Q2 2022 Stifel Financial Corp Earnings Call
Good day, and thank you for standing by and welcome to the Stifel Second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone please be advised.
Is that today's call is being recorded.
You require any further assistance. Please press star Zero I would now turn the call over to Mr. Joel Jeffrey head of Investor Relations. Please go ahead Sir.
Thank you operator, I'd like to welcome everyone to Stifel Financial's second quarter financial results Conference call I'm joined on the call today by our chairman and CEO , Ron Kruszewski co presidents, Victor Niecy, and Jim's, Denmark, and our CFO , Jim Ericson earlier.
Earlier. This morning, we issued an earnings release and posted a slide deck with financial supplement to our website, which can be found on the investor Relations page at Www Dot Stifel Dot Gov.
I would note that some of the numbers that we state throughout our presentation are presented on a non-GAAP basis and I would refer you to our reconciliation of GAAP to non-GAAP as disclosed in our press release I would also remind listeners to refer to our earnings release financial supplement and our slide presentation for information on forward looking statements and non-GAAP measures.
Leo cast is copyrighted material of Stifel Financial Corp, and may not be duplicated reproduced or rebroadcast without the consent of Stifel financial I will now turn the call over to our chairman and CEO , Brian for Stephanie.
Thanks, Joe Torre again, good morning, and thank you for taking the time to listen to our second quarter results. Let me start by saying our second quarter and first half results were good particularly in light of the significant market headwinds as.
Widely reported it known financial conditions in 2022 have been challenging to say the least the S&P 500 had its worst first half since 1970 down 21, 4% fared a little better at the Bloomberg U S aggregate Bond index declined 11% the tenure yield was.
3% at June 30, more than double the year end yield of 146% while credit spreads have also widened significantly since the beginning of the year with investment grade spread widening to $1 55 from <unk> 93, and high yield of $5 69 from $2 78.
Economic measures of inflation hit 40 year highs. In addition of the Russia, Ukraine conflict, China, Lockdowns and increasing risk of recession, all contributed to the economic malaise, while driving sentiment much slower to address inflation. The federal reserve has become very hawkish remember at the beginning of the.
A year of the markets, where pricing and 325 basis point increases for all of 2022 today. The markets are pricing the equivalent of 12 to 13 25 basis point rate hikes.
Clearly the actions of the Federal reserve will continue to tighten economic conditions going forward I expect increased volatility and more uncertainty we will manage our business accordingly.
Against this backdrop, we recorded our second highest net revenue and EPS for both the second quarter.
First half of the year.
Our second quarter revenue totaled a little more than $1 1 billion, a 1% sequential decline any 4% decline from the second quarter of 2021 earnings per share came in at $1 40, So while the market environment was difficult, we nevertheless generated pretax margins.
Over 21% pretax pre provision income of $248 million, which was in line with the first quarter and a return on tangible common equity of 22%.
As I have stated on numerous occasions Stifel as a diversified financial services company was balanced across businesses.
Current quarter, just demonstrated this resiliency and the benefits of the investments we have made in our client base and franchise to illustrate slide two provides a revenue bridge from the prior year quarter depicting the $45 million decline in revenue I would note that client facilitation revenue and NII.
Both reflective of our increasing relevance to our clients and indicating the building of our franchise increased nearly $100 million. Offsetting this was the decrease in revenues more closely tied to the difficult market conditions, one had one worth noting at the $39 million decline in our trading gains.
<unk> investments and warrant valuation.
This $23 million is reflected in transactional revenue of another $15 million is recorded in other revenue. In addition, underwriting declined nearly 100 million as industry volumes remain muted given the ongoing market volatility.
Said another way we are pleased with our client engagement activities, both in wealth management, and institutional more and more especially during times of stress and volatility when good advice and execution skills matter. Most clients are turning to Stifel. The increasing confidence of our clients have in us will far out last the current.
Difficult markets.
The diversity and balance of our business model yields good earning results I would note that our pre tax pre provision income was essentially unchanged from the first quarter and down 9% from the prior year.
Net income and earnings per share both declined 18% from the prior year and the difference between the 9% decline in pre tax pre provision is due to a $22 million increase in loan loss provision due to loan growth and last year's reserve release. Additionally, there was an increase in the.
Effective tax rate to 26, 4% from 25%.
Looking at segment Global wealth management revenue increased 10% to a record $698 million.
