Asset Management segment) to the independent registered investment advisors who are affiliated with
us.
Securities borrowing and lending activities with other broker-dealers, financial institutions and other counterparties. The
net revenues of this business generally consist of the interest spreads generated on these activities.
Diversification strategies and alternative investment products to qualified clients of our affiliated financial advisors.
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 (referred to as our “tax credit funds” business).
Capital Markets segment net revenues for the fiscal year ended September 30, 2020 are presented in the following graph.
* Included in “Investment banking” on our Consolidated Statements of Income and Comprehensive Income.
We provide the following products and services through this segment.
Equity products and services
• We earn brokerage revenues on the sale of equity products to institutional clients. Client activity is influenced by a
combination of general market activity and our Capital Markets group’s ability to identify attractive investment
opportunities for our institutional clients. Revenues on equity transactions are generally based on trade size and the amount
of business conducted annually with each institution.
5
Net RevenuesFixed incomebrokerage revenues33%Equity brokerage revenues12%Merger & acquisitionand advisory *22%Equity underwriting *14%Debt underwriting *10%Tax credit fund revenues6%Net interest andall other3% RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
• We provide various investment banking services including public and private equity financing for corporate clients and
merger & acquisition and advisory services. Our investment banking activities include a comprehensive range of strategic
and financial advisory services tailored to our clients’ business life cycles and backed by our strategic industry focus.
•
Our global research department supports our institutional and retail sales efforts and publishes research on a wide variety of
companies. This research primarily focuses on U.S. and Canadian companies in specific industries, including consumer,
energy, financial services, healthcare, industrial, mining and natural resources, real estate, technology and communications,
and transportation. Research reports are made available to both institutional and retail clients.
Fixed income products and services
• We earn revenues from institutional clients who purchase and sell both taxable and tax-exempt fixed income products,
primarily municipal, corporate, government agency and mortgage-backed bonds, and whole loans. We carry inventories of
taxable and tax-exempt securities to facilitate client transactions.
•
Our investment banking services include public finance and debt underwriting activities where we serve as a financial
advisor, placement agent or underwriter to various issuers, including private and public corporate entities, state and local
government agencies (and their political subdivisions), housing agencies, and non-profit entities including healthcare and
higher education institutions.
• We enter into interest rate derivatives to facilitate client transactions or to actively manage risk exposures that arise from
our client activity, including a portion of our trading inventory. In addition, we conduct a “matched book” derivatives
business where we may enter into interest rate derivative transactions with clients. In this matched book business, for
every derivative transaction we enter into with a client, we enter into an offsetting derivative transaction with a credit
support provider that is a third-party financial institution.
Tax credit funds
• We act as the general partner or managing member in partnerships and limited liability companies that invest in real estate
project entities which qualify for tax credits under Section 42 of the Internal Revenue Code and/or provide a mechanism
for banks and other institutions to meet their Community Reinvestment Act (“CRA”) obligations throughout the U.S. We
earn fees for the origination and sale of these investment products as well as for the oversight and management of the
investments over the statutory tax credit compliance period.
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 a portion of
our fee-based AUA for our PCG clients through our Asset Management Services division (“AMS”) and through Raymond
James Trust, N.A. (“RJ Trust”). This segment also provides asset management services through Carillon Tower Advisers and
affiliates (collectively, “Carillon Tower Advisers”) for certain retail accounts managed on behalf of third-party institutions,
institutional accounts and proprietary mutual funds that we manage.
Management fees in this segment are generally calculated as a percentage of the value of our fee-billable financial assets under
management (“AUM”) in both AMS (including the portion of fee-based AUA in PCG that is overseen by AMS) and Carillon
Tower Advisers, where investment decisions are made by in-house or third-party portfolio managers or investment committees.
The fee rates applied are dependent upon various factors, including the distinctive services provided and the level of assets
within each client relationship. The fee rates applied in Carillon Tower Advisers may also vary based on the account objective
(i.e., equity, fixed income, or balanced). Our AUM are impacted by market fluctuations and net inflows or outflows of assets,
including transfers between fee-based accounts and traditional transaction-based accounts within our PCG segment. Fees are
generally collected quarterly and are based on balances as of the beginning of the quarter (particularly in AMS) or the end of
the quarter, or based on average daily balances throughout the quarter.
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).
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Our AUM and our Carillon Tower Advisers AUM by objective as of September 30, 2020 are presented in the following graphs.
RJ Bank
RJ Bank is a national bank that provides various types of loans, including corporate loans (commercial and industrial (“C&I”),
commercial real estate (“CRE”) and CRE construction), tax-exempt loans, residential loans, securities-based loans (“SBL”) and
other loans. RJ Bank is active in corporate loan syndications and participations. RJ Bank also provides Federal Deposit
Insurance Corporation (“FDIC”)-insured deposit accounts, including 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.
As of September 30, 2020, corporate and tax-exempt loans represented approximately 57% of RJ Bank’s loan portfolio, of
which 87% were U.S. and Canadian syndicated loans. Residential mortgage loans are originated or purchased and held for
investment or sold in the secondary market. RJ Bank’s investment portfolio is primarily comprised of agency mortgage-backed
securities (“MBS”) and agency collateralized mortgage obligations (“CMOs”) and is classified as available-for-sale. RJ Bank’s
liabilities primarily consist of deposits that are cash balances swept from the investment accounts of PCG clients.
The following graph details the composition of RJ Bank’s total assets as of September 30, 2020.
7
Financial Assets Under ManagementAMS63%CarillonTower37%Carillon Tower AdvisersFinancial Assets Under Management byObjectiveEquity43%Fixed income48%Balanced9%RJ Bank Total AssetsC&I loans25%CRE and CREconstruction loans12%Tax-exempt loans4%Residential mortgage loans16%SBL and other loans13%Available-for-sale securities25%Cash and other assets5% RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Other
Our Other segment includes our private equity investments, interest income on certain corporate cash balances, and certain
corporate overhead costs of RJF, 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.
Our private equity portfolio includes various direct investments, as well as investments in third-party private equity funds and
various legacy private equity funds which we sponsor.
HUMAN CAPITAL
Our “associates” (which include our employee financial advisors and all of our other employees, and independent contractor
financial advisors) are vital to our success in the financial services industry. As a human-capital intensive business, the long-
term success of our firm depends on our people. Our goal is to ensure that we have the right talent, in the right place, at the
right time. We do that through our commitment to attracting, developing and retaining our associates.
We strive to attract individuals who are people-focused and share our values. We have competitive programs dedicated to
selecting new talent and enhancing the skills of our associates. In our recruiting efforts, we strive to have a diverse group of
candidates to consider for our roles. To that end, we have strong relationships with a variety of industry associations that
represent diverse professionals and with diversity groups at the colleges and universities where we recruit. Among other
opportunities, we offer selected students and recent graduates summer internships and pipeline programs across many areas of
the firm, which may lead to permanent roles. Individuals who want to become financial advisors in our PCG segment can gain
relevant branch experience through our Wealth Management Associate Program or move to our Advisor Mastery Program and
begin building their client base.
We have designed a compensation structure, including an array of benefit plans and programs, that we believe is attractive to
our current and prospective associates. We also offer our associates the opportunity to participate in a variety of professional
and leadership development programs. Our extensive program catalog includes a variety of industry, product, technical,
professional, business development, leadership and regulatory topics. These programs are available online and in-person. In
addition, we have a variety of mentoring programs in place to support the development of our associates and expand their
networks within the firm. We have a department dedicated to providing practice education and management resources to our
PCG financial advisors. We also offer these advisors the opportunity to participate in conferences and workshops, and we offer
resources and coaching at all levels to help them grow their businesses. These include separate national conferences for our
employee and independent contractor financial advisor channels, each of which is attended by thousands of our advisors and
their families each year.
We seek to retain our associates by using their feedback to create and continually enhance programs that support their needs.
We use firmwide pulse surveys to solicit feedback from our associates. We have a formal annual goal setting and performance
review processes for our employees. We have a values-based culture, an important factor in retaining our associates, which is
memorialized in a culture “blueprint” that is communicated to all associates. Our training to share and communicate our culture
to all associates plays an important part in this process. We are committed to having a diverse workforce, and an inclusive
work environment is a natural extension of our culture. We have recently renewed our commitment to ensuring that all our
associates feel welcomed, valued, respected and heard so that they can fully contribute their unique talents for the benefit of
clients, their careers, our firm and our communities. We also invest substantial resources in the community-supporting
organizations that are dedicated to improving the lives of diverse individuals. Our firmwide diversity and inclusion advisory
council stewards the firm’s efforts and provides guidance on priorities. This council is composed of associate representatives
from all areas of our business and locations where we operate. We also have firmwide and business unit-specific diversity and
inclusion networks, which host various events and conferences to educate and support our diversity and inclusion efforts.
We monitor and evaluate various turnover and attrition metrics throughout our management teams. Our annualized voluntary
turnover is relatively low, as is the case for turnover of our top performers, a record which we attribute to our strong values-
based culture, commitment to career development, and attractive compensation and benefit programs. Importantly, our
financial advisor attrition rate is even lower.
As of September 30, 2020, we had approximately 14,800 employees (including 3,404 employee financial advisors) and 4,835
affiliated independent contractor financial advisors.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
OPERATIONS AND INFORMATION PROCESSING
We have operations personnel at various locations who are responsible for processing securities transactions, custody of client
securities, support of client accounts, the receipt, identification and delivery of funds and securities, and compliance with
regulatory and legal requirements for most of our securities brokerage operations.
The information technology department develops and supports the integrated solutions that provide a customized platform for
our businesses. These include a platform for financial advisors designed to allow them to spend more time with their clients
and enhance and grow their businesses; systems that support institutional and retail sales and trading activity from initiation to
settlement and custody; and thorough security protocols to protect firm and client information.
In the area of information security, we have developed and implemented a framework of principles, policies and technology to
protect our own information and that of our clients. We apply numerous safeguards to maintain the confidentiality, integrity
and availability of both client and firm information.
Our business continuity program has been developed to provide reasonable assurance that we will continue to operate in the
event of disruptions at our critical facilities or other business disruptions. We have developed operational plans for such
disruptions, and we have devoted significant resources to maintaining those plans. Our business continuity plan continues to be
enhanced and tested to allow for continuous operations in the event of weather-related or other interruptions at our corporate
headquarters in Florida, one of our operations processing or data center sites (located in Florida, Colorado, Tennessee or
Michigan), and our branch and office locations throughout the U.S., Canada and Europe.
In response to the coronavirus (“COVID-19”) pandemic, we activated certain aspects of our business continuity program during
2020 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. The firm continues to monitor the pandemic 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.
COMPETITION
The financial services industry is intensely competitive. We compete with many other financial services firms, including a
number of larger securities firms, most of which are affiliated with major financial services companies, insurance companies,
banking institutions and other organizations. We also compete with companies that offer web-based financial services and
discount brokerage services to individual clients, usually with lower levels of service, and, more recently, financial technology
(“fintech”) firms. We compete principally on the basis of the quality of our associates, services, product selection, performance
records, location and reputation in local markets.
Our ability to compete effectively is substantially dependent on our continuing ability to develop or attract, retain and motivate
qualified financial advisors, investment bankers, trading professionals, portfolio managers and other revenue-producing or
specialized personnel.
REGULATION
The following discussion summarizes the principal elements of the regulatory and supervisory framework applicable to us as a
participant in the financial services industry and, in particular, the banking and securities sectors. The framework includes
extensive regulation under U.S. federal and state laws, as well as the applicable laws of the jurisdictions outside the U.S. in
which we do business. This framework is intended to protect our clients, the integrity of the financial markets, our depositors
and the Federal Deposit Insurance Fund and is not intended to protect our creditors or shareholders. These rules and regulations
limit our ability to engage in certain activities, as well as our ability to fund RJF from our regulated subsidiaries, which include
RJ Bank, RJ Trust and our broker-dealer subsidiaries. To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions that are
referenced. A change in applicable statutes or regulations or in regulatory or supervisory policy may have a material effect on
our business.
We continue to experience a period of notable changes in financial regulation and supervision. We continue to monitor the
likelihood of changes in taxation and regulations due to changes in the political environment. Based upon the outcome of the
most recent U.S. federal elections, the likelihood of changes in both corporate and individual taxation, as well as regulations,
has likely increased. These changes could have a significant impact on our business, financial condition, results of operations
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
and cash flows in the future; however, we cannot predict the exact changes or quantify their potential impacts. (see “Item 1A -
Risk Factors” of this Form 10-K for further discussion of the potential future impact on our operations).
Banking supervision and regulation
RJF is a bank holding company (“BHC”) under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), that
has made an election to be a financial holding company (“FHC”) and is subject to regulation, oversight and consolidated
supervision, including periodic examination, by the Fed. Under the system of “functional regulation” established under the
BHC Act, the primary regulators of our U.S. non-bank subsidiaries directly regulate the activities of those subsidiaries, with the
Fed exercising a supervisory role. Such “functionally regulated” subsidiaries include our broker-dealers registered with the
Securities and Exchange Commission (“SEC”), such as Raymond James & Associates, Inc. (“RJ&A”) and Raymond James
Financial Services, Inc. (“RJFS”), investment advisors registered with the SEC with respect to their investment advisory
activities, and our depository institution and trust company chartered and regulated by the Office of the Comptroller of the
Currency (“OCC”).
RJ Bank is a national bank and insured depository institution regulated, supervised and examined by the OCC and the
Consumer Financial Protection Bureau (“CFPB”). Our trust company non-depository subsidiary, RJ Trust, is also regulated,
supervised and examined by the OCC. The Fed and the FDIC also regulate and may examine RJ Bank and, with respect to the
Fed, RJ Trust.
Collectively, the rules and regulations of the Fed, the OCC, the FDIC and the CFPB cover all aspects of the banking business,
including, for example, lending practices, the receipt of deposits, capital structure, transactions with affiliates, conduct and
qualifications of personnel and, as discussed further in the following sections, capital requirements. This regulatory,
supervisory and oversight framework is subject to significant changes that can affect the operating costs and permissible
businesses of RJF, RJ Bank, RJ Trust and all of our other subsidiaries. As a part of their supervisory functions, the Fed, the
OCC, the FDIC, and the CFPB also have the power to bring enforcement actions for violations of law and, in the case of the
Fed, the OCC and the FDIC, for unsafe or unsound practices.
Basel III and U.S. capital rules
Both RJF and RJ Bank are subject to minimum capital requirements and overall capital adequacy standards. The OCC, the Fed
and the FDIC published final U.S. rules implementing the Basel III capital framework developed by the Basel Committee on
Banking Supervision and certain Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and other
capital provisions, and updated the prompt corrective action framework to reflect the new regulatory capital minimums (the
“U.S. Basel III Rules”). The U.S. Basel III Rules: (i) increased the quantity and quality of regulatory capital; (ii) established a
capital conservation buffer; and (iii) made changes to the calculation of risk-weighted assets. The capital requirements could
restrict our ability to grow, including during favorable market conditions, and to return capital to shareholders, or require us to
raise additional capital. As a result, our business, results of operations, financial condition and future prospects could be
adversely affected. See “Item 1A - Risk Factors” of this Form 10-K for more information.
Failure to meet minimum capital requirements can trigger discretionary, and in certain cases, mandatory actions by regulators
that could have a direct material effect on the financial results of RJF and RJ Bank. Under capital adequacy guidelines, RJF
and RJ Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-
balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification for RJF and RJ
Bank are also subject to the qualitative judgments of U.S. regulators based on components of capital, risk-weightings of assets,
off-balance sheet transactions and other factors. Quantitative measures established by federal banking regulations to ensure
capital adequacy require that RJF and RJ Bank maintain minimum amounts and ratios of: (i) Common Equity Tier 1 (or
“CET1”), Tier 1 and Total capital to risk-weighted assets; (ii) Tier 1 capital to average total consolidated assets; and (iii) capital
conservation buffers.
In July 2019, the Fed issued a final rule to simplify and clarify a number of existing regulatory capital rules for certain banking
organizations. The rule was effective on October 1, 2019, for revisions to the pre-approval requirements for the repurchase of
common stock and became effective on April 1, 2020, for the amendments to simplify capital rules. The rule simplifies the
capital treatment for mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of
unconsolidated financial institutions, and minority interest. This rule also allows BHCs like RJF to repurchase common stock
without prior approval from the Fed to the extent that the BHC is not subject to a separate legal or regulatory requirement to
obtain prior approval. RJF would continue to need to obtain prior approval from the Fed if it were not “well-capitalized” or
“well-managed” or if it were subject to any unresolved supervisory issues. Guidance from the Fed also indicates that RJF
would need to inform the Fed in advance of repurchasing common stock in certain prescribed situations, such as if it were
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
experiencing, or at risk of experiencing, financial weaknesses or considering expansion, either through acquisitions or other
new activities. Further, Fed guidance indicates that, pursuant to the Fed’s general supervisory and enforcement authority, Fed
supervisory staff should prevent a BHC from repurchasing its common stock if such action would be inconsistent with the
BHC’s prospective capital needs and safe and sound operation.
See Note 22 of the Notes to the Consolidated Financial Statements of this Form 10-K for further information.
Source of strength
The Fed requires that BHCs, such as RJF, serve as a source of financial strength for any of its subsidiary depository institutions.
The term “source of financial strength” is defined as the ability of a company to provide financial assistance to its insured
depository institution subsidiaries in the event of financial distress at such subsidiaries. Under this requirement, RJF could be
required to provide financial assistance to RJ Bank in the future should it experience financial distress.
Transactions between affiliates
Transactions between (i) RJ Bank, RJ Trust or their subsidiaries on the one hand and (ii) RJF or its other subsidiaries or
affiliates on the other hand are subject to compliance with Sections 23A and 23B of the Federal Reserve Act and Regulation W
issued by the Fed. These laws and regulations generally limit the types and amounts of transactions (including credit extensions
from (i) RJ Bank, RJ Trust or their subsidiaries to (ii) RJF or its other subsidiaries or affiliates) that may take place and
generally require those transactions to be on market terms. These laws and regulations generally do not apply to transactions
between RJ Bank or RJ Trust and their subsidiaries.
The Volcker Rule, a provision of the Dodd-Frank Act, generally prohibits certain transactions and imposes a market terms
requirement on certain other transactions between (i) RJF or its other subsidiaries or affiliates on the one hand and (ii) covered
funds for which RJF or its subsidiaries or affiliates serve as the investment manager, investment advisor, commodity trading
advisor or sponsor, or other covered funds organized and offered by RJF or its other subsidiaries or affiliates on the other hand.
See “The Volcker Rule” in the following section.
Deposit insurance
Since RJ Bank provides deposits covered by FDIC insurance, generally up to $250,000 per account ownership type, RJ Bank is
subject to the Federal Deposit Insurance Act. For banks with greater than $10 billion in assets, which includes RJ Bank, the
FDIC’s current assessment rate calculation relies on a scorecard designed to measure financial performance and ability to
withstand stress, in addition to measuring the FDIC’s exposure should the bank fail.
Prompt corrective action
The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the U.S. federal bank
regulatory agencies to take “prompt corrective action” with respect to depository institutions that do not meet specified capital
requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as RJ Bank: well-capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
An institution may be downgraded to, or deemed to be in, a capital category that is lower than the category indicated by its
capital ratios if the institution is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory
examination rating with respect to certain matters. FDICIA imposes progressively more restrictive constraints on operations,
management and capital distributions, as the capital category of an institution declines. Failure to meet the capital requirements
could also require a depository institution to raise capital. Ultimately, critically undercapitalized institutions are subject to the
appointment of a receiver or conservator.
The prompt corrective action regulations do not apply to BHCs, such as RJF. However, the Fed is authorized to take
appropriate action at the BHC level, based upon the undercapitalized status of the BHC’s depository institution subsidiaries. In
certain instances related to an undercapitalized depository institution subsidiary, the BHC would be required to guarantee the
performance of the undercapitalized subsidiary’s capital restoration plan and might be liable for civil money damages for failure
to fulfill its commitments on that guarantee. Furthermore, in the event of the bankruptcy of the BHC, this guarantee would take
priority over the BHC’s general unsecured creditors. As of September 30, 2020, RJ Bank was categorized as well-capitalized.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
The Volcker Rule
RJF is subject to the Volcker Rule, which generally prohibits BHCs and their subsidiaries and affiliates from engaging in
proprietary trading or acquiring or retaining an ownership interest, sponsoring, or having certain relationships with hedge funds
and private equity funds, subject to certain exceptions.
We have proprietary private equity investments that meet the definition of covered funds under the Volcker Rule. The
conformance period for compliance with the rule with respect to investments in covered funds was July 2017; however,
banking entities were able to apply for an extension to provide up to an additional five years to conform investments in certain
illiquid funds. The majority of our covered fund investments meet the criteria to be considered an illiquid fund under the
Volcker Rule and we received approval from the Fed to continue to hold such investments until July 2022. The extension of
the conformance deadline provides us with additional time to attempt to realize the value of these investments in due course and
to execute appropriate strategies to comply with the Volcker Rule at such time. However, our current focus is on the divestiture
of our existing covered fund portfolio.
The Fed, OCC, FDIC, SEC, and Commodity Futures Trading Commission (“CFTC”) finalized amendments to the Volcker
Rule in 2019, which relate primarily to the Volcker Rule’s proprietary trading and compliance program requirements. The
amendments do not change the Volcker Rule’s general prohibitions, but they offer certain clarifications and a simplified
approach to compliance.
In June 2020, the Fed, OCC, FDIC, SEC and CFTC finalized further amendments to the Volcker Rule. The final rule includes
new exclusions from the Volcker Rule’s general prohibition on banking entities investing in and sponsoring private equity
funds, hedge funds, and certain other investment vehicles (collectively, “covered funds”) for credit funds, venture capital funds,
family wealth management vehicles, and customer facilitation vehicles. The final rule also revises existing exclusions for
foreign public funds, loan securitizations, and public welfare and small business funds. In addition, the final rules modify the
“Super 23” provisions of the Volcker Rule, which prohibit banking entities from extending credit to and entering into certain
transactions with advised or sponsored covered funds, by exempting certain short-term extensions of credit, among several
other previously prohibited transactions.
Many of the amendments contained in the final rule address aspects of the existing regulations that have, since their adoption in
2013, proven in practice to be complex and burdensome or to have unintended consequences. The final rule is intended to
clarify and simplify compliance with the implementing regulations and permit additional fund activities that do not present the
risks that the Volcker Rule was intended to address. The final rule became effective on October 1, 2020 for all banking entities
subject to the Volcker Rule, including RJF and its subsidiaries.
Compensation practices
Our compensation practices are subject to oversight by the Fed. Compensation regulation in the financial industry continues to
develop, and we expect these regulations to change over a number of years. The U.S. federal bank regulatory agencies have
provided guidance designed to ensure incentive compensation policies do not encourage imprudent risk-taking and are
consistent with safety and soundness. The Dodd-Frank Act requires the U.S. financial regulators to adopt rules on incentive-
based payment arrangements. The U.S. financial regulators proposed revised rules in 2016, which have not yet been finalized.
Community Reinvestment Act regulations
RJ Bank is subject to the CRA, which is intended to encourage banks to help meet the credit needs of their communities,
including low and moderate income neighborhoods, consistent with safe and sound bank operations. Under the CRA, the Fed,
the FDIC and the OCC are required to periodically examine and assign to each bank a public CRA rating. If any insured
depository institution subsidiary of a FHC fails to maintain at least a “satisfactory” rating under the CRA, the FHC would be
subject to restrictions on certain new activities and acquisitions.
The OCC issued a final rule comprehensively amending the CRA regulations applicable to RJ Bank and other OCC-regulated
banks in May 2020. At the core of the OCC’s final rule is a set of new general performance standards that establish more
quantitative measures of CRA performance than the tests set forth in existing CRA regulations.
While RJ Bank will be required to comply with the final rule by January 2023, the OCC has deferred the decision of how key
thresholds and benchmarks used in the rule will be applied to determine the level of performance necessary to achieve a
particular performance rating to a future rulemaking process. As a result, the final rule creates some uncertainty for RJ Bank
and other OCC-regulated banks in planning their CRA activities until that decision is made.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Neither the FDIC nor the Fed joined the OCC in issuing the final rule, and the Fed issued an advanced notice of proposed
rulemaking for the CRA regulations applicable to state-charted banks it supervises in September 2020. State-chartered banks
will therefore continue to operate under the FDIC’s and Fed’s CRA regulations rather than the OCC’s CRA regulations. In
June 2020, certain organizations filed suit against the OCC asking a court to issue an order setting the rule aside. In the same
month, the U.S. House of Representatives passed a Congressional Review Act resolution of disapproval in an attempt to nullify
the rule. This measure failed to pass a required U.S. Senate vote in October 2020. These developments create further
uncertainty for RJ Bank and others in planning their CRA activities.
Other restrictions
FHCs, such as RJF, generally can engage in a broader range of financial and related activities than are otherwise permissible for
BHCs as long as they continue to meet the eligibility requirements for FHCs. The broader range of permissible activities for
FHCs includes underwriting, dealing and making markets in securities and making investments in non-FHCs or merchant
banking activities.
The Fed, however, has the authority to limit an FHC’s ability to conduct activities that would otherwise be permissible, and will
likely do so if the FHC does not satisfactorily meet certain requirements of the Fed. For example, if an FHC or any of its U.S.
depository institution subsidiaries ceases to maintain its status as “well-capitalized” or “well-managed,” the Fed may impose
corrective capital and/or managerial requirements, as well as additional limitations or conditions. If the deficiencies persist, the
FHC may be required to divest its U.S. depository institution subsidiaries or to cease engaging in activities other than the
business of banking and certain closely related activities.
In addition, we are required to obtain prior Fed approval before engaging in certain banking and other financial activities both
within and outside the U.S.
Broker-dealer and securities regulation
The SEC is the federal agency charged with administration of the federal securities laws in the U.S. Our U.S. broker-dealer
subsidiaries are subject to SEC regulations relating to their business operations, including sales and trading practices, public
offerings, publication of research reports, use and safekeeping of client funds and securities, capital structure, record-keeping,
privacy requirements, and the conduct of directors, officers and employees. Financial services firms are also subject to
regulation by state securities commissions in those states in which they conduct business. Our primary U.S. broker-dealers,
RJ&A and RJFS, are currently registered as broker-dealers in all 50 states.
Financial services firms are also subject to regulation by various foreign governments, securities exchanges, central banks and
regulatory bodies, particularly in those countries where they have established offices. Outside of the U.S., we have additional
offices primarily in Canada and Europe and are subject to regulations in those areas. Much of the regulation of broker-dealers
in the U.S. and Canada, however, has been delegated to self-regulatory organizations (“SROs”) (e.g., the Financial Industry
Regulatory Authority (“FINRA”), the Investment Industry Regulatory Organization of Canada (“IIROC”) and securities
exchanges). These SROs adopt and amend rules for regulating the industry, subject to the approval of government agencies.
These SROs also conduct periodic examinations of member broker-dealers.
The SEC, SROs and state securities regulators may conduct administrative proceedings that can result in censure, fine,
suspension or expulsion of a broker-dealer, its officers, employees or other associated persons. Such administrative
proceedings, whether or not resulting in adverse findings, can require substantial expenditures and may adversely impact the
reputation of a broker-dealer.
Our U.S. broker-dealer subsidiaries are subject to the Securities Investor Protection Act (“SIPA”) and are required by federal
law to be members of the Securities Investors Protection Corporation (“SIPC”). The SIPC was established under SIPA, and
oversees the liquidation of broker-dealers during liquidation or financial distress. The SIPC fund provides protection for cash
and securities held in client accounts up to $500,000 per client, with a limitation of $250,000 on claims for cash balances.
U.S. broker-dealer capital
Broker-dealers are required to maintain the minimum net capital deemed necessary to meet their continuing commitments to
customers and others, and are required to keep their assets in relatively liquid form. These rules also limit the ability of broker-
dealers to transfer capital to parent companies and other affiliates. Our broker-dealer subsidiaries are subject to certain of the
SEC’s financial stability rules, including the: (i) net capital rule; (ii) customer protection rule; (iii) record-keeping rules; and (iv)
notification rules.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Standard of care
Pursuant to the Dodd-Frank Act, the SEC was charged with considering whether broker-dealers should be subject to a standard
of care similar to the fiduciary standard applicable to registered investment advisors. In June 2019, the SEC adopted a package
of rule-makings and interpretations related to the provision of advice by broker-dealers and investment advisers, including
Regulation Best Interest and Form CRS. Among other things, Regulation Best Interest requires a broker-dealer to act in the
best interest of a retail customer when making a recommendation to that customer of any securities transaction or investment
strategy involving securities. Form CRS requires that broker-dealers and investment advisers provide retail investors with a
brief summary document containing simple, easy-to-understand information about the nature of the relationship between the
parties. Since June 30, 2020, we have been required to comply with Regulation Best Interest and Form CRS. Implementation
of the regulations required us to review and modify our policies and procedures, as well as associated supervisory and
compliance controls, satisfy additional disclosure obligations, and provide related education and training to financial advisors.
Additionally, various states have proposed, or adopted, laws and regulations seeking to impose new standards of conduct on
broker-dealers that may differ from the SEC’s new regulations, which will lead to additional implementation costs. The
Department of Labor (“DOL”) has also reinstated the historical “five-part test” for determining who is an investment advice
“fiduciary” when dealing with certain retirement plans and accounts and proposed a new exemption to allow investment advice
fiduciaries to receive transaction-based compensation and engage in certain principal trades. We are studying and evaluating
the proposal. The total impact of the DOL change on our business will not be fully known until the proposal is finalized and
could lead to additional costs.
Investment management regulation
Our investment advisory operations, including the mutual funds that we sponsor, are also subject to extensive regulation in the
U.S. The majority of our asset managers are registered as investment advisers with the SEC under the Investment Advisers Act
of 1940 as amended (the “Investment Advisers Act”), and are also required to make notice filings in certain states. Virtually all
aspects of our asset management business are subject to various federal and state laws and regulations. These laws and
regulations are primarily intended for the benefit of our clients.
Anti-money laundering, economic sanctions, and anti-bribery and corruption regulation
The U.S. Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act of 2001 (“PATRIOT Act”) and the Customer
Due Diligence Rule, contains anti-money laundering and financial transparency laws and mandates the implementation of
various regulations applicable to all financial institutions, including standards for verifying client identification at account
opening, and obligations to monitor client transactions and report suspicious activities. Through these and other provisions, the
BSA and the PATRIOT Act seek to promote the identification of parties that may be involved in terrorism, money laundering
or other suspicious activities. Anti-money laundering laws outside the U.S. contain some similar provisions.
The U.S. Treasury’s Office of Foreign Assets Control administers economic and trade sanctions programs and enforces
sanctions regulations with which all U.S. persons must comply. The European Union (“E.U.”) as well as various countries have
also adopted economic sanctions programs targeted at countries, entities and individuals that are involved in terrorism,
hostilities, embezzlement or human rights violations.
In addition, various countries have adopted laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K.
Bribery Act, related to corrupt and illegal payments to, and hiring practices with regard to, government officials and others. The
scope of the types of payments or other benefits covered by these laws is very broad and is subject to significant uncertainties
that may be clarified only in the context of further regulatory guidance or enforcement proceedings.
RJF and its affiliates have been required to implement and maintain internal policies, procedures, and controls to meet the
compliance obligations imposed by such U.S. and non-U.S. laws and regulations concerning anti-money laundering, economic
sanctions, and anti-bribery and corruption. Failure to meet the requirements of these regulations can result in supervisory action,
including fines.
Privacy and data protection
U.S. federal law establishes minimum federal standards for financial privacy by, among other provisions, requiring financial
institutions to adopt and disclose privacy policies with respect to consumer information and setting forth certain limitations on
disclosure to third parties of consumer information. U.S. state laws and regulations adopted under U.S. federal law impose
obligations on RJF and its subsidiaries for protecting the confidentiality, integrity and availability of client information, and
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
require notice of data breaches to certain U.S. regulators and to clients. The SEC’s Regulation S-ID mandates the development
and implementation of a written Identity Theft Prevention Program that is designed to detect, prevent, and mitigate identity
theft. The California Consumer Privacy Act, which became effective on January 1, 2020, imposes privacy compliance
obligations with regard to the personal information of California residents, including requiring companies to provide new
disclosures to California consumers, and provides for a number of new rights for California residents. Similarly, the General
Data Protection Regulation (“GDPR”) imposes additional requirements for companies that collect or store personal data of E.U.
residents. GDPR expands the scope of the E.U. data protection law to all foreign companies processing personal data of E.U.
residents, imposes a strict data protection compliance regime, and includes new rights for E.U. residents. We have adopted
privacy policies and communicated required information relating to financial privacy and data security, in accordance with
applicable laws. We continue to monitor regulations related to data privacy and protection on both a domestic and international
level to assess requirements and impacts on our global business operations.
Legislative and regulatory changes in connection with COVID-19
The COVID-19 pandemic has resulted in governments around the world implementing numerous measures to help control the
spread of the virus, including, among others, quarantines, travel restrictions and business curtailments. In addition,
governments globally intervened with fiscal policy to mitigate the impact of the pandemic, including the Coronavirus Aid,
Relief, and Economic Security (“CARES”) Act in the U.S., which aimed to provide economic relief to businesses and
individuals.
The CARES Act includes a broad range of provisions intended to support the U.S. economy. Among its provisions, the act
allocates funds for a new Paycheck Protection Program that expands an existing Small Business Administration (“SBA”) loan
guarantee program for small businesses to keep their employees on payroll and make other eligible payments. Currently, the
firm does not act as a lender under these programs and facilities, and has no immediate plans to do so.
The CARES Act also provides certain temporary regulatory relief for financial institutions, including RJF and its subsidiaries.
The act permits financial institutions to temporarily suspend any determination of a loan modified as a result of the effects of
the COVID-19 pandemic as being a troubled debt restructuring (“TDR”), including impairment for accounting purposes. We
elected to apply the CARES Act relief to certain loan modifications that relate primarily to short-term payment deferrals and
have not classified such modifications as TDRs. See “Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Risk management - Credit risk” for further information on the impact of such loan modifications. The
act also permits financial institutions to temporarily delay the implementation of the Current Expected Credit Losses (“CECL”)
model for estimating allowances for credit losses. In addition, the Fed, the FDIC and the OCC issued a joint statement
providing banking organizations optional temporary relief by delaying the initial adoption impact of CECL on regulatory
capital for two years, followed by a three-year transition period to phase out the aggregate amount of the capital benefit
provided during 2020 and 2021 (i.e., a five-year transition period). We did not delay our October 1, 2020 initial adoption of the
implementation of CECL and did not take the optional temporary relief by delaying the impact of CECL on our regulatory
capital calculations.
The CARES Act grants potential tax relief and liquidity to businesses, including corporate tax provisions that: temporarily
allow for the carryback of net operating losses and remove limitations on the use of loss carryforwards, increase interest
expense deduction limitations, and allow accelerated depreciation deductions on certain asset improvements. In addition, the
CARES Act allows employers to defer the payment, including the deposit, of payroll taxes for the 2020 calendar year from
March 27, 2020 until December 31, 2021 for 50 percent of such taxes and December 31, 2022 for the remaining 50 percent.
The CARES Act further provides a number of consumer finance protections. The act provides a range of forbearance rights
with respect to any federally backed residential or multi-family mortgage loan and generally limits the ability of a lender or
servicer to institute foreclosure or similar proceedings. The act additionally imposes a moratorium on evictions from dwellings
of many tenants. On September 1, 2020, the Department of Health and Human services, through the Centers for Disease
Control and Prevention, announced a nationwide order temporarily halting certain residential evictions. These provisions are
consistent with supervisory guidance previously issued by federal banking agencies, which also stated that they would not
criticize financial institutions for working with customers affected by the outbreak in a safe and sound manner. We have
modified our processes to ensure full compliance and are working as appropriate to support affected businesses and individuals
during this time. Many state and local authorities have also taken, or are considering taking, legislative, executive, or other
action to respond to the economic disruptions caused by the spread of COVID-19, including with respect to foreclosure and
repossession moratoriums.
The Company’s legislative and regulatory environment is continually changing in response to the COVID-19 pandemic, and
new or modified laws, regulations and guidance may be promulgated at very short notice.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Other non-U.S. regulation
Raymond James Ltd. (“RJ Ltd.”) is currently registered as an investment dealer in all provinces and territories in Canada. The
financial services industry in Canada is subject to comprehensive regulation under both federal and provincial laws. Securities
commissions have been established in all provinces and territorial jurisdictions, which are charged with the administration of
securities laws. Investment dealers in Canada are subject to regulation by IIROC, a SRO under the oversight of the securities
commissions that make up the Canadian Securities Administrators. IIROC is responsible for the enforcement of, and
conformity with, securities legislation for their members and has been granted the powers to prescribe their own rules of
conduct and financial requirements of members, including RJ Ltd. IIROC also requires that RJ Ltd. be a member of the
Canadian Investors Protection Fund, whose primary role is investor protection. This fund provides protection for securities and
cash held in client accounts up to 1 million Canadian dollars (“CAD”) per client, with additional coverage of CAD 1 million for
certain types of accounts. See Note 22 of the Notes to Consolidated Financial Statements of this Form 10-K for further
information pertaining to broker-dealer regulatory minimum net capital requirements.
Certain of our subsidiaries are registered in, and operate from, the U.K. which has a highly developed and comprehensive
regulatory regime. Certain of these subsidiaries operate in the retail sector, providing investment and financial planning
services to high-net-worth individuals, while others provide brokerage and investment banking services to institutional clients.
These subsidiaries are authorized and regulated by the U.K. conduct regulator, the Financial Conduct Authority (“FCA”), and
have permission to carry out business in other E.U. countries as part of treaty arrangements; however, these permissions may be
negatively impacted by the terms and conditions of the U.K.’s withdrawal from the E.U. (“Brexit”).
As of September 30, 2020, we have entered into an agreement to sell our interests in certain of our subsidiaries which are
incorporated and operate in France and that provide investment and asset management services to high-net-worth individuals
and brokerage services to institutional clients. These subsidiaries are both authorized and regulated by the French Regulatory
Authority the L’Autorité de contrôle prudentiel et de resolution and Autorité des Marchés Financiers and have permission to
carry out business in other E.U. countries as part of treaty arrangements. We expect the sale to be completed in the first half of
fiscal 2021.
In Europe, the Markets in Financial Instruments Regulation and a revision of the Markets in Financial Instruments Directive
(together, “MiFID II”), generally took effect on January 3, 2018, and introduced comprehensive, new trading and market
infrastructure reforms in the E.U., including new trading venues, enhancements to pre- and post-trading transparency, and
additional investor protection requirements, among others. These reforms also changed the way investment managers can pay
for the receipt of investment research and mandated unbundling between execution and other major services, including
research, for broker-dealers.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Executive officers of the registrant (which includes officers of certain significant subsidiaries) are as follows:
Paul D. Allison
James E. Bunn
64 Chairman, President and CEO - Raymond James Ltd. since January 2009
47 President - Global Equities and Investment Banking - Raymond James & Associates, Inc. since
December 2018 and Head of Investment Banking - Raymond James & Associates, Inc. since
January 2014; Co-President - Global Equities and Investment Banking - Raymond James &
Associates, Inc., October 2017 - December 2018
John C. Carson, Jr.
64 President since April 2012; President - Morgan Keegan & Company, LLC, formerly known as
Morgan Keegan & Company, Inc., since July 2013
George Catanese
61 Chief Risk Officer since February 2006
Scott A. Curtis
58 President - Private Client Group since June 2018; President - Raymond James Financial
Services, Inc. since January 2012
Jeffrey A. Dowdle
Tashtego S. Elwyn
56 Chief Operating Officer and Head of Asset Management Group since October 2019; Chief
Administrative Officer, August 2018 - October 2019; President - Asset Management Group,
May 2016 - October 2019; Executive Vice President - Asset Management Group, February
2014 - May 2016
49 Chief Executive Officer and President - Raymond James & Associates, Inc. since June 2018;
President - Private Client Group - Raymond James & Associates, Inc., January 2012 - June
2018
Thomas A. James
78 Chairman Emeritus since February 2017; Executive Chairman, May 2010 - February 2017
Jeffrey P. Julien
64 Executive Vice President - Finance since August 2009; Chief Financial Officer, April 1987 -
December 2019; Treasurer, February 2011 - February 2018
Bella Loykhter Allaire
67 Executive Vice President - Technology and Operations - Raymond James & Associates, Inc.
since June 2011
Jodi L. Perry
49 President - Independent Contractor Division - Raymond James Financial Services, Inc. since
June 2018; Senior Vice President, National Director - ICD - Raymond James Financial
Services, Inc., May 2018 - June 2018; Senior Vice President, ICD Regional Director -
Raymond James Financial Services, Inc., June 2012 - May 2018
Steven M. Raney
55 President and CEO - Raymond James Bank, N.A. since January 2006
Paul C. Reilly
66 Chairman since February 2017 and Chief Executive Officer since May 2010; Director since
January 2006
Jonathan N. Santelli
Paul M. Shoukry
49 Executive Vice President, General Counsel and Secretary since May 2016; Senior Vice
President and Deputy General Counsel - First Republic Bank, October 2013 to April 2016
37 Chief Financial Officer since January 2020 and Treasurer since February 2018; Senior Vice
President - Finance and Investor Relations, January 2017 - December 2019; Senior Vice
President - Treasury, January 2017 - February 2018; Vice President - Finance and Investor
Relations, July 2012 - December 2016
Except where otherwise indicated, the executive officer has held his or her current position for more than five years.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ADDITIONAL INFORMATION
Our Internet address is www.raymondjames.com. We make available on our website, free of charge and in printer-friendly
format including “.pdf” file extensions, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our
reports and other information that we electronically file with the SEC are also available free of charge on the SEC’s website at
www.sec.gov.
