Q3 2019 Earnings Call

Now, let's turn the call over to Joel Jeffrey.

Just a relationship with Stifel.

Thank you operator, I'd now like to welcome everyone to Stifel Financial third quarter 2019 financial results Conference call. At this time I'd like to remind everyone that today's call may include forward looking statements. These statements represent the firm's belief regarding future events that by their nature are uncertain outside firms control.

Actual results and financial condition may differ possibly materially from what is indicated and those forward looking statements discussion of some of the risks and factors that could affect our future results. Please see the description of risks factors in the current annual report on Form 10-K for the year ended December 2018.

I would also direct you to read the forward looking disclaimers in our quarterly earnings release, particularly as it relates to the firm's ability to successfully integrate acquired companies or branch offices or financial advisors changes in interest rate environments and changes in legislation and regulation.

You should also read the information on the calculation Nongaap financial measures, which posted on the Investor relations portions of our website at Www Dot Stifel Dot com.

You know cast is copyrighted material Stifel Financial Corp, and may not be duplicated reproduced or rebroadcast without the consent of Stifel Financial Corp.

I will now turn the call over to our chairman and Chief Executive Officer, Ron Kruszewski.

Thank you.

Good morning, and thank you for taking the time to listen to our third quarter 2019 resolved.

Earlier. This morning, we issued an earnings release and post the flight deck on our website.

Joining me on the call today, as our co President, Jim Zemlyak, and our CFO Jim Marisha.

I'm going to run through the highlights of our quarterly results as well as our segment results to American will take you through our net interest income our balance sheet expenses and our outlook for the fourth quarter. I'll then come back with my concluding thoughts.

So we had a great third quarter of 2009, Peanuts, we posted record quarterly net revenue of 822 million up more than 11% from 2018.

Contributing to our record revenue was a 9% increase and brokerage and 8% increase in asset management service fees and an 18% increase in investment banking. Furthermore, both our primary operating segments generated excellent quarterly result.

Wealth management posted record revenue of 535 million Wow institutional revenue of 290 million was the second highest in our history.

In addition to our revenue grow our expense discipline contributed to pre tax margins of more than 20% and our second highest non-GAAP earnings per share of $1.50 up 11%, resulting on and non-GAAP return on tangible common equity of more than 24%.

Brokerage revenue totaled 262 million up from 241 million in 2018.

The improvement was driven by institutional brokerage that increased 23% over 2018 with fixed income increasing 58% more than offsetting a 7% decline in institutional equities.

We had expected institutional head, what primarily tied to seasonality, but increased market volatility during the quarter resulted in higher trading volumes.

I would note that our modest sequential increase in institutional equities compares favorably with many of our mid cap peers, who experienced sequential decline.

Wealth management brokerage revenue was up 1% year on year as I stated in the past the mix between brokerage and asset management is shifting with more weight now in asset management.

How said management service fees were a record 218 million up 8%.

Combined basis global wealth management brokerage revenue and asset in service fees totaled 378 million up 5% from 2018.

On the next slide we examine our investment banking revenues up 199 million compared to 169 million in 2018.

Our advisory business generated piece of 105 million, which was up 39% 2018 with our strongest results coming from the financial then technology verticals.

KBW benefit benefited from increased activity levels that included the closing of the Tcf chemical deal I.

I think it's worth mentioning that KBW has advised on seven of the top 10 bank mergers in 2019 and as of today and through our third quarter only one of them is closed. In addition, strong advisory results in our technology vertical was impacted by our recent acquisition of Moreland part.

No.

Capital raising total 94 million up 1%, primarily as a result about 51% increase in debt capital raising as you know much of our debt capital raising is attributable to our public finance business that continues to rank number one nationally and the number of senior manager Nick.

Oh shoot at new issues with roughly a 10.5% marketshare. Additionally, we anticipate incremental contributions in the fourth quarter from that recent acquisition of George cable.

Equity capital raising revenue of 53 million was driven by solid activity in healthcare and technology, which helped to offset slower activity in financials.

Moving onto our segment results and starting with global wealth management.

As I stated, we posted record quarterly revenue, which increased 7% from 2018.

Quarterly profitability was a record 203 million, representing a pre tax pre tax margin of 38% driven by our revenue growth and lower non comp expenses.

I'm pleased not only with our record revenue, but also the fact that net interest income increased 8% from 2018, well net interest margin. Despite two rate cuts in the quarter increase sequentially, Jim will provide greater detail on our NIM later in the call.

