RAYMOND JAMES FINANCIAL INC (RJF)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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FACTORS AFFECTING “FORWARD-LOOKING STATEMENTS”

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

INTRODUCTION

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

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

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EXECUTIVE OVERVIEW

Summary results of operations

Quarter ended June 30, 2026 compared with the quarter ended June 30, 2025

For our fiscal third quarter of 2026, we generated net revenues of $3.93 billion, an increase of 16% compared with the prior-year quarter, and pre-tax income of $750 million, an increase of 33%. Our net income available to common shareholders of $595 million increased 37% compared with the prior-year quarter and our earnings per diluted share were $3.01, an increase of 42%. Our ROCE was 18.8%, up from 14.3% for the prior-year quarter, and our ROTCE was 22.6%(1), compared with 16.7%(1) for the prior-year quarter.

For the three months ended June 30, 2026, adjusted net income available to common shareholders, which excluded the impact of $25 million of acquisition-related expenses, net of tax, was $620 million(1), an increase of 38% compared with adjusted net income available to common shareholders for the prior-year quarter. Our adjusted earnings per diluted share were $3.14(1), an increase of 44% compared with the prior-year quarter. Adjusted ROCE was 19.6%(1), compared with 14.8%(1) for the prior-year quarter, and adjusted ROTCE was 23.5%(1), compared with 17.2%(1) for the prior-year quarter.

The increase in net revenues compared with the prior-year quarter was primarily due to higher asset management and related administrative fees, reflecting growth in PCG fee-based client assets resulting from market appreciation and net new assets driven by financial advisor recruiting and retention. Net revenues also increased due to higher investment banking revenues largely driven by higher mergers & acquisitions and advisory and debt underwriting revenues, and higher brokerage revenues due to an increase in client activity in our PCG segment.

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

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Compensation, commissions and benefits expense increased 17%, primarily due to an increase in commissions expense resulting from higher asset management and related administrative fees and brokerage revenues in the PCG segment, and an increase in compensation costs related to our growth, including incremental compensation expense associated with our current-year acquisitions of Clark Capital and GreensLedge and higher PCG financial advisor recruiting and retention-related compensation. Our total compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 65.7% compared with 64.8% for the prior-year quarter. Our adjusted total compensation ratio, which excluded acquisition-related compensation expenses, was 65.5%(1) compared with 64.5%(1) for the prior-year quarter. The increase in the total compensation ratio primarily resulted from changes in our revenue mix compared with the prior-year quarter, as revenues with a higher associated direct compensation expense, including asset management and related administrative fees, increased, while interest-related revenues in the PCG segment, which have little associated direct compensation expense, decreased.

Non-compensation expenses decreased 5%, primarily due to a $58 million prior-year quarter expense associated with the settlement of a certain legal matter which did not reoccur, as well as the impact of a bank loan benefit for credit losses of $26 million for the current quarter compared with a provision of $15 million for the prior-year quarter. These decreases were partially offset by higher professional fees, reflecting an increase in external legal fees during the current quarter, and an increase in expenses related to our growth, including incremental expenses associated with our acquisitions of Clark Capital and GreensLedge in fiscal 2026 and higher business development expenses.

Our effective income tax rate was 20.7% for our fiscal third quarter of 2026, a decrease from 22.6% for the prior-year quarter largely due to higher non-taxable valuation gains on our corporate-owned life insurance policies reflected in the current quarter compared with the prior-year quarter.

We continue to maintain strong levels of liquidity and capital. As of June 30, 2026, our tier 1 leverage ratio was 11.7% and total capital ratio was 22.5%, both well above regulatory capital requirements. We also continue to have substantial liquidity with $2.5 billion of RJF corporate cash(2) as of June 30, 2026. Consistent with our long‑term strategic priorities and disciplined acquisition approach, during the current quarter we deployed capital and liquidity in connection with our acquisition of Clark Capital.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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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

Summary results of operations

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

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Year ended September 30, 2025 compared with the year ended September 30, 2024

For the year ended September 30, 2025, we generated net revenues of $14.07 billion, an increase of 10% compared with the prior year, and pre-tax income of $2.71 billion, an increase of 3%. Our net income available to common shareholders of $2.13 billion was 3% higher than the prior year and our earnings per diluted share were $10.30, reflecting a 6% increase. Our ROCE was 17.7%, down from 18.9% for the prior year, and our ROTCE was 20.6%(1), compared with 22.6%(1) for the prior year.

