BANK LOANS, NET

6 Months Ended

Mar. 31, 2022

Bank client receivables are comprised of loans originated or purchased by Raymond James Bank and include commercial and industrial (“C&I”) loans, real estate investment trust (“REIT”) loans, tax-exempt loans, commercial and residential real estate loans, and securities-based 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, securities or are unsecured. We segregate our loan portfolio into six loan portfolio segments: C&I, commercial real estate (“CRE”), REIT, tax-exempt, residential mortgage, and SBL and other. See Note 2 of our 2021 Form 10-K for a discussion of our October 1, 2020 adoption of new accounting guidance related to the measurement of credit losses on financial instruments and our accounting policies related to bank loans and the allowance for credit losses.

Loan balances in the following tables are presented at amortized cost (outstanding principal balance net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs), except for certain held for sale loans recorded at fair value. Bank loans are presented on our Condensed Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for credit losses.

The following table presents 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 Raymond James Bank’s total loan portfolio.


	March 31, 2022				September 30, 2021
$ in millions	Balance		%		Balance		%
C&I loans	$	9,067	32	%	$	8,440	33	%
CRE loans	3,321		12	%	2,872		11	%
REIT loans	1,408		5	%	1,112		5	%
Tax-exempt loans	1,287		5	%	1,321		5	%
Residential mortgage loans	5,945		21	%	5,318		21	%
SBL and other	6,904		24	%	6,106		24	%
Total loans held for investment	27,932		99	%	25,169		99	%
Held for sale loans	279		1	%	145		1	%
Total loans held for sale and investment	28,211		100	%	25,314		100	%
Allowance for credit losses	(328)				(320)
Bank loans, net	$	27,883			$	24,994
Accrued interest receivable on bank loans	$	55			$	48

The allowance for credit losses was 1.17% and 1.27% of the held for investment loan portfolio as of March 31, 2022 and September 30, 2021, respectively. Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

At March 31, 2022, the FHLB had a blanket lien on Raymond James Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. See Note 16 of our 2021 Form 10-K for more information regarding borrowings from the FHLB.

Held for sale loans

Raymond James Bank originated or purchased $999 million and $1.97 billion of loans held for sale during the three and six months ended March 31, 2022, respectively, and $528 million and $1.11 billion during the three and six months ended March 31, 2021, respectively. The majority of these loans were purchases of the guaranteed portions of Small Business Administration (“SBA”) loans intended for resale in the secondary market as individual SBA loans or as securitized pools of SBA loans. Proceeds from the sales of these held for sale loans amounted to $339 million and $677 million during the three and six months ended March 31, 2022, respectively, and $207 million and $395 million during the three and six months ended March 31, 2021, respectively. Net gains resulting from such sales were insignificant in all periods during the three and six months ended March 31, 2022 and 2021.

Purchases and sales of loans held for investment

The following table presents purchases and sales of loans held for investment by portfolio segment.


$ in millions	C&I loans		Residential mortgage loans		Total
Three months ended March 31, 2022
Purchases	$	441	$	223	$	664
Sales	$	61	$	—	$	61
Six months ended March 31, 2022
Purchases	$	780	$	407	$	1,187
Sales	$	112	$	—	$	112
Three months ended March 31, 2021
Purchases	$	538	$	114	$	652
Sales	$	95	$	—	$	95
Six months ended March 31, 2021
Purchases	$	660	$	160	$	820
Sales	$	100	$	—	$	100

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 of our 2021 Form 10-K, corporate loan sales generally occur as part of our credit management activities.

Aging analysis of loans held for investment

The following table presents information on delinquency status of our loans held for investment.


$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual with allowance		Nonaccrual with no allowance		Current and accruing		Total loans held for investment
March 31, 2022
C&I loans	$	—	$	—	$	—	$	57	$	—	$	9,010	$	9,067
CRE loans	—		—		—		12		19		3,290		3,321
REIT loans	—		—		—		—		—		1,408		1,408
Tax-exempt loans	—		—		—		—		—		1,287		1,287
Residential mortgage loans	1		—		1		1		15		5,928		5,945
SBL and other	—		—		—		—		—		6,904		6,904
Total loans held for investment	$	1	$	—	$	1	$	70	$	34	$	27,827	$	27,932

September 30, 2021
C&I loans	$	—	$	—	$	—	$	39	$	—	$	8,401	$	8,440
CRE loans	—		—		—		—		20		2,852		2,872
REIT loans	—		—		—		—		—		1,112		1,112
Tax-exempt loans	—		—		—		—		—		1,321		1,321
Residential mortgage loans	2		—		2		2		13		5,301		5,318
SBL and other	—		—		—		—		—		6,106		6,106
Total loans held for investment	$	2	$	—	$	2	$	41	$	33	$	25,093	$	25,169

The preceding table includes $92 million and $61 million at March 31, 2022 and September 30, 2021, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes troubled debt restructurings (“TDRs”) of $12 million for both CRE loans and residential first mortgage loans at March 31, 2022, and $12 million and $13 million, respectively, at September 30, 2021.

