RJF - Earnings call transcript Q3 2022 | Raymond James Financial, Inc.

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Operator

Good morning and welcome to Raymond James Financial’s Third Quarter Fiscal 2022 earnings call. This call is being recorded and will be available for replay on the company’s Investor Relations website.

Now, I will turn it over to Kristie Waugh, Senior Vice President of Investor Relations at Raymond James Financial.

Kristie Waugh

Good morning, everyone. And thank you for joining us. and Raymond time Financial. your appreciate interest James in We Paul call and Shoukry, With the are Chief Reilly, Officer. Paul us on and today Chair Officer Chief Financial Executive James this available being morning presentation website. reviewed on The Raymond Investor Relations is

are anticipated results, open acquired concerning timing benefits strategic constitute the results objectives, questions. line statements forward-looking or two. financial note statements. Calling future conditions. Following during made but slide for certain to of These impacts the statements integrating prospects, acquisition, general our and of operator developments, level not attention pandemic businesses, and this remarks our information the regulatory business the Please of anticipated prepared COVID-XX of economic limited will litigation success and to your divestitures call include may

such future are materially be In differ results terms of negative and will, available that as described any you and X-K, our necessarily consider risks that those expressed looking our may, actual We on will believes Relations which Please to the statements. not the plans, subsequent other terminology, well there should, identify urge such Form Investor or expects, note can recent intends, Forms as events no XX-K as most in statements. in XX-Q assurance are statement addition, forward Forms from website. intended on words to anticipates, forward or looking or comparable other could, depends

accompanying the release of GAAP press information presentation. of business may we reconciliation most to call, performance. use During today’s to the and found view non-GAAP in measures to non-GAAP will also ongoing comparable measures schedules be these pertinent measures our certain our management’s financial provide A

turn to CEO, the to Reilly. Chair happy Paul? and over I’m Now, Paul call

Paul Reilly

our across of fiscal business, acquisitions, strong And domestic over growth retention group, with assets continued In thank to with challenging a during our financial and our industry numbers net of people to year, growth In nine negatively I client private months market business, are the conditions the third the more trailing recent were in advisors all know continued the pipelines. us morning. our new by we the drive am and complicated, excellent I contributed XX our leading for volatility impacted months technology while X.X% recruiting banking of markets pleased quarter you quarter, the the and results to the capital investment first have but little to market Good we see with help fiscal today. period. revenues joining for despite of continue invest businesses.

expertise team and $XX.X assets we the income dealing will billion capital just with after capital In have has with enhance acquisition in Tristate capabilities, adding the of $X.X a extensive Partners, experience bank, under of Tristate in with platform holdings, through Chartwell Investment As acquisition fixed we fantastic corporate. the and and July and organically the In management. completed X, performed financial of June, acquisitions loans SumRidge billion we completed added driven our very technology on well. which Partners niche quarter both including

to attractive reflecting categories. our James growth loan at to across during all loan addition contribution Raymond an the impressive In grew Tristate’s X% quarter bank almost loans portfolio,

fees assets while in will always declines quarter the market fee do we regulatory of with capital with a curve. in well solid the are of invest short always term, the in related term we the So sheet client in administrative which base long as Furthermore, the the for have in cycle, impact attractive from our given asset putting increases the we fourth any assets, management equity decrease the rates, to the continue And majority excess market quarter for and well-positioned growth flexible we earning ratios end negatively maintained short first. of during balance requirements. float

common current Turning on third and fully this James quarter, quarter, which reported losses moving weaker there the initial at the discuss net detail. will from million, losses $XX of revenues provision party offset and the was diluted available appreciate net and primarily investment $X.XX revenue macro explain which firm credit four, quarter, The income rates which in decline parts RJBDP fiscal more lot Paul of detail. from of a of sequential bank, Paul strong Tristate total the Raymond attributable outlook or short capital revenues benefit environment. were and provision growth Year-over-year credit in economic income slide I common billion for the more the market growth the increased $X.XX. to in shareholders per brokerage business available a on In reflects results the bank, revenues both Shoukry development income, than and acquired $XXX in will on loan interest to more net a declines reflects expenses, the fees earnings banks million higher shareholders interest primarily to during the challenging of share net higher in third banking resulting term the from bank as loans for

Annualized shareholders equity share. per expenses and tangible annualized quarter the Excluding $XX market million adjusted on was capital quarterly on environment to challenging diluted adjusted position. the given for $XXX results especially was common income of our $X.XX available acquisitions, and million, strong return common return and XX.X% equity related was XX.X% to or impressive

reflect of assets billion. quarter We client decreased decline $X.XX assets market quarter management XX% declines ended Partners, prior net quarter. preceding XXX advisors, Chartwell of inflows XXX financial the primarily more quarter asset markets Moving to We fee or $XXX RIA $XXX one net of PCG advisors, assets decline under sequentially quarter the assets five, and of Investment S&P this the over accounts equity sequential the of a during billion, a to and division, including the client which compared the and a to equity services negatively XXX as Results firm increase includes custody trillion the based in quarter. offset total than the a with RCS sharp Financial from in X% acquired slide transfer and administration levels. our and with under quarter. period, the of in ended XXX decrease the index impacted X,XXX during year

advisor While firm. client app transfers impact that to RCS that count the the remained the typically custody

