Q3 2025 Stifel Financial Corp Earnings Call

Operator: Please stand by. The conference will begin shortly.

Please stand by. The conference will begin shortly.

Joel Jeffrey: Good day and welcome to the Stifel Financial Corp. Q4 2025 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Joel Jeffrey, Head of Investor Relations. Please go ahead.

Joel Jeffrey: Thank you, Operator. Good morning and welcome to Stifel Financial Corp. Q4 2025 Earnings Call. On behalf of Stifel Financial Corp., I will begin the call with the following information and disclaimers. This call is being recorded. During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at stifel.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Stifel Financial Corp. does not undertake to update the forward-looking statements in this discussion. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in our earnings release. I will now turn the call over to our Chairman and Chief Executive Officer, Ron Kruszewski.

Good day and welcome to the steeple Financial third quarter 2025 Financial results conference call. Today's conference is being recorded at this time. I'd like to turn the conference over to Joel Jeffrey, head of investor relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Steve full financials third. Quarter 2025 earnings call on behalf of steeple. Financial Corp. I will begin the call with the following information and disclaimers this call is being reported. During today's presentation, we will refer to our earnings release and financial supplement copies of which are available at stifel.com.

Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially.

Ron Kruszewski: Thanks, Joel, and good morning, everyone. Stifel Financial Corp. delivered another record quarter, once again demonstrating the strength of our diversified business model and the leverage it provides in an improving environment. In my nearly 30 years as CEO, Stifel Financial Corp. has grown from a regional firm into a global company by consistently reinvesting in our people and our platform. That same mindset, reinvesting to increase relevancy, has defined our 135-year history. This quarter, we achieved record net revenue of more than $1.4 billion and record client assets, and produced our third-highest earnings per share in firm history and a record for any third quarter at $1.95. Return on tangible common equity exceeded 24%. Both of our business segments contributed to the performance, with another record in Global Wealth Management and the third-best quarter in terms of revenue for our Institutional Group.

People Financial Court, does not undertake to update the forward-looking statements in this discussion. Please refer to our notices regarding forward-looking statements and non-gaap measures that appear in our earnings release. I will now turn the call over to our chairman and chief executive officer, Ron, Bishop, thanks, Joe, and good morning everyone.

People delivered another record for once again, demonstrating the strength of our diverse business model and the leverage to provide an improving environment.

In my nearly 30 years as a CEO, Steve was grown from a regional firm into a global company by consistently reinvesting in our people and our platform that same mindset. We investing to increase relevancy and defined our 135 year history. This quarter we achieved record net revenue with more than 1.4 billion dollars and record client assets and produced our third highest earnings per share in firm history and a record for any third quarter at a $1.95 return on tangible, common Equity exceeded 24%.

Ron Kruszewski: On last quarter's call, I said we expected a strong second half as optimism builds around lower taxes, reduced regulatory burdens, and higher capital spending in technology. That is exactly how it's played out. The S&P 500 is up roughly 15% this year and more than 35% from its lows following the Liberation Day tariffs. The Fed's first rate cut in September added further momentum. While valuations are elevated and the nominal equity risk premium has narrowed to near zero, the underlying economy remains constructive. We've also seen something worth noting, and even with yesterday's pullback, this year, gold and silver have outperformed even as equities have rallied. When risk assets and traditional hedges rise together, it often reflects abundant liquidity and a search for stability. It reminds investors that confidence in markets can sometimes outpace confidence in currency, and that's when discipline and fundamentals matter most.

Both of our business segments, contributed to the performance with another record, the global wealth management and the third best order in terms of revenue revenue, uh, for our institutional growth.

Our last quarter's call. I said, we expected a strong second half as optimism built around lower taxes, reduced regulatory burdens, and higher Capital, spending and Technologies and that's exactly how it's played out. The S&P 500 is up, roughly 15% this year and more than 35% from its lowest following The Liberation day terrorists, the feds first race cut in September added further, momentum

Evaluations are elevated. In the nominal Equity risk premium has narrowed in near to zero the underlying economy remains constructive

Ron Kruszewski: In that environment, Stifel Financial Corp.'s balanced model and disciplined execution continue to deliver results. Turning to slide two, I think it's important to put this year's quarter results into perspective. At our core, Stifel Financial Corp. is a growth company. Decades of consistent reinvestment, hiring talented advisors and bankers, making strategic acquisitions, and executing on our integrated banking strategy with a focus on risk-adjusted returns have produced steady, durable growth and meaningful operating scale. I find it worth pointing out that our third-quarter revenue alone exceeded our total annual revenue in 2011. That comparison speaks not only to our growth but how we've achieved it. We've grown in a balanced way, expanding both of our core businesses while maintaining a consistent mix between wealth management and our institutional group. Today, wealth represents about 64% of revenue and institutional 36%, essentially the same proportion as more than a decade ago.

It reminds us that confidence in markets and sometimes I'll pay confidence and currency and that's when discipline and fundamentals matter. Most and that environment people's balance model and discipline, execution continue to deliver results.

Turning the slide to, I think it's important to put this year's border results into perspective. At our core people, as a Growth Company. Decades of consistent reinvestment, hiring counted advisors and bankers making strategic Acquisitions. And executing on our integrated banking strategy, with a focus on risk, adjusted returns to produce steady, durable growth and meaningful operating scale.

I find it worth pointing out that our third quarter revenue alone exceeded our total annual revenue in 2011.

That comparison speaks not only to our growth but how we achieved it. We've grown in a balanced way. Expanding both of our core businesses, while maintaining a consistent mix between wealth management and our institutional group today, wealth represents about 64% of Revenue and institutional 36%

Ron Kruszewski: Equally important is how that revenue has evolved. What was once primarily transactional is now largely fee-based. Fee-related businesses, asset management, net interest income and wealth, and advisory and institutional now account for 52% of total revenue, up from 26% in 2011. That shift has made our earnings more stable, our margins stronger, and our growth more durable. Our pre-tax margin reached 21.2%, more than 800 basis points higher than 2011, and annualized EPS has grown more than five-fold. Our growth has allowed us to raise our dividend every year since we introduced the dividend in 2017. Looking ahead, milestones that we've talked about, like $10 billion in annual revenue and $1 trillion in client assets, are not distant goals. They're the logical next steps in the evolution of our strategy and scale. As is our custom, we compare results each quarter to consensus estimates.

Essentially the same proportion as more than a decade ago.

Equally important is how that revenue has evolved.

What was once primarily transactional is now largely fee based?

Few related businesses—Asset Management, net interest income and wealth, and advisory and institutional—now account for 52% of total revenue, up from 26% in 2011.

That ship has made our earnings more stable, our margins stronger, and our growth more durable.

Our pretext margin reached 21.2% more than 800 basis points, higher than 2011, and annualized DPS has grown more than 5 bullets. Our growth has allowed us to raise our dividends every year since we introduced the dividend in 2017.

Looking ahead, milestones that we've talked about, like $10 billion in annual revenue and $1 trillion in client assets, are not distant bills. There's a logical next step in the evolution of our strategy and scale.

Ron Kruszewski: Once again, we exceeded stated expectations across the board. Total net revenue of $1.4 billion, as I've said, was about 7% above consensus, reflecting broad-based strength in investment banking, transactional activity, and net interest income. Earnings per share of $1.95 were 5% ahead of estimates, marking another quarter of strong operating leverage. Investment banking outperformed across both underwriting and advisory, and wealth management activity was stronger than forecast. Expenses were in line with guidance, and our pre-tax margin came in above expectations. In short, we delivered another quarter of record results, balanced contributions across our businesses, and continued momentum heading into year-end. With that, let me turn the call over to our Chief Financial Officer, Jim Marischen, to provide more detail on our financial results.

