NOTE 3 – FAIR VALUE

For a further discussion of our valuation methodologies for assets, liabilities measured at fair value, and the fair value hierarchy, see Note 1, pages 81 – 84, in our 2010 Form 10-K.

There have been no material changes to our valuation methodologies since our year ended September 30, 2010.

Assets and liabilities measured at fair value on a recurring basis are presented below:

June 30, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1) (1)		Significant Other Observable Inputs (Level 2) (1)		Significant Unobservable Inputs (Level 3)			Netting Adjustments (2)			Balance as of June 30, 2011
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	6	$	177,781	$	6,310		$	-		$	184,097
Corporate obligations		8,666		28,485		-			-			37,151
Government and agency obligations		15,052		26,314		-			-			41,366
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”)		234		231,983		-			-			232,217
Non-agency CMOs and asset-backed securities (“ABS”)		-		12,748		58			-			12,806
Total debt securities		23,958		477,311		6,368			-			507,637
Derivative contracts		-		84,171		-			(62,301	)		21,870
Equity securities		29,831		2,953		1,347			-			34,131
Other securities		2,534		8,905		-			-			11,439
Total trading instruments		56,323		573,340		7,715			(62,301	)		575,077

Available for sale securities:
Agency MBS and CMOs		-		160,512		-			-			160,512
Non-agency CMOs		-		162,691		915			-			163,606
Other securities		11		-		-			-			11
Total available for sale securities		11		323,203		915			-			324,129

Private equity and other investments:
Private equity investments		-		-		167,774	(3)		-			167,774
Other investments		153,888		93		45			-			154,026
Total private equity and other investments		153,888		93		167,819			-			321,800

Other assets		-		-		25			-			25
Total	$	210,222	$	896,636	$	176,474		$	(62,301	)	$	1,221,031

Liabilities:
Trading instruments sold but not yet purchased:
Municipal and provincial obligations	$	-	$	720	$	-		$	-		$	720
Corporate obligations		-		1,610		-			-			1,610
Government obligations		173,371		-		-			-			173,371
Agency MBS and CMOs		5		-		-			-			5
Total debt securities		173,376		2,330		-			-			175,706
Derivative contracts		-		65,292		-			(65,030	)		262
Equity securities		19,360		315		-			-			19,675
Other securities		-		150		-			-			150
Total trading instruments sold but not yet purchased		192,736		68,087		-			(65,030	)		195,793

Other liabilities		-		14		40			-			54
Total	$	192,736	$	68,101	$	40		$	(65,030	)	$	195,847

(1)	We had no significant transfers of financial instruments between Level 1 and Level 2 during the period ended June 30, 2011. Our policy is to use the end of each respective quarterly reporting period to determine when transfers of financial instruments between levels are recognized.

(2)	We have elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists.

(3)

Includes $87.9 million in private equity investments of which the weighted-average portion we own is approximately 20%. The portion of this investment we do not own becomes a component of noncontrolling interests on our Condensed Consolidated Statements of Financial Condition, and amounted to $70 million of that total as of June 30, 2011.

September 30, 2010	Quoted Prices in Active Markets for Identical Assets (Level 1) (1)		Significant Other Observable Inputs (Level 2) (1)		Significant Unobservable Inputs (Level 3)			Netting Adjustments (2)			Balance as of September 30, 2010
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	7	$	162,071	$	6,275		$	-		$	168,353
Corporate obligations		21,485		16,986		-			-			38,471
Government and agency obligations		27,374		9,520		-			-			36,894
Agency MBS and CMOs		303		278,275		-			-			278,578
Non-agency CMOs and ABS		-		4,367		3,930			-			8,297
Total debt securities		49,169		471,219		10,205			-			530,593
Derivative contracts		-		102,490		-			(76,123	)		26,367
Equity securities		28,506		113		3,025			-			31,644
Other securities		1,250		1,593		-			-			2,843
Total trading instruments		78,925		575,415		13,230			(76,123	)		591,447

Available for sale securities:
Agency MBS and CMOs		-		217,879		-			-			217,879
Non-agency CMOs		-		200,559		1,011			-			201,570
Other securities		9		5,003		-			-			5,012
Total available for sale securities		9		423,441		1,011			-			424,461