A key element to the growth in private client revenue has been the success of our recruiting during the third quarter. We added 25, new advisors with estimated annual production of 15 million and had only two regrettable departures, but estimated production of $700000.

Year to date, we've recruited 105 financial advisors. The trailing 12 month production of approximately 82 million. The success of our recruiting and continued solid market performance resulted in record client assets up 312 billion, including record fee based assets of 100.

Third in eight Oh, yes.

Our institutional business posted 290 million in revenue.

Our second highest quarterly revenue result, and an increase up 18% over 2018.

As I previously stated our institutional revenue was driven by a 39% increase in advisory and a 23% increase and brokerage offsetting modest decline in capital raising and other revenue we continue to see the benefits of the investments we've made in our business as our platform as both larger and more to.

First then it was just a few years ago and enables us to generate revenue growth and various market conditions.

You know, we look at our institutional business through the lens of advisory on one hand, and both equity and fixed income brokerage and capital raising on the other.

I spoke to the strength of our advisory revenue earlier, but we also posted very strong fixed income results with revenue of 92 million of 55% driven by strength in both brokerage up 58% and banking, which increased 51%.

Our equities business generated 94 million in revenue. This represented a 7% sequential decline as a slowdown in equity underwriting revenue was partially offset by a slight increase in equity brokerage revenue.

Our institutional business generated pre tax margin on nearly 17%, which increased 290 basis points from 2018 due to the improved revenue a 30 basis point decline in the comp ratio and a 250 basis point decline in the non comp ratio.

Today, we've made investments in our platform through hiring of strategic acquisitions as well as return capital to our shareholders always with a focus on risk adjusted return.

As you can see in this slide we've made a significant number of acquisitions throughout the last 20 years and in 2019, we again deployed our excess capital to acquire businesses that would further enhance the value of our franchise. So far in 2019, we closed the acquisitions a first empire.

More than partners, George K bomb and be enough capital. Additionally, we expect to close my first and GMP in the fourth quarter of 2019.

And with that let me turn the call over to our CFO Kim Marisha.

Thanks, Ron and good morning, everyone. So starting with net interest income.

As expected net interest income totaled 135 million, which was up 11% over 2018 and flat with the second quarter. The results were in line with the midpoint of our guidance for the second half the year as a three basis point sequential increase in net interest margin to 270 basis points was offset by modest decline in average interest rate.

Any assets.

The sequential increase in Firmwide net interest margin was due to a three basis point increase and banks net interest margin 314 basis points lower funding costs and continued remixing of assets more than offset the impact of lower rates during the quarter.

Well I'll get into more detail on the opportunity for additional changes in the composition of our balance sheet. In later slides I want to know this is consistent with the strategy, we laid out at the beginning the year to limit or balance sheet growth and focusing on opportunities through mix or assets and liabilities, which we believe will generate the best risk adjusted returns.

Moving onto the balance sheet.

Total assets decreased sequentially, the 24.2 billion.

Total consolidated average interest, earning assets were 19.9 billion, which were down roughly 325 million sequentially due to nearly 540 million reduction in our securities portfolio that was partially offset by more than 200 million increase in our loan portfolio.

Average yields in our loan portfolio decreased by 12 basis points and our investment portfolio yield decreased by 13 basis points as both were negatively impacted by lower LIBOR rates.

The average yield on the liabilities decreased by 18 basis points sequentially due to the impact of the cut in fed funds as or deposit beta on the July rate cut was roughly 70%.

Additionally, we continue to reliability optimization strategy by replacing higher yielding Cds with lower yielding sweep deposits.

Well, we closed three acquisitions and continued or share repurchase program. The strong earnings performance offset those factors and resulted in essentially flat capital ratios with the tier one leverage tier one leverage ratio of 10% and a tier one risk based capital ratio of 18.1%.

Book value per share $46, a 34 cents increased by $1.66 as a result of the aforementioned strong earnings growth and acquisitions, partially offset by repurchase activity.

In terms of state Stifel Bank Corp. Total assets were 16.4 billion a decline of approximately $200 million. The reduction in assets was due to selective bond sales in amortization from the investment portfolio, which outpaced the reinvestment of cash into higher yielding loans.

Total bank loans increased 10% year on year to roughly 9.4 billion, which was driven by growth in Sierra mortgage and securities based loans.

Total investments decreased by 20% year on year to 6.3 billion due to declines in asset back in mortgage backed securities.

Cash as a percentage of client assets totaled 4.6%, which was slightly up sequentially.