FACTORS AFFECTING “FORWARD-LOOKING STATEMENTS”
litigation,
results of
Certain statements made in this Annual Report on Form 10-K 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 and divestitures,
regulatory developments, effects of accounting pronouncements, and general
anticipated
economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” 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 “Item 1A - Risk Factors” of this report. 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.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described in the following
sections, which could adversely affect our business, financial condition, results of operations, liquidity and the trading price of
our common stock. The list of risk factors provided in the following sections is not exhaustive; there may be other factors that
adversely impact our results of operations, harm our reputation or inhibit our ability to generate new business prospects. The
following sections should be read in conjunction with “Item 7 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and our consolidated financial statements and accompanying notes in “Item 8 - Financial Statements
and Supplementary Data” of this Annual Report on Form 10-K. In particular, see “Item 7 - Management’s Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and capital resources” for additional information on
liquidity and how we manage our liquidity risk and “Item 7 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Risk management” for additional information on our exposure and how we monitor and manage our
market, credit, operational, compliance and certain other risks.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
The worldwide COVID-19 pandemic has adversely affected, and will likely continue to adversely affect, our business,
financial condition, and results of operations.
The worldwide 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, have had a significant impact on global economic conditions and
have negatively impacted certain aspects of our business and results of operations, and may continue to do so in the future.
Although certain economic conditions showed signs of improvement toward the end of fiscal 2020, certain of the impacts of the
COVID-19 pandemic may continue to affect our results in the future, including: lower net interest income and RJBDP fees
from third-party banks due to a significant reduction by the Federal Reserve of its benchmark short-term interest rate in
response to the pandemic; volatility in our brokerage revenues and investment banking revenues due to market uncertainty
caused by the pandemic; increased credit risk, particularly with regard to industries most vulnerable to the pandemic (e.g.,
airline, restaurant, gaming, entertainment/leisure and energy), which may continue to result in an elevated bank loan loss
provision and charge-offs. In addition, should market conditions deteriorate further, or if there is a decline in equity markets
similar to that experienced during our fiscal 2020 second quarter, the value of our clients’ assets and certain of our investments
would also be negatively affected.
We may also continue to experience business disruptions as a result of the continued spread of COVID-19, resulting from
restrictions on our employees’ ability to travel, as well as temporary partial or full closures of our facilities and the facilities of
our customers, suppliers, or other vendors. We often recruit skilled professionals by visiting their offices or having them visit
our offices. Although we have transitioned such visits to virtual meetings, continued travel restrictions or other disruptions that
prevent us from meeting with professional prospects may adversely impact our ability to recruit such professional prospects.
Further, the increased availability of remote working arrangements in response to the pandemic may intensify competition for
prospective new associates and impair our ability to retain current associates. It may also become more difficult to maintain our
distinctive corporate culture, which is in part dependent on a certain level of in-person interaction, in the face of a prolonged,
large-scale industry shift to remote work. While we maintain contingency plans for events such as pandemic outbreaks, the
further spread of COVID-19 or a similar contagious disease could also impair the effectiveness of our executive officers or
other associates who are necessary to conduct our business. In addition, any continued spread of COVID-19 or new outbreak
could harm the operations of third-party service providers who perform critical services for our business.
If COVID-19, or another highly infectious or contagious disease, continues to spread or the response to contain it is
unsuccessful, we will likely experience further adverse effects on our business, financial condition, liquidity, and results of
operations. A prolonged period of economic deterioration could ultimately result in impairment of our goodwill and
identifiable intangible assets. In addition, if conditions in financial markets further deteriorate as a result of the pandemic, our
access to capital and other sources of funding may become constrained, which may require us to restructure debt or obtain
additional financing on terms that may be onerous or highly dilutive.
The extent of any of the previously-described effects on our business will depend on future developments which are highly
uncertain and cannot be predicted, including the duration of the COVID-19 pandemic, the development, distribution, and
acceptance of an effective vaccine, the measures taken by various governmental authorities in response to the pandemic and the
possible further impacts on the global economy.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Damage to our reputation could damage our businesses.
Maintaining our reputation is critical to attracting and maintaining clients, investors, and associates. If we fail to address, or
appear to fail to address, issues that may give rise to reputational risk, we could significantly harm our business prospects.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including appropriately dealing with
potential conflicts of interest, legal and regulatory requirements, ethical issues, money laundering, cybersecurity and privacy,
record-keeping, sales and trading practices, and associate misconduct. In addition, the failure to sell securities we have
underwritten at anticipated price levels and the proper identification of the risks inherent in the products and services we offer
could also give rise to reputational risk. Failure to maintain appropriate service and quality standards or a failure or perceived
failure to treat clients fairly can result in client dissatisfaction, litigation and heightened regulatory scrutiny, all of which can
lead to lost revenue, higher operating costs and reputational harm. Negative publicity about us, whether or not true, may also
harm our reputation. Further, failures at other large financial institutions or other market participants, regardless of whether
they relate to our activities, could lead to a general loss of customer confidence in financial institutions that could negatively
affect us, including harming the market perception of the financial system in general.
We are affected by domestic and international macroeconomic conditions that impact the global financial markets.
We are engaged in various financial services businesses. As such, we are affected by domestic and international
macroeconomic and political conditions, as well as economic output levels, interest and inflation rates, employment levels,
prices of commodities, consumer confidence levels, international trade policy, and fiscal and monetary policy. For example,
Fed policies determine, in large part, the cost of funds for lending and investing and the return earned on those loans and
investments. The market impact from such policies also can decrease materially the value of certain of our financial assets,
most notably debt securities, as well as our cash flows, such as those associated with client cash balances. Changes in Fed
policies are beyond our control and, consequently, the impact of these changes on our activities and results of our operations are
difficult to predict. In addition, our results of operations may be impacted by changes resulting from different political
philosophies governing individual and corporate taxation, as well as regulation, which may result from the outcome of the
recent federal elections in the U.S. Changes in tax law and regulation, or any market uncertainty caused by a change in the
political environment, may negatively affect our business. Macroeconomic conditions may also directly and indirectly impact a
number of factors in the global financial markets that may be detrimental to our operating results, including trading levels,
investing, and origination activity in the securities markets, financial instrument valuations, the absolute and relative level and
volatility of interest and currency rates, real estate values, the actual and perceived quality of issuers and borrowers, and the
supply of and demand for loans and deposits.
In recent years, we experienced an operating environment that was favorable for many of our businesses, characterized by
rising equity markets and higher levels of interest rates. However, the recent significant reduction by the Fed of its benchmark
short-term interest rate, including to ameliorate the macroeconomic effects of the COVID-19 pandemic, has had a significant
negative impact on our 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. These market interest rate declines will continue
to negatively impact our results and cash flows in future quarters.
In addition, if we were to experience a period of sustained downturn in the securities markets, credit market dislocations,
reductions in the value of real estate, further increases in mortgage and other loan delinquencies, or other negative market
factors, including from the continuing impact of the COVID-19 pandemic, our revenues could be adversely impacted. Market
volatility could also cause clients to move their investments to lower margin products, or withdraw them, which could have an
adverse impact on our profitability. We could also experience a material reduction in trading volume and lower securities
prices in times of market uncertainty, which would result in lower brokerage revenues, including losses on firm inventory.
Conversely, periods of severe market volatility may result in a significantly higher level of transactions and other activity which
may cause operational challenges that may result in losses. These can include, but are not limited to, trade errors, failed
transaction settlements, late collateral calls to borrowers and counterparties, or interruptions to our system processing. The fair
values of certain of our investments could also be negatively impacted, resulting in additional unrealized or realized losses on
such investments. Periods of reduced revenue and other losses could lead to reduced profitability because certain of our
expenses, including our interest expense on debt, rent, facilities and salary expenses, are fixed, and our ability to reduce them
over short time periods is limited.
U.S. markets may also be impacted by political and civil unrest occurring in other parts of the world. Our businesses and
revenues derived from non-U.S. operations may also be subject to risk of loss from currency fluctuations, social or political
instability, less established regulatory regimes, changes in governmental or central bank policies, downgrades in the credit
ratings of sovereign countries, expropriation, nationalization, confiscation of assets and unfavorable legislative, economic and
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
political developments. Concerns about Brexit and the stability of the E.U.’s sovereign debt could cause uncertainty and
disruption in financial markets globally. Continued uncertainties loom over the future of the U.K.’s relationship with the E.U.,
including future trading arrangements between the U.K. and the E.U., following the expiration of the transition period on
December 31, 2020. During the transition period of Brexit, we are taking steps to make certain changes to our European
operations in an effort to ensure that, where possible, we can continue to provide cross-border services in E.U. member states
without the need for separate regulatory authorizations in each member state. There is also continued uncertainty regarding the
outcome of the E.U.’s financial support programs. It is possible that other E.U. member states may experience financial
troubles in the future, or may choose to follow the U.K.’s lead and leave the E.U. Any negative impact on economic conditions
and global markets from these developments could adversely affect our business, financial condition and liquidity.
We may be negatively impacted by budget pressures affecting U.S. state and local governments, as well as negative trends in
the housing and labor markets, including those resulting directly or indirectly from the COVID-19 pandemic. Investor concerns
regarding these trends could potentially reduce the number and size of transactions in which we participate and, in turn, reduce
our debt underwriting revenues. In addition, such factors could potentially have an adverse effect on the value of the municipal
securities we hold in our trading inventory.
RJ Bank is affected primarily by economic conditions in North America. Market conditions in the U.S. and Canada can be
assessed through the following metrics: the level and volatility of interest rates; unemployment and under-employment rates;
real estate prices; consumer confidence levels and changes in consumer spending; and the number of personal bankruptcies,
among others. Deterioration of market conditions, such as those we have experienced due to the COVID-19 pandemic, have
and could continue to diminish loan demand, which may result in sales of loans at unattractive prices in order to reduce risk in
our loan portfolio, lead to an increase in mortgage and other loan delinquencies, affect loan repayment performance, and result
in higher loan loss provisions and net charge-offs, which can adversely affect our earnings.
Lack of liquidity or access to capital could impair our business and financial condition.
Our inability to maintain adequate liquidity or to easily access credit and capital markets could have a significant negative effect
on our financial condition. If liquidity from our brokerage or banking operations is inadequate or unavailable, we may be
required to scale back or curtail our operations, such as limiting our recruiting of additional financial advisors, limiting lending,
selling assets at unfavorable prices, and cutting or eliminating dividend payments. Our liquidity could be negatively affected
by: the inability of our subsidiaries to generate cash in the form of dividends from earnings; liquidity or capital requirements
applicable to our subsidiaries that may prevent us from distributing cash to the parent company; limited or no accessibility to
credit markets for secured and unsecured borrowings by our subsidiaries; diminished access to the capital markets for RJF; and
other commitments or restrictions on capital as a result of adverse legal settlements, judgments, or regulatory sanctions.
Furthermore, as a bank holding company, we may become subject to prohibitions or limitations on our ability to pay dividends
and/or repurchase our stock. Certain of our regulators have the authority, and under certain circumstances, the duty, to prohibit
or to limit dividend payments by regulated subsidiaries to their parent company.
The availability of financing, including access to the credit and capital markets, depends on various factors, such as conditions
in the debt and equity markets, the general availability of credit, the volume of securities trading activity, the overall availability
of credit to the financial services sector, and our credit ratings. Our cost of capital and the availability of funding may be
adversely affected by illiquid credit markets and wider credit spreads. Additionally, lenders may from time to time curtail, or
even cease to provide, funding to borrowers as a result of future concerns over the strength of specific counterparties, as well as
the stability of markets generally.
We are exposed to credit risk.
We are generally exposed to the risk that third parties that owe us money, securities or other assets will fail to meet their
obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others. This risk
has been and may further be exacerbated by the effects of the COVID-19 pandemic. We actively buy and sell securities from
and to clients and counterparties in the normal course of our broker-dealers’ trading and underwriting businesses, which
exposes us to credit risk. Although generally collateralized by the underlying security to the transaction, we still face risk
associated with changes in the market value of collateral through settlement date. We also hold certain securities, loans and
derivatives as part of our trading operations. Deterioration in the actual or perceived credit quality of the underlying issuers of
securities or loans or the non-performance of issuers and counterparties to certain derivatives could result in losses.
We borrow securities from, and lend securities to, other broker-dealers and may also enter into agreements to repurchase and/or
resell securities as part of investing and financing activities. A sharp change in the security market values utilized in these
transactions may result in losses if counterparties to these transactions fail to honor their commitments. We manage the risk
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
associated with these transactions by establishing and monitoring credit limits, as well as by evaluating collateral and
transaction levels on a recurring basis. Significant deterioration in the credit quality of one of our counterparties could lead to
widespread concerns about the credit quality of other counterparties in the same industry, thereby exacerbating our credit risk.
In addition, we permit our clients to purchase securities on margin. During periods of steep declines in securities prices, the
value of the collateral securing client margin loans may fall below the amount of the purchaser’s indebtedness. If clients are
unable to provide additional collateral for these margin loans, we may incur losses on those margin transactions. This may
cause us to incur additional expenses defending or pursuing claims or litigation related to counterparty or client defaults.
We deposit our cash in depository institutions as a means of maintaining the liquidity necessary to meet our operating needs,
and we also facilitate the deposit of cash awaiting investment in depository institutions on behalf of our clients. A failure of a
depository institution to return these deposits could severely impact our operating liquidity, result in significant reputational
damage, and adversely impact our financial performance.
We also incur credit risk by lending to businesses and individuals, including through offering C&I loans, commercial and
residential mortgage loans, tax-exempt loans, home equity lines of credit, SBL and other loans. We also incur credit risk
through our investments. Our credit risk and credit losses can increase if our loans or investments are concentrated among
borrowers or issuers engaged in the same or similar activities, industries, or geographies, or to borrowers or issuers who as a
group may be uniquely or disproportionately affected by economic or market conditions, such as those most impacted by the
COVID-19 pandemic, including the airline, restaurant, gaming, entertainment/leisure and energy sectors. The deterioration of
an individually large exposure, for example due to natural disasters, health emergencies or pandemics, acts of terrorism, severe
weather events or other adverse economic events, could lead to additional loan loss provisions and/or charges-offs, or credit
impairment of our investments, and subsequently have a material impact on our net income and regulatory capital.
Declines in the real estate market or sustained economic downturns may cause us to write down the value of some of the loans
in RJ Bank’s portfolio, sell loans at unattractive prices, foreclose on certain real estate properties or write down the value of
some of our securities. Credit quality generally may also be affected by adverse changes in the financial performance or
condition of our debtors or deterioration in the strength of the U.S. economy.
We are exposed to market risk, including interest rate risk.
We are, directly and indirectly, affected by changes in market conditions. Market risk generally represents the risk that values
of assets and liabilities or revenues will be adversely affected by changes in market conditions. For example, interest rate
changes could adversely affect our net interest spread, the difference between the yield we earn on our interest-earning assets
and the interest rate we pay for deposits and other sources of funding, which in turn impacts our net interest income and
earnings. Interest rate changes could affect the interest earned on assets differently than interest paid on liabilities. Moreover,
while there is no indication currently that the Fed plans to reduce its targeted Fed funds rate to a negative rate, if such a policy
were to be adopted the cost to hold both firm and client deposits would have an adverse impact on our profitability.
In our brokerage operations, a rising interest rate environment generally results in our earning a larger net interest spread and an
increase in servicing fees received on cash swept to third-party banks as part of the RJBDP, our multi-bank sweep program.
Conversely, in those operations, a falling interest rate environment generally results in our earning a smaller net interest spread
and lower RJBDP fees from third-party banks. If we are unable to effectively manage our interest rate risk, changes in interest
rates could have a material adverse effect on our profitability.
Market risk is inherent in the financial instruments associated with our operations and activities, including loans, deposits,
securities, short-term borrowings, long-term debt, trading account assets and liabilities, derivatives and private equity
investments. Market conditions that change from time to time, thereby exposing us to market risk, include fluctuations in
interest rates, equity prices, foreign exchange rates, and price deterioration or changes in value due to changes in market
perception or actual credit quality of an issuer. In addition, disruptions in the liquidity or transparency of the financial markets
may result in our inability to sell, syndicate or realize the value of security positions, thereby leading to increased
concentrations. The inability to reduce our positions in specific securities may not only increase the market and credit risks
associated with such positions, but also increase the level of risk-weighted assets on our balance sheet, thereby increasing our
capital requirements, which could have an adverse effect on our business results, financial condition and liquidity.
Our private equity investments are carried at fair value with unrealized gains and losses reflected in earnings. The value of our
private equity portfolios can fluctuate and earnings from our investments can be volatile and difficult to predict. When, and if,
we recognize gains can depend on a number of factors, including general economic conditions, the prospects of the companies
in which we invest, if these companies go public and the size of our position relative to the public float, and whether we are
subject to any resale restrictions.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Significant volatility in our domestic clients’ cash balances could negatively impact our net revenues and/or our ability
to fund RJ Bank’s growth and may impact our regulatory ratios.
The majority of RJ Bank’s deposits are primarily driven by the RJBDP, our multi-bank sweep program in which PCG clients’
cash deposits in their brokerage accounts are swept into FDIC-insured, interest-bearing deposit accounts at RJ Bank and various
third-party banks. The RJBDP is a source of relatively low-cost, stable deposits for RJ Bank and we rely heavily on the RJBDP
to fund RJ Bank’s asset growth. A significant reduction in PCG clients’ cash balances, a change in the allocation of that cash
between RJ Bank and third-party banks within the RJBDP, or a transfer of cash away from the firm could significantly impact
RJ Bank’s ability to continue growing interest-earning assets and/or require RJ Bank to use higher-cost deposit sources to grow
interest-earning assets.
The RJBDP also generates service fee income from third-party banks related to the deposits they receive through their
participation in the RJBDP. If PCG clients were to materially increase their cash balances at a time when third-party bank
demand for RJBDP deposits has been largely met, our ability to generate meaningful revenues from the placement of these
incremental deposits would be adversely affected. In addition, our inability to deploy client cash to third-party banks through
RJBDP would require us to retain more cash at RJ Bank or in our Client Interest Program, both of which may cause a
significant increase in our assets. Such an increase in our assets may negatively impact certain of our regulatory ratios.
Our business depends on fees generated from the distribution of financial products, fees earned from the management
of client accounts, and asset management fees.
A large portion of our revenues are derived from fees generated from the distribution of financial products, such as mutual
funds and variable annuities. Changes in the structure or amount of the fees paid by the sponsors of these products could
directly affect our revenues, business and financial condition. In addition, if these products experience losses or increased
investor redemptions, we may receive lower fee revenue from the distribution services we provide on behalf of the mutual fund
and annuity companies.
The asset management fees we are paid are dependent upon the value of client assets in fee-based accounts in our PCG
segment, as well as AUM in our Asset Management segment. The value of our fee-based assets and AUM is impacted by
market fluctuations and inflows or outflows of assets. As our PCG clients increasingly show a preference for fee-based
accounts over traditional transaction-based accounts, a larger portion of our client assets are more directly impacted by market
movements. Therefore, in periods of declining market values, the values of fee-based accounts and AUM may resultantly
decline, which would negatively impact our revenues. In addition, below-market investment performance by our funds,
portfolio managers or financial advisors could result in reputational damage that might cause outflows or make it more difficult
to attract new investors into our asset management products and thus, further impact our business and financial condition.
Our asset management fees may also decline over time due to factors such as increased competition and the renegotiation of
contracts. In addition, the market environment in recent years has resulted in a shift to passive investment products, which
generate lower fees than actively managed products. A continued trend toward passive investments or changes in market values
or in the fee structure of asset management accounts would negatively affect our revenues, business and financial condition.
Our underwriting, market-making, trading, and other business activities place our capital at risk.
We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we
have underwritten at the anticipated price levels. As an underwriter, we also are subject to heightened standards regarding
liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings in which we
are involved. From time to time as part of our underwriting processes, we may carry significant positions in securities of a
single issuer or issuers engaged in a specific industry. Sudden changes in the value of these positions, despite our risk
mitigation policies, could impact our financial results.
As a market maker, we may own positions in specific securities, and these undiversified holdings concentrate the risk of market
fluctuations and may result in greater losses than would be the case if our holdings were more diversified. Despite risk
mitigation policies, we may incur losses as a result of positions we hold in connection with our trading activities.
We have made and, to the limited extent permitted by applicable regulations, may continue to make principal investments in
private equity funds and other illiquid investments. We may be unable to realize our investment objectives if we cannot sell or
otherwise dispose of our interests at attractive prices or complete a desirable exit strategy. In particular, these risks could arise
from changes in the financial condition or prospects of the portfolio companies in which investments are made, changes in
economic conditions or changes in laws, regulations, fiscal policies or political conditions. It could take a substantial period of
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
time to identify attractive investment opportunities and then to realize the cash value of such investments. In addition, even if a
private equity investment proves to be profitable, it may be several years or longer before any profits can be realized in cash.
Any cyber-attack or other security breach of our technology systems, or those of our clients or other third-party
vendors we rely on, could subject us to significant liability and harm our reputation.
Our operations rely heavily on the secure processing, storage and transmission of sensitive and confidential financial, personal
and other information in our computer systems and networks. There have been several highly publicized cases involving
financial services companies reporting the unauthorized disclosure of client or other confidential information in recent years, as
well as cyber-attacks involving the theft, dissemination and destruction of corporate information or other assets, in some cases
as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties. Like other
financial services firms, we experience malicious cyber activity directed at our computer systems, software, networks and its
users on a daily basis. This malicious activity includes attempts at unauthorized access, implantation of computer viruses or
malware, and denial-of-service attacks. We also experience large volumes of phishing and other forms of social engineering
attempted for the purpose of perpetrating fraud against the firm, our associates, or our clients. Additionally, like many large
enterprises, since mid-March 2020, we have shifted the majority of our associates to remote work arrangements in response to
the COVID-19 pandemic. This change in our operating model has enabled us to successfully continue business operations, but
also introduces potential new vulnerabilities to cyber threats. We seek to continuously monitor for and nimbly react to any and
all such malicious cyber activity, and we develop our systems to protect our technology infrastructure and data from misuse,
misappropriation or corruption.
Cyber-attacks can originate from a variety of sources, including third parties affiliated with foreign governments, organized
crime or terrorist organizations. Third parties may also attempt to place individuals within our firm or induce employees,
clients or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may
be difficult to detect or prevent. Although cybersecurity incidents among financial services firms are on the rise, we have not
experienced any material losses relating to cyber-attacks or other information security breaches. However, the techniques used
in these attacks are increasingly sophisticated, change frequently and are often not recognized until launched. Although we
seek to maintain a robust suite of authentication and layered information security controls, including our cyber threat analytics,
data encryption and tokenization technologies, anti-malware defenses and vulnerability management programs, any one or
combination of these controls could fail to detect, mitigate or remediate these risks in a timely manner. 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, equipment failure, natural disasters, power loss, spam attacks,
unauthorized access, distributed denial of service attacks, computer viruses and other malicious code, and other events that
could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our
operations.
We also rely on numerous third-party service providers to conduct other aspects of our business operations, and we face similar
risks relating to them. While we regularly conduct security assessments on these third-party vendors, we cannot be certain that
their information security protocols are sufficient to withstand a cyber-attack or other security breach. In addition, in order to
access our products and services, our customers may use computers and other devices that are beyond our security control
systems.
Notwithstanding the precautions we take, if a cyber-attack or other information security breach were to occur, this could
jeopardize the information we confidentially maintain, or otherwise cause interruptions in our operations or those of our clients
and counterparties, exposing us to liability. As attempted attacks continue to evolve in scope and sophistication, we may be
required to expend substantial additional resources to modify or enhance our protective measures, to investigate and remediate
vulnerabilities or other exposures or to communicate about cyber-attacks to our customers. Though we have insurance against
some cyber-risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits or are not
covered under any of our current insurance policies. A technological breakdown could also interfere with our ability to comply
with financial reporting and other regulatory requirements, exposing us to potential disciplinary action by regulators. Further,
successful cyber-attacks at other large financial institutions or other market participants, whether or not we are affected, could
lead to a general loss of customer confidence in financial institutions that could negatively affect us, including harming the
market perception of the effectiveness of our security measures or the financial system in general, which could result in reduced
use of our financial products and services.
Further, in light of the high volume of transactions we process, the large number of our clients, partners and counterparties, the
increasing sophistication of malicious actors, and our remote work environment in response to the COVID-19 pandemic, a
cyber-attack could occur and persist for an extended period of time without detection. We expect that any investigation of a
cyber-attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
information. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain
errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further
increase the costs and consequences of such an attack.
We may also be subject to liability under various data protection laws. In providing services to clients, we manage, utilize and
store sensitive or confidential client or employee data, including personal data. As a result, we are subject to numerous laws
and regulations designed to protect this information, such as U.S. federal, state and international laws governing the protection
of personally identifiable information. These laws and regulations are increasing in complexity and number. If any person,
including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or
employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages,
regulatory enforcement actions, fines and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or
confidential client or employee data, whether through system failure, employee negligence, fraud or misappropriation, could
damage our reputation and cause us to lose clients and related revenue. Potential liability in the event of a security breach of
client data could be significant. Depending on the circumstances giving rise to the breach, this liability may not be subject to a
contractual limit or an exclusion of consequential or indirect damages.
A continued interruption to our telecommunications or data processing systems, or the failure to effectively update the
technology we utilize, could be materially adverse to our business.
Our businesses rely extensively on data processing and communications systems. In addition to better serving clients, the
effective use of technology increases efficiency and enables us to reduce costs. Adapting or developing our technology systems
to meet new regulatory requirements, client needs, and competitive demands is critical for our business. Introduction of new
technology presents challenges on a regular basis. There are significant technical and financial costs and risks in the
development of new or enhanced applications, including the risk that we might be unable to effectively use new technologies or
adapt our applications to emerging industry standards.
Our continued success depends, in part, upon our ability to: (i) successfully maintain and upgrade the capability of our
technology systems on a regular basis; (ii) maintain the quality of the information contained in our data processing and
communications systems; (iii) address the needs of our clients by using technology to provide products and services that satisfy
their demands; and (iv) retain skilled information technology employees. Failure of our technology systems, which could result
from events beyond our control, including a systems malfunction or cyber-attack, failure by a third-party service provider, or an
inability to effectively upgrade those systems or implement new technology-driven products or services, could result in
financial losses, liability to clients, violations of applicable privacy and other applicable laws and regulatory sanctions.
The soundness of other financial institutions and intermediaries affects us.
We face the risk of operational failure, termination or capacity constraints of any of the clearing agents, exchanges, clearing
houses or other financial intermediaries that we use to facilitate our securities and derivative transactions. As a result of
regulatory changes and the consolidation over the years among clearing agents, exchanges and clearing houses, our exposure to
certain financial intermediaries has increased and could affect our ability to find adequate and cost-effective alternatives should
the need arise. Any failure, termination or constraint of these intermediaries could adversely affect our ability to execute
transactions, service our clients and manage our exposure to risk.
Our ability to engage in routine trading and funding transactions could be affected adversely by the actions and commercial
soundness of other financial institutions. Financial services institutions are interdependent as a result of trading, clearing,
funding, counterparty or other relationships. We have exposure to many different industries and counterparties, and we
routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks,
investment banks, mutual and hedge funds and other institutional clients. Defaults by, or even rumors or questions about the
financial condition of, one or more financial services institutions, or the financial services industry generally, have historically
led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these
transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be
exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount
of the loan or derivative exposure due us. Losses arising in connection with counterparty defaults may have a material adverse
effect on our results of operations.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Our risk management and conflicts of interest policies and procedures may leave us exposed to unidentified or
unanticipated risk.
We seek to manage, monitor and control our market, credit, operational, liquidity and legal and regulatory compliance risk
through operational and compliance reporting systems, internal controls, management review processes and other mechanisms;
however, there can be no assurance that our procedures will be effective. While we use limits and other risk mitigation
techniques, those techniques and the judgments that accompany their application cannot always anticipate unforeseen economic
and financial outcomes or the specifics and timing of such outcomes. Our risk management methods may not predict future
risk exposures effectively. In addition, some of our risk management methods are based on an evaluation of information
regarding markets, clients and other matters that are based on assumptions that may no longer be accurate or may have limited
predictive value. A failure to manage our growth adequately, including growth in the products or services we offer, or to
manage our risk effectively, could materially and adversely affect our business and financial condition.
Financial services firms are subject to numerous actual or perceived conflicts of interest, which are routinely examined by U.S.
federal and state regulators and SROs such as FINRA and are often used as the basis for claims for legal liability by plaintiffs in
actions against us. Our risk management processes include addressing potential conflicts of interest that arise in our business.
Management of potential conflicts of interest has become increasingly complex as we expand our business activities. A
perceived or actual failure to address conflicts of interest adequately could affect our reputation, the willingness of clients to
transact business with us or give rise to litigation or regulatory actions. Therefore, there can be no assurance that conflicts of
interest will not arise in the future that could result in material harm to our business and financial condition.
We continue to experience pricing pressures in areas of our business which may impair our future revenue and
profitability.
We continue to experience pricing pressures on trading margins and commissions in fixed income and equity trading. In the
fixed income market, regulatory requirements have resulted in greater price transparency, leading to price competition and
decreased trading margins. In the equity market, we experience pricing pressure from institutional clients to reduce
commissions, partially due to the industry trend toward the separate payment for research and execution services. Our trading
margins have been further compressed by the shift from high- to low-touch execution services, which has created additional
competitive pressure. We believe that price competition and pricing pressures in these and other areas will continue as
institutional investors continue to reduce the amounts they are willing to pay, including by reducing the number of brokerage
firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins.
We face intense competition.
We are engaged in intensely competitive businesses. We compete on the basis of a number of factors, including the quality of
our associates, our products and services, pricing (such as execution pricing and fee levels), and location and reputation in
relevant markets. Over time, there has been substantial consolidation and convergence among companies in the financial
services industry, which has significantly increased the capital base and geographic reach of our competitors. See “Item 1 -
Business - Competition” of this Form 10-K for additional information about our competitors.
We compete directly with other national full service broker-dealers, investment banking firms, commercial banks, and
investment advisors, and to a lesser extent, with discount brokers and dealers. In addition, we face competition from more
recent entrants into the market, including financial technology companies, and increased use of alternative sales channels by
other firms. For example, recently several commercial firms and other non-traditional competitors have applied for banking
licenses or have entered into partnerships with banks to provide banking services. We also compete indirectly for investment
assets with insurance companies, real estate firms and hedge funds, among others. This competition could cause our business to
suffer.
To remain competitive, our future success also depends in part on our ability to develop and enhance our products and services.
The inability to develop new products and services, or enhance existing offerings, could have a material adverse effect on our
profitability. In addition, we may incur substantial expenditures to keep pace with the constant changes and enhancements
being made in technology.
Our ability to attract and retain senior professionals, qualified financial advisors and other associates is critical to the
continued success of our business.
Our ability to recruit, serve and retain our clients depends on the reputation, judgment, leadership, business generation
capabilities and client service skills of our client-serving professionals, members of our executive committees, as well as
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
employees who support revenue-generating professionals and their clients. To compete effectively we must attract, develop,
and retain qualified professionals, including successful financial advisors, investment bankers, trading professionals, portfolio
managers and other revenue-producing or specialized personnel. Competitive pressures we experience could have an adverse
effect on our business, results of operations, financial condition and liquidity.
Turnover in the financial services industry is high. The cost of recruiting and retaining skilled professionals in the financial
services industry is considerable. Financial industry employers are increasingly offering guaranteed contracts, upfront
payments, and increased compensation. These can be important factors in a current associate’s decision to leave us as well as in
a prospective associate’s decision to join us. As competition for skilled professionals in the industry remains intense, we may
have to devote significant resources to attract and retain qualified personnel. To the extent we have compensation targets, we
may not be able to retain our associates, which could result in increased recruiting expense or result in our recruiting additional
associates at compensation levels that are not within our target range. In particular, our financial results may be adversely
affected by the costs we incur in connection with any loans or other incentives we may offer to newly recruited financial
advisors and other key personnel. If we were to lose the services of any of our investment bankers, senior equity research, sales
and trading professionals, asset managers, or executive officers to a competitor or otherwise, we may not be able to retain
valuable relationships and some of our clients could choose to use the services of a competitor instead of our services. If we are
unable to retain our senior professionals or recruit additional professionals, our reputation, business, results of operations and
financial condition will be adversely affected. Further, new business initiatives and efforts to expand existing businesses
generally require that we incur compensation and benefits expense before generating additional revenues.
Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those
competitors have engaged in unfair hiring practices. We have been subject to several such claims and may be subject to
additional claims in the future as we seek to hire qualified personnel, some of whom may work for our competitors. Some of
these claims may result in material litigation. We could incur substantial costs in defending against these claims, regardless of
their merits. Such claims could also discourage potential associates who work for our competitors from joining us. We
participate in the Protocol for Broker Recruiting (“Protocol”), a voluntary agreement among many firms in the industry that
governs, among other things, the client information that financial advisors may take with them when they affiliate with a new
firm. The ability to bring such customer data to a new broker-dealer generally means that the clients of the financial advisor are
more likely to choose to open accounts at the advisor’s new firm. Participation is voluntary and it is possible that certain of our
competitors will withdraw from the Protocol. If the broker-dealers from whom we recruit new financial advisors prevent, or
significantly limit, the transfer of client data, our recruiting efforts may be adversely affected and we could continue to
experience claims against us relating to our recruiting efforts.
A downgrade in our credit ratings could have a material adverse effect on our operations, earnings and financial
condition.
If our credit ratings were downgraded, or if rating agencies indicate that a downgrade may occur, our business, financial
position, and results of operations could be adversely affected, perceptions of our financial strength could be damaged, and as a
result, adversely affect our client relationships. Such a change in our credit ratings could also adversely affect our liquidity and
competitive position, increase our borrowing costs, limit our access to the capital markets, trigger obligations under certain
financial agreements, or decrease the number of investors, clients and counterparties willing or permitted to do business with or
lend to us, thereby curtailing our business operations and reducing profitability.
We may not be able to obtain additional outside financing to fund our operations on favorable terms, or at all. The impact of a
credit rating downgrade to a level below investment grade would result in our breaching provisions in certain of our derivative
instruments, and may result in a request for immediate payment and/or ongoing overnight collateralization on our derivative
instruments in liability positions. A credit rating downgrade would also result in the firm incurring a higher facility fee on its
$500 million unsecured revolving credit facility agreement (the “Credit Facility”), in addition to triggering a higher interest rate
applicable to any borrowings outstanding on the line as of and subsequent to such downgrade (see Note 14 of the Notes to
Consolidated Financial Statements of this Form 10-K for information on the Credit Facility).
Business growth could increase costs and regulatory and integration risks.
We continue to grow, including through acquisitions and through our recruiting efforts. Integrating acquired businesses,
providing a platform for new businesses and partnering with other firms involve risks and present financial, managerial and
operational challenges. We may incur significant expense in connection with expanding our existing businesses, recruiting
financial advisors or making strategic acquisitions or investments. Our overall profitability would be negatively affected if
investments and expenses associated with such growth are not matched or exceeded by the revenues derived from such
investments or growth.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Expansion may also create a need for additional compliance, documentation, risk management and internal control procedures,
and often involves hiring additional personnel to address these procedures. To the extent such procedures are not adequate or
not adhered to with respect to our expanded business or any new business, we could be exposed to a material loss or regulatory
sanction.
Moreover, to the extent we pursue acquisitions, we may be unable to complete such acquisitions on acceptable terms. We may
be unable to integrate any acquired business into our existing business successfully. Difficulties we may encounter in
integrating an acquired business could have an adverse effect on our business, financial condition, and results of operations. In
addition, we may need to raise capital or borrow funds in order to finance an acquisition, which could result in dilution or
increased leverage. We may not be able to obtain financing on favorable terms or perhaps at all.
Associate misconduct, which is difficult to detect and deter, could harm us by impairing our ability to attract and retain
clients and subject us to significant legal liability and reputational harm.
There is a risk that our associates could engage in misconduct that adversely affects our business. For example, our investment
banking business often requires that we deal with confidential matters of great significance to our clients. Our associates
interact with clients, customers and counterparties on an ongoing basis. All associates are expected to exhibit the behaviors and
ethics that are reflected in our framework of principles, policies and technology to protect both our own information as well as
that of our clients. Associate conduct on non–business matters, such as social issues, could be inconsistent with the Company’s
policies and ethics and result in reputational harm to our business as a result of their employment or affiliation. If our
associates improperly use or disclose confidential information provided by our clients, we could be subject to future regulatory
sanctions and suffer serious harm to our reputation, financial position, current client relationships and ability to attract future
clients. We are also subject to a number of obligations and standards arising from our asset management business and our
authority over our assets under management. In addition, our financial advisors may act in a fiduciary capacity, providing
financial planning, investment advice and discretionary asset management. The violation of these obligations and standards by
any of our associates would adversely affect our clients and us. It is not always possible to deter or prevent every instance of
associate misconduct, and the precautions we take to detect and prevent this activity may not be effective in all cases. If our
associates engage in misconduct, our business would be adversely affected.
We are exposed to litigation risks, which could materially and adversely impact our business operations and prospects.
Many aspects of our business involve substantial risk of liability. We have been named as a defendant or co-defendant in
lawsuits and arbitrations primarily involving claims for damages. The risks associated with potential litigation often may be
difficult to assess or quantify and the existence and magnitude of potential claims often remain unknown for substantial periods
of time. Unauthorized or illegal acts of our associates could also result in substantial liability.
In challenging market conditions, the volume of claims and amount of damages sought in litigation and regulatory proceedings
against financial institutions have historically increased. Litigation risks include potential liability under securities laws or other
laws for: alleged materially false or misleading statements made in connection with securities offerings and other transactions;
issues related to our investment recommendations, including the suitability of such recommendations or potential concentration
of investments; the inability to sell or redeem securities in a timely manner during adverse market conditions; contractual
issues; employment claims; and potential liability for other advice we provide to participants in strategic transactions.
Substantial legal liability could have a material adverse financial impact or cause us significant reputational harm, which in turn
could seriously harm our business and future business prospects. In addition to the foregoing financial costs and risks
associated with potential liability, the costs of defending individual litigation and claims continue to increase over time. The
amount of third-party attorneys’ fees incurred in connection with the defense of litigation and claims could be substantial and
might materially and adversely affect our results of operations. See “Item 3 - Legal Proceedings” of this Form 10-K for further
information about legal matters.
The preparation of the consolidated financial statements requires the use of estimates that may vary from actual results
and new accounting standards could adversely affect future reported results.
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of
revenues and expenses for the reporting period. Such estimates and assumptions may require management to make difficult,
subjective and complex judgments about matters that are inherently uncertain. One of our most critical estimates is RJ Bank’s
allowance for loan losses. At any given point in time, conditions in real estate and credit markets may increase the complexity
and uncertainty involved in estimating the losses inherent in RJ Bank’s loan portfolio. If management’s underlying
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assumptions and judgments prove to be inaccurate, the allowance for loan losses could be insufficient to cover actual losses.
Our financial condition, including our liquidity and capital, and results of operations could be materially and adversely
impacted.
Our financial instruments, including certain trading assets and liabilities, derivatives, available-for-sale securities, certain loans
and investments, among other items, require management to make a determination of their fair value in order to prepare our
consolidated financial statements. Where quoted market prices are not available, we may make fair value determinations based
on internally developed models or other means, which ultimately rely to some degree on our subjective judgment. Some of
these instruments and other assets and liabilities may have no directly observable inputs, making their valuation particularly
subjective and, consequently, based on estimation and judgment. In addition, sudden illiquidity in markets or declines in prices
of certain securities may make it more difficult to value certain items, which may lead to the possibility that such valuations
will be subject to further change or adjustment, as well as declines in our earnings in subsequent periods.
Our accounting policies and methods are fundamental to how we record and report our financial condition and results of
operations. The Financial Accounting Standards Board (the “FASB”) and the SEC have at times revised the financial
accounting and reporting standards that govern the preparation of our financial statements. In addition, accounting standard
setters and those who interpret the accounting standards may change or even reverse their previous interpretations or positions
on how these standards should be applied. These changes can be hard to predict and can materially impact how we record and
report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard
retroactively, resulting in our restating prior-period financial statements. For further discussion of our significant accounting
estimates, policies and standards, see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Critical accounting estimates” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Recent accounting developments” of this Form 10-K and Note 2 of the Notes to Consolidated Financial
Statements of this Form 10-K.
Our operations could be adversely affected by serious weather conditions.
Certain of our principal operations are located in St. Petersburg, Florida. While we have a business continuity plan that also
permits significant operations to be conducted out of remote locations as well as our Southfield, Michigan and Memphis,
Tennessee corporate offices and our information systems processing to be conducted out of our information technology data
center in the Denver, Colorado area, our operations could be adversely affected by hurricanes or other serious weather
conditions that could affect the processing of transactions, communications, and the ability of our associates to get to our
offices, or work from home. In addition, since activating certain aspects of our business continuity plan in response to the
COVID-19 pandemic to allow nearly all of our associates to work remotely, our associates’ ability to relocate to a secondary
location in the event of a power outage or other disruption is limited due to the pandemic. As previously mentioned, weather
events could also adversely impact certain loans within RJ Bank’s portfolio.
The phase-out of LIBOR could negatively impact our net interest income and require significant operational work.
The FCA, which regulates the London Interbank Offered Rate (“LIBOR”), has announced that it will not compel panel banks to
contribute to LIBOR after 2021. It is likely that banks will not continue to provide submissions for the calculation of LIBOR
after 2021 and possibly prior to then. The discontinuance of LIBOR has resulted in significant uncertainty regarding the
transition to suitable alternative reference rates and could adversely impact our business, operations, and financial results.
Although the full impact of transition remains unclear, this change may have an adverse impact on the value of, return on and
trading markets for a broad array of financial products, including any LIBOR-based securities, loans and derivatives that are
included in our financial assets and liabilities. If LIBOR is discontinued after 2021 as expected, there will be uncertainty or
differences in the calculation of the applicable interest rate or payment amount depending on the terms of the governing
instruments, which may also impact our net interest income and account and service fees. In addition, LIBOR may perform
differently during the phase-out period than in the past which could result in lower interest earned on certain assets and a
reduction in the value of certain assets.
To facilitate an orderly transition away from LIBOR, we have established an enterprise-wide initiative to assess and implement
necessary changes to our contracts, systems, processes, documentation, and models. These changes may also impact our
existing transaction data, products, internal infrastructure, and valuation processes.
