Edgar Filing: RAYMOND JAMES FINANCIAL INC

q10033110.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 1-9109

RAYMOND JAMES FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Florida		No. 59-1517485
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

880 Carillon Parkway, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

(727) 567-1000

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o

Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

124,050,270 shares of Common Stock as of May 3, 2010

	RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

	Form 10-Q for the Quarter Ended March 31, 2010

	INDEX

		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Financial Condition as of March 31, 2010 and September 30, 2009 (unaudited)	3

	Condensed Consolidated Statements of Income and Comprehensive Income for the three and six month periods ended March 31, 2010 and March 31, 2009 (unaudited)	4

	Condensed Consolidated Statements of Cash Flow for the six months ended March 31, 2010 and March 31, 2009 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71

Item 4.	Controls and Procedures	78

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	78

Item 1A.	Risk Factors	79

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79

Item 3.	Defaults Upon Senior Securities	80

Item 5.	Other Information	80

Item 6.	Exhibits	80

	Signatures	81

PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	March 31,	September 30,
	2010	2009
	($ in 000’s)
Assets
Cash and Cash Equivalents	$ 928,986	$ 2,306,085
Assets Segregated Pursuant to Regulations and Other Segregated Assets	2,253,594	2,310,261
Securities Purchased under Agreements to Resell and Other Collateralized Financings	379,538	2,306,186
Financial Instruments, at Fair Value:
Trading Instruments	700,578	431,445
Available for Sale Securities	455,775	509,073
Private Equity and Other Investments	313,166	291,389
Receivables:
Brokerage Clients, Net	1,608,940	1,463,136
Stock Borrowed	747,718	416,964
Bank Loans, Net	6,236,923	6,593,973
Brokers-Dealers and Clearing Organizations	75,892	38,610
Other	456,154	540,035
Deposits with Clearing Organizations	79,547	83,799
Prepaid Expenses and Other Assets	337,354	260,427
Investments in Real Estate Partnerships - Held by Variable Interest Entities	274,948	270,139
Property and Equipment, Net	181,301	186,232
Deferred Income Taxes, Net	184,161	156,399
Goodwill	62,575	62,575

Total Assets	$ 15,277,150	$ 18,226,728

Liabilities and Equity
Trading Instruments Sold but Not Yet Purchased, at Fair Value	$ 131,778	$ 93,376
Securities Sold Under Agreements to Repurchase	73,650	102,758
Payables:
Brokerage Clients	3,265,692	3,789,870
Stock Loaned	1,343,139	490,240
Bank Deposits	6,731,459	9,423,387
Brokers-Dealers and Clearing Organizations	226,341	157,032
Trade and Other	339,910	177,769
Other Borrowings	50,070	980,000
Accrued Compensation, Commissions and Benefits	278,849	330,879
Loans Payable Related to Investments by Variable Interest Entities in Real Estate Partnerships	82,925	89,244
Corporate Debt	357,521	359,034

Total Liabilities	12,881,334	15,993,589

Commitments and Contingencies (See Note 12)

Equity
Preferred Stock; $.10 Par Value; Authorized 10,000,000 Shares; Issued and Outstanding -0- Shares	-	-
Common Stock; $.01 Par Value; Authorized 350,000,000 Shares; Issued 128,095,818 at March 31, 2010 and 127,039,672 at September 30, 2009	1,230	1,227
Shares Exchangeable into Common Stock; 247,793 at March 31, 2010 and 249,168 at September 30, 2009	3,180	3,198
Additional Paid-In Capital	452,451	416,662
Retained Earnings	1,807,726	1,737,591
Treasury Stock, at Cost, 4,142,746 Common Shares at March 31, 2010 and 3,975,136 Common Shares at September 30, 2009	(88,706)	(84,412)
Accumulated Other Comprehensive Income	(16,014)	(41,803)
Total Equity Attributable to Raymond James Financial, Inc.	2,159,867	2,032,463
Noncontrolling Interests	235,949	200,676
Total Equity	2,395,816	2,233,139

Total Liabilities and Equity	$ 15,277,150	$ 18,226,728

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(in 000’s, except per share amounts)

	Three Months Ended		Six Months Ended
	March 31,	March 31,	March 31,	March 31,
	2010	2009	2010	2009
Revenues:
Securities Commissions and Fees	$ 479,302	$ 369,705	$ 948,453	$ 787,930
Investment Banking	44,839	18,001	70,557	38,734
Investment Advisory Fees	42,218	34,290	86,193	78,725
Interest	93,275	108,073	184,647	251,685
Net Trading Profits	10,170	12,766	21,807	21,941
Financial Service Fees	39,286	30,805	76,068	63,940
Other	40,897	18,100	64,931	44,618
Total Revenues	749,987	591,740	1,452,656	1,287,573

Interest Expense	15,548	6,744	31,250	38,635
Net Revenues	734,439	584,996	1,421,406	1,248,938

Non-Interest Expenses:
Compensation, Commissions and Benefits	497,419	391,902	968,498	811,156
Communications and Information Processing	32,445	29,956	60,519	65,179
Occupancy and Equipment Costs	25,892	24,945	52,607	51,380
Clearance and Floor Brokerage	8,828	7,464	17,330	16,052
Business Development	20,614	18,817	40,495	43,541
Investment Advisory Fees	9,409	7,222	18,512	16,944
Bank Loan Loss Provision	19,937	74,979	42,772	99,849
Other	25,687	23,485	59,352	41,954
Total Non-Interest Expenses	640,231	578,770	1,260,085	1,146,055

Income Including Noncontrolling Interests and Before Provision for Income Taxes	94,208	6,226	161,321	102,883

Provision for Income Taxes	34,028	6,825	60,513	47,396

Net Income (Loss) Including Noncontrolling Interests	60,180	( 599)	100,808	55,487
Net Income (Loss) Attributable to Noncontrolling Interests	4,552	(6,692)	2,277	(11,699)
Net Income Attributable to Raymond James Financial, Inc.	$ 55,628	$ 6,093	$ 98,531	$ 67,186

Net Income per Common Share-Basic	$ 0.45	$ 0.05	$ 0.79	$ 0.55
Net Income per Common Share-Diluted	$ 0.45	$ 0.05	$ 0.79	$ 0.55
Weighted Average Common Shares Outstanding-Basic	119,288	117,134	118,981	116,685
Weighted Average Common and Common Equivalent Shares Outstanding-Diluted	119,580	117,187	119,234	116,812


Net Income Attributable to Raymond James Financial, Inc.	$ 55,628	$ 6,093	$ 98,531	$ 67,186
Other Comprehensive Income, Net of Tax:
Change in Unrealized Loss on Available for Sale Securities and Non-Credit Portion of Other-Than-Temporary Impairment Losses	5,071	16,732	18,294	(36,555)
Change in Currency Translations	4,522	(4,598)	7,495	(24,408)
Total Comprehensive Income	$ 65,221	$ 18,227	$ 124,320	$ 6,223

Other-Than-Temporary Impairment:
Total Other-than-Temporary Impairment Losses	$ (1,858)	$ (10,954)	$ (17,378)	$ (11,525)
Portion of Losses recognized in Other Comprehensive Income (Before Taxes)	(581)	4,789	11,940	4,789
Net Impairment Losses Recognized in Other Revenue	$ (2,439)	$ (6,165)	$ (5,438)	$ (6,736)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in 000’s)

(continued on next page)

	Six Months Ended
	March 31, 2010	March 31, 2009
Cash Flows From Operating Activities:
Net Income Attributable to Raymond James Financial, Inc.	$ 98,531	$ 67,186
Net Income (Loss) Attributable to Noncontrolling Interests	2,277	(11,699)
Net Income Including Noncontrolling Interests	100,808	55,487
Adjustments to Reconcile Net Income Including Noncontrolling Interests
to Net Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization	23,898	16,566
Deferred Income Taxes	(38,322)	(13,509)
Premium and Discount Amortization on Available for Sale Securities and Unrealized/Realized Gain on Other Investments	(12,511)	(509)
Other-than-Temporary Impairment on Available for Sale Securities	5,438	6,736
Impairment of and Loss on Sale of Property and Equipment	33	7,269
Gain on Sale of Securitizations and Loans Held for Sale	(847)	(158)
Provision for Loan Loss, Legal Proceedings, Bad Debts and Other Accruals	59,543	109,218
Stock-Based Compensation Expense	24,181	12,358
(Gain) Loss on Company-Owned Life Insurance	(9,176)	14,979