As is our customs We compare results. Each quarter the consensus consensus estimates. Once again, we exceeded 3 to expectations across the board.

Total net revenue of $1.4 billion, as I said, was about 7% above consensus, reflecting broad-based strength in investment banking transactional activity and net interest payments. Earnings per share of $1.95 were 5% ahead of estimates, marking another quarter of strong operating performance.

Investment Banking outperformed across both underwriting and advisory and wealth management activity. Was stronger than forecasts expenses, were in line with guidance. And our pre-tax margin came in about expectations, in short, we delivered. Another quarter of record results. Dallas contributions across our businesses and continued momentum heading into year end.

Jim Marischen: Thanks, Ron, and good morning, everyone. Record quarterly net revenue grew 17% year over year with gains across the board. Commissions and principal transactions rose 20% as both Global Wealth Management and Institutional Group segments improved from last year. Investment banking revenue was up 33%, our strongest quarter since late 2021. Asset management revenue rose 13% on market appreciation and improved organic growth. Net interest income increased 6% as higher interest-earning assets and lower funding costs more than offset lower asset yields. Our compensation ratio was 58%, which is consistent with guidance. Our operating pre-tax margin was 21.2%, and operating EPS was $1.95, up 30% from last year. Turning to slide five, I'll discuss our wealth business. Global Wealth Management delivered another record quarter with a revenue of $907 million and pre-tax margins of nearly 38%, our highest in almost two years.

With that, let me turn the call over to Achieve Financial Officer. Jim marrison to provide more details on our financial results.

Thanks Ron and good morning everyone.

Record quarterly net revenue grew 17% year-over-year, with games across the board.

Commissions and principal transactions, Rose. 20% as both global wealth and institutional segments improved from last year.

Investment banking revenue was up 33%, our strongest quarter since late 2021.

Asset management revenue rose 13% due to market appreciation and improved organic growth.

Net interest income increased 6%, as higher interest-earning assets and lower funding costs more than offset lower asset yields.

Our compensation ratio was 58%.

Which is consistent with guidance.

Our operating pre-tax margin was 21.2%.

And operating EPS was 1.95 up 30% from last year.

Turning to slide 5, I'll discuss our wealth business Global wealth management. Delivered, another record order with revenue of 907 million and pre-tax margins of nearly 38%.

Jim Marischen: Transactional revenue reached a record $203 million as clients were active in both equity and fixed income markets, and asset management revenue also reached a record $431 million. We ended the quarter with a record total client assets of $544 billion and record fee-based assets of $219 billion, reflecting continued market appreciation and net new asset growth in the low to mid-single digits. Advisor recruiting remained active and high quality. We added 33 advisors during the quarter, including 17 experienced hires, with trailing 12-month production of $19 million. Retention remains strong. Our recruiting pipeline is healthy, heading into year-end. Productivity benefited from higher client engagement, record asset management revenue, and an expanding suite of wealth and lending solutions. Moving on to slide six, our integrated banking model continues to strengthen our wealth platform.

Our highest in almost 2 years.

Transactional revenue reached a record $203 million. His clients were active in both equity and fixed income markets. Additionally, management revenue also reached a record $431 million.

We entered the quarter with a record total client assets of $544 billion and record database assets of $219 billion.

Reflecting continued Market appreciation, and net new asset growth and the low to mid single digits.

Advisor recruiting remains active and of high quality.

We added 33 advisors during this quarter, including 17 experienced hires with trailing 12-month production of $19 million.

Retention remains strong. Our recruiting pipeline is healthy heading into your end.

Productivity benefited from a higher client engagement record, asset management revenue, and an expanding suite of wealth and lending solutions.

Jim Marischen: Net interest income was $276 million, which was above guidance, as firm-wide net interest margin improved modestly, and our cost of funds remained essentially flat. We forecast fourth quarter NII to be in a range of $270 to $280 million. Client cash levels increased during the quarter, with sweep deposits up $640 million and non-wealth deposits up $760 million, including strong growth from the venture banking team, as those deposits increased by more than $1 billion during the quarter. Credit metrics remain solid, with the non-performing asset ratio at 49 basis points, provision expenses $8 million, and an allowance-to-loans ratio of 81 basis points. On the next slide, I'll discuss our Institutional Group. Institutional revenue was $500 million, up 34% from the prior year. Strength was broad-based across investment banking and transactional revenues. Investment banking totaled $323 million, with gains in both capital raising and advisory.

Moving on to slide 6. Our integrated banking model continues to strengthen our wealth platform.

That interest income was 276 million which was above guidance as firmwide net, interest margin and improved modestly. Our cost of funds remained essentially flat.

Before we forecast, fourth quarter needs to be in a range of $270 million to $280 million.

By cash levels increased during the quarter with sweep deposits up 640 million in non-wealthy million, including strong growth from The Venture banking team as those deposits increased by more than a billion dollars during the quarter.

Credit metrics remain solid with the non-performing asset ratio at 49 basis points.

Provision expense of 8 million that allow us to loans ratio of 81 basis points.

On the next slide, I'll discuss our institutional group.

Institutional Revenue was $500 million of 34% from the prior year.

Strength was broad-based across Investment Banking and transactional revenues.

Jim Marischen: Equity capital raising revenue was $79 million, the best since late 2021, with continued activity in financials and renewed issuance in biotech. Fixed-income underwriting was $59 million, up from last year, driven by increased public finance activity. Stifel Financial Corp. remains the number one negotiated issue manager by deal count, and our calendar remains very active into the fourth quarter. Trading results were also strong, with equity trading revenue of $58 million and fixed-income trading revenue of $123 million, reflecting higher client activity, healthy secondary market liquidity, and multiple strategic balance sheet restructuring assignments. Advisory revenue was $179 million, with broad contributions across sectors and early benefits from the integration of Brian Garnier. Our investment banking and advisory pipelines ended the quarter at record levels, providing strong visibility into the fourth quarter and beyond. Moving on to slide eight, expenses remained well controlled.

Investment Banking total 323 million with gains in both Capital, raising and advisory

Equity Capital using Revenue was 79 million the best. Since late 2021 with continued activity and financials and renewed issues in biotech.

Fixed income underwriting was 59 million up from last year?

Driven by increased Public Finance, activity.

Steve for Maine's, the number 1 negative issue, manager by deal County and our calendar remains very active in the fourth quarter.

Training results were also strong with Equity trading revenue of 58 million and fixed income trading revenue of 123 million.

Reflecting higher client, activity healthy, secondary Market, liquidity, and multiple strategic balance sheet restructuring assignments.

Advisory revenue was $179 million, with broad contributions across sectors and early benefits from the integration of Brian Garnier.

Our investment banking advisory pipelines into the quarter are at record levels, providing strong visibility into the fourth quarter and beyond.

Moving on to slide 8.

Jim Marischen: Non-compensation expenses were $298 million, up 7% from a year ago, and the adjusted non-comp operating ratio was 19%. The sequential increases in total expenses reflected deal-related investment banking gross-ups. We expect a similar adjusted non-comp ratio in the fourth quarter, which is at the low end of our annual guidance range. The tax rate for the quarter was 26.1%. Our share price remains around current levels. We anticipate a full-year effective tax rate of 20% to 22%, implying a fourth-quarter rate of 12% to 14%. The projected decline in the effective tax rate is a result of the excess tax benefit associated with stock-based compensation. Our balance sheet remains well-capitalized. Tier 1 leveraged capital rose to 11.1%, and Tier 1 risk-based capital ratio increased to 17.6%. Based on a 10% Tier 1 leverage target, we ended the quarter with approximately $421 million of excess capital.