These results were driven by the growth in our balance sheet and higher interest rates as well as the addition of productive financial advisors as you can see from the chart on the lower right of the slide our pretax margins reached 35% in the quarter as we continue to benefit from increased net interest income contribution.
Asset management revenue was up 12% from last year as I mentioned earlier, the equities markets declined further in the second quarter with the S&P 500, falling 16% the decline offset strong inflows as our fee based assets ended the quarter at $141 billion in total client assets were 300.
And 78 billion.
On the next slide we highlight our strong recruiting activity client asset growth and increased loan portfolio for the quarter and as a foundation of our long term growth strategy. We added 41 advisors, including 23 experienced advisors, who joined Stifel as their pharma choice choosing.
Because our advisor friendly culture expansive products industry, leading.
Fair compensation plan, an excellent technology.
These new advisors <unk> trailing 12 month production of $24 million, our recruiting pipeline remains strong and we are encouraged by the traction we're gaining in the independent channel that added eight net advisors during the quarter.
Our recurring revenue was more than 74% for the first half of the year, although the percentage of recurring revenue benefited from slower transaction activity. We expect it to remain elevated over historical levels as contributions from net interest income and asset management continue to grow lastly, we grew.
Our loan portfolio by $1 $4 billion during the quarter up 8% sequentially.
Total firm wide assets at June 30th 36.
<unk> 5 billion up $2 5 billion year to date.
Institutional revenue of $411 million illustrates the balance of our franchise against the difficult markets revenues declined from an exceptionally strong prior year.
We continue to generate solid advisory revenue down only slightly from last year and up 10% from the first quarter and our client facilitation business performed well as I previously mentioned, our transactional revenue was negatively impacted by changes in warrant valuations and a reduction in trading gains.
$23 million within the institutional segment.
Excluding the valuation and trading results from both periods, our client flow business totaled $139 million up about 8% I will refer to this further when I discuss transactional revenue for both equities and fixed income finally, mark conditions weighed heavily at capital raising activity, especially in equities.
Institutional has been and continues to be a growth business, albeit with some cyclicality.
<unk> the market headwinds, we are still on track to generate the second highest institutional revenue in our history. We have built a diversified business in this segment by consistently adding capacity and products, although enhance our market relevance to clients and we believe that we are well positioned for continued growth as the operating environment.
Covers.
As you know we look at our institutional business through the lens of equities and fixed income fixed income generated net revenue of $136 million in the quarter and posted record revenue for the first half of the year, our equities business was down 56%, primarily due to an industry wide capital raising decline of over seven.
5%.
As I mentioned the comparison of our transactional business is skewed by a quarter over quarter reduction in warrant marks in trading games I do view, the warrant marks and trading a somewhat unusual and will exclude its impact as I discuss overall trends.
Therefore adjusted.
Client equity transactional revenue totaled $52 million essentially unchanged from the prior year, we are seeing fruits from our investments in electronic and algo trading, but these were essentially offset by weakness in our international businesses also the lack of comparable equity underwriting is a factor.
And our equity transaction trading revenue.
Adjusted fixed income client transactional revenue totaled $87 million up 15%. This increase was primarily attributed attributable to our addition of Vining Sparks, which has been a successful integration I would note that Stifel does not engage in commodities and currency trading which during the quarter.
We believe was a primary driver of the fixed income result of some of the bulge bracket firms.
On slide seven we look at our investment banking business for the quarter, we posted revenue of $271 million, which was down $105 million or 28% simply heightened volatility lead clients to delay strategic actions and new issue activity nearly all of this decline was in capital.
Raising as advisory fees totaled $200 million down slightly from a strong prior year quarter.
The diversity of our advisory business continued as we generated strong contributions from financial health care technology and gaming.
Additionally, we are seeing solid production from Miller backfire in restructuring and Eaton partners in fund placement.
In terms of underwriting our equity capital raising business declined 75%.
From the same period last year and was down 78% for the first half of the year.
But frankly, a small constellation by our calculation, reflecting the investments we have made Stifel has gained market share.
As I look forward, we are well positioned for the return of capital markets activity, which usually happens quickly with valuation stabilize with reduced volatility.
Look said another way our first half equity underwriting results are much closer to zero than what our capabilities will generate and normal market condition.
Markets also impacted fixed income investment banking fixed income underwriting posted $40 million of revenue a decline of 27% from last year. We look at this business through the lens of taxable issuer generally high grade and leverage levels and Muni finance.