(Increase) Decrease in Operating Assets:
Assets Segregated Pursuant to Regulations and Other Segregated Assets	56,667	(764,981)
Receivables:
Brokerage Clients, Net	(145,441)	584,491
Stock Borrowed	(330,754)	177,246
Brokers-Dealers and Clearing Organizations	(37,282)	152,707
Other	79,617	(77,832)
Securities Purchased Under Agreements to Resell and Other Collateralized Financings, Net of Securities Sold Under Agreements to Repurchase	(102,460)	(129,536)
Trading Instruments, Net	(117,682)	(52,156)
Proceeds from Sale of Securitizations and Loans Held for Sale	258,084	12,632
Purchase and Origination of Loans Held for Sale	(166,140)	(14,282)
Excess Tax Benefits from Stock-Based Payment Arrangements	564	(2,874)
Prepaid Expenses and Other Assets	(36,142)	102,508

Increase (Decrease) in Operating Liabilities:
Payables:
Brokerage Clients	(524,178)	423,977
Stock Loaned	852,899	(177,142)
Brokers-Dealers and Clearing Organizations	69,309	(164,730)
Trade and Other	(12,704)	3,514
Accrued Compensation, Commissions and Benefits	(51,067)	(108,412)

Net Cash (Used in) Provided by Operating Activities	(53,665)	173,567

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in 000’s)

(continued)

	Six Months Ended
	March 31, 2010	March 31, 2009

Cash Flows from Investing Activities:
Additions to Property and Equipment, Net	(13,244)	(23,110)
Decrease (Increase) in Loans, Net	247,292	(572,710)
Purchases of Private Equity and Other Investments, Net	(2,099)	2,123
Investments in Company-Owned Life Insurance	(12,207)	(10,355)
Investments in Real Estate Partnerships-Held by Variable Interest Entities	(4,809)	(28,358)
Repayments of Loans by Investor Members of Variable Interest Entities Related to Investments in Real Estate Partnerships	493	1,391
Decrease (Increase) in Securities Purchased Under Agreements to Resell, Net	2,000,000	(45,000)
Purchases of Available for Sale Securities	-	(82,516)
Available for Sale Securities Maturations and Repayments	76,810	57,385

Net Cash Provided by (Used in) Investing Activities	2,292,236	(701,150)

Cash Flows from Financing Activities:
Proceeds from Borrowed Funds, Net	70	-
Repayments of Borrowings, Net	(931,516)	(1,981,667)
Proceeds from Borrowed Funds Related to Company-Owned Life Insurance	-	38,120
Proceeds from Borrowed Funds Related to Investments by Variable Interest Entities in Real Estate Partnerships	2,193	2,539
Repayments of Borrowed Funds Related to Investments by Variable Interest Entities in Real Estate Partnerships	(8,512)	(9,131)
Proceeds from Capital Contributed to Variable Interest Entities Related to Investments in Real Estate Partnerships	34,382	13,411
Exercise of Stock Options and Employee Stock Purchases	10,263	20,925
Decrease in Bank Deposits	(2,691,928)	(405,365)
Purchase of Treasury Stock	(3,362)	(6,571)
Dividends on Common Stock	(28,397)	(26,878)
Excess Tax Benefits from Stock-Based Payment Arrangements	(564)	2,874

Net Cash Used in Financing Activities	(3,617,371)	(2,351,743)

Currency Adjustment:
Effect of Exchange Rate Changes on Cash	1,701	(4,758)
Net Decrease in Cash and Cash Equivalents	(1,377,099)	(2,884,084)
Cash Reduced by Deconsolidation of Certain Internally Sponsored Private Equity Limited Partnerships	-	(6,217)
Cash and Cash Equivalents at Beginning of Year	2,306,085	3,207,493

Cash and Cash Equivalents at End of Period	$ 928,986	$ 317,192

Supplemental Disclosures of Cash Flow Information:
Cash Paid for Interest	$ 27,860	$ 40,193
Cash Paid for Income Taxes	$ 110,258	$ 82,810
Loans Charged-off, Net	$ 44,686	$ 46,661

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2010

NOTE 1 - BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements include the accounts of Raymond James Financial, Inc. (“RJF”) and its consolidated subsidiaries that are generally controlled through a majority voting interest. RJF is a holding company headquartered in Florida whose subsidiaries are engaged in various financial service businesses; as used herein, the terms “our”, “we” or “us” refer to RJF and/or one or more of its subsidiaries. In addition, we consolidate any variable interest entities (“VIEs”) in which we are the primary beneficiary. Additional information on these VIEs is provided in Note 7 of these Notes to Condensed Consolidated Financial Statements. 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.

Certain financial information that is normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") but not required for interim reporting purposes has been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented.

The nature of our business is such that the results of any interim period are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended September 30, 2009, as filed with the United States of America (“U.S.”) Securities and Exchange Commission (the “2009 Form 10-K”). To prepare consolidated financial statements in conformity with GAAP, we must make certain 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 during the reporting period. Actual results could differ from those estimates and could have a material impact on the consolidated financial statements.

Reclassifications and Update of Significant Accounting Policies

Prior to October 1, 2009, we reported minority interest within mezzanine equity on our consolidated statements of financial condition and in minority interest in earnings of subsidiaries in our computation of net income. Effective October 1, 2009, we implemented new Financial Accounting Standards Board (“FASB”) guidance under which we now present noncontrolling interests within shareholders’ equity, separately from our equity. We have reclassified certain amounts previously reported in prior quarterly and year-to-date financial statements to retrospectively reflect noncontrolling interest within shareholders’ equity and to allocate net income (loss) between noncontrolling and our own interests.

Effective October 1, 2009 we implemented new FASB guidance regarding the computation of earnings per share which impacted the prior year computations. See Note 17 of these Notes to Condensed Consolidated Financial Statements for discussion of the change in method and its impact on prior quarterly and year-to-date periods.

On our Condensed Consolidated Statements of Income and Comprehensive Income for the three and six month periods ended March 31, 2009, we have reclassified $4.7 million, in both respective periods, of expense arising from our waiver of certain money market account investment advisory fees. This expense had been previously included as a component of Other Expense and has been reclassified to Investment Advisory Fees, resulting in a reduction of total revenues.

Certain other prior period amounts have been reclassified to conform to the current presentation.

A summary of our significant accounting policies is included in Note 1 on pages 77 – 88 of our 2009 Form 10-K. New FASB guidance related to the valuation of Private Equity Investments and the application of certain pronouncements applicable to nonfinancial assets and liabilities that are not measured at fair value on a recurring basis are discussed in Note 3 of these Notes to Condensed Consolidated Financial Statements. These two changes, together with the changes in minority interests and earnings per share discussed previously, are the only changes in significant accounting policies implemented since the year ended September 30, 2009.

NOTE 2 - CASH AND CASH EQUIVALENTS, ASSETS SEGREGATED PURSUANT TO REGULATIONS, AND DEPOSITS WITH CLEARING ORGANIZATIONS:

Our cash equivalents include money market funds or highly liquid investments not held for resale with original maturities of 90 days or less, other than those used for trading purposes. For further discussion of our accounting policies regarding assets segregated pursuant to regulations and other segregated assets, see Note 1 on page 78 of our 2009 Form 10-K.

The following are financial instruments that are cash and cash equivalents or other investment balances which are readily convertible into cash as of March 31, 2010 and September 30, 2009:

	March 31,	September 30,
	2010	2009
	(in 000's)
Cash and Cash Equivalents:
Cash in banks	$ 910,241	$ 1,085,202
U. S. Treasury securities(1)	240	1,206,914
Money market investments	18,505	13,969
Total cash and cash equivalents	928,986	2,306,085

Cash and securities segregated pursuant to federal regulations and other segregated assets (2)	2,253,594	2,310,261
Deposits with clearing organizations(3)	79,547	83,799
	$ 3,262,127	$ 4,700,145

(1)

Consists of U.S. Treasury Securities with maturities of 90 days or less. The balance at September 30, 2009 included $1.2 billion in U.S. Treasury Securities purchased as part of the transactions associated with the point-in-time regulatory balance sheet composition requirements of Raymond James Bank, FSB (“RJ Bank”). See Note 21 on page 127 of our 2009 Form 10-K for discussion of the September 30, 2009 point-in-time test.

(2)

Consists of cash and cash equivalents maintained in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934. Raymond James and Associates, Inc. (“RJ&A”), as a broker-dealer carrying client accounts, is subject to requirements related to maintaining cash or qualified securities in a segregated reserve account for the exclusive benefit of its clients. Additionally, our Canadian broker-dealer subsidiary Raymond James Ltd. (“RJ Ltd”) is required to hold client Registered Retirement Savings Plan funds in trust. RJ Bank maintains interest-bearing bank deposits that are restricted for pre-funding letter of credit draws related to certain syndicated borrowing relationships in which it is involved. These RJ Bank deposits are occasionally pledged as collateral for Federal Home Loan Bank (“FHLB”) advances.

