RJF - Earnings call 1 2023 | Raymond James Financial, Inc.

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Operator

Good afternoon and welcome to Raymond James Financial's First Quarter Fiscal 2023 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.

Kristina Waugh

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

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

believes other or terms to that are addition, of such identify terminology negative comparable necessarily or events statements. continue any as words depends anticipates, In such other or a intended forward-looking well may, as as will, future statements on expects, could,

will that which there that We to note Please described X-K, the consider subsequent forward-looking recent XX-K on Forms the Forms expressed Investor in urge our and results can materially and XX-Q statements. you Form risks available no website. assurance from those most in our are actual Relations not be differ

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

and the over Chair Paul like CEO, Reilly. turn I'd Paul? to call that, With to

Paul Reilly

for joining you today. and afternoon thank Good us

playoff Bulldogs disappointment for more through National of Raymond won me with James solid is Bucks' is a Although for even us performance. Shoukry's good, lot disappointment another in again Championship, came the Paul and there game the

environment, return tangible having XX.X% shareholders common of market annualized diverse and common quarterly annualized XX.X%. adjusted Once net businesses. available record income $XXX results challenging results, and on highlight of and on complementary equity of to strong we of value common again, generated these including volatile million, a During return equity the

Group Client third-party margins through segment segment, in growth, robust in organic the balances declines offset at with the businesses. of Private Bank Record by market-driven and PCG the Capital strong results yields net RJBDP expansion banks driven on interest the along Markets experienced

this demonstrated balance interest and solid in the been fees, high capital and rate remain have continued given ample with ratios. a sources, As floating well rise and for sheet positioned quarter, interest flexibility sharp short-term net increase concentration we in with of strong and income diverse funding assets rates RJBDP

share. on diluted Slide income Turning of per now pretax of billion, reported the to record and million or record of net income available revenues firm million quarter, fiscal to results first shareholders common starting $XXX $X.XX $X.XX $XXX X. the net In the

of $XX Excluding income expenses common related net $XXX favorable the share. to impact shareholders diluted insurance million acquisitions to available settlement the a million received during and $X.XX per adjusted or was quarter,

and asset to over higher quarterly interest to down quarter third-party by were rates benefit due declines interest banks. revenues largely fees net RJBDP of increased from on income Record offset to flat related shareholders third-party from quarter common fees. prior preceding X% the first investment and net short-term and revenues the interest compared management banking fees fiscal XX% year in market-driven driven RJBDP quarter prior Quarterly higher largely the administrative and and available the by income net year's net income to banks, the compared

market XX.X%. our given returns, return we very generated conditions on earlier, the position. especially Impressive common strong on tangible and of And return common strong as challenging mentioned with annualized and equity of XX.X% I annualized adjusted equity capital results,

of consistently $X.XX high-quality X. focus Slide assets trillion, and our billion $XXX client attracting financial of retaining, total and assets With quarter, the on growth $XXX of a We management generated billion. fee-based administration of billion PCG quarter growth. and generates unwavering rate under $XX accounts in financial of financial new advisers, with annualized strong to quarter representing ended assets. PCG organic under supporting assets and on X.X% period the with We the net ended on X,XXX PCG beginning Moving assets the domestic domestic nearly advisers

quarter assets Net received new December. by this in interest the seasonally helped and were strong and dividends also high

domestic of the XX-month of at the the beginning net period. trailing growth of new period, Over asset we PCG generated X.X% assets

During $XX XX-month domestic previous nearly trailing $XXX we the of contractor firms. with and channels same assets advisers to their recruited our period, client financial approximately billion production XX-month of million independent and at employee

PCG Total balances Capital yield yet utilize bank balances record representing Bank deposits. a suite billion, assets Bank. both sequentially deposits to reflecting to $XX cash at enhanced grew savings X% under our attract domestic TriState to as X.X% have XX% Raymond sweep James cash clients' domestic of accounts The Total loans growth administration. and represent $XX we billion, lowest declined domestic cost to

Moving record $XXX pretax to of billion million. X. Private Slide Client generated income with of net quarterly Group $X.XX and revenues The results

Asset-based revenues declined.

benefit results increased rates, interest on the banks including third-party higher However, segment's yields the were lifted segment. from by RJBDP fees Bank and the short-term from

Markets and $XXX prior Capital Capital in $XX the volatile to of net pretax declined and mostly The million. the lower the banking due driven compared uncertain generated a quarter, million segment markets. of and Markets revenues to revenues quarterly largely by results XX% investment year record-setting revenues loss

under Group were of the financial pretax fee-based The Management the Private revenues to fixed income management income decline. to Client offset accounts net Asset were $XX and inflows markets in million. net of equity and in decreases The million on generated revenue net year-over-year by a lower income segment as attributable pretax $XXX assets largely

and million growth $XXX was of Bank interest The record ago significant segment for rate XX quarterly balances X.XX% revenues and basis and of revenue year points XXX to of nature income higher sheet. expansion up the of reflecting our basis due bank's balance floating quarter, $XXX quarter preceding generated a net margin from million. points the the Net primarily to the flexible and loan quarter, net pretax over

quarter financial I'm turn Paul detailed first And call of now to for to results, a Paul? over Shoukry. more our going review the