and quarter, our Excluding the these increased transfers, recruiting. [indiscernible] reflecting advisors strong from the number low XX of financial continued attrition or preceding

the supporting volatile our platforms affiliation on experienced through James of has focus especially well as multiple clients, advisors results advisor as Raymond options. to to retention, recruiting strong their markets, Our of led in our terms and during advisors

of assets period the to XX we approximately contract channels, XX June independent over XXXX domestic period. months previous approximately of ending Over we net and $XX firms. beginning ending with assets at of employee XX, billion And $XX recruited new four leading of highlighting PCG nearly representing client and billion generate PCG June $XXX and domestic at million the the trailing growth, our quarters advisors their XX, XXXX assets the our production industry trailing X.X% financial domestic of

impressive of to result billion. annualized, record and growth Third of asset strong Bank was growth the generated be quarter. continues Raymond given strong. X.X% payments XX% Bank growth in impact $XX.X sequentially quarter year-over-year, X% loan PCG James new tax domestic to the loan net plant a a

which have bank Tristate over them loans this $XX.X across they for to growth record as represents loan generate quarter billion of continued very their a bought capital portfolios. Additionally, attractive

million. of Moving private billion $XXX of revenues segment and on the record to income $X.XX generated results six, with pre-tax on slide results group client quarterly net

asset rates. expansion margin primarily While capital significant on higher revenue revenues loan of and sequentially due income under declined income The of which quarter Raymond term income uncertain for over segment The quarterly interest loan the brokerage Bank revenues management the million. income underwriting to the benefit asset quarterly up year pre-tax The Tristate and decline base due $XXX declined, and segment quarter. net market the the James segment Remember, $XXX driven in and net short in net on to segment the negative generated the Capital sequential in generated basis impact markets so equity financial income were segment bank and $XX to XX% we prior in the of were pre-tax points results primarily and bank’s aforementioned their the $XX period, quarter markets. revenues one closed Capital is The net million segment the a balances $XXX results. growth, loss was to revenue includes revenues and pre-tax on this Despite due of the bank decline and management of generated bank’s interest month lifted on million, volatile asset the of fixed Net capital growth proceeding $XX revenues by quarter. result pre-tax by record XX million. mainly declined assets attributable million. million lower X% X, to from mostly management which from revenues of now higher Bank revenues higher revenues pre-tax income Tristate only X.XX% equity and June reflects markets.

of to of slide at during nine generated ago. diluted share on nine same a of XXXX. over compared XX% the $X.XX Looking months fiscal fiscal year the first Record X% record fiscal $X.XX months first billion per of earnings the net up to-date XXXX, period X, revenues year we increased the

equity common XX.X% and equity Additionally, adjusted the we period. of return strong on and annualized common of for tangible month nine generated annualized return XX.X%

our client segment record eight. All during year-to-date months over record businesses. the net pre-tax private Again, for I will of the operating the and Paul segments nine reinforcing segments complementary third group more the on revenues, management first Shoukry. Moving generated to of fiscal year-to-date now asset Paul? the the and capital value quarter markets to generate view detailed call of slide core year. turn and results four income and the And fiscal results, diverse

Paul Shoukry

XX. Paul. and consolidated revenues billion year-over-year with Starting net you, on $X.XX X% of revenues slide Quarterly XX% sequentially. grew Thank

As quarter and a in line with quarter’s compared management grew the on over guidance fees preceding X% year's the prior third quarter, provided call. last fiscal to we the declined XX%

fiscal steep result as markets the of creating I revenues. many asset third net a the year's compared brokerage quarter. income have trail benefited largely financial for larger assets March and But quarter, the in which compared the segment. posted declined shortly. businesses, trading service in of group, client declines accounting ended fiscal based base currency not the well quarter quarter. $XXX the due in as know quarter. firms down XX% group to firms significant we institutional brokerage asset headwind discuss quarter was and the X% remember, a revenues capital lower accounts Investment compared in market services XXXX, revenues some the fees do fee brokerage a during fiscal commodities in this the in equity fixed to revenues in quarter. management other the fourth year-over-year those meaningful private presence client private interest compared preceding The decreased and to to revenues to and declined Brokerage of decline As million of prior X% a rate revenues increases interest $XXX volatile million income preceding revenues more much I'll third X% banking intentionally

there's lot are the strong, heightened uncertainty our a While market volatility. given of pipelines

market we And markets months. in we banking relatively right are next fiscal similar remained that if quarter quarter. a guess the our resilient of results really pleased over the couple Given result investment could the the now environment, achieve fourth this the is with best

sweep quarter Moving and to the of at clients the balances assets. PCG domestic domestic billion cash $XX.X client X.X% compared ended slide representing preceding to X% XX down quarter