Total client cash was 14.3 billion, which is up from 13.7 billion at the end of last quarter. We stated on her last earnings call that client cash levels and increased roughly 14 billion by the end of July so that trend continue during the remainder of the quarter.

I also want to note. The 14.3 billion does not include roughly 6 billion that our clients hold and money market accounts as rates decline, we can see some movement if those funds back into our banks we program.

Overall client cash levels continue to benefit from strong essay recruiting is adding to client cash levels as wells from our new deposit gathering initiatives at Stifel Bank.

Provision for loan loss expense was just under 1 million and declined by approximately 1.5 million sequentially as loan growth was driven by lower risk mortgage and securities based loans.

The allowance for loan losses percentage of loans decreased to 99 basis points.

Overall, our credit metrics remained solid as nonperforming asset ratio was 11 basis points, which was down modestly on a sequential basis due to sales and Oreo property.

We continue to see strong asset quality metrics that compare favorably to the overall market.

Moving on to the next slide.

We generated a pretax margin of 20.2% there was up modestly from the prior quarter. The sequential improvement was the result of 60 basis point decrease in our non comp ratio that was partially offset by slight increase in our comp ratio, which came in at 58.1% in the third quarter.

This is essentially at the midpoint of our full year targeted comp range of 57% to 59% and our comp ratio increased modestly from the prior quarter due to a number of factors, including flat net interest income the impact of increased recruiting activity investments in our business as well some charges, we took in the quarter that impacted other revenues.

For the fourth quarter, we anticipate the comp ratio at approximately 58% given the impact of lower interest rates continued strong recruiting a financial advisors as well as investments in our business.

non-GAAP non-GAAP operating expenses, excluding the loan loss provision expenses related to investment banking transactions totaled approximately 169 million and were within our guidance range. The sequential increase was the result of higher travel legal and professional fees.

While we remain focused on cost discipline, given a recent investments the timing revenues associated with them as well as higher seasonal business development costs associated with higher revenues, we'd expect our targeted non comp operating expenses in the fourth quarter to come in between 170 and 175 million.

In terms of our share count per average fully diluted share count was down roughly 900000 shares sequentially as a result of our share repurchase activity in the overall lower share price during the third quarter.

In the fourth quarter, we've already repurchased approximately 500000 shares.

Assuming no further share repurchases and accounts of share price, we expect our fully diluted average share count to be approximately 77.6 million.

With respect to our outlook.

Our global wealth management segment, our fourth quarter asset management revenue will benefit from the 4% increase in fee based assets during the third quarter, which outpaced a roughly 1% increase in the S&P 500.

I would also note that we would expect some negative impact on a revenue capture rate related to third party cash sweeps as a result of the expected recovery.

In terms of our bank, we would expect fourth quarter average interest, earning bank assets to decline modestly from third quarter levels, and we're increasing our NIM guidance to 300 intend to 320 basis points.

This is a five basis point increase versus last quarter's guidance, primarily due to lower funding costs as we're able to replace higher cost Cds and other wholesale funding with sweep deposits.

Additionally, we will benefit from the timing of the repricing of our assets.

These factors should more than offset the impact of the expected rate cut on our fourth quarter results.

I would also note that given the decline in absolute deposit yields we'd anticipated deposit beta on today's expected rate cut of around 50%.

While we will still be able to transition into higher yielding assets and offset the roughly 1 billion in Cds and FHLB advances that are still under balance sheet with lower cost funding any further rate cuts would result in significantly lower deposit betas.

Based on this guidance, we'd expect fourth quarter net interest income to be in the range of 130 940 million, which is inline with the guidance that we gave for the second half the year on our last earnings call.

Moving onto our institutional business in terms of investment banking, our pipelines remain robust and we anticipate fourth quarter revenue to be higher than revenue in the third quarter.

That said concerns that the ongoing trade dispute between the U.S. in China as well as political uncertainty could lead to more volatility in the markets in could impact the timing of deal closures.

For institutional brokerage business, we expect to see slightly higher revenue sequentially due to the usual seasonal pickup in the fourth quarter.

Now, let me turn the call back to Ron.

Thanks, Jim.

Before my concluding remarks, let me anticipate a number of questions I assume I'll get based on recent events first the announcement by the major Discounters cutting commission rate to zero has really had no impact on Stifel simply we are in the advice and compete on advice and client service not zero based trade cost.

Also certain firms have announced the elimination of separate asset management fees and wrap type accounts I believe this is simply the bundling a separate pieces into one fee without any overall change in the overall fee paid by clients. So again really no impact on steeple.