Starting with municipal our public finance year to date industry, New issue negotiated deal volume declined 27%, while our first half revenue declined 18%.
For the quarter Stifel Public finance revenue increased 10% sequentially, given the industry slowdown and I am pleased with our market share calculated on the number of noga negotiated transactions, which increased to an industry, leading 15, 2% from 12, 5% in the first half.
Last year.
Widening credit spreads and the sharp rise in rates impacted our taxable issuance business as we saw a 40% decline from the second quarter of 2021.
Overall, our investment banking pipelines remain solid conversion of this backlog to revenue will largely be dependent on market conditions and corporate confidence that said, our client dialogue and engagement continues to be strong and with that let me turn the call over to our CFO Kevin Berryman.
Thanks, Ron and good morning, everyone.
I'll start by addressing net interest income NII.
NII was up 25% sequentially to $195 million and came at the midpoint of our guidance.
Growth was driven by a 44 basis point increase in our bank NIM to 288 basis points and a 6% increase in our interest earning assets as we continue to grow our loan portfolio and our Securities Holdings.
Given the timing of the 50 75 basis point rate increases in the second quarter, we anticipate the bulk of the upside to NII from these hikes to occur in the third quarter.
As such we project net interest income in the third quarter in a range of $235 million to $245 million in the bank NIM of 320 to 330 basis points.
I'll touch on our overall updated full year guidance at the end of my comments.
Moving on the next slide I'll quickly review, the bank's loan and investment portfolios.
We ended the quarter with total net loans of $19 2 billion.
Which was up approximately $1 $4 billion from the prior quarter.
Our commercial portfolio increased by $730 million with particular strength in fund banking and industrial sectors.
On the consumer side, our mortgage portfolio increased by $600 million.
While our securities based loan portfolio was relatively flat.
Moving to the investment portfolio totaled.
Total investments increased by $600 million sequentially.
This was driven by a $570 million increase in CLO.
Turning to credit metrics.
The credit loss provision totaled $12 million due to loan growth and the allowance to total loans ratio remained at 75 basis points.
Our nonperforming assets as a percentage of total assets, we're at 10 basis points, indicating continued strength in our credit metrics.
Moving on to capital and liquidity.
Our risk based and leverage capital ratios remained strong at 18% and 11, 2% respectively.
The modest decreases in our capital ratios were the result of loan growth.
During the second quarter, we repurchased $31 million of shares in our book value and tangible book value per share increased by 2% and 3% respectively.
I would also note that we have $10 3 million shares remaining on our repurchase authorization.
As you can see from the chart in the lower left of the slide we have a long history of growing our funding base through multiple cycles are.
Utilizing available funding has increased by more than $15 billion in the past five and a half years.
We continue to have substantial funding capabilities for our bank.
Our total available and utilized funding totaled more than $40 billion.
No similar to levels in the first quarter.
Note that overall client cash sweep deposit balances declined by $1 $7 billion during the quarter to approximately $27 billion.
The decline was driven by the seasonal nature of tax payments and deployment of yield seeking cash it was consistent with historical seasonal trends.
Further we continue to see strength in advisory recruiting and our wealth management clients currently hold an additional $6 $3 billion in money market fund balances.
We also continue to build our deposit capabilities of the bank since.
Since quarter end, we have grown an additional $600 million through our smart rate deposit program, which now has one $5 billion in deposits.
On the next slide we go through expenses are.
Our comp to revenue ratio of 58, 1% was down 140 basis points from both comparable periods as we're benefiting from the increased NII contribution to our revenue mix.
Despite the meaningful decrease in our comp ratio, we continue to accrue compensation expense conservatively early in the year.
Non compensation operating expenses, excluding the credit loss provision and expenses related to investment banking transactions totaled approximately $208 million and represented 18, 8% of our net revenue.
This was above our full year guidance, primarily due to a pickup in expenses tied to business development combined with lower institutional revenues.
The effective tax rate during the quarter came in at 26%, which is the high end of our guidance and was driven by a lack of any discrete tax benefits during the quarter and the operating contribution from foreign subs.
Finally, our average fully diluted share count came in below our guidance due to declines in our share price and our repurchase activity.
Absent any assumption for additional share repurchases and assuming a stable stock price, we would expect the third quarter fully diluted share count to be $117 3 million shares.
Before I turn the presentation back to Ron I wanted to provide an update on our forward guidance.