Paul Shoukry

consolidated you, revenues year-over-year Slide billion with X. on sequentially. of Thank $X.XX Quarterly declined flat and were Paul. Starting revenues net X%

preceding declined last assets compared the in management administrative prior quarter to the to due and the equity end based guidance quarter, call related and at with market XX% of fees preceding on declines. line year Asset lower to X% on we compared provided the the the quarter fee-based quarter's

the management reflecting days. X X%. This we administrative to X% second fewer fees, quarter, grew related expect which X% to fiscal This quarter, growth billable fee-based provide assets asset for in a and tailwind should increase

decline in largely of income revenues declined and quarter due revenues well as income X% the to trail segment lower brokerage net fixed first service Brokerage quarter. in XX% fees to was and as million asset-based grew preceding $XXX discuss revenues the Markets lower and compared account fiscal prior PCG. the equity shortly. The year-over-year Capital interest I'll over year's and

much lot XX% the the quarter market we declined anticipated say increased closings creativity. revenues prior when the pipeline last investment conducive a of the and it difficult good record XX% in deal in market will to given compared Despite uncertainty heightened than banking At and and timing difficult conditions a call, year on become there volatility. healthy preceding compared quarter. quarter's a point, to to set of In is of levels, environment more $XXX million remains to the pace this engagement too

quarter. $XX XX% high was which of in primarily revenues the to preceding seasonally in due million Other housing the revenues affordable declined sequentially lower investments business,

continues to business this pipeline. have forward, Looking a strong

down Moving compared Program X. experienced sweep Client balances the quarter XX% domestic billion, as ended Interest and to sweep $XX.X third-party client the as preceding to at well representing broker-dealer of Slide PCG X.X% assets. quarter The in with Clients' banks. at domestic declines were the cash balance the

payments billion, balances As quarterly additional to of during January of just the the sorting $XX in as under paid last approximately as Friday, billion month. well declined these reflecting activity cash $X.X fee have

have James independent Program source providing deposit relatively diversified to Raymond TriState that for funding continues value having system, process yield seen also the And [ enhanced in be base. the more significantly in ] we realize Client franchise, Group and deposits Capital To an our are funding, multiple James Bank financial Private a program The we Program savings Bank Raymond Deposit Deposit we Bank an adds as across a entire (sic) launching low-cost of declined sources. funding end, of Sweep even greater clients.

Combined fiscal first limited the interest assets to $XXX the income immediate Slide and our concentration given net banks and strong quarter. Turning short-term rates the XX% on million, reflects rate impact year's This third-party prior XX. duration balance of from preceding XXX% high over fees higher the up sheet. and was growth quarter floating from over RJBDP

high a this floating maintain which significant in proving rate rising be to approach Our assets, been to long-standing has a of rate environment. concentration tailwind is

RJBDP on the to on call points more increased the sequentially beta shown third-party net interest increase RJBDP expected to bank's yield than The slide quarter's X.XX%. XX%. last the average deposit with as the balances closer increased and banks average for we XX of on basis bottom margin Both NIM basis points rate on increased was to And on the yield the a the last quarter. balances X.XX% XX portion

The on the close X.X%, X.X%. RJBDP the yield is currently and for is spot approximately NIM spot balances Bank segment to

increases the related ongoing net help. also quarter. activity. cash So But in near-term there X should tailwinds anticipated interest fees we sorting are for currently fewer The fiscal expect second rate the continued days and despite remember, income

stabilize third-party bank's sweep fund the Bank portion the future cost have if growth. deposits, rates anticipating segment, higher larger banks a we that of to of at sheet longer being will be still to balance redeployed be utilized deposits with these levels, impacted term, we by the expect the balances mix NIM While could

margin. goal see we have the pleased said to over income the over sheet prioritized our as in expansion, we we balance as While we net are net net grow always growing to interest And have income significant interest deliberately past, the continue interest time. is NIM

Moving was lower The largely to XX.X%, XX.X% from nearly Capital during flat higher compensation income ratio consolidated reflects was and the on interest Beginning ratio The compensation Markets revenues, XX. the the third-party net benefit expenses quarter RJBDP compensation our banks. the with quarter. expense, compensation. from fees quarter. ratio adjusted largest for preceding Despite the from total significant Slide

at XX% will the of X calendar the acquisition-related million our expenses taxes favorable $XX of impact a impact As on of reflected beginning of of and Noncompensation expenses $XXX the the reminder, second fiscal $XXX $XX year quarter. noncompensation noncompensation sequentially. of salary in earnings reset in be were the increases the included the during received January adjustments, quarter. payroll effective and million, both million expenses million for decreased Adjusting non-GAAP

loan growth. changes service million credit on where The the exhibited levels ensuring primarily investing well in $XX of used management again focused proud quarter advisers bank remain in as and modest quarter in our I'm the loan assumptions growth for models losses for this expenses provision their macroeconomic reflects and of high of as CECL disciplined clients. continued to we

quarter. Given from the over XX% past we quarters, to for be around short-term the revenues benefits rates, aforementioned been losses in segment Markets has the Capital lower our for expect to compensation XX% year. maintain are much expenses, this non-GAAP higher $X.X as provision it with billion well credit below fiscal around and expected Noncompensation X even adjustments, the the ratio excluding interest still

first diversified result, trend upside very the over margin focus the being rates short-term the benefit consistent the our higher In our quarters. interest we strong business pretax preserve, past the on expenses. and shows generated XX disciplined highlighting of a we a on fiscal the pretax XX.X%, margin model, X of Slide quarter,

ratio, the Similar delivering believe to my pretax currently continue we XX% are tailwinds, compensation comments above target. interest previously the given we on well disclosed the to XX% positioned margins to rate