(3)	Consists of deposits of cash and cash equivalents or other short-term securities held by other clearing organizations or exchanges.

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 79 - 82 in our 2009 Form 10-K.

There have been no material changes to our valuation models since our year ended September 30, 2009.

Effective October 1, 2009 we adopted new FASB accounting guidance regarding the method of determination of the fair value of certain of our investments within our Private Equity Investments. The application of the new accounting valuation guidance during the first quarter of fiscal year 2010 did not result in a significant change in the fair value determinations of our Private Equity Investments.

Our Private Equity Investments include various direct and third-party private equity and merchant banking investments. Private Equity Investments include approximately 45 private equity funds and Raymond James Employee Investment Funds I and II (collectively, the “Private Funds”). See Note 7 of these Notes to Condensed Consolidated Financial Statements for further discussion of the consolidation of the employee investment funds I and II which are variable interest entities. These Private Funds invest primarily in new and developing companies. Our investments in these funds cannot be redeemed directly with the funds; our investment is monetized through distributions received through the liquidation of the underlying assets of these funds. We estimate that the underlying assets of these funds will be liquidated over the life of these funds (typically 10 to 15 years). Approval by the management of these funds is required for us to sell or transfer these investments. Merchant banking investments include ownership interests in private companies with long-term growth potential. See Note 12 of these Notes to Condensed Consolidated Financial Statements for information regarding our unfunded commitments to these funds.

Effective January 1, 2010, we adopted new FASB accounting guidance which mandates the following disclosures that we had not previously included amongst our fair value disclosures: 1) the amount of significant transfers between levels 1 and 2 of the fair value hierarchy and the reasons for any such transfers. 2) The reason for any significant transfers into and out of Level 3. 3) Our policy for determining when transfers between levels within the fair value hierarchy are recognized. The additional disclosures required by this new pronouncement are included herein.

Recurring Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2010 and September 30, 2009 are presented below:

March 31, 2010 (in 000’s)	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 March 31, 2010

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 91	$ 145,542	$ 5,581	$ -	$ 151,214
Corporate Obligations	10,347	37,541	-	-	47,888
Government and Agency Obligations	6,695	56,309	-	-	63,004
Agency Mortgage Backed Securities (“MBS”) and Collateralized Mortgage Obligations (“CMOs”)	478	234,111	-	-	234,589
Non-Agency CMOs and Asset Backed Securities (“ABS”)	-	5,405	6,145	-	11,550
Total Debt Securities	17,611	478,908	11,726	-	508,245
Derivative Contracts	-	77,756	13	(52,745)	25,024
Equity Securities	163,264	691	-	-	163,955
Other Securities	30	1,750	1,574	-	3,354
Total Trading Instruments	180,905	559,105	13,313	(52,745)	700,578

Available for Sale Securities:
Agency MBS and CMOs	-	227,314	-	-	227,314
Non-Agency CMOs	-	221,820	1,623	-	223,443
Other Securities	9	5,009	-	-	5,018
Total Available for Sale Securities	9	454,143	1,623	-	455,775

Private Equity and Other Investments:
Private Equity Investments	-	-	157,797(3)	-	157,797
Other Investments	149,522	5,625	222	-	155,369
Total Private Equity and Other Investments	149,522	5,625	158,019	-	313,166

Other Assets	-	68	-	-	68
Total	$ 330,436	$ 1,018,941	$ 172,955	$ (52,745)	$ 1,469,587

Liabilities:
Trading Instruments Sold but Not Yet Purchased:
Municipal and Provincial Obligations	$ -	$ 794	$ -	$ -	$ 794
Corporate Obligations	9	414	-	-	423
Government Obligations	113,833	-	-	-	113,833
Agency MBS and CMOs	37	-	-	-	37
Total Debt Securities	113,879	1,208	-	-	115,087
Derivative Contracts	-	56,007	38	(51,250)	4,795
Equity Securities	11,881	15	-	-	11,896
Total Trading Instruments Sold but Not Yet Purchased	125,760	57,230	38	(51,250)	131,778

Other Liabilities	-	8	46	-	54
Total	$ 125,760	$ 57,238	$ 84	$ (51,250)	$ 131,832

(1)	We had no significant transfers of financial instruments between Level 1 and Level 2 during the period ended March 31, 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 $87 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 March 31, 2010.

September 30, 2009 (in 000’s)	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Netting Adjustments(1)	Balance as of September 30,2009

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 21	$ 129,897	$ 5,316	$ -	$ 135,234
Corporate Obligations	4,369	16,317	-	-	20,686
Government and Agency Obligations	39,365	7,660	-	-	47,025
Agency MBS and CMOs	10	95,336	-	-	95,346
Non-Agency CMOs and ABS	-	37,852	10,915	-	48,767
Total Debt Securities	43,765	287,062	16,231	-	347,058
Derivative Contracts	-	104,956	222	(74,255)	30,923
Equity Securities	49,006	1,337	-	-	50,343
Other Securities	37	2,165	919	-	3,121
Total Trading Instruments	92,808	395,520	17,372	(74,255)	431,445

Available for Sale Securities:
Agency MBS and CMOs	-	272,892	-	-	272,892
Non-Agency CMOs	-	228,567	2,596	-	231,163
Other Securities	8	5,010	-	-	5,018
Total Available for Sale Securities	8	506,469	2,596	-	509,073

Private Equity and Other Investments:
Private Equity Investments	-	-	142,671(2)	-	142,671
Other Investments	143,545	4,946	227	-	148,718
Total Private Equity and Other Investments	143,545	4,946	142,898	-	291,389

Other Assets	-	322	-	-	322
Total	$ 236,361	$ 907,257	$ 162,866	$ (74,255)	$ 1,232,229

Liabilities:
Trading Instruments Sold but Not Yet Purchased:
Municipal and Provincial Obligations	$ -	$ 241	$ -	$ -	$ 241
Corporate Obligations	-	478	-	-	478
Government Obligations	55,327	-	-	-	55,327
Agency MBS and CMOs	302	360	-	-	662
Total Debt Securities	55,629	1,079	-	-	56,708
Derivative Contracts	-	85,375	-	(81,518)	3,857
Equity Securities	29,367	3,353	-	-	32,720
Other Securities	-	91	-	-	91
Total Trading Instruments Sold but Not Yet Purchased	84,996	89,898	-	(81,518)	93,376

Other Liabilities	-	6	59	-	65
Total	$ 84,996	$ 89,904	$ 59	$ (81,518)	$ 93,441

(1)	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.

(2)

Includes $76.1 million in private equity investments of which the weighted average portion we own is approximately 19% as of September 30, 2009. 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 $61.3 million of that total as of September 30, 2009.

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.

The following tables present additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the three and six months ended March 31, 2010 and 2009:


			Level 3 Financial Assets at Fair Value
Three Months Ended March 31, 2010 (in 000’s)	Fair Value, December 31,2009	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, March 31,2010	Change in Unrealized Gains/ (Losses) Related to Financial Instruments Held at March 31,2010

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 5,323	$ 258		$ -	$ -	$ -	$ -	$ 5,581	$ 258
Non-Agency CMOs and ABS	9,176	(156)		-	(2,875)	-	-	6,145	414
Derivative Contracts	-	13		-	-	-	-	13	13
Other Securities	1,460	110		-	4	-	-	1,574	110

Available for Sale Securities:
Non-Agency CMOs	2,621	(1,772)		858	(84)	-	-	1,623	(1,772)

Private Equity and Other Investments
Private Equity Investments	144,967	12,376(1)		-	454	-	-	157,797	12,376
Other Investments	223	(1)		-	-	-	-	222	(1)

Liabilities:
Derivative Contracts	$ (117)	$ 79		$ -	$ -	$ -	$ -	$ (38)	$ 79
Other Liabilities	(46)	-		-	-	-	-	(46)	-

(1)	Primarily results from the write-up of a private equity investment. Since we only own a portion of these investments, only $1.8 million of the gain is included in net income attributable to RJF (after noncontrolling interests).