We are exposed to risks related to our insurance programs.
Our operations and financial results are subject to risks and uncertainties related to our use of a combination of insurance, self-
insured retention and self-insurance for a number of risks. We have elected to self-insure our errors and omissions liability and
29
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
our employee-related health care benefit plans. We have self-insured retention risk related to our property and casualty,
workers compensation and general liability benefit plans.
While we endeavor to purchase insurance coverage appropriate to our risk assessment, we are unable to predict with certainty
the frequency, nature or magnitude of claims for direct or consequential damages. Our business may be negatively affected if
our insurance proves to be inadequate or unavailable. In addition, claims associated with risks we have retained either through
our self-insurance retention or by self-insuring may exceed our recorded reserves which could negatively impact future
earnings. Insurance claims may divert management resources away from operating our business.
RISKS RELATED TO OUR REGULATORY ENVIRONMENT
Financial services firms are highly regulated and such regulation may increase the risk of financial liability and
reputational harm resulting from adverse regulatory actions.
Financial services firms operate in an evolving regulatory environment. The industry has experienced an extended period of
significant change in laws and regulations governing the financial services industry, as well as a high degree of scrutiny from
various regulators, including the SEC, the Fed, the OCC and the CFPB, in addition to stock exchanges, FINRA and state
attorneys general. For example, the Dodd-Frank Act resulted in sweeping changes to the regulatory regime, including a
significant increase in the supervision and regulation of the financial services industry. Penalties and fines imposed by
regulatory authorities have been substantial in recent years. We may be adversely affected by changes in the interpretation or
enforcement of existing laws, rules and regulations. Existing and new laws and regulations could affect our revenue, limit our
ability to pursue business opportunities, impact the value of our assets, require us to alter at least some of our business practices,
impose additional compliance costs, and otherwise adversely affect our businesses.
There is also increased regulatory scrutiny (and related compliance costs) as we continue to grow and surpass certain
consolidated asset thresholds established under the Dodd-Frank Act, which have the effect of imposing enhanced standards and
requirements on larger institutions. These include, but are not limited to, RJ Bank’s oversight by the CFPB. Any action taken
by the CFPB could result in requirements to alter or cease offering affected products and services, make such products and
services less attractive, impose additional compliance measures, or result in fines, penalties or required remediation.
We are also required to comply with the Volcker Rule’s provisions. Although we have not historically engaged in significant
levels of proprietary trading, due to our underwriting and trading activities and our investments in covered funds, we have
experienced and expect to continue to experience increased operational and compliance costs and changes to our private equity
investments. Any changes to regulations or changes to the supervisory approach may also result in increased compliance costs
to the extent we are required to modify our existing compliance policies, procedures and practices.
Broker-dealers and investment advisors are subject to regulations covering all aspects of the securities business, including, but
not limited to: sales and trading methods; trade practices among broker-dealers; use and safekeeping of clients’ funds and
securities; capital structure of securities firms; anti-money laundering efforts; recordkeeping; and the conduct of directors,
officers and employees. Any violation of these laws or regulations could subject us to the following events, any of which could
have a material adverse effect on our business, financial condition and prospects: civil and criminal liability; sanctions, which
could include the revocation of our subsidiaries’ registrations as investment advisors or broker-dealers; the revocation of the
licenses of our financial advisors; censures; fines; or a temporary suspension or permanent bar from conducting business.
The majority of our affiliated financial advisors are independent contractors. Legislative or regulatory action that redefines the
criteria for determining whether a person is an employee or an independent contractor could materially impact our relationships
with our advisors and our business, resulting in an adverse effect on our results of operations.
In addition, we have certain international business operations that are subject to laws, regulations, and standards in the countries
in which we operate. Any violations of these laws, regulations or standards could subject us to a range of potential regulatory
events or outcomes that could have a material adverse effect on our business, financial condition and prospects including
potential adverse impacts on continued operations in the relevant international jurisdiction.
Regulatory actions brought against us may result in judgments, settlements, fines, penalties or other results, any of which could
have a material adverse effect on our business, financial condition or results of operations. There is no assurance that regulators
will be satisfied with the policies and procedures implemented by RJF and its subsidiaries. In addition, from time to time, RJF
and its subsidiaries may become subject to additional findings with respect to supervisory, compliance or other regulatory
deficiencies, which could subject us to additional liability, including penalties and restrictions on our business activities.
Among other things, these restrictions could limit our ability to make investments, complete acquisitions, expand into new
30
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
business lines, pay dividends on our common stock and/or engage in share repurchases. See “Item 1 - Business - Regulation”
of this Form 10-K for additional information regarding our regulatory environment.
Changes in requirements relating to the standard of conduct for broker-dealers applicable under federal and state law
have increased our costs.
In June 2019, the SEC adopted a package of rulemakings and interpretations related to the provision of advice by broker-dealers
and investment advisers, including Regulation Best Interest. Since June 30, 2020, Regulation Best Interest requires, among
other things, a broker-dealer to act in the best interest of a retail customer when making a recommendation to that customer of
any securities transaction or investment strategy involving securities. The regulation imposes heightened standards on broker-
dealers, and we have incurred substantial costs in order to review and modify our policies and procedures, including associated
supervisory and compliance controls. We anticipate that we will continue to incur costs in the future to comply with the
standard.
In addition to the SEC, various states have adopted, or are considering adopting, laws and regulations seeking to impose new
standards of conduct on broker-dealers that, as written, differ from the SEC’s new regulations and may lead to additional
implementation costs. Implementation of the new SEC regulations, as well as any new state rules that are adopted addressing
similar matters, has resulted in (and may continue to result in) increased costs related to compliance, legal, operations and
information technology.
Numerous regulatory changes and enhanced regulatory and enforcement activity relating to our investment
management activities may increase our compliance and legal costs and otherwise adversely affect our business.
As some of our wholly-owned subsidiaries are registered as investment advisors with the SEC, increased regulatory scrutiny
and rulemaking initiatives may result in additional operational and compliance costs or the assessment of significant fines or
penalties against our asset management business, and may otherwise limit our ability to engage in certain activities. While it is
not possible to determine the extent of the long-term impact of any new laws or regulations that have been promulgated, or
initiatives that have been or may be proposed, even the short-term impact of preparing for or implementing changes to our
infrastructure and processes could negatively impact the ways we conduct business and increase our compliance and legal costs.
Conformance with any new law or regulations could also make compliance more difficult and expensive and affect our product
and service offerings.
Investment management businesses have been affected by the SEC’s Regulation Best Interest which, in addition to creating a
standard of care a financial advisor owes its clients, also impacts investment advice provided by investment advisers. The result
has been increased scrutiny within the industry regarding how advisory products are offered and sold. Such changes could
impact our revenues and profitability. In addition, the SEC and other regulators continue to scrutinize broker-dealer platforms.
With respect to mutual funds, for example, the SEC’s well-publicized Share Class Selection Disclosure Initiative has required
Raymond James’ affiliated broker-dealers and others to make changes to the availability of mutual funds and mutual fund share
classes on their distribution platforms. Such changes could impact mutual fund sales, including those sponsored by our
subsidiaries, and affect our profitability.
In addition, U.S. and foreign governments have taken regulatory actions impacting the investment management industry, and
may continue to do so including expanding current (or enacting new) standards, requirements and rules that may be applicable
to us and our subsidiaries. For example, MiFID II in the E.U. requires the use of “hard dollars” for research, as opposed to the
use of “soft dollars,” where a portion of commissions paid to broker-dealers in connection with the execution of trades also
pays for research and other services provided to advisors. The research relied on in our investment management activities in the
investment decision-making process is typically generated internally by our investment analysts or external research, including
external research paid for with soft dollars. This external research is generally used for information gathering or verification
purposes, and includes broker-provided research, as well as third-party provided databases and research services. If the use of
soft dollars were to become limited in the U.S., we may have to bear some of these additional costs.
New regulations regarding the management of hedge funds and the use of certain investment products, including additional
recordkeeping and disclosure requirements, may also impact our asset management business and result in increased costs.
Failure to comply with regulatory capital requirements primarily applicable to RJF, RJ Bank or our broker-dealer
subsidiaries would significantly harm our business.
As discussed in “Item 1 - Business - Regulation” of this Form 10-K, RJF and RJ Bank are subject to capital requirements
administered by various federal regulators in the U.S. and, accordingly, must meet specific capital guidelines that involve
31
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
quantitative measures of RJF and RJ Bank’s assets, liabilities and certain off-balance sheet items, as calculated under regulatory
guidelines. Failure to meet minimum capital requirements can trigger certain mandatory (and potentially discretionary) actions
by regulators that, if undertaken, could harm either RJF or RJ Bank’s operations and financial condition. Further, we are
subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1) and FINRA’s net capital rule, which may limit our ability to
make withdrawals of capital from our broker-dealer subsidiaries. RJ Ltd. is subject to similar limitations under applicable
regulations in Canada by IIROC. Additionally, our U.S. entities operating as nonbank custodians of Individual Retirement
Accounts (“IRAs”) must also satisfy certain Internal Revenue Service (“IRS”) regulations in order to accept new IRA and
qualified plans and retain the accounts for which it serves as nonbank custodian. Regulatory capital requirements applicable to
some of our significant subsidiaries may impede access to funds that RJF may need to make payments on any of its obligations.
See Note 22 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulations and
capital requirements.
The Basel III regulatory capital standards impose additional capital and other requirements on us that could decrease
our profitability.
The Fed, the OCC and the FDIC have implemented the global regulatory capital reforms of Basel III and certain changes
required by the Dodd-Frank Act. The U.S. Basel III Rules increase the quantity and quality of regulatory capital, establish a
capital conservation buffer and make selected changes to the calculation of risk-weighted assets. We became subject to the
requirements under the final U.S. Basel III Rules as of January 1, 2015, subject to a phase-in period for several of its provisions,
including the new minimum capital ratio requirements, the capital conservation buffer and the regulatory capital adjustments
and deductions. The capital requirements stipulated under the U.S. Basel III Rules could restrict our ability to grow during
favorable market conditions or require us to raise additional capital. As a result, our business, results of operations, financial
condition and prospects could be adversely affected.
As a financial holding company, RJF’s liquidity depends on payments from its subsidiaries, which may be subject to
regulatory restrictions.
RJF as a financial holding company depends on dividends, distributions and other payments from its subsidiaries in order to
meet its obligations, including its debt service obligations. RJF’s subsidiaries are subject to laws and regulations that restrict
dividend payments or authorize regulatory bodies to prevent or reduce the flow of funds from those subsidiaries to RJF. RJF’s
broker-dealers and bank subsidiary are limited in their ability to lend or transact with affiliates and are subject to minimum
regulatory capital and other requirements, as well as limitations on their ability to use funds deposited with them in brokerage
or bank accounts to fund their businesses. These requirements may hinder RJF’s ability to access funds from its subsidiaries.
RJF may also become subject to a prohibition or limitations on its ability to pay dividends or repurchase its common stock. The
federal banking regulators, including the OCC, the Fed and the FDIC, as well as the SEC (through FINRA) have the authority
and under certain circumstances, the obligation, to limit or prohibit dividend payments and stock repurchases by the banking
organizations they supervise, including RJF and its bank subsidiaries.
RJ Bank is subject to the Community Reinvestment Act and fair lending laws, and failure to comply with these laws
could lead to penalties.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other U.S. federal fair lending laws and regulations
impose nondiscriminatory lending requirements on financial institutions. The U.S. Department of Justice and other federal
agencies, including the CFPB, are responsible for enforcing these laws and regulations. An unfavorable CRA rating or a
successful challenge to an institution’s performance under the fair lending laws and regulations could result in a wide variety of
sanctions, including the required payment of damages and civil monetary penalties, injunctive relief, and the imposition of
restrictions on mergers, acquisitions and expansion activity. Private parties may also have the ability to challenge a financial
institution’s performance under fair lending laws by bringing private class action litigation.
As discussed in “Item 1 - Business - Regulation” of this Form 10-K, certain amendments to the CRA have not yet been
finalized. These developments create further uncertainty for RJ Bank and others in planning their CRA activities. Any
revisions to the final regulations that implement the CRA may negatively impact our business, including through increased
costs related to compliance.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
32
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 2. PROPERTIES
We operate our business from our principal location in St. Petersburg, Florida in 1.25 million square feet of office space that we
own in the Carillon Office Park. We conduct certain operations from our owned facility in Southfield, Michigan, comprising
approximately 90,000 square feet, and operate a 40,000 square foot information technology data center on land we own in the
Denver, Colorado area. Generally, our owned locations and principal leases, identified below, support all of our business
segments.
We lease the premises we occupy in other U.S. and foreign locations, including employee-based branch office operations.
Leases for branch offices for independent contractors are the responsibility of the respective independent contractor financial
advisors and are not included in the amounts listed below. Our leases contain various expiration dates through fiscal year 2032.
Our principal leases are in the following locations:
• We occupy leased space of approximately 190,000 square feet in Memphis, Tennessee, along with approximately 130,000
square feet in New York City, 70,000 square feet in Chicago and 30,000 square feet in Denver, with other office and
branch locations throughout the U.S.;
• We occupy leased space of approximately 80,000 and 85,000 square feet in Vancouver and Toronto, respectively, along
with other office and branch locations throughout Canada;
• We occupy leased space of approximately 30,000 square feet in London, along with other office locations in Europe,
primarily in Germany.
Additionally, we own approximately 65 acres of land located in Pasco County, Florida for potential development, as needed.
We regularly monitor the facilities owned or occupied by our company to ensure that they suit our needs. To the extent that
they do not meet our needs, we expand, contract or relocate, as necessary.
See Note 2 and Note 12 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our
lease obligations.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of our business, we have been named, from time to time, as a defendant in various legal actions, including
arbitrations, class actions and other litigation, arising in connection with our activities as a diversified financial services
institution.
RJF and certain of its subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory
organizations. Reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures
to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business
activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time, among
other things, into industry practices, which can also result in the imposition of such sanctions.
We may contest liability and/or the amount of damages, as appropriate, in each pending matter. Over the last several years, the
level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies in the
financial services industry continues to be significant. There can be no assurance that material losses will not be incurred from
claims that have not yet been asserted or are not yet determined to be material.
For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss as we cannot predict if,
how or when such proceedings or investigations will be resolved or what the eventual settlement, fine, penalty or other relief, if
any, may be. A large number of factors may contribute to this inherent unpredictability: the proceeding is in its early stages; the
damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed
to proceed on that basis; the other party is seeking relief other than or in addition to compensatory damages (including, in the
case of regulatory and governmental proceedings, potential fines and penalties); the matters present significant legal
uncertainties; we have not engaged in settlement discussions; discovery is not complete; there are significant facts in dispute;
and numerous parties are named as defendants (including where it is uncertain how liability might be shared among
defendants). Subject to the foregoing, after consultation with counsel, we believe that the outcome of such litigation and
regulatory proceedings will not have a material adverse effect on our consolidated financial condition. However, the outcome
of such litigation and regulatory proceedings could be material to our operating results and cash flows for a particular future
period, depending on, among other things, our revenues or income for such period.
33
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
We may from time to time include in any descriptions of individual matters herein certain quantitative information about the
plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings. Although this information may provide
insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as
to any currently appropriate accrual related thereto.
See Note 17 of the Notes to Consolidated Financial Statements of this Form 10-K for additional information regarding legal and
regulatory matter contingencies, and refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Critical accounting estimates” in the section “Loss provisions for legal and regulatory matters” and Note
2 of the Notes to Consolidated Financial Statements of this Form 10-K for information on our criteria for establishing accruals.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NYSE under the symbol “RJF.” As of November 19, 2020, we had 323 holders of record of
our common stock. Shares of our common stock are held by a substantially greater number of beneficial owners, whose shares
are held of record by banks, brokers, and other financial institutions.
See Note 22 of the Notes to Consolidated Financial Statements of this Form 10-K for information regarding our intentions for
paying cash dividends and the related capital restrictions.
Information related to our compensation plans under which equity securities are authorized for issuance is presented in Note 21
of the Notes to Consolidated Financial Statements and Part III, Item 12 of this Form 10-K.
We did not have any sales of unregistered securities for the fiscal years ended September 30, 2020, 2019 or 2018.
We purchase our own stock from time to time in conjunction with a number of activities, each of which is described in the
following paragraphs. The following table presents information on our purchases of our own stock, on a monthly basis, for the
twelve months ended September 30, 2020.
Total number of
shares
purchased
Average price
per share
Number of shares
purchased as part of
publicly announced
plans or programs
Approximate dollar value (in
millions) at each month-end, of
securities that may yet be purchased
under the plans or programs
October 1, 2019 – October 31, 2019
November 1, 2019 – November 30, 2019
December 1, 2019 – December 31, 2019
First quarter
January 1, 2020 – January 31, 2020
February 1, 2020 – February 29, 2020
March 1, 2020 – March 31, 2020
Second quarter
April 1, 2020 – April 30, 2020
May 1, 2020 – May 31, 2020
June 1, 2020 – June 30, 2020
Third quarter
July 1, 2020 – July 31, 2020
August 1, 2020 – August 31, 2020
September 1, 2020 – September 30, 2020
Fourth quarter
Fiscal year total
5,582 $
86,720 $
132,723 $
225,025 $
40,106 $
721,432 $
1,800,682 $
2,562,220 $
— $
— $
— $
— $
— $
115,594 $
565,719 $
681,313 $
3,468,558 $
84.80
89.35
89.33
89.23
89.74
89.47
74.94
79.26
—
—
—
—
—
71.16
74.27
73.74
78.82
34
—
—
125,567
125,567
32,988
719,250
1,795,764
2,548,002
—
—
—
—
—
113,002
565,085
678,087
3,351,656
$750
$750
$739
$736
$672
$537
$537
$537
$537
$537
$529
$487
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
In the preceding table, the total number of shares purchased includes shares purchased pursuant to the Restricted Stock Trust
Fund, which was established to acquire our common stock in the open market and used to settle restricted stock units (“RSUs”)
granted as a retention vehicle for certain employees of our wholly-owned Canadian subsidiaries. For more information on this
trust fund, see Note 2 and Note 8 of the Notes to Consolidated Financial Statements of this Form 10-K. These activities do not
utilize the repurchase authorization presented in the preceding table.
The total number of shares purchased also includes shares repurchased as a result of employees surrendering shares as payment
for option exercises or withholding taxes. These activities do not utilize the repurchase authorization presented in the preceding
table.
ITEM 6. SELECTED FINANCIAL DATA
in millions, except per share amounts
2020
2019
2018
2017
2016
Year ended September 30,
Operating results:
Net revenues
Net income
Earnings per common share - basic
Earnings per common share - diluted
Weighted-average common shares outstanding - basic
Weighted-average common and common equivalent shares
outstanding - diluted
Dividends per common share - declared
Financial condition:
Total assets
Long-term borrowings:
Non-current portion of other borrowings
Non-current portion of senior notes payable
Total long-term borrowings
Total equity attributable to Raymond James Financial, Inc.
Shares outstanding
Book value per share
$
$
$
$
$
$
$
$
$
$
$
7,990 $
818 $
5.94 $
5.83 $
137.6
140.2
7,740 $
1,034 $
7.32 $
7.17 $
141.0
144.0
7,274 $
6,371 $
857 $
5.89 $
5.75 $
145.3
148.8
636 $
4.43 $
4.33 $
143.3
146.6
1.48 $
1.36 $
1.10 $
0.88 $
5,405
529
3.72
3.65
141.8
144.5
0.80
47,482 $
38,830 $
37,413 $
34,883 $
31,487
858 $
2,050 $
2,908 $
7,114 $
136.6
889 $
1,550 $
2,439 $
6,581 $
137.8
894 $
1,550 $
2,444 $
6,368 $
145.6
899 $
1,550 $
2,449 $
5,582 $
144.1
52.08 $
47.76 $
43.73 $
38.74 $
604
1,700
2,304
4,917
141.5
34.73
Amounts related to senior notes payable exclude the impact of debt issuance costs and unaccreted discounts or premiums.
35
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INDEX
Introduction
Executive overview
Reconciliation of Non-GAAP financial measures to GAAP financial measures
Segments
Net interest analysis
Results of Operations
Private Client Group
Capital Markets
Asset Management
RJ Bank
Other
Certain statistical disclosures by bank holding companies
Liquidity and capital resources
Statement of financial condition analysis
Contractual obligations
Regulatory
Critical accounting estimates
Recent accounting developments
Off-balance sheet arrangements
Effects of inflation
Risk management
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48
50
52
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56
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62
62
62
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65
65
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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
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
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.
39
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.
$ in millions, except per share amounts
Net income
Non-GAAP adjustments:
Acquisition and disposition-related expenses
Reduction in workforce expenses
Goodwill impairment
Pre-tax impact of non-GAAP adjustments
Tax effect of non-GAAP adjustments
Total non-GAAP adjustments, net of tax
Adjusted net income
Earnings per diluted share
Non-GAAP adjustments:
Acquisition and disposition-related expenses
Reduction in workforce expenses
Goodwill impairment
Pre-tax impact of non-GAAP adjustments
Tax effect of non-GAAP adjustments
Total non-GAAP adjustments, net of tax
Adjusted earnings per diluted share
Year ended September 30,
2020
2019
$
818
$
1,034
7
46
—
53
(13)
40
858
5.83
0.05
0.32
—
0.37
(0.09)
0.28
6.11
$
$
$
15
—
19
34
—
34
1,068
7.17
0.10
—
0.13
0.23
—
0.23
7.40
$
$
$
40
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
$ in millions
Return on equity
Average equity
Impact on average equity of non-GAAP adjustments:
Acquisition and disposition-related expenses
Reduction in workforce expenses
Goodwill impairment
Pre-tax impact of non-GAAP adjustments
Tax effect of non-GAAP adjustments
Total non-GAAP adjustments, net of tax
Adjusted average equity
Average equity
Less:
Average goodwill and identifiable intangible assets, net
Average deferred tax liabilities, net
Average tangible common equity
Impact on average tangible common equity of non-GAAP adjustments:
Acquisition and disposition-related expenses
Reduction in workforce expenses
Goodwill impairment
Pre-tax impact of non-GAAP adjustments
Tax effect of non-GAAP adjustments
Total non-GAAP adjustments, net of tax
Adjusted average tangible common equity
Return on equity
Adjusted return on equity
Return on tangible common equity
Adjusted return on tangible common equity
Year ended September 30,
2020
2019
$
6,860
$
6,392
1
9
—
10
(2)
8
$
$
6,868
6,860
$
$
605
(31)
12
—
4
16
—
16
6,408
6,392
630
(31)
$
6,286
$
5,793
1
9
—
10
(2)
8
12
—
4
16
—
16
$
6,294
$
5,809
11.9 %
12.5 %
13.0 %
13.6 %
16.2 %
16.7 %
17.8 %
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
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.
$ in millions
Total company
Net revenues
Pre-tax income
Private Client Group
Net revenues
Pre-tax income
Capital Markets
Net revenues
Pre-tax income
Asset Management
Net revenues
Pre-tax income
RJ Bank
Net revenues
Pre-tax income
Other
Net revenues
Pre-tax loss
Intersegment eliminations
Net revenues
Year ended September 30,
% change
2020
2019
2018
2020 vs. 2019
2019 vs. 2018
$
$
$
$
$
$
$
$
$
$
$
$
7,990 $
7,740 $
1,052 $
1,375 $
7,274
1,311
5,552 $
5,359 $
5,093
539 $
579 $
576
1,291 $
1,083 $
225 $
110 $
715 $
284 $
691 $
253 $
765 $
196 $
846 $
515 $
964
91
654
235
727
492
3 %
(23) %
4 %
(7) %
19 %
105 %
3 %
12 %
(10) %
(62) %
(82) $
(192) $
5 $
(82) $
(15)
(83)
NM
(134) %
6 %
5 %
5 %
1 %
12 %
21 %
6 %
8 %
16 %
5 %
NM
1 %
$
(251) $
(244) $
(149)
NM
NM
42
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.
Twelve months ended:
September 30, 2020
September 30, 2019
September 30, 2018
Target federal funds rate
Low
High
End of period
0.00 %
1.75 %
1.00 %
1.75 %
2.50 %
2.25 %
0% - 0.25%
1.75% - 2.00%
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
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
balance
Interest
inc./exp.
Average
yield/
cost
Average
balance
Interest
inc./exp.
Average
yield/cost
Average
balance
Interest
inc./exp.
Average
yield/cost
$ in millions
Interest-earning assets:
Assets segregated pursuant to
regulations
Trading instruments
Available-for-sale securities
Margin loans
Bank loans, net of unearned income
and deferred expenses:
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Loans held for sale
Total bank loans, net
Loans to financial advisors, net
Corporate cash and all other
$
3,040 $
545
4,250
2,206
7,885
209
3,688
1,246
4,874
3,559
130
21,591
978
6,077
28
20
83
84
0.91 % $
2,399 $
3.65 %
1.94 %
3.82 %
733
2,872
2,584
59
26
69
3.56 %
2.39 %
122
4.73 %
693
2,531
2,590
2.47 % $
3,011 $
275
3.43 %
8,070
9
4.10 %
120
33
148
112
3.21 %
3.35 %
3.04 %
3.10 %
5
3.70 %
221
3,451
1,284
4,091
3,139
151
702
3.25 %
20,407
20
63
2.01 %
916
1.05 %
4,658
378
12
159
35
135
145
7
871
18
116
4.62 %
7,619
5.51 %
4.53 %
3.36 %
3.30 %
4.57 %
4.73 %
166
3,231
1,146
3,448
2,690
126
4.26 %
18,426
2.01 %
882
2.48 %
4,007
53
23
52
107
326
8
133
30
109
111
5
722
15
72
Total interest-earning assets
$
38,687 $
1,000
3.45 % $
34,569 $
1,281
3.71 % $
32,140 $
1,044
Interest-bearing liabilities:
Bank deposits:
Savings, money market and
Negotiable Order of Withdrawal
(“NOW”) accounts
$
23,629 $
Certificates of deposit
Trading instrument liabilities
Brokerage client payables
Other borrowings
Senior notes payable
Other
Total interest-bearing
liabilities
Net interest income
1,006
192
3,922
891
1,798
406
$
31,844 $
$
21
20
3
11
20
85
18
178
822
0.09 % $
20,889 $
120
0.58 % $
18,473 $
2.03 %
1.58 %
536
292
0.29 %
3,326
2.25 %
926
4.73 %
1,550
3.04 %
738
0.54 % $
28,257 $
$
12
7
21
21
73
29
283
998
2.24 %
2.50 %
372
278
0.62 %
4,147
2.30 %
914
4.70 %
1,549
3.91 %
599
1.00 % $
26,332 $
$
60
6
7
15
22
73
19
202
842
1.76 %
3.32 %
2.07 %
4.14 %
4.22 %
5.08 %
4.06 %
3.42 %
3.16 %
4.09 %
4.01 %
3.93 %
1.71 %
1.79 %
3.25 %
0.32 %
1.67 %
2.64 %
0.37 %
2.41 %
4.69 %
3.10 %
0.77 %
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.
44
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.
45
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Operating results
$ in millions
Revenues:
Year ended September 30,
% change
2020
2019
2018
2020 vs. 2019
2019 vs. 2018
Asset management and related administrative fees
$
3,162 $
2,820 $
2,517
Brokerage revenues:
Mutual and other fund products
Insurance and annuity products
Equities, ETFs and fixed income products
Total brokerage revenues
Account and service fees:
Mutual fund and annuity service fees
RJBDP fees:
Third-party banks
RJ Bank
Client account and other fees
Total account and service fees
Investment banking
Interest income
All other
Total revenues
Interest expense
Net revenues
Non-interest expenses:
Financial advisor compensation and benefits
Administrative compensation and benefits
Total compensation, commissions and benefits
Non-compensation expenses:
Communications and information processing
Occupancy and equipment
Business development
Professional fees
All other
Total non-compensation expenses
Total non-interest expenses
Pre-tax income
Selected key metrics
PCG client asset balances
$ in billions
AUA
Assets in fee-based accounts (1)
Percent of AUA in fee-based accounts
567
397
419
599
412
378
703
414
432
1,383
1,389
1,549
348
150
180
129
807
41
155
27
5,575
(23)
5,552
3,428
971
4,399
251
175
79
33
76
614
5,013
334
280
173
122
909
32
225
26
5,401
(42)
5,359
3,190
933
4,123
235
168
124
33
97
657
4,780
$
539 $
579 $
332
262
92
111
797
35
193
30
5,121
(28)
5,093
3,051
835
3,886
220
154
115
46
96
631
4,517
576
12 %
(5) %
(4) %
11 %
—
4 %
(46) %
4 %
6 %
(11) %
28 %
(31) %
4 %
3 %
(45) %
4 %
7 %
4 %
7 %
7 %
4 %
(36) %
—
(22) %
(7) %
5 %
(7) %
12 %
(15) %
—
(13) %
(10) %
1 %
7 %
88 %
10 %
14 %
(9) %
17 %
(13) %
5 %
50 %
5 %
5 %
12 %
6 %
7 %
9 %
8 %
(28) %
1 %
4 %
6 %
1 %
As of September 30,
2020
2019
2018
$
$
883.3
475.3
$
$
53.8 %
798.4
409.1
$
$
51.2 %
755.7
366.3
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
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
Employees
Independent contractors
Total advisors
2020
September 30,
2019
2018
3,404
4,835
8,239
3,301
4,710
8,011
3,167
4,646
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
$ in millions
RJBDP
RJ Bank
Third-party banks
Subtotal RJBDP
Money market funds (1)
CIP
As of September 30,
2020
2019
2018
$
25,599 $
21,649 $
25,998
51,597
—
3,999
14,043
35,692
—
2,022
Total clients’ domestic cash sweep balances
$
55,596 $
37,714 $
19,446
15,564
35,010
3,240
2,807
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.
Average yield on RJBDP - third-party banks
Year ended September 30,
2020
2019
2018
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
47
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
48
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
$ in millions
Revenues:
Brokerage revenues:
Fixed income
Equity
Total brokerage revenues
Investment banking:
Merger & acquisition and advisory
Equity underwriting
Debt underwriting
Total investment banking
Interest income
Tax credit fund revenues
All other
Total revenues
Interest expense
Net revenues
Non-interest expenses:
Compensation, commissions and benefits
Non-compensation expenses:
Communications and information processing
Occupancy and equipment
Business development
Professional fees
Acquisition and disposition-related expenses
Goodwill impairment
All other
Total non-compensation expenses
Total non-interest expenses
Pre-tax income
Year ended September 30,
% change
2020
2019
2018
2020 vs.
2019
2019 vs.
2018
$
421 $
283 $
150
571
290
185
133
608
25
83
20
131
414
379
100
85
564
38
86
15
1,307
(16)
1,291
1,117
(34)
1,083
774
665
77
36
47
48
7
—
77
292
1,066
75
35
48
45
15
19
71
308
973
$
225 $
110 $
245
156
401
312
93
61
466
32
79
14
992
(28)
964
635
73
34
45
14
—
—
72
238
873
91
49 %
15 %
38 %
(23) %
85 %
56 %
8 %
(34) %
(3) %
33 %
17 %
(53) %
19 %
16 %
3 %
3 %
(2) %
7 %
(53) %
(100) %
8 %
(5) %
10 %
105 %
16 %
(16) %
3 %
21 %
8 %
39 %
21 %
19 %
9 %
7 %
13 %
21 %
12 %
5 %
3 %
3 %
7 %
221 %
NM
NM
(1) %
29 %
11 %
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.
49
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
$ in millions
Revenues:
Asset management and related administrative fees:
Managed programs
Administration and other
Total asset management and related administrative fees
Account and service fees
All other
Net revenues
Non-interest expenses:
Compensation, commissions and benefits
Non-compensation expenses:
Communications and information processing
Investment sub-advisory fees
All other
Total non-compensation expenses
Total non-interest expenses
Pre-tax income
Year ended September 30,
% change
2020
2019
2018
2020 vs.
2019
2019 vs.
2018
$
481 $
467 $
207
688
16
11
715
177
45
99
110
254
431
178
645
31
15
691
179
44
93
122
259
438
$
284 $
253 $
50
454
156
610
28
16
654
170
38
90
121
249
419
235
3 %
16 %
7 %
(48) %
(27) %
3 %
3 %
14 %
6 %
11 %
(6) %
6 %
(1) %
5 %
2 %
6 %
(10) %
(2) %
(2) %
12 %
16 %
3 %
1 %
4 %
5 %
8 %
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
$ in billions
AMS (1)
Carillon Tower Advisers
Subtotal financial assets under management
Less: Assets managed for affiliated entities
Total financial assets under management
September 30,
2020
2019
2018
102.2 $
91.8 $
59.5
161.7
(8.6)
58.5
150.3
(7.2)
153.1 $
143.1 $
83.3
63.3
146.6
(5.7)
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)
$ in billions
Year ended September 30,
2020
2019
2018
Financial assets under management at beginning of year
$
150.3 $
146.6 $
101.8
Carillon Tower Advisers:
Scout Group acquisition
Other - net outflows
AMS - net inflows
Net market appreciation in asset values
—
(5.4)
6.1
10.7
—
(5.8)
6.0
3.5
Financial assets under management at end of year
$
161.7 $
150.3 $
27.1
(0.1)
9.3
8.5
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
51
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
Equity
Fixed income
Balanced
Total financial assets under management
Non-discretionary asset-based programs
September 30, 2020
Average fee rate
$
$
25.5
28.8
5.2
59.5
0.54%
0.18%
0.37%
0.35%
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”).
$ in billions
Total assets
Year ended September 30,
2020
2019
2018
$
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).
$ in billions
Total assets
Year ended September 30,
2020
2019
2018
$
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
52
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
$ in millions
Revenues:
Interest income
Interest expense
Net interest income
All other
Net revenues
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Loan loss provision
RJBDP fees to PCG
All other
Total non-compensation expenses
Total non-interest expenses
Pre-tax income
Year ended September 30,
% change
2020
2019
2018
2020 vs.
2019
2019 vs.
2018
$
800 $
975 $
(62)
738
27
765
51
233
180
105
518
569
(155)
820
26
846
49
22
173
87
282
331
$
196 $
515 $
793
(89)
704
23
727
41
20
92
82
194
235
492
(18) %
(60) %
(10) %
4 %
(10) %
23 %
74 %
16 %
13 %
16 %
4 %
20 %
959 %
4 %
21 %
84 %
72 %
(62) %
10 %
88 %
6 %
45 %
41 %
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.
53
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.
$ in millions
Interest-earning assets:
Cash
Available-for-sale securities
Bank, net of unearned income and
deferred expenses:
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Loans held for sale
Total loans, net
FHLB stock, Federal Reserve Bank
(“FRB”) stock and other
Year ended September 30,
2020
2019
2018
Average
balance
Interest
inc./exp.
Average
yield/
cost
Average
balance
Interest
inc./exp.
Average
yield/
cost
Average
balance
Interest
inc./exp.
Average
yield/
cost
$
1,981 $
4,250
11
83
0.55 % $
1,239 $
1.94 %
2,872
28
69
2.29 % $
957 $
2.39 %
2,430
15
50
1.57 %
2.04 %
7,885
209
3,688
1,246
4,874
3,559
130
21,591
275
9
120
33
148
112
5
702
3.43 %
8,070
4.10 %
3.21 %
3.35 %
3.04 %
3.10 %
3.70 %
3.25 %
221
3,451
1,284
4,091
3,139
151
20,407
378
12
159
35
135
145
7
871
4.62 %
7,619
5.51 %
4.53 %
3.36 %
3.30 %
4.57 %
4.73 %
4.26 %
166
3,231
1,146
3,448
2,690
126
18,426
223
4
2.04 %
172
7
4.01 %
138
326
8
133
30
109
111
5
722
6
4.22 %
5.08 %
4.06 %
3.42 %
3.16 %
4.09 %
4.01 %
3.93 %
4.33 %
3.62 %
Total interest-earning assets
28,045 $
800
2.85 %
24,690 $
975
3.95 %
21,951 $
793
Non-interest-earning assets:
Unrealized gain/(loss) on available-for-
sale securities
Allowance for loan losses
Other assets
Total non-interest-earning assets
80
(271)
392
201
(22)
(214)
394
158
(44)
(193)
379
142
Total assets
$ 28,246
$ 24,848
$ 22,093
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW
accounts
Certificates of deposit
FHLB advances and other
$ 23,806 $
1,006
889
Total interest-bearing liabilities
25,701 $
Non-interest-bearing liabilities
Total liabilities
Total shareholder’s equity
Total liabilities and shareholder’s
246
25,947
2,299
22
20
20
62
0.09 % $ 21,058 $
124
0.59 % $ 18,694 $
2.03 %
2.21 %
536
911
12
19
2.24 %
2.08 %
372
917
0.24 %
22,505 $
155
0.69 %
19,983 $
63
6
20
89
0.34 %
1.67 %
2.13 %
0.44 %
200
22,705
2,143
195
20,178
1,915
equity
$ 28,246
$ 24,848
$ 22,093
Excess of interest-earning assets over
interest-bearing liabilities/net interest
income
Bank net interest:
Spread
Margin (net yield on interest-earning
assets)
Ratio of interest-earning assets to
interest-bearing liabilities
$
2,344 $
738
$
2,185 $
820
$
1,968 $
704
2.61 %
2.63 %
109.12 %
3.26 %
3.32 %
109.71 %
3.18 %
3.22 %
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.
54
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.
Savings, money market and NOW accounts
$
16 $
(118) $
(102) $
8 $
53 $
$ in millions
Interest income:
Interest-earning assets:
Cash
Available-for-sale securities
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Loans held for sale
Total bank loans, net
FHLB stock, FRB stock and other
Total interest-earning assets
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Certificates of deposit
FHLB advances and other
Total interest-bearing liabilities
Change in net interest income
13
19
52
4
26
5
26
34
2
149
1
182
61
6
(1)
66
Year ended September 30,
2020 compared to 2019
Increase/(decrease) due to
2019 compared to 2018
Increase/(decrease) due to
Volume
Rate
Total
Volume
Rate
Total
$
17 $
33
(9)
(1)
11
(2)
26
19
(1)
43
3
(34) $
(19) $
(17) $
14
4 $
9
9 $
10
(94)
(2)
(50)
—
(13)
(52)
(1)
(212)
(6)
(103)
(3)
(39)
(2)
13
(33)
(2)
(169)
(3)
19
3
9
4
20
19
1
75
2
33
1
17
1
6
15
1
74
(1)
$
96 $
(271) $
(175) $
90 $
92 $
10
(1)
25
(2)
2
(118)
8
1
(93)
3
—
11
3
(1)
55
$
71 $
(153) $
(82) $
79 $
37 $
116
55
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
$ in millions
Revenues:
Interest income
Gains/(losses) on private equity investments
All other
Total revenues
Interest expense
Net revenues
Non-interest expenses:
Compensation and all other
Reduction in workforce expenses
Acquisition-related expenses
Total non-interest expenses
Pre-tax loss
Year ended September 30,
% change
2020
2019
2018
2020 vs.
2019
2019 vs.
2018
$
30 $
63 $
(28)
4
6
(88)
(82)
64
46
—
110
14
3
80
(75)
5
87
—
—
87
42
9
9
60
(75)
(15)
64
—
4
68
(52) %
NM
33 %
(93) %
17 %
NM
(26) %
NM
—
26 %
$
(192) $
(82) $
(83)
(134) %
50 %
56 %
(67) %
33 %
—
NM
36 %
—
(100) %
28 %
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.
Return on assets
Return on equity
Average equity to average assets
Dividend payout ratio
Year ended September 30,
2020
1.9%
11.9%
15.5%
25.4%
2019
2.7%
16.2%
16.7%
19.0%
2018
2.4%
14.4%
16.5%
19.1%
56
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.
57
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
RJF
RJ&A
RJ Bank
RJ Ltd.
RJFS
$
Carillon Tower Advisers
Other subsidiaries
Total cash and cash equivalents
$
September 30, 2020
478
2,748
1,072
705
120
78
189
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.
58
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.
$ in millions
Financing arrangement:
Committed secured
Committed unsecured (1)
Total committed financing arrangements
Outstanding borrowing amount:
Committed secured
Committed unsecured
Total outstanding borrowing amount
September 30, 2020
RJ&A
RJF
Total
Total number of
arrangements
$
$
$
$
100 $
200
300 $
— $
—
— $
— $
300
300 $
— $
—
— $
100
500
600
—
—
—
1
1
2
(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
Outstanding borrowing amount:
Uncommitted secured
Uncommitted unsecured
Total outstanding borrowing amount
September 30, 2020
$
$
165
—
165
59
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
month-end
balance
outstanding
during the
quarter
Average daily
balance
outstanding
End of period
balance
outstanding
Average daily
balance
outstanding
Maximum
month-end
balance
outstanding
during the
quarter
End of period
balance
outstanding
$
$
$
$
$
140 $
222 $
218 $
184 $
170 $
165 $
278 $
238 $
200 $
158 $
165 $
228 $
215 $
200 $
150 $
199 $
168 $
283 $
355 $
334 $
260 $
193 $
388 $
351 $
343 $
207
193
130
326
343
For the quarter ended:
($ in millions)
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
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
Standard & Poor’s Ratings Services
Moody’s Investors Services
Rating
BBB+
Baa1
Outlook
Stable
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
60
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.
61
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.
$ in millions
Long-term debt obligations:
Senior notes payable - principal
Other borrowings
Total long-term debt obligations
Contractual interest payments
Certificates of deposit (including interest)
Lease obligations
Purchase obligations and other
Total
2021
2022
2023
2024
2025
Thereafter
Year ended September 30,
$
2,050 $
863
— $
5
— $
6
— $
852
250 $
—
— $
—
2,913
1,452
1,060
583
428
5
114
241
101
200
6
100
262
98
101
852
96
246
85
57
250
95
206
68
37
—
81
105
54
15
1,800
—
1,800
966
—
177
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
62
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
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
64
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
65
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,
$ in millions
High
Low
September 30,
2020
September 30,
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
and
Information.”
“Other Reports
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.
Instantaneous changes in rate
Net interest income
($ in millions)
Projected change in
net interest income
+200
+100
0
-100
$851
$804
$638
$607
33.4%
26.0%
—
(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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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
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.