Expenses remained, well controlled.

Non-compensation expenses were $298 million, up 7% from a year ago, and the adjusted non-comp operating ratio was 19%.

The sequential increases in total expenses, reflected deal related. Investment Banking, Grow Ups

We expect a similar adjusted non-conference ratio in the fourth quarter, which is at the low end of our annual guidance range.

The tax rate for the quarter was 26.1%.

Our share price remains around current levels. We anticipate a full-year effective tax rate of 20% to 22%.

Replying to a fourth quarter rate of 12% to 14%.

The projected decline in the effective tax rate is a result of the excess tax benefit associated with stock-based compensation.

Our balance sheet remains well. Capitalized Tier 1, leverage Capital rows to 11.1% and tear 1. Risk-based Capital ratio increased to 17.6%.

Jim Marischen: We repurchased about 275,000 shares during the quarter and have 7.9 million shares remaining on our current authorization. Assuming no additional repurchases and a stable stock price, the fully diluted share count for the fourth quarter will be about 110.3 million shares. That, Ron, back to you.

Based on a 10%, Tier 1, leverage Target. We ended the quarter with approximately 421 million of excess capital,

We were purchased about 275,000 shares during the quarter and that's 7.9 million shares remaining on our current authorization.

Assuming no additional repurchases and a stable stock price.

Fully diluted share count for the fourth quarter will be about 110.3 million shares.

Ron Kruszewski: Thanks, Jim. I'm pleased with our overall results and how our teams are executing across the firm. We're entering year-end well-positioned to capitalize on favorable markets and unfavorable market environments, supported by continued momentum across both our operating segments. Specifically, in our wealth business, another record quarter with record client assets and strong profitability. We continue to attract highly selective advisors, and our recruiting pipeline remains robust. Deposit gathering continues to grow, both through advisor recruiting and the addition of venture banking teams, driving strong treasury deposit growth. Earlier this year, as I've mentioned before, Stifel was recognized by Gady Power for having the highest investor satisfaction among full-service wealth management companies, a reflection of our advisor-centric model and trust our clients place in it. In our institutional business, investment banking pipelines are at record levels as our earlier investments continue to drive scale.

That Ron back to you.

Thanks Jim.

Look, I'm pleased with our overall results and how our teams are executing across the pond. We're entering gear and are well positioned to capitalize on favorable markets. On these favorable market environments, supported by continued momentum across both our operating systems.

Specifically in our wealth business, and another record quarter with a record client assets. And strong profitability, we continue to attract highly productive providers. Our recruiting pipeline is remaining for a box.

Recruiting and the addition of venture banking teams are driving strong treasury deposit growth.

Ron Kruszewski: We maintain leading market share in financials through our KBW platform and rank in the top 10 in equity capital market fees year to date. In public finance, as Jim said, we remain number one by number of negotiated issues led. We're also seeing increasing synergy between fixed income trading and investment banking, strengthening client relationships and expanding our reach. Looking at the markets more broadly, there's a lot of optimism out there, and I share that optimism. We all know markets move in cycles. The best way to navigate them is with discipline, balance, and perspective, qualities that have defined Stifel from the beginning. In conclusion, I have a little food for thought. In the past, I've illustrated what I believe to be Stifel's valuation gap compared to both the market and our peers. Instead of repeating those metrics, let me put it this way.

Earlier this year, as I've mentioned before people would recognize by JD Power for having the highest and best of satisfaction among both service wealth management. Club, a reflection of our advisor Centric model, the trust for clients. Placing us, our institutional business Investment Banking type pipelines are at record levels of our records as our earlier, Investments, continue to drive scale

To maintain leading market share and financials through our KBW spot coming. Ranked in the top 10 in equity Capital Market fees here today and Public Finance. As Jim said, we remain number 1 by number of negotiated issues left.

We're also seeing increasing Synergy between fixed income trading and Investment Banking, strengthening client relationships, and expanding our reach.

Looking at the markets more broadly, there's a lot of optimism out there, and I share that optimism. But we all know markets move in cycles; the best way to navigate them is with discipline, balance, and perspective—qualities that are defined steeply from the beginning.

And it's sort of, in conclusion, I have a little food for thought from the past. I go straight to what I believe to be Sleepless: the valuation gap compared to both the market and our peers.

Ron Kruszewski: At current prices, you get a growth company at value company prices. I think it's a compelling valuation. As we move forward, we'll keep doing what's always worked for Stifel: staying disciplined, managing risk, and investing for the long term. That approach has built the Stifel of today and positions us well for the opportunities ahead. With that, please open the call for questions.

Instead of repeating those metrics, we put it this way: at current prices, you get growth company and value company prices. I think it's a compelling valuation.

So as we move forward, we'll keep doing what's always worked for people thing to put discipline, managing risks and investing. For the long term that approach has built the sea flow today in positions, as well, for the opportunities ahead with that. Please open the call for questions.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. If you are on the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click send. Our first question is going to come from Devin Ryan from Citizens.

Thank you. If you are dialed in via telephone and would like to ask a question, please signal by pressing *1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to signal.

To allow your signal to reach our equipment, again, press star 1 to ask a question.

If you are on the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click Send.

And our first question is going to come from Devin Ryan from citizens.

[Analyst]: Hey, good morning, Ron. Good morning, Jim. How are you?

Ron Kruszewski: Good morning.

Hey, good morning, Ron. Good morning, Jim. How are you?

Good morning. Good morning.

[Analyst]: I want to start with a question on investment banking. Obviously, kind of been an uneven year, but you know, second-best start to a year since 2021. We look at Stifel today relative to then, you're obviously quite a bit even bigger than that point. It would just be good to hear a little bit more about, you know, I guess, the record investment banking pipeline and how you guys are thinking about the upside for revenues in a more normal environment. I'm not sure if there's any way to frame it relative to kind of that prior 2021 peak. If you can, just give a little more color on the sector supporting that and specifically love to hear about what you're seeing in the depository space as well. Thanks.

Um, I want to start with a question on investment banking, um, obviously, um, kind of been an uneven year, but, you know, second best start to a year since, uh, 2021. And we look at stifel today, relative to, then you're obviously quite a bit even bigger, uh, than that point. So would just be good to hear a little bit more about, uh, you know, I guess the, the record Investment Banking Pipeline and and how you guys are thinking about the upside for revenues and in a more normal environment. I'm not sure if there's any way to frame it relative to the kind of that prior 2021 Peak and then if you can just give a little more color on the sector supporting that and and specifically love to hear about what you're seeing in the depository space as well. Thanks.

Ron Kruszewski: I think we did, what, $500 million in institutional revenue. That annualizes at around, obviously, $2 billion and, you know, what did we do? $2.2 billion in 2021. That just gives you a sense we're not, even on an annualized basis, at the 2021 level. Of course, the mix has changed and our capabilities are more than they were in 2021. In terms of just where we are relative to what we can do, we're making progress. The market environment certainly is helping us, as we said it would, starting with regulatory attitude, as much as anything else. Clearly, this administration is more open to M&A and even other strategic initiatives than was the prior. I don't think there's much argument about that. The environment's good. A little caveat, the government shutdown hasn't helped IPOs at this point. I think we all know that.