We are lowering our revenue expectations for 2022 to a range that equates to a 5% variance above or below 2021 net revenue.
The reduction in our expectations is primarily the result of continued headwinds in our institutional business as well as weaker than expected equity markets.
Comparing our updated assumptions to those in our initial guidance, it's easy to see the impact of the market is having on our business.
At the beginning of the year, we'd expected a modest pullback in investment banking from our record results in 2021.
<unk> pipelines were at record levels, but have you already begun to see a slowdown in capital raising activity.
Despite strong advisory results in the first half.
Underwriting market was essentially close.
In terms of transactional revenue, we anticipated it to be relatively flat. However, transactional revenue was down 8%. So far this year, primarily due to the impact of lower capital markets activity and marks on our trading books.
That said, we expect transactional revenue to improve in the back half of the year as our commission business has been resilient and we expect the market impact on our trading book to be less pronounced.
The magnitude of the market sell off has also impacted our forecast for asset management revenue.
Call that we anticipated a market correction in the first quarter with the S&P 500 being up mid to high single digits at year end.
The S&P down 20% so far this year, our expectations for asset management revenue have also been lowered.
One benefit from the impact of inflation on the economy as the increased pace at which the federal reserve has raised short term interest rates.
For the full year, we are raising our guidance for net interest income to 825 million to $925 million based on the faster than expected increase in the fed funds rate.
This assumes additional federal reserve increases rate increases of 175 basis points and with projected.
Year, and fed funds target rate range of $3 two five to three 5%.
Point out based on this forecast and growing our balance sheet to the midpoint of our guidance, we would exit 2022 with an annual run rate NII of approximately $1 2 billion.
We often get a number of questions related to deposit betas cash sorting and asset mix and how it impacts our NII forecast.
Would reiterate but all of those assumptions are incorporated into the quarterly and full year forecast noted above.
The higher revenue contribution from NII will have a positive impact on our comp ratio. So we continue to expect to come in at 56% to 58%.
So while we now see lower revenue than initially forecasted 2022 is still on track to be one of the strongest years in our history.
And with that I will turn the call back over to Ron.
Thanks, Jim.
In short the diversity of our business resulted in another strong start to the year with our first half net revenue and EPS for the second highest in our history look market conditions are volatile and difficult to predict and as such we will remain both cautious and opportunistic.
As a base case for the second half of the year, we are assuming an operating environment similar to the first half.
That said, we anticipate an increase in revenues as compared to the first six months as a substantial growth in our net interest income will provide a meaningful offset to the impact of the current market could have on our more cyclical businesses overall Stifel is well positioned for continued growth as our capital levels remain robust.
And as we have done throughout our history, we will use periods of market dislocation to reinvest in our business for future growth.
That said I'd like to thank all my partners at Stifel for their efforts in building our franchise into the World class organization that has capabilities to weather market downturns and generate continued growth.
With that operator, please open the line for questions.
Yes.
Thank you Sir as a reminder to ask a question you will need to press star one on your telephone.
Draw your question. Please press star two.
Please standby, while we compile the Q&A roster.
And our first question will come from the line of Devin Ryan with JMP Securities.
Great Good morning, everyone.
Hey, Devin good morning.
Hey, So first question just on the.
The outlook for the back half of the year. So when we think about investment banking.
Theres a lot of uncertainty I think in terms of just completion of backlog, but.
Can you just help us think about like even your expectations what.
What I guess, what the backlog looks like today relative to starting the year and then.
We're hearing a lot from other firms about elongation processes deals take a long time to close but not a lot about deals breaking yet are you guys seeing deals break and so therefore expectations are lower.
Because of that or just any other flavor around kind of some of the puts and takes for more on the investment banking side in the back half of the year.
I would echo.
The elongation comment alright.
We're definitely talking or engaging with clients.
The advice.
It's a difficult market to execute transactions, especially capital markets.
Very difficult to finance the merger in the leverage loan market today.
What we're saying is as a pause.
Especially on the capital raising side due to volatility in the markets.
And as it relates to the second half of the year.
We were assuming just for a base case that not going to pick the point that that changes, but I do know that when it does change a change as fast I can point to a number of instances where you know.
You have to you have to be ready to be ready as bankers like to say because the markets can change path, but appropriate in terms of what we're thinking about we're just thinking that it will be similar to the first half.
Where we had no basically equity capital markets revenues so that.
That's how we're thinking about it but.
The.