With respect to Greg B.I.

I have previously stated I believe this is a good rule and an enhancement to the federal suitability rule implementation will require some additional work, especially after form Crs and the fact that Reg VI introduces a formal duty of care also the department of Labor is expected to propose a role for retail.

Firemen account, but I believe this role will largely conform with the principles of right VI.

As I said in my opening remarks, I am pleased with our performance in a third quarter, our record results and the growth in the business validate our long term strategy to build a diversified financial services firm that consistent that can consistently generate strong performance and various market conditions.

Success of our long term growth strategy is apparent when looking back five years term results in the third quarter 2014.

Comparing that quarter to our third quarter, 2019, which I would note saw an interest rate decline volatility increase and weaker equity capital market activity.

This comparison truly underscore the remarkable progress we've made in the third quarter of this year as compared to the third quarter of 2014, we've generated net revenue of 822 million of 57% from 525 billion.

Net income of 117 million increased 141% from 49 million adjusted EPS of $1.50 increased 134% from 64 cents.

Pre tax margin of 20.2% compared to 14.9% five years ago and return on common equity of 15% increased from 9%.

The improvement over that timeframe was driven by significant revenue growth and advisory and asset management as well as net interest income as these are all areas, where we've focused our growth initiatives.

Again this underscores the benefits of the investments in our business and People's ability to continue to grow despite changes in the market environment.

I would also note that despite several acquisitions and continued share based compensation our diluted shares outstanding have only increased 2%.

The only negative in the comparison between these quarters is that our forward PE multiple in 2014 was about 15 times versus our current multiple of roughly nine times well I understand that all financial firms have seen multiple compression I believe our current earnings multiple.

Represent represents a significant discount to our closest peers.

As I look forward I'm optimistic about the outlook for our business as well as our ability to generate strong returns despite potential market headwinds that include political uncertainty a lower rate environment and ongoing global trade concerns.

We projected for 2019 that we would generate 500 million of excess capital.

We are on track to reach if not surpassed that projection.

We put this capital to use as we've repurchased 3.3 million shares of stock paid out more than 50 million in dividends recruited over 100, new financial advisors and close for acquisitions as well as one strategic investment so far this year, our capital deployment illustrates our ability.

To both invest in our business for future growth and continued to return capital to our shareholders.

Our capital deployment will continue to be guided by where we believe we can generate the best risk adjusted returns I believe that our current share price and discounted valuation make share repurchases and attracted use of capital with nearly 6 million shares remaining on our current repurchase authorization, we would expect to continue.

Repurchase repurchase shares at these price levels, so with that operator, please open the lines for questions.

Certainly at this time, if you'd like to ask a question press star one on your telephone.

To withdraw your question press the pound Keith will pause for just a moment to compile the kuni roster.

Your first question comes from the line Alex Blostein.

Goldman Sachs. Please go ahead your line is open.

Great.

Good morning, everyone.

First question just around.

Competition structure and compensation leverage really as we as we go forward. So I guess totally understand the dynamic about lower interest rates and obviously, that's going to put some pressure on the comp rate. So maybe it will be helpful to talk about the comp rate and the complex kind of excluding an IR and cash sweep revenues. It looks like that ratio has been around 70% over the last four or five.

Quarter. So maybe you guys can kind of help us think through.

How are the evolution of the business model will impact that ratio again, isolating the impact so far lower interest in other words like.

So many good run rate should be higher should be lower given given how how the business mix changing.

Yes.

This is Jim I would say that's a good run rate going form excluding an IR and the other nonconvertible factors anything I'd say, we talked a little bit about some of these charges and other revenues there is about $8 million. The charges. There this quarter, which is impacting that so you have to take all that into the analysis.

But again 70 grew around 70% as a good run rate there.

And I would just add I think that.

We believe we have the range and we have we have a diversify revenue source and different revenue levels than this quarter.

The non compensable revenues relative to everything else was a little bit lessened.

And for that moves the comp ratio around.

And when we always like to be Conservative also.

For the ended the year so.

I understand the question, but I don't think Theres.

A lot of.

Variance around what you're saying.

Got it.

Good where should we guys just around the handful of deals that you've done this year or some of them, obviously already close some havent.

Maybe as we look out into 2020, assuming that everything closes and into 2019.

Can you help us think through the kind of incremental revenues and incremental expenses that we should anticipate from all these deals.

Kind of heading the full run rate and then which ones are these would you say could be the most sort of synergistic with the rest of Stifel, particularly on the revenue side.