Well okay, I think we did um a 500 million dollars of institutional Revenue by annualizing that prompt. Well, obviously 2 billion and you know what we do, 2.2 billion and 2021. So I just give you a sense for that, even on an annualized basis, we're not at the 2021 level. Of course, the mix has changed. Our capabilities are more than they were in 2021. So, uh, in terms of just, you know, where we are relative to what we can do, you know, we're making progress and, uh, and the market environment, certainly is helping

As we as we set a goal, uh, you know, starting with regulatory, uh, attitude, uh, as much as anything else. Uh, clearly uh, this Administration is more open to, uh, to m&a and even strategic, uh,

Ron Kruszewski: The good news is that what's sitting on the desk not being reviewed will get off those desks. That's not only true for Stifel Financial Corp., that's true across the street. Clearly, financials have been a strength, not only on the capital side, but also what we are doing in fixed income, balance sheet restructuring related to mergers. Just look at the lead tables and you can see that as it relates to depository M&A, we are doing quite well, not only in absolute terms but in relative terms as it relates to market share. I would note that, across the industry, healthcare, I think, has been a lagger. Not just at Stifel Financial Corp., but across the board, healthcare volumes are not what they were nor what we think they're going to be. I view that as upside. Clearly, technology has been a strength.

Ron Kruszewski: I think we can do better in technology. It's a lot of big deals, but it's a strength. Industrials is a strength. We've seen strength there. Across the board, big is obviously doing quite well, and our second biggest vertical, healthcare, has upside to what we're seeing. We're beginning to see, I'm not going to use that word. What do they always talk about? Green shoes? Let's not, let's put that one in the used bin for a while. Certainly, the environment is better. Jim, I don't know if you have anything to add.

Look at the looking for the lead cables and you can see that as it relates to depository m&a. Uh, we are doing quite well, not only an absolute terms relative terms as relates to market share. You know, I would note that, uh, across the industry Healthcare. I think is not a lagger. Okay, I just not yet steeple, but just across the board Healthcare. Uh, volumes are not, uh, what they were, nor what we think they're going to be side view that, uh, as upside, uh, Co technology has been a strength. I think we can do better, uh, in technology. It's, uh, you know, it's a lot of big deals, but it's a strength Industrials. Uh, is a strength that we've seen strength there, so kind of the cross the board with with uh, you know, big is uh is obviously doing uh quite well. Um and by our second biggest vertical uh Healthcare has upside.

[Analyst]: That's perfect. Yeah, that's great. Thanks, Ron. Just to follow up, on the credit backdrop, obviously, several recent credit hiccups in the market, several private credit players and banks disclosing losses, and that's received some attention. I'm just curious what you are all seeing in the market right now, how you feel about the position at Stifel just across both the loan book and the CLO exposure as well, and any other thoughts more broadly. Thanks.

Uh, to what we're seeing and we're beginning to see, I'm not going to use that word. What do they always talk about green shoes? Let's not, let's, let's put that 1 in the, in the, uh, in the used bin for a while. But certainly, the environments are, is that okay? Can that

That's yeah.

Yeah, that's great. Thanks Ron. Um, and just to follow up, um, just on um, you know, the credit backdrop obviously, um, you know, several recent uh credit, hiccups in the market, several private credit players and Banks.

Disclosing losses and that's received some attention. So I'm just curious what you were all seeing in the market right now. You know how you feel about the position at stifel just a cross. Both the loan book and and the co exposure as well. Just any other thoughts more broadly, thanks.

Ron Kruszewski: Yeah, look, I think that there's a lot of commentary you've heard, whether it's one-time roaches more, etc., things like that as it relates to the credit. It feels to me still a little idiosyncratic about things that have happened, at least in terms of the two bankruptcies and then the one moving asset management. It doesn't feel like a broad-based sector type thing. I would say that in general. You give me an opportunity, Devin, just to maybe point out that I think it's very important to understand. I know that you do. First of all, Stifel Financial Corp. is not a regional bank. I'll give you some commentary as it relates to my view from KBW and all our great bank clients that we've talked to. As you know, many regional banks have 85% to 90% of their revenues generated by NII.

Ron Kruszewski: Consequently, lending and the lending environment is very important to their ability to grow. Look at Stifel Financial Corp., as we've pointed out many times, a little over 20%, maybe a little bit more of our revenue is NII. We're fee-based and with PCG and institutional accounting for the vast majority of our revenue. We don't look, nor are we a regional bank. We really drive our revenue growth without greater exposure to credit. When we do grow our loan book, it's relatively low-risk categories like mortgages to our high-net-worth clients, security-based loan, fund banking. In fact, Jim, those accounts for what?

Yeah, have a look. I I think that, you know, there's there's a lot of commentary, you've heard, uh, you know, with this 1 cockroaches, more Etc, things like that, as it relates uh, to the credit. It feels to me feel feel a little idiosyncratic, uh, about, uh, things that have happened at least in terms of the 2 Banks and 1, um, the asset management. Uh, but it's, it doesn't feel like a broad base sector type thing. I would say that in general, but but you know, you give me an opportunity, Devon just to maybe uh, point out that uh, I think it's very important to understand. I and I know that you do first of all its steeple is not a Regional Bank. Um so I I'll give you some commentary as it relates to my view from KBW and all our great main clients that we talked to. But as you know, many many Regional banks have 85 to 90% of the revenue is generated by nyeon.

[Analyst]: It's $3 billion or $4 billion or something.

Ron Kruszewski: Seventy percent.

[Analyst]: 70% in total of the entire retained loan portfolio.

Ron Kruszewski: Yeah, we fund these loans with deposits from our wealth clients and our venture business that are either highly complementary to our wealth and institutional business. Your second part of your question regarding CLOs, Devin, I've dealt with this question for about, it feels like, 10-plus years. I think I'll let Jim Marischen handle it this time.

You know, consequently and all lending. And, and the lending environment is very important to their ability to grow. You know, I look at Steve Paul. It's it's as we pointed out many times, you know, a little over 20, maybe a little bit more of our revenue is knee. We're we're debates and and I with PCG and institutional accounting for the vast majority of our revenues. And uh, you know, we don't look nor are we original Bank? We, uh, we we really Drive our Revenue growth, without greater exposure to credits. Um, you know, look when we do grow a long book, It's relatively low-risk category. It's like mortgages to our high. Net worth clients Security based Loan Fund Banking. And in fact again those accounts for what it's about, 34 billion dollars a month, 70% in total of the entire retained loan portfolio. Yeah so you know we fund these loans with deposits from our wealth clients and our Venture business that either highly complimentary

[Analyst]: Certainly. Whenever we get questions on the CLO book, the first thing we like to do is point out where in the CLO structure we are investing. Our entire portfolio is comprised of AAA and AA CLOs. That breaks down roughly 60% in the AAA class and the remaining 40% in the AA class. I think from there, it's important to understand how the diversion of cash flows really protects those senior classes. The key metric to look at in regards to that is the credit enhancement levels. Our portfolio has a weighted average credit enhancement level of 32%, so it's pretty significant. The diversion of those cash flows is what protects the senior class. When you think back through time, we have never seen a AAA CLO default.

For our wealth and institutional business and you know, look it's the second part of your question regarding cos you know Devin I dealt with this question for about it feels like 10 plus years. I think I'll let marish and handle with this time certainly whatever questions on the whenever we get questions on the co book. The first thing we like to do is point out where in the co structure we are investing. Our entire portfolio is comprised.

Of Triple A and double a, COS that breaks down roughly 60% and the AAA class and the remaining 40% and the double a class. And I think from there and it's important to understand how the diversion of cash flows, really protect those senior classes and the key metric to look at in regards to that is the credit enhancement levels.

[Analyst]: We've only seen one AA CLO default, and that bond was issued prior to the great financial crisis at much lower levels of credit enhancement. When you think about the structural benefits here, the operating performance over time through a number of different cycles, we feel very, very comfortable with our exposure in the CLO space and where we're at there today.