July, quarterly roughly half comprise As the payments, the reflecting $XX as of and declined balances were well approximately this have some activity the in fee paid continued month. which decline shorting cash of during month, this week, to billion, these as

third Turning interest from and of approach million, astounding growth risk preceding party well prior RJBDP over assets. Combined XX% XXX% net is in short as the higher as and was of reinforces $XXX to rate year’s term income fiscal up limited long quarter. an with the from slide fees interest quarter XX. third revenue banks really largely balances higher rates loan a bank floating the segment taking of our concentration which a high duration standing result This

from portion left margin of bank You third third quarter. sequentially X.XX% balances net for average segments points points substantial basis to the with basis in and anticipated XX are the expected interest The yield on from the yield the bottom the Both quarter. can the and party recent rate banks RJBDP the increased banks XX and slide, increases. the increases increase further average at see name party to

this third increase fiscal week, in the the For around some quarter, the would and expect from fourth average assumptions to variables, on average beta fourth the RJBDP party banks factoring deposit quarter other yield fiscal and for rate around X.X%. we

in which As segments will X.X% deposit for of experience. week’s of Tristate for months expected the would interest the contribution. quarter impacted fiscal we around this we capital’s projections and around bank increase reflect to rate the average beta them, be two a by obviously fourth quarter, actual But these full

put end for more on our generous clients to on the staying the continue will We spectrum and first clients. of focus

So deposit far, But incremental rate each expect each our that started to deposit about the Fed been XX% has increase. increasing around the in beta the subsequent We to would rates cumulative increase June increasing XX%. with with with has continue increase. since accelerated beta March

to consolidated on slide Moving expenses XX.

time, we quarter expenses more line acquisition detail more we such shortly. our now assets, discuss At line loan related including amortization acquired are acquisition we our Namely, retention, the a change non-GAAP made eliminated their in Let and of presentation including expenses now bank item in respective me capturing provision item the are in items. a significant identified acquisition will point all related expense same I expenses. items this as and of adjustments related intangible out to the

of million acquisitions $XX quarter adjustments. are this in example, non-GAAP included related For expenses to the

you the across a of results gain on our I very many line the emphasize adjusted of five which well alongside amount which these on always, XX, understanding better GAAP have provides hope refinements your help history. as reconciliation We associated per and know detailed responsive expense will are any to our As disclose. And many as a of quarter item common our requests slide been table results. operating we peers results of we as

XX.X% So for turning decreased largest compensation. XX.X%, our quarter. preceding total in the compensation quarter from the to expense, was ratio which The

was loan an $XX to with provision purchase around increased The a with with associated associated and reflects ratio non-GAAP provision quarter, adjusts the with the the adjustments, introduced RJBDP XX. loan in during for sequential retention bank outlook. at adjusted acquisition decline the was of increase this an requires and increased this bank, as over. ratio sequential pent macro capital compensation big non-GAAP since expenses acquisitions. adjust where A conferences, prior high our are and results. third watermark acquisitions increased put of provision and this travel during quarter. the The The income $XX does adjusted the compensation this million. item, recognition us the $XXX growth million item sequentially. for loans fiscal accounting for several for as $XX of included was losses X% typically fees expenses interest the with acquisition, The adjustments. of our to revenues XX% million, also which The increased totaled both to allowance quarter. quarter expenses did ratio this loan We from million prior in weaker Tristate to total development related increase and loan To the increased through losses Business compensation And transfer COVID million. grown including benefit as slide considerably expenses $XX which during the portion includes $XX initial million was well $XX economic Other in bank on for quarters as increased, compensation to comparability non-GAAP quarter credit periods an outlined of provision help not line business reflecting To the perspective, in third portion the for to XXXX the associated advisor line which net then, Non-compensation million James banks. loan acquisition the earnings million in included from allowance this have majority acquired largely pre-closing you we bank third initial up and the of events, quarter, during the expenses attributable and $XX the XXXX associated primarily remaining a substantially, related higher portion party our XX.X% of Raymond quarter. fiscal in was establish sequential

Slide past pre-tax trend investing a quarters quarters. on margin the capital of past remain in So service over compensation, of pre-tax their XX is I been acquisitions. in couple Stanley high shows main clients. with expenses quarter, heavily non-compensation advisors XX.X% But margin we expenses for generated while still growth know a the the lot discipline and the and focused there's XX.X%. of related and the on the five In takeaway fiscal noise margin Tristate then over we Charles manage all of of third pre-tax adjusted ensuring levels and

billion the doesn't yet in and at remain that Also, just more the both short significant SumRidge, billion relatively well environment since end certainly I assets, on capital, solid well capital note were the is total and has the reflect Tristate we an month well still On more significant our May, from Tristate as at leverage bank. reflecting of quarter, target ratio pre-tax very total RJF at above the day rates, James and includes the flexibility market stays requirements margin the interest to higher addition the $XX.X and assets While believe capitalized, Liquidity analysts providing July which would ratio increase, term out levels. to billion leverage at investment one target. X. be we to one tier current are closed slide opportunistic end being of tier Raymond double the growth. assuming continue sequential capital XX, XX% regulatory cash as in given of assets growth XX% invest resilient at capital of market corporate than the challenging the loans of the of XX% at the XX.X% of benefits become strong. and laid the apparent quarter ratio $X of one The XX.X% $X.X appropriate

So the XX% the call, requirement. And as dealer leverage sheet the we client at above the still acquisition spot I on program, sheet and balance regulatory SumRidge other below billion ended quarter at the the $XX.X our don't the following the the tier cash well is which broker accommodating the client same assets. as on X% view we ratio quarter's interest said, one last balance