Excluding the impact of $75 million of expenses, net of their tax effect, related to acquisitions completed in prior years, adjusted net income available to common shareholders for the year ended September 30, 2025 was $2.21 billion(1), an increase of 3% compared with adjusted net income available to common shareholders for the prior year. Our adjusted earnings per diluted share were $10.66(1), an increase of 6% compared with the prior year. Adjusted ROCE was 18.3%(1), compared with 19.6%(1) for the prior year, and adjusted ROTCE was 21.3%(1), compared with 23.3%(1) in the prior year.

The increase in net revenues compared with the prior year was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts at the beginning of each of the current-year billing periods compared with the prior-year billing periods. The increase in PCG client assets in fee-based accounts resulted from net market appreciation and net new assets to the firm since the prior year. Investment banking revenues also increased significantly compared with the prior year primarily due to more favorable market conditions during the year. Brokerage revenues also increased compared with the prior year largely due to an increase in client activity in both our PCG and Capital Markets segments. Offsetting these increases was a decrease in combined net interest income and RJBDP fees from third-party banks, due to lower short-term interest rates compared with the prior year and lower RJBDP balances swept to third-party banks, which more than offset a favorable impact from growth in average interest-earning assets.

Compensation, commissions and benefits expense increased 10%, primarily due to an increase in compensable revenues, an increase in compensation costs to support our growth, including financial advisor recruiting-related expenses, and annual salary increases. Our compensation ratio was 64.5%, compared with 64.1% for the prior year. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 64.3%(1), compared with an adjusted compensation ratio of 63.7%(1) for the prior year. The increase in the compensation ratio primarily resulted from changes in our revenue mix due to increases in compensable revenues compared with the prior year, including asset management and related administrative fees, investment banking revenues, and brokerage revenues, as well as a decrease in combined net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

Non-compensation expenses increased 16%, primarily due to higher provisions for legal and regulatory matters as the current year included a net provision expense for legal and regulatory matters, including a $58 million expense increase associated with the settlement of a legal matter related to bond underwritings for a specific issuer sold to institutional investors between 2013 and 2015, while the prior year reflected a net reserve release. Non-compensation expenses also increased due to higher communications and information processing expenses resulting from continued investments in technology to benefit our advisors and their clients and to support our growth, higher investment sub-advisory fees resulting from growth in assets under management in sub-advised programs, and higher business development expenses, primarily due to financial advisor recruiting and other business growth investments.

Our effective income tax rate was 21.3% for the year ended September 30, 2025, a decrease from 21.8% for the prior year, primarily due to the impact of a larger tax benefit recognized during the current year related to share-based compensation that vested during the year and, to a lesser extent, the release of accruals for uncertain tax positions following the expiration of applicable statutes of limitations, partially offset by lower non-taxable valuation gains on our corporate-owned life insurance policies recognized in the current year compared with the prior year.

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

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We continue to maintain strong levels of liquidity and capital. As of September 30, 2025, our tier 1 leverage ratio was 13.1% and total capital ratio was 24.1%, both well above regulatory capital requirements. On September 11, 2025, to secure financing during a period of favorable market conditions characterized by tight credit spreads and attractive benchmark yields, we issued $1.5 billion in senior notes, consisting of $650 million in 4.90% senior notes due 2035 and $850 million in 5.65% senior notes due 2055. We also amended our revolving credit facility to increase our borrowing capacity to $1 billion and reduce our cost of borrowing. These actions increased our available liquidity on hand for deployment in our growth and to meet client needs, resulting in $3.7 billion of RJF corporate cash(1) as of September 30, 2025. During the year ended September 30, 2025, we repurchased 7.4 million shares of our common stock for $1.1 billion at an average price of $148 per share under the Board of Directors’ common stock repurchase authorization, leaving $399 million available under the authorization as of September 30, 2025. We believe our strong capital and liquidity positions enable us to invest in growth across our businesses and remain opportunistic in our capital deployment.

Year ended September 30, 2024 compared with the year ended September 30, 2023

Refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Form 10-K for a discussion of our fiscal 2024 results compared to fiscal 2023.

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

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 fin

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