However, uncertainty, environment. given this to well the and in cash it sorting rate as is formally our interest update dynamics believe we targets as premature market volatile

quarter at total increase balances. a ratio the primarily Client end, billion, leverage The sheet Interest helped Tier quarter. XX, in were decline the Program assets X% reflecting $XX reduction sequential Slide On balance during X cash assets decrease, the of

the quarter the X remained leverage capital cash XX.X%, corporate to above The ratio ended Tier be XX.X% the the and well requirements ratio capitalized. more both strong. well Liquidity double $X are of target. at our billion, at of $X.X total billion capital than RJF regulatory very parent

in and levels growth. flexibility capital to to being continue significant opportunistic invest continue Our provide

recognized rate benefit The was compensation vested reflecting the the share-based for for period. that effective during tax tax quarter a XX.X%,

appropriate an Going believe models. in XX% forward, use still we XX% your is to estimate to

repurchases $X.XX Slide capital of previous authorized billion. Board up past of per XX common over the increased actions provides and replacing share quarterly share December, cash of XX% billion, our to a quarters. of X shares the summary the to dividend Directors on the $X authorization In $X.X

$XXX price $XXX million first per at shares the firm the average share. stock for X.XX repurchased an million of common quarter, During fiscal of

approved billion As $X.X stock available of common XX, authorization. January XXXX, Board's repurchase the remained under

Since as other achieve our and share acquisition under We X the coming capital X remain repurchased million the we closing of expect XX, associated of still have share common to monitor quarters. objective these we plan of in offset continue of course, million well or repurchasing as share-based approximately through market the $XXX fiscal TriState dilution $XXX XXXX. per TriState for billion acquisition, shares compensation to on January the the $X to June repurchases committed Board But conditions as for needs and of over shares will with authorization. the approximately we issuance closely

which credit TriState remains total December loans healthy. quarter at ended the held percentage credit credit a as James X.XX%, for for Bank. The investment held at percentage marketable flat an higher approximately our down in The to we Lastly, due decline Criticized losses. of year-over-year account as reflects held provide loan of credit typically the of at X.XX% includes loans loans bank segment, loans acquisition Bank. for of XX% allowance for X.XX%. from allowance not on of portfolio Slide Capital quarter investment ended Raymond proportion for portfolio, loan Securities-based sequentially. and quality Capital largely the TriState which the The the Bank require loans, investment a the of generally for collateralized losses for allowance metrics losses percentage total loan do XXXX, a are by as nearly of for and our securities Bank loans loan XX, bank key securities-based bank total credit

quarter on are continuing investment of We loan corporate as represents allowance for to believe a was closely end. loans any we monitor a reserve, held The for constraints of percentage at recession credit corporate bank our potential losses portfolio. an loans inflation, chain supply appropriate this impacts corporate X.XX% but and on

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

Paul Reilly

Paul. you, Thank

positioned record over be with the the while said to uncertainties, are volatile As of many drive we I I'm call, our generate earnings results all ability of market. to we're in to long very what there our term and start a And during growth the pleased businesses. continues well believe across our

the results Client related Private expected be to the in next In will impacted sequential X% increase by Group, management X% quarter favorably asset and administrative fees.

by continue Additionally, described from rates, higher to the segment benefit will short-term interest Paul. as

I production delivering as attracted advisers optimistic Focusing more on long the values our term, we in will technology are solutions. client-focused am current and continue leading and to prospective industry-leading growth

on balances depository putting pressure conditions. heavily pipelines the the deposit for the in closings healthy, In Capital securities, our declining market timing less income and have segment, remain pace Markets investing be will M&A and available brokerage of influenced by And while in cash are space, experiencing activity. fixed clients

our elevated its as typically with rapidly benefits and rate business evolving fixed enhances this trading technology marketplace, income from position SumRidge, volatility. However,

we the past over term, given Capital long for Markets capacity market X our significantly increased are which have the growth have investments across positioned Over made productive years, we and the share. well

revenues the if the tailwind should financial the under conducive. the markets growth In segment strong fiscal long-term up confident management. under of Group will which X% accounts provide the assets second quarter, We Management Client to assets Private starting in Asset are to remain assets of preceding drive segment, compared a financial quarter remain in fee-based that management growth

quarter, and inflows synergies. grow increased marketing further scale, interest for short-term sheet to management, segment we modest balance Bank rates rising And has addition, positioned growth drive is well help to operational the In James investment expect distribution, generated ample the this and through which net Raymond prudently. capital

increasing rate headwinds face new to an borrowings. in stabilize borrowers growth of the in However, until adjust and cost will loan a environment, normal rates

program, sources at sweep balances that the sweep on the in we the diversified with has to continued Currently, term. of banks Bank long sorting Additionally, over sheet third-party as the growth higher bank's the segment. be balance redeployed expect have could cash to increase the funding we focus costs,

past has on taught depending that increase the sweep cash or us market balances rapidly also conditions. However, decrease can