So and we our up balance actions utilize to capital the cash to effective corporate flexibility from provides returns am two increased sheet. for invest pleased the to quarters. our capital rate the non-deductible deploying years to across over five really a we first for the our reinforcing quarter after XX life past portfolio. past on Slide attractive on have XX.X% insurance to still our have the the all I made balance of in quarter, very businesses owned tax summary in deliver we primarily ample of adjusting XX.X%, excess balances those sheet with over progress term since priority disclosed capital preceding our long targets, shareholders. the due losses higher The growth capital

the repurchased share. X.XX approximately million, of repurchase for per we or shares common the authorization. acquisition approximately We Tristate million common Following board our $XX on shares began June X, closing under $XXX

XX, approximately under repurchase XXXX, of approved As remained authorization. the million board $XXX July available share

few over as further I believe capital coming over to the the we June next issuance needs conditions share plan with acquisition day monitor and on of closely in and other is in to action will As quarters. Tristate our current demonstrates But repurchases May, investor offset we market this continue our associated prior explained evaluate the quarters. analysts we calls the And commitment.

at X.XX%, percent portfolio and the and which and credit for from reflect remain the loans metrics of Lastly, our we trends metrics our down X.XX%, a formed for segments, held most loan XXXX, and The capital continue bank XXXX. XX, James improve. June on bank to bank. strong, these at segments March, X.XX% investment quarter includes loans Tristate Criticize as ended quality slide bank credit at Raymond key remember, newly of provide total

Paul. call the to to turn discuss over back Paul Riley I'll our Now outlook.

Paul Reilly

Paul. you, Thank

of negatively said pleased we and are with private are quarter across uncertainties, earlier. businesses. I growth I'm will management start expected In fees our group, the our As our there asset that XX% the of by impacted described call, related drive And while be all at I sequential believe many results administrative the well-positioned Paul next results. decline client to of

industry our markets, made and in to over group long to financial management. fixed the under recruiting technology productive higher focusing attracted we continue term segment pace pipelines under Over the benefit and well-positioned years advisors we'll a However, In rapidly and the strong our solid management client will based fee fourth our remains leading the short of enhance partners term starting are closings from expect as management influenced I'm growth position The the long will our deliver be term, asset focused more trading income of current in the and with retention In are growth remain significant and segment, capacity. quarter but space, market accounts rates. long while the to and lower values equity confident we client segment increased drive optimistic private fiscal on evolving some we I for technology team due five and of capital combined the continue market pipeline assets platform. also In leading and our growth to investments heavily assets interest will marketplace. past the fixed platform segment, rich M&A we term, timing confident strong robust, growth am as financial conditions. to are assets are income

segments as loan term importantly, capital rising prudently. remains grow most help we In And and the drive scale short operational bank with edition balance Chartwell Investment growth And synergies. the distribution, have Caroline addition, the segment we further marketing and well-positioned sheet strong. bank rates, portfolio to ample to and advisors expect is increased its through for credit new funding of of Tower the interest Partners quality

excellent questions. our to and thank to want it associates I dedication advisors, service each for and Thank that always, you. every to As our I'm going up perseverance, their of clients for operator, With providing day. their all and open to

Operator

[Operator Instructions] first Gerry ahead. of Jefferies. question comes you. go Thank O’Hara The from Please

Gerry O’Hara

unpack the the hoping be and you. cash sort to in Great, was Thank and thanks. give what just that what might good the sense a you in bit able you quarter shorting little And we morning. expect of perhaps of just around I us comments a of saw help might dynamic. maybe

Paul Reilly

the quarter Jerry. down cash morning. Thanks, relatively Good stayed balances in for Actually, only the X% resilient as you quarter. about saw the

we've were sorting month the Now client balances, expecting of almost seen fee rates $XX a now all just we as now, decline have July at were that to about out total then quarter. some ago, month billion start in billion from the was at balances the portion put billings, were of client come reflects the of the And cash in the increase. of days. in $XX quite we of cash been cash year to that which first other pre-COVID which context, from half for elevated And just kind time into the a quarterly

cash surprising think rates don't be as going I it So forward. increase see should to some shorting

Gerry O’Hara

a increased typically a appreciate the seeing, the be help Great, the then just think of high it, thanks. quarter us commentary normalization watermark, and rate next of follow being but I missed but of of given maybe quarters over something run a helpful. I around expenses. can that'd the the if growth you apologies of sort the other basis some might about of up sort expense couple trend pressures that on of T&A think and on business maybe Paul, the that obviously, And sort we're just how sort

Paul Shoukry

higher quarter, much Last an but like with were still we expenses seems Omicron. quarter. dealing development were eternity, Business Certainly. this

weren't beginning really the people So traveling of at the quarter.

advisor have This adviser for quarter, independent our we business. the conference biggest

lot it travel and So is again. There quarter quarter people each see which travel the up why pre-COVID, had is are to pent this watermark a out other high that is we person to there. it in usually and People historically, even a again. we've starting of is wanting --

look for back aggregate, and non-compensation you million the when basis, quarter. the GAAP expense $XXX ended at it think I stepping So just a at on in up looking

$XX million related about were adjustments Now to of non-GAAP acquisitions. that

a an two gets reflect there. that basis capital down more $XXX of months expenses, non-GAAP, Tristate We to about So us non adjusted compensation million. still on for have to

So million run their quarter that's $XX look million, were $XX some expenses rate, the of this you about if but elevated. at

a maybe jumping point of minus quarters. as at of a million off couple plus So sort the next good we few or dollars look

Paul Reilly

mean I it to and maybe higher quarter. remember I revenue was know to the also this compare in in line the revenue those It's numbers significantly. X% X% you than item that people you I anticipated. 'XX think have if 'XX But that we've time. about so about of grown of was

I well. think we're managing the costs very

So just based on were. those we percentages I don't think where we're back to

have events expenses, this conferences, our advisor occurred in and big managing quarter. biggest we're but see can our You

typical not it's a -- so So

Gerry O’Hara

this Understood. Thanks questions for taking my morning.