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total loans held for investment
Loans held for sale
Total loans
One year or less
> One year – five
years
> 5 years
Total
Due in
$
117 $
4,369 $
2,964 $
26
638
1
—
4,050
4,832
—
149
2,264
73
5
35
6,895
1
2
632
1,185
4,942
—
9,725
101
$
4,832 $
6,896 $
9,826 $
7,450
177
3,534
1,259
4,947
4,085
21,452
102
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.
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total loans held for investment
Loans held for sale
Total loans
Interest rate type
Fixed
Adjustable
Total
$
226 $
7,107 $
2
104
1,258
197
—
1,787
4
149
2,792
—
4,750
35
14,833
98
$
1,791 $
14,931 $
7,333
151
2,896
1,258
4,947
35
16,620
102
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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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
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
69
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
70
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.
71
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.
$ in millions
Allowance for loan losses beginning of year
Provision for loan losses
Charge-offs:
C&I loans
CRE loans
Residential mortgage loans
Total charge-offs
Recoveries:
CRE loans
Residential mortgage loans
Total recoveries
Net charge-offs
Foreign exchange translation adjustment
Allowance for loan losses end of year
Year ended September 30,
2020
2019
2018
2017
2016
$
$
218
233
$
203
22
$
190
20
$
197
13
172
28
(96)
(4)
—
(100)
—
2
2
(98)
1
354
$
(2)
(5)
(1)
(8)
—
2
2
(6)
(1)
(10)
—
—
(10)
—
2
2
(8)
1
(26)
—
(1)
(27)
5
1
6
(21)
1
$
218
$
203
$
190
$
(3)
—
(1)
(4)
—
1
1
(3)
—
197
1.30 %
Allowance for loan losses to loans held for investment
1.65 %
1.04 %
1.04 %
1.11 %
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
(charge-off)/
recovery
amount (1)
% of avg.
outstanding
loans
Net loan
(charge-off)/
recovery
amount (1)
% of avg.
outstanding
loans
Net loan
(charge-off)/
recovery
amount (1)
% of avg.
outstanding
loans
$
$
(96)
(4)
2
(98)
1.22 % $
0.11 %
0.04 %
0.45 % $
(2)
(5)
1
(6)
2017
0.02 % $
0.14 %
0.02 %
0.04 % $
Year ended September 30,
0.13 %
—
0.06 %
0.04 %
(10)
—
2
(8)
2016
Net loan
(charge-off)/
recovery
amount (1)
% of avg.
outstanding
loans
Net loan
(charge-off)/
recovery
amount (1)
% of avg.
outstanding
loans
$
$
(26)
5
(21)
0.35 % $
0.18 %
0.13 % $
(3)
—
(3)
0.04 %
—
0.02 %
$ in millions
C&I loans
CRE loans
Residential mortgage loans
Total
$ in millions
C&I loans
CRE loans
Total
(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.
72
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.
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total
2020
September 30,
2019
2018
Nonperforming
loan balance
Allowance for
loan losses
balance
Nonperforming
loan balance
Allowance for
loan losses
balance
Nonperforming
loan balance
Allowance for
loan losses
balance
$
$
2
—
14
—
14
—
30
$
200 $
3
114
14
18
5
$
354 $
19
—
8
—
16
—
43
$
139 $
3
46
9
16
5
$
218 $
2
—
—
—
23
—
25
$
$
123
3
47
9
17
4
203
Total nonperforming loans as a % of
RJ Bank total loans
0.14 %
0.21 %
0.12 %
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total
September 30,
2017
2016
Nonperforming
loan balance
Allowance for
loan losses
balance
Nonperforming
loan balance
Allowance for
loan losses
balance
$
$
5
—
—
—
34
—
39
$
120 $
1
42
6
17
4
$
190 $
35
—
4
—
42
—
81
$
$
138
1
36
4
13
5
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.
73
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.
74
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.
Amount of delinquent residential loans
Delinquent residential loans as a percentage of
outstanding loan balances
$ in millions
September 30, 2020
September 30, 2019
30-89 days
90 days or more
Total
30-89 days
90 days or more
Total
$
$
3 $
2 $
7 $
10 $
10
12
0.06 %
0.04 %
0.14 %
0.22 %
0.20 %
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.
Loans outstanding as a % of RJ Bank total residential mortgage loans
Loans outstanding as a % of RJ Bank total loans
September 30, 2020
CA
FL
TX
NY
CO
25.1%
16.5%
8.8%
6.9%
4.2%
5.8%
3.8%
2.0%
1.6%
1.0%
75
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.
Loans outstanding as a % of RJ Bank total corporate loans
Loans outstanding as a % of RJ Bank total loans
September 30, 2020
Office real estate
Automotive/transportation
Hospitality
Business systems and services
Multi-family
7.5%
6.7%
6.5%
6.3%
5.6%
3.9%
3.5%
3.4%
3.2%
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.
76
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.
77
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management” of
this Form 10-K for our quantitative and qualitative disclosures about market risk.
78
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Table of Contents
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Condition
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1 - Organization and basis of presentation
Note 2 - Summary of significant accounting policies
Note 3 - Fair value
Note 4 - Available-for-sale securities
Note 5 - Derivative assets and derivative liabilities
Note 6 - Collateralized agreements and financings
Note 7 - Bank loans, net
Note 8 - Variable interest entities
Note 9 - Property and equipment, net
Note 10 - Goodwill and identifiable intangible assets, net
Note 11 - Other assets
Note 12 - Leases
Note 13 - Bank deposits
Note 14 - Other borrowings
Note 15 - Senior notes payable
Note 16 - Income taxes
Note 17 - Commitments, contingencies and guarantees
Note 18 - Accumulated other comprehensive income/(loss)
Note 19 - Revenues
Note 20 - Interest income and interest expense
Note 21 - Share-based and other compensation
Note 22 - Regulatory capital requirements
Note 23 - Earnings per share
Note 24 - Segment information
Note 25 - Condensed financial information (parent company only)
Supplementary data
79
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113
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146
150
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Raymond James Financial, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial condition of Raymond James Financial, Inc. and
subsidiaries (the Company) as of September 30, 2020 and 2019, the related consolidated statements of income and
comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three‑year period ended
September 30, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and
2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended September 30,
2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of September 30, 2020, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated November 24, 2020 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the allowance for loan losses related to both the commercial and industrial (C&I) and the commercial real
estate (CRE) loan portfolios that are collectively evaluated for impairment
As discussed in Notes 2 and 7 to the consolidated financial statements, the Company’s allowance for loan losses related to
loans collectively evaluated for impairment (ALL) was based on quantitative historical loss rates adjusted by an estimate of
the loss emergence period. The Company also adjusted the quantitative historical loss rates by considering qualitative
factors that cause the estimated losses to differ from quantitatively calculated amounts. The Company recorded a total
allowance for loan losses of $354 million as of September 30, 2020. Of that amount, the ALL for C&I loans was $200
million or 56% of the total allowance, and the ALL for CRE loans was $117 million or 33% of the total allowance.
80
We identified the assessment of the ALL related to the C&I and CRE loan portfolios as a critical audit matter because it
required a significant degree of subjective auditor judgment and specialized industry skills and knowledge. There was
subjectivity in performing procedures over key factors and assumptions used by the Company, including selection of proxy
data used to develop loss rates and the evaluation of loss emergence periods. There were also subjective judgments and
specialized skills and knowledge needed to assess loan characteristics, such as loan risk ratings, and to evaluate the
development and application of the ALL methodology and the use of qualitative factors.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to the measurement of the ALL for the C&I and CRE
loan portfolios. This included controls related to the (1) development and approval of the ALL methodology, (2)
determination and calculation of key factors and assumptions as well as qualitative factors, and (3) analysis of the ALL
results, trends, and ratios. We evaluated the relevance of the historical proxy data used to develop loss rates by comparing
the Company’s C&I loan portfolio characteristics to the historical proxy data characteristics. In addition, we tested the CRE
loss estimates by comparing them to loss data from independently determined industry peer groups. We evaluated the loss
emergence period by testing the loss triggering and confirmation dates for a selection of loans. We assessed how the
underlying assumptions used by the Company incorporated accurate metrics and other information and were applied in
accordance with the qualitative framework. In addition, we involved credit risk professionals with specialized industry
skills and knowledge, who assisted in testing the Company’s process, including:
•
•
•
evaluating the Company’s ALL methodology to determine if it is sufficiently structured, transparent, and repeatable to
produce an estimate that is compliant with U.S. generally accepted accounting principles,
performing credit file reviews on a selection of loans to assess loan characteristics, such as loan risk ratings, and
evaluating the conceptual soundness of the qualitative framework to determine if it identified the relevant incremental
risks not captured by the quantitative estimate.
/s/ KPMG LLP
We have served as the Company’s auditor since 2001.
Tampa, Florida
November 24, 2020
81
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
$ in millions, except per share amounts
Assets:
Cash and cash equivalents
Cash and cash equivalents segregated pursuant to regulations
Collateralized agreements
Financial instruments, at fair value:
Trading instruments ($265 and $535 pledged as collateral)
Available-for-sale securities ($23 and $24 pledged as collateral)
Derivative assets
Other investments ($37 and $32 pledged as collateral)
Brokerage client receivables, net
Other receivables, net
Bank loans, net
Loans to financial advisors, net
Property and equipment, net
Deferred income taxes, net
Goodwill and identifiable intangible assets, net
Other assets
Total assets
Liabilities and shareholders’ equity:
Bank deposits
Collateralized financings
Financial instrument liabilities, at fair value:
Trading instruments
Derivative liabilities
Brokerage client payables
Accrued compensation, commissions and benefits
Other payables
Other borrowings
Senior notes payable
Total liabilities
Commitments and contingencies (see Note 17)
Shareholders’ equity
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding
Common stock; $.01 par value; 350,000,000 shares authorized; 159,007,158 and 158,435,030 shares issued
as of September 30, 2020 and 2019, respectively, and 136,556,559 and 137,841,952 shares outstanding
as of September 30, 2020 and 2019, respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost; 22,450,599 and 20,593,078 common shares as of September 30, 2020 and 2019,
respectively
Accumulated other comprehensive income/(loss)
Total equity attributable to Raymond James Financial, Inc.
Noncontrolling interests
Total shareholders’ equity
September 30,
2020
2019
$
5,390 $
4,244
422
513
7,650
438
334
2,435
927
21,195
1,012
535
262
600
1,525
$
$
47,482 $
26,801 $
250
240
393
6,792
1,384
1,513
888
2,045
40,306
—
2
2,007
6,484
(1,390)
11
7,114
62
7,176
Total liabilities and shareholders’ equity
$
47,482 $
See accompanying Notes to Consolidated Financial Statements.
82
3,957
2,014
591
708
3,093
338
365
2,671
830
20,891
983
527
231
611
1,020
38,830
22,281
473
296
313
4,361
1,272
747
894
1,550
32,187
—
2
1,938
5,874
(1,210)
(23)
6,581
62
6,643
38,830
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
in millions, except per share amounts
Revenues:
Year ended September 30,
2020
2019
2018
Asset management and related administrative fees
$
3,834 $
3,451 $
3,119
Brokerage revenues:
Securities commissions
Principal transactions
Total brokerage revenues
Account and service fees
Investment banking
Interest income
Other
Total revenues
Interest expense
Net revenues
Non-interest expenses:
Compensation, commissions and benefits
Non-compensation expenses:
Communications and information processing
Occupancy and equipment
Business development
Investment sub-advisory fees
Professional fees
Bank loan loss provision
Acquisition and disposition-related expenses
Reduction in workforce expenses
Other
Total non-compensation expenses
Total non-interest expenses
Pre-tax income
Provision for income taxes
Net income
Earnings per common share – basic
Earnings per common share – diluted
Weighted-average common shares outstanding – basic
Weighted-average common and common equivalent shares outstanding – diluted
Net income
Other comprehensive income/(loss), net of tax:
Available-for-sale securities
Currency translations, net of the impact of net investment hedges
Cash flow hedges
Total other comprehensive income/(loss), net of tax
Total comprehensive income
1,468
488
1,956
624
650
1,000
104
8,168
(178)
7,990
1,450
357
1,807
738
596
1,281
150
8,023
(283)
7,740
1,626
329
1,955
713
501
1,044
144
7,476
(202)
7,274
5,465
5,087
4,795
393
225
134
101
91
233
7
46
243
1,473
6,938
1,052
234
373
218
194
94
85
22
15
—
277
1,278
6,365
1,375
341
818 $
1,034 $
5.94 $
5.83 $
137.6
140.2
7.32 $
7.17 $
141.0
144.0
352
202
181
92
74
20
4
—
243
1,168
5,963
1,311
454
857
5.89
5.75
145.3
148.8
818 $
1,034 $
857
68
—
(34)
34 $
852 $
71
(2)
(61)
8 $
1,042 $
(42)
(3)
33
(12)
845
$
$
$
$
$
$
See accompanying Notes to Consolidated Financial Statements.
83
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
$ in millions, except per share amounts
Common stock, par value $.01 per share:
Balance beginning of year
Share issuances
Balance end of year
Additional paid-in capital:
Balance beginning of year
Employee stock purchases
Exercise of stock options and vesting of restricted stock units, net of forfeitures
Restricted stock, stock option and restricted stock unit expense
Acquisition of noncontrolling interest and other
Balance end of year
Retained earnings:
Balance beginning of year
Net income attributable to Raymond James Financial, Inc.
Cash dividends declared (see Note 23)
Other
Balance end of year
Treasury stock:
Balance beginning of year
Purchases/surrenders
Exercise of stock options and vesting of restricted stock units, net of forfeitures
Balance end of year
Accumulated other comprehensive income/(loss):
Balance beginning of year
Other comprehensive income/(loss), net of tax
Other
Balance end of year
Total equity attributable to Raymond James Financial, Inc.
Noncontrolling interests:
Balance beginning of year
Net loss attributable to noncontrolling interests
Capital contributions
Distributions and other
Balance end of year
Total shareholders’ equity
Year ended September 30,
2020
2019
2018
$
2 $
2 $
—
2
—
2
2
—
2
1,938
1,808
1,645
36
(80)
113
—
34
21
107
(32)
31
32
98
2
2,007
1,938
1,808
5,874
818
(208)
—
6,484
(1,210)
(273)
93
(1,390)
(23)
34
—
11
5,032
1,034
(196)
4
5,874
(447)
(759)
(4)
(1,210)
(27)
8
(4)
(23)
4,340
857
(164)
(1)
5,032
(390)
(45)
(12)
(447)
(15)
(12)
—
(27)
$
$
7,114 $
6,581 $
6,368
62 $
(26)
3
23
62
84 $
(14)
2
(10)
62
112
(6)
—
(22)
84
$
7,176 $
6,643 $
6,452
See accompanying Notes to Consolidated Financial Statements.
84
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
$ in millions
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Premium and discount amortization on available-for-sale securities and loss on other investments
Provisions for loan losses, legal and regulatory proceedings and bad debts
Share-based compensation expense
Unrealized gain on company-owned life insurance policies, net of expenses
Goodwill impairment
Other
Net change in:
Collateralized agreements, net of collateralized financings
Loans provided to financial advisors, net of repayments
Brokerage client receivables and other accounts receivable, net
Trading instruments, net
Derivative instruments, net
Other assets
Brokerage client payables and other accounts payable
Accrued compensation, commissions and benefits
Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held
for sale
Net cash provided by operating activities
Cash flows from investing activities:
Additions to property and equipment
Increase in bank loans, net
Proceeds from sales of loans held for investment
Purchases of available-for-sale securities
Available-for-sale securities maturations, repayments and redemptions
Proceeds from sales of available-for-sale securities
Business acquisitions, net of cash acquired
Other investing activities, net
Net cash used in investing activities
Year ended September 30,
2020
2019
2018
$
818 $
1,034 $
857
119
(39)
57
257
120
(46)
—
92
(55)
(49)
127
150
(51)
(13)
112
(23)
14
59
112
(10)
19
51
(101)
(79)
682
41
(144)
(71)
2,486
(1,231)
70
11
4,054
(124)
(1,136)
634
(5,710)
1,188
222
(5)
(54)
80
32
577
(138)
(1,605)
235
(1,027)
644
—
(5)
(1)
99
117
21
55
99
(32)
—
17
(83)
(87)
(491)
(143)
73
—
346
132
(96)
884
(134)
(2,818)
193
(1,124)
495
45
(159)
26
(4,985)
(1,897)
(3,476)
See accompanying Notes to Consolidated Financial Statements.
85
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued from previous page)
$ in millions
Cash flows from financing activities:
Proceeds from borrowings on the RJF Credit Facility
Repayment of borrowings on the RJF Credit Facility
Repayments of short-term borrowings, net
Proceeds from Federal Home Loan Bank advances
Repayments of Federal Home Loan Bank advances and other borrowed funds
Proceeds from senior notes issuances, net of debt issuance costs paid
Acquisition-related contingent consideration paid, net
Exercise of stock options and employee stock purchases
Increase in bank deposits
Purchases of treasury stock
Dividends on common stock
Acquisitions of and distributions to noncontrolling interests, net
Net cash provided by financing activities
Currency adjustment:
Effect of exchange rate changes on cash
Net increase/(decrease) in cash and cash equivalents and cash and cash equivalents segregated
pursuant to regulations
Cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at beginning of
year
Cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at end of
year
Cash and cash equivalents
Cash and cash equivalents segregated pursuant to regulations
Total cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at
end of year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income taxes, net
Year ended September 30,
2019
2018
2020
—
—
—
850
(855)
494
—
62
4,520
(272)
(205)
(1)
4,593
1
3,663
5,971
300
(300)
—
850
(855)
—
—
65
2,339
(778)
(191)
(57)
1,373
300
(300)
(610)
850
(855)
—
(7)
63
2,210
(62)
(151)
(18)
1,420
(23)
30
(33)
(1,205)
5,941
7,146
$
$
$
$
$
9,634 $
5,971 $
5,941
5,390 $
3,957 $
4,244
2,014
3,500
2,441
9,634 $
5,971 $
5,941
164 $
246 $
283 $
390 $
201
231
See accompanying Notes to Consolidated Financial Statements.
86
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Organization
Raymond James Financial, Inc. (“RJF,” the “firm” or the “Company”) is a financial holding company which, together with its
subsidiaries, is engaged in various financial services activities, including providing investment management services to retail
and institutional clients, the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of
mutual funds and other investment products. The firm also provides corporate and retail banking services, and trust
services. For further information about our business segments, see Note 24 of this Form 10-K. As used herein, the terms “our,”
“we,” or “us” refer to RJF and/or one or more of its subsidiaries.
Basis of presentation
The accompanying consolidated financial statements include the accounts of RJF and its consolidated subsidiaries that are
generally controlled through a majority voting interest. We consolidate all of our 100% owned subsidiaries. In addition, we
consolidate any variable interest entity (“VIE”) in which we are the primary beneficiary. Additional information on these VIEs
is provided in Note 2 and in Note 8 of this Form 10-K. When we do not have a controlling interest in an entity, but we exert
significant influence over the entity, we apply the equity method of accounting. All material intercompany balances and
transactions have been eliminated in consolidation.
Effective April 2019, we increased our ownership of ClariVest Asset Management LLC (“ClariVest”) from 45% to 100%
making ClariVest a wholly-owned subsidiary of Eagle Asset Management. ClariVest has been included in our consolidated
financial statements since our initial investment of the 45% interest as we concluded we were required to consolidate as defined
by the accounting guidance. The increase in ownership was accounted for as a shareholders’ equity transaction.
Accounting estimates and assumptions
The preparation of consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting
principles (“GAAP”) requires us to make certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported
amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates and could have a
material impact on the consolidated financial statements.
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current year’s presentation.
87
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recognition of non-interest revenues
Revenue from contracts with customers is recognized when promised goods or services are delivered to our customers in an
amount we expect to receive in exchange for those goods or services (i.e., the transaction price). Contracts with customers can
include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct.
Our performance obligations to our customers are generally satisfied when we transfer the promised good or service to our
customer, either at a point in time or over time. Revenue from a performance obligation transferred at a point in time is
recognized at the time that the customer obtains control over the promised good or service. Revenue from our performance
obligations satisfied over time is recognized in a manner that depicts our performance in transferring control of the good or
service, which is generally measured based on time elapsed, as our customers receive the benefit of our services as they are
provided.
Payment for the majority of our services is considered to be variable consideration, as the amount of revenue we expect to
receive is subject to factors outside of our control, including market conditions. Variable consideration is only included in
revenue when amounts are not subject to significant reversal, which is generally when uncertainty around the amount of
revenue to be received is resolved. We record deferred revenue from contracts with customers when payment is received prior
to the performance of our obligation to the customer.
We involve third parties in providing services to the customer for certain of our contracts with customers. We are generally
deemed to control the promised services before they are transferred to the customer. Accordingly, we present the related
revenues gross of the related costs.
Asset management and related administrative fees
We earn asset management and related administrative fees for performing asset management, portfolio management and related
administrative services to retail and institutional clients. Such fees are generally calculated as a percentage of the value of client
assets in fee-based accounts in our Private Client Group (“PCG”) segment or on the net asset value of assets managed by
Carillon Tower Advisers and its affiliates (collectively “Carillon Tower Advisers”) in our Asset Management segment. The
value of these assets is impacted by market fluctuations and net inflows or outflows of assets. Fees are generally collected
quarterly and are based on balances either at the beginning of the quarter or the end of the quarter, or average balances
throughout the quarter. Asset management and related administrative fees are recognized on a monthly basis (i.e., over time) as
the services are performed.
Revenues related to fee-based accounts under administration in PCG are shared by the PCG and Asset Management segments,
the amount of which depends on whether clients are invested in “managed programs” that are overseen by our Asset
Management segment (i.e., included in financial assets under management (“AUM”) in the Asset Management segment) and
the administrative services provided. Asset management revenues earned by Carillon Tower Advisers for retail accounts
managed on behalf of third-party institutions, institutional accounts or proprietary mutual funds that we manage are recorded
entirely in the Asset Management segment.
Brokerage revenues
Securities commissions
Mutual and other fund products and insurance and annuity products
We earn revenues for distribution and related support services performed related to mutual and other funds, fixed and variable
annuities and insurance products. Depending on the product sold, we may receive an upfront fee for our services, a trailing
commission, or some combination thereof. Upfront commissions received are generally based on a fixed rate applied, as a
percentage, to amounts invested or the value of the contract at the time of sale and are generally recognized at the time of sale.
Trailing commissions are generally based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value
of the insurance policy or annuity contract. Trailing commissions are generally received monthly or quarterly while our client
holds the investment or holds the contract. As these trailing commissions are based on factors outside of our control, including
market movements and client behavior (i.e., how long clients hold their investment, insurance policy or annuity contract), such
revenue is recognized when it is probable that a significant reversal will not occur.
88
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Equities, ETFs and fixed income products
We earn commissions for executing and clearing transactions for customers, primarily in listed and over-the-counter (“OTC”)
equity securities, including exchange-traded funds (“ETFs”), and options. Such revenues primarily arise from transactions for
retail clients in our PCG segment, as well as services related to sales and trading activities transacted on an agency basis in our
Capital Markets segment. Commissions are recognized on trade date, generally received from the customer on settlement date,
and we record a receivable between the trade date and the date collected from the customer.
Principal transactions
Principal transactions include revenues from customers’ purchases and sales of financial instruments, including fixed income
and equity securities and derivatives, in which we transact on a principal basis. To facilitate such transactions, we carry
inventories of financial instruments. The gains and losses on such inventories, both realized and unrealized, are reported as
principal transactions revenues.
Account and service fees
Mutual fund and annuity service fees
We earn servicing fees for providing sales and marketing support to product partners and for supporting the availability and
distribution of their products on our platforms. We also earn servicing fees from such partners for accounting and
administrative services provided to such partners. These fees, which are received monthly or quarterly, are generally based on
the market value of assets or number of positions in such programs or, in certain cases, are a fixed annual fee, and are
recognized over time as the services are performed.
RJBDP fees
We earn servicing fees from various banks for administrative services we provide related to our clients’ deposits that are swept
to such banks as part of the Raymond James Bank Deposit Program (“RJBDP”), our multi-bank sweep program. The amounts
received 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 fees are
earned over time as the related administrative services are performed and are received monthly. Our PCG segment also earns
servicing fees from RJ Bank, which are based on the number of accounts that are swept to RJ Bank. These fees are eliminated
in consolidation.
Investment banking
We earn revenue from investment banking transactions, including public and private equity and debt financing, merger &
acquisition advisory services, and other advisory services. Underwriting revenues, which are typically deducted from the
proceeds remitted to the issuer, are recognized on trade date if there is no uncertainty or contingency related to the amount to be
paid. Fees from merger & acquisition and advisory assignments are generally recognized at the time the services related to the
transaction are completed under the terms of the engagement. Fees for merger & acquisition and advisory services are typically
received upfront, as non-refundable retainer fees, or as a success fee upon completion of a transaction. Expenses related to
investment banking transactions are generally deferred until the related revenue is recognized or the assignment is otherwise
concluded. Such expenses are included in “Professional fees” on our Consolidated Statements of Income and Comprehensive
Income.
We have elected the practical expedient allowed by the accounting guidance to not disclose information about remaining
performance obligations pertaining to contracts that have an original expected duration of one year or less. See Note 19 in the
accompanying Notes to the Consolidated Financial Statements for additional information on our revenue streams.
Cash and cash equivalents
Our cash equivalents include money market funds or highly liquid investments with original maturities of 3 months or less,
other than those used for trading purposes.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Cash and cash equivalents segregated pursuant to regulations
In accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, Raymond James & Associates, Inc. (“RJ&A”), as a
broker-dealer carrying client accounts, is subject to requirements to maintain cash or qualified securities in a segregated reserve
account for the exclusive benefit of its clients. The amounts included in “Cash and cash equivalents segregated pursuant to
regulations” on our Consolidated Statements of Financial Condition represent the amounts of cash and cash equivalents, which
includes highly liquid investments with original maturities of 3 months or less, on deposit in our segregated reserve accounts for
regulatory purposes as of each respective period-end. From time to time, we may also segregate highly liquid securities, such
as U.S. Treasuries, which have original maturities of greater than 3 months. Such securities are carried at fair value on our
Consolidated Statements of Financial Condition. In addition, Raymond James Ltd. (“RJ Ltd.”) is required to hold client
Registered Retirement Savings Plan funds in trust.
Collateralized agreements and financings
Securities purchased under agreements to resell and securities sold under agreements to repurchase
We purchase securities under short-term agreements to resell (“reverse repurchase agreements”). Additionally, we sell
securities under agreements to repurchase (“repurchase agreements”). Both reverse repurchase agreements and repurchase
agreements are accounted for as collateralized financings and are carried at contractual amounts plus accrued interest. We
receive collateral with a fair value that is typically equal to or in excess of the principal amount loaned under reverse repurchase
agreements to mitigate credit exposure. To ensure that the market value of the underlying collateral remains sufficient,
collateral values are evaluated on a daily basis, and collateral is obtained from or returned to the counterparty when
contractually required. Under repurchase agreements, we are required to post collateral in an amount that typically exceeds the
carrying value of these agreements. In the event that the market value of the securities we pledge as collateral declines, we may
have to post additional collateral or reduce borrowing amounts. Reverse repurchase agreements and repurchase agreements are
included in “Collateralized agreements” and “Collateralized financings,” respectively, on our Consolidated Statements of
Financial Condition. See Note 6 for additional information regarding collateralized agreements and financings.
Securities borrowed and securities loaned
We act as an intermediary between broker-dealers and other financial institutions whereby we borrow securities from one
broker-dealer and then either lend them to another broker-dealer or use them to cover short positions. Where permitted, we
have also loaned, to broker-dealers and other financial institutions, securities owned by the firm, our clients, or others we have
received as collateral. Both securities borrowed and securities loaned transactions are accounted for as collateralized financings
and are recorded at the amount of cash advanced or received. In securities borrowed transactions, we are required to deposit
cash with the lender in an amount which is generally in excess of the market value of securities borrowed. With respect to
securities loaned, we generally receive cash in an amount in excess of the market value of securities loaned. We evaluate the
market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary.
Securities borrowed and securities loaned are included in “Collateralized agreements” and “Collateralized financings,”
respectively, on our Consolidated Statements of Financial Condition. See Note 6 for additional information regarding
collateralized agreements and financings.
Financial instruments, financial instrument liabilities, at fair value
“Financial instruments” and “Financial instrument liabilities” are recorded at fair value. 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 in accordance with GAAP, 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. GAAP provides for the following three levels to be used to classify our
fair value measurements.
Level 1 - Financial instruments included in Level 1 are highly liquid instruments valued using unadjusted quoted prices in
active markets for identical assets or liabilities.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Level 2 - Financial instruments reported in Level 2 include those that have pricing inputs that are other than unadjusted
quoted prices in active markets, but which are either directly or indirectly observable as of the reporting date (i.e., prices for
similar instruments).
Level 3 - Financial instruments reported in Level 3 have little, if any, market activity and are measured using one or more
inputs that are significant to the fair value measurement and unobservable. These valuations require judgment or
estimation. These instruments are generally valued using discounted cash flow techniques, market multiples, or
investment-specific events.
GAAP requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when performing
our fair value measurements. 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.
Valuation techniques and inputs
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. In accordance
with GAAP, the criteria used to determine whether the market for a financial instrument is active or inactive is based on the
particular asset or liability. For equity securities, our definition of actively traded is based on average daily trading volume.
We have determined the market for certain other types of financial instruments, including private equity investments, to be
uncertain or inactive as of both September 30, 2020 and 2019. As a result, the valuation of these financial instruments included
management judgment in determining the relevance and reliability of market information available.
The level within the fair value hierarchy, specific valuation techniques, and other significant accounting policies pertaining to
financial instruments at fair value on our Consolidated Statements of Financial Condition are described as follows.
Trading instruments and trading instruments sold but not yet purchased
Trading instruments and trading instruments sold but not yet purchased are comprised primarily of the financial instruments
held by our broker-dealer subsidiaries and include debt securities, equity securities, brokered certificates of deposit, and other
securities. These instruments are recorded at fair value with realized and unrealized gains and losses reflected in current period
net income.
When available, we use quoted prices in active markets to determine the fair value of our trading instruments. Such instruments
are classified within Level 1 of the fair value hierarchy.
When trading instruments are traded in secondary markets and quoted market prices for identical instruments do not exist, we
utilize valuation techniques, including matrix pricing, to estimate fair value. Matrix pricing generally utilizes spread-based
models periodically re-calibrated to observable inputs such as market trades or to dealer price bids in similar securities in order
to derive the fair value of the instruments. Valuation techniques may also rely on other observable inputs such as yield curves,
interest rates and expected principal repayments and default probabilities. We utilize prices from third-party pricing services to
corroborate our estimates of fair value. Depending upon the type of security, the pricing service may provide a listed price, a
matrix price or use other methods including broker-dealer price quotations. Securities valued using these techniques are
classified within Level 2 of the fair value hierarchy.
We offset our long and short positions for identical securities recorded at fair value as part of our trading instruments (long
positions) and trading instruments sold but not yet purchased (short positions).
Available-for-sale securities
Available-for-sale securities are generally held by RJ Bank and classified at the date of purchase. They are comprised primarily
of agency mortgage-backed securities (“MBS”) and agency collateralized mortgage obligations (“CMOs”), which are
guaranteed by the U.S. government or its agencies. Available-for-sale securities owned by RJ Bank are used as part of its
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
interest rate risk and liquidity management strategies and may be sold in response to changes in interest rates, changes in
prepayment risks, or other factors.
Interest on available-for-sale securities is recognized in interest income on an accrual basis. Discounts are accreted and
premiums are amortized as an adjustment to yield over the estimated average life of the security. Realized gains and losses on
sales of available-for-sale securities are recognized using the specific identification method and reflected in “Other” revenue in
the period sold. Unrealized gains or losses on available-for-sale securities, except for those that are deemed to be other-than-
temporarily-impaired, are recorded through other comprehensive income/(loss) (“OCI”) and are thereafter presented in equity
as a component of accumulated other comprehensive income (“AOCI”) on our Consolidated Statements of Financial Condition.
For any available-for-sale securities in an unrealized loss position at a reporting period end, we make an assessment whether
such securities are impaired on an other-than-temporary basis. The following factors are considered in order to determine
whether an impairment is other-than-temporary: our intention to sell the security, our assessment of whether it is more likely
than not that we will be required to sell the security before the recovery of its amortized cost basis, and whether the evidence
indicating that we will recover the amortized cost basis of a security in full outweighs evidence to the contrary. Evidence
considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in
value subsequent to period-end, recent events specific to the issuer or industry and forecasted performance of the security. Due
to the guarantee of the full payment of principal and interest by the U.S. government or its agencies, as well as our ability and
intent to hold these securities, we do not consider our agency available-for-sale securities to be other-than-temporarily-
impaired.
The fair value of our available-for-sale securities is determined by obtaining prices primarily based on valuation models from
third-party pricing services. The third-party pricing services provide comparable price evaluations utilizing observable market
data for similar securities, which includes observable data comprised of benchmark yields, reported trades, broker-dealer
quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data including market research
publications, and loan performance experience. We utilize other third-party pricing services to corroborate the pricing
information obtained from the primary pricing service. Securities valued using valuation techniques that rely on observable
market data are classified within Level 2 of the fair value hierarchy.
Derivative assets and derivative liabilities
Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative
liabilities” on our Consolidated Statements of Financial Condition. To reduce credit exposure on certain of our derivative
transactions, we may enter into a master netting arrangement that allows for net settlement of all derivative transactions with
each counterparty. In addition, the credit support annex allows parties to the master netting agreement to mitigate their credit
risk by requiring the party which is out of the money to post collateral. We accept collateral in the form of cash or other
marketable securities. Where permitted, we elect to net-by-counterparty certain derivatives entered into under a legally
enforceable master netting agreement and, therefore, the fair value of those derivatives are netted by counterparty on our
Consolidated Statements of Financial Condition. As we elect to net-by-counterparty the fair value of such derivatives, we also
net-by-counterparty cash collateral exchanged as part of those derivative agreements. We may also require certain
counterparties to make a deposit at the inception of a derivative agreement, referred to as “initial margin.” This initial margin is
included in “Other payables” on our Consolidated Statements of Financial Condition.
We are also required to maintain deposits with the clearing organizations we utilize to clear certain of our interest rate
derivatives, for which we have posted securities as collateral. This initial margin is included as a component of “Other
investments” and “Available-for-sale securities” on our Consolidated Statements of Financial Condition. On a daily basis, we
also pay cash to, or receive cash from, these clearing organizations due to changes in the fair value of the derivatives which they
clear. Such payments are referred to as “variation margin” and are considered to be settlement of the related derivatives.
Fixed income business operations
We enter into interest rate derivatives in our fixed income business to facilitate client transactions or to actively manage risk
exposures that arise from our client activity, including a portion of our trading inventory. The majority of these derivatives are
traded in the over-the-counter market and are executed directly with another counterparty or are cleared and settled through a
clearing organization. Realized and unrealized gains or losses on our fixed income derivatives are recorded in “Principal
transactions” on our Consolidated Statements of Income and Comprehensive Income. The fair values of these interest rate
derivatives are obtained from internal pricing models that consider current market trading levels and the contractual prices for
the underlying financial instruments, as well as time value, yield curve and other volatility factors underlying the positions.
Since our model inputs can be observed in liquid markets and the models do not require significant judgment, such derivatives
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
are classified within Level 2 of the fair value hierarchy. We corroborate the output of our internal pricing models by preparing
an independent calculation using a third-party model. Our fixed income business also holds to-be-announced (“TBA”) security
contracts that are accounted for as derivatives, which are classified within Level 1 of the fair value hierarchy.
Matched book
We also facilitate matched book derivative transactions in which we enter into interest rate derivatives with clients. For every
derivative we enter into with a client, we also enter into an offsetting derivative on terms that mirror the client transaction with a
credit support provider, which is a third-party financial institution. Any collateral required to be exchanged under these
derivatives is administered directly between the client and the third-party financial institution. Due to this pass-through
transaction structure, we have completely mitigated the market and credit risk on these derivatives. As a result, derivatives for
which the fair value is in an asset position have an equal and offsetting derivative liability. Fair value is determined using an
internal pricing model which includes inputs from independent pricing sources to project future cash flows under each
underlying derivative. Since any changes in fair value are completely offset by a change in fair value of the offsetting
derivative, there is no net impact on our Consolidated Statements of Income and Comprehensive Income from changes in the
fair value of these derivatives. We recognize revenue on these derivatives on the transaction date, computed as the present
value of the expected cash flows we expect to receive from the third-party financial institution over the life of the derivative.
The difference between the present value of these cash flows at the date of inception and the gross amount potentially received
is accreted to revenue over the term of the contract. The revenue from these transactions is included within “Other” revenues
on our Consolidated Statements of Income and Comprehensive Income.
RJ Bank derivatives
Foreign-exchange derivatives
We enter into three-month forward foreign exchange contracts primarily to hedge the risks related to RJ Bank’s investment in
its Canadian subsidiary, as well as its risk resulting from transactions denominated in currencies other than the U.S. dollar. The
majority of these derivatives are designated as net investment hedges. The gain or loss related to RJ Bank’s designated net
investment hedges is recorded, net of tax, in shareholders’ equity as part of the cumulative translation adjustment component of
AOCI with such balance impacting “Other” revenues in the event the net investment is sold or substantially liquidated. Gains
and losses on the undesignated derivative instruments are recorded in earnings on our Consolidated Statements of Income and
Comprehensive Income. Hedge effectiveness is assessed at each reporting period using a method that is based on changes in
forward rates and measured using the hypothetical derivatives method. As the terms of the hedging instrument and hypothetical
derivative generally match at inception, the hedge is expected to be highly effective.
The fair value of our forward foreign exchange contracts is determined by obtaining valuations from a third-party pricing
service or model. These valuations are based on observable inputs such as spot rates, foreign exchange rates and both U.S. and
foreign interest rate curves. We validate the observable inputs utilized in the third-party valuation model by preparing an
independent calculation using a secondary third-party valuation model. These forward foreign exchange contracts are classified
within Level 2 of the fair value hierarchy.
Interest rate derivatives
The cash flows associated with certain assets held by RJ Bank provide interest income at fixed interest rates. Therefore, the
value of these assets, absent any risk mitigation, is subject to fluctuation based upon changes in market rates of interest over
time. RJ Bank enters into floating-rate advances from the Federal Home Loan Bank (“FHLB”) to, in part, fund these assets and
then enters into interest rate contracts which swap variable interest payments on this debt for fixed interest payments. These
interest rate swaps are designated as cash flow hedges and effectively fix RJ Bank’s cost of funds associated with these assets to
mitigate a portion of the market risk. The gain or loss on RJ Bank’s cash flow hedges is recorded, net of tax, in shareholders’
equity as part of the cash flow hedge component of AOCI and subsequently reclassified to earnings when the hedged
transaction affects earnings, specifically upon the incurrence of interest expense on the hedged borrowings. Hedge
effectiveness is assessed at inception and at each reporting period utilizing regression analysis. As the key terms of the hedging
instrument and hedged transaction match at inception, management expects the hedges to be effective while they are
outstanding. The fair value of these interest rate swaps is determined by obtaining valuations from a third-party pricing service.
These third-party valuations are based on observable inputs such as time value and yield curves. We validate these observable
inputs by preparing an independent calculation using a secondary third-party model. Cash flows from hedging activities are
included in the same category as the items being hedged. Cash flows from derivative instruments used to manage interest rates
are classified as operating activities. We classify these derivatives within Level 2 of the fair value hierarchy.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Other investments
Other investments consist primarily of private equity investments, securities pledged as collateral with clearing organizations,
and term deposits with Canadian financial institutions. Our securities pledged as collateral with clearing organizations, which
primarily include U.S. Treasury securities, and term deposits are categorized within Level 1 of the fair value hierarchy.
Private equity investments
Private equity investments consist of direct investments, investments in third-party private equity funds and various legacy
private equity funds which we sponsor. The private equity funds in which we invest are primarily closed-end funds in which
our investments are generally not eligible for redemption. We receive distributions from these funds as the underlying assets
are liquidated or distributed. These investments are measured at fair value with any gains or losses recognized in “Other”
revenues on our Consolidated Statements of Income and Comprehensive Income. The fair value of private equity investments
are determined utilizing either the net asset value (“NAV”) of the fund as a practical expedient or Level 3 valuation techniques.
We utilize NAV or its equivalent as a practical expedient to determine the fair value of our private equity investments when:
(1) the fund does not have a readily determinable fair value; (2) the NAV of the fund is calculated in a manner consistent with
the measurement principles of investment-company accounting, including measurement of the underlying investments at fair
value; and (3) it is not probable that we will sell the investment at an amount other than NAV. The NAV is calculated based on
our proportionate share of the net assets of the fund as provided by the fund manager.
The portion of our private equity investment portfolio that is not valued at NAV is valued initially at the transaction price until
significant transactions or developments indicate that a change in the carrying values of these investments is appropriate. The
carrying values of these investments are adjusted based on financial performance, investment-specific events, financing and
sales transactions with third parties and/or discounted cash flow models incorporating changes in market outlook. Investments
valued using these valuation techniques are classified within Level 3 of the fair value hierarchy. The valuation of such
investments requires judgment due to the absence of quoted market prices, inherent lack of liquidity and long-term nature of
these assets. As a result, these values cannot be determined with precision and the calculated fair value estimates may not be
realizable in a current sale.
Brokerage client receivables, net
Brokerage client receivables include receivables from the clients of our broker-dealer and asset management subsidiaries. The
receivables from broker-dealer clients are principally for amounts due on cash and margin transactions and are generally
collateralized by securities owned by the clients. The receivables from asset management clients are primarily for accrued asset
management fees. Brokerage client receivables are reported at their outstanding principal balance, net of any allowance for
doubtful accounts. An allowance is established when collectability is not reasonably assured. When the receivable from a
brokerage client is considered to be impaired, the amount of the impairment is generally measured based on the fair value of the
securities acting as collateral, which is based on current prices from independent sources such as listed market prices or broker-
dealer price quotations. Our allowance for doubtful accounts was insignificant at both September 30, 2020 and 2019.