Importantly, portfolio. we strong, portfolio economic segment's loan quality lending the closely Bank to remains conditions and credit watching the of the are related

a remaining its period bank chartered ongoing a to of relationships. In own should strong just model, client capital, operating the short growth. foster closing performance. including pleased with its since acquisition with our very am the with I of independent their TriState true model, coupled Capital, This separately TriState's Staying

is positioned steady for for market our that It's decisions long volatile It growth. in making result are future the no conditions. well accident term, and businesses especially of on a focus uncertain our

for balance are loan of well We are rise the assets the floating funding positioned sources, in sheet requirements. with well which solid solid short-term given all rates diverse growth, excess interest high rate continued concentration of ratios, capital in regulatory ample and flexibility

the clients these trusted thank to clients excellent advisers unwavering uncertain providing their their to most. I day. And dedication times for want our in is when associates advice and service each Finally, need to every and

Our reflection of strong contributions. a your are results direct

very you thank of to you. all So much

for you questions? With it that, will operator, open please up

Operator

[Operator the with Devin The JMP first of Securities. question Instructions] line Ryan from comes

Devin Ryan

just I my ones of quick on end. a couple guess

First, on the buyback.

implied $XXX $XXX repurchased million. million you It's So bit a average the below target.

And a be there's guess catch the so implication I up. is to going

we maybe think price to through reasons cadence were of trying kind that being the conscious there. the So to that other whether I'm you impact the just trying in cadence, the again, or didn't quarter any or about, blackout factors understand it was see

Paul Shoukry

said we've times as for of several targeting still billion XXXX, We're the $X repurchases fiscal now.

on going forward get to we would ratchet that that mark. to And that an obviously basis up $X billion to have so average means

out, then point volatility always you particular quarter. of a this blackout And lot a was as period. there's in There

So of have pleased understand our kind that get we hit going But to target $XXX increase to average. forward, million going to were in. that to we're

with and can being all the we're of firm. the that the change we said, the conditions end for sources But market do to cash so capital that year, fiscal a lot still at -- and have and now between going and uses we monitor

Devin Ryan

it. Got

interest here clients. private just And income net follow-up a on Okay. in

Program. than that of that's And been see very better were the and the obviously Client for. we in kind in decline came looking Interest So strong, we the

the driven and your if so about margin higher strength lending had Or trying of And by rates? helped the just margin some there well. think to continued you're as kind was drivers sec other some peers there, of that

curious if kind there lumpy I'm there. So of lending any was sec in

Just of the strong. some really that trying keeping to think parts moving about that's

Paul Shoukry

was Really, is the will sorting going on dramatically just as on most the out" higher broker-dealer margin cash, assets as Interest declined in, "last a the lending out really it well to has pursuant segregated Sec of yields point the cash higher this was But type the during the cycle. balances. yields not driver. the the Client sort both forward, regulations of Program and I first that cash

$X so around $X to at the today billion. balances versus billion for the of those billion average probably $X of And we're quarter balance of sort

something to rates of be need factoring consider, you last hikes factor into rate would as well, this would which potential quarter, be and quarter by your the higher that would something partially to going modeling. that So offset full hikes but you rate a in quarter's need forward would

Operator

O'Hara And from Jefferies. from the the of Gerry next line question comes

Gerald O'Hara

just see be coming be kind of that to little to could able incremental what color the might demand for rates the you on potential product, be that where and clients. sort yield a of offered might give enhanced the you Hoping

Paul Reilly

Yes.

haven't programs dwindles mechanism, new. -- offer today look the and markets defensive them into money need Whether or moving I we've offered just their without have, And for If are we just client of sweeps more -- their markets a product, or because a amount think everyone that's will at almost had even yield of have had. We and has money a that an on the that into of money not cash you them. are insured And thinking moving enhanced we which as fixed competitive mean, income I people money, things. products have account. and or the people if they people yield as

a really of that. the that's than in firms So relying number on primarily industry

said, But rates haven't reaching as we've of those to an we'll "If of We in area, funds. offer get we're and some the we X.XX% we've area competitive are cost probably products." The this had -- because of between it today's where market X%. always

some cut we're positive doing outliers what side that sure to point always that's but competitors on the the Some cost -- we're side, our make either on going and been have the and to cash. to the

adding spread. as can Good it will those virtually we all on And as news some at won't is even still most have of impact X earn deposits since places just really we and our also be have an of higher high-cost rates, a today. big much cost low-yield be almost -- deposits deposits, funds significant

Gerald O'Hara

attracting and of of as maybe advisers? Is also the of just sort touch and kind it what advantageous there seasonal you around And of Great. would recruiting seeing perhaps if to the in dynamics then just calendar of on that anything kind of any transition relates about environment. the kind assistance one kind turning you're be the marketplace. on just could And recruiting

Paul Reilly

It's have it's are everybody only other It I thing paid a very that years, backlog. be than the for competitive space. more long continues third-party at the new in for I people mean RIA I said competitive adviser say that would the you. some said, the same. are is competitive." the is "Well, aggregators competing last in about time. to we competitive. hear there firms year we environment been strong Thank the But a

we strong employee, own one set both and faster and little independent's large but little the first The through a our very in mean, quarter. independent slower year, teams. our I record. very, what led division its very employee a backlog, way this division in slower, was divisions, And quarter, Last the is see recruiting the

-- if the charts we've at you recruiting. the think the still up right top few it's of And years, assets we last just on about feel new So recruiting. been at and net good I look the