Paul Reilly

Jerry. Thanks,

Paul Shoukry

you. Thank

Operator

comes question go Goldman of Blostein Sachs. from ahead. next The Please Alex

Unidentified Analyst

Alex. Hey guys, this is Michael on for

would So can color TSEs of we you're great. kind how and Thanks. size the deposits an want of timing update be us deposits. updated give I with [RJBDS] swapping Any think you on about thinking

Paul Reilly

guys in it's And deploy let really I can I irrelevant James that. talk almost either bank. we you Tristate the But will on about bank sweeps. Paul think versus first or whether cash it's Raymond

are a they options maximize to of as the for banks before. earnings looking on and bank have we again, sweeps, So cash weren't flexibility lot where

deployed at clients, operating But question. for it their asking. have of think some But which progress Tristate's look a franchise. little on the on of part you should we're detail. a there depository making made clients, how they're But you progress. And I it's in I relationships already depends know, strategically you Paul you get that. forward, really necessarily not they more all and We've and So go into as much keep let too. it's

Paul? So

Paul Shoukry

their supplemented covered another think said, our already have and you. an plans relationships Paul those sources clients. billion. as be frankly, with us about funding over their those next certainly the valuable a very you've Paul, few But they're have honor they dollars We we their billion supplement overall. deposit those we've organization to base with could running in it deposits with Thank diversified well, independent to their business, an clients. very And want of deposits years, as to and

So business. we're earnings a on maximizing focused We're of accretion really the not term organization the for on focused short in overall. flexibility standalone

Unidentified Analyst

Great, thanks.

So like still closed. this guys we what kind gave it the expect? initial was commentary of when can sounds of you acquisition kind the Is

Paul Reilly

so the the we're on the we where way, that deploy kind plan. on right? So of say But the based change I'd cash can is we far trend and could need. they what

Unidentified Analyst

And great. maybe one then right, up. quick follow All

You for fourth Thanks. NIM. guys jumping help little bit. out gave about NII a and point the the can fiscal that us off for good us firmwide you think a like Maybe flush guidance

Paul Shoukry

mean, the We're gave for quarter component NIM kind X.X%, this the average, you almost that XX biggest of with higher quarter. the which would X.X%, we about fourth be the expecting to fiscal quarter. for I averaged the than basis points it be particular it

basis, nice course, earning bank So standalone had and from on Tristate. grew of we've on X% both sequentially. a And adding and which assets, Raymond James growth some then

points well, said we to quarter. to next then yesterday, announced over are beta, to on you to So they around that swept BDP the main we rate X.X% income, was I had some the average quarter. calculating average increase that which deposit fees, basis And increase party expect the banks. that this third with substantial for think assumptions that The and those kind inputs XX cash net and as of gives interest

banks. for and net tailwinds I I But really for fees that. coming here know thing peers time, third and our a have income, environment. party rates, not quite been time staying from think is approach not the serve So markets well criticized RJBDP taking important more the our in is we've interest is bond lot flexible some the to And significant duration. and long of done trying the rate standing to us of this curves very rising going from

Unidentified Analyst

guys. you Thank Great.

Operator

ahead. The Research. go from you. question of Chubak next comes Wolfe Please Steven Thank

Steven Chubak

tightening the is upcoming last decision to quite have about decision earnings in you certainly Hey, such market maintain sensitivity Paul, bank shorting amount ended cycle. you the serving volatility. a that since in to same easing did to fed know cuts, talking time, fair response, on and create way in And a At price the the where you that more that gearing, of this starting well, 'XX. beginning cycle, I the your manage rate

themselves earnings some And type You I environment. too happen agree they're of that with a right result floating struck, statement. to if as that punished mix taking if Fed overextended when be where some begins this assets. peers something be the also there's that and rate to of you'd that's protect you duration. in easing? fixed that balance downside a healthy cited have much on think to, But amenable could that versus I Curious getting maintain

Paul Reilly

no close this XXXX to because bank's Yes, the Stephen, it. you're you sheet. balance very had we on at remember well, securities all

rate and more deposits do, we we to we have deposits. And diversified. But be And and all floating more so diversified regard. been balanced in are think our I balanced plan of continuing that almost on

would duration a between essentially more So mismatch the on to assets and be the much making a take deposits. between and bet

duration expect given to deposit to of to our to will balance the exposed think end more or short And of And diversified we have just is are the which sheet be securities to is loans, But we our mortgages years I that has the much than were five etc. on six diversified. just we exempt more tax you nature floating. base, So jumbo your it, exposed, portfolio. also some our ago continue us more focus point curve, the should we be with