Securities beneficially owned by customers, including those that collateralize margin or other similar transactions, are not
reflected on our Consolidated Statements of Financial Condition (see Note 6 for additional information regarding this
collateral).
Other receivables, net
Other receivables primarily include receivables from brokers, dealers and clearing organizations, accrued interest receivables
and accrued fees from product sponsors. Receivables from brokers, dealers and clearing organizations primarily consist of cash
deposits placed with clearing organizations, including initial margin, receivables related to sales of securities which have traded,
but not yet settled, and amounts receivable for securities failed to deliver.
We present “Other receivables” on our Consolidated Statements of Financial Condition, net of any allowance.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Bank loans, net
Loans held for investment
Bank loans are comprised of loans originated or purchased by RJ Bank and include commercial and industrial (“C&I”) loans,
tax-exempt loans, commercial and residential real estate loans, securities-based loans (“SBL”) and other loans. The loans
which we have the intent and the ability to hold until maturity or payoff are recorded at their unpaid principal balance plus any
premium paid in connection with the purchase of the loan, less the allowance for loan losses and any discounts received in
connection with the purchase of the loan and net of deferred fees and costs on originated loans. Loan origination fees and direct
costs, as well as premiums and discounts on loans that are not revolving, are capitalized and recognized in interest income using
the interest method. For revolving loans, the straight-line method is used based on the contractual term. Syndicated loans
purchased in the secondary market are recognized as of the trade date. Interest income is recognized on an accrual basis.
We segregate our loan portfolio into six loan portfolio segments: C&I, commercial real estate (“CRE”), CRE construction, tax-
exempt, residential mortgage, and SBL and other. These portfolio segments also serve as the portfolio loan classes for purposes
of credit analysis, except for residential mortgage loans which are further disaggregated into residential first mortgage and
residential home equity classes.
Loans held for sale
Certain residential mortgage loans originated and intended for sale in the secondary market due to their fixed interest rate terms,
as well as Small Business Administration (“SBA”) loans purchased and intended for sale in the secondary market but not yet
aggregated for securitization into pools, are each carried at the lower of cost or estimated fair value. The fair values of the
residential mortgage loans held for sale are estimated using observable prices obtained from counterparties for similar loans.
These nonrecurring fair value measurements are classified within Level 2 of the fair value hierarchy.
We purchase the guaranteed portions of SBA loans and account for these loans in accordance with the policy for loans held for
sale. We then aggregate SBA loans with similar characteristics into pools for securitization and sell these pools in the
secondary market. Individual loans may be sold prior to securitization.
The determination of the fair value of the SBA loans depends upon their intended disposition. The fair value of the SBA loans
to be individually sold are determined based upon their committed sales price. The fair value of the loans to be aggregated into
pools for securitization, which are committed to be sold, are determined based upon third-party price quotes. The fair value of
all other SBA loans are determined using a third-party pricing service. The prices for the SBA loans, other than those
committed to be individually sold, are validated by comparing the third-party price quote or the third-party pricing service
prices, as applicable, for a sample of loans to observable market trades obtained from external sources.
Once the SBA loans are securitized into a pool, the respective securities are classified as trading instruments and are carried at
fair value based on our intention to sell the securitizations within the near term. Any changes in the fair value of the securitized
pools as well as any realized gains or losses earned thereon are reflected in “Principal transactions” on our Consolidated
Statements of Income and Comprehensive Income. Sales of the securitizations are accounted for as of settlement date, which is
the date we have surrendered control over the transferred assets. We do not retain any interest in the securitizations once they
are sold. The fair value for SBA loan securitizations is determined by utilizing observable prices obtained from a third-party
pricing service, which provides comparable price evaluations utilizing observable market data for similar securities. We
substantiate the prices obtained from the third-party pricing service by comparing such prices for a sample of securities to
observable market trades obtained from external sources. The instruments valued using these observable inputs are typically
classified within Level 2 of the fair value hierarchy.
Corporate loans, which include C&I, CRE, CRE construction, and tax-exempt loans are designated as held for investment upon
inception and recognized in loans receivable. If we subsequently designate a corporate or tax-exempt loan as held for sale,
which generally occurs as part of our credit management activities, we then write down the carrying value of the loan with a
partial charge-off, if necessary, to carry it at the lower of cost or estimated fair value.
Gains and losses on sales of residential mortgage loans held for sale, SBA loans that are not part of a securitized pool, and
corporate loans transferred from the held for investment portfolio, are included as a component of “Other” revenues on our
Consolidated Statements of Income and Comprehensive Income, while interest collected on these assets is included in “Interest
income.” Net unrealized losses are recognized through a valuation allowance by charges to income as a component of “Other”
revenues on our Consolidated Statements of Income and Comprehensive Income.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Off-balance sheet loan commitments
We have outstanding at any time a significant number of commitments to extend credit and other credit-related off-balance
sheet financial instruments such as revolving lines of credit, standby letters of credit and loan purchases. Our policy is
generally to require customers to provide collateral at the time of closing. The amount of collateral obtained, if it is deemed
necessary upon extension of credit, is based on our credit evaluation of the borrower. Collateral held varies but may include
assets such as marketable securities, accounts receivable, inventory, real estate, and income-producing commercial properties.
In the normal course of business, RJ Bank issues or participates in the issuance of standby letters of credit whereby it provides
an irrevocable guarantee of payment in the event the letter of credit is drawn down by the beneficiary. These standby letters of
credit generally expire in one year or less. In the event that a letter of credit is drawn down, RJ Bank would pursue repayment
from the party under the existing borrowing relationship or would liquidate collateral, or both. The proceeds from repayment or
liquidation of collateral are expected to satisfy the amounts drawn down under the existing letters of credit.
The potential credit loss associated with these off-balance sheet loan commitments is accrued and reflected in “Other payables”
on our Consolidated Statements of Financial Condition. Refer to the allowance for loan losses and reserve for unfunded
lending commitments section that follows for a discussion of the reserve calculation methodology and Note 17 for further
information about these commitments.
We recognize the revenue associated with corporate syndicated standby letters of credit, which is generally received quarterly,
on a cash basis, the effect of which does not differ significantly from recognizing the revenue in the period the fee is earned.
Unused corporate line fees are accounted for on an accrual basis.
Nonperforming assets
Nonperforming assets are comprised of both nonperforming loans and other real estate owned (“OREO”). Nonperforming
loans include those loans which have been placed on nonaccrual status and any accruing loans which are 90 days or more past
due and in the process of collection. Loans which have been restructured in a manner that grant a concession to a borrower
experiencing financial difficulties we would not otherwise consider are deemed to be a troubled debt restructuring (“TDR”).
Loans structured as TDRs which are currently placed on nonaccrual status are considered nonperforming loans.
Loans of all classes are placed on nonaccrual status when we determine that full payment of all contractual principal and
interest is in doubt or the loan is past due 90 days or more as to contractual interest or principal unless the loan, in our opinion,
is well-secured and in the process of collection. When a loan is placed on nonaccrual status, the accrued and unpaid interest
receivable is written-off against interest income and accretion of the net deferred loan origination fees cease. Interest is
recognized using the cash method for residential (first mortgage and home equity) loans and SBL and other loans, and the cost
recovery method for corporate and tax-exempt loans thereafter until the loan qualifies for return to accrual status. Loans
(including first mortgage and home equity residential mortgage TDRs) are returned to an accrual status when the loans have
been brought contractually current with the original or amended terms and have been maintained on a current basis for a
reasonable period, generally six months. Corporate loan TDRs have generally been partially charged off and therefore, remain
on nonaccrual status until the loan is fully resolved.
Other real estate acquired in the settlement of loans, including through, or in lieu of, loan foreclosure, is initially recorded at the
lower of cost or fair value less estimated selling costs through a charge to the allowance for loan losses, thus establishing a new
cost basis. Subsequent to foreclosure, valuations are periodically performed and the assets are carried at the lower of the
carrying amount or fair value, as determined by a current appraisal or valuation less estimated costs to sell, and are classified as
“Other assets” on our Consolidated Statements of Financial Condition. These nonrecurring fair value measurements are
classified within Level 2 of the fair value hierarchy.
Impaired loans
Loans in all classes are considered to be impaired when, based on current information and events, it is probable that we will be
unable to collect the scheduled payments of principal and interest on a loan when due according to the contractual terms of the
loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as
impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the
principal and interest owed. For individual loans identified as impaired, impairment is measured based on the present value of
expected future cash flows discounted at the loan’s effective interest rate and taking into consideration the factors described in
the following section in relation to the evaluation of the allowance for loan losses, except that as a practical expedient, we
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Notes to Consolidated Financial Statements
measure impairment based on the loan’s observable market price, or the fair value of the collateral if the loan is collateral
dependent. Impaired loans include all corporate nonaccrual loans, all residential mortgage nonaccrual loans for which a charge-
off had previously been recorded, and all loans which have been modified in TDRs. Interest income on impaired loans is
recognized consistently with the recognition policy of nonaccrual loans.
Allowance for loan losses and reserve for unfunded lending commitments
We maintain an allowance for loan losses to provide for probable losses inherent in our loan portfolio based on ongoing
evaluations of the portfolio, the related risk characteristics, and the overall economic and environmental conditions affecting the
loan portfolio. Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.
We have developed policies and procedures for assessing the adequacy of the allowance for loan losses that reflect the
assessment of risk considering all available information. In developing this assessment, we rely on estimates and exercise
judgment in evaluating credit risk. The evaluation is inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available. Depending on changes in circumstances, future assessments of
credit risk may yield materially different results from the prior estimates, which may require an increase or a decrease in the
allowance for loan losses. Estimates that are particularly susceptible to change that may have an impact on the amount of the
allowance include:
•
•
•
•
•
the selection of proxy data used to calculate loss factors;
the evaluation of loss emergence and historical loss experience periods;
our evaluation of the risk profile of loan portfolio segments, including internal risk ratings;
the value of underlying collateral, which impacts loss severity and certain cash flow assumptions; and
our selection and evaluation of qualitative factors, which reflect the imprecision that is inherent in the estimation of
probable loan losses.
The allowance for loan losses is comprised of two components: allowances calculated based on formulas for homogeneous
classes of loans collectively evaluated for impairment, which are re-evaluated quarterly and adjusted based on our analysis of
certain qualitative factors, and specific allowances assigned to certain classified loans individually evaluated for impairment.
These homogeneous classes are a result of management’s disaggregation of the loan portfolio and are comprised of the
previously mentioned classes: C&I, CRE, CRE construction, tax-exempt, residential first mortgage, residential home equity,
and SBL and other.
An annual analysis of the loss emergence period estimate, which is the average length of time between the event that triggers a
loss and the confirmation and/or charge-off of that loss, is performed for all loan classes. The analysis is utilized in establishing
the allowance for each of the classes of loans through the application of an adjustment to the calculated allowance percentage
for the respective loan grade.
The loans within the corporate and tax-exempt loan classes are assigned to an internal loan grade based upon the respective
loan’s credit characteristics. The loans within the residential first mortgage, residential home equity, and SBL and other classes
are assigned loan grades equivalent to the loan classifications utilized by bank regulators, dependent on their respective
likelihood of loss. For all loan classes except for CRE loans, we assign each loan grade an allowance percentage based on the
estimated incurred loss associated with that grade. The allowance for loan losses for all non-impaired loans within those loan
classes is then calculated based on the allowance percentage assigned to the respective loan’s class and grade factoring in the
respective loss emergence period. For the CRE loan class, the allowance for loan losses is calculated based on the allowance
percentage assigned to each loan. The allowance for loan losses for all impaired loans and those nonaccrual residential first
mortgage loans that have been evaluated for a charge-off are based on an individual evaluation of impairment as previously
described in the impaired loans section.
The quantitative factors taken into consideration when assigning loan grades and allowance percentages to loans within the
corporate and tax-exempt loan classes include: estimates of borrower default probabilities and collateral type, past loss history,
Shared National Credit (“SNC”) reviews and examination results from bank regulators. Loan grades for individual C&I and
tax-exempt loans are derived from analyzing two aspects of the risk profile in a particular loan: the obligor rating and the
facility (collateral) rating. The obligor rating relates to a borrower’s probability of default and the facility rating is utilized to
estimate the anticipated loss given default. These two ratings, which are based on historical long-term industry loss rates
(proxy data) as we have limited loss history, are considered in combination with certain adjustments for the loss emergence
period to derive the final C&I and tax-exempt loan grades and allowance percentages. The allowance for loans within the CRE
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
and CRE construction loan portfolios is based on loan-level probability of default and loss given default estimates in
combination with certain adjustments for a loss emergence period.
The quantitative loss rates for corporate and tax-exempt loans are supplemented by considering qualitative factors that may
cause estimated losses to differ from quantitatively calculated amounts. These qualitative factors are intended to address
developing trends, and include, but are not limited to: trends in delinquencies; loan growth; loan terms; changes in geographic
distribution; changes in the value of the underlying collateral for collateral-dependent loans; lending policies; loan review
process; local, regional, national and international economic conditions; competition; legal and regulatory requirements; and
concentrations of credit risk.
Historical loan loss rates, which are based on our historical loss data over a period of time, are utilized when assigning the
allowance percentages for residential first mortgage loans and residential home equity loans. We currently utilize a look back
period for residential first mortgage and home equity loans reflecting the current housing cycle that includes the last downturn.
The SBL portfolio is not yet seasoned enough to exhibit a loss trend. As a result, the allowance is determined judgmentally by
management, primarily utilizing peer benchmarking data and qualitative factors.
For residential first mortgage loan, residential home equity loan and SBL classes, the qualitative factors considered to
supplement the quantitative analysis include, but are not limited to: loan performance trends, loan product parameters and
qualification requirements, borrower credit scores at origination, occupancy (i.e., owner occupied, second home or investment
property), documentation level, loan purpose, geographic concentrations, average loan size, loan policy exceptions, loan-to-
value (“LTV”) ratios, as well as the factors previously noted that are utilized for corporate loans.
We reserve for losses inherent in our unfunded lending commitments using a methodology similar to that used for loans in the
respective portfolio segment, based upon loan grade and expected funding probabilities for fully binding commitments. This
will result in some reserve variability over different periods depending upon the mix of the loan portfolio at the time and
funding expectations. All unfunded lending commitments associated with a class of impaired loans are analyzed in conjunction
with the impaired allowance process previously described.
Loan charge-off policies
Corporate and tax-exempt loans are monitored on an individual basis, and loan grades are reviewed at least quarterly to ensure
they reflect the loan’s current credit risk. When we determine that it is likely that a corporate or tax-exempt loan will not be
collected in full, the loan is evaluated for potential impairment. After consideration of the borrower’s ability to restructure the
loan, alternative sources of repayment, and other factors affecting the borrower’s ability to repay the debt, the portion of the
loan deemed to be a confirmed loss, if any, is charged-off. For collateral-dependent loans secured by real estate, the amount of
the loan considered a confirmed loss and charged-off is generally equal to the difference between the recorded investment in the
loan and the collateral’s appraised value less estimated costs to sell. For C&I and tax-exempt loans, we evaluate all sources of
repayment to arrive at the amount considered to be a loss and charged-off. Corporate banking and credit risk managers also
meet regularly to review criticized loans (loans that are rated special mention or worse as defined by bank regulators, see Note 7
for further discussion). Additional charge-offs are taken when the value of the collateral changes or there is an adverse change
in the expected cash flows.
The majority of our corporate loan portfolio is comprised of participations in either SNCs or other large syndicated loans in the
U.S. and Canada. The SNCs are U.S. loan syndications totaling over $100 million that are shared between three or more
regulated institutions. The agent bank’s regulator reviews a portion of SNC loans on a semi-annual basis and provides a
synopsis of each loan’s regulatory classification, including loans that are designated for nonaccrual status and directed charge-
offs. We must be at least as critical with nonaccrual designations, directed charge-offs, and classifications, potentially
impacting our allowance for loan losses and charge-offs. Corporate loans are subject to our internal review procedures and
regulatory review by the Office of the Comptroller of the Currency (“OCC”) and the Board of Governors of the Federal
Reserve System (“the Fed”) as part of the Bank’s regulatory examinations.
Every residential mortgage loan over 60 days past due is reviewed to determine loan status, collection strategy and charge-off
recommendations. Charge-offs are typically considered on residential mortgage loans once the loans are delinquent 90 days or
more and then generally taken before the loan is 120 days past due. A charge-off is taken against the allowance for loan losses
for the difference between the loan amount and the amount that we estimate will ultimately be collected, based on the value of
the underlying collateral less estimated costs to sell. We predominantly use broker price opinions (“BPO”) for these valuations.
If a loan remains in pre-foreclosure status for more than nine months, an updated valuation is obtained to determine if further
charge-offs are necessary.
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Notes to Consolidated Financial Statements
Loans to financial advisors, net
We offer loans to financial advisors and certain other key revenue producers, primarily for recruiting, transitional cost
assistance, and retention purposes. These loans are generally repaid over a five to nine year period with interest recognized as
earned and are contingent upon affiliation with us. These loans are not assignable by the financial advisor and may only be
assigned by us to a successor in interest. There is no fee income associated with these loans. In the event that the financial
advisor is no longer affiliated with us, any unpaid balance of such loan becomes immediately due and payable to us. In
determining the allowance for doubtful accounts related to former employees or independent contractors, management
primarily considers our historical collection experience as well as other factors including amounts due at termination, the
reasons for the terminated relationship, and the former financial advisor’s overall financial position. When the review of these
factors indicates that further collection activity is highly unlikely, the outstanding balance of such loan is written-off and the
corresponding allowance is reduced. Further, the aging of this receivable balance is not a determinative factor in computing our
allowance for doubtful accounts, as concerns regarding the recoverability of these loans primarily arise in the event that the
financial advisor is no longer affiliated with us. We present the outstanding balance of loans to financial advisors on our
Consolidated Statements of Financial Condition, net of the allowance for doubtful accounts. Our allowance for doubtful
accounts was approximately $4 million and $9 million at September 30, 2020 and 2019, respectively.
Property and equipment, net
Property and equipment on our Consolidated Statements of Financial Condition are stated at cost less accumulated depreciation
and amortization. Property and equipment primarily consists of software, buildings and leasehold improvements, and furniture.
Software includes both purchased software and internally developed software including development in progress. Buildings
primarily consists of owned facilities. Leasehold improvements are generally costs associated with interior office space.
Equipment primarily consists of communications and technology hardware. Depreciation of assets (other than land) is
primarily calculated using the straight-line method over the estimated useful lives of the assets outlined in the following table.
Asset type
Buildings, building components and land improvements
Furniture, fixtures and equipment
Software
Leasehold improvements
Estimated useful life
10 to 40 years
3 to 5 years
2 to 10 years
Lesser of useful life or lease term
Costs for significant internally developed software projects are capitalized when the costs relate to development of new
applications or modification of existing internal-use software that results in additional functionality. Internally developed
software project costs related to preliminary-project and post-project activities are expensed as incurred.
Additions, improvements and expenditures that extend the useful life of an asset are capitalized. Expenditures for repairs and
maintenance, as well as all maintenance costs associated with software applications, are charged to operations in the period
incurred. Depreciation expense associated with property and equipment is included in “Occupancy and equipment” expense on
our Consolidated Statements of Income and Comprehensive Income. Amortization expense associated with computer software
is included in “Communications and information processing” expense on our Consolidated Statements of Income and
Comprehensive Income. Gains and losses on disposals of property and equipment are reflected in “Other” revenues on our
Consolidated Statements of Income and Comprehensive Income in the period incurred.
Intangible assets, net
Certain identifiable intangible assets we acquire such as customer relationships, trade names and non-compete agreements, are
amortized over their estimated useful lives on a straight-line basis and are evaluated for potential impairment whenever events
or changes in circumstances suggest that the carrying value of an asset or asset group may not be fully recoverable.
Amortization expense associated with such intangible assets is included in “Other” expenses on our Consolidated Statements of
Income and Comprehensive Income.
We also hold indefinite-lived intangible assets, which are not amortized under GAAP. Rather, these assets are subject to an
evaluation of potential impairment on an annual basis to determine whether the estimated fair value is in excess of its carrying
value, or between annual dates, if events or circumstances indicate there may be impairment. In the course of our evaluation of
the potential impairment of such indefinite-lived assets, we may elect either a qualitative or a quantitative assessment. If after
assessing the totality of events or circumstances, we determine it is more likely than not that the fair value is greater than its
carrying amount, we are not required to perform a quantitative impairment analysis. However, if we conclude otherwise, we
then perform a quantitative impairment analysis. We have elected January 1 as our annual impairment evaluation date,
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Notes to Consolidated Financial Statements
evaluating balances as of December 31. See Note 10 for additional information regarding the outcome of our impairment
assessment.
Goodwill
Goodwill represents the cost of acquired businesses in excess of the fair value of the related net assets acquired. Indefinite-life
intangible assets such as goodwill are not amortized, but rather evaluated for impairment at least annually, or between annual
dates whenever events or circumstances indicate potential impairment exists. Impairment exists when the carrying value of a
reporting unit, which is generally at the level of or one level below our business segments, exceeds its respective fair value.
In the course of our evaluation of the potential impairment to goodwill, we may elect either a qualitative or a quantitative
assessment. Our qualitative assessments consider macroeconomic indicators including, but not limited to, trends in equity and
fixed income markets and other revenue-generating activities, gross domestic product, unemployment rates, and interest rates.
We also consider regulatory changes, market capitalization, reporting unit specific results, and changes in key personnel and
strategy. We assess these, and other, qualitative factors to determine whether the existence of events or circumstances indicates
that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more
likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative
impairment analysis is not required. However, if we conclude otherwise, then we perform a quantitative impairment analysis.
If we either elect not to perform a qualitative assessment, or we elect to perform a qualitative assessment but are unable to
qualitatively conclude that no impairment has occurred, then we perform a quantitative evaluation. In our quantitative
assessment, we estimate the fair value of the reporting unit with which the goodwill is associated and compare it to the carrying
value. We estimate the fair value of our reporting units using an income approach based on a discounted cash flow model that
includes significant assumptions about future operating results and cash flows, and, if appropriate, a market approach. If the
carrying value of a reporting unit is greater than the estimated fair value, an impairment charge is recognized for the excess.
We have elected January 1 as our annual goodwill impairment evaluation date, evaluating balances as of December 31. See
Note 10 for additional information regarding the outcome of our goodwill impairment assessments.
Other assets
Other assets is primarily comprised of investments in company-owned life insurance, right-of-use assets (“ROU assets”)
associated with leases, prepaid expenses, FHLB stock, FRB stock, and investments in real estate partnerships held by
consolidated VIEs. See Note 11 for further information.
We maintain investments in company-owned life insurance policies utilized to fund certain non-qualified deferred
compensation plans and other employee benefit plans (see Note 21 for information on the non-qualified deferred compensation
plans). The life insurance policies are recorded at cash surrender value as determined by the insurer.
Ownership of FHLB and FRB stock is a requirement for all banks seeking membership into and access to the services provided
by these banking systems. These shares are accounted for at amortized cost.
Raymond James Tax Credit Funds, Inc. (“RJTCF”), a wholly-owned subsidiary of RJF, or one of its affiliates, is the managing
member or general partner in Low-Income Housing Tax Credit (“LIHTC”) funds, some of which require consolidation. These
funds invest in housing project limited partnerships or limited liability companies (“LLCs”) which purchase and develop
affordable housing properties qualifying for federal and state low-income housing tax credits. The investments in project
partnerships of all of the LIHTC fund VIEs which require consolidation are included in “Other assets” on our Consolidated
Statements of Financial Condition.
Leases
On October 1, 2019, we adopted new accounting guidance related to the accounting for leases. Under the new guidance, we
recognize assets and liabilities on the balance sheet related to the rights and obligations created by lease agreements with terms
greater than 12 months, regardless of whether they are classified as finance or operating leases. Accordingly, on the date of
adoption, we recognized ROU assets and lease liabilities in “Other assets” and “Other payables,” respectively, on our
Consolidated Statement of Financial Condition.
We have operating leases for the premises we occupy in many of our U.S. and foreign locations, including our employee-based
branch office operations. At inception, we determine if an arrangement to utilize a building or piece of equipment is a lease
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Notes to Consolidated Financial Statements
and, if so, the appropriate lease classification. Substantially all of our leases are operating leases. If the arrangement is
determined to be a lease, we recognize an ROU asset and a corresponding lease liability on our Consolidated Statements of
Financial Condition. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent
our obligation to make lease payments arising from the lease. We elected the practical expedient, where leases with an initial
term of 12 months or less are not recorded as an ROU asset or lease liability. Our lease terms include any noncancelable
periods and may reflect periods covered by options to extend or terminate when it is reasonably certain that we will exercise
those options.
We record our lease ROU assets at the amount of the lease liability plus any prepaid rent and initial direct costs, less any lease
incentives and accrued rent. We record lease liabilities at commencement date based on the present value of lease payments
over the lease term, which is discounted using our commencement date incremental borrowing rate, or at the imputed rate
within the lease, as appropriate. Our incremental borrowing rate considers the weighted-average yields on our senior notes
payable, adjusted for collateralization and tenor. Payments that vary because of changes in facts or circumstances occurring
after the commencement date, such as operating expense payments under a real estate lease, are considered variable and are
expensed in the period incurred. For our real estate leases, we elected the practical expedient to account for the lease and non-
lease components as a single lease. Lease expense for our lease payments is recognized on a straight-line basis over the lease
term if the ROU asset has not been impaired or abandoned. See Note 12 for additional information on our leases.
Contingent liabilities
We recognize liabilities for contingencies when there is an exposure that, when fully analyzed, indicates it is both probable that
a liability has been incurred and the amount of loss can be reasonably estimated. Whether a loss is probable, and if so, the
estimated range of possible loss, is based upon currently available information and is subject to significant judgment, a variety
of assumptions, and uncertainties. When a loss is probable and a range of possible loss can be estimated, we accrue the most
likely amount within that range; if the most likely amount of possible loss within that range is not determinable, the minimum
amount in the range of loss is accrued. No liability is recognized for those matters which, in management’s judgment, the
determination of a reasonable estimate of loss is not possible, or for which a loss is not determined to be probable.
We record liabilities related to legal and regulatory proceedings in “Other payables” on our Consolidated Statements of
Financial Condition. The determination of these liability amounts requires significant judgment on the part of management.
Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client’s
account; the basis and validity of the claim; the possibility of wrongdoing on the part of one of our employees or financial
advisors; previous results in similar cases; and legal precedents and case law. Each legal proceeding or significant regulatory
matter is reviewed in each accounting period and the liability balance is adjusted as deemed appropriate by management. Any
change in the liability amount is recorded in our consolidated financial statements and is recognized in net income in that
period. The actual costs of resolving legal matters or regulatory proceedings may be substantially higher or lower than the
recorded liability amounts for such matters. We expense our cost of defense related to such matters in the period they are
incurred. See Note 17 for additional information.
Share-based compensation
We account for share-based awards through the measurement and recognition of compensation expense for all share-based
payment awards made to employees, directors, and independent contractors based on estimated fair values. The compensation
cost of our share-based awards, net of estimated forfeitures, is recognized over the requisite service period of the awards and is
calculated as the market value of the awards on the date of the grant. See Note 21 for additional information on our share-based
compensation plan.
Deferred compensation plans
We maintain various deferred compensation plans for the benefit of certain employees and independent contractors that provide
a return to the participant based upon the performance of various referenced investments. For the Voluntary Deferred
Compensation Plan (the “VDCP”), Long Term Incentive Plan (“LTIP”), and certain other plans, we purchase and hold
company-owned life insurance policies on the lives of certain current and former participants to earn a competitive rate of
return for participants and to provide a source of funds available to satisfy our obligations under the plan. See Note 11 for
information regarding the carrying value of such policies. Compensation expense is recognized for all awards made under such
plans with future service requirements over the requisite service period using the straight-line method. Changes in the value of
the company-owned life insurance policies and other investments, as well as the expenses associated with the related deferred
compensation plans, are recorded in “Compensation, commissions and benefits” expense on our Consolidated Statements of
Income and Comprehensive Income. See Note 21 for additional information.
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Notes to Consolidated Financial Statements
Foreign currency translation
The statements of financial condition of the foreign subsidiaries we consolidate are translated at exchange rates as of the period-
end. The statements of income are translated either at an average exchange rate for the period or, in certain cases, at the
exchange rate in effect on the date which transactions occur. The gains or losses resulting from translating foreign currency
financial statements into U.S. dollars are included in OCI and are thereafter presented in equity as a component of AOCI.
Income taxes
The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year. We
utilize the asset and liability method to provide for income taxes on all transactions recorded in our consolidated financial
statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences
between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for
each temporary difference is determined based on the tax rates that we expect to be in effect when the underlying items of
income and expense are realized. Judgment is required in assessing the future tax consequences of events that have been
recognized in our financial statements or tax returns, including the repatriation of undistributed earnings of foreign subsidiaries.
Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of
operations, or liquidity. See Note 16 for further information on our income taxes.
Earnings per share (“EPS”)
Basic EPS is calculated by dividing earnings attributable to common shareholders by the weighted-average common shares
outstanding. Earnings attributable to common shareholders represents net income reduced by the allocation of earnings and
dividends to participating securities. Diluted EPS is similar to basic EPS, but adjusts for the dilutive effect of outstanding stock
options and certain restricted stock units (“RSUs”) by application of the treasury stock method.
Evaluation of VIEs to determine whether consolidation is required
A VIE requires consolidation by the entity’s primary beneficiary. Examples of entities that may be VIEs include certain legal
entities structured as corporations, partnerships or limited liability companies.
We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable
interest and are the primary beneficiary. We hold variable interests primarily in the following VIEs: certain private equity
investments, a trust fund established for employee retention purposes (“Restricted Stock Trust Fund”) and certain LIHTC funds.
See Note 8 for further information on our VIEs.
Determination of the primary beneficiary of a VIE
We consolidate VIEs that are subject to assessment when we are deemed to be the primary beneficiary of the VIE. The process
for determining whether we are the primary beneficiary of the VIE is to conclude whether we are a party to the VIE holding a
variable interest that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the
economic performance of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits that in either case
could potentially be significant to the VIE.
Private Equity Interests
As part of our private equity investments, we hold interests in a number of limited partnerships (our “Private Equity Interests”).
We have concluded that the Private Equity Interests are VIEs, primarily as a result of the treatment of limited partner kick-out
and participation rights as a simple majority of the limited partners cannot initiate an action to kick-out the general partner
without cause and the limited partners with equity at-risk lack substantive participating rights.
In our analysis of the criteria to determine whether we are the primary beneficiary of the Private Equity Interests VIEs, we
analyze the power and benefits criteria. In a number of these entities, we are a passive limited partner investor, and thus, we do
not have the power to make decisions that most significantly affect the economic performance of such VIEs. Accordingly, in
such circumstances, we have determined we are not the primary beneficiary and therefore we do not consolidate the VIE.
However, in certain of these entities, we have concluded that we are the primary beneficiary as we meet the power and benefits
criteria. In such instances, we consolidate the Private Equity Interests VIE.
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Notes to Consolidated Financial Statements
Restricted Stock Trust Fund
We utilize a trust in connection with certain of our RSU awards. This trust fund was established and funded for the purpose of
acquiring our common stock in the open market to be used to settle RSUs granted as a retention vehicle for certain employees
of our Canadian subsidiaries. We are deemed to be the primary beneficiary and, accordingly, consolidate this trust fund.
LIHTC funds
RJTCF is the managing member or general partner in a number of LIHTC funds having one or more investor members or
limited partners. These LIHTC funds are organized as LLCs or limited partnerships for the purpose of investing in a number of
project partnerships, which are limited partnerships or LLCs that purchase and develop low-income housing properties
qualifying for tax credits and/or provide a mechanism for banks and other institutions to meet their Community Reinvestment
Act obligations throughout the U.S.
Our determination of the primary beneficiary of each tax credit fund in which RJTCF has a variable interest requires judgment
and is based on an analysis of all relevant facts and circumstances, including: (1) an assessment of the characteristics of
RJTCF’s variable interest and other involvement it has with the tax credit fund, including involvement of related parties and
any de facto agents, as well as the involvement of other variable interest holders, namely, limited partners or investor members,
and (2) the tax credit funds’ purpose and design, including the risks that the tax credit fund was designed to create and pass
through to its variable interest holders. In the design of tax credit fund VIEs, the overriding premise is that the investor
members invest solely for tax attributes associated with the portfolio of low-income housing properties held by the fund, while
RJTCF, as the managing member or general partner of the fund, is responsible for overseeing the fund’s operations.
RJTCF sponsors two general types of tax credit funds that generally do not meet VIE consolidation criteria. The types of funds
include single investor funds and multi-investor funds. RJTCF does not typically provide guarantees related to the delivery or
funding of tax credits or other tax attributes to the investor members or limited partners of tax credit funds. The investor
member(s) or limited partner(s) of the VIEs bear the risk of loss on their investment. Additionally, under the tax credit funds’
designed structure, the investor member(s) or limited partner(s) receive nearly all of the tax credits and tax-deductible loss
benefits designed to be delivered by the fund entity, as well as a majority of any proceeds upon a sale of a project partnership
held by a tax credit fund (fund level residuals). RJTCF earns fees from the fund for its services in organizing the fund,
identifying and acquiring the project partnership investments and ongoing asset management, and receives a share of any
residuals arising from sale of project partnerships upon the termination of the fund.
In single investor funds, RJTCF has concluded that the one single investor member or limited partner in such funds, in nearly
all instances, has significant participating rights over the activities that most significantly impact the economics of the fund.
Therefore RJTCF, as managing member or general partner of such funds, is not the one party with power over such activities
and resultantly is not deemed to be the primary beneficiary of such single investor funds and, in nearly all cases, these funds are
not consolidated.
In multi-investor funds, RJTCF has concluded that since the participating rights over the activities that most significantly
impact the economics of the fund are not held by one single investor member or limited partner, RJTCF is deemed to have the
power over such activities. RJTCF then assesses whether its projected benefits to be received from the multi-investor funds,
primarily its share of any residuals upon the termination of the fund, are potentially significant to the fund. As such residuals
received upon termination are not expected to be significant to the funds, in nearly all cases, these funds are not consolidated.
Direct investments in LIHTC project partnerships
RJ Bank is the investor member of a LIHTC fund which we have determined to be a VIE, and in which a subsidiary of RJTCF
is the managing member. We have determined that RJ Bank is the primary beneficiary of this VIE and therefore, we
consolidate the fund. All LIHTC funds which we consolidate are investor members in certain LIHTC project partnerships.
Since unrelated third parties are the managing members of the investee project partnerships, we have determined that
consolidation of these project partnerships is not required and the funds account for their project partnership investments under
the equity method. The carrying value of the funds’ project partnership investments are included in “Other assets” on our
Consolidated Statements of Financial Condition. The federal tax credits that result from these investments reduce our tax
expense in the year they are received.
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Notes to Consolidated Financial Statements
Recent accounting developments
Accounting guidance recently adopted
Lease accounting - In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the
accounting for leases (ASU 2016-02). We adopted this guidance as of October 1, 2019 using the alternative modified
retrospective approach, with no adjustments to prior periods presented. In addition, we elected the practical expedients
permitted under the transition guidance which, among other things, allowed us to carry forward historical lease classification
determinations. On the adoption date, we recognized ROU assets and lease liabilities of $333 million and $357 million,
respectively. The adoption had no effect on our results of operations or cash flows. The impact of the adoption on our
regulatory capital measures was insignificant. Refer to the lease section of this footnote and to Note 12 for further information.
Reference rate reform - In March 2020, the FASB issued guidance to ease the financial reporting burdens of the expected
market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR (ASU 2020-04).
The guidance simplifies the accounting for modifying contracts (including those in hedging relationships) that refer to LIBOR
and other interbank offered rates. In addition, the guidance allows for changes to the critical terms of a hedging relationship
affected by reference rate reform without having to dedesignate the relationship. The guidance was effective upon issuance and
generally can be applied through December 31, 2022. We have elected certain expedients for cash flow hedges to assert that
the hedged forecasted transaction remains probable, regardless of any expected modification in terms related to reference rate
reform. The expedients elected did not impact our financial position or results of operations.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 3 – FAIR VALUE
Our “Financial instruments owned” and “Financial instrument liabilities” on our Consolidated Statements of Financial
Condition are recorded at fair value under GAAP. For further information about such instruments and our significant
accounting policies related to fair value, see Note 2. The following tables present assets and liabilities measured at fair value on
a recurring basis. Netting adjustments represent the impact of counterparty and collateral netting on our derivative balances
included on our Consolidated Statements of Financial Condition. See Note 5 for additional information.
$ in millions
Assets at fair value on a recurring basis:
Trading instruments
Level 1
Level 2
Level 3
Netting
adjustments
Balance as of
September 30,
2020
Municipal and provincial obligations
$
5 $
120 $
— $
— $
Corporate obligations
Government and agency obligations
Agency MBS and agency CMOs
Non-agency CMOs and asset-backed securities (“ABS”)
Total debt securities
Equity securities
Brokered certificates of deposit
Other
Total trading instruments
Available-for-sale securities (1)
Derivative assets
Interest rate - matched book
Interest rate - other
Total derivative assets
Other investments - private equity - not measured at NAV
All other investments
Subtotal
Other investments - private equity - measured at NAV
Total assets at fair value on a recurring basis
Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased
Municipal and provincial obligations
Corporate obligations
Government and agency obligations
Non-agency CMOs and ABS
Total debt securities
Equity securities
Total trading instruments sold but not yet purchased
$
$
Derivative liabilities
Interest rate - matched book
Interest rate - other
Foreign exchange
Other
Total derivative liabilities
11
13
—
—
29
11
—
—
40
16
—
16
16
—
195
267
45
131
130
13
439
5
17
—
461
7,634
333
224
557
—
1
8,653
—
—
—
—
—
—
—
12
12
—
—
—
—
37
22
71
—
—
—
—
—
—
—
—
—
—
—
(135)
(135)
—
—
(135)
267 $
8,653 $
71 $
(135) $
1 $
— $
— $
— $
—
136
—
137
96
233
—
16
—
—
16
5
—
2
7
—
7
333
145
5
1
484
—
—
—
—
—
—
—
—
—
5
5
—
—
—
—
—
—
—
(112)
—
—
(112)
(112) $
125
56
144
130
13
468
16
17
12
513
7,650
333
105
438
37
218
8,856
79
8,935
1
5
136
2
144
96
240
333
49
5
6
393
633
Total liabilities at fair value on a recurring basis
$
249 $
491 $
5 $
(1) Substantially all of our available-for-sale securities consist of agency MBS and agency CMOs. See Note 4 for further information.
105
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
$ in millions
Assets at fair value on a recurring basis:
Trading instruments
Level 1
Level 2
Level 3
Netting
adjustments
Balance as of
September 30,
2019
Municipal and provincial obligations
$
— $
267 $
— $
— $
Corporate obligations
Government and agency obligations
Agency MBS and agency CMOs
Non-agency CMOs and ABS
Total debt securities
Equity securities
Brokered certificates of deposit
Other
Total trading instruments
Available-for-sale securities (1)
Derivative assets
Interest rate - matched book
Interest rate - other
Total derivative assets
Other investments - private equity - not measured at NAV
All other investments
Subtotal
Other investments - private equity - measured at NAV
Total assets at fair value on a recurring basis
Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased
Corporate obligations
Government and agency obligations
Total debt securities
Equity securities
Other
Total trading instruments sold but not yet purchased
$
$
Derivative liabilities
Interest rate - matched book
Interest rate - other
Foreign exchange
Other
Total derivative liabilities
8
12
—
—
20
12
—
—
32
10
—
3
3
—
194
239
95
67
147
51
627
1
45
—
673
3,083
280
182
462
—
1
4,219
—
—
—
—
—
—
—
3
3
—
—
—
—
63
24
90
—
—
—
—
—
—
—
—
—
—
—
(127)
(127)
—
—
(127)
239 $
4,219 $
90 $
(127) $
2 $
20 $
— $
— $
269
271
4
—
275
—
4
—
—
4
—
20
—
—
20
280
142
2
6
430
—
—
—
1
1
—
—
—
—
—
—
—
—
—
—
—
(121)
—
—
(121)
Total liabilities at fair value on a recurring basis
$
279 $
450 $
1 $
(121) $
(1) Substantially all of our available-for-sale securities consist of agency MBS and agency CMOs. See Note 4 for further information.
267
103
79
147
51
647
13
45
3
708
3,093
280
58
338
63
219
4,421
83
4,504
22
269
291
4
1
296
280
25
2
6
313
609
106
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Level 3 recurring fair value measurements
The following tables present the changes in fair value for Level 3 assets and liabilities measured at fair value on a recurring
basis. The realized and unrealized gains and losses in the tables may include changes in fair value that were attributable to both
observable and unobservable inputs. In the following tables, gains/(losses) on trading instruments are reported in “Principal
transactions” and gains/(losses) on other investments are reported in “Other” revenues.
$ in millions
Fair value beginning of year
Total gains/(losses) included in earnings
Purchases and contributions
Sales and distributions
Transfers:
Into Level 3
Out of Level 3
Fair value end of year
Unrealized gains/(losses) for the year included in earnings
for instruments held at the end of the year
Year ended September 30, 2020
Level 3 instruments at fair value
Financial assets
Financial
liabilities
Trading
instruments
Other investments
Trading
instruments
Derivative
liabilities
Other
Private equity
investments
All other
Other
Other
$
3 $
63 $
24 $
(1) $
(4)
70
(57)
—
—
(29)
4
(1)
—
—
$
$
12 $
37 $
(1) $
(29) $
Year ended September 30, 2019
Level 3 instruments at fair value
(2)
—
—
—
—
22 $
(2) $
—
2
(1)
—
—
— $
— $
—
(5)
—
—
—
—
(5)
(5)
$ in millions
Fair value beginning of year
Total gains/(losses) included in earnings
Purchases and contributions
Sales and distributions
Transfers:
Into Level 3
Out of Level 3
Fair value end of year
Unrealized gains/(losses) for the year included in earnings for instruments held
at the end of the year
Financial assets
Trading
instruments
Other investments
Financial
liabilities
Trading
instruments
Other
Private equity
investments
All other
Other
$
1 $
56 $
67 $
(3)
109
(104)
—
—
4
3
—
—
—
$
$
3 $
63 $
— $
4 $
(3)
—
(40)
—
—
24 $
(1) $
(7)
2
19
(15)
—
—
(1)
—
The net unrealized losses on our Level 3 private equity investments for the year ended September 30, 2020 were primarily
driven by the negative impact of the coronavirus (“COVID-19”) pandemic on the valuation of certain of our investments. Of
these losses, approximately $20 million were attributable to noncontrolling interests, which are reflected as an offset in “Other”
expenses on our Consolidated Statements of Income and Comprehensive Income.