Operator

from And Manan of the next the Morgan line question Stanley. comes Gosalia with

Manan Gosalia

on cash the that of Can range trends getting assets in a X% has past. to client lower wanted you sorting. of broader ask a in cash sorting? We're closer been on that the comment of to I the sort end question

good that X% how still is a settle? get base where quickly should for think So cash And you there? we'd do

Paul Shoukry

true period. X% the one that knows. was is think based 'XX that XXXX I answer no to really -- on We number

we have course, as So historical an benchmarking out to -- a of of don't Fed lot target 'XX industry, period, a X.X%. at lot the because, that funds of XXXX in great topped even

earn client arguably, your the is so And rate cash sensitivity yields Fed when rate target today's can at around balances. fund investable that heightened you and you're on

additional So X% hat certainly a good, we clients our of I being are that attractive also they as to gives Capital source which not potentially looking we sources that clients, is us on why, have hanging guess, and because as that but our the of any, all Paul our says, offer independent the is be well. X%, funding we're as funding diversified would and at appreciation franchise an diversified can TriState

Paul Reilly

we I said, are cash a You've TriState joined where deposits." of us, roll wanted no funding, tried acquired all figure what -- got bottoms a sudden, diversified bringing one the out when higher-yielding we because in frames. of overnight. why we we "Well, we again out we are don't people record I just think up? started talked when that you lot Well, even about think and ready these cash, to always -- cash got products anticipate some flooded XXXX, time with And to

rapidly. can and change these know we So dynamics change,

a at And bottom steady. Whether I know. are so continued. deposits, balance been very of the have lot lower, reported, cash which it A goes it's as lower don't X% sorting or very, the significant, little

on home some at probably make difference enough to point, higher find material the a enough the lower accounts, at a change. make where to rates it's it's like today's -- just deposits a bank not So

But the always -- just we just you -- generally we're fear and know. because worst. So don't prepare

if we'll wish I hope we'll So is be And I the it bottom, -- X% prepared but wasn't. see.

Manan Gosalia

Got it.

more And bank deposits, noted bank program. Great. you than in third-party Okay. the terms to a deposits then you're of allocating rather

is loan-to-deposit should a there this at about a specific continues hoarding how we So the same forward And think level about you're at bank? that or maintaining rate? going if ratio cash thinking liquidity

Paul Shoukry

BDP own said, to on sweep constraint want our rapidly we to that deposits bank in that banks biggest sort always of decline of be than because The there and of case that we cushion third-party just we expect. Paul is are as more a percentage wanted do Yes. swept the balances, balances

But today, billion XX% higher factor. a kind it mean governing our that's sweep to So the go cash third-party bit $XX much still of exposing swapped good going terms ourselves could that in we prudent risk not we're It's that best-in-class them, the as of sure offer FDIC and funding in really to shifting as way, at with we be a roughly own little to is we by bank Maybe far the over. insurance portion preserving of make own over of industry, being is than by that. today cash amount of will banks, the the that the too to BDP want our banks. I tell. of also while to clients' which can $XX billion

Paul Reilly

Yes.

of liquidity. and We plenty have capital

model. the then is ways, to a a our good that's the So of to our but is first overflow business of lot And in sweep our the cash a business. part fund extent, banks, really source

a still But XX% for we've -- some gone up people point, leverage right us. alarmed. have just We We to flexibility. little not So to of have that known at we're something. now, that's cash or

Operator

Sachs. Goldman line Alex with Blostein And from of next the question comes the

Alexander Blostein

Apologies for a X-parter, but it is related.

to just So guys for the better I'm strategy you from here. hoping balance sheet understand

yield you're slowing the one time, this deposit sweep the third-party environment. you enhanced an So talked of despite about then on lots bank the product growth hand, on Paul, liquidity in side you in And same talking still. the that loan at deposit about launching fact have

How will bank. months? third-party you understand the that bank of over how program help you me in terms are ultimately $XX about big ultimately growth think much assets? is next guys the overall of how the billion maybe you for your growth And to the the bank XX at be So enhanced yield sweepable thinking in

Paul Shoukry

Yes.

But growth are so now right? the slow experiencing when expect. his we demand remarks, get rates, that you not driven growth by stretch is would does expect demand, the for not prepared interest the classes in move, client-oriented. asset said into Paul down to of ultimately, normal bank demand we're headwinds get as continue. client today, the client in those one that the do are used headwinds rates to we going interest is environment Until So as or naturally -- is really rate not that client to they And new growth given on thing will the

said, With the certainly is a that we trend. always prepare not of for to in being quarter future. want funding, terms the One

so to be years we now. year X for want out to And to a clients, our whether it's there X from

we quickly we sure be. will demand just diversifying funding And don't that so to know want come back. the and client come eventually -- sources we ample funding back, that so for does we're when it have our will or strengthening how it our we make know when Because

trying of to how sort that's it's quarter-to-quarter. it the think a strategy, versus strategy long-term about we So manage

Paul Reilly

it's think amount, I we know. in of the terms don't

it and to of in I clients always letting by lots have you more, you speed mean you what do is the pushing it start on know, levers turn So changing can raising market. up. the accelerate program, the you competitive more it money, rate

slow can stop certainly down you it You it. or can

it. do So any you unless you those -- but of start can't

open We've the it have to and out more and the and segments. it we go adviser of off. base need need running. it down it if to we'll up other So we're up we'll slow going more, than now degree. to see spread it or a it And a the broader being turn it goes way, if And we technology ends out we cash we And got tested. up

could be in more just if So make it's about TriState, sure them, we If need turn just being to sources, interest. we can And on, then them has prepared. said, It's aggressive. we don't, And third-party we stop. we there, they're same prepare too. get the

a just it's balance. So

know -- models and cash We how if how don't but we we we we'd run it. have how raise, really we can to react so know, is you. we the we tell we we're to but -- truth to cash -- yes, much much we always know need If need, speculate, assume able to much we we need know be just