Private equity and other investments:
Private equity investments		-		-		161,230	(3)		-			161,230
Other investments		158,653		1,151		45			-			159,849
Total private equity and other investments		158,653		1,151		161,275			-			321,079

Other assets		-		25		-			-			25
Total	$	237,587	$	1,000,032	$	175,516		$	(76,123	)	$	1,337,012

Liabilities:
Trading instruments sold but not yet purchased:
Municipal and provincial obligations	$	-	$	296	$	-		$	-		$	296
Corporate obligations		17		676		-			-			693
Government obligations		99,631		-		-			-			99,631
Agency MBS and CMOs		105		-		-			-			105
Total debt securities		99,753		972		-			-			100,725
Derivative contracts		-		86,039		-			(84,390	)		1,649
Equity securities		15,890		12,774		-			-			28,664
Total trading instruments sold but not yet purchased		115,643		99,785		-			(84,390	)		131,038

Other liabilities		-		105		46			-			151
Total	$	115,643	$	99,890	$	46		$	(84,390	)	$	131,189

(1)	We had no significant transfers of financial instruments between Level 1 and Level 2 during the year ended September 30, 2010. Our policy is to use the end of each respective quarterly reporting period to determine when transfers of financial instruments between levels are recognized.

(2)	We have elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists.

(3)

Includes $86.3 million in private equity investments of which the weighted-average portion we own is approximately 20%. The portion of this investment we do not own becomes a component of noncontrolling interests on our Condensed Consolidated Statements of Financial Condition, and amounted to $69.1 million of that total as of September 30, 2010.

Changes in Level 3 Recurring Fair Value Measurements

The realized and unrealized gains and losses for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value that were attributable to both observable and unobservable inputs.

Additional information about Level 3 assets and liabilities measured at fair value on a recurring basis are presented below:

	Level 3 Financial Assets at Fair Value
Three months ended June 30, 2011	Fair Value, March 31, 2011			Total Realized/ Unrealized Gains (Losses) Included in Earnings			Total Unrealized Gains (Losses) Included in Other Comprehensive Income		Purchases, Issuances, and Settlements, Net			Transfers into Level 3		Transfers out of Level 3		Fair Value, June 30, 2011			Change in Unrealized Gains (Losses) Related to Financial Instruments Held at June 30, 2011
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	5,688		$	(129	)	$	-	$	751		$	-	$	-	$	6,310		$	(54	)
Non-agency CMOs and ABS		3,921			570			-		(4,433	)		-		-		58			(63	)
Equity securities		1,925			-			-		(578	)		-		-		1,347			-

Available for sale securities:
Non-agency CMOs		800			-			136		(21	)		-		-		915			-

Private equity and other investments:
Private equity investments		157,046			8,819	(1)		-		1,909			-		-		167,774			8,819
Other investments		45			-			-		-			-		-		45			-
Other assets		25			-			-		-			-		-		25			-

Liabilities:
Other liabilities	$	(42	)	$	-		$	-	$	-		$	-	$	2	$	(40	)	$	-

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $6.3 million which is included in net income attributable to RJF (after noncontrolling interests), the noncontrolling interests' share of the net valuation adjustments was a gain of approximately $2.5 million.

	Level 3 Financial Assets at Fair Value
Nine months ended June 30, 2011	Fair Value September 30, 2010			Total Realized/ Unrealized Gains (Losses) Included in Earnings			Total Unrealized Gains (Losses) Included in Other Comprehensive Income		Purchases, Issuances, and Settlements, Net			Transfers into Level 3			Transfers out of Level 3		Fair Value, June 30, 2011			Change in Unrealized Gains (Losses) Related to Financial Instruments Held at June 30, 2011
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	6,275		$	(710	)	$	-	$	745		$	-		$	-	$	6,310		$	(855	)
Non-agency CMOs and ABS		3,930			1,310			-		(5,182	)		-			-		58			(190	)
Equity securities		3,025			-			-		(1,678	)		-			-		1,347			-

Available for sale securities:
Non-agency CMOs		1,011			121			202		(419	)		-			-		915			(81	)

Private equity and other investments:
Private equity investments		161,230			8,417	(1)		-		(1,873	)		-			-		167,774			8,417
Other investments		45			-			-		-			-			-		45			-
Other assets		-			-			-		-			25			-		25			-

Liabilities:
Other liabilities	$	(46	)	$	-		$	-	$	-		$	(3	)	$	9	$	(40	)	$	-

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $3.7 million which is included in net income attributable to RJF (after noncontrolling interests), the noncontrolling interests' share of the net valuation adjustments was a gain of approximately $4.7 million.