Other real estate owned, included in “Other assets” on our Condensed Consolidated Statements of Financial Condition, was insignificant at both March 31, 2022 and September 30, 2021.

Collateral-dependent loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the underlying collateral. At March 31, 2022, we had $31 million of collateral-dependent CRE loans which were fully collateralized by retail, industrial, and healthcare real estate. At September 30, 2021, we had $20 million of collateral-dependent CRE loans which were fully collateralized by retail and industrial real estate. We had $7 million and $5 million of collateral-dependent residential loans at March 31, 2022 and September 30, 2021, respectively, which were fully collateralized by single family homes. 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 $4 million at March 31, 2022 and September 30, 2021, respectively.

Credit quality indicators

The credit quality of our bank loan portfolio is summarized monthly by management using internal risk ratings, which align with the standard asset classification system utilized by bank regulators. 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 us 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 we 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 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 tables present our held for investment bank loan portfolio by credit quality indicator. Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.


	March 31, 2022
	Loans by origination fiscal year
$ in millions	2022		2021		2020		2019		2018		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	415	$	1,173	$	1,326	$	1,159	$	1,391	$	2,317	$	1,050	$	8,831
Special mention	—		—		30		39		—		69		7		145
Substandard	—		—		3		24		41		—		—		68
Doubtful	—		—		—		14		9		—		—		23
Total C&I loans	$	415	$	1,173	$	1,359	$	1,236	$	1,441	$	2,386	$	1,057	$	9,067



CRE loans
Risk rating:
Pass	$	616	$	578	$	382	$	399	$	649	$	340	$	81	$	3,045
Special mention	—		—		45		27		36		—		—		108
Substandard	—		—		—		45		80		43		—		168
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	616	$	578	$	427	$	471	$	765	$	383	$	81	$	3,321



REIT loans
Risk rating:
Pass	$	94	$	238	$	103	$	61	$	25	$	140	$	553	$	1,214
Special mention	—		—		—		13		11		138		5		167
Substandard	—		—		—		21		—		4		2		27
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	94	$	238	$	103	$	95	$	36	$	282	$	560	$	1,408



Tax-exempt loans
Risk rating:
Pass	$	—	$	170	$	58	$	117	$	197	$	745	$	—	$	1,287
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	—	$	170	$	58	$	117	$	197	$	745	$	—	$	1,287



Residential mortgage loans
Risk rating:
Pass	$	1,250	$	1,766	$	1,105	$	516	$	321	$	939	$	19	$	5,916
Special mention	—		1		—		2		—		4		—		7
Substandard	—		—		—		—		1		21		—		22
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	1,250	$	1,767	$	1,105	$	518	$	322	$	964	$	19	$	5,945



SBL and other
Risk rating:
Pass	$	5	$	11	$	24	$	12	$	—	$	—	$	6,852	$	6,904
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	5	$	11	$	24	$	12	$	—	$	—	$	6,852	$	6,904


	September 30, 2021
	Loans by origination fiscal year
$ in millions	2021		2020		2019		2018		2017		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	999	$	1,273	$	1,180	$	1,408	$	935	$	1,633	$	739	$	8,167
Special mention	—		—		41		—		26		54		1		122
Substandard	—		—		24		84		—		28		—		136
Doubtful	—		—		15		—		—		—		—		15
Total C&I loans	$	999	$	1,273	$	1,260	$	1,492	$	961	$	1,715	$	740	$	8,440



CRE loans
Risk rating:
Pass	$	533	$	459	$	442	$	652	$	223	$	174	$	62	$	2,545
Special mention	—		45		58		36		—		—		—		139
Substandard	—		—		32		98		8		50		—		188
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	533	$	504	$	532	$	786	$	231	$	224	$	62	$	2,872



REIT loans
Risk rating:
Pass	$	235	$	95	$	75	$	60	$	46	$	167	$	237	$	915
Special mention	—		—		13		11		33		106		6		169
Substandard	—		—		21		—		4		—		3		28
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	235	$	95	$	109	$	71	$	83	$	273	$	246	$	1,112