Operator

question And from the Bill next Suisse. Credit comes Katz with line of the

William Katz

moving the call you appreciate Also tonight. back conference

line up of last questioning. sort following on Just this of

securities and growth, you demand? grow b, little mixed in sort a it grow, loan you of As and earning you And about loan there's environment an where investment can if between bit could growth think portfolio? a, the sorting does about asset that decision-making the talk

Paul Shoukry

right how environment do client is sheet when client difference we between sheet certainly Again, and really side. about that's client think we portfolio we on now, And a prioritizing there over tighter to accommodate balance we is our how for we and a -- like needed the just demand, peers balances. our client and of uncertain clients. many on demand environment, -- that's think security funding in funding portfolio about cash the are needs balance Again, more asset we our both and kind prioritize funding securities that surplus the funding primarily the the of

terms clients. Paul advice loans advisers be. it's financing, for what mortgages they stretch corporate their them. know our need and there but clients do that to going M&A provide or forward, to as don't or we're says, need extent in for What our growth, have So securities-based And we yes, then want provide we we reengage will -- to of in they going be excellent is force going our to for the really not growth to continue loan the

William Katz

ratio think to you looking? just back then of capital. be on capital position, to that to is settle follow-up. the on mentioned. Maybe And I Can you've you you have moment. -- Okay. of Will capital as you're a mentioned buy buy back $X Obviously, M&A? you M&A, in And a function of where interested opportunities able it full your billion? And be potential thinking deploy you'd a both out? you might switch if would back what couple Or times Tier your you update is have latest us to strong X leverage where like pretty said a a for

Paul Reilly

So would best. tell like assets. when in like can't It's yes, let not large, growth me targets, our we acquisitions we're first, when if those for organic been it's because And go doing new backwards we're net into right still we the but happen. and the sustained, we focus and the consistent, space, acquisitions it's question. PCG Even the And growing. --

people think deals were few if the we and closed we years, I X quickly. pretty then last serious, in doubted

we So reason our But that at Tier sheet, too. the earnings. balance a just XX%. is balance now really right of the target It's up target. faster. of our goals We're part Good other news is corporate the still X shrinking of is gone that sheet, gave in

As sheet, changes. lot up cash has a up that really balance come without the ratio went of

the $X to committed his billion got as -- to in Paul aggressive to that, remarks, plans. our year. we're committed We to wanted this we that's partially We're still $X We're and quarter, that mentioned more hit the it. we do we know get there but have target, billion to this

that is right In one, if Is acquisition question. best would have terms to a tomorrow of a required our say now always capital. lot buybacks? so accretive? billion and plans what's it instead focus But on don't great I use balance the use commitment theoretical we'll our But capital, Don't -- hit did, the great $X the other -- it of of of we'll it to up this if Advantaged? Possibly. capital, target. we showed always

Operator

(sic) the Seaport Mitchell ]. line from comes Seaport Jim with Capital question Research of [ next the And Partners

James Mitchell

thoughts. just Paul, the maybe on NII

be it up. If you could think average about funds, Fed

the If curve, the look versus at points up you deposits. could to basis be this forward fourth. XX in of first quarter you close it shift sort mix in the But have then

higher spot into have going first quarter. NIM the You

to the do to to NII. Can want Or want So we the -- kind XQ? us. grow give year, shift and NII in after how trying starts you Just about we hurt negative consistently? want or how think it's you we expect NIM to And You XQ of the about to mentioned trajectory? first think quarter? should thinking mix whatever full do whether you're NII growth you do that

Paul Shoukry

go a our into that. Jim, fiscal for But the in I lot of there's, for the Obviously, look we're variables kind as second we with NIM entering into Bank of mean, quarter, X.X% of bank's segment. that a rate -- spot

before And further rate additional from potentially. so hikes that's any benefit

X%. have assets grown X% so of have bank's the And grown sequentially. Their we and -- portfolio

of the BDP balances fact balances about Probably, XX% sequentially decline days probably the that first of have earned the will than And on net able the -- we of a yield income versus be will quarter, average the rate quarter in are decline will quarter a fewer X.X%. there's we down. as during X.X% sort quarter interest up the that the you balances. when down we've put be of net-net, entering again, XX% We're believe we may higher partially quarter. spot a to offset So second be think the spread a -- X the that just first those we'll because in with But offset segment. average second by the -- a proportion greater the to funds Bank that in likely grow still in overall by to fees

Paul Reilly

really I the start that huge a that obviously, impacting enough impact in on have high-cost have dynamic hustle think also we is if we'd shorter raising raise. continues, the cash deposits, as which on to But significant and to will term. could be sorting number

see have that goes. we'll to So just how

James Mitchell

Right.

percent. Okay. intersegment? that run notice sequentially. segments? that kind And was some did think, was line? I that rate? PCG Or there that I there as is follow-up, and of just down Or those higher comp on just a comp the a up, benefits shifting maybe XX% of X% among upward costs kind Is Other pressure new is line year-over-year, admin Was in of and Because a XX-plus some in Corporate,