Ron Kruszewski: You know, Devin, maybe I can't help myself, but to, you know, find one answer on this. Look, when I get up and I try to think of things to worry about, which I do, that's what my job is, I don't think I ever get up and think worry about our loan book and CLOs. I've said this for like 10 years, so nothing bad.

[Analyst]: Yeah, appreciate it. Sorry for giving you the same question 10 years in a row, but always appreciate it.

Default and that Bond was issued prior to the great financial crisis at much, lower levels of credit enhancements. So when you think about the structural benefits here that operating performance over time through a number of different Cycles, uh, we feel very very comfortable with our exposure in the cllo space, uh, and where we're at there today, you know, Devin and I maybe maybe I can't help myself but it's, you know, 51 answer on this but well when I get up and I try to think of things to worry about, all right, which I do, that's what my job is. I don't think I ever get up and think worry about about our law work and see, okay? So and I said this for like 10 years, so enough of that.

Yeah.

Ron Kruszewski: Hey, you're consistent, okay? It's telling me it's been our 10 years.

Yeah, well, appreciate it. Uh, sorry for giving you the same question 10 years in a row. Hey, hey, hey. You're consistent. Okay, so it's telling me that you've been our...

[Analyst]: I think it's been 20, but yeah.

Ron Kruszewski: All right.

That's good too. But I think I think it's been 20. But yeah. All right.

[Analyst]: Thanks, Devin.

Ron Kruszewski: Thanks, Devin.

Operator: Our next question is going to come from Bill Katz from TD Cowen.

Thanks Tim. Thanks Deb.

Ron Kruszewski: Hey, Bill.

And our next question is going to come from Bill Cats from TD Cowen.

Hey Bill.

[Analyst]: I've taken the questions. Apologize for a hoarse voice here. Just to come back to the investment banking opportunity, Ron, you sort of mentioned that you're already running at a run rate of reps equal to 2021, which was a quite robust year. Could we talk a little bit about maybe how you sort of see the incremental margin, the Institutional Group margin improve very nicely, both quarter on quarter and year on year? How much more incremental leverage is there to the segment? Relatedly, how much that might flow to the bottom line? Thank you.

Ron Kruszewski: I think, Jim, correct me. Broadly speaking, I think we did 12% margins in the quarters.

I've taken the questions apologize for a hoarse voice here. Um just to come back to the investment banking opportunity. Uh Ron I sort of mentioned that you're already running at a run rate of revs uh equal to 2021 which was a quite robust year. Can we talk a little bit about maybe how you sort of see the incremental margin? The institutional group margin improve very nicely, both quarter on quarter and year on year. How much more incremental Leverage is there to segment and then relay how much that might flow to the bottom line. Thank you.

Look, okay, thanks, Jim. Correct me if I'm wrong, but broadly speaking, I think we did.

[Analyst]: Institutional is 13.6%.

Ron Kruszewski: Look at how %.

[Analyst]: I'm sorry, that's year to date.

12% margins in the quarters, but the institution was 13.6.

Ron Kruszewski: That's the year to date. So 13.6, that's why you're CFO. That's really good. Instead of 12, it's 13.6. We believe that 20, 20 to low 20s is achievable. Think about it as about 10 points of margin on the quarter, $500 million. Annualized, $2 billion. If you're trying to say, as we restructure and right size, including our international operations, which is part of the improvement, we've been making improvement there. When I look at it, snapshot, I think there's 10 points of incremental pickup. That's a couple hundred million bucks. Read that.

[Analyst]: Right. When you think about it, that's going to be leverage. We're going to get both on the comp ratio as well as a non-comp. Year to date, we were about 62% in terms of the comp ratio, and that number could get closer down into the 58% range. Where you see even more pickup in terms of the type of margin expansion that Ron was talking about, you can see within the non-comp side of the ledger where that was running, call it about 25% year to date as well. Definitely a lot of margin, increased capacity there.

Look it up. I'm so that's here today now, so 13.6. That's why your CFO that's really good. Uh, so instead of 12 to 13.6 our, you know, we believe that 20, uh, 20, 20 to low 20s is is achievable. So when so think about it, as about 10 points of of margins, on the quarter, to 500 million. So, annualized 2 billion. So if you're trying to say as we as we restructure and right side including our International operations, which is that's part of the Improvement that we've been making Improvement there. But when I look at it snapshot I think there's 10 points of incremental pickup. Uh so

A couple hundred, nine bucks free tap.

Right? When you think about it, that's going to be leveraged. We're going to get both on the copper ratio as well as a non-top, you know. Year-to-date, we were about 62% in terms of the copper ratio, and that number could get closer down into the, you know, 58% range. But where you see some, uh, you know, even more pickup in terms of the, you know, the type of margin expansion that Ron was talking about. You can see within the non-con side of the ledger where that was running, call it about,

Ron Kruszewski: We're focused on this, Bill.

25% year-to-date as well, so definitely a lot of margin. Um, a margin increase capacity there.

[Analyst]: Yeah, that sounds like it. Okay. Another question for you, and thank you for taking the questions. I want to pick up where you left off, Ron. We sort of mentioned you get a sort of a growth company at a value opportunity. You've been pretty prescient in terms of calling that over time. How do we think about maybe capital uses from here? How should we be thinking about either expanding the banking opportunity since the deposits are starting to grow again, versus maybe inorganic opportunities? It doesn't sound high right now versus maybe a step up of capital return to a buyback, certainly given the strong balance sheet position. Thank you.

We're focused on this bill.

Ron Kruszewski: You know, Bill, it's always a great question. You've asked it numerous times. The answer is always the same, which is, you know, our capital allocation will be based on opportunity. That opportunity is grounded in our view of what's the best risk-adjusted returns on capital. As always, we pay a dividend. We buy back stock. I've said this year, and you can look at it, our volume of stock repurchases accelerated when we were in Liberation Day, market suppression, if you will, and lower equity values. We said we wouldn't grow our balance sheet as much as a stock rebounded, and we saw more opportunities as the economy improved in lending. We allocated more capital to that, and acquisitions are, you know, obviously, it's in our DNA. It's certainly my DNA as CEO.

Yeah, it sounds like it. Okay, another question for you, and thank you for taking the questions. So, I want to pick up where you left off, Ron. We sort of mentioned that you get a sort of a growth company out of a value opportunity. You've been pretty patient in terms of calling that over time. How do we think about maybe capital uses from here? How should we be thinking about either expanding the banking opportunities since the deposits are starting to grow again versus maybe inorganic opportunities? It doesn't sound high right now versus maybe a step up of capital return to buyback. Certainly, given the strong balance sheet position. Thank you.

To that.

Ron Kruszewski: As I've said, the level that cash flows and future earnings are trading at, which, you know, and as I've said before, people come to me and say, "What do you think at 20 times adjusted EBITDA?" And I think, "Well, I don't think that." We've been more muted. Look, we understand the importance to our shareholders, managing our capital, buying back equities. I think the stock is compelling, and that should support buybacks. We're also going to grow the bank because that supports the integrated bank, supports our wealth and institutional businesses. Those are investments. Buybacks are a financial transaction. Growing the balance sheet is strategic and builds franchise value. We'll always look at our dividend and will consider acquisitions when they think they add, agreed to our return on investment. I can't give you any numbers on that because I don't know what they are.