									Change in
									Unrealized
			Level 3 Financial Assets at Fair Value						Gains/
				Total					(Losses)
				Unrealized					Related to
		Total Realized		Gains/(Losses)	Purchases,				Financial
		/Unrealized		Included in	Issuances,				Instruments
	Fair Value,	Gains/(Losses)		Other	and	Transfers	Transfers	Fair Value,	Held at
Six Months Ended	September 30,	Included in		Comprehensive	Settlements,	Into	Out of	March 31,	March 31,
March 31, 2010 (in 000’s)	2009	Earnings		Income	Net	Level 3	Level 3	2010	2010

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 5,316	$ 265		$ -	$ -	$ -	$ -	$ 5,581	$ 265
Non-Agency CMOs and ABS	10,915	(496)		-	(4,274)	-	-	6,145	(12)
Derivative Contracts	222	(209)		-	-	-	-	13	(75)
Other Securities	919	634		-	21	-	-	1,574	633

Available for Sale Securities:
Non-Agency CMOs	2,596	(2,324)		1,569	(218)	-	-	1,623	(2,324)

Private Equity and Other Investments:
Private Equity Investments	142,671	12,073(1)		-	3,053	-	-	157,797	12,073
Other Investments	227	(5)		-	-	-	-	222	(5)

Liabilities:
Derivative Contracts	$ -	$ (38)		$ -	$ -	$ -	$ -	$ (38)	$ (38)
Other Liabilities	(59)	13		-	-	-	-	(46)	(7)

(1)	Primarily results from the write-up of a private equity investment. Since we only own a portion of these investments, only $1.8 million of the gain is included in net income attributable to RJF (after noncontrolling interests).

							Change in
							Unrealized
	Level 3 Financial Assets at Fair Value						Gains/
			Total				(Losses)
			Unrealized				Related to
		Total Realized	Gains/(Losses)	Purchases,			Financial
		/Unrealized	Included in	Issuances,	Transfers		Instruments
	Fair Value,	Gains/(Losses)	Other	and	In and/	Fair Value,	Held at
Three Months Ended	December 31,	Included in	Comprehensive	Settlements,	or Out of	March 31,	March 31,
March 31, 2009 (in 000’s)	2008	Earnings	Income	Net	Level 3	2009	2009

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 8,028	$ (66)	$ -	$ -	$ -	$ 7,962	$ (66)
Corporate Obligations	1,114	-	-	(1,114)	3,834(1)	3,834	-
Non-Agency CMOs and ABS	17,446	(1,617)	-	(345)	-	15,484	(1,863)

Available for Sale Securities:
Non-Agency CMOs	7,434	(5,396)	3,304	(19)	-	5,323	(5,396)

Private Equity and Other Investments:
Investments:
Private Equity Investments	157,176	(45)	-	(26,229)(2)	-	130,902	-
Other Investments	714	99	-	(592)	-	221	-

Liabilities:
Other Liabilities	$ (267)	$ 14	$ -	$ -	$ -	$ (253)	$ (20)

(1)	The level classification transfer of a corporate obligation was driven by changes in the price transparency for the security. This classification transfer occurred as of the end of the reporting period.

(2)	Excluding the impact of the deconsolidation during the three months ended March 31, 2009 of certain internally sponsored private equity limited partnerships, the purchases of private equity investments net of any distributions received was $2.3 million for the period presented.

							Change in
							Unrealized
	Level 3 Financial Assets at Fair Value						Gains/
			Total				(Losses)
			Unrealized				Related to
		Total Realized	Gains/(Losses)	Purchases,			Financial
		/Unrealized	Included in	Issuances,	Transfers		Instruments
	Fair Value,	Gains/(Losses)	Other	and	In and/	Fair Value,	Held at
Six Months Ended	September 30,	Included in	Comprehensive	Settlements,	or Out of	March 31,	March 31,
March 31, 2009 (in 000’s)	2008	Earnings	Income	Net	Level 3	2009	2009

Assets:
Trading Instruments:
Municipal and Provincial Obligations	$ 7,107	$ (416)	$ -	$ 1,271	$ -	$ 7,962	$ (416)
Corporate Obligations	-	(138)	-	138	3,834(1)	3,834	(138)
Non-Agency CMOs and ABS	20,220	(2,613)	-	(2,123)	-	15,484	(2,996)

Available for Sale Securities:
Non-Agency CMOs	8,710	(5,967)	2,656	(76)	-	5,323	(5,967)

Private Equity and Other Investments:
Private Equity Investments	153,282	(375)	-	(22,005)(2)	-	130,902	(247)
Other Investments	844	132	-	(755)	-	221	(130)

Liabilities:
Other Liabilities	$ (178)	$ (75)	$ -	$ -	$ -	$ (253)	$ (109)

(1)	The level classification transfer of a corporate obligation was driven by changes in the price transparency for the security. This classification transfer occurred as of the end of the reporting period.

(2)	Excluding the impact of the deconsolidation during the three months ended March 31, 2009 of certain internally sponsored private equity limited partnerships, the purchases of private equity investments net of any distributions received was $6.5 million for the period presented.

As of March 31, 2010, 9.6% of our assets and 1.0% 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 March 31, 2010 represent 11.8% of our assets measured at fair value. As of March 31, 2009, 5.8% and 0.5% 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 March 31, 2009 represented 15.6% of our assets measured at fair value.

Gains and losses (realized and unrealized) included in net income for the three and six months ended March 31, 2010 and 2009 are reported in net trading profits and other revenues in our Condensed Consolidated Statements of Income as follows:

For the Three Months Ended March 31, 2010 (in 000’s)	Net Trading Profits	Other Revenues

Total gains or (losses) included in earnings	$ 211	$ 10,696
Change in unrealized gains or (losses) relating to assets still held at reporting date	$ 781	$ 10,696

For the Six Months Ended March 31, 2010 (in 000’s)	Net Trading Profits	Other Revenues

Total gains or (losses) included in earnings	$ 398	$ 9,516
Change in unrealized gains or (losses) relating to assets still held at reporting date	$ 881	$ 9,630

For the Three Months Ended March 31, 2009 (in 000’s)	Net Trading Profits	Other Revenues

Total losses included in earnings	$ (1,683)	$ (5,328)
Change in unrealized losses relating to assets still held at reporting date	$ (1,929)	$ (5,416)

For the Six Months Ended March 31, 2009 (in 000’s)	Net Trading Profits	Other Revenues

Total losses included in earnings	$ (3,167)	$ (6,285)
Change in unrealized losses relating to assets still held at reporting date	$ (3,550)	$ (6,453)

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.

Effective October 1, 2009, we adopted new accounting guidance regarding the application of certain fair value accounting pronouncements applicable to nonfinancial assets (such as Other Real Estate Owned ) and nonfinancial liabilities that are not measured at fair value on a recurring basis. Although goodwill is a nonfinancial asset measured on a nonrecurring basis, it is not included within the table below as the outcome of our most recent annual impairment test performed as of December 31, 2009 concluded that there was no impairment of goodwill. Accordingly, the table below provides information, by level within the fair value hierarchy, for both financial and nonfinancial assets measured at fair value on a nonrecurring basis during the six month period and held at March 31, 2010.

	Fair Value Measurements
	Quoted Prices in	Significant Other	Significant
	Active Markets for	Observable	Unobservable	Balance as of
	Identical Assets	Inputs	Inputs	March 31,
March 31, 2010 (in 000’s)	(Level 1)	(Level 2)	(Level 3)	2010

Assets at fair value on a nonrecurring basis:
Bank Loans, Net(1)	$ -	$ 6,690	$ 46,484	$ 53,174
Other Real Estate Owned (2)	-	21,821	-	21,821

(1)	Includes individual loans classified as held for sale, which were measured at a fair value lower than cost at March 31, 2010.

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

The following table presents financial instruments by level within the fair value hierarchy at September 30, 2009, for which a nonrecurring change in fair value was recorded.

	Fair Value Measurements
	Quoted Prices in	Significant Other	Significant
	Active Markets for	Observable	Unobservable	Balance as of
	Identical Assets	Inputs	Inputs	September 30,
September 30, 2009 (in 000’s)	(Level 1)	(Level 2)	(Level 3)	2009

Assets at fair value on a nonrecurring basis:
Bank Loans, Net	$ -	$ -	$ 69,193	$ 69,193

The adjustment to fair value of the nonrecurring fair value measures for the six months ended March 31, 2010 resulted in $20.5 million in additional loan loss provision expense and charge-offs as well as $2.2 million in other losses during the six month period.