Paul Shoukry

and always then sort Jim, accruals bit the year, noisy quarter Yes. the to we that and fourth actual quarter, those just for of to the quarter the quarter. comparisons reflect always you I are trying reset the would first fourth bonus adjust fiscal little benefit to first we're accruals tell in the the results because a in

this at an increase was XX% year last . an think time, admin it PCG I example. comp So as like in

So sequential there's acquisitions. of -- comparing year-over-year, -- a course, we there's have of some noise the lot

PCG well the Stanley as for We as full of PCG the business. acquisition have growth the just quarter kind Charles in this the overall in year of business

then of the as have on see tax payroll the the of being we in salary we increases second the we quarter, calendar year significant. this reset were X. And beginning effective January impact also increases that enter will salary become And the of year. those said, the that impact With do the have

success reflected always did, inflationary success in we on of done, have that that fully record year increases we And with want associates As environment, passing we fiscal associates. in were will in firm our who to we always in generous our the in share be this results second our particularly salary quarter. the to possible. the And make given the

Operator

with line comes the of the next from KBW. question Voigt Kyle And

Kyle Voigt

given you into the guess bank support guide of as the [ this you expectations way match kind on and in to Fed betas high I for look fair your help would the the cycle, think begin forward yields just if to by question, that deposit first down cuts well? help could few deposit good I curve towards betas Give funds a XXXX, market think XXXX, relatively rates environment. cycle I year-end is are ] was last rate it how on us about during you the wondering as cycle and adjustments NIM. for for back the the Fed and declining a a cutting And the now through XXXX last

Paul Shoukry

up Yes, this are what we're a still deposit the exactly cycle. betas in having being hard right time on

different other in a do. So very the and environment the difficult certainly, time. cycle trying it be is competitive to based that will to predict dynamics on of apply lot what a at be It'd

last the rate it had surges was cycle, For we example, balances to pandemic. due and in because the cash

to place. we not when had figure per a the so that be rates And rates may have -- a to had We out se. decrease. were cash how case not actually That did time had funding next we cut, need obviously

cycles because different think so don't each just unique. compare I one you is can

to been of be know. way but the people on the we So on will don't what deposit that's are most really way sort they've good the guessing symmetrical guess a guess, betas I that down up.

Kyle Voigt

in And just Okay. net a growth the on the follow-up then maybe loan just quarter.

like see for Just wondering by us Q demand ], within if some more some dynamics but could we'll bit loan it SBL bucket. a you the of weaker. looks know understand [ infills I And help been the has

looks decent even with it backdrop. you're tough seeing mortgages, demand so for like the And

And growth I of where rest fiscal expect this more year, of we come guess, the or expect the that loan should really near given from? just to year persist we term? should of SBL this So slower demand to kind

Paul Shoukry

a the lot balances SBL went sequentially. repayments that up And to rates as X buried do the we Yes, declined some the there. frankly, supplement, lot end-of-period on of more are in know provide kind but detail it's line-by-line you X lines. due last is interest a the those loans right, there. we months was of But in so provide over I there actually the to, of materials, dramatically

mortgages lot process even was the due up. mortgages quarter. that A went so were And in to of before residential that

mortgages process. As a you know, to go underwriting while through take the and closing

the what on based look be as going dynamic like we It's going really know So said going don't client to we earlier, forward. demand. is to

to is, categories, settle expect fixed get coupons are all well, for X% in growth industry the just ago. mortgages really, do borrowers much -- across until used floating loan used when it certainly, the to norm whatever was category that we to getting fixed. although the new the fixed the do out years to and headwinds X.X% do both as clients we is and a still of because way up X.X X.X% We don't are rates X.X% But expect across

short dramatic change a pretty pretty period time. of in is a So it

Operator

next of And UBS. the the Hawken comes question with line from Brennan

Brennan Hawken

this a we on follow-up. I you've you confused, often, sheet side. the and liquidity to sorry, asset Paul of times, a certainly ask the on couple -- a about speak can little love liquidity so the I'm I'd in still and Paul touched know Shoukry, but your balance see

-- why replaceable is the allow you especially some for that's And clear this easily to of so could assets funding simply I'm I impulse higher-cost the yield guess as enhanced like stuff when off, program run XXX% what not raise to securities. through to the

So could maybe you clarify me? for that

rough own a also, mix have launch similar see we've you deposit any has estimates the idea any type Do led in in competitors to about last or strong higher then favor seen And to you'll few shift shift that pretty products some funding. in how and the your quarters, base? cost that much of mix

Paul Shoukry

securities X Yes, years run continuing over accommodating growth off. so to on your the lot is that let point, kind Brennan, to A portfolio of of we balance the last sheet. the balances are client really cash

Bank. liquidity well really we targets that beyond so built James Raymond at our up And

sure point funding. do even to various on. comes that you we kind We Paul to learn make do And they're a the understand hard relatively we're is really when that that amount doing the it's just of to the So all and all But don't balances to is, extent Paul But of to cetera. sure to prepared we we enhanced when have turned what want relative also, on need then it yield needs. to demand funding. The we through on the that our with sources starting answer it fronts drive ability these making have working, other that funding up many the small it comes make ability above the so we're it. turned said, as of have sure that. capabilities levers, the overall that. are, that et We're We're was that to bringing savings, -- more then from we if is