Clients.
Our engaged and will this is a market where deals will get done.
They're just being delayed.
Yes, I appreciate that you have I'm, just trying to get a sense of the conservatism or not baked into that outlook, but I think you guys hit on that so thank you.
And then just a follow up for Jim.
You gave a lot of details on net interest income and expectations.
And then kind of the exit rate on the year. So that's all helpful. And then you also touched on.
Cash sorting can you maybe just help us with like how much more you expect.
What history would suggest.
In terms of additional cash sorting from here. So any other detail you can give us in terms of what's baked into your.
Customer cash expectations kind of exiting the year would.
It would be helpful.
Now, let me jump in on that but I'll, let Jim get to that I think is an.
<unk> point Devon.
And I'm going to speak to cash starting a little bit in in June I forget the exact time there was.
A significant increase in the two year.
And then in Muni rates, and what and what happened and what where it is today is the yield curve became very steep from fed funds effective to the two year.
Then of course, the yield curve inverts.
And so in the deposit environment.
It is what I would expect cash yielding products.
There is a big big difference between.
The money market rates and the cash sweep deposits and ladder and a two year treasury.
And that.
So what we're seeing is what we would expect especially in an adviser led business.
To that now what's going to happen and it's going to happen today is that that steepness of the yield curve flattened pretty quick.
Today $50 to 75 basis points of that steepness will go away.
Happened in September and then that environment will lead to a more conducive environment for deposits. So I think that's been lost a little bit on what's been going on.
Secondly, the steepness from fed funds effective to the two year.
Maybe on top of that rate dynamic a couple a couple of things. Obviously, there is always some seasonal outflows related to tax payments I think you've heard a number of competitors discuss similar type trends during the quarter and I think as we sit here and think long term and one of the things. We put on the chart is just our long term growth in deposits and thats going to continue to be driven by financial adviser recruiting which remains strong.
I'll also say, we'll highlight the smart rate deposit program, we're catching are capturing more of that yield seeking cash and keeping that on our balance sheet and then again, we're growing our capabilities with venture and fund banking.
Kind of going back to smart rate I think you know.
We're going to be able to compete against some of that six plus billion dollars into money funds and I think that is a key area for us to kind of combat some of the things near term that Ron talked about.
Yes.
Yes, that's great color guys. Thanks, so much I'll leave it there.
Thanks Devin.
Alright. Your next question will come from the line of Steven <unk> with Wolfe Research.
Hi, good morning.
Good morning, it's David.
So one of the questions I just wanted to unpack is around there are topics I wanted on packages around the NII guidance. Jim I believe you noted youre contemplating fed funds of $3 25 to $3 50 is certainly helpful to hear the exit rate for the year. It does support some pretty strong momentum at the bank.
But the curve is actually reflecting cuts in 2023, that's certainly something that started to garner increased attention I just wanted to understand because you do tend to have a lot of short end sensitivity, whether youre, taking any actions to protect the margins if the fed reverses course, maybe adding some fixed rate MBS.
Just to add some duration in lieu of CLO products, but you've had greater appetite for historically.
No that makes sense. When you were talking about you know I would highlight that we did add over $600 million of mortgage product all of that is adjustable rate mortgage during the quarter and so we've had conversations talking about the environment for 2023, we can see obviously, what fed fund future looking at the thing I would say at that point I think if youre looking at an environment where.
We're seeing rate cuts the dynamic Ron talked about in terms of cash sorting probably goes away and you think about the starting point of where our asset yields are at today, we would be able to generate a sufficient return we're talking about 320 to 330 basis point NIM in the third quarter. So you think about our ability to generate.
Meet our return hurdles at lower rates than that I, yes.
I would view that more as just an opportunity to grow NII at that point as we see more cash deposits come again.
Helpful color and maybe just for my follow up on the non comps they did come in a little bit higher than we were anticipating you did note that the ratio in the quarter was running above what you had guided to at least for the full year. Some of that could certainly be season, all it was encouraging to hear that.
Comp ratio guidance for the full year was unchanged was hoping you could just help frame how we should be thinking about the cadence for a dollar of non comps you cited the elevated.
Biz Dev in the corridor or certainly we're seeing some normalization in TNA, but just trying to frame how we should think about the non comp trajectory in the back half of the year.
Well first of all I'll, let Jim get into we we do provide guidance on non comp as a percent of net revenues. So.
First thing.