Steven Chubak

the Really terms with industry think you about caller, for guys to tend line of the I be overall Paul, follow deposit my on and commentary. beta. more costs in you If manage deposit of how last beta in cycle, some just helpful up

something cycle? running Is So rates, bit more or the competitive believe a some far, this fiscal I been was reflective else? modeling be that the call on cash you've driving little be deposit word we ahead peers. cited third decision of quarter? with already beyond And the beta of used should you the what headwinds generous on the pricing what's of to

Paul Reilly

Yes, rate bunch increases look, a that, knew I we just were right. think of coming,

that and much about there can people even more to there we're how and tells public seeing looking businesses bank everyone's was return. suite the happened as you back And in everybody haven't coming be our access, a had a can what's markets the which program, program, cash. where But you banks grew people into demand see belief lot in rates take would liquidity. for maximize you, So and is was and talking cash cash you process, when up much too to can your of went bank that the biggest suite the

aggressive did we on to but was, have to be We'd chances lived And we've when So our tight more of view that as but increases or other first a the cooling retaining job treated cycles or fairly, way modify to not cash as be if see in the going make we could could balances. we then really a was we aggressive. through clients down further good cash industry. sure

to right. putting people some and savings already And high yield CDs deposits now, fund out are other and

sweetbreads deposits. also higher they're So they're may be cost adding lower, but

Take look So a rates always time it. they long we care of in And rising we're yet to to term that rising, on clients. just adjust. know we keep had trying

have it higher. So Paul, and changing on to you tell little I a know be at to hard beta certainly to committee. comment historically, until hard not. if It'll maybe rate It's was, want least what don't we a setting or

Paul Shoukry

I think you've covered it well, Paul.

Steven Chubak

appreciate Thanks, questions. you taking and my Paul Paul,

Paul Reilly

Steve. Thanks

Operator

Kyle go ahead. from The Thank comes you. next KBW. Please Voigt, question

Kyle Voigt

morning. good Hi,

And what's may the segment I more inorganic item. that some when Thank But related have to growth PCG of $XX revenues you year-on-year, growth revenues expenses. even that those year-on-year. on comp look the any driving of you. both XX%. in growth, administrative you to rate is color line level saw guess Compensable that look XX% segment organic PCG question sequential you or be as first I the haven't year-on-year we dropped expenses. kind expenses, of were when they increase for at million The XX%. dropped know up Total

Paul Reilly

Yes.

market a taking an those doing two salaries who job. a the our of raise are in now decided months that adjustments, instead else cycle with give that an it we across more doing to is reasons year course, different the of of actually to was and great. benchmarked across a But the take we just associates we've hit We've have segment. and hard environment. which is gave in really our actually what not them and But inflation adjustment associates care catch. bonus a that across are to kind all inflationary unraised number do out do rewarded specifically all really sure drawn to impact Because for it's to bonus really quarter should onetime salary that adjustments paying board off know. importantly, and lower a haven't good a salaries forever. concerned which are salary unbelievable thoughtfully So of an in And we associates been did kind the is that of of comp number about to cope automatic our the make this We associates and common and done a our firms of board housing, been and this is to the is it to is wanted everything that people numbers really for we gasoline, our of help do process, the just costs accordingly is are of end

And been end to job them Our up which felt to for them the this, certainly the until should numbers to But we you take to terms the but biggest adjustments. impact Paul, go year normal our turnover than doing a been good They've industry. it's we do of know don't we was I that of in number. want us. owed that been lower through get if else. any anything cycle or more

Kyle Voigt

quantify mean, impact that of bonus, you Paul? the I guess Yes, I

Paul Shoukry

firm and PCG under is Total have most because for it the takes the the business firm about million far the largest they're by of $XX for majority the just and associates. just

Kyle Voigt

And That's helpful. account. it. the is follow my then on advisor Got up just

Can those of was on the from standpoint? division. just switch? you one then Thank noted firm most XXX help of switches from that moving us you. us to more any in And economics there your were You Can like with you kind a of RA change happen? an large understand advisors when AUM that switch color the how them remind migrations of

Paul Reilly

gone is our any segment we've strategically virtually at to fastest was and They've because has good of our bolstered just XXX% news industry. James. the growing to stayed really of RIA RIA in set offering it almost switched people and have custodian, haven't been it Raymond most, when the First, the up And competitors. they

changed. was really a big This We So retention business whose it's coming. has model been firm good what's tool. know one

planning the FINRA But good are Raymond they a anymore. their James, The producing they they're but is are assets can't go us. the space, that We advisors on again, are once in advisors count it year. way in RA RA a into custodial have news we with who for a stay we license, licensed not with count model, FINRA

advisors, So a of or kind movement usually for strategy relatively it, And that business there a really but about that been end of at quarter. three year, it's on them. this the half, one advisors was big, if since a it's a look four at year a a XXX was you the and focused off moved really, big changing group

was, we the So It's between business largest and RIA not different went I don't channels. will on rest people of one platform usual. as it's think see it the but than of certainly move, a continue it's firms the not the our that movement to

Operator

Thank you. Mitchell, The question comes ahead. go Jim Seaport next Please from Research.