Paul Reilly

client had of balance CDs, liquidity been have balance a money. -- don't that institutions rate raising unusually and been haven't enhanced part high our other lot of both of to, driven and know sheet and aggressively what's our don't we our on Because I of They've in sheet cash, floating that's wealth. the earnings.

start they but funded. than off industry it'll run have still continue to we case the we'll we'll and forever the more be and that So assume or well last we in can could enough -- expects, programs

just So And we're in if it. the starting reason more, is it case. need we'll accelerate we

dial So always, -- flexibility. the it, that needed had We've don't we and to have -- be aggressive a until we been the of it, many they we it the it it and ready of any Most it go. we And you're place or But have only going way you dial you to in if it everything long wait deposits up flexibility. have very is and you know we're and there's didn't in going all place. we're to in is because prudent the And actually wouldn't and executing it look then it, you programs to back to and firms collecting so... need need well. really have sudden, place have certainly as when working other you that they've term,

Paul Shoukry

other only so, the would but -- like it's around thing not much is I understandably they so -- shift thing cash concern moving. mix there's only The add as isn't

institutional fund offered tell. size market the any It's far have I to money can as the platform We purchase industry, share classes best client. as in

decisions. destinations type to it And advisers is as the higher-yielding should, financial and so the clients moving it's their like of other those help not cash with

frankly, concerned are of in attractive they we very meet sheet money balance an -- extent on funds, because the to didn't still cycles. meets last So that product needs, offer about couple the can some clients' market that well perform

of to the better goes if than it FDIC-insured it So a the could other offer have be into spread earns products, on win-win. sheet an product, those actually funding which balance and we a keeps some

at of kind looking that's how we're So well. as it

Brennan Hawken

Totally available. being magnitude big substitutes program Sure. broadly this be? any get sense could you the of how of for Sure. on your expectations Yes. And

Paul Shoukry

because on limit deposit, size pull, we the the we the levers we offer, that that levers et We frankly, the No, count right? it depends rate or the of size have it the really, around to, cetera.

of last had fund said, years, balance almost sheet they aggressive deployed be So with as come growth. most because all their in to have competitors our the of Paul deposits to already of out couple it and

or that said, and for it ago, to that so criticism we year of lot always a keep a we cash We very took wanted flexible.

And had the so don't we past they acute have that the funding X on have over pressures months. same

balance out clients the And so the figuring more be and for to we're right able firm. sort of in for deliberate

Operator

And Research. the line from Steven with of final the Wolfe Chubak question comes

Steven Chubak

one make I more one Capital had just final not in profitability lack or, thereof and quarter. question the I guess, trend ]. I Markets, recognize the does [ specifically, quarter on

itself, incur how we the you're if in What a the pretax in expenses You about the did better of thinking is loss I challenging and remain managing saw the banking you complex comp segment. wanted to understand within given lack investment backdrop? that segment

Market. firm -- certainly And managed something much Cap The lot ratio margin leverage comp getting get the positive overall. strong time, a the we're this a question was of pretax and firm. for the was quite you at because didn't by was same It's comp well the for secured quarter, that the

be provide could you really insight would there helpful. any So

Paul Reilly

firms, Yes, Capital -- good mean it to overhead. the any a for have a we I compared there's But lot everyone. And of so couple Markets other part of been of the have a One, unallocated secondly, difficult factors. have -- don't didn't quarter.

in of answer different the might closer firms every and segment, you who or overhead certainly see a of a a a firms, other lower So they fully a loaded to of if that case there answer. bit are other have had little lot results, P&L, but is not a it's so allocated had, penny

with at M&A, -- banks. we due off what's about the slowdown know It we was and an quarter all fixed the talked And business and both to, again, that first, happening dynamic third-party underwriting. cash with income

challenging. So was it

what do we'll always So we do.

variable we X are our them, raised bonuses lower structure as places. than -- did still we And of took big right, lot a First, we our have years -- basis, pay ago, cuts. that although very a comp we we

them the You year executives the year. could even before through this see

we adjustments whatever that, then a make of that So we'll comp we the and at business to have businesses will those have just structure to. have in care look variable and take

we're conservative. actually The good very been -- corporately, we've news is

hired hiring these making a of just people we're sure people, of lot and positions, cycles. keep have lot aggressive we've through less and the we need being a Although with we we open

are support those what So there way what to don't Markets, think they tech overloaded. going And in the companies, have go Capital I they're in make decisions. need and businesses to to at we like just look

programs we So sizable don't in I don't certainly, -- plan but any read other firms. layoff that you've

Operator

no are questions. there And further

Paul Reilly

many lot much. a on testament drive comes just committed We people contingency uncertainties Well, know very -- don't there's to us. I a knew of with up capital Great. And we're the forward. think going the value. questions you thank record shareholders again, if this income all ask, it. the We you'd think but too net all and model something the but joining shareholder can Thanks are quarter, that only think more to we overall, repurchases, and for showing it's I

you and all on they run vary experiences, could cash models based our And that. and questions. cash good answers sorting, We them, the but give from on

and need business we're as to much So just the it we it. raise need as going support if cash we -- don't not we to raise

that far, served so well. us And

soon. you appreciate joining call So the talk and

Operator

you We your and for ask your please you does participation today's That that disconnect thank conference. conclude lines.

Raymond James Financial (RJF) 25 Jan 232023 Q1 Earnings call transcript