Uh, at, uh, acquisitions. Um, are you know, obviously it's in our DNA and certainly my DNA as CEO. Uh, but as I've said, um, the level that that cash flows and future earnings are trading at, which, you know. And as I've said before, people companies say, "What do you think in 20 times adjusted EBITDA?" Do I think? Well, I don't think that, and so we've been more muted. But, look, we understand it's important to our shareholders to manage our capital, buying back equities. I think it's, uh, I think that the stock is compelling, uh, and that should support buybacks, uh, but we're also going to grow the bank, and that supports, uh, the integrated bank, supports our wealth and institutional businesses. So those are investments, buybacks, or financial transactions.

Ron Kruszewski: It would depend on the opportunities as they present themselves.

Growing, the balance sheet is strategic and builds. Franchise value will always look at our dividend and will consider Acquisitions. When they think they add, uh, agreeably to our return on investment. Uh, so, can you give me any numbers on that? Because I don't know what they are with depend on the opportunity because they present themselves.

[Analyst]: Okay. Thank you.

Okay, thank you.

Operator: Our next question is going to come from Steven Chubak from Wolfe Research.

At our next question is going to come from Steven chabuk from Wolfe research.

[Analyst]: Hi. Good morning, Ron. Good morning, Jim. Thanks for taking my questions.

Ron Kruszewski: Yeah, always.

Hi, good morning Ron, good morning Jim. Uh, thanks for taking my questions. Yeah, always.

[Analyst]: Always appreciated. I did want to start off with a question on the fixed brokerage business. The performance was quite impressive this quarter. It was also pretty strong last quarter. You cited some enhanced revenue synergies with the banking side of the business and was hoping you could just unpack some of the sources of strength a bit further and whether those synergies support a higher run rate. If you can contextualize that a bit more, it would be really helpful.

Always appreciate it. Well, I I did want to start off with a question on the Fig brokerage business. Uh, the performance, uh, was quite impressive. This quarter was also pretty strong last quarter you cited some. Enhanced Revenue synergies with the banking side of the business and was hoping you could just unpack some of the sources of strength a bit further and whether those synergies support a higher run rate, if you can contextualize that a bit more, would be really helpful.

Ron Kruszewski: Yeah, we've been looking in the last few quarters, even at ourselves, at strong fixed income performance, and then we'll say, "Oh, hey, hey, we want to caution you. It's not, you know, sustainable." You listen to us say that. What I think is happening is that the integration of a lot of the things that we've done over the years from Sterne Agee through, you know, Empire, through some of the smaller acquisitions, and then importantly, B.C. Ziegler combined with the pickup in depository environment, which has been a normalization of the yield curve. M&A activity, which often, the restructuring of M&A will lead in an M&A moment to restructuring the balance sheet of either the target or the combined company. What we've seen is what we talk about.

You know, we've been looking at the last few quarters, even at ourselves, at Frog fixed income performance. MX will say, 'Oh, hey, hey, we want to talk to, you know, it's not, you know, sustainable.' We'll say that. What I think is happening is that the integration of a lot of the things that we've done over the years, from Sterne Agee through, you know, Empire, through some of the smaller acquisitions, and then importantly, finding Sparks.

Ron Kruszewski: The reason we do these deals is to increase our relevance so that we're able to have a seat at those tables. Instead of just doing advisory, we're also helping restructure balance sheets. We're talking to financial officers as the yield curve adjusts, not only normalized, but appears, you know, at least on the short end to be coming down. Frankly, our relevance is equaling more revenue.

Combined, with the picked up, uh, in depository environment which been has been a normalization of the deal curve and then m&a, uh, activity, uh, which often um, the restructuring of m&a will lead in the in, in an m&a, moment to uh, restructuring, the balance sheet of either in the Target or the combined company. And so, what we've seen is, is what we talked about. The reason we do these deals is the brief our relevance so that we're able to, um, have a seat at those tables. So, instead of just doing advisory, we're also, uh, helping restructure balance sheets. We're talking, um, to financial officers as the yield curve adjusts and not only normalize what appears, you know, at least on the short end to be coming down. And frankly, um,

Our relevance is equaling.

More Revenue.

[Analyst]: I think that's fair. Obviously, we've talked about some of the transactions. Obviously, we had some of the gains in the prior quarter related to aircraft. We've got some of the balance sheet restructuring transactions we're talking about here. If you're thinking about it from a pure run rate perspective, I would think about it along the lines of the traditional transactional revenue around a $100 million run rate for the fourth quarter prior to layering on any of those, I guess, what do we call them last quarter, recurring non-recurring items. I think.

I think that's fair. You know, obviously we've talked about some of the, the transactions, you know, obviously we had some of the gains in the prior quarter related. Aircraft got some of the balance sheet restructuring transactions. We're talking about here. If you're thinking about it from a pure run rate perspective, I would think about it along the lines of the traditional transactional, Revenue around a hundred million dollar run rate for the fourth quarter prior to layering on.

Ron Kruszewski: That's what you call them.

[Analyst]: That's what I call them.

Ron Kruszewski: Your guidance is always, it has proven to be low.

Any of those, um I guess, what do we call them? Last quarter recurring non-recurring items so I think that's what you call.

Your guidance is always.

[Analyst]: It's a good way to think about it.

Ron Kruszewski: Yeah, that's fine.

Proven to be low. It's a good way to think about it. Yeah, that's fine.

[Analyst]: have a two-parter for my follow-up, and I recognize both questions are unrelated. The first is just on the recruitment trends. Nice to see the uptick in FAA ads and recruitment levels. I was hoping you could speak to what's driving some of that strength, whether you're seeing continued seeding of share from the wirehouses or if you're seeing just more opportunities with some of the regional brokers. I was also hoping for an update on sweep deposit trends in the month of October.

Ron Kruszewski: I'll do the first. I'll let Jim do the second. Jim can think about sweep deposit. Recruiting is robust. We've talked about the reasons. We've talked about it's a confluence of events. We've built a great platform. We've built a great service platform. We have good technology. We've made sure that we're competitive on the front because I felt when we were losing, it was not capabilities. It was more financial related. Recruiting is an ongoing thing. It's like reading a novel, or reading War and Peace. You're halfway through it. You don't start over, and then you got a lot more to do. It's an ongoing everyday thing that we're doing. We're a great alternative for a lot of advisors that are looking for a firm that puts advisors first and has a culture of a wealth management firm with banking and underwriting capabilities.

the wire houses or if you're seeing just more opportunities with some of the regional brokers, and then I was hoping for an update on sweep deposit trends in the month of October.

I'll do the first, I'll let Jim do the second so you need to think about sweeping about that. Uh, look

recruiting is robust. We've talked about, we've talked about the reasons. We've talked about, it's a Confluence of events. We've built a great platform. We've we've built a great service platform. We have good technology. Yeah, you know, we've, uh, We've made sure that we're competitive, uh, on the products that I felt when we were losing. It was, it was not capabilities, it was more financial, uh, related. Uh, and

You know, the recruiting is a...

An ongoing thing. It's like reading a novel of, you know, our reading board piece, you know you're you're halfway through it, you know, start over and and then you got a lot more to do. Uh it's it's an ongoing every day. Uh, thing that we're doing. We have a great

Ron Kruszewski: There are not a lot of us out there like that. We certainly are one of them, and we're attracting a lot of people. Now we just need to execute. I have been and I'm continuing to be optimistic about that part of our business. I will note, as I always do when I get to November, recruiting in the fourth quarter slows down. Half of the, I mean, they shut down the ACAT system in December. That's known on the street. You should know that too, and I think you do.