For a discussion of our accounting policies for impairment of loans held for investment, loans held for sale, and other real estate owned, see Note 1 on pages 83 - 85 of our 2009 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 March 31, 2010, 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 92 - 93 of our 2009 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 at March 31, 2010 and September 30, 2009, respectively, are as follows:

	March 31, 2010		September 30, 2009
	Carrying	Estimated	Carrying	Estimated
	Amount	Fair Value	Amount	Fair Value
	(in 000’s)
Financial Assets:
Bank Loans, Net	$ 6,236,923	$ 6,242,507	$ 6,593,973	$ 6,597,496
Financial Liabilities:
Bank Deposits	6,731,459	6,737,462	9,423,387	9,428,892
Other Borrowings	50,070	51,860	980,000	982,741
Corporate Debt	357,521	400,728	359,034	398,108

NOTE 4 – TRADING INSTRUMENTS AND TRADING INSTRUMENTS SOLD BUT NOT YET PURCHASED:

	March 31, 2010		September 30, 2009
	Trading Instruments	Instruments Sold but Not Yet Purchased	Trading Instruments	Instruments Sold but Not Yet Purchased
	(in 000's)

Provincial and Municipal Obligations	$ 151,214	$ 794	$ 135,234	$ 241
Corporate Obligations	47,888	423	20,686	478
Government and Agency Obligations	63,004	113,833	47,025	55,327
Agency MBS and CMOs	234,589	37	95,346	662
Non-Agency CMOs and ABS	11,550	-	48,767	-
Total Debt Securities	508,245	115,087	347,058	56,708

Derivative Contracts	25,024	4,795	30,923	3,857
Equity Securities	163,955	11,896	50,343	32,721
Other Securities	3,354	-	3,121	90
Total	$ 700,578	$ 131,778	$ 431,445	$ 93,376

Auction rate securities totaling $6 million and $5.8 million at March 31, 2010 and September 30, 2009, respectively, are predominately included within Provincial and Municipal Obligations presented in the table above. There were no auction rate securities in Trading Instruments Sold but Not Yet Purchased as of either March 31, 2010 or September 30, 2009.

See Note 3 of these Notes to Condensed Consolidated Financial Statements for additional information regarding the fair value of Trading Instruments and Trading Instruments Sold but Not Yet Purchased.

NOTE 5 - AVAILABLE FOR SALE SECURITIES:

Available for sale securities are comprised primarily of CMOs and other mortgage-related debt securities owned by RJ Bank, and certain equity securities owned by our non-broker-dealer subsidiaries. There were no proceeds from the sale of available for sale securities for either of the six month periods ended March 31, 2010 or 2009.

The amortized cost and fair values of securities available for sale at March 31, 2010 and September 30, 2009 are as follows:

	March 31, 2010
	Cost Basis	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(in 000's)

Available for Sale Securities:
Agency MBS and CMOs	$ 227,650	$ 449	$ (785)	$ 227,314
Non-Agency CMOs(1)	292,014	-	(68,571)	223,443
Other Securities	5,000	9	-	5,009

Total RJ Bank Available for Sale Securities	524,664	458	(69,356)	455,766

Other Securities	3	6	-	9

Total Available for Sale Securities	$ 524,667	$ 464	$ (69,356)	$ 455,775

(1)	As of March 31, 2010, the non-credit portion of other-than-temporary impairment (“OTTI”) recorded in Accumulated Other Comprehensive Income (“AOCI”) was $32.4 million (before taxes).

	September 30, 2009
	Cost Basis	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(in 000's)

Available for Sale Securities:
Agency MBS and CMOs	$ 275,995	$ 213	$ (3,316)	$ 272,892
Non-Agency CMOs(1)	325,823	-	(94,660)	231,163
Other Securities	5,000	10	-	5,010

Total RJ Bank Available for Sale Securities	606,818	223	(97,976)	509,065

Other Securities	3	5	-	8

Total Available for Sale Securities	$ 606,821	$ 228	$ (97,976)	$ 509,073

(1)	As of September 30, 2009, the non-credit portion of OTTI recorded in AOCI was $20.5 million (before taxes).

See Note 3 of these Notes to Condensed Consolidated Financial Statements for additional information regarding the fair value of Available for Sale Securities.

Since RJ Bank’s available for sale securities are backed by mortgages, actual maturities will differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. The contractual maturities, carrying values, and current yields for RJ Bank's available for sale securities at March 31, 2010 are as follows:

	Within One Year		After One But Within Five Years		After Five But Within Ten Years		After Ten Years		Total
	Balance Due	Weighted Average Yield	Balance Due	Weighted Average Yield	Balance Due	Weighted Average Yield	Balance Due	Weighted Average Yield	Balance Due	Weighted Average Yield
	($ in 000’s)


Agency MBS & CMOs	$ -	-	$ 2,596	0.76%	$ 92,082	0.78%	$ 132,636	0.82%	$ 227,314	0.80%
Non-Agency CMOs	-	-	-	-	-	-	223,443	5.53%	223,443	5.53%
Other Securities	5,009	0.33%	-	-	-	-	-	-	5,009	0.33%
	$ 5,009		$ 2,596		$ 92,082		$ 356,079		$ 455,766

Impaired Securities

For a further discussion of our Available for Sale Securities’ accounting policies, including the fair value determination processes, see Note 1 pages 80 - 81 in our 2009 Form 10-K.

RJ Bank’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2010 and September 30, 2009 are as follows:

	March 31, 2010
	Less than 12 Months		12 Months or More		Total
	Estimated Fair Value	Unrealized Losses	Estimated Fair Value	Unrealized Losses	Estimated Fair Value	Unrealized Losses
	(in 000’s)

Agency MBS and CMOs	$ 3,833	$ (6)	$ 169,495	$ (779)	$ 173,328	$ (785)

Non-Agency CMOs	-	-	223,443	(68,571)	223,443	(68,571)


Total Impaired Securities	$ 3,833	$ (6)	$ 392,938	$ (69,350)	$ 396,771	$ (69,356)

	September 30, 2009
	Less than 12 Months		12 Months or More		Total
	Estimated Fair Value	Unrealized Losses	Estimated Fair Value	Unrealized Losses	Estimated Fair Value	Unrealized Losses
	(in 000’s)

Agency MBS and CMOs	$ 85,500	$ (873)	$ 167,952	$ (2,443)	$ 253,452	$ (3,316)

Non-Agency CMOs	-	-	231,163	(94,660)	231,163	(94,660)


Total Impaired Securities	$ 85,500	$ (873)	$ 399,115	$ (97,103)	$ 484,615	$ (97,976)

The reference point for determining when securities are in a loss position is the reporting period-end. As such, it is possible that a security had a fair value that exceeded its amortized cost on other days during the period.

Agency MBS and CMOs

The Federal National Mortgage Association (“FNMA”) or Federal Home Loan Mortgage Corporation (“FHLMC”), both of which were placed under the conservatorship of the U.S. Government on September 7, 2008, as well as the Government National Mortgage Association (“GNMA”), guarantee the contractual cash flows of the agency mortgage-backed securities. At March 31, 2010, of the 68 U.S. government-sponsored enterprise mortgage-backed securities in a continuous unrealized loss position, nine were in a continuous unrealized loss position for less than 12 months and 59 for 12 months or more. The unrealized losses at March 31, 2010 were primarily due to the continued illiquidity and uncertainty in the markets. We do not consider these securities other-than-temporarily impaired due to the guarantee provided by FNMA, FHLMC, and GNMA as to the full payment of principal and interest, and the fact that we have the ability and intent to hold these securities to maturity.

Non-Agency CMOs

As of March 31, 2010 and including subsequent ratings changes, $17.1 million of the non-agency CMOs were rated AAA by two rating agencies, and $206.3 million were rated less than AAA by at least one rating agency. At March 31, 2010, all of the 27 non-agency CMOs were in a continuous unrealized loss position for 12 months or more. All of the non-agency securities carry various amounts of credit enhancement, and none are collateralized with subprime loans. These securities were purchased based on the underlying loan characteristics such as loan to value (“LTV”) ratio, credit scores, property type, location, and level of credit enhancement. Current characteristics of each security owned, such as delinquency and foreclosure levels, credit enhancement, projected losses, and coverage are reviewed monthly by management. Only those non-agency CMOs whose entire amortized cost basis we do not expect to recover are considered to be other-than-temporarily impaired as we have the ability and intent to hold these securities to maturity.

Other-Than-Temporarily Impaired Securities

Based on the expected cash flows derived from our valuation model, we expect to recover the remaining unrealized losses on non-agency CMOs. However, it is possible that the underlying loan collateral of these securities will perform worse than current expectations, which may lead to adverse changes in the cash flows expected to be collected on these securities and potential future OTTI securities losses. Significant assumptions used in the valuation of non-agency CMOs include default rates, loss severity, and prepayment rates.

The significant assumptions used in the valuation of non-agency CMOs as of March 31, 2010 are as follows:

	March 31, 2010
	Range	Weighted Average(1)

Default Rate	1.7% - 31.5%	13.5%
Loss Severity	6.3% - 48.0%	33.8%
Prepayment Rate	10.6% - 39.2%	18.4%

(1)	Represents the expected activity for the next twelve months.

Although there is no intent to sell our non-agency CMOs and it is not more likely than not that we will be required to sell these securities, we do not expect to recover the entire amortized cost basis of certain securities within this portfolio, and therefore, we recorded $2.4 million of OTTI in other revenue and reversed $581,000 from AOCI for the three months ended March 31, 2010. We recorded $5.4 million of OTTI in other revenue and recorded $11.9 million in AOCI for the six months ended March 31, 2010.