	Level 3 Financial Assets at Fair Value
Three months ended June 30, 2010	Fair Value, March 31, 2010			Total Realized/ Unrealized Gains (Losses) Included in Earnings			Total Unrealized Gains (Losses) Included in Other Comprehensive Income			Purchases, Issuances, and Settlements, Net			Transfers into Level 3		Transfers out of Level 3		Fair Value, June 30, 2010			Change in Unrealized Gains (Losses) Related to Financial Instruments Held at June 30, 2010
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	5,581		$	575		$	-		$	-		$	-	$	-	$	6,156		$	575
Non-agency CMOs and ABS		6,145			(95	)		-			(1,084	)		-		-		4,966			177
Derivative contracts		13			(13	)		-			-			-		-		-			-
Equity securities		-			-			-			6			-		-		6			-
Other securities		1,574			86			-			(14	)		-		-		1,646			86

Available for sale securities:
Non-agency CMOs		1,623			(202	)		(300	)		(88	)		-		-		1,033			(202	)

Private equity and other investments:
Private equity investments		157,797			2,425	(1)		-			2,924			-		-		163,146			2,425
Other investments		222			249			-			(425	)		-		-		46			1

Liabilities:
Derivative contracts	$	(38	)	$	38		$	-		$	-		$	-	$	-	$	-		$	-
Other liabilities		(46	)		-			-			-			-		-		(46	)		-

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $2.7 million which is included in net income attributable to RJF (after noncontrolling interests). The noncontrolling interests share of the net valuation adjustments was a loss of approximately $300,000.

	Level 3 Financial Assets at Fair Value
Nine months ended June 30, 2010	Fair Value, September 30, 2009			Total Realized/ Unrealized Gains (Losses) Included in Earnings			Total Unrealized Gains (Losses) Included in Other Comprehensive Income		Purchases, Issuances, and Settlements, Net			Transfers into Level 3		Transfers out of Level 3		Fair Value, June 30, 2010			Change in Unrealized Gains (Losses) Related to Financial Instruments Held at June 30, 2010
	(in thousands)
Assets:
Trading instruments:
Municipal and provincial obligations	$	5,316		$	840		$	-	$	-		$	-	$	-	$	6,156		$	840
Non-agency CMOs and ABS		10,915			(591	)		-		(5,358	)		-		-		4,966			165
Derivative contracts		222			(222	)		-		-			-		-		-			-
Equity securities		-			-			-		6			-		-		6			-
Other securities		919			720			-		7			-		-		1,646			719

Available for sale securities:
Non-agency CMOs		2,596			(2,526	)		1,269		(306	)		-		-		1,033			(2,526	)

Private equity and other investments:
Private equity investments		142,671			14,498	(1)		-		5,977			-		-		163,146			14,498
Other investments		227			244			-		(425	)		-		-		46			(4	)

Liabilities:
Other liabilities		(59	)		13			-		-			-		-		(46	)		(7	)

(1)

Primarily results from valuation adjustments of certain private equity investments. Since we only own a portion of these investments, our share of the net valuation adjustments resulted in a gain of $4.2 million which is included in net income attributable to RJF (after noncontrolling interests), the noncontrolling interests share of the net valuation adjustments was a gain of approximately $10.3 million.

As of June 30, 2011, 7.6% of our assets and 1.5% of our liabilities are instruments measured at fair value on a recurring basis. Instruments measured at fair value on a recurring basis categorized as Level 3 as of June 30, 2011 represent 14.5% of our assets measured at fair value. As of June 30, 2010, 8.9% and 0.7% of our assets and liabilities, respectively, represented instruments measured at fair value on a recurring basis. Instruments measured at fair value on a recurring basis categorized as Level 3 as of June 30, 2010 represented 13.4% of all our assets measured at fair value.