Tax-exempt loans
Risk rating:
Pass	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321



Residential mortgage loans
Risk rating:
Pass	$	1,861	$	1,266	$	640	$	386	$	451	$	666	$	20	$	5,290
Special mention	—		—		—		—		—		5		—		5
Substandard	—		—		—		1		2		20		—		23
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	1,861	$	1,266	$	640	$	387	$	453	$	691	$	20	$	5,318



SBL and other
Risk rating:
Pass	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106

We also monitor the credit quality of the residential mortgage loan portfolio utilizing Fair Isaac Corporation (“FICO”) scores and loan-to-value (“LTV”) ratios. A FICO score measures a borrower’s creditworthiness by considering factors such as payment and credit history. LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan.

The following table presents the held for investment residential mortgage loan portfolio by FICO score and by LTV ratio at origination.


$ in millions	March 31, 2022		September 30, 2021
FICO score:
Below 600	$	67	$	67
600 - 699	445		416
700 - 799	4,298		3,772
800 +	1,129		1,058
FICO score not available	6		5
Total	$	5,945	$	5,318

LTV ratio:
Below 80%	$	4,666	$	4,123
80%+	1,279		1,195
Total	$	5,945	$	5,318

Allowance for credit losses

The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment.


$ in millions	C&I loans		CRE loans		REIT loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended March 31, 2022
Balance at beginning of period	$	179	$	72	$	22	$	2	$	30	$	3	$	308

Provision/(benefit) for credit losses	17		(1)		3		—		2		—		21
Net (charge-offs)/recoveries:
Charge-offs	(1)		—		—		—		—		—		(1)
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	(1)		—		—		—		—		—		(1)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	195	$	71	$	25	$	2	$	32	$	3	$	328

Six months ended March 31, 2022
Balance at beginning of period	$	191	$	66	$	22	$	2	$	35	$	4	$	320

Provision/(benefit) for credit losses	7		5		3		—		(4)		(1)		10
Net (charge-offs)/recoveries:
Charge-offs	(3)		—		—		—		—		—		(3)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(3)		—		—		—		1		—		(2)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	195	$	71	$	25	$	2	$	32	$	3	$	328

Three months ended March 31, 2021
Balance at beginning of period	$	198	$	112	$	30	$	2	$	33	$	3	$	378

Provision/(benefit) for credit losses	7		(39)		6		—		(7)		1		(32)
Net (charge-offs)/recoveries:
Charge-offs	(2)		—		—		—		—		—		(2)
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	(2)		—		—		—		—		—		(2)
Foreign exchange translation adjustment	—		1		—		—		—		—		1
Balance at end of period	$	203	$	74	$	36	$	2	$	26	$	4	$	345

Six months ended March 31, 2021
Balance at beginning of period	$	200	$	81	$	36	$	14	$	18	$	5	$	354
Impact of CECL adoption	19		(11)		(9)		(12)		24		(2)		9
Provision/(benefit) for credit losses	(15)		3		9		—		(16)		1		(18)
Net (charge-offs)/recoveries:
Charge-offs	(2)		—		—		—		—		—		(2)
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	(2)		—		—		—		—		—		(2)
Foreign exchange translation adjustment	1		1		—		—		—		—		2
Balance at end of period	$	203	$	74	$	36	$	2	$	26	$	4	$	345

The allowance for credit losses on held for investment bank loans increased $20 million and $8 million during the three and six months ended March 31, 2022, respectively, primarily due to loan growth.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $12 million at both March 31, 2022 and December 31, 2021 and $13 million at September 30, 2021.

LOANS TO FINANCIAL ADVISORS, NET

Loans to financial advisors are primarily comprised of loans originated as a part of our recruiting activities. See Note 2 of our 2021 Form 10-K for a discussion of our accounting policies related to loans to financial advisors and the related allowance for credit losses. The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.


$ in millions	March 31, 2022			September 30, 2021
Currently affiliated with the firm (1)	$	1,144		$	1,074
No longer affiliated with the firm (2)	9			10
Total loans to financial advisors	1,153			1,084
Allowance for credit losses	(29)			(27)
Loans to financial advisors, net	$	1,124		$	1,057
Accrued interest receivable on loans to financial advisors	$	5		$	4
Allowance for credit losses as a percent of the loan portfolio	2.52		%	2.49		%

(1) These loans were predominantly current.

(2) These loans were predominantly past due for a period of 180 days or more.

Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on the Condensed Consolidated Statements of Financial Condition.