For certain securities which were identified as other-than-temporarily impaired during the three months ended March 31, 2009, we recorded $6.2 million of OTTI in other revenue and $4.8 million in AOCI. For the six months ended March 31, 2009, we recorded $6.7 million of OTTI in other revenue and $4.8 million in AOCI.

Changes in the amount related to credit losses recognized in earnings on available for sale securities are as follows:

	Three Months Ended		Six Months Ended
	March 31,2010	March 31,2009	March 31,2010	March 31,2009
	(in 000’s)
Amount related to credit losses on securities we held
at the beginning of the period	$ 17,430	$ 5,440	$ 17,762	$ 4,869
Additions to the amount related to credit loss for
which an OTTI was not previously recognized	184	5,376	1,789	5,376
Additional increases to the amount related to credit loss for
which an OTTI was previously recognized	2,255	789	3,649	1,360
Decreases to the amount related to credit losses for
worthless securities	-	-	(3,331)	-
Amount related to credit losses on securities we held
at the end of the period	$ 19,869	$ 11,605	$ 19,869	$ 11,605

NOTE 6 – BANK LOANS, NET:

Bank client receivables are primarily comprised of loans originated or purchased by RJ Bank and include commercial and residential real estate loans, as well as commercial and consumer loans. These receivables are collateralized by first or second mortgages on residential or other real property, by other assets of the borrower, or are unsecured.

For a discussion of our accounting policies regarding bank loans, including the policies regarding the allowance for loan losses, nonaccrual and impaired loans, charge-offs and other real estate owned, see Note 1 pages 83 - 85 in our 2009 Form 10-K.

The following table presents the balance and associated percentage of each major loan category in RJ Bank's portfolio, including loans receivable and loans held for sale as of March 31, 2010 and September 30, 2009:

	March 31, 2010		September 30, 2009
	Balance	%	Balance	%
	($ in 000’s)

Commercial Loans	$ 752,319	12%	$ 851,657	13%
Real Estate Construction Loans	81,403	1%	163,951	3%
Commercial Real Estate Loans (1)	3,320,199	52%	3,343,989	49%
Residential Mortgage Loans	2,244,362	35%	2,398,822	35%
Consumer Loans	25,334	-	22,816	-

Total Loans	6,423,617	100%	6,781,235	100%

Net Unearned Income and Deferred Expenses (2)	(38,336)		(36,990)
Allowance for Loan Losses	(148,358)		(150,272)

	(186,694)		(187,262)

Loans, Net	$ 6,236,923		$ 6,593,973

(1)

Of this amount, $1.1 billion and $1.2 billion is secured by non-owner occupied commercial real estate properties or their repayment is dependent upon the operation or sale of commercial real estate properties as of March 31, 2010 and September 30, 2009, respectively. The remainder is wholly or partially secured by real estate, the majority of which is also secured by other assets of the borrower.

(2)	Includes purchase premiums, purchase discounts, and net deferred origination fees and costs.

At March 31, 2010 and September 30, 2009, RJ Bank had $50 million and $950 million, respectively, in FHLB advances outstanding which were secured by a blanket lien on RJ Bank's residential mortgage loan portfolio. See Note 9 of these Notes to Condensed Consolidated Financial Statements for more information regarding the FHLB advances.

At March 31, 2010 and September 30, 2009, RJ Bank had $10.1 million and $40.5 million in loans held for sale, respectively. RJ Bank's gain from the sale of these loans held for sale was $240,000 and $158,000, which was recorded in Other Revenues on our Condensed Consolidated Statements of Income for the six months ended March 31, 2010 and 2009, respectively.

The following table shows the contractual maturities of RJ Bank’s loan portfolio at March 31, 2010, including contractual principal repayments. This table does not, however, include any estimates of prepayments. These prepayments could significantly shorten the average loan lives and cause the actual timing of the loan repayments to differ from those shown in the following table:

	Due in
	1 Year or Less	1 Year – 5 Years	> 5 Years	Total
	(in 000’s)

Commercial Loans	$ 51,415	$ 650,198	$ 50,706	$ 752,319
Real Estate Construction Loans	8,435	72,968	-	81,403
Commercial Real Estate Loans(1)	511,748	2,579,506	228,945	3,320,199
Residential Mortgage Loans	771	12,207	2,231,384	2,244,362
Consumer Loans	25,038	271	25	25,334

Total Loans	$ 597,407	$ 3,315,150	$ 2,511,060	$ 6,423,617

(1)

Of this amount, $1.1 billion is secured by non-owner occupied commercial real estate properties or their repayment is dependent upon the operation or sale of commercial real estate properties as of March 31, 2010. The remainder is wholly or partially secured by real estate, the majority of which is also secured by other assets of the borrower.

The following table shows the comparative data for nonperforming loans and assets:

	March 31, 2010	September 30, 2009
	($ in 000’s)
Nonaccrual Loans:
Corporate	$ 58,633	$ 73,961
Residential/Consumer(1)	75,762	55,097
Total	134,395	129,058

Accruing Loans Which are 90 Days Past Due:
Corporate	-	12,461
Residential/Consumer	6,819	16,863
Total	6,819	29,324

Total Nonperforming Loans	141,214	158,382

Real Estate Owned and Other Repossessed Assets, Net:
Corporate	16,687	4,646
Residential/Consumer	8,702	4,045
Total	25,389	8,691

Total Nonperforming Assets, Net	$ 166,603	$ 167,073
Total Nonperforming Assets as a % of Total Loans, Net and Other Real Estate
Owned, Net	2.66%	2.53%

(1)	Of the total residential/consumer nonaccrual loans, there are residential mortgage loans totaling $59.7 million and $43.8 million as of March 31, 2010 and September 30, 2009, respectively, for which a charge-off had previously been recorded.

As of March 31, 2010, RJ Bank did not have any commitments to lend to borrowers whose loans were classified as nonperforming.

The gross interest income related to the nonperforming loans reflected in the previous table, which would have been recorded had these loans been current in accordance with their original terms, totaled $2.5 million and $5 million for the three and six month periods ended March 31, 2010. The interest income recognized on nonaccrual loans was $372,000 and $557,000 for the three and six month periods ended March 31, 2010.

The following table provides a summary of RJ Bank’s impaired loans, troubled debt restructurings included in these impaired loans, and commitments to lend additional funds as of March 31, 2010 and September 30, 2009:

	March 31, 2010		September 30, 2009
	Gross Recorded Investment	Allowance For Losses (1)	Gross Recorded Investment	Allowance For Losses (1)
	(in 000’s)
Impaired Loans with Allowance for Loan Losses:
Corporate	$ 55,198	$ 16,734	$ 68,549	$ 7,383
Residential/Consumer	5,070	1,700	2,879	1,507
Total	60,268	18,434	71,428	8,890

Impaired Loans without Allowance for Loan Losses: (2)
Corporate	$ 3,435	$ -	$ 5,411	$ -
Residential/Consumer	1,215	-	1,244	-
Total	4,650	-	6,655	-
Total Impaired Loans	$ 64,918	$ 18,434	$ 78,083	$ 8,890

Troubled Debt Restructurings:
Corporate	$ 6,900	$ 3,629	$ 3,479	$ 202
Residential/Consumer	3,913	711	1,325	186
Total	$ 10,813	$ 4,340	$ 4,804	$ 388

(1)	All recorded impaired loan balances have had reserves established based upon management’s analysis.

(2)	When the discounted cash flows, collateral value or market value equals or exceeds the carrying value of the loan, then the loan does not require an allowance.

As of March 31, 2010 and September 30, 2009, RJ Bank did not have any commitments to lend to borrowers whose existing loans were troubled debt restructurings.