As of September 30, 2020, 19% of our assets and 2% of our liabilities were measured at fair value on a recurring basis. In
comparison, as of September 30, 2019, 12% of our assets and 2% of our liabilities were measured at fair value on a recurring
basis. The increase in assets measured at fair value on a recurring basis as a percentage of total assets was due to a significant
increase in our available-for-sale securities during fiscal 2020. As of September 30, 2020 and 2019, Level 3 assets represented
1% and 2%, respectively, of our assets measured at fair value on a recurring basis.
107
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Quantitative information about level 3 fair value measurements
The following tables present the valuation techniques and significant unobservable inputs used in the valuation of certain of our
private equity investments classified as level 3. These inputs represent those that a market participant would take into account
when pricing these instruments. Weighted averages are calculated by weighting each input by the relative fair value of the
related financial instrument. Certain investments are valued initially at transaction price and updated as other investment-
specific events take place which indicate that a change in the carrying values of these investments is appropriate. Other
investment-specific events include such events as our periodic review, significant transactions occur or new developments
become known.
Recurring measurements
$ in millions
Fair value at
September 30, 2020
Valuation technique(s)
Unobservable input
Range
(weighted-average)
Other investments - private
equity investments (not
measured at NAV)
$
37
Discounted cash flow,
transaction price or other
investment-specific events
Discount rate
Terminal earnings before interest,
tax, depreciation and amortization
(“EBITDA”) multiple
25%
9.0x
Fair value at
September 30, 2019
$
63
Other investments - private
equity investments (not
measured at NAV)
Discounted cash flow,
transaction price or other
investment-specific events
Terminal year
2021 - 2042 (2023)
Discount rate
Terminal EBITDA multiple
25%
12.5x
Terminal year
2021 - 2042 (2022)
Qualitative disclosure about unobservable inputs
For our recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the sensitivity of the fair value
measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs are
described in the following section.
Private equity investments
The significant unobservable inputs used in the fair value measurement of private equity investments generally relate to the
financial performance of the investment entity and the market’s required return on investments from entities in industries in
which we hold investments. Increases in the discount rate would have resulted in a lower fair value measurement. Increases in
the terminal EBITDA multiple would have resulted in a higher fair value measurement. Increases in the terminal year are
dependent upon each investment’s strategy, but generally result in a lower fair value measurement.
Investments in private equity measured at net asset value per share
As more fully described in Note 2, as a practical expedient, we utilize NAV or its equivalent to determine the recorded value of
a portion of our private equity investments portfolio. We utilize NAV when the fund investment does not have a readily
determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of
investment company accounting, including measurement of the investments at fair value.
Our private equity portfolio as of September 30, 2020 includes various direct investments, as well as investments in third-party
private equity funds and various legacy private equity funds which we sponsor. The portfolio is primarily invested in a broad
range of strategies including leveraged buyouts, growth capital, distressed capital, venture capital and mezzanine capital. Due
to the closed-end nature of certain of our fund investments, such investments cannot be redeemed directly with the funds. Our
investment is monetized by distributions received through the liquidation of the underlying assets of those funds, the timing of
which is uncertain.
108
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents the recorded value and unfunded commitments related to our private equity investments portfolio.
$ in millions
September 30, 2020
Private equity investments measured at NAV
Private equity investments not measured at NAV
Total private equity investments
September 30, 2019
Private equity investments measured at NAV
Private equity investments not measured at NAV
Total private equity investments
Recorded value
Unfunded
commitment
$
$
$
$
79 $
9
37
116
83 $
15
63
146
Of the total private equity investments, the portions we owned were $90 million and $99 million as of September 30, 2020 and
2019, respectively. The portions of the private equity investments we did not own were $26 million and $47 million as of
September 30, 2020 and 2019, respectively, and were included as a component of noncontrolling interests on our Consolidated
Statements of Financial Condition.
Many of our proprietary private equity fund investments meet the definition of prohibited covered funds as defined by the
Volcker Rule enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank
Act”). We have received approval from the Fed to continue to hold the majority of our covered fund investments until July
2022.
Financial instruments measured at fair value on a nonrecurring basis
The following table presents assets measured at fair value on a nonrecurring basis along with the valuation techniques and
significant unobservable inputs used in the valuation of the assets classified as level 3. These inputs represent those that a
market participant would take into account when pricing these instruments. Weighted averages are calculated by weighting
each input by the relative fair value of the related financial instrument.
$ in millions
September 30, 2020
Bank loans, net:
Impaired loans: residential
Impaired loans: corporate
Loans held for sale
Other assets: other real estate
owned
September 30, 2019
Bank loans, net:
Impaired loans: residential
Impaired loans: corporate
Loans held for sale
Other assets: other real estate
owned
$
$
$
$
$
$
$
$
Level 2
Level 3
Total fair
value
Valuation technique(s)
Unobservable
input
Range
(weighted-average)
4 $
— $
38 $
1 $
7 $
— $
66 $
1 $
13 $
15 $
— $
— $
14 $
21 $
— $
— $
17
Discounted cash flow
15 Collateral or discounted
cash flow (1)
Prepayment rate
Not meaningful (1)
7 yrs. - 12 yrs. (10.6 yrs.)
Not meaningful (1)
38
1
N/A
N/A
N/A
N/A
N/A
N/A
21
Discounted cash flow
21 Collateral or discounted
cash flow (1)
Prepayment rate
Not meaningful (1)
7 yrs. - 12 yrs. (10.4 yrs.)
Not meaningful (1)
66
1
N/A
N/A
N/A
N/A
N/A
N/A
(1) The valuation techniques used for the corporate loans are based on collateral value less selling costs for the collateral dependent loans and discounted cash
flows for impaired loans that are not collateral dependent.
109
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Financial instruments not recorded at fair value
Many, but not all, of the financial instruments we hold were recorded at fair value on the Consolidated Statements of Financial
Condition. The following table presents the estimated fair value and fair value hierarchy of financial assets and liabilities that
are not recorded at fair value in accordance with GAAP on the Consolidated Statements of Financial Condition at
September 30, 2020 and 2019. This table excludes financial instruments that are carried at amounts which approximate fair
value.
$ in millions
September 30, 2020
Financial assets:
Bank loans, net
Financial liabilities:
Bank deposits - certificates of deposit
Senior notes payable
September 30, 2019
Financial assets:
Bank loans, net
Financial liabilities:
Bank deposits - certificates of deposit
Senior notes payable
Level 2
Level 3
Total estimated
fair value
Carrying amount
72 $
21,119 $
21,191 $
21,125
— $
2,504 $
1,056 $
— $
1,056 $
2,504 $
1,017
2,045
75 $
20,710 $
20,785 $
20,783
— $
1,760 $
617 $
— $
617 $
1,760 $
605
1,550
$
$
$
$
$
$
Short-term financial instruments: The carrying value of short-term financial instruments, including cash and cash equivalents,
cash and cash equivalents segregated pursuant to regulations, and the majority of collateralized agreements and collateralized
financings, are recorded at amounts that approximate the fair value of these instruments. These financial instruments generally
expose us to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that
approximate market rates. Under the fair value hierarchy, cash and cash equivalents and cash and cash equivalents segregated
pursuant to regulations are classified as Level 1 and collateralized agreements and financings are classified as Level 2.
Bank loans, net: These financial instruments are primarily comprised of loans originated or purchased by RJ Bank and include
C&I loans, commercial and residential real estate loans, tax-exempt loans, SBL and other loans intended to be held until
maturity or payoff. These financial instruments are primarily recorded at amounts that result from the application of the
methodologies for loans held for investment summarized in Note 2. Certain bank loans are held for sale, which are carried at
the lower of cost or market value. A portion of these loans held for sale, as well as any impaired loans held for investment, are
recorded at fair value as nonrecurring fair value measurements and therefore are excluded from the preceding table.
The fair values for both variable and fixed-rate loans held for investment are estimated using a discounted cash flow analysis
based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, which includes
our estimate of future credit losses expected to be incurred. The majority of these loans are classified as Level 3 under the fair
value hierarchy. Refer to Note 2 for information regarding the fair value policies specific to loans held for sale.
Receivables and other assets: Brokerage client receivables, other receivables, and certain other assets are recorded at amounts
that approximate fair value and are classified as Level 2 and 3 under the fair value hierarchy. As specified under GAAP, the
FHLB and FRB stock are recorded at cost, which we have determined to approximate their estimated fair value, and are
classified as Level 2 under the fair value hierarchy.
Loans to financial advisors, net: These financial instruments are primarily comprised of loans provided to financial advisors
and certain key revenue producers, primarily for recruiting, transitional cost assistance, and retention purposes. Loans to
financial advisors, net are recorded at amounts that approximate fair value and are classified as Level 2 under the fair value
hierarchy. Refer to Note 2 for information regarding loans to financial advisors, net.
Bank deposits: The carrying amounts of variable-rate money market and savings accounts approximate their fair values as these
are short-term in nature. Due to their short-term nature, variable-rate money market and savings accounts are classified as
Level 2 under the fair value hierarchy. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on certificates to a schedule of expected monthly maturities
on time deposits. These fixed-rate certificates of deposit are classified as Level 3 under the fair value hierarchy.
110
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Payables: Brokerage client payables and other payables are recorded at amounts that approximate fair value and are classified
as Level 2 under the fair value hierarchy.
Other borrowings: Other borrowings is primarily comprised of RJ Bank’s borrowings from the FHLB. Substantially all of such
borrowings reflect terms that approximate current market rates for similar loans and therefore, their carrying value
approximates fair value. Our other borrowings are classified as Level 2 under the fair value hierarchy.
Senior notes payable: The fair value of our senior notes payable is calculated based upon recent trades of those debt securities
in the market. Our senior notes payable are classified as Level 2 under the fair value hierarchy.
NOTE 4 – AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities are primarily comprised of agency MBS and agency CMOs owned by RJ Bank. Refer to Note 2
for a discussion of our available-for-sale securities accounting policies, including the fair value determination process.
The following table details the amortized costs and fair values of our available-for-sale securities.
$ in millions
September 30, 2020
Agency residential MBS
Agency commercial MBS
Agency CMOs
Other securities
Total available-for-sale securities
September 30, 2019
Agency residential MBS
Agency commercial MBS
Agency CMOs
Other securities
Total available-for-sale securities
Cost basis
Gross
unrealized gains
Gross
unrealized losses
Fair value
$
$
$
$
4,064 $
74 $
948
2,504
15
22
27
1
7,531 $
124 $
1,555 $
20 $
305
1,195
10
5
7
—
3,065 $
32 $
(3) $
(1)
(1)
—
(5) $
(1) $
—
(3)
—
(4) $
4,135
969
2,530
16
7,650
1,574
310
1,199
10
3,093
See Note 3 for additional information regarding the fair value of available-for-sale securities.
111
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table details the contractual maturities, amortized costs, carrying values and current yields for our available-for-
sale securities. Since our MBS and CMO available-for-sale securities are backed by mortgages, actual maturities may differ
from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. As of
September 30, 2020, the duration of our available-for-sale securities portfolio was approximately three years.
Within one year
After one but
within five years
After five but
within ten years
After ten years
Total
September 30, 2020
$ in millions
Agency residential MBS
Amortized cost
Carrying value
Agency commercial MBS
Amortized cost
Carrying value
Agency CMOs
Amortized cost
Carrying value
Other securities
Amortized cost
Carrying value
Total available-for-sale securities
Amortized cost
Carrying value
$
$
$
$
$
$
$
$
$
$
—
—
32
33
—
—
—
—
32
33
$
$
$
$
$
$
$
$
$
$
Weighted-average yield
2.72 %
$
$
$
$
$
$
$
$
$
$
34
36
153
157
11
11
6
6
204
210
2.06 %
$
$
$
$
$
$
$
$
$
$
1,403
1,434
583
598
74
75
9
10
2,069
2,117
1.67 %
$
$
$
$
$
$
$
$
$
$
2,627
2,665
180
181
2,419
2,444
—
—
5,226
5,290
1.41 %
4,064
4,135
948
969
2,504
2,530
15
16
7,531
7,650
1.51 %
The following table details the gross unrealized losses and fair values of securities that were in a loss position at the reporting
period end, aggregated by investment category and length of time the individual securities have been in a continuous unrealized
loss position.
$ in millions
September 30, 2020
Agency residential MBS
Agency commercial MBS
Agency CMOs
Total
September 30, 2019
Agency residential MBS
Agency commercial MBS
Agency CMOs
Other securities
Total
Less than 12 months
12 months or more
Total
Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
$
$
$
966 $
(3) $
— $
— $
966 $
177
410
(1)
(1)
—
—
—
—
177
410
1,553 $
(5) $
— $
— $
1,553 $
166 $
— $
114 $
(1) $
280 $
—
145
2
—
(1)
—
44
351
—
—
(2)
—
44
496
2
$
313 $
(1) $
509 $
(3) $
822 $
(3)
(1)
(1)
(5)
(1)
—
(3)
—
(4)
The contractual cash flows of our available-for-sale securities are guaranteed by the U.S. government or its agencies. At
September 30, 2020, of the 83 available-for-sale securities in an unrealized loss position, all were in a continuous unrealized
loss position for less than 12 months. At September 30, 2020, debt securities we held in excess of ten percent of our equity
included Federal National Home Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”)
which had an amortized cost of $4.84 billion and $2.40 billion, respectively, and a fair value of $4.92 billion and $2.43 billion,
respectively.
For the year ended September 30, 2020, we received proceeds of $222 million, resulting in an insignificant gain, from the sales
of agency MBS and agency CMO available-for-sale securities. The gain that resulted from the sales was included in “Other”
revenues on our Consolidated Statements of Income and Comprehensive Income. There were no sales of agency MBS or CMO
available-for-sale securities for the years ended September 30, 2019 and 2018.
112
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 5 – DERIVATIVE ASSETS AND DERIVATIVE LIABILITIES
Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative
liabilities” on our Consolidated Statements of Financial Condition. Cash flows related to our derivatives are included within
operating activities on the Consolidated Statements of Cash Flows. The significant accounting policies governing our
derivatives, including our methodologies for determining fair value, are described in Note 2.
Derivative balances included on our financial statements
The following table presents the gross fair value and notional amount of derivatives by product type, the amounts of
counterparty and cash collateral netting on our Consolidated Statements of Financial Condition, as well as collateral posted and
received under credit support agreements that do not meet the criteria for netting under GAAP.
$ in millions
Derivatives not designated as hedging instruments
Interest rate - matched book
Interest rate - other (1)
Foreign exchange
Other
Subtotal
Derivatives designated as hedging instruments
Interest rate
Foreign exchange
Subtotal
Total gross fair value/notional amount
Offset on the Consolidated Statements of Financial Condition
Counterparty netting
Cash collateral netting
Total amounts offset
Net amounts presented on the Consolidated Statements of
Financial Condition
Gross amounts not offset on the Consolidated Statements of
Financial Condition
Financial instruments (2)
Total
September 30, 2020
September 30, 2019
Derivative
assets
Derivative
liabilities
Notional
amount
Derivative
assets
Derivative
liabilities
Notional
amount
$
333 $
333 $
2,174 $
280 $
280 $
2,296
240
—
—
573
—
—
—
573
(40)
(95)
(135)
161
19,206
2
6
605
608
502
22,593
—
3
3
850
866
1,716
505 $
24,309
(40)
(72)
(112)
184
—
—
464
1
—
1
465
(24)
(103)
(127)
146
10,690
1
6
573
272
433
13,831
—
1
1
850
856
1,706
434 $
15,537
(24)
(97)
(121)
438
393
338
313
(349)
$
89 $
(333)
60
(297)
$
41 $
(280)
33
(1) Substantially all relates to interest rate derivatives entered into as part of our fixed income business operations, including TBA security contracts that are
accounted for as derivatives.
(2) Although the matched book derivative arrangements do not meet the definition of a master netting arrangement as specified by GAAP, the agreement with
the third-party intermediary includes terms that are similar to a master netting agreement. As a result, we present the matched book amounts net in the
preceding table.
The following table details the gains/(losses) included in AOCI, net of income taxes, on derivatives designated as hedging
instruments. These gains/(losses) included any amounts reclassified from AOCI to net income during the year. See Note 18 for
additional information.
$ in millions
Interest rate (cash flow hedges)
Foreign exchange (net investment hedges)
Total gains/(losses) in AOCI, net of taxes
Year ended September 30,
2020
2019
2018
$
$
(34) $
5
(29) $
(61) $
22
(39) $
33
28
61
There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for any of the
years ended September 30, 2020, 2019 or 2018. We expect to reclassify $15 million of interest expense out of AOCI and into
earnings within the next 12 months. The maximum length of time over which forecasted transactions are or will be hedged is
seven years.
113
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table details the gains/(losses) on derivatives not designated as hedging instruments recognized on the
Consolidated Statements of Income and Comprehensive Income.
$ in millions
Interest rate
Foreign exchange
Other
Other
Location of gain/(loss)
2020
2019
2018
Principal transactions/other revenues
Other revenues
Principal transactions
Compensation, commissions and benefits expense
$
$
$
$
7 $
— $
(5) $
(1) $
7 $
25 $
— $
5 $
6
18
—
8
Year ended September 30,
Risks associated with our derivatives and related risk mitigation
Credit risk
We are exposed to credit losses in the event of nonperformance by our counterparties to derivatives that are not cleared through
a clearing organization. Where we are subject to credit exposure, we perform a credit evaluation of counterparties prior to
entering into derivative transactions and we monitor their credit standings. We may require initial margin or collateral from
counterparties in the form of cash deposits or other marketable securities to support certain of these obligations as established
by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties.
Our only exposure to credit risk in the matched book derivatives operations is related to our uncollected derivative transaction
fee revenues, which were insignificant as of both September 30, 2020 and 2019. We are not exposed to market risk on these
derivatives due to the pass-through transaction structure previously described in Note 2.
Interest rate and foreign exchange risk
We are exposed to interest rate risk related to certain of our interest rate derivatives. We are also exposed to foreign exchange
risk related to our forward foreign exchange derivatives. On a daily basis, we monitor our risk exposure on our derivatives
based on established limits with respect to a number of factors, including interest rate, foreign exchange spot and forward rates,
spread, ratio, basis and volatility risks, both for the total portfolio and by maturity period.
Derivatives with credit-risk-related contingent features
Certain of our derivative contracts contain provisions that require our debt to maintain an investment-grade rating from one or
more of the major credit rating agencies. If our debt were to fall below investment-grade, the counterparties to the derivative
instruments could terminate and request immediate payment or demand immediate and ongoing overnight collateralization on
our derivative instruments in liability positions. The aggregate fair value of all derivative instruments with such credit-risk-
related contingent features that were in a liability position was insignificant as of both September 30, 2020 and 2019.
114
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6 – COLLATERALIZED AGREEMENTS AND FINANCINGS
Collateralized agreements are comprised of reverse repurchase agreements and securities borrowed. Collateralized financings
are comprised of repurchase agreements and securities loaned. We enter into these transactions in order to facilitate client
activities, acquire securities to cover short positions and finance certain firm activities. The significant accounting policies
governing our collateralized agreements and financings are described in Note 2.
For financial statement purposes, we do not offset our reverse repurchase agreements, repurchase agreements, securities
borrowing and securities lending transactions because the conditions for netting as specified by GAAP are not met. Our reverse
repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions are governed by master
agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as
well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the parties to the
transaction. Although not offset on the Consolidated Statements of Financial Condition, these transactions are included in the
following table.
$ in millions
September 30, 2020
Collateralized agreements
Collateralized financings
Reverse
repurchase
agreements
Securities
borrowed
Total
Repurchase
agreements
Securities
loaned
Total
Gross amounts of recognized assets/liabilities
$
207 $
215 $
422 $
165 $
85 $
250
Gross amounts offset on the Consolidated Statements of
Financial Condition
Net amounts presented on the Consolidated Statements of
Financial Condition
Gross amounts not offset on the Consolidated Statements of
Financial Condition
Net amount
September 30, 2019
Gross amounts of recognized assets/liabilities
Gross amounts offset on the Consolidated Statements of
Financial Condition
Net amounts presented on the Consolidated Statements of
Financial Condition
Gross amounts not offset on the Consolidated Statements of
Financial Condition
Net amount
—
207
—
215
—
422
—
165
—
85
(207)
(209)
(416)
(165)
(79)
— $
6 $
6 $
— $
6 $
—
250
(244)
6
343 $
248 $
591 $
150 $
323 $
473
$
$
—
343
—
248
—
591
—
150
—
323
(343)
(243)
(586)
(150)
(311)
$
— $
5 $
5 $
— $
12 $
—
473
(461)
12
The total amount of collateral received under reverse repurchase agreements and the total amount of collateral posted under
repurchase agreements exceeds the carrying value of these agreements on our Consolidated Statements of Financial Condition.
Collateral received and pledged
We receive cash and securities as collateral, primarily in connection with reverse repurchase agreements, securities borrowed,
derivative transactions and client margin loans. The collateral we receive reduces our credit exposure to individual
counterparties.
In many cases, we are permitted to deliver or repledge financial instruments we have received as collateral to satisfy our
collateral requirements under our repurchase agreements, securities lending agreements or other secured borrowings, to satisfy
deposit requirements with clearing organizations, or to otherwise meet either our or our clients’ settlement requirements.
The following table presents financial instruments at fair value that we received as collateral, were not included on our
Consolidated Statements of Financial Condition, and that were available to be delivered or repledged, along with the balances
of such instruments that were delivered or repledged, to satisfy one of our purposes previously described.
$ in millions
Collateral we received that was available to be delivered or repledged
Collateral that we delivered or repledged
September 30,
2020
2019
$
$
2,869 $
788 $
2,931
897
115
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Encumbered assets
We pledge certain of our assets to collateralize either repurchase agreements or other secured borrowings, maintain lines of
credit, or to satisfy our collateral or settlement requirements with counterparties or clearing organizations who may or may not
have the right to deliver or repledge such instruments. The following table presents information about our assets that have been
pledged for one of the purposes previously described.
$ in millions
Had the right to deliver or repledge
Did not have the right to deliver or repledge
Bank loans, net pledged at FHLB and the FRB
September 30,
2020
2019
$
$
$
325 $
65 $
5,367 $
591
65
4,653
Repurchase agreements, repurchase-to-maturity transactions and securities loaned accounted for as secured borrowings
The following table presents the remaining contractual maturity of repurchase agreements and securities lending transactions
accounted for as secured borrowings.
$ in millions
September 30, 2020
Repurchase agreements:
Government and agency obligations
Agency MBS and agency CMOs
Total repurchase agreements
Securities loaned:
Equity securities
Total collateralized financings
September 30, 2019
Repurchase agreements:
Government and agency obligations
Agency MBS and agency CMOs
Total repurchase agreements
Securities loaned:
Equity securities
Total collateralized financings
Overnight and
continuous
Up to 30 days
30-90 days
Greater than 90
days
Total
$
$
$
$
87 $
— $
— $
— $
78
165
85
250 $
—
—
—
—
—
—
—
—
—
— $
— $
— $
70 $
— $
— $
— $
80
150
323
473 $
—
—
—
—
—
—
—
—
—
— $
— $
— $
87
78
165
85
250
70
80
150
323
473
As of both September 30, 2020 and 2019, we did not have any “repurchase-to-maturity” agreements, which are repurchase
agreements where a security is transferred under an agreement to repurchase and the maturity date of the repurchase agreement
matches the maturity date of the underlying security.
NOTE 7 – BANK LOANS, NET
Bank client receivables are comprised of loans originated or purchased by RJ Bank and include C&I loans, tax-exempt loans,
commercial and residential real estate loans, SBL and other loans. These receivables are collateralized by first and, to a lesser
extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue or are
unsecured. See Note 2 for a discussion of accounting policies related to bank loans and allowances for losses.
We segregate our loan portfolio into six loan portfolio segments: C&I, CRE, CRE construction, tax-exempt, residential
mortgage, and SBL and other. These portfolio segments also serve as the portfolio loan classes for purposes of credit analysis,
except for residential mortgage loans which are further disaggregated into residential first mortgage and residential home equity
classes.
116
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following tables present the balances for both the held for sale and held for investment loan portfolios, as well as the
associated percentage of each portfolio segment in RJ Bank’s total loan portfolio. “Loans held for sale, net” and “Total loans
held for investment, net” in the following tables are presented net of unearned income and deferred expenses, which include
purchase premiums, purchase discounts and net deferred origination fees and costs.
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total loans held for investment
Net unearned income and deferred expenses
Total loans held for investment, net
Loans held for sale, net
Total loans held for sale and investment
Allowance for loan losses
Bank loans, net
$ in millions
Loans held for investment:
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total loans held for investment
Net unearned income and deferred expenses
Total loans held for investment, net
Loans held for sale, net
Total loans held for sale and investment
Allowance for loan losses
Bank loans, net
2020
September 30,
2019
2018
Balance
%
Balance
%
Balance
%
$
$
34 % $
1 %
16 %
6 %
23 %
19 %
7,450
177
3,534
1,259
4,947
4,085
21,452
(13)
21,439
110
1 %
21,549
(354)
21,195
100 %
$
8,098
185
3,652
1,241
4,454
3,349
20,979
(12)
20,967
142
21,109
(218)
20,891
38 % $
1 %
17 %
6 %
21 %
16 %
1 %
100 %
$
September 30,
40 %
1 %
18 %
6 %
19 %
15 %
1 %
100 %
7,786
151
3,624
1,227
3,757
3,033
19,578
(21)
19,557
164
19,721
(203)
19,518
2017
2016
Balance
%
Balance
%
$
43 % $
1 %
18 %
6 %
18 %
14 %
7,386
113
3,106
1,018
3,149
2,386
17,158
(31)
17,127
70
—
7,470
123
2,554
741
2,442
1,905
15,235
(41)
15,194
214
48 %
1 %
17 %
5 %
16 %
12 %
1 %
17,197
100 %
15,408
100 %
(190)
(197)
$
17,007
$
15,211
At September 30, 2020, the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the
repayment of certain borrowings. See Note 14 for more information regarding borrowings from the FHLB.
Loans held for sale
RJ Bank originated or purchased $1.79 billion, $2.33 billion and $1.69 billion of loans held for sale during the years ended
September 30, 2020, 2019 and 2018, respectively. Proceeds from the sale of these held for sale loans amounted to $776
million, $800 million and $606 million for the years ended September 30, 2020, 2019 and 2018, respectively. Net gains
resulting from such sales were insignificant in each of the years ended September 30, 2020, 2019 and 2018.
117
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Purchases and sales of loans held for investment
The following table presents purchases and sales of any loans held for investment by portfolio segment.
$ in millions
Year ended September 30, 2020
Purchases
Sales
Year ended September 30, 2019
Purchases
Sales
Year ended September 30, 2018
Purchases
Sales
C&I loans
CRE loans
Residential
mortgage loans
Total
$
$
$
$
$
$
589 $
598 $
1,046 $
126 $
467 $
213 $
5 $
27 $
42 $
— $
145 $
— $
402 $
2 $
400 $
— $
303 $
— $
996
627
1,488
126
915
213
Sales in the preceding table represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held
for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period.
As more fully described in Note 2, corporate loan sales generally occur as part of our credit management activities.
Aging analysis of loans held for investment
The following table presents an analysis of the payment status of loans held for investment. Amounts in the table exclude any
net unearned income and deferred expenses.
30-89
days and
accruing
90 days
or more and
accruing
Total past due
and accruing
Nonaccrual
Current and
accruing
Total loans held for
investment
$ in millions
September 30, 2020
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans:
First mortgage loans
Home equity loans/lines
SBL and other
$
— $
— $
— $
2 $
7,448 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
14
—
14
—
—
177
3,520
1,259
4,911
22
4,085
Total loans held for investment
$
— $
— $
— $
30 $
21,422 $
September 30, 2019
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans:
First mortgage loans
Home equity loans/lines
SBL and other
$
— $
— $
— $
19 $
8,079 $
—
—
—
2
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
8
—
16
—
—
185
3,644
1,241
4,409
27
3,349
Total loans held for investment
$
2 $
— $
2 $
43 $
20,934 $
7,450
177
3,534
1,259
4,925
22
4,085
21,452
8,098
185
3,652
1,241
4,427
27
3,349
20,979
The preceding table includes $15 million and $32 million at September 30, 2020 and 2019, respectively, of nonaccrual loans
which were current pursuant to their contractual terms.
Other real estate owned, included in “Other assets” on our Consolidated Statements of Financial Condition, was $2 million and
$3 million at September 30, 2020 and 2019. The recorded investment in mortgage loans secured by one-to-four family
residential properties for which formal foreclosure proceedings were in process was $6 million and $7 million at September 30,
2020 and 2019, respectively.
118
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Impaired loans and troubled debt restructurings
The following table provides a summary of RJ Bank’s impaired loans.
$ in millions
Impaired loans with allowance for loan losses:
C&I loans
Residential - first mortgage loans
Total
Impaired loans without allowance for loan losses:
CRE loans
Residential - first mortgage loans
Total
Gross
recorded
investment
2020
Unpaid
principal
balance
September 30,
Allowance
for losses
Gross
recorded
investment
2019
Unpaid
principal
balance
Allowance
for losses
$
2 $
2 $
— $
19 $
20 $
8
10
13
10
23
10
12
21
14
35
1
1
—
—
—
11
30
8
11
19
13
33
13
17
30
6
1
7
—
—
—
7
Total impaired loans
$
33 $
47 $
1 $
49 $
63 $
Impaired loan balances with allowances for loan losses have had reserves established based upon management’s analysis.
There is no allowance required when the discounted cash flow, collateral value or market value of a loan equals or exceeds the
carrying value. These are generally loans in process of foreclosure that have already been adjusted to fair value.
The preceding table includes TDRs of $6 million and $15 million related to CRE and residential first mortgage loans,
respectively, at September 30, 2020 and $19 million, $8 million and $18 million related to C&I, CRE and residential first
mortgage loans, respectively, at September 30, 2019.
The average balance of the total impaired loans was as follows.
$ in millions
C&I loans
CRE loans
Residential - first mortgage loans
Total average impaired loan balance
Credit quality indicators
Year ended September 30,
2020
2019
2018
$
$
8 $
7
20
35 $
19 $
5
25
49 $
4
—
33
37
The credit quality of RJ Bank’s loan portfolio is summarized monthly by management using the standard asset classification
system utilized by bank regulators for the SBL and residential mortgage loan portfolios and internal risk ratings, which
correspond to the same standard asset classifications for the corporate loan portfolios. These classifications are divided into
three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss).
These terms are defined as follows:
Pass – Loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by
the fair value, less costs to acquire and sell, of any underlying collateral in a timely manner.
Special Mention – Loans which have potential weaknesses that deserve management’s close attention. These loans are not
adversely classified and do not expose RJ Bank to sufficient risk to warrant an adverse classification.
Substandard – Loans which are inadequately protected by the current sound worth and paying capacity of the obligor or by the
collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that RJ Bank will sustain
some loss if the deficiencies are not corrected.
Doubtful – Loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that
the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently-known facts,
conditions and values.
Loss – Loans which are considered by management to be uncollectible and of such little value that their continuance on our
books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. We do not have any
119
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
bank loan balances within this classification because, in accordance with our accounting policy, loans, or a portion thereof
considered to be uncollectible, are charged-off prior to the assignment of this classification.
The following table presents the credit quality of RJ Bank’s held for investment loan portfolio.
$ in millions
September 30, 2020
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans:
First mortgage loans
Home equity loans/lines
SBL and other
Pass
Special mention
Substandard
Doubtful
Total
$
6,966 $
236 $
248 $
— $
177
3,113
1,259
4,897
22
4,085
—
256
—
6
—
—
—
165
—
22
—
—
—
—
—
—
—
—
Total loans held for investment
$
20,519 $
498 $
435 $
— $
September 30, 2019
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans:
First mortgage loans
Home equity loans/lines
SBL and other
$
7,870 $
152 $
76 $
— $
185
3,630
1,241
4,392
27
3,349
—
—
—
10
—
—
—
22
—
25
—
—
—
—
—
—
—
—
Total loans held for investment
$
20,694 $
162 $
123 $
— $
7,450
177
3,534
1,259
4,925
22
4,085
21,452
8,098
185
3,652
1,241
4,427
27
3,349
20,979
Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.
Allowance for loan losses and reserve for unfunded lending commitments
The following table presents changes in the allowance for loan losses of RJ Bank by portfolio segment.
$ in millions
C&I loans
Year ended September 30, 2020
Loans held for investment
CRE
construction
loans
CRE loans
Tax-exempt
loans
Residential
mortgage
loans
SBL and
other
Total
Balance at beginning of year
$
139 $
3 $
Provision for loan losses
Net (charge-offs)/recoveries:
Charge-offs (1)
Recoveries
Net (charge-offs)/recoveries
Foreign exchange translation adjustment
Balance at end of year
Year ended September 30, 2019
Balance at beginning of year
Provision/(benefit) for loan losses
Net (charge-offs)/recoveries:
Charge-offs (1)
Recoveries
Net (charge-offs)/recoveries
Foreign exchange translation adjustment
$
$
157
(96)
—
(96)
—
—
—
—
—
—
46 $
71
(4)
—
(4)
1
9 $
16 $
5 $
5
—
—
—
—
—
—
2
2
—
—
—
—
—
—
200 $
3 $
114 $
14 $
18 $
5 $
123 $
3 $
47 $
9 $
17 $
4 $
19
(2)
—
(2)
(1)
—
—
—
—
—
4
(5)
—
(5)
—
—
—
—
—
—
(2)
(1)
2
1
—
1
—
—
—
—
218
233
(100)
2
(98)
1
354
203
22
(8)
2
(6)
(1)
Balance at end of year
$
139 $
3 $
46 $
9 $
16 $
5 $
218
(1) Charge-offs related to loan sales amounted to $87 million and $2 million for the years ended September 30, 2020 and 2019, respectively.
120
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents, by loan portfolio segment, RJ Bank’s recorded investment (excluding any net unearned income
and deferred expenses) and the related allowance for loan losses.
Loans held for investment
Allowance for loan losses
Recorded investment
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
Total
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
Total
$
— $
200 $
200 $
2 $
7,448 $
—
—
—
1
—
3
114
14
17
5
3
114
14
18
5
—
14
—
25
—
177
3,520
1,259
4,922
4,085
7,450
177
3,534
1,259
4,947
4,085
$
$
1 $
353 $
354 $
41 $
21,411 $
21,452
6 $
133 $
139 $
19 $
8,079 $
—
—
—
1
—
3
46
9
15
5
3
46
9
16
5
—
8
—
28
—
185
3,644
1,241
4,426
3,349
8,098
185
3,652
1,241
4,454
3,349
$
7 $
211 $
218 $
55 $
20,924 $
20,979
$ in millions
September 30, 2020
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total
September 30, 2019
C&I loans
CRE construction loans
CRE loans
Tax-exempt loans
Residential mortgage loans
SBL and other
Total
The reserve for unfunded lending commitments, which is included in “Other payables” on our Consolidated Statements of
Financial Condition, was $12 million and $9 million at September 30, 2020 and 2019, respectively.
NOTE 8 – VARIABLE INTEREST ENTITIES
A VIE requires consolidation by the entity’s primary beneficiary. We evaluate all of the entities in which we are involved to
determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary. Refer to Note 2
for a discussion of our principal involvement with VIEs and the accounting policies regarding determination of whether we are
deemed to be the primary beneficiary of VIEs.
VIEs where we are the primary beneficiary
Of the VIEs in which we hold an interest, we have determined that certain Private Equity Interests, certain LIHTC funds and the
Restricted Stock Trust Fund require consolidation in our financial statements, as we are deemed the primary beneficiary of such
VIEs. The aggregate assets and liabilities of the VIEs we consolidate are provided in the following table. Aggregate assets and
aggregate liabilities may differ from the consolidated carrying value of assets and liabilities due to the elimination of
intercompany assets and liabilities held by the consolidated VIE.
$ in millions
September 30, 2020
Private Equity Interests
LIHTC funds
Restricted Stock Trust Fund
Total
September 30, 2019
Private Equity Interests
LIHTC funds
Restricted Stock Trust Fund
Total
Aggregate
assets
Aggregate
liabilities
$
$
$
$
39 $
168
14
221 $
65 $
80
14
159 $
4
76
14
94
4
5
14
23
121
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents information about the carrying value of the assets and liabilities of the VIEs which we consolidate
and which are included on our Consolidated Statements of Financial Condition. Intercompany balances are eliminated in
consolidation and not reflected in the following table.
$ in millions
Assets:
Cash, cash equivalents and cash segregated pursuant to regulations
Other investments
Other assets
Total assets
Liabilities:
Other payables
Total liabilities
Noncontrolling interests
September 30,
2020
2019
$
$
$
$
$
9 $
37
164
210 $
76 $
76 $
62 $
7
63
75
145
4
4
60
VIEs where we hold a variable interest but are not the primary beneficiary
As discussed in Note 2, we have concluded that for certain VIEs we are not the primary beneficiary and therefore do not
consolidate these VIEs. Such VIEs include certain Private Equity Interests, certain LIHTC funds, and other limited
partnerships. Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these
VIEs.
Aggregate assets, liabilities and risk of loss
The aggregate assets, liabilities, and our exposure to loss from those VIEs in which we hold a variable interest, but as to which
we have concluded we are not the primary beneficiary, are provided in the following table.
$ in millions
Private Equity Interests
LIHTC funds
Other
Total
Aggregate
assets
2020
Aggregate
liabilities
September 30,
Our risk
of loss
Aggregate
assets
2019
Aggregate
liabilities
Our risk
of loss
$
$
7,738 $
96 $
67 $
6,317 $
117 $
6,516
227
1,993
136
66
6
6,001
205
2,221
115
14,481 $
2,225 $
139 $
12,523 $
2,453 $
63
64
4
131
NOTE 9 - PROPERTY AND EQUIPMENT, NET
The following table presents the components of our property and equipment, net as of the dates indicated.
$ in millions
Land
Software, including development in progress
Buildings, building components, leasehold and land improvements
Furniture, fixtures and equipment
Total property and equipment
Less: Accumulated depreciation and amortization
Total property and equipment, net
September 30,
2020
2019
$
29 $
565
406
294
1,294
(759)
$
535 $
29
490
391
278
1,188
(661)
527
Depreciation expense associated with property and equipment was $52 million, $48 million, and $41 million for the years
ended September 30, 2020, 2019, and 2018, respectively, and is included in “Occupancy and equipment” expense on our
Consolidated Statements of Income and Comprehensive Income. Amortization expense associated with computer software was
$54 million, $49 million, and $44 million for the years ended September 30, 2020, 2019, and 2018, respectively, and is
included in “Communications and information processing” expense on our Consolidated Statements of Income and
Comprehensive Income. We also incur software licensing fees, which are also included in “Communications and information
processing” expense on our Consolidated Statements of Income and Comprehensive Income.
122
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 10 - GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET
Our goodwill and identifiable intangible assets result from various acquisitions. See Note 2 for a discussion of our goodwill
and intangible assets accounting policies. The following table presents our goodwill and net identifiable intangible asset
balances as of the dates indicated.
$ in millions
Goodwill
Identifiable intangible assets, net
Total goodwill and identifiable intangible assets, net
Goodwill
September 30,
2020
2019
$
$
466 $
134
600 $
464
147
611
The following table summarizes our goodwill by segment and the balances and activity for the years indicated.
$ in millions
Year ended September 30, 2020
Goodwill as of beginning of year
Foreign currency translations
Goodwill as of end of year
Year ended September 30, 2019
Goodwill as of beginning of year
Additions
Foreign currency translations
Impairment
Goodwill as of end of year
Private Client
Group
Capital
Markets
Asset
Management
Total
$
$
$
$
275 $
2
277 $
120 $
—
120 $
69 $
—
69 $
276 $
133 $
69 $
—
(1)
—
7
(1)
(19)
—
—
—
275 $
120 $
69 $
464
2
466
478
7
(2)
(19)
464
The addition to goodwill during the year ended September 30, 2019 arose from our acquisition of Silver Lane Advisors LLC
(“Silver Lane”) and primarily represents synergies from combining this entity with our existing business. The goodwill
associated with Silver Lane is deductible for tax purposes over 15 years. The impairment to goodwill during the year ended
September 30, 2019 represents a $19 million impairment charge related to our Canadian Capital Markets business.
Qualitative assessments
As described in Note 2, we perform goodwill impairment testing on an annual basis or when an event occurs or circumstances
change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We performed our
latest annual goodwill impairment testing as of our January 1, 2020 evaluation date, evaluating balances as of December 31,
2019. In that testing, we performed a qualitative assessment for each of our reporting units that had goodwill. Based upon the
outcome of our qualitative assessments, no impairment was identified.
Our qualitative assessments consider macroeconomic indicators, such as trends in equity and fixed income markets, gross
domestic product, unemployment rates, and interest rates. We also consider regulatory changes, reporting unit results, and
changes in key personnel and strategy. Changes in these indicators, and our ability to respond to such changes, may trigger the
need for impairment testing at a point other than our annual assessment date.