Well, yes, I think first of all we want to I think we'll we'll have more visibility in that our fourth quarter call. When we because I think we need to provide a bridge for revenue incorporating the six acquisitions since.

We haven't really discussed and.

Nor have we have given all the revenue numbers, Alex it's hard to do on this call.

Each of them are unique in our wages you saw already seen.

Benefit so we've already seen benefits from the more Lindale certainly the first Empire deal has worked out.

Nicely.

And we.

Close George pay bomb and.

Oh, Yeah now they just closed and then we have we bought we expect that mine first in GMP.

We'll close and in the fourth quarter.

Those deals are incremental obviously, they're different geographic market spare investments as well, but I.

There are these are six transactions that will add.

Nicely to revenue and to profitability the way that we've structured deals.

Unfortunately, I can't put numbers to that today I haven't done it yet but it is it is on our Rob.

What we want to do when we talk about 2020 on our next call.

Great well stay tuned thanks, guys, yes. Thank you.

Your next question comes from the line of Devin Ryan with JMP Securities. Please go ahead. Your line is open.

Great Good morning, guys.

Morning, Devin.

Maybe first one here just a question on M&A opportunities in wealth management.

It's going the opposite direction I think many.

I think changing the financial forecasts for many companies and so I'm just curious how you think that might impact companies in the wealth management industry kind of their willingness to look to sell their business in either the employee or independent channel.

On a related what maybe if you can your current view undersea independent broker channel.

Well first site.

Yes.

Yes, the current environment, certainly with with rates coming down would would put some pressure on most financial services firms and wealth management firms for sure.

I don't believe that it really.

Creates a lot of opportunity and M&A.

In almost any industry. When you when you have something like that some people may view it as short term.

Their price expectations do not come down commensurately so.

There's no there's risk.

Who knows politically there could be risk and the tax rate.

There is risk and the interest rate so I I don't see the current.

Changes, primarily as a relates to to the interest rate and if it cuts recently and maybe even one today.

Driving people to a conclusion that they may need to do something not not not so.

And to the extent they do I think I do think that's a span a.

A sellers market and in wealth management.

With respect to the independent channel.

Always we look at that channel, we believe that that is that as a business that the that requires.

Certainly requires some scale and.

We we would always said we have looked at both businesses, we actually bought and sold one.

In an independent model for reasons that we sold it because I believe.

I believe it or not we don't do every acquisition, we do we don't keep everything analysts are for some of our.

Shareholders to believe but that is okay, but we would like we would look at independents at the right situation came along.

Okay terrific.

And just one on recruiting you guys have had a lot of success here recently in into this a little bit.

Two.

You pulled back on recruiting kind of the deal just given the uncertainty.

With the ruling so as we're heading into an election year, just the possibility of a democratic agenda.

Potentially increased.

Regulation. That's currently do you see anything that would change kind of your more aggressive stance right now some of that momentum.

Get closer that election or.

Do you still.

Good quarters feel like it's.

Yes.

Well I, but look our recruiting as whose role is half robust as ever back on.

There there is not I think we're way way too early to make that call.

With respect to what what could happen I also.

I believe that you know that you need more than just a change and the presidential you probably need something in the center that all although I do recognize that executive branches can do things.

I think it's early to make that call I think what we did learn from the deal is that there's also a cost.

Oh, I'm trying to slow down recruiting in that it takes a while the to pick it back up.

So the answer as is.

Now we're in recruiting mode and I don't see any reason now to slow it down.

Great. Thanks, Ron appreciate it.

Your next question comes from the line of Chris Allen with Compass Compass point.

Your line is open.

Morning, guys just wanted to follow up on the on kind of the recruiting breakdown a little bit obviously, the the recruiting production numbers are turning the right direction I was little surprising to see flat if they count so this being due to a little bit hi, retirements or just.

People, leaving the you know the as you said, although non non regrettable attrition numbers. So just any color would be beat the heard there would be helpful.

Oh look we try and we've been trying to.

To give you the two numbers that we focus on one is who were bringing in the door.

That.

That's our hires and those that have left that we didn't want to leave and we gave those numbers in the quarter in between that and what we don't really talk about as much but it is set at the past our.

Excuse me, our retirement and people that I've retired or.

Thats, primarily what it out so I don't know what else other color I can put to that other than.

A lot of those books.

Hitting our asset growth and you're seeing you're seeing the fact that are you amortize outpacing market gain that's from recruiting and a lot of the retirements have been plan and their endo existing teams and those books our transition. So I thought we had a good recruiting costs.