That happens you get to the high end of the range. When your revenue comes in lower than that a lot of that is.
Being driven on a ratio basis versus an absolute basis now that said, we've said that our <unk> and our comprehensive and those expenses are going to increase but some of it is the fact that.
Our institutional business has been muted in this timeframe. So that that's driving that ratio higher the same reason that comp ratio is coming lower because we're driving higher NII, yes, I mean, maybe a little color to what Bryan just mentioned, if we would've hit the original midpoint of our revenue guidance, we'd be at a $16 five adjusted non <unk>.
Comp ratio that would be right in the middle of our original guidance. So in terms of absolute dollars, we're right, where we thought we would be just more of a function of that.
The revenue shortfall.
Okay very helpful. Thanks for taking my questions.
Alright.
Welcome Alright.
Once again that is star one if you'd like to ask a question next.
The next question will come from the line of Alex <unk> with Goldman Sachs.
Hello, Alex.
Hey, good morning, everybody. Thanks for the question as well.
I wanted to go back to some of the funding dynamics at the bank. So it looks like you guys will exhaust the third party bank sweep fair.
Fairly quickly here I think there's less than $2 billion left and Jim I know you talked about money market funds and the smart deposit program. That's meant to be more competitive with money market fund yields, but I guess with industry money fund yields now kind of north of 1% probably approaching 2% by the end of the year should we be thinking about deposit cost on these incremental.
Deposits sort of beyond what you could move from third party bank sweep coming in close.
If money market fund rates.
Yes. So if you think about our deposit rate thus far in this rate cycle. It's been about 25%, we've talked about a 25% to 50% deposit data and when you look at smart rate today before today's movement, it's going to be one 5%. So it's already in that baked into that math, but I think what we're saying is we still have the capability to go above 50% could pause.
The beta on future rate hikes, and still meet those NII guidance based upon what we've done thus far and so I think we have some flexibility there to be more aggressive and still hit our NII targets for the year.
Yeah, and I would say I think Alex here, yes.
The embedded in your question is a good question one that we look at and that is ultimately what's your cost of funds going to be alright, I mean, that's really what we're talking about and where we're comfortable first of all I'm comfortable with our ability to source funding we've been doing this a long time and.
We did this when the bank was half that size. So we we will be able to fund the bank.
I'll go back to the dynamic, which we saw before which is the steepness of the yield curve, which has some.
Cash <unk>.
Seeking deposits at the high end and weird isn't not just not at Stifel. That's across the industry in my opinion.
And that will begin to taper today.
With an increase in fed funds effective and again in September so.
We're confident in our forecast certainly through the end of the year with our with our growth.
Our deposit.
Our cost of funds effectively.
Yes.
Factors that.
What we're doing with smart right.
Got it and then on the asset side of the balance sheet. Just another quick follow up as you think about the appetite for loans versus securities in this point in the credit cycle.
Obviously I heard your comments for the back half of the year, but as you think in a little bit further than that should we be expecting a similar pace of loan growth or that's likely to moderate as we kind of progress through slower periods of economic growth.
I think what we said before is we still feel good feel confident are $4 billion to $6 billion growth target for the year, which we said is predominantly going to be loans.
Being said there is theres a number of verticals on the on the loan various different loan channels that we've been pretty good at generating balances with.
That said, we still see attractive opportunities in CLO, and so there'll be somewhat of a mixture of that but if I look forward to the third quarter.
And into the fourth I would say, it's predominantly going to be loan growth and in terms of asset class we've always.
<unk> sold a lot more.
Mortgages than we than we keep on balance sheet and and there are some alluding to the previous question. There are some opportunities for us we're very short term.
Nature.
And are we where we are.
Where we move with the yield curve in that short term sorry.
We certainly have a lot of.
On demand.
Looking forward past this year, it's going to really depend on economic conditions in the market and whether or not there's a recession looming all of the things that will shape our views as we go forward, but overall I would say that we're going to continue to grow our balance sheet into the future.
Yes, I'll make sense. Thank you guys.
And there are no further questions at this time, so I'd like to turn the call back over to Mr. Ron Kruszewski.
Thank you operator.
Everyone I hope everyone joining their summer certainly been hot here in the Midwest and I look forward to catching.
Catching up with everyone on our third.
Quarter earnings calls so.
Have a great rest of the summer and.
We look forward to catching up again, thank you.
Okay.
And that does conclude today's conference we thank everyone again for their participation.
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