Subsequent to our annual goodwill impairment testing, the COVID-19 pandemic broadly impacted the operating environment
and caused deterioration in market conditions, particularly toward the end of our fiscal second quarter. However, the operating
environment toward the end of our fiscal year continued to recover and market conditions generally improved. We performed
an evaluation to determine whether the economic impacts resulting from the pandemic were indicators requiring us to perform
an impairment test as of September 30, 2020. Multiple factors, including performance, macroeconomic, and fair value
indicators, were assessed with respect to each of our reporting units to determine whether it was more likely than not that the
estimated fair value of any of these reporting units was less than its carrying value. As a result of our review, we concluded that
it was more likely than not that the estimated fair values of our reporting units exceeded their respective carrying values and
that the impact of the COVID-19 pandemic through the end of our fiscal year 2020 was not a triggering event to perform a
quantitative assessment as of a date other than our annual evaluation date.
123
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Identifiable intangible assets, net
The following table sets forth our identifiable intangible asset balances by segment, net of accumulated amortization, and
activity for the years indicated.
$ in millions
Year ended September 30, 2020
Net identifiable intangible assets as of beginning of year
Amortization expense
Net identifiable intangible assets as of end of year
Year ended September 30, 2019
Net identifiable intangible assets as of beginning of year
Additions
Amortization expense
Net identifiable intangible assets as of end of year
Private Client
Group
Capital
Markets
Asset
Management
Total
$
$
$
$
35 $
(4)
31 $
41 $
—
(6)
35 $
17 $
(4)
13 $
20 $
1
(4)
17 $
95 $
(5)
90 $
100 $
—
(5)
95 $
147
(13)
134
161
1
(15)
147
The addition of intangible assets during the year ended September 30, 2019 was attributable to the acquisition of Silver Lane.
The following table summarizes our identifiable intangible assets by type.
$ in millions
Customer relationships
Non-amortizing customer relationships
Trade name
Seller relationship agreements
Other
Total
September 30,
2020
2019
Gross carrying
value
Accumulated
amortization
Gross carrying
value
Accumulated
amortization
$
$
134 $
(61) $
134 $
52
10
4
6
—
(4)
(2)
(5)
52
12
5
6
206 $
(72) $
209 $
(50)
—
(5)
(3)
(4)
(62)
The following table sets forth the projected amortization expense by fiscal year associated with our identifiable intangible assets
with finite lives.
Fiscal year ended September 30,
$ in millions
2021
2022
2023
2024
2025
Thereafter
Total
Qualitative assessments
$
$
12
11
10
10
8
31
82
As described in Note 2, we perform impairment testing for our non-amortizing customer relationship intangible asset on an
annual basis or when an event occurs or circumstances change that would more likely than not reduce the fair value of the asset
below its carrying value. We performed our latest annual impairment test as of our January 1, 2020 evaluation date, evaluating
balances as of December 31, 2019. In that testing, we performed a qualitative assessment for our non-amortizing customer
relationship intangible asset. Based upon the outcome of our qualitative assessment, no impairment was identified.
Subsequent to our annual impairment testing of our non-amortizing customer relationship intangible asset, we performed an
evaluation to determine whether the economic impacts resulting from the COVID-19 pandemic were indicators requiring us to
perform an impairment test as of September 30, 2020. In performing our assessment, we considered multiple factors, including
macroeconomic and market conditions, performance, and relevant entity-specific events, among others, to determine whether it
was more likely than not that the estimated fair value of the asset was less than its carrying value. As a result of our review, we
concluded that it was more likely than not that the fair value of the non-amortizing customer relationship intangible asset
exceeded its carrying value and that the impact of the COVID-19 pandemic through the end of our fiscal year 2020 was not a
triggering event to perform a quantitative assessment as of a date other than our annual evaluation date.
124
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 11 - OTHER ASSETS
The following table details the components of other assets. See Note 2 for a discussion of the accounting polices related to
these components.
$ in millions
Investments in company-owned life insurance policies
Lease ROU assets
Investments in real estate partnerships held by consolidated variable interest entities
Prepaid expenses
Investment in FHLB stock
Investment in FRB stock
All other
Total other assets
September 30,
2020
2019
$
773 $
321
164
123
52
25
67
675
—
75
123
52
25
70
$
1,525 $
1,020
As of September 30, 2020, the cumulative face value of our company-owned life insurance policies was $1.91 billion.
On October 1, 2019, we adopted new accounting guidance related to leases. See Notes 2 and 12 for further information about
this guidance and for a discussion of our accounting policies related to leases.
NOTE 12 - LEASES
On October 1, 2019, we adopted new accounting guidance related to the accounting for leases. See Note 2 for further
information about this guidance and for a discussion of our accounting policies related to leases.
As of September 30, 2020, our lease commitments resulted in ROU assets of $321 million and lease liabilities of $345 million,
which were included in “Other assets” and “Other payables,” respectively, on our Consolidated Statements of Financial
Condition. The weighted-average remaining lease term and discount-rate for our leases was five years and 3.86%, respectively,
as of September 30, 2020.
Lease expense
Lease expense is recognized on a straight-line basis over the lease term if the ROU asset has not been impaired or abandoned.
The following table details the components of lease expense, which is included in “Occupancy and equipment” expense on our
Consolidated Statements of Income and Comprehensive Income.
$ in millions
Lease costs
Variable lease costs
Year ended
September 30, 2020
$
$
98
26
Variable lease costs in the preceding table includes payments for common area maintenance charges and other variable costs
that are not reflected in the measurement of ROU assets and lease liabilities.
125
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Lease liabilities
The maturities of lease liabilities as of September 30, 2020 are presented in the following table.
Fiscal year ended September 30,
$ in millions
2021
2022
2023
2024
2025
Thereafter
Gross lease payments
Less: interest
Present value of lease liabilities
$
97
83
65
48
34
55
382
(37)
345
Lease payments in the preceding table exclude $201 million of legally binding minimum lease payments for leases signed but
not yet commenced. These leases are estimated to commence between fiscal year 2021 and 2022 with lease terms ranging from
five years to 11 years.
Statement of cash flows supplemental information
$ in millions
Cash outflows - lease liabilities
Non-cash - ROU assets recorded for new and modified leases
Minimum future lease commitments (under previous GAAP)
Year ended
September 30, 2020
$
$
101
74
As of the date of adoption, our undiscounted minimum annual rental commitments were materially unchanged from the
disclosure in Note 17 of our 2019 Form 10-K, which is included in the following table.
Fiscal year ended September 30,
$ in millions
2020
2021
2022
2023
2024
Thereafter
Total
$
$
103
95
79
66
49
127
519
NOTE 13 – BANK DEPOSITS
Bank deposits include savings and money market accounts, certificates of deposit with RJ Bank, Negotiable Order of
Withdrawal (“NOW”) accounts and demand deposits. The following table presents a summary of bank deposits, as well as the
weighted-average interest rates on such deposits. The calculation of the weighted-average rates were based on the actual
deposit balances and rates at each respective period end.
$ in millions
Savings and money market accounts
Certificates of deposit
NOW accounts
Demand deposits (non-interest-bearing)
Total bank deposits
September 30,
2020
2019
Balance
Weighted-average
rate
Balance
Weighted-average
rate
$
$
25,604
1,017
156
24
26,801
0.01 % $
1.94 %
1.92 %
—
21,654
605
6
16
0.09 % $
22,281
0.25 %
2.33 %
0.01 %
—
0.31 %
126
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Total bank deposits in the preceding table exclude affiliate deposits of $185 million and $163 million at September 30, 2020
and 2019, respectively, all of which were held in a deposit account at RJ Bank on behalf of RJF. See Note 25 for additional
information.
Savings and money market accounts in the preceding table consist primarily of deposits that are cash balances swept to RJ Bank
from the client investment accounts maintained at RJ&A. These balances are held in Federal Deposit Insurance Corporation
(“FDIC”)-insured bank accounts through the RJBDP. The aggregate amount of individual time deposit account balances that
exceeded the FDIC insurance limit at September 30, 2020 was $23 million.
The following table sets forth the scheduled maturities of certificates of deposit.
$ in millions
Three months or less
Over three through six months
Over six through twelve months
Over one through two years
Over two through three years
Over three through four years
Over four through five years
September 30,
2020
2019
Denominations
greater than or
equal to $100,000
Denominations
less than $100,000
Denominations
greater than or
equal to $100,000
Denominations
less than $100,000
$
59 $
76 $
24 $
26
19
43
67
37
7
18
26
206
170
165
98
26
75
32
40
66
38
19
21
37
36
93
47
51
Total certificates of deposit
$
258 $
759 $
301 $
304
Interest expense on deposits, excluding interest expense related to affiliate deposits, is summarized in the following table.
$ in millions
Savings, money market, and NOW accounts
Certificates of deposit
Total interest expense on deposits
NOTE 14 – OTHER BORROWINGS
The following table details the components of other borrowings.
$ in millions
FHLB advances
Mortgage notes payable
Total other borrowings
FHLB advances
Year ended September 30,
2020
2019
2018
$
$
21 $
20
41 $
120 $
12
132 $
60
6
66
September 30,
2020
2019
$
$
875 $
13
888 $
875
19
894
Borrowings from the FHLB as of September 30, 2020 and 2019 were comprised of both floating and fixed-rate advances. As
of September 30, 2020 and 2019, the floating-rate advances totaled $850 million. The interest rates on the floating-rate
advances, which mature in December 2022, reset quarterly and are generally based on LIBOR. We use interest rate swaps to
manage the risk of increases in interest rates associated with these floating-rate advances by converting the balances subject to
variable interest rates to a fixed interest rate. Refer to Note 2 for information regarding these interest rate swaps, which are
accounted for as hedging instruments. As of both September 30, 2020 and 2019, the fixed-rate advance totaled $25 million and
incurred interest at a fixed rate of 3.4%. This advance matured and was repaid in October 2020. All of the advances were
secured by a blanket lien granted to the FHLB on our residential mortgage loan portfolio. The weighted-average interest rate on
these FHLB advances as of September 30, 2020 and 2019 was 0.45% and 2.17%, respectively.
Secured and unsecured financing arrangements
On February 19, 2019, RJF and RJ&A entered into an unsecured revolving credit facility agreement (the “Credit Facility”).
The Credit Facility has a maturity date of February 2024 and the lenders include a number of financial institutions. This
committed unsecured borrowing facility provides for maximum borrowings of up to $500 million, with a sublimit of $300
127
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
million for RJF. RJ&A may borrow up to $500 million under the Credit Facility, depending on the amount of outstanding
borrowings of RJF. The interest rates on borrowings under the Credit Facility are variable and based on LIBOR, as adjusted for
RJF’s credit rating. There were no borrowings outstanding on the Credit Facility as of September 30, 2020. There is a facility
fee associated with the Credit Facility, which also varies with RJF’s credit rating. Based upon RJF’s credit rating as of
September 30, 2020, the variable rate facility fee, which is applied to the committed amount, was 0.175% per annum.
In addition to the Credit Facility, we maintain various secured and unsecured lines of credit, which are generally utilized to
finance certain fixed income securities or for cash management purposes. Borrowings during the year were generally day-to-
day and there were no borrowings outstanding on these arrangements as of September 30, 2020. The interest rates for these
arrangements are variable and are based on the Fed Funds rate, LIBOR, a lender’s prime rate, or the Canadian prime rate, as
applicable.
We also have other collateralized financings included in “Collateralized financings” on our Consolidated Statements of
Financial Condition. See Note 6 for information regarding our other collateralized financing arrangements.
Mortgage notes payable
Mortgage notes payable pertain to mortgage loans on certain of our corporate headquarters offices located in St. Petersburg,
Florida. These mortgage loans are secured by land, buildings, and improvements. These mortgage loans bear a fixed interest
rate of 5.7% with repayment terms of monthly interest and principal debt service and have a January 2023 maturity.
Maturities
Our other borrowings as of September 30, 2020, mature as follows based on their contractual terms.
Fiscal year ended September 30,
$ in millions
2021
2022
2023
Total
$
$
30
6
852
888
NOTE 15 – SENIOR NOTES PAYABLE
The following table summarizes our senior notes payable.
$ in millions
5.625% senior notes, due 2024
3.625% senior notes, due 2026
4.65% senior notes, due 2030
4.95% senior notes, due 2046
Total principal amount
Unaccreted premium/(discount)
Unamortized debt issuance costs
Total senior notes payable
September 30,
2020
2019
$
250 $
500
500
800
2,050
10
(15)
$
2,045 $
250
500
—
800
1,550
11
(11)
1,550
In March 2012, we sold in a registered underwritten public offering $250 million in aggregate principal amount of 5.625%
senior notes due April 2024. Interest on these senior notes is payable semi-annually. We may redeem some or all of these
senior notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of
the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon,
discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 50 basis points, plus accrued
and unpaid interest thereon to the redemption date.
In July 2016, we sold in a registered underwritten public offering $500 million in aggregate principal amount of 3.625% senior
notes due September 2026. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior
notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of the
notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon,
128
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 35 basis points, plus accrued
and unpaid interest thereon to the redemption date.
In March 2020, we sold in a registered underwritten public offering $500 million in aggregate principal amount of 4.65% senior
notes due April 2030. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior
notes at any time prior to January 1, 2030, at a redemption price equal to the greater of (i) 100% of the principal amount of the
notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon,
discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 50 basis points; and on or
after January 1, 2030, at 100% of the principal amount of the notes redeemed; plus, in each case, accrued and unpaid interest
thereon to the redemption date.
In July 2016, we sold in a registered underwritten public offering $300 million in aggregate principal amount of 4.95% senior
notes due July 2046. In May 2017, we reopened the offering and sold, in a registered underwritten public offering, an
additional $500 million in aggregate principal amount of 4.95% senior notes due July 2046. These additional senior notes were
consolidated, formed into a single series, and are fully fungible with the $300 million in aggregate principal amount 4.95%
senior notes issued in July 2016. Interest on these senior notes is payable semi-annually. We may redeem some or all of these
senior notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of
the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon,
discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 45 basis points, plus accrued
and unpaid interest thereon to the redemption date.
NOTE 16 – INCOME TAXES
For a discussion of our income tax accounting policies and other income tax-related information see Note 2.
Income taxes
The following table details the total income tax provision/(benefit) allocation for each respective period.
$ in millions
Recorded in:
Year ended September 30,
2020
2019
2018
Net income (1)
Equity, arising from available-for-sale securities recorded through OCI
Equity, arising from currency translations, net of the impact of net investment hedges recorded
through OCI
Equity, arising from cash flow hedges recorded through OCI
Total provision for income taxes
$
234 $
341 $
23
2
(12)
27
7
(23)
$
247 $
352 $
454
(19)
10
15
460
(1) Our provision for income taxes for the year ended September 30, 2018 included $105 million related to the enactment of the Tax Cuts and Jobs Act (“Tax
Act”) in December 2017, primarily due to the remeasurement of U.S. deferred tax assets at a lower enacted federal corporate tax rate.
The following table details our provision/(benefit) for income taxes included in net income for each respective period.
$ in millions
Current:
Federal
State and local
Foreign
Total current
Deferred:
Federal
State and local
Total deferred
Year ended September 30,
2020
2019
2018
$
215 $
286 $
49
9
273
(36)
(3)
(39)
63
15
364
(22)
(1)
(23)
Total provision for income taxes
$
234 $
341 $
129
258
65
14
337
121
(4)
117
454
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is detailed in the following table.
Provision calculated at statutory rate
Impact of Tax Act
State income tax, net of federal benefit
Excess tax benefits related to share-based compensation
Gains on company-owned life insurance policies which are not subject to tax
Federal tax credits
Other, net
Total provision for income tax
Year ended September 30,
2020
2019
2018
21.0 %
—
3.6 %
(0.6) %
(1.0) %
(1.1) %
0.3 %
22.2 %
21.0 %
0.1 %
3.6 %
(0.4) %
(0.1) %
(0.9) %
1.5 %
24.8 %
24.5 %
8.1 %
3.9 %
(0.9) %
(0.7) %
(0.7) %
0.6 %
34.8 %
Our U.S. federal statutory tax rate for the year ended September 30, 2018 of 24.5% reflected a blended federal statutory rate of
35.0% for our first fiscal quarter and 21.0% for the remaining three fiscal quarters as a result of the Tax Act.
The following table presents our U.S. and foreign components of pre-tax income for each respective period.
$ in millions
U.S.
Foreign
Pre-tax income
Year ended September 30,
2020
2019
2018
$
$
1,019 $
1,340 $
33
35
1,052 $
1,375 $
1,268
43
1,311
The cumulative effects of temporary differences that give rise to significant portions of the deferred tax asset/(liability) items
are detailed in the following table.
$ in millions
Deferred tax assets:
Deferred compensation
Allowances for loan losses and reserves for unfunded commitments
Unrealized loss associated with foreign currency translations
Unrealized loss associated with cash flow hedges
Accrued expenses
Partnership investments
Lease liabilities
Other
Total deferred tax assets
Deferred tax liabilities:
Goodwill and identifiable intangible assets
Property and equipment
Lease ROU assets
Unrealized gain associated with available-for-sale securities
Total deferred tax liabilities
Net deferred tax assets
September 30,
2020
2019
$
229 $
192
89
8
18
34
13
80
16
487
(34)
(81)
(80)
(30)
$
(225)
262 $
56
10
6
35
12
—
12
323
(28)
(57)
—
(7)
(92)
231
We had a net deferred tax asset at both September 30, 2020 and 2019. We believe that the realization of the net deferred tax
asset of $262 million is more likely than not based on expectations of future taxable income.
As of September 30, 2020, we considered nearly all undistributed earnings of non-U.S. subsidiaries to be permanently
reinvested. Therefore, we have not provided for any U.S. deferred income taxes related to such subsidiaries. As of
September 30, 2020, we had approximately $311 million of cumulative undistributed earnings attributable to foreign
subsidiaries, most of which were subject to U.S. tax under the transition tax on foreign earnings under the Tax Act. Because the
time and manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes and foreign tax
credits associated with the future repatriation of such earnings, and therefore, cannot quantify the tax liability that would be
payable in the event all such foreign earnings are repatriated.
130
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of September 30, 2020, the current tax receivable, which is included in “Other receivables” on our Consolidated Statements
of Financial Condition, was $17 million, and the current tax payable, which is included in “Other payables,” was $82 million.
As of September 30, 2019, the current tax receivable was $22 million and the current tax payable was $49 million.
Uncertain tax positions
We recognize the accrual of interest and penalties related to income tax matters in interest expense and other expense,
respectively. As of September 30, 2020 and 2019, accrued interest and penalties were approximately $8 million and $6 million,
respectively.
The following table presents the aggregate changes in the balances for uncertain tax positions.
$ in millions
Uncertain tax positions beginning of year
Increases for tax positions related to the current year
Increases for tax positions related to prior years
Decreases for tax positions related to prior years
Decreases due to lapsed statute of limitations
Decreases related to settlements
Uncertain tax positions end of year
Year ended September 30,
2020
2019
2018
$
42 $
31 $
5
3
(1)
(4)
—
45 $
11
7
—
(2)
(5)
42 $
$
20
5
10
(1)
(3)
—
31
The total amount of uncertain tax positions that, if recognized, would impact the effective tax rate (the items included in the
preceding table after considering the federal tax benefit associated with any state tax provisions) was $40 million, $38 million,
and $27 million at September 30, 2020, 2019 and 2018, respectively. We anticipate that the uncertain tax position liability
balance will decrease by approximately $8 million over the next 12 months due to the expiration of statutes of limitations on
federal and state tax returns and settlements of positions with the IRS.
We file U.S. federal income tax returns as well as returns with various state, local and foreign jurisdictions. With few
exceptions, we are generally no longer subject to U.S. federal, state and local, or foreign income tax examination by tax
authorities for years prior to fiscal year 2017 for federal tax returns, fiscal year 2016 for state and local tax returns and fiscal
year 2016 for foreign tax returns. Various foreign and state audits in process are expected to be completed in fiscal year 2021.
NOTE 17 – COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments and contingencies
Loan and underwriting commitments
In the normal course of business, we enter into commitments for debt and equity underwritings. As of September 30, 2020, we
had six such open underwriting commitments, of which all but one were subsequently settled in open market transactions and
none of which resulted in a significant loss.
We offer loans to prospective financial advisors and certain key revenue producers primarily for recruiting, transitional cost
assistance, and retention purposes (see Note 2 for a discussion of our accounting policies governing these transactions). These
offers are contingent upon certain events occurring, including the individuals joining us and meeting certain conditions outlined
in their offer. Our unfunded loan commitments related to such offers were $15 million as of September 30, 2020.
Commitments to extend credit and other credit-related financial instruments
RJ Bank has outstanding, at any time, a significant number of commitments to extend credit and other credit-related off-balance
sheet financial instruments, such as standby letters of credit and loan purchases, which then extend over varying periods of
time. These arrangements are subject to strict underwriting assessments and each customer’s credit worthiness is evaluated on a
case-by-case basis. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and our
exposure is limited to the replacement value of those commitments.
131
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents RJ Bank’s commitments to extend credit and other credit-related off-balance sheet financial
instruments outstanding.
$ in millions
Open-end consumer lines of credit (primarily SBL)
Commercial lines of credit
Unfunded loan commitments
Standby letters of credit
September 30,
2020
2019
$
$
$
$
12,148 $
1,482 $
532 $
33 $
9,328
1,527
599
40
Open-end consumer lines of credit primarily represent the unfunded amounts of RJ Bank loans to consumers that are secured by
marketable securities at advance rates consistent with industry standards. The proceeds from repayment or, if necessary, the
liquidation of collateral, which is monitored daily, are expected to satisfy the amounts drawn against these existing lines of
credit. These lines of credit are primarily uncommitted, as we reserve the right to not make any advances or may terminate
these lines at any time.
Because many of our lending commitments expire without being funded in whole or in part, the contractual amounts are not
estimates of our actual future credit exposure or future liquidity requirements. We maintain a reserve to provide for potential
losses related to the unfunded lending commitments. See Note 7 for further discussion of this reserve for unfunded lending
commitments.
RJ&A enters into margin lending arrangements which allow customers to borrow against the value of qualifying securities.
Margin loans are collateralized by the securities held in the customer’s account at RJ&A. Collateral levels and established
credit terms are monitored daily and we require customers to deposit additional collateral or reduce balances as necessary.
Investment commitments
We had unfunded commitments to various investments, including private equity investments and certain RJ Bank investments,
of $36 million as of September 30, 2020.
Other commitments
RJTCF sells investments in project partnerships to various LIHTC funds, which have third-party investors, and for which
RJTCF serves as the managing member or general partner. RJTCF typically sells investments in project partnerships to LIHTC
funds within 90 days of their acquisition. Until such investments are sold to LIHTC funds, RJTCF is responsible for funding
investment commitments to such partnerships. As of September 30, 2020, RJTCF had committed approximately $56 million to
project partnerships that had not yet been sold to LIHTC funds. Because we expect to sell these project partnerships to LIHTC
funds and the equity funding events arise over future periods, the contractual commitments are not expected to materially
impact our future liquidity requirements. RJTCF may also make short-term loans or advances to project partnerships and
LIHTC funds.
As a part of our fixed income public finance operations, we enter into forward commitments to purchase agency MBS. See
Note 2 for further discussion of these activities. At September 30, 2020, we had $443 million of principal amount of
outstanding forward MBS purchase commitments, which were expected to be purchased within 90 days following
commitment. In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the
commitment and the date of sale of the MBS, we enter into TBA security contracts with investors for generic MBS at specific
rates and prices to be delivered on settlement dates in the future. We may be subject to loss if the timing of, or the actual
amount of, the MBS differs significantly from the term and notional amount of the TBA security contract to which we entered.
These TBA securities and related purchase commitments are accounted for at fair value. As of September 30, 2020, the fair
value of the TBA securities and the estimated fair value of the purchase commitments were insignificant.
For information regarding our lease commitments, including the maturities of our lease liabilities, see Note 12.
Guarantees
Our U.S. broker-dealer subsidiaries are required by federal law to be members of the Securities Investors Protection
Corporation (“SIPC”). The SIPC fund provides protection up to $500 thousand per client for securities and cash held in client
accounts, including a limitation of $250 thousand on claims for cash balances. We have purchased excess SIPC coverage
through various syndicates of Lloyd’s of London. For RJ&A, our clearing broker-dealer, the additional protection currently
132
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
provided has an aggregate firm limit of $750 million for cash and securities, including a sub-limit of $1.9 million per client for
cash above basic SIPC. Account protection applies when a SIPC member fails financially and is unable to meet its obligations
to clients. This coverage does not protect against market fluctuations. RJF has provided an indemnity to Lloyd’s of London
against any and all losses they may incur associated with the excess SIPC policies.
We guarantee the debt of one of our private equity investments. The amount of such debt, including the undrawn portion of a
revolving credit facility, was $13 million as of September 30, 2020. The debt, which matures in 2022, is secured by
substantially all of the assets of the borrower.
Legal and regulatory matter contingencies
In addition to any matters that may be specifically described in the following sections, in the normal course of our business, we
have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other
litigation, arising in connection with our activities as a diversified financial services institution.
RJF and certain of its subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory
organizations. Reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures
to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business
activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time, among
other things, into industry practices, which can also result in the imposition of such sanctions.
We may contest liability and/or the amount of damages, as appropriate, in each pending matter. Over the last several years, the
level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies in the
financial services industry continues to be significant. There can be no assurance that material losses will not be incurred from
claims that have not yet been asserted or are not yet determined to be material.
For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss as we cannot predict if,
how or when such proceedings or investigations will be resolved or what the eventual settlement, fine, penalty or other relief, if
any, may be. A large number of factors may contribute to this inherent unpredictability: the proceeding is in its early stages; the
damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed
to proceed on that basis; the other party is seeking relief other than or in addition to compensatory damages (including, in the
case of regulatory and governmental proceedings, potential fines and penalties); the matters present significant legal
uncertainties; we have not engaged in settlement discussions; discovery is not complete; there are significant facts in dispute;
and numerous parties are named as defendants (including where it is uncertain how liability might be shared among
defendants). Subject to the foregoing, after consultation with counsel, we believe that the outcome of such litigation and
regulatory proceedings will not have a material adverse effect on our consolidated financial condition. However, the outcome
of such litigation and regulatory proceedings could be material to our operating results and cash flows for a particular future
period, depending on, among other things, our revenues or income for such period.
There are certain matters for which we are unable to estimate the upper end of the range of reasonably possible loss. With
respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss as of
September 30, 2020, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately $120
million in excess of the aggregate accruals for such matters. Refer to Note 2 for a discussion of our criteria for recognizing
liabilities for contingencies.
We may from time to time include in any descriptions of individual matters herein certain quantitative information about the
plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings. Although this information may provide
insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as
to any currently appropriate accrual related thereto.
133
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 18 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
All of the components of OCI, net of tax, were attributable to RJF. The following table presents the net change in AOCI as
well as the changes, and the related tax effects, of each component of AOCI.
$ in millions
Year ended September 30, 2020
Net
investment
hedges
Currency
translations
Subtotal: net
investment hedges
and currency
translations
Available-for-
sale securities
Cash flow
hedges
Total
AOCI as of beginning of year
$
110 $
(135) $
(25) $
21 $
(19) $
(23)
OCI:
OCI before reclassifications and taxes
Amounts reclassified from AOCI, before tax
Pre-tax net OCI
Income tax effect
OCI for the year, net of tax
AOCI as of end of year
Year ended September 30, 2019
AOCI as of beginning of year
Cumulative effect of adoption of ASU 2016-01
OCI:
OCI before reclassifications and taxes
Amounts reclassified from AOCI, before tax
Pre-tax net OCI
Income tax effect
OCI for the year, net of tax
$
$
7
—
7
(2)
5
(5)
—
(5)
—
(5)
2
—
2
(2)
—
94
(3)
91
(23)
68
(51)
5
(46)
12
(34)
115 $
(140) $
(25) $
89 $
(53) $
88 $
(111) $
(23) $
—
29
—
29
(7)
22
—
(24)
—
(24)
—
(24)
—
5
—
5
(7)
(2)
(46) $
(4)
42 $
—
98
—
98
(27)
71
(79)
(5)
(84)
23
(61)
AOCI as of end of year
$
110 $
(135) $
(25) $
21 $
(19) $
45
2
47
(13)
34
11
(27)
(4)
24
(5)
19
(11)
8
(23)
As of October 1, 2018, we adopted accounting guidance (ASU 2016-01) that generally requires changes in the fair value of
equity securities to be recorded in net income. Accordingly, as of the date of adoption, we reclassified a cumulative unrealized
gain on such securities, net of tax, from AOCI to retained earnings.
Reclassifications from AOCI to net income, excluding taxes, for the year ended September 30, 2020 were recorded in “Other”
revenue and “Interest expense” on the Consolidated Statements of Income and Comprehensive Income. Reclassifications from
AOCI to net income, excluding taxes, for the year ended September 30, 2019 were recorded in “Interest expense” on the
Consolidated Statements of Income and Comprehensive Income.
Our net investment hedges and cash flow hedges relate to our derivatives associated with RJ Bank’s business operations. See
Notes 2 and 5 for additional information on these derivatives.
134
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 19 - REVENUES
The following tables present our sources of revenues by segment. For further information about our significant accounting
policies related to revenue recognition, see Note 2. See Note 24 for additional information on our segment results.
$ in millions
Revenues:
Year ended September 30, 2020
Private Client
Group
Capital
Markets
Asset
Management
RJ Bank
Other and
intersegment
eliminations
Total
Asset management and related administrative fees
$
3,162 $
7 $
688 $
— $
(23) $
3,834
Brokerage revenues:
Securities commissions:
Mutual and other fund products
Insurance and annuity products
Equities, ETFs and fixed income products
Subtotal securities commissions
Principal transactions (1)
Total brokerage revenues
Account and services fees:
Mutual fund and annuity service fees
RJBDP fees
Client account and other fees
Total account and service fees
Investment banking:
Merger & acquisition and advisory
Equity underwriting
Debt underwriting
Total investment banking
Other:
Tax credit fund revenues
All other (1)
Total other
Total non-interest revenues
Interest income (1)
Total revenues
Interest expense
Net revenues
567
397
355
1,319
64
1,383
348
330
129
807
—
41
—
41
—
27
27
5,420
155
5,575
(23)
7
—
137
144
427
571
—
1
5
6
290
185
133
608
83
7
90
1,282
25
1,307
(16)
8
—
—
8
—
8
1
—
15
16
—
—
—
—
—
2
2
714
1
715
—
—
—
—
—
1
1
—
—
—
—
—
—
—
—
—
26
26
27
800
827
(62)
(3)
—
—
(3)
(4)
(7)
(1)
(181)
(23)
(205)
—
1
—
1
—
(41)
(41)
(275)
19
(256)
(77)
$
5,552 $
1,291 $
715 $
765 $
(333) $
579
397
492
1,468
488
1,956
348
150
126
624
290
227
133
650
83
21
104
7,168
1,000
8,168
(178)
7,990
(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.
135
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
$ in millions
Revenues:
Year ended September 30, 2019
Private Client
Group
Capital
Markets
Asset
Management
RJ Bank
Other and
intersegment
eliminations
Total
Asset management and related administrative fees
$
2,820 $
6 $
645 $
— $
(20) $
3,451
Brokerage revenues:
Securities commissions:
Mutual and other fund products
Insurance and annuity products
Equities, ETFs and fixed income products
Subtotal securities commissions
Principal transactions (1)
Total brokerage revenues
Account and services fees:
Mutual fund and annuity service fees
RJBDP fees
Client account and other fees
Total account and service fees
Investment banking:
Merger & acquisition and advisory
Equity underwriting
Debt underwriting
Total investment banking
Other:
Tax credit fund revenues
All other (1)
Total other
Total non-interest revenues
Interest income (1)
Total revenues
Interest expense
Net revenues
599
412
304
1,315
74
1,389
334
453
122
909
—
32
—
32
—
26
26
5,176
225
5,401
(42)
6
—
123
129
285
414
—
—
5
5
379
100
85
564
86
4
90
1,079
38
1,117
(34)
10
—
—
10
—
10
2
3
26
31
—
—
—
—
—
2
2
688
3
691
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
26
26
26
975
1,001
(155)
(4)
—
—
(4)
(2)
(6)
(10)
(176)
(21)
(207)
—
—
—
—
—
6
6
(227)
40
(187)
(52)
$
5,359 $
1,083 $
691 $
846 $
(239) $
611
412
427
1,450
357
1,807
326
280
132
738
379
132
85
596
86
64
150
6,742
1,281
8,023
(283)
7,740
(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.
136
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
$ in millions
Revenues:
Year ended September 30, 2018
Private Client
Group
Capital
Markets
Asset
Management
RJ Bank
Other and
intersegment
eliminations
Total
Asset management and related administrative fees
$
2,517 $
8 $
610 $
— $
(16) $
3,119
Brokerage revenues:
Securities commissions:
Mutual and other fund products
Insurance and annuity products
Equities, ETFs and fixed income products
Subtotal securities commissions
Principal transactions (1)
Total brokerage revenues
Account and services fees:
Mutual fund and annuity service fees
RJBDP fees
Client account and other fees
Total account and service fees
Investment banking:
Merger & acquisition and advisory
Equity underwriting
Debt underwriting
Total investment banking
Other:
Tax credit fund revenues
All other (1)
Total other
Total non-interest revenues
Interest income (1)
Total revenues
Interest expense
Net revenues
703
414
352
1,469
80
1,549
332
354
111
797
—
35
—
35
—
30
30
4,928
193
5,121
(28)
7
—
145
152
249
401
—
—
5
5
312
93
61
466
79
1
80
960
32
992
(28)
12
—
—
12
—
12
2
3
23
28
—
—
—
—
—
2
2
652
2
654
—
—
—
—
—
1
1
—
—
—
—
—
—
—
—
—
22
22
23
793
816
(89)
(5)
—
(2)
(7)
(1)
(8)
(9)
(92)
(16)
(117)
—
—
—
—
—
10
10
(131)
24
(107)
(57)
$
5,093 $
964 $
654 $
727 $
(164) $
717
414
495
1,626
329
1,955
325
265
123
713
312
128
61
501
79
65
144
6,432
1,044
7,476
(202)
7,274
(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.
At September 30, 2020 and September 30, 2019, net receivables related to contracts with customers were $342 million and
$347 million, respectively.
137
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 20 – INTEREST INCOME AND INTEREST EXPENSE
The following table details the components of interest income and interest expense.
$ in millions
Interest income:
Year ended September 30,
2020
2019
2018
Assets segregated pursuant to regulations
$
28 $
59 $
Trading instruments
Available-for-sale securities
Margin loans
Bank loans, net of unearned income and deferred expenses
Loans to financial advisors
Corporate cash and all other
Total interest income
Interest expense:
Bank deposits
Trading instruments sold but not yet purchased
Brokerage client payables
Other borrowings
Senior notes payable
Other
Total interest expense
Net interest income
Bank loan loss provision
1,000
1,281
1,044
20
83
84
702
20
63
26
69
122
871
18
116
41
3
11
20
85
18
178
822
(233)
132
7
21
21
73
29
283
998
(22)
53
23
52
107
722
15
72
66
7
15
22
73
19
202
842
(20)
822
Net interest income after bank loan loss provision
$
589 $
976 $
Interest expense related to bank deposits in the preceding table excludes interest expense associated with affiliate deposits,
which has been eliminated in consolidation.
NOTE 21 - SHARE-BASED AND OTHER COMPENSATION
Share-based compensation plans
We have one share-based compensation plan for our employees, Board of Directors and independent contractor financial
advisors. The Amended and Restated 2012 Stock Incentive Plan (the “2012 Plan”) authorizes us to grant 52.2 million new
shares, including the shares available for grant under six predecessor plans. As of September 30, 2020, 15.5 million shares
were available under the 2012 Plan. Generally, we reissue our treasury shares under the 2012 Plan; however, we are also
permitted to issue new shares. Our share-based compensation accounting policies are described in Note 2.
Stock options granted and outstanding to our employees and independent contractors as of September 30, 2020 and the related
expense for the years ended September 30, 2020, 2019 and 2018 were insignificant, as we generally ceased issuing stock
options in our fiscal third quarter of 2019 and have instead issued RSUs. Cash received from stock option exercises during the
year ended September 30, 2020 was $28 million.
RSU awards
We may grant awards under the 2012 Plan in connection with initial employment or under various retention programs for
individuals who are responsible for contributing to our management, growth, and/or profitability. Through our Canadian
subsidiary, we established the Restricted Stock Trust Fund, which we funded to enable the trust fund to acquire our common
stock in the open market to be used to settle RSUs granted as a retention vehicle for certain employees of our Canadian
subsidiaries. We may also grant awards to officers and certain other employees in lieu of cash for 10% to 50% of annual bonus
amounts in excess of $250,000. Under the plan, the awards are generally restricted for a three- to five-year period, during
which time the awards are forfeitable in the event of termination other than for death, disability or retirement.
We grant RSUs annually to non-employee members of our Board of Directors. The RSUs granted to these Directors vest over a
1-year period from their grant date or upon retirement from our Board.
138
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents the RSU award activity, which includes grants to employees and members of our Board of
Directors, for the year ended September 30, 2020.
Non-vested as of beginning of year
Granted
Vested
Forfeited
Non-vested as of end of year
Shares/Units
(in millions)
Weighted- average
grant date fair value
(per share)
5.0 $
1.7 $
(1.3) $
(0.1) $
5.3 $
74.08
87.30
66.48
82.08
80.15
The following table presents expense and income tax benefits related to our RSUs granted to our employees and members of
our Board of Directors for the periods indicated.
$ in millions
Total share-based expense
Income tax benefits related to share-based expense
Year ended September 30,
2020
2019
2018
$
$
110 $
25 $
101 $
23 $
89
23
For the year ended September 30, 2020, we realized $27 million of excess tax benefits related to our RSUs, which favorably
impacted income tax expense on our Consolidated Statements of Income and Comprehensive Income. See Note 16 for
additional information regarding income taxes.
As of September 30, 2020, there was $176 million of total pre-tax compensation costs not yet recognized (net of estimated
forfeitures) related to RSUs granted to employees and members of our Board of Directors. These costs are expected to be
recognized over a weighted-average period of approximately three years. The following RSU activity occurred for the periods
indicated.
$ in millions, except per unit award amounts
Weighted-average grant date fair value per unit award
Total fair value of shares and unit awards vested
Employee stock purchase plan
Year ended September 30,
2020
2019
2018
$
$
87.30 $
83 $
76.72 $
63 $
87.33
51
Under the 2003 Employee Stock Purchase Plan, we are authorized to issue up to 7.4 million shares of common stock to our full-
time employees, nearly all of whom are eligible to participate. Under the terms of the plan, share purchases in any calendar
year are limited to the lesser of 1,000 shares or shares with a fair value of $25,000. The purchase price of the stock is 85% of
the average high and low market price on the day prior to the purchase date. Under the plan, we sold approximately 466
thousand, 424 thousand and 336 thousand shares to employees during the years ended September 30, 2020, 2019 and 2018,
respectively. The compensation cost is calculated as the value of the 15% discount from market value and was $5 million for
each of the years ended September 30, 2020, 2019 and 2018.
Employee other compensation
Our profit sharing plan and employee stock ownership plan (“ESOP”) provide certain death, disability or retirement benefits for
all employees who meet certain service requirements. The plans are noncontributory. Our contributions, if any, are determined
annually by our Board of Directors on a discretionary basis and are recognized as compensation expense throughout the year.
Benefits become fully vested after five years of qualified service, at 65, or if a participant separates from service due to death or
disability.
All shares owned by the ESOP are included in earnings per share calculations. Cash dividends paid to the ESOP are reflected
as a reduction of retained earnings. The number of shares of our common stock held by the ESOP at September 30, 2020 and
2019 was 4.7 million and 4.6 million, respectively. The market value of our common stock held by the ESOP at September 30,
2020 was $341 million, of which $5 million was unearned (not yet vested) by ESOP plan participants.
We also offer a plan pursuant to section 401(k) of the Internal Revenue Code, which is a qualified plan that may provide for a
discretionary contribution or a matching contribution each year. Matching contributions are 75% of the first $1,000 and 25% of
the next $1,000 of eligible compensation deferred by each participant annually.
139
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Our LTIP is a non-qualified deferred compensation plan that provides benefits to employees who meet certain compensation or
production requirements. We have purchased and hold life insurance on the lives of certain current and former employee
participants to earn a competitive rate of return for participants and to provide the primary source of funds available to satisfy
our obligations under this plan. See Note 11 for information regarding the carrying value of these company-owned life
insurance policies.
Contributions to the qualified plans and the LTIP are approved annually by the Board of Directors or a committee thereof.
We have the VDCP, a non-qualified and voluntary opportunity for certain highly compensated employees to defer
compensation. Eligible participants may elect to defer a percentage or specific dollar amount of their compensation into the
VDCP. Company-owned life insurance is the primary source of funding for this plan.
Compensation expense associated with all of the qualified and non-qualified plans previously described totaled $149 million,
$162 million and $154 million for the fiscal years ended September 30, 2020, 2019 and 2018, respectively.
Non-employee other compensation
We offer non-qualified deferred compensation plans that provide benefits to our independent contractor financial advisors who
meet certain production requirements. Company-owned life insurance is the primary source of funding for this plan. The
contributions are made in amounts approved annually by management.
Certain independent contractor financial advisors are also eligible to participate in our VDCP. Eligible participants may elect to
defer a percentage or specific dollar amount of their compensation into the VDCP. Company-owned life insurance is the
primary source of funding for this plan.
140
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 22 – REGULATORY CAPITAL REQUIREMENTS
RJF, as a bank holding company and financial holding company, RJ Bank, Raymond James Trust, N.A. (“RJ Trust”) and our
broker-dealer subsidiaries are subject to capital requirements by various regulatory authorities. Capital levels of each entity are
monitored to ensure compliance with our various regulatory capital requirements. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken,
could have a direct material effect on our financial results.
As a bank holding company, RJF is subject to the risk-based capital requirements of the Fed. These risk-based capital
requirements are expressed as capital ratios that compare measures of regulatory capital to risk-weighted assets, which
incorporates quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory
guidelines. RJF’s and RJ Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators
about components, risk-weightings, and other factors.