Jim Mitchell

the Paul, just morning. deal that good it's closed. Tristate Hey, maybe on now

announced rates you the higher. since deal, a are obviously, lot think I

the like out looks better longer Tri state. had You've

sense helpful? it be there's of kind of about us you least is the sooner? So to is there way would If a give greater maybe Is more And any accretion can that Is specificity it? expected? to think any than the you benefits? think that way timing

Paul Reilly

think Jim. right, I you're

they're tailwind. clients. sort closing the factor, significant all change the the their of they're we're originally is growing faster with continue such is doing client of most handling able anticipated and to with lot once, fantastic nicely which a at a been dealing are interest clients integration than has with that been job importantly, and staying is their like much the through job announcement of way through of frankly, and have efforts All Tristate their a out rates, business a clients. lot they relationships serving and great doing their some But are including increasing our which major great a we of And a because their their factors,

So for all team pull off. and being a originally positive the anticipated, we capital able that's more great to been Tristate to than kudos that

to higher going that environment with our being a as is and earnings base rate be Now, well. said, higher

our dilution function numerator and is being analysis denominator a the of So base. both accretion earnings the the

focused apples. their hard this, a aren't frankly, So to entails and concerned to And term again, innings. see which thus overly at accretion. early interest the what that the that we're client having. the Paul excited that franchise is accretion of to rate their X is by success determine growth the And they've be. XX short had really have far we it's keeping about going in We're the extremely well. looking we're relationships in over great success to going tech, It's what But apples to I near compare years. And to extremely transaction the great But tailwinds. next is on not and really it's they're the term

Jim Mitchell

guess But it sounds I like, ahead. go

Paul Reilly

Right. and pleased. It is we're better

Jim Mitchell

there's the not no there's saying real or negative is the falling upside the you're like side sounds on revenues surprises bottom anything it lot to and line? expense a So of that

Paul Shoukry

correct. Yes, that's

Jim Mitchell

kind on buyback, issuance? that is dilution right then you say? you three a offset that And Okay. the four the of or said quarters The pace the next you think is do can the or that few you quarters can

Paul Shoukry

But timeline, balance we're I be, we going to needs, That a patient. we're we're as capital sounds to but faster going like going going We're it than think a reasonable be from deliberate factors, said, from depending us could to not to it sheet whether other of more quickly, same patient. I year that. or Yes, the growth, be from on up. other be as be it start, slower gets start, it we manner. said, rush going a to we do the it back, in a to we're or and Paul kind in buy place now to do the do

Jim Mitchell

down. of is, I you there's timeframe. profitable, is deploying had redeploy if again plan your the growth capital, mean, capital, Sure, bank could around but you you to course. something an right now some but acquisition, you that of if that that that down had else, no it had you and any very now. turns that we'll plan was economy plan may I big the the think it would be watch But right slow But of plans sharply kind stick on to the really But

everything the think equal, Right. being I that's plan. you. Thank Makes sense.

Operator

Securities. Ryan, next The from you. question Please Devin comes ahead. JMP go Thank

Devin Ryan

Hey, good morning, How you? guys. are

Paul Reilly

Great, Devin.

Paul Shoukry

Devin. Hey

Devin Ryan

do But remains change Hey. lot a the been have the Most want here. recruiting I out there's a asked to But dig environment. of kind been in bit of of in little strong. pipeline advisor on more

more context give trends some love them to I'd so guys on of And there. seeing were you the

markets have level. rates. interest but the production down. profitable assuming you at hand higher one businesses firm The down, I more am So

that guess, on are do what adviser inundated and when then I and to fact for all guys, what it's So seeing, what to markets side? the advisors sometimes shifting you were the expectations talking competitively seeing you our then choppy, are are in at hard clients. And leave they

the in the schematically guys curious market? just kind of pipeline is how are I'm you recruiting advisor competitively what so And evolving, and seeing

Paul Reilly

been always Devin, I think that competitive. first, it's

all, a at building But just of they built platform an net count. very ago, the If few I on high for think you'd the really of to of the Alex probably and just high knowledge kind testament of space. And see advisor businesses that our growth never and a we it's I kind very, platform, us, it's in entire Brown worth platform to been years firm. was worth a teams, the focus size the when and really, it's joining net joined ultra lot ones look that our would brought not us are of large our the it's not record kind

slip. joining lot seen little that's cycles, risk taking, not where we'd of a pipeline. been the that's independent people of commit think fire, we channels is the recruiting And the people see they're are haven't this really advisors goes the employee in doing slippage. sign thought economy more It It'll slowdown, going And We would I in the the we well. on very really well. year when a So one and channel we have we typically more was a is kind see more. more the really, the thought maybe

them advisors we firm. to their rarely coming. Once make decide leave see they So not still that decision, are

highest competitive, the think in compete really certain out pace well always But competitive. market. seem still proposition. But because in it's is assistance. in the fair the certain very, transition very been And spaces, good. say pay I we have jumped it's the the It's to we a can't value of competitors, We very market. I always So

so it So, so been it, had good. if now. still very, It's far, we very about concerns looks any solid right

Devin Ryan

back to more more revenue because actually scale let Great, we at the those it once with adoption, could adding the but material be something them and a know to of a think I and opportunity, the like creating years group, become one outside, differentiation around late kind revenues you in there's have Thanks. integrated gets become about spoke thanks, in of about and one, more and kind hobbies have being And of consulting but goal there's others. going from advisor focus I just service there relationship the around kind non-compensable it to them a Interesting Paul. I financial was admin few stickiness The business two, the your platform out analyst feels then follow up these May more kind guess I your appreciate are involved in and contributors to meaningful pilot, drivers days extension, them. guys here, new me expanding you early of talked on you're come to day. has