The average balance of the impaired loans and the related interest income recognized in the Condensed Consolidated Statements of Income for the three and six months ended March 31, 2010 and 2009 were as follows:

	Three Months Ended		Six Months Ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
	(in 000’s)

Average Impaired Loan Balance:
Corporate	$ 48,337	$ 52,274	$ 54,443	$ 44,364
Residential/Consumer	6,282	1,721	4,964	1,409
Total	$ 54,619	$ 53,995	$ 59,407	$ 45,773

Interest Income Recognized:
Corporate	$ -	$ -	$ -	$ -
Residential/Consumer	25	9	53	9
Total	$ 25	$ 9	$ 53	$ 9

Changes in the allowance for loan losses at RJ Bank were as follows:

	Three Months Ended		Six Months Ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
	($ in 000’s)
Allowance for Loan Losses, Beginning of Period	$ 149,164	$ 106,140	$ 150,272	$ 88,155
Provision For Loan Losses	19,937	74,979	42,772	99,849
Charge-Offs:
Commercial Real Estate Loans	(13,055)	(34,152)	(29,656)	(37,294)
Residential Mortgage Loans	(8,253)	(5,934)	(17,784)	(9,677)
Consumer Loans	(49)	-	(49)	-
Total Charge-Offs	(21,357)	(40,086)	(47,489)	(46,971)
Recoveries:
Commercial Real Estate Loans	19	1	2,023	1
Residential Mortgage Loans	595	309	780	309
Total Recoveries	614	310	2,803	310
Net Charge-Offs	(20,743)	(39,776)	(44,686)	(46,661)
Allowance for Loan Losses, End of Period	$ 148,358	$ 141,343	$ 148,358	$ 141,343

Net Charge-Offs to Average Bank Loans, Net Outstanding (annualized)	1.27%	2.05%	1.35%	1.21%

The reserves for unfunded lending commitments, included in Trade and Other Payables on our Condensed Consolidated Statements of Financial Condition, were $10.3 million and $9.4 million at March 31, 2010 and September 30, 2009, respectively.

RJ Bank’s net interest income after provision for loan losses for the three months ended March 31, 2010 and 2009 was $47.2 million and $9 million, respectively. RJ Bank’s net interest income after provision for loan losses for the six months ended March 31, 2010 and 2009 was $90 million and $78.6 million, respectively.

NOTE 7 - VARIABLE INTEREST ENTITIES:

A VIE requires consolidation by the entity’s primary beneficiary. Refer to Note 1 page 86 and Note 8 pages 102 - 105 in our 2009 Form 10-K for a further description of our policies regarding consolidation of VIEs and our principal involvement with VIEs.

We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we are the primary beneficiary. We hold variable interests in the following entities: Raymond James Employee Investment Funds I and II (the “EIF Funds”), a trust fund established for employee retention purposes, certain low income housing tax credit fund entities in which Raymond James Tax Credit Funds, Inc. (“RJTCF”) holds an interest, and various other partnerships involving real estate.

VIEs where we are the Primary Beneficiary

Of the VIEs in which we hold an interest, we have determined that the EIF Funds, the trust fund established for retention purposes, and certain of RJTCF’s low income housing tax credit fund entities are required to be consolidated in our financial statements as we are the primary beneficiary of those VIEs.

The following table presents information about the assets, liabilities, and equity of the VIEs which we consolidate and are included within our Condensed Consolidated Statements of Financial Condition. The Noncontrolling Interests presented in this table represent the portion of these net assets which are not ours:

	March 31, 2010	September 30, 2009
	(in 000's)
Assets:
Cash and Cash Equivalents	$ 15,486	$ 12,393
Receivables, Other	2,387	2,803
Investments in Real Estate Partnerships – Held by Variable Interest Entities	274,948	270,139
Trust Fund Investment in Raymond James Financial, Inc. Common Stock(1)	15,296	12,120
Prepaid Expenses and Other Assets	16,327	17,195

Total Assets	$ 324,444	$ 314,650

Liabilities And Equity:
Loans Payable Related to Investments by Variable Interest Entities in Real Estate Partnerships(2)	$ 82,925	$ 89,244
Trade and Other Payable	3,010	1,964
Intercompany Payable	11,739	20,033

Total Liabilities	97,674	111,241

RJF Equity	53,630	55,092
Noncontrolling Interests	173,140	148,317

Total Equity	226,770	203,409

Total Liabilities and Equity	$ 324,444	$ 314,650

(1)	Included in treasury stock in our Condensed Consolidated Statements of Financial Condition.

(2)	Comprised of several non-recourse loans. We are not contingently liable under any of these loans.

The following table presents information about the net loss of the VIEs for the three and six month periods ended March 31, 2010 and 2009, which we consolidate and are included within our Condensed Consolidated Statements of Income. The Noncontrolling Interests presented in this table represent the portion of the net loss from these VIEs which are not ours.

	Three Months Ended		Six Months Ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
	(in 000’s)
Revenues:
Interest	$ 6	$ 55	$ 12	$ 176
Other	1,126	467	2,169	1,888

Total Revenues	1,132	522	2,181	2,064

Interest Expense	1,112	1,313	2,225	2,710
Net Revenues (Expense)	20	(791)	(44)	(646)

Non-Interest Expenses	6,272	4,532	9,965	7,990

Net Loss Including Noncontrolling Interests	(6,252)	(5,323)	(10,009)	(8,636)

Net Loss Attributable to Noncontrolling Interests	(5,694)	(5,513)	(8,547)	(8,582)

Net (Loss) Income Attributable to RJF	$ (558)	$ 190	$ (1,462)	$ (54)

EIF Funds

We are deemed to be the primary beneficiary, and accordingly, we consolidate the EIF Funds, which have combined assets of approximately $17.3 million and $18.4 million at March 31, 2010 and September 30, 2009, respectively. None of those assets act as collateral for any obligations of the EIF Funds. Our exposure to loss is limited to our contributions and the non-recourse loans funded to the employee investors, for which their partnership interests serve as collateral. This exposure is approximately $114,000 and $2 million at March 31, 2010 and September 30, 2009, respectively.

Restricted Stock Trust Fund

We are deemed to be the primary beneficiary, and accordingly, consolidate this trust fund used in connection with one of our restricted stock plans. The trust fund has assets of approximately $15.3 million and $12.3 million at March 31, 2010 and September 30, 2009, respectively. None of those assets are specifically pledged as collateral for any obligations of the trust fund. Our exposure to loss is limited to our contributions to the trust fund and that exposure is approximately $15.3 million and $12.3 million at March 31, 2010 and September 30, 2009, respectively.

Low Income Housing Partnerships

RJTCF is the managing member or general partner in 62 separate tax credit housing funds having one or more investor members or limited partners.

RJTCF has concluded that it is the primary beneficiary in 13 of the 60 low income housing tax credit funds it has determined to be VIEs, and accordingly, consolidates these funds, which have combined assets of approximately $292 million and $284 million at March 31, 2010 and September 30, 2009, respectively. None of these assets act as collateral for any obligations of these funds. The investor member(s) or limited partner(s) of the VIEs bear the risk of loss on their investments. Our exposure to loss is limited to our investments in, advances to, and receivables due from these funds and that exposure is approximately $53 million and $65.9 million at March 31, 2010 and September 30, 2009, respectively.

VIEs where we hold a variable interest but we are not the Primary Beneficiary

Low Income Housing Partnerships

RJTCF is not the primary beneficiary of the remaining 47 low income housing tax credit funds it determined to be VIEs, and accordingly, we do not consolidate these funds. These funds have combined assets of approximately $1.23 billion and $1.15 billion at March 31, 2010 and September 30, 2009, respectively. Our exposure to loss is limited to our investments in, advances to, and receivables due from these funds and that exposure is approximately $4 million and $7.3 million at March 31, 2010 and September 30, 2009, respectively.

Other Real Estate Limited Partnerships

As of March 31, 2010, we have a variable interest in several limited partnerships involved in various real estate activities in which one of our subsidiaries is the general partner. Given that we are not entitled to receive the majority of any residual returns and we do not have the ability to significantly influence the financial results of these partnerships, we have determined that we are not the primary beneficiary of these VIEs. Accordingly, we do not consolidate these partnerships which have assets of approximately $10.6 million and $11 million at March 31, 2010 and September 30, 2009, respectively. The carrying value of our investment in these partnerships, and therefore our exposure to any of their losses, is insignificant at both March 31, 2010 and September 30, 2009.

Entities evaluated but determined not to be VIEs

RJTCF has determined that two of its low income housing tax credit funds are not VIEs. These funds are held 99% by RJTCF. At March 31, 2010, only one of these funds had any material activity. These funds typically hold interests in certain tax credit limited partnerships for less than 90 days, or until beneficial interest in the fund is sold to third parties. As of March 31, 2010 these two funds had no assets. At September 30, 2009, these two funds had assets of approximately $1.6 million, which are included in Other Assets in our Condensed Consolidated Statements of Financial Condition. These asset balances also represent our exposure to loss as of each respective date.

See Note 12 of the Notes to Condensed Consolidated Financial Statements for discussion of our commitments related to RJTCF.

NOTE 8 - BANK DEPOSITS:

For further discussion of bank deposits, see Note 10 pages 106 - 107 in our 2009 Form 10-K.