RJF and RJ Bank are required to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), Tier 1 capital to average assets (as defined), and under rules defined under the
Basel III capital framework, Common equity Tier 1 capital (“CET1”) to risk-weighted assets. RJF and RJ Bank each calculate
these ratios under the Basel III standardized approach in order to assess compliance with both regulatory requirements and their
internal capital policies. In order to maintain our ability to take certain capital actions, including dividends and common equity
repurchases, and to make bonus payments, we must hold a capital conservation buffer above our minimum risk-based capital
requirements. As of September 30, 2020, both RJF’s and RJ Bank’s capital levels exceeded the capital conservation buffer
requirement and were each categorized as “well-capitalized.”
To meet requirements for capital adequacy purposes or to be categorized as “well-capitalized,” RJF must maintain minimum
CET1, Tier 1 capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the following table.
$ in millions
Amount
Ratio
Amount
Ratio
Amount
Ratio
Actual
Requirement for capital
adequacy purposes
To be well-capitalized under
regulatory provisions
RJF as of September 30, 2020:
CET1
Tier 1 capital
Total capital
Tier 1 leverage
RJF as of September 30, 2019:
CET1
Tier 1 capital
Total capital
Tier 1 leverage
$
$
$
$
$
$
$
$
6,490
6,490
6,804
6,490
5,971
5,971
6,207
5,971
24.2 % $
24.2 % $
25.4 % $
14.2 % $
24.8 % $
24.8 % $
25.8 % $
15.7 % $
1,208
1,610
2,147
1,824
1,085
1,446
1,928
1,525
4.5 % $
6.0 % $
8.0 % $
4.0 % $
4.5 % $
6.0 % $
8.0 % $
4.0 % $
1,744
2,147
2,684
2,280
1,567
1,928
2,410
1,906
6.5 %
8.0 %
10.0 %
5.0 %
6.5 %
8.0 %
10.0 %
5.0 %
RJF’s Tier 1 and Total capital ratios at September 30, 2020 decreased compared to September 30, 2019, due to an increase in
risk-weighted assets, partially offset by an increase in equity. The increase in risk-weighted assets was primarily due to growth
in cash and cash equivalents segregated pursuant to regulations, available-for-sale securities held at RJ Bank and the residential
loan portfolio, as well as the impact of higher market volatility on our market risk-weighted assets, partially offset by a decrease
in the C&I loan portfolio. The increase in equity reflected positive earnings during the year, net of share repurchases and
dividends. RJF’s Tier 1 leverage ratio at September 30, 2020 decreased compared to September 30, 2019, due to growth of
average assets, primarily cash, cash and cash equivalents segregated pursuant to regulations and available-for-sale securities
held at RJ Bank, partially offset by the aforementioned change in equity.
141
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
To meet the requirements for capital adequacy or to be categorized as “well-capitalized,” RJ Bank must maintain CET1, Tier 1
capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the following table.
$ in millions
Amount
Ratio
Amount
Ratio
Amount
Ratio
Actual
Requirement for capital
adequacy purposes
To be well-capitalized under
regulatory provisions
RJ Bank as of September 30, 2020:
CET1
Tier 1 capital
Total capital
Tier 1 leverage
RJ Bank as of September 30, 2019:
CET1
Tier 1 capital
Total capital
Tier 1 leverage
$
$
$
$
$
$
$
$
2,279
2,279
2,500
2,279
2,246
2,246
2,458
2,246
13.0 % $
13.0 % $
14.3 % $
7.7 % $
13.2 % $
13.2 % $
14.5 % $
8.8 % $
788
1,051
1,401
1,183
764
1,018
1,358
1,021
4.5 % $
6.0 % $
8.0 % $
4.0 % $
4.5 % $
6.0 % $
8.0 % $
4.0 % $
1,138
1,401
1,751
1,479
1,103
1,358
1,697
1,276
6.5 %
8.0 %
10.0 %
5.0 %
6.5 %
8.0 %
10.0 %
5.0 %
RJ Bank’s Tier 1 capital and Total capital ratios at September 30, 2020 decreased compared to September 30, 2019, primarily
due to the growth in available-for-sale securities and residential loans, net of decreases in C&I loans. RJ Bank’s Tier 1 leverage
ratio at September 30, 2020 decreased compared to September 30, 2019, due to the growth in average assets, primarily related
to available-for-sale securities.
Our intention is to maintain RJ Bank’s “well-capitalized” status. In the unlikely event that RJ Bank failed to maintain its “well-
capitalized” status, the consequences could include a requirement to obtain a waiver from the FDIC prior to acceptance,
renewal, or rollover of brokered deposits and higher FDIC premiums but would not significantly impact on our operations.
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.
Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under
the Securities Exchange Act of 1934. As a member firm of the Financial Industry Regulatory Authority (“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 balances. 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. The following table presents the net capital position of RJ&A.
$ in millions
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items
Net capital
Less: required net capital
Excess net capital
September 30,
2020
2019
$
$
48.0 %
1,245
(52)
1,193
$
$
39.7 %
1,056
(53)
1,003
As of September 30, 2020, RJ Trust, RJFS, RJ Ltd. and all of our other active regulated domestic and international subsidiaries
were in compliance with and exceeded all applicable capital requirements.
RJF expects to continue paying cash dividends. However, the payment and rate of dividends on our common stock are subject
to several factors including our operating results, financial and regulatory requirements or restrictions, and the availability of
funds from our subsidiaries, including our broker-dealer and bank subsidiaries, which may also be subject to restrictions under
regulatory capital rules. The availability of funds from subsidiaries may also be subject to restrictions contained in loan
covenants of certain broker-dealer loan agreements and restrictions by bank regulators on dividends to the parent from RJ Bank.
142
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 23 – EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per common share.
$ in millions, except per share amounts
Income for basic earnings per common share:
Net income
Less allocation of earnings and dividends to participating securities
Net income attributable to RJF common shareholders
Income for diluted earnings per common share:
Net income
Less allocation of earnings and dividends to participating securities
Net income attributable to RJF common shareholders
Common shares:
Average common shares in basic computation
Dilutive effect of outstanding stock options and certain RSUs
Average common shares used in diluted computation
Earnings per common share:
Basic
Diluted
Stock options and certain RSUs excluded from weighted-average diluted common shares
because their effect would be antidilutive
Year ended September 30,
2020
2019
2018
$
$
$
$
$
$
818 $
(1)
817 $
818 $
(1)
817 $
137.6
2.6
140.2
1,034 $
(2)
1,032 $
1,034 $
(2)
1,032 $
141.0
3.0
144.0
5.94 $
5.83 $
7.32 $
7.17 $
1.6
0.4
857
(1)
856
857
(1)
856
145.3
3.5
148.8
5.89
5.75
0.5
The allocation of earnings and dividends to participating securities in the preceding table represents dividends paid during the
year to participating securities plus an allocation of undistributed earnings to participating securities. Participating securities
represent unvested restricted stock and certain RSUs. Participating securities and related dividends paid on these participating
securities were insignificant for the years ended September 30, 2020, 2019 and 2018. Undistributed earnings are allocated to
participating securities based upon their right to share in earnings if all earnings for the period had been distributed.
Dividends per common share declared and paid are detailed in the following table for each respective period.
Dividends per common share - declared
Dividends per common share - paid
Year ended September 30,
2020
2019
2018
$
$
1.48 $
1.45 $
1.36 $
1.32 $
1.10
1.02
143
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 24 – SEGMENT INFORMATION
We currently operate through the following five segments: PCG; Capital Markets; Asset Management; RJ Bank; and Other.
The segments are determined based upon factors such as the services provided and the distribution channels served and are
consistent with how we assess performance and determine how to allocate our resources. The financial results of our segments
are presented using the same policies as those described in Note 2. Segment results include allocations of most corporate
overhead and benefits expenses to each segment. Refer to the following discussion of the Other segment for a description of
the corporate expenses that are not allocated to segments. Intersegment revenues, expenses, receivables and payables are
eliminated upon consolidation.
The PCG segment provides financial planning, investment advisory and securities transaction services through a branch office
network throughout the U.S., Canada and the United Kingdom. The PCG segment includes revenues from securities
transaction services, including the sale of equities, mutual funds, fixed income products, and insurance and annuity products to
retail clients. In addition, this segment includes revenues from investment advisory services for which we charge either a fee
computed as a percentage of assets in a client’s account or a flat period fee. The segment includes servicing fee revenues from
mutual fund and annuity companies whose products we distribute and from banks to which we sweep clients’ cash in the
RJBDP, our multi-bank sweep program. The segment also includes net interest earnings primarily on client margin loans and
cash balances.
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 primarily conduct these activities in the U.S.,
Canada and Europe.
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 a portion of
our fee-based assets under administration for our PCG clients through our Asset Management Services division and through RJ
Trust. This segment also provides asset management services through Carillon Tower Advisers and affiliates (collectively,
“Carillon Tower Advisers”) for certain retail accounts managed on behalf of third-party institutions, institutional accounts and
proprietary mutual funds that we manage.
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
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.
The Other segment includes the results of our private equity investments, interest income on certain corporate cash balances,
and certain corporate overhead costs of RJF that are not allocated to operating segments, including the interest costs on our
public debt. The Other segment also includes expenses related to our reduction in workforce during the fiscal fourth quarter of
2020.
144
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following tables present information concerning operations in these segments.
$ in millions
Net revenues:
Private Client Group
Capital Markets
Asset Management
RJ Bank
Other
Intersegment eliminations
Total net revenues
Pre-tax income/(loss):
Private Client Group
Capital Markets (1)
Asset Management
RJ Bank
Other (2)
Total pre-tax income
Year ended September 30,
2020
2019
2018
$
$
$
5,552 $
1,291
5,359 $
1,083
715
765
(82)
(251)
7,990 $
691
846
5
(244)
7,740 $
539 $
579 $
225
284
196
(192)
110
253
515
(82)
5,093
964
654
727
(15)
(149)
7,274
576
91
235
492
(83)
$
1,052 $
1,375 $
1,311
(1) The year ended September 30, 2020 includes a $7 million loss related to the pending disposition of our interests in certain entities that operate
predominantly in France. The year ended September 30, 2019 includes a $15 million loss on the sale of our operations related to research, sales and
trading of European equities, as well as a $19 million goodwill impairment charge related to our Canadian Capital Markets business.
(2) The year ended September 30, 2020 includes reduction in workforce expenses of $46 million associated with position eliminations that occurred in our
fiscal fourth quarter of 2020 in response to the economic environment. These expenses primarily consist of severance and related payroll expenses, as
well as expenses related to company-paid benefits.
No individual client accounted for more than ten percent of revenues in any of the years presented.
The following table presents our net income on a segment basis.
$ in millions
Net interest income/(expense):
Private Client Group
Capital Markets
Asset Management
RJ Bank
Other and intersegment eliminations
Net interest income
The following table presents our total assets on a segment basis.
$ in millions
Total assets:
Private Client Group
Capital Markets
Asset Management
RJ Bank
Other
Total
Year ended September 30,
2020
2019
2018
$
132 $
183 $
9
1
738
(58)
4
3
820
(12)
$
822 $
998 $
September 30,
2020
2019
$
$
12,574 $
2,336
380
30,356
1,836
47,482 $
165
4
2
704
(33)
842
9,042
2,287
401
25,516
1,584
38,830
145
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents goodwill, which was included in our total assets, on a segment basis.
$ in millions
Goodwill:
Private Client Group
Capital Markets
Asset Management
Total
September 30,
2020
2019
$
$
277 $
120
69
466 $
275
120
69
464
We have operations in the U.S., Canada and Europe. Substantially all long-lived assets are located in the U.S. The following
table presents our net revenues and pre-tax income classified by major geographic area in which they were earned.
$ in millions
Net revenues:
U.S.
Canada
Europe
Total
Pre-tax income/(loss):
U.S.
Canada
Europe (1)
Total
Year ended September 30,
2020
2019
2018
$
$
$
$
7,446 $
7,211 $
386
158
391
138
7,990 $
7,740 $
6,754
381
139
7,274
1,028 $
1,356 $
1,269
29
(5)
29
(10)
47
(5)
1,052 $
1,375 $
1,311
(1) The pre-tax loss in Europe for the year ended September 30, 2020 reflects a $7 million loss related to the pending disposition of our interests in certain
entities that operate predominantly in France. The pre-tax loss in Europe for the year ended September 30, 2019 reflects a $15 million loss on the sale of
our operations related to research, sales and trading of European equities. These losses were recorded in our Capital Markets segment.
The following table presents our total assets by major geographic area in which they were held.
$ in millions
Total assets:
U.S.
Canada
Europe
Total
September 30,
2020
2019
$
$
44,090 $
3,260
132
47,482 $
35,978
2,754
98
38,830
The following table presents goodwill, which was included in our total assets, classified by major geographic area in which it
was held.
$ in millions
Goodwill:
U.S.
Canada
Europe
Total
September 30,
2020
2019
$
$
433 $
24
9
466 $
433
23
8
464
During the year ended September 30, 2019, we recognized an impairment charge of $19 million related to our Canadian Capital
Markets business. See Note 10 for a discussion of our goodwill impairment testing.
NOTE 25 – CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
As more fully described in Note 1, RJF (or the “Parent”) is a financial holding company whose subsidiaries are engaged in
various financial services activities. The Parent’s primary activities include investments in subsidiaries and corporate
investments, including cash management, company-owned life insurance policies and private equity investments. The primary
source of operating cash available to the Parent is provided by dividends from its subsidiaries.
146
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
RJ&A, our principal domestic broker-dealer subsidiary of the Parent, is required by regulations to maintain a minimum amount
of net capital. Other broker-dealer, non-bank subsidiaries of the Parent are also required by regulations to maintain a minimum
amount of net capital, but the net capital requirements of those other subsidiaries are much less significant. RJ&A is further
required by certain covenants in its borrowing agreements to maintain minimum net capital equal to 10% of aggregate debit
balances. At September 30, 2020, each of these broker-dealer subsidiaries exceeded their minimum net capital requirements
(see Note 22 for further information).
Net assets of approximately $3.30 billion as of September 30, 2020 were restricted under regulatory or other restrictions from
being transferred from certain subsidiaries to the Parent without prior approval of the respective entities’ regulator.
Cash and cash equivalents of $2.16 billion and $1.35 billion as of September 30, 2020 and 2019, respectively, were held
directly by RJF in depository accounts at third-party financial institutions, held in depository accounts at RJ Bank, or were
otherwise invested by one of our subsidiaries on behalf of RJF. The amount held in depository accounts at RJ Bank was $185
million as of September 30, 2020, of which $108 million was available on demand without restriction. As of September 30,
2019, $163 million was held in depository accounts at RJ Bank, of which $107 million was available on demand without
restriction.
See Notes 14, 15, 17 and 22 for more information regarding borrowings, commitments, contingencies and guarantees, and
regulatory capital requirements of the Parent and its subsidiaries.
The following table presents the Parent’s statements of financial condition.
$ in millions
Assets:
Cash and cash equivalents
Assets segregated pursuant to regulations
Intercompany receivables from subsidiaries (primarily non-bank subsidiaries)
Investments in consolidated subsidiaries:
Bank subsidiary
Non-bank subsidiaries
Property and equipment, net
Goodwill and identifiable intangible assets, net
Other assets
Total assets
Liabilities and equity:
Accrued compensation and benefits
Intercompany payables to subsidiaries:
Bank subsidiary
Non-bank subsidiaries
Other payables
Senior notes payable
Total liabilities
Equity
September 30,
2020
2019
$
478 $
$
$
78
1,903
2,315
4,306
14
32
804
9,930 $
596 $
21
28
126
2,045
2,816
7,114
Total liabilities and equity
$
9,930 $
540
57
1,143
2,248
4,093
14
32
728
8,855
514
—
119
91
1,550
2,274
6,581
8,855
Of the total intercompany receivable from non-bank subsidiaries, $1.70 billion and $827 million at September 30, 2020 and
2019, respectively, was invested in cash and cash equivalents by the subsidiary on behalf of the Parent.
147
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents the Parent’s statements of income.
$ in millions
Revenues:
Dividends from non-bank subsidiaries
Dividends from bank subsidiary
Interest from subsidiaries
Interest income
Other
Total revenues
Interest expense
Net revenues
Non-interest expenses:
Compensation and benefits (1)
Non-compensations expenses:
Communications and information processing
Occupancy and equipment
Business development
Other
Intercompany allocations and charges
Total non-compensation expenses
Total non-interest expenses
Pre-tax income before equity in undistributed net income of subsidiaries
Income tax benefit
Income before equity in undistributed net income of subsidiaries
Equity in undistributed net income of subsidiaries
Year ended September 30,
2020
2019
2018
$
634 $
632 $
130
18
3
23
808
(87)
721
63
6
1
18
23
(16)
32
95
626
(58)
684
134
190
31
7
20
880
(75)
805
73
8
1
20
16
(24)
21
94
711
(31)
742
292
Net income
$
818 $
1,034 $
225
130
25
4
20
404
(74)
330
68
9
1
20
17
(32)
15
83
247
(12)
259
598
857
(1) The year ended September 30, 2020 includes the portion of the reduction in workforce expenses incurred during the fiscal fourth quarter of 2020 that
relates to the Parent.
148
Year ended September 30,
2020
2019
2018
$
818 $
1,034 $
857
4
(50)
(134)
102
—
126
24
(70)
24
73
917
(106)
(885)
9
(55)
(1,037)
—
—
494
62
(272)
(205)
79
(41)
596
4
(5)
(292)
100
—
(51)
(16)
(22)
(1)
34
785
(24)
63
3
(44)
(2)
300
(300)
—
65
(778)
(191)
(904)
(121)
717
555 $
596 $
478 $
77
555 $
540 $
56
596 $
72 $
32 $
78 $
42 $
1
(37)
(598)
114
(1)
6
49
88
13
66
558
(205)
4
12
(70)
(259)
300
(300)
—
63
(62)
(151)
(150)
149
568
717
695
22
717
78
163
— $
(43) $
—
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table presents the Parent’s statements of cash flows.
$ in millions
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on investments
Unrealized gain on company-owned life insurance policies, net of expenses
Equity in undistributed net income of subsidiaries
Other
Net change in:
Assets segregated pursuant to regulations
Intercompany receivables
Other assets
Intercompany payables
Other payables
Accrued compensation and benefits
Net cash provided by operating activities
Cash flows from investing activities:
Investments in subsidiaries
(Advances to)/repayments from subsidiaries, net
Proceeds from sales of investments
Purchase of investments in company-owned life insurance policies, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from borrowing on the RJF Credit Facility
Repayment of borrowings on the RJF Credit Facility
Proceeds from senior note issuances, net of debt issuance costs paid
Exercise of stock options and employee stock purchases
Purchase of treasury stock
Dividends on common stock
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash, cash equivalents, and cash segregated pursuant to regulations at beginning of year
Cash, cash equivalents, and cash segregated pursuant to regulations at end of year
Cash and cash equivalents
Cash segregated pursuant to regulations
Total cash, cash equivalents, and cash segregated pursuant to regulations at end of year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income taxes, net
Supplemental disclosures of noncash activity:
Investments in subsidiaries, net
$
$
$
$
$
$
149
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
SUPPLEMENTARY DATA:
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
Fiscal Year 2020
in millions, except per share amounts
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Net revenues
Non-interest expenses
Pre-tax income
Net income
Earnings per common share - basic
Earnings per common share - diluted
Dividends per common share - declared
in millions, except per share amounts
Net revenues
Non-interest expenses
Pre-tax income
Net income
Earnings per common share - basic
Earnings per common share - diluted
Dividends per common share - declared
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,009 $
1,650 $
359 $
268 $
1.93 $
1.89 $
0.37 $
2,068 $
1,829 $
239 $
169 $
1.22 $
1.20 $
0.37 $
Fiscal Year 2019
1,834 $
1,636 $
198 $
172 $
1.25 $
1.23 $
0.37 $
2,079
1,823
256
209
1.53
1.50
0.37
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
1,931 $
1,599 $
332 $
249 $
1.73 $
1.69 $
0.34 $
1,859 $
1,512 $
347 $
261 $
1.85 $
1.81 $
0.34 $
1,927 $
1,585 $
342 $
259 $
1.84 $
1.80 $
0.34 $
2,023
1,669
354
265
1.90
1.86
0.34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls are procedures designed to ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934, such as this report, are recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated
and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Securities Exchange Act of
1934 Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the year ended September 30, 2020 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal
control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting
for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over
financial reporting includes maintaining records that, in reasonable detail, accurately and fairly reflect our transactions;
providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing
150
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
reasonable assurance that receipts and expenditures of our assets are made in accordance with management authorization; and
providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect
on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements
would be prevented or detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013) issued by COSO. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of September 30, 2020. KPMG LLP, who audited
and reported on our consolidated financial statements included in this report, has issued an attestation report on our internal
control over financial reporting as of September 30, 2020 (included as follows).
151
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Raymond James Financial, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Raymond James Financial, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
September 30, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial condition of the Company as of September 30, 2020 and 2019, the related
consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for each of the
years in the three-year period ended September 30, 2020, and the related notes (collectively, the consolidated financial
statements), and our report dated November 24, 2020 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of
Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Tampa, Florida
November 24, 2020
152
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
A list of our executive officers appears in Part I, Item 1 of this report. The balance of the information required by Item 10 is
incorporated herein by reference to the registrant’s definitive proxy statement for the 2021 Annual Meeting of Shareholders
which will be filed with the SEC no later than 120 days after the close of the fiscal year ended September 30, 2020.
ITEMS 11, 12, 13 and 14.
The information required by Items 11, 12, 13 and 14 is incorporated herein by reference to the registrant’s definitive proxy
statement for the 2021 Annual Meeting of Shareholders which will be filed with the SEC no later than 120 days after the close
of the fiscal year ended September 30, 2020.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Schedules
PART IV
The financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules
have been omitted since they are either not required, not applicable, or the information is otherwise included.
(b) Exhibit listing
See below and continued on the following pages.
Exhibit
Number
3.1
3.2
4.1
4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
4.2.6
10.1
10.2
Description
Restated Articles of Incorporation of Raymond James Financial, Inc. as filed with the Secretary of State of Florida on November 25,
2008, incorporated by reference to Exhibit 3(i).1 to the Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on November 28, 2008.
Amended and Restated By-Laws of Raymond James Financial, Inc., reflecting amendments adopted by the Board of Directors on
November 30, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on December 5, 2017.
Description of Capital Stock, incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on November 26, 2019.
Indenture, dated as of August 10, 2009 for Senior Debt Securities, between Raymond James Financial, Inc. and The Bank of New
York Mellon Trust Company, N.A., incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed
with the Securities and Exchange Commission on August 10, 2009.
Fourth Supplemental Indenture, dated as of March 26, 2012, for the 5.625% Senior Notes Due 2024, between Raymond James
Financial, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 26, 2012.
Fifth Supplemental Indenture, dated as of July 12, 2016, for the 3.625% Senior Notes Due 2026, between Raymond James Financial,
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Company’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 12, 2016.
Sixth Supplemental Indenture, dated as of July 12, 2016, for the 4.950% Senior Notes Due 2046, between Raymond James Financial,
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.2 to the Company’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 12, 2016.
Sixth (Reopening) Supplemental Indenture, dated as of May 10, 2017, for the 4.950% Senior Notes due 2046, between Raymond
James Financial, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1
to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 10, 2017.
Seventh Supplemental Indenture, dated as of March 31, 2020, for the 4.650% Senior Notes due 2030, between Raymond James
Financial, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.2 to the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 31, 2020.
* Raymond James Financial, Inc. 2002 Incentive Stock Option Plan, effective February 14, 2002, incorporated by reference to Exhibit
4.1 to the Company’s Registration Statement on Form S-8, No. 333-98537, filed with the Securities and Exchange Commission on
August 22, 2002.
Mortgage Agreement, dated as of December 13, 2002, incorporated by reference to Exhibit 10.10 to the Company’s Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on December 23, 2002.
153
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Exhibit
Number
Description
10.3
10.4
* Composite Version of 2005 Raymond James Financial, Inc. Restricted Stock Plan (as amended on December 10, 2010), incorporated
by reference to Appendix A to the Company’s Definitive Proxy Statement for the Annual Meeting of Shareholders held February 24,
2011, filed with the Securities and Exchange Commission on January 18, 2011.
Stock Purchase Agreement, dated January 11, 2012, between Raymond James Financial, Inc. and Regions Financial Corporation
(excluding certain exhibits and schedules), incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-
K, filed with the Securities and Exchange Commission on January 12, 2012.
10.5.1
* Raymond James Financial, Inc. Amended and Restated 2012 Stock Incentive Plan (as amended through February 20, 2020),
incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on February 24, 2020.
10.5.2
* Form of Restricted Stock Unit Agreement for Non-Employee Director under 2012 Stock Incentive Plan, incorporated by reference to
Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 9,
2012.
10.5.3
* Form of Stock Option Agreement under 2012 Stock Incentive Plan, as revised and approved on August 21, 2013, incorporated by
reference to Exhibit 10.16.3 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on
November 26, 2013.
10.5.4
* Form of Restricted Stock Unit Agreement for Non-Bonus Award (Employee/Independent Contractor) under 2012 Stock Incentive
Plan, as revised and approved on August 21, 2013, incorporated by reference to Exhibit 10.16.4 to the Company’s Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on November 26, 2013.
10.5.5
* Form of Stock Option Agreement under 2012 Stock Incentive Plan, as revised and approved on November 20, 2013, incorporated by
reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on
February 7, 2014.
10.5.6
* Form of Restricted Stock Unit Agreement for Non-Bonus Award under 2012 Stock Incentive Plan, as revised and approved on
November 20, 2013, incorporated by reference to Exhibit 10.24 to the Company’s Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission on February 7, 2014.
10.5.7
10.5.8
Raymond James Financial, Inc. 2012 Stock Incentive Plan Sub-Plan for French Employees with Form of Restricted Stock Unit
Agreement, adopted and approved on February 20, 2014, incorporated by reference to Exhibit 10.16.9 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on May 9, 2014.
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting), as revised and approved
on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 8, 2018.
10.5.9
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting), as revised and
approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.2 to
the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 8, 2018.
10.5.10
* Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award, as revised and approved on May 17, 2017,
under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on February 8, 2018.
10.5.11
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting) for Canadian Employees,
as revised and approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to
Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 8,
2018.
10.5.12
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting) for Canadian
Employees, as revised and approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by
reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on
February 8, 2018.
10.5.13
* Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award for Canadian Employees, as revised and
approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.6 to
the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 8, 2018.
10.5.14
* Form of Award Agreement for Grant of Retention RSUs to Mr. Paul C. Reilly, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 1, 2018.
10.5.15
* Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award for Mr. Paul C. Reilly, first used for awards
granted on November 29, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 6, 2018.
10.5.16
10.5.17
10.5.18
10.5.19
* Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award for Canadian Employees, first used for awards
granted on November 29, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 6, 2018.
* Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award, first used for awards granted on November 29,
2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 6, 2018.
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting) for Mr. Paul C. Reilly,
first used for awards granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
December 20, 2018.
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting) for Canadian Employees,
first used for awards granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
December 20, 2018.
154
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Exhibit
Number
Description
10.5.20
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting), first used for awards
granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 20, 2018.
10.5.21
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting) for Mr. Paul C.
Reilly, first used for awards granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan,
incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on December 20, 2018.
10.5.22
10.5.23
10.6
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting) for Canadian
Employees, first used for awards granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan,
incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on December 20, 2018.
* Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting), first used for
awards granted on December 14, 2018, under the Amended and Restated 2012 Stock Incentive Plan, incorporated by reference to
Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 20,
2018.
* Amended and Restated Raymond James Financial Long-Term Incentive Plan, effective August 22, 2018, incorporated by reference
to Exhibit 10.9 to the Company’s Annual Report on Form 10-K, filed with the Securities Exchange Commission on November 21,
2018.
10.7
* Raymond James Financial, Inc. Amended and Restated Voluntary Deferred Compensation Plan, effective May 17, 2017,
incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed with the Securities Exchange
Commission on November 21, 2018.
10.8
10.9.1
10.9.2
10.9.3
* Amended and Restated Raymond James Financial, Inc. 2003 Employee Stock Purchase Plan, incorporated by reference to Appendix
A to the Company’s Definitive Proxy Statement for the Annual Meeting of Shareholders held February 28, 2019, filed with the
Securities and Exchange Commission on January 17, 2019.
Credit Agreement, dated as of February 19, 2019, among Raymond James Financial, Inc., Raymond James & Associates, Inc., the
Lenders party thereto and Bank of America, N.A., incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K, filed with the Securities and Exchange Commission on February 22, 2019.
First Amendment to Credit Agreement, dated as of May 23, 2019, among Raymond James Financial, Inc., Raymond James &
Associates, Inc., the Lenders party thereto and Bank of America, N.A., incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 8, 2019.
Second Amendment to Credit Agreement, dated as of May 27, 2020, among Raymond James Financial, Inc., Raymond James &
Associates, Inc., the Lenders party thereto and Bank of America, N.A., incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 7, 2020.
10.10
* Amended and Restated Form of Director and Officer Indemnification Agreement, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 6, 2019.
21
23
31.1
31.2
32
List of Subsidiaries.
Consent of Independent Registered Public Accounting Firm.
Certification of Paul C. Reilly pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Paul M. Shoukry pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Paul C. Reilly and Paul M. Shoukry pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
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* Indicates a management contract or compensatory plan or arrangement in which a director or executive officer participates.
155
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Petersburg, State of Florida, on
the 24th day of November, 2020.
RAYMOND JAMES FINANCIAL, INC.
By: /s/ PAUL C. REILLY
Paul C. Reilly, Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
/s/ PAUL C. REILLY
Paul C. Reilly
Title
Chairman and Chief Executive Officer (Principal Executive Officer)
and Director
Date
November 24, 2020
/s/ PAUL M. SHOUKRY
Chief Financial Officer and Treasurer (Principal Financial Officer)
November 24, 2020
Paul M. Shoukry
/s/ JONATHAN W. OORLOG, JR.
Senior Vice President and Controller (Principal Accounting Officer)
November 24, 2020
Jonathan W. Oorlog, Jr.
/s/ THOMAS A. JAMES
Thomas A. James
Chairman Emeritus and Director
November 24, 2020
/s/ CHARLES G. VON ARENTSCHILDT
Director
Charles G. von Arentschildt
/s/ ROBERT M. DUTKOWSKY
Director
Robert M. Dutkowsky
/s/ JEFFREY N. EDWARDS
Director
Jeffrey N. Edwards
/s/ BENJAMIN C. ESTY
Benjamin C. Esty
/s/ ANNE GATES
Anne Gates
Director
Director
November 24, 2020
November 24, 2020
November 24, 2020
November 24, 2020
November 24, 2020
/s/ FRANCIS S. GODBOLD
Vice Chairman and Director
November 24, 2020
Francis S. Godbold
/s/ GORDON L. JOHNSON
Director
Gordon L. Johnson
/s/ RODERICK C. MCGEARY
Director
Roderick C. McGeary
/s/ RAJ SESHADRI
Raj Seshadri
/s/ SUSAN N. STORY
Susan N. Story
Director
Director
156
November 24, 2020
November 24, 2020
November 24, 2020
November 24, 2020
EXHIBIT 21
RAYMOND JAMES FINANCIAL, INC.
LIST OF SUBSIDIARIES
The following listing includes all of the registrant's subsidiaries as of September 30, 2020, which are included in the
consolidated financial statements:
Entity Name
State/Country of
Incorporation
Subsidiary or Joint Venture of
740780 Carillon, LLC
800 Carillon, LLC
Carillon Fund Distributors, Inc.
Carillon Fund Services, Inc.
Carillon Tower Advisers, Inc.
ClariVest Asset Management, LLC
Cougar Global ETF Portfolio Management Inc.
Cougar Global Investments Limited
Eagle Asset Management, Inc.
EB Management I, LLC
Gateway Institutional Tax Credit Fund II, Ltd
MK Holding, Inc.
MK Investment Management, Inc.
Morgan Keegan & Associates, LLC
Morgan Keegan & Company, LLC
Florida
Florida
Florida
Florida
Florida
Delaware
Delaware
Ontario
Florida
Florida
Florida
Alabama
Delaware
Delaware
Tennessee
Raymond James Financial, Inc.
Raymond James Financial, Inc.
Eagle Asset Management, Inc.
Carillon Tower Advisers, Inc.
Raymond James Financial, Inc.
Eagle Asset Management, Inc.
Cougar Global Investments Limited
Raymond James International Canada, Inc.
Carillon Tower Advisers, Inc.
Eagle Asset Management, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Financial, Inc.
MK Holding, Inc.
MK Holding, Inc.
Raymond James Financial, Inc.
Morgan Keegan Private Equity Employee Fund of Funds II, LP
Delaware
MK Investment Management, Inc.
Morgan Keegan Private Equity Fund of Funds II, LP
Morgan Keegan Private Equity Fund of Funds II Blocker, LLC
Delaware
Delaware
Morgan Keegan Private Equity Fund of Funds II Holdings, LP
Delaware
Morgan Keegan Private Equity QP Fund of Funds II, LP
Morgan Properties, LLC
Native American Housing Fund III, L.L.C.
Native American Housing Fund IV, L.L.C.
Native American Housing Fund V, L.L.C.
Raymond James & Associates, Inc.
Raymond James (USA) Ltd.
Raymond James Affordable Housing Fund 1 LP
Raymond James Affordable Housing Fund 2 LP
Raymond James Affordable Housing Fund 3 LP
Raymond James Affordable Housing Fund 4 LLC
Raymond James Affordable Housing Fund 5 LLC
Raymond James Affordable Housing Fund 6 LLC
Raymond James Affordable Housing Fund 7 LLC
Raymond James Affordable Housing Fund 8 LLC
Raymond James Affordable Housing Fund 9 LLC
Raymond James Affordable Housing Fund 10 LLC
Raymond James Asset Management International, S.A.
Raymond James Bank, National Association
Delaware
Tennessee
Delaware
Delaware
Delaware
Florida
Canada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
France
U.S.A.
MK Investment Management, Inc.
Morgan Keegan Private Equity QP Fund of Funds II, LP;
Morgan Keegan Private Equity Fund of Funds II, LP;
Morgan Keegan Private Equity Employee Fund of Funds II,
LP
Morgan Keegan Private Equity QP Fund of Funds II, LP;
Morgan Keegan Private Equity Fund of Funds II, LP;
Morgan Keegan Private Equity Employee Fund of Funds II,
LP; Morgan Keegan Private Equity Fund of Funds II
Blocker, LLC
MK Investment Management, Inc.
Raymond James Investments, LLC
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Financial, Inc.
Raymond James Ltd.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James International Holdings, Inc.
Raymond James Financial, Inc.
Raymond James California Housing Opportunities Fund IX L.L.C. Florida
Raymond James Tax Credit Funds, Inc.
Raymond James Canada, LLC
Raymond James Canadian Acquisition, Inc.
Raymond James Canadian Holdings, LLC
Raymond James Capital Inc.
Raymond James Financial, Inc.
Raymond James Bank, National Association
Raymond James Canadian Acquisition, Inc.
Raymond James Financial, Inc.
Florida
Florida
Florida
Delaware
157
Entity Name
Raymond James Capital Funding, Inc.
Raymond James Capital Services, LLC
Raymond James Community Reinvestment Fund 1, LLC
Raymond James Corporate Finance GmbH
Raymond James Development Tax Credit Fund LLC
Raymond James Euro Equities SAS
Raymond James European Holdings, Inc.
Raymond James European Securities S.A.S.
Raymond James Finance Company of Canada, Ltd.
Raymond James Financial International Limited
Raymond James Financial Management Ltd.
Raymond James Financial Planning Ltd.
Raymond James Financial Products, Inc.
Raymond James Financial Services Advisors, Inc.
Raymond James Financial Services, Inc.
Raymond James Global Holdings Limited
Raymond James Insurance Group, Inc.
Raymond James International Canada, Inc.
Raymond James International Holdings, Inc.
Raymond James Investment Counsel Ltd.
Raymond James Investments, LLC
Raymond James Investment Services Limited
Raymond James Ltd.
Raymond James Management, LLC
Raymond James Management-Forensics, LLC
Raymond James Mortgage Company, Inc.
Raymond James Multifamily Finance, Inc.
Raymond James Municipal Products, Inc.
Raymond James Preservation Opportunities Fund III L.L.C.
Raymond James Preservation Opportunities Fund XX L.L.C.
Raymond James Research Services, LLC
Raymond James South American Holdings, Inc.
Raymond James Structured Products, Inc.
Raymond James Tax Credit Fund 34 L.L.C.
Raymond James Tax Credit Fund XI L.L.C.
Raymond James Tax Credit Fund XX L.L.C.
Raymond James Tax Credit Fund XXIII L.L.C.
Raymond James Tax Credit Funds, Inc.
Raymond James Trust, National Association
Raymond James Trust (Canada)
Raymond James Trust (Quebec) Ltd.
Raymond James Yatirim Menkul Kiymetler A.S.
RJ Capital Services, Inc.
RJ Economic Development Fund, Inc.
RJ Securities, Inc.
RJA Structured Finance, Inc.
RJC Forensics, LLC
RJOZF 2 L.L.C.
RJTCF Disposition Corporation
RJTCF Disposition Fund, LLC
Scout Investments, Inc.
Silver Lane Advisors LLC
SLA Acquisition Co.
State/Country of
Incorporation
Florida
Delaware
Florida
Germany
Delaware
France
Florida
France
Canada
U.K.
Canada
Subsidiary or Joint Venture of
Raymond James Bank, National Association
MK Holding, Inc.
Raymond James Bank, National Association
Raymond James Global Holdings Limited
Raymond James Tax Credit Funds, Inc.
Raymond James European Securities S.A.S.
Raymond James International Holdings, Inc.
Raymond James International Holdings, Inc.
Raymond James Canadian Holdings, LLC
Raymond James International Holdings, Inc.
Raymond James Ltd.
British Columbia
Raymond James Ltd.
Tennessee
MK Holding, Inc.
Raymond James Financial, Inc.
Raymond James Financial, Inc.
Raymond James International Holdings, Inc
Raymond James Financial, Inc.
Raymond James International Holdings, Inc.
Raymond James Financial, Inc.
Raymond James Ltd.
Raymond James Financial, Inc.
Raymond James Financial, Inc.
Raymond James Canada, LLC
Raymond James Investments, LLC
Raymond James Investments, LLC
MK Holding, Inc.
Raymond James Tax Credit Funds, Inc.
MK Holding, Inc.
Raymond James Multifamily Finance, Inc.
Raymond James Multifamily Finance, Inc.
Raymond James Financial, Inc.
Raymond James International Holdings, Inc.
MK Holding, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Financial, Inc.
Raymond James Financial, Inc.
Raymond James Ltd.
Raymond James Ltd.
Raymond James European Holdings, Inc.
Raymond James Financial, Inc.
Raymond James Financial, Inc.
Raymond James Investments, LLC
Raymond James Financial, Inc.
Raymond James Investments, LLC
Raymond James Tax Credit Funds, Inc.
RJTCF Disposition Fund, LLC
Raymond James Tax Credit Funds, Inc.
Carillon Tower Advisers, Inc.
SLA Acquisition Co.
Raymond James Financial, Inc.
Florida
Florida
U.K.
Florida
Florida
Florida
Canada
Florida
U.K.
Canada
Delaware
Delaware
Tennessee
Florida
Delaware
Florida
Florida
Florida
Florida
Delaware
Delaware
Delaware
Florida
Delaware
Florida
U.S.A.
Ontario
Quebec
Turkey
Delaware
Florida
Florida
Delaware
Delaware
Florida
Florida
Florida
Missouri
Delaware
Florida
158
Entity Name
State/Country of
Incorporation
SLG Partners GP, LLC
SLG Partners, LP
SLG Partners, LP II
The Producers Choice LLC
Value Partners, Inc.
Wiregrass Raymond James, LLC
Delaware
Delaware
Delaware
Michigan
Florida
Florida
Subsidiary or Joint Venture of
Raymond James Investments, LLC; Raymond James
Management, LLC
SLG Partners GP, LLC
SLG Partners GP, LLC
Raymond James Insurance Group, Inc.
Raymond James Tax Credit Funds, Inc.
Raymond James Financial, Inc.
159
EXHIBIT 23
The Board of Directors
Raymond James Financial, Inc.:
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-103280, 333-98537, 333-125214,
333-141998, 333-157516, 333-157519, 333-179683, 333-209628, 333-230065, 333-236605) on Form S-8 and (Nos.
333-159583, 333-204400, 333-225044) on Form S-3ASR of Raymond James Financial, Inc. and subsidiaries of our reports
dated November 24, 2020, with respect to the consolidated statements of financial condition of Raymond James Financial, Inc.
and subsidiaries as of September 30, 2020 and 2019, the related consolidated statements of income and comprehensive income,
changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended September 30, 2020, and
the effectiveness of internal control over financial reporting as of September 30, 2020, which reports appear in the
September 30, 2020 annual report on Form 10-K of Raymond James Financial, Inc.
/s/ KPMG LLP
Tampa, Florida
November 24, 2020
160
EXHIBIT 31.1
I, Paul C. Reilly, certify that:
CERTIFICATIONS
1. I have reviewed this annual report on Form 10-K of Raymond James Financial, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or
persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: November 24, 2020
/s/ PAUL C. REILLY
Paul C. Reilly
Chairman and Chief Executive Officer
161
EXHIBIT 31.2
I, Paul M. Shoukry, certify that:
CERTIFICATIONS
1. I have reviewed this annual report on Form 10-K of Raymond James Financial, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or
persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: November 24, 2020
/s/ PAUL M. SHOUKRY
Paul M. Shoukry
Chief Financial Officer and Treasurer
162
Exhibit 32
CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Raymond James Financial, Inc. (the “Company”) on Form 10-K for the year
ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we hereby
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our
knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ PAUL C. REILLY
Paul C. Reilly
Chairman and Chief Executive Officer
November 24, 2020
/s/ PAUL M. SHOUKRY
Paul M. Shoukry
Chief Financial Officer and Treasurer
November 24, 2020
163
RAYMOND JAMES ANNUAL REPORT 2020 INTERNATIONAL HEADQUARTERS: THE RAYMOND JAMES FINANCIAL CENTER
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