Paul Reilly

the the former. think latter it's than almost I

we I it who people the existing to having thought. like than they're big very has to advisors transition. think they're platform someone offering that the been and or Even gets has everyone's with office very, services strengthening easier or attractive we're out be talent, much have on finding like happy those by on services, services more those sick, uptake war whether and the it. of businesses, the an better platform The and the uptake makes of

days, to that going it's So for a we're in those be brokerage going item, it's to the positively and the be early margins is to like I impact scaling going but certainly businesses. revenue, something doubt line

even early. of into it's existing so the We're And than scaling is just so very few advisors But still far, we higher it. on quarters thought. but it's very, good. But we're a really reception

Devin Ryan

It but late, Thanks, the thanks it that. to sort caller, of I'll appreciate guys. Yes, and there. was leave

Operator

our And ahead. comes Manan Morgan Gosalia final you. of Stanley. Thank from question Please go

Manan Gosalia

now. and I you the can how so bank deposits CIP would growth on recognize you're mean to party nimble and program. covered my deposits even thinking have you I if party morning. own deposits. you've that, that your can for your that third between from third we're certain done also question demand good deposit a that already And that for you even Hey, flowing and I how those shrinking other was business But have CIP what need your, about you wondering seeing from apologize further increase your is this talk bank this. cases. in billion about party or deposits bank? in the likely third And banks banks be is own $XX quarters is for the from But

Paul Shoukry

balances be We we flexible the for balance the they banks The demand. the CIP Manan. third balances on party because to able have didn't deposits the Great overflow sheet really with question can sweep very weren't when point. to your are

up, definitely well. has picking eager as as been even big that days, get from those see type deposits. as not banks demand a of which picks so banks been historically early we're to but We're still the And significant seeing it starting demand those who from to tone up, in change have

to sweep those else So being be as CIP those, seeing pickup, equal. that more able third from all start we banks, party to wouldn't demand we

come we come have lot see a We great flexibility. to do would back. of but back. It's the eventually knew the demand demand So

so we And why stay deposits. that's to with flexible wanted those

Manan Gosalia

flexible bank, But at of also your can depending own be growth on you're what deposits party own between seeing in your third loan bank you level bank?

Paul Shoukry

be that's that as what client and large banks July time since the in growth now over deposits extent we the mean, comments, to that's good a Yes, has could risk programs but I good billion, very fund to we the time that grow those the $XX and client, of $XX extent interest third that over declined our beginning of of those balance clients, sheet with used portion I be find private absolutely. adjusted etc. the deposits can somewhat can said billion a party balance returns to the portion the to sheet the on group loans and

again, but we lot So capacity. a of flexibility lot and a yes, of have

Manan Gosalia

you CNI you're of prioritizing about seeing volatility and about demand? a terms you rates for just is you're which that Okay, how similar portfolio both are Is loan think managing to loan and should in and offering, moving and there great. a see all rise? equity a higher as fixed Tristate, loan just, to then are growth the get given it some that the CRE as but plan loan we my a now I recession you And wanted markets, environment this low this demand to of how like gives segment business, slow how loan SBA Or book risk? separate own your and product. still and second maybe as you're meet You exposure have question thinking have growth? that and in growth and growth sense And credit across of in risks we has what that income pressure also

Paul Reilly

Well, first it's a good question.

that a look of to you I cheaper borrowing most rising source happen think rates, going If what's it's in for still at clients.

and borrow. our higher it's SPL of get to things rates people way in we a is that this the environment, don't about higher way but low still it's higher effective maybe one From anticipate cost standpoint we because and two callable. borrow So very liquidity love

it's it also frankly, has, risk, right Secondly, supports spreads clients. low best now it's secured, the and but it and very

we've to that portfolio loans done of part focus it of we reduce liquid on speed So segment, that the the by as so any few sheet. very on one CNI think there risk are balance we're while. even for it I we times segment, of COVID parts and the continue and loan up portion we term before, B sheet. the sold down And do balance the can banks a we Most different have of and the slowed portfolio the a loans, taken manage to

we we're that we where relative to So that we'll see risk return you long offering, term the loans we're only, credit plan look demand depending happy and segment. very slow contribution in at the growing in market tradeoffs SPL market. item are the of and support offering If starts each and then risky on the down that

from certainly. different So our the very markets TriState

internal other firms. external markets, Our markets their to

banks capital like and funding and categories, but is both too and cash, run the SPL important. we'd both separate, are so the And in have those the very loans separately, the which

lot of and have We funding. a flexibility

Manan Gosalia

for questions. my thanks taking Great,

Operator

And the for Turn back over that speakers was our any remarks. call to our closing question. final

Paul Reilly

I know related little I Yes, and difficult the a to numbers thank were everybody bit want of attending a and for acquisition more with lot changes. expenses

effort the questions of it. write know put a I lot but time appreciate the into the I So you and ups,

always to thank and again, generate take they've these So numbers. our I associates and as all you for to want advisors done

easy to great a doing such present when job. them it's So they're

next and you So to talk thank call. we'll you

Operator

day. conference you a disconnect lines. you please have We Thank for conclude and your good participation that you. today. for the Thank does thank ask your This and you

Raymond James Financial (RJF) 28 Jul 222022 Q3 Earnings call transcript