The following table presents a summary of bank deposits at March 31, 2010 and September 30, 2009:

	March 31, 2010		September 30, 2009
	Balance	Weighted Average Rate (1)	Balance	Weighted Average Rate (1)
	($ in 000's)

Bank Deposits:
Negotiable Order of Withdrawal (“NOW”) Accounts	$ 4,240	0.03%	$ 3,413	0.01%
Demand Deposits (Non-Interest Bearing)	2,459	-	3,672	-
Savings and Money Market Accounts (2)	6,513,693	0.15%	9,222,823	0.12%
Certificates of Deposit	211,067	3.17%	193,479	3.45%
Total Bank Deposits	$ 6,731,459	0.24%	$ 9,423,387	0.19%

(1)	Weighted average rate calculation is based on the actual deposit balances at March 31, 2010 and September 30, 2009, respectively.

(2)

The balance sheet at September 30, 2009 included additional deposits received through the Raymond James Bank Deposit Program (“RJBDP”) as part of the transactions associated with the point-in-time regulatory balance sheet composition requirements of RJ Bank. See Note 21 on page 127 of our 2009 Form 10-K for discussion of the September 30, 2009 point-in-time test.

RJ Bank’s savings and money market accounts in the table above consist primarily of deposits that are cash balances swept from the investment accounts maintained at RJ&A. These balances are held in the Federal Deposit Insurance Corporation (“FDIC”) insured bank accounts through the RJBDP administered by RJ&A.

RJ Bank had direct deposits from RJF executive officers and directors of $509,000 and $512,000 at March 31, 2010 and September 30, 2009, respectively.

Scheduled maturities of certificates of deposit at March 31, 2010 and September 30, 2009 were as follows:

	March 31, 2010		September 30, 2009
	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
	(in 000's)

Three Months or Less	$ 10,848	$ 15,220	$ 13,061	$ 16,097
Over Three Through Six Months	10,731	20,105	6,886	17,454
Over Six Through Twelve Months	7,271	18,366	12,156	30,128
Over One Through Two Years	16,749	28,850	13,580	29,632
Over Two Through Three Years	5,609	10,574	2,720	10,226
Over Three Through Four Years	10,040	11,165	8,993	10,507
Over Four Years	20,730	24,809	8,742	13,297
Total	$ 81,978	$ 129,089	$ 66,138	$ 127,341

Interest expense on deposits is summarized as follows:

	Three Months Ended		Six Months Ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
	(in 000's)
Certificates of Deposit	$ 1,639	$ 2,076	$3,297	$ 4,524
Money Market, Savings and NOW Accounts	2,358	929	4,961	13,564
Total Interest Expense on Deposits	$ 3,997	$ 3,005	$ 8,258	$ 18,088

NOTE 9 – OTHER BORROWINGS:

The following table details the components of Other Borrowings at March 31, 2010 and September 30, 2009:

	March 31, 2010	September 30, 2009
	(in 000's)
Short-Term Other Borrowings:
Federal Home Loan Bank Advances (1)	$ 50,000	$ 905,000
Borrowings on Secured Lines of Credit (2)	-	30,000
Borrowings on Unsecured Lines of Credit (3)	70	-
Total Short-Term Other Borrowings	50,070	935,000

Long-Term Other Borrowings:
Federal Home Loan Bank Advances (1)	-	45,000

Total Other Borrowings	$ 50,070	$ 980,000

(1)

RJ Bank has $50 million and $950 million in FHLB advances outstanding at March 31, 2010 and September 30, 2009, respectively. These borrowings at March 31, 2010 are comprised of several short-term fixed rate advances. The September 30, 2009 FHLB advances included $900 million in overnight advances to meet point-in-time regulatory balance sheet composition requirements related to RJ Bank qualifying as a thrift institution. These borrowed funds were invested in qualifying assets and the necessary qualification was met. The overnight advance was repaid on October 1, 2009. There were no overnight advances outstanding as of March 31, 2010.

All FHLB advances are secured by a blanket lien on RJ Bank's residential loan portfolio granted to FHLB. The FHLB has the right to convert advances totaling $35 million at March 31, 2010 to a floating rate at one or more future dates. RJ Bank has the right to prepay these advances without penalty if the FHLB exercises its right.

(2)	Secured borrowings are day-to-day and are generally utilized to finance fixed income securities. We had no secured bank loans outstanding at March 31, 2010. At September 30, 2009, there were $30 million in outstanding secured borrowings.

(3)

We maintain three unsecured settlement lines of credit available to our Argentina joint venture in the aggregate amount of $13.4 million. Of the aggregate amount, one settlement line for $9 million is guaranteed by RJF. At March 31, 2010 there was $70,000 in outstanding borrowings on one of these lines of credit. There were no borrowings outstanding on any of these lines of credit as of September 30, 2009.

As of September 30, 2009, we maintained a $100 million committed unsecured revolving line of credit with no outstanding borrowings. This facility expired under its terms on February 4, 2010. We elected not to renew this revolving credit facility upon its expiration. There were no borrowings made under this facility since its inception on February 6, 2009.

The short-term borrowings as of March 31, 2010 all mature during the following 12 months.

As of March 31, 2010, there were collateralized financings outstanding in the amount of $74 million. These collateralized financings are included in Securities Sold Under Agreement to Repurchase on the Consolidated Statements of Financial Condition. As of September 30, 2009, in addition to the $30 million of secured borrowings which are described above, there were $74.3 million of collateralized financings outstanding which are included in Securities Sold Under Agreements to Repurchase on the Condensed Consolidated Statements of Financial Condition. These financings were collateralized by non-customer, RJ&A-owned securities and were repaid during the three months ended December 31, 2009.

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS:

We enter into interest rate swaps and futures contracts as part of our fixed income business to facilitate customer transactions and to hedge a portion of our trading inventory. The majority of our derivative positions are executed in the over-the-counter market with financial institutions. These positions are recorded at fair value with the related gain or loss and interest recorded in earnings within the Condensed Consolidated Statements of Income. The revenue related to the interest rate contracts includes realized and unrealized gains and losses on derivative instruments. Cash flows related to these fixed income interest rate contracts are included as Operating Activities (the “Trading Instruments, Net” line) on the Condensed Consolidated Statements of Cash Flows for the period.

We elect to net-by-counterparty the fair value of interest rate swap contracts entered into by our Fixed Income Trading group. Certain of these contracts contain a legally enforceable master netting arrangement and therefore, the fair value of those swap contracts are netted by counterparty in the Condensed Consolidated Statements of Financial Condition. As we elect to net-by-counterparty the fair value of interest rate swap contracts, we also net-by-counterparty any collateral exchanged as part of the swap agreement. This cash collateral is recorded net-by-counterparty at the related fair value. The cash collateral included in the net fair value of all open derivative asset positions at March 31, 2010 and September 30, 2009, is $(5.1) million and $(2.2) million, respectively. The cash collateral included in the net fair value of all open derivative liability positions at March 31, 2010 and September 30, 2009, is $4.5 million and $10.3 million, respectively. The master netting agreement referenced above allows for netting of all individual swap receivables and payables with each counterparty. The credit support annex allows parties to the master agreement to mitigate their credit risk by requiring the party which is out of the money to post collateral. Our maximum loss exposure under these interest rate swap contracts at March 31, 2010 is $26.4 million.

To mitigate interest rate risk in a significantly rising rate environment during the year ended September 30, 2008, RJ Bank purchased three-year term interest rate caps with high strike rates (more than 300 basis points higher than rates in effect as of their date of purchase). These interest rate caps will increase in value over time if interest rates rise and will entitle RJ Bank to cash flows if interest rates rise above their strike rates. In addition, RJ Bank, in the ordinary course of business, enters into commitments to sell originated fixed-rate mortgages as well as Small Business Administration (“SBA”) loans. These derivative instruments are recorded at fair value with any changes in fair value recorded in earnings within the Condensed Consolidated Statements of Income for the period. Cash flows related to these derivative instruments are included in Operating Activities on the Condensed Consolidated Statements of Cash Flows for the period. Our maximum loss exposure under these derivative instruments is insignificant to the Condensed Consolidated Financial Statements at March 31, 2010.

A subsidiary of RJTCF has made commitments to provide certain loans of a relatively long duration at a fixed rate of interest (“Permanent Loan Commitments”) directly to certain low income housing project partnerships subject only to those project partnerships meeting certain qualifying criteria within a prospective two-year period. These Permanent Loan Commitments meet the criteria of a derivative. As such, the Permanent Loan Commitments are recorded at fair value with any changes in fair value recorded in earnings within the Condensed Consolidated Statements of Income. Cash flows related to these commitments are reflected in Operating Activities on the Condensed Consolidated Statements of Cash Flows. Our maximum loss exposure under these Permanent Loan Commitments at March 31, 2010 is $3.7 million.

None of our derivatives meet the criteria for designation as a fair value or cash flow hedge.

See the table below for the notional and fair value amounts of bot