We're a great alternative for a lot of advisors that are looking for uh, a firm that puts advisors, you know, first and, and has a culture of of a wealth management firm with baking and underwriting capabilities. So, there's not a lot of us out there like that. We certainly are 1 of them, and we're attracting a lot of people. Well, now, we just need to

[Analyst]: In regards to an update on sweep cash, through yesterday, we were down from quarter end, probably about $500 million plus in terms of those balances. I would hesitate and say that those balances are moving several hundred million dollars on a day-to-day basis. I'd also highlight that we did generate another $1 billion of deposit growth across the venture group. Given the additional investments made in those new team members, as well as the strong recruiting that Ron talked about, while it won't always necessarily be on a straight line, we do expect cash balances to continue to grow through the end of the year. Great, Colin. Thanks so much for taking my question.

Okay, uh, so I'm I'm uh, I have been and I've continued to be optimistic about that part of our business. Uh, you know, I won't, I won't know as I always do when I get to November recruiting the fourth quarter, slow, South half of the uh I mean they shut down. The aat system in December. So people, and that's known on the screen for you. You should know that too. And I think you

And then in, in regards to an update on sweep cache, uh, through yesterday we were down from quarter end probably about 500 million plus dollars in terms of those balances, but I would hesitate. And, you know, say that there are, you know, those balances are moving several hundred million dollars on a day-to-day basis. Um, I'd also highlight that we did generate, you know, another billion dollars of deposit growth across the Venture group, uh, and given the additional Investments made in uh, those new team members as well as the strong recruiting that Ron talked about while it was necessary to be on a straight line. We do expect cash, balances to continue, continue to grow through the end of the year.

Ron Kruszewski: We've also hired some more leaders too that have helped, I just want to note that. We won't name names, but yeah, it's all part of a flywheel type thing. You got to have the platform, you have to have the products, and you also have to have the leadership that can go, you know, track the people. We've invested in all of those areas.

Great. Thanks so much for taking my call and and and we will

Spring.

You know, we've uh, We've hired some, some more leaders too that, that, uh, that have helped, I guess, you know, note that when they make. But, uh,

It's it's all part of a flywheel type thing. It's got a got to have a platform.

You have to have products, and you also have to have the leadership that can track the people. We've invested in all of those areas.

[Analyst]: Thanks for the additional call, Ron.

Ron Kruszewski: Yeah.

Well said, thanks for the additional call around. Yeah,

Operator: Our next question is going to come from Brennan Hawkin from Bank of Montreal. Please go ahead.

And our next question.

Brennan Hawk.

From Montreal.

Please go ahead.

[Analyst]: Morning. Morning, Ron and Jim. Thanks for taking my questions. Ron, you spoke to a valuation gap, which you have spoken to fairly consistently over the years, but the valuation gap has also been persistent. The interesting thing that's different about the current environment versus recent years is that there's seen as maybe a window for large firms to begin to acquire firms and roll up certain spaces. The wealth space is an area where a lot of large firms want to grow, and Stifel is an attractive asset, right? You've got an employee-oriented wealth firm, which fits well with a large entity. Many investors believe that you can make for a good target, but we all know wealth firms are sold, not bought. Could you maybe share your views on that, and how you're thinking about it?

Morning Rohn and Jim. Uh, thanks for taking my questions.

Um, Ron, you spoke to valuation gap, which you have spoken to fairly consistently over the years. Um,

but uh, but the valuation Gap is also

In persistent. Uh, and the interesting thing that's different about the current environment versus recent years is that.

there's um, seen as maybe a window for large, firms to begin to acquire uh uh firms and and roll up certain spaces in the wealth spaces is an area where a lot of large firms want to grow.

And and people are using attractive asset. Right? You've got an employee oriented work firm which fits well with a large entity. Many investors believe that you can make for a good Target, uh, but we all know what firms are sold and not bought.

So could you maybe share your views on that uh and how you're thinking about it?

Ron Kruszewski: Did you just ask me about selling the firm?

[Analyst]: Welcome back, Brennan.

Ron Kruszewski: Yeah, first of all, I appreciate the compliment. We've got a great asset. Are you kidding? For many firms that would want to be in our space, there's not very many alternatives. A company that's got 24% return on tangible equity and margins and a great culture and great technology and all of those things. Yes, maybe my persistent valuation gap comes from the way I answer this question all the time, which is, we see no need to sell other than maybe the short-term pop in a share price, which then eliminates a 135-year-old firm and a firm that's gaining market share as we have over the years. I got asked this question in 2011. Why won't you sell? You're an attractive asset. Everyone coming out of the financial crisis, people want to invest. We've grown the firm, as I showed you on the slide, significantly.

Did you just ask me about selling the firm? Welcome back, Brandon.

Ron Kruszewski: Maybe some of the questions will go surrounding when the CEO is running out of energy and they want to sell. That ain't the case here, okay? I'm not looking to do anything. We get phone calls once in a while. I always say, "Can I run it for the combined thing?" They said, "What?" That's there. I'm kind of kidding there. My point is that we're in a good spot. We're gaining market share. You should own our stock with a valuation discount, which has been proven by our historical growth, both in revenue, earnings per share, profitability, and relevance. We are a growth company. Our results show it. We trade like a company that really can't grow and more of a value play. I'll say it. I'll continue to say it. It doesn't matter, but it's a fun way to end the calls every once in a while.

Percent return on tangible equity and margins, and a great culture and great technology and all of those things. And um, yeah, maybe maybe my persistent valuation Gap. Comes from the way I answer this question all the time which is, you know, we see no need uh to to sell other than maybe the the short term uh pop uh in a share price. We've sent eliminates the 135 year old firm and a firm that's gaining market. Share as we have over the years, I got asked this question in 2011 why don't you sell you're an attractive asset, everyone coming out of the financial crisis that you know people want to invest and we've grown the firm as a a showdown assigned significantly. Um, and you know, and and maybe some of the some of the questions will go surrounding uh, you know, when the CEO is running out of energy and they want to sell well, I think the casing, okay, so I'm I'm not looking uh, to do anything.

Um, I get we get phone calls once in a while. I always say, well, can I run it for the combined thing? They said what? So they answer there, but, um, I'm kind of kidding there. My point is, is that we're in a good spot. We're gaining market, share, you should own our stock. We've evaluation discount, which has been proven by our historical growth, both with Revenue earnings, per share profitability and relevance. We are a Growth Company.

Our results show it and we trade like uh, you know, the a company that really can't grow and more of a value plan, I'll say it. I'll continue to say it. That doesn't matter but it's a fun way to end the calls every once in a while.

[Analyst]: Fair enough. Thanks, Ron. I'd love to hear about some trends that you're seeing in advisory. You guys have sponsors that are a fairly big cohort for your advisory business. What are you seeing in your backlogs as far as that group of market participants? Are we starting to see some return there? It looked like your advisory revenue was better than the public data. It suggests maybe some smaller sponsor-oriented deals might have been part of it. Is that the case? How are you thinking about that cohort going forward? Thanks.

Ron Kruszewski: I thought our reported numbers are consistently above what you would try to anticipate in the public data. I think that is because we do small and mid-cap deals as well, and that's been true not just last quarter, but for years. That's the case.

Fair enough, thanks Ron. Um, uh, and then I'd love to hear about some trends that you're seeing in advisory so you guys have sponsors are fairly big uh, cohort for your advisory business. You know, what are you seeing in your backlogs? As far as that, uh, group of uh, of Market? Participants, um, are we starting to see some return? There? It looks like your advisory Revenue was was better than the public data. So it suggests. Maybe some smaller, uh, advisory or, uh, sorry. Sponsor oriented deals might have been part of it. Um, is that the case? And, and how are you thinking about that cohort going forward? Thanks, well, first of all, I I thought of our reported numbers are, are consistently above what you would?