Right I recognize that the flat number.

We have.

Certain message at the highest surface, but thats why we try to give the in this case, the 25 and too.

So we had a good recruiting quarter and.

Hey.

People that retired those assets are still here and our clients of the far.

Thanks, and then just on the investment banking I'll stuff, obviously fairly positive and you talked kind of alluded to eminent the advisory potential from KBW deals closing.

Any color just in terms, how you're thinking about the SCM and DCM pipelines here.

No we have we have.

Good and robust pipelines I I will say that when I look at our advisory platform. We have a number of announced deals that you just mentioned that I mentioned on the call deals that that are now that have not closed.

We have a number of private transaction.

And capital market transactions I.

Market, while we're hitting all time record the I would say that it's actually becoming a little more difficult to do deals in this environment.

Not sure.

No I think it as a combination of rate uncertainty in term, what's going to be said today regarding the future geopolitical trade.

So the the the market on the capital raising side, Bob a pipeline both than probably private is strong and robust.

The probability weighting.

Actually getting these deals done.

Probably a little choppy right now to just tell you how we look at it. So it's good you would think thats when you're hitting all kind all time highs and the market deals would be getting done.

A lot faster that's just that's not true, but not true Jeff at Stifel, That's not true across the market.

Thanks, guys.

Again, if you'd like to ask a question press star one on your telephone.

Our next question comes from the line of Steven Chubak with Wolfe Research. Please go ahead. Your line is open.

Good morning does is actually shown in lung filling in for Stephen.

I kind of wanted to get your updated thoughts on what you're seeing in terms of cash sorting behavior, because it looks like.

Cash balances.

Grew in the quarter.

I see a decline a little as I was wondering if you know there any dynamics related to money market and what you're seeing in terms of that.

There was a slight decline and I am.

Very very small I don't think there's there's there's really.

I don't know and Tim I don't know if anything that battling focused and I think one of things we talked about 6 billion in money market accounts is an opportunity for us and I think as we continue to expand some of the deposit gave us the capabilities of Stifel Bank and also trying to pull some of those funds back into that the Sweet program, it's an opportunity for additional.

Dry powder to grow the bank going forward.

Okay, Great and then I'm just wondering on capital management I know you'd mentioned.

No more than 500 million of excess capital generation this year.

Just wanted to get your updated thoughts on how you are.

Oh, sorry in terms of the balance of M&A versus you know for seeing accelerated buybacks.

Well you know I.

Thats always say a that's always the great question without specific answer.

We.

We look at as we look at buybacks.

Return on investment.

And we look at acquisition that adds a return on investment and we we evaluate them in fact, one becomes a hurdle for the other and vice versa. So.

The appetite.

Hands on the attractiveness of the deal versus the attractiveness of buying back our stock and if the calculation that we make all the time and certainly whenever whenever we're doing a transaction we have a number of hurdle rates and relevance rates as we call them in terms of took the deal help us become.

More relevant but one of them all as.

Well, what if we just bought back our stock what do we acquired up a set of acquired what we're looking at acquiring and so those are those are the exercises that we go through.

Too as I said.

Today, we believe that our stock certainly.

Relative to our closest peers was trading at a discount and we've said that we believe that our stock is an attractive.

Option today, but that doesn't mean, an acquisition couldn't become more attractive. So it's always opportunistic it's always based upon what is the best use of capital and.

Until I see till we see it and analyze the.

It's hard to to answer a question like that as to which one would be more attractive.

I think you can see in what we talked about in terms of what we already repurchased in October given what our share price did we've already repurchased 500000 shares in the quarter and I think thats indicative of kind of our intentions there.

And let me let me let me take a moment I wanted to go back to the question about.

Capital markets I do want to make sure that.

When we were to what I was talking about equity capital markets and that choppy in our pipeline, we do I know I don't want.

In any way darken the comment I made which is I believe that in the fourth quarter banking is going to be up and advisory I think it's all going to be up so we see good we're seeing good market just.

They feel choppy, but they are choppy higher than the third quarter in terms of what we think it's going to happen.

There are any of the question. Yes. There are no further questions at this time I turn the call back over to the presenters.

Well I'd like to say.

Good morning, everyone. Thanks for joining us I hope everyone.

Joy Tower, Wayne and well look forward to.

Getting together not only with what I, what I hope will be good Corp. third quarter earnings call inline with what we've told you today, but will also provide you. Some we look into what we're thinking about 2020 and with that I wish everyone. A great day. Thank you.

Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.