Gains and losses (realized and unrealized) included in revenues are reported in net trading profits and other revenues in our Condensed Consolidated Statements of Income and Comprehensive Income (the “Condensed Consolidated Statements of Income”), as follows:

For the three months ended June 30, 2011	Net Trading Profits			Other Revenues
	(in thousands)

Total gains included in revenues	$	441		$	8,819
Change in unrealized (losses) gains relating to assets still held at reporting date		(117	)		8,819

For the nine months ended June 30, 2011	Net Trading Profits			Other Revenues
	(in thousands)

Total gains included in revenues	$	600		$	8,538
Change in unrealized (losses) gains relating to assets still held at reporting date		(1,045	)		8,336

For the three months ended June 30, 2010	Net Trading Profits		Other Revenues
	(in thousands)

Total gains included in revenues	$	815	$	2,248
Change in unrealized gains relating to assets still held at reporting date		839		2,804

For the nine months ended June 30, 2010	Net Trading Profits		Other Revenues
	(in thousands)

Total gains included in revenues	$	1,213	$	11,764
Change in unrealized gains relating to assets still held at reporting date		1,720		11,966

Nonrecurring Fair Value Measurements

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value measurement only in certain circumstances; for example, when there is evidence of impairment or in other situations where the lower of cost or fair value method of accounting is applied. Our financial instruments which are measured at fair value on a nonrecurring basis include certain RJ Bank loans that have been deemed impaired and certain loans classified as held for sale. Assets that are not financial instruments but are subject to measurement at fair value on a nonrecurring basis include goodwill and other real estate owned (“OREO”). The table below provides information, by level within the fair value hierarchy, for assets measured at fair value during the year and still held as of the reporting date.

	Fair Value Measurements
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2011:	(in thousands)
Assets at fair value on a nonrecurring basis:
Bank loans, net (1)	$	-	$	36,538	$	56,547	$	93,085
OREO (2)		-		5,895		-		5,895

September 30, 2010:
Assets at fair value on a nonrecurring basis:
Bank loans, net (1)	$	-	$	1,901	$	71,920	$	73,821
OREO (2)		-		19,431		-		19,431

(1)	Includes individual loans classified as held for sale, which were recorded at a fair value lower than cost.

(2)	Represents the fair value of foreclosed properties which were measured at a fair value subsequent to their initial classification as OREO. The recorded value in the Condensed Consolidated Statements of Financial Condition is net of the estimated selling costs.

The adjustment to fair value of the nonrecurring fair value measures for the nine months ended June 30, 2011 resulted in $13.4 million in additional provision for loan losses as well as $2.8 in other losses during the nine month period.

For a discussion of our accounting policies for impairment of loans held for investment, loans held for sale, and OREO, see Note 1 on pages 85 - 87 of our 2010 Form 10-K.

Fair Value Option

The fair value option is an accounting election that allows the reporting entity to apply fair value accounting for certain financial assets and liabilities on an instrument by instrument basis. As of June 30, 2011, we have elected not to choose the fair value option for any of our financial assets or liabilities not already recorded at fair value.

OTHER FAIR VALUE DISCLOSURES

Many, but not all, of the financial instruments we hold are recorded at fair value in the Condensed Consolidated Statements of Financial Condition. Refer to Note 3, pages 95 – 96, of our 2010 Form 10-K for discussion of the methods and assumptions we apply to the determination of fair value of our financial instruments that are not otherwise recorded at fair value.

The carrying amounts and estimated fair values of our financial instruments that are not carried at fair value are as follows:

	June 30, 2011				September 30, 2010
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
	(in thousands)
Financial assets:
Bank loans, net	$	6,252,094	$	6,288,241	$	6,094,929	$	6,099,106
Financial liabilities:
Bank deposits		6,944,458		6,951,761		7,079,718		7,088,297
Other borrowings		-		-		2,557,000		2,557,613
Corporate debt		612,648		686,758		355,964		421,132