[Analyst]: Right. In terms of pipeline, we're seeing strength across the board, every single vertical, every single product. We've built a company here really to take advantage of the markets when it is accommodative, and we're starting to see that. We're optimistic as we look forward to, you know, fourth quarter in 2026.

Try to anticipate in the public data. And I think that is because we do, you know, we do small and mid-cap Fields as well. And that's, that's, that's, that's been true, not just last quarter. But for years, uh, so that is that's the case, right? In terms of pipeline, we're seeing strength across the board, every single vertical, every single product, we've built a company here really to take advantage of the markets when it when it is accommodative, and we're starting to see that. And so, we're optimistic as

Ron Kruszewski: Yeah, it's a good, hey, let's not underestimate the importance of the environment. Yeah, we're doing well. I'm sure a lot of my peers and competitors are doing well. I just feel from my perspective that we're gaining market share and we see a very nice growth pattern, a growth picture in front of us, just like I saw in 2011. That's why we're optimistic.

We look forward to, you know, fourth quarter and 2026.

Yeah, it's a good. Hey, let's let's uh, let's not underestimate importance of the environment and and uh, you know, we're doing well. And I share share a lot of my peers and competitors are doing well. I just feel for my perspective that we're gaining market share, and we see a very nice growth pattern, growth picture in front of us, just like I saw in 2011. So,

that's why, uh,

[Analyst]: Great. Thanks for taking my questions.

Great. Thanks for taking my questions.

Operator: Okay. If anyone would like to ask a question, please press star one on your telephone keypad or enter your question in the ask a question box and click send. Our next question is going to come from Michael Chao. Please go ahead.

Okay. And

and 1 would like to ask.

[Analyst]: Hi. Good morning. Thanks for taking my question. I just wanted to follow up on the corporate M&A discussion that we were just having. There's some news about Stifel Financial Corp.'s independent advisor business. I recognize it's a small part of the business and something Stifel Financial Corp. has maybe strategically de-emphasized for some time, but maybe it's a good time. I was hoping, Ron, maybe I could just get your broader perspective on some key considerations around this prospective exit of this segment and how you think Stifel Financial Corp. will be better positioned longer term from this reshuffling of the business.

On your telephone keypad or enter your question on the ask a question box, and click send. Our next question is going to come from Michael Chow. Please, go ahead.

Hi, good morning, thanks for. Uh thanks for taking my question. Um I just wanted to follow up on the

On the corporate MMA discussion that we were just having, um, you know, there, there's some news about the Steeples independent advisor business. Um, I mean, I recognize it's a small part of the business and something people, maybe strategically deemphasized for some time, but maybe it's a good time. I was hoping maybe I could just get your broader perspective on some key considerations around this perspective. Exit of

Segment and and how do you think people be better positioned longer term? Um from from this uh uh reshuffling of the of the business?

Ron Kruszewski: I mean, a fair question. You have nothing to announce on this, so you can appreciate my inability to talk in any specifics, okay? That said, I think that the article that was written, and I don't, I'm not really going to comment on the article other than context. I think that the context in the article that sort of, I didn't talk to the reporter, but I thought, wow, they got a little bit of what my, the history and the way we think about the business correct. I think that it's very, it's immaterial to us, okay, and doesn't really change what we believe we will grow. I can't really answer your question. I hope you appreciate that. Yet, a lot of the thought process was captured well. I will say that.

In any specific. Okay. Um,

That said, you know, I think that, uh, I think that the, uh, the article that was written, uh, and I, I don't, I'm not really going to comment on the article other than context. And I think that the context in the article that sort of...

I didn't talk to the reporter but I, I, I thought, wow, they had a little bit of a, my, the history and the way we think about the business, um, correct. I, I think that is, uh, it's, it's very, it's immaterial to us, okay? Uh, and it doesn't really change what we believe, we will grow. Uh, so look, I, it's, I can't really answer your question, I hope you appreciate that. Yeah. Um, a lot of the thought process was was captured. Well, so, I will say that.

[Analyst]: Okay. Great. No, fair enough. I guess just a quick small follow-up, Jim. It's just on balance sheet growth outlook from here. You called out venture banking during the quarter, and I think maybe last quarter you were talking about maybe $1 billion of loan growth into the end of 2025. Just kind of curious, any updates in terms of balance sheet growth from here, any key segments you might call out maybe outside of venture banking? Thanks.

[Analyst]: Right. In some of our prepared marks, we talked about the confirmation of the goal of getting to $1 billion in loan growth for the back half of the year, and we still feel confident in that. When you think about the component line items that are comprising that growth, I think you'll continue to see what you've seen historically. You're going to continue to see fund banking being a large contributor there. We continue to add one to four family residential loans, and then again, as we talked about, you'll continue to see some additional venture balances there as well. That's much more of a deposit generation play, more than the loan growth, what loan growth we'll see from that.

Okay, great. No fair enough. Um, it's just a quick small follow-up. Jim. Um, you just on on balance sheet growth Outlook from here. You can call that Venture banking during the quarter. Um, and I think maybe last where you're talking about, maybe a billion dollars of fun. Go into the end of, uh, end of the 25th of curious, any updates in terms of, uh, balance sheet growth from here. Um, and you can keep segments, you might call out and be outside of venture banking, thanks? Right? In in some of our prepared marks. We, we talked about the, the confirmation of the goal, get into a billion dollars of loan, growth for the

The back half of the year and we still feel confident in that. When you think about the, the component line items that are comprising that growth, uh, I think you'll continue to see what you've seen historically and you're going to see. Can you continue to see fund banking being a large contributor there? Uh, we continue to add 1 to 4 family residential loans. Um, and then again, as as we talked about the, you'll continue to see some additional Venture balances as well. There as well. That's much more of a deposit generation play, uh, more than the, uh, the loan growth. Uh,

With loan growth. See that so

[Analyst]: Great. Thank you.

great. Thank you.

Operator: There are no further questions at this time. I will turn the conference back over to Joel Jeffrey for any additional or closing remarks.

[Analyst]: Oh, I appreciate you asking for my opinions, but I'm going to turn it over to Ron to have his closing remarks.

And there are no further questions in the at this time, I will turn the conference back over to Joel Jeffries for any additional or closing remarks.

Ron Kruszewski: Yeah, I'll answer what you were going to say. Thank you all for attending and your interest in Stifel Financial Corp. I'll reiterate what we said at the call. We talked about the back half of the year being where we could see some nice pickup in activity driven by the environment. We see that. Let's get the government shutdown done so we can get going on some of the capital market transactions. The environment is good, and the company, Stifel Financial Corp., is well positioned. I look forward to reporting to you our fourth quarter and full-year results. Everyone have a great remainder of the day and holidays and everything until we meet again. Thank you.

I appreciate you asking for my opinions, but I'm going to turn it over to Ron. That has this closing remarks. Thank you so much, everybody. When you were to say, uh, you know, uh, we, uh, thank you all for, uh, you know, attending and your interests and Steve, Paul, you know, I'll reiterate what we set up the call. We we talked about the back half of the year, uh, being, uh,

You know, where we could see some, some nice pickup and activity, driven by the environment, we see that gutless, get the government shutdown done. So we can get some, um, get free going on some

Of the Capital Market transactions of the environment. The environment is good and uh the company SEO is well positioned. So I look forward to uh reporting to you our fourth quarter and full year results, and everyone have a uh have a great uh, remainder of the day and uh holidays and everything. Until we so we meet again, thank you.

Operator: This concludes today's call. Thank you for your participation. You may now disconnect.

And this concludes today's call. Thank you for your participation. You may now disconnect.