Earnings call transcript Q3 2023

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Kristina Waugh

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

Following the prepared remarks, the operator will open the line for questions.

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

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

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

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

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

Paul Reilly

volatile Recognition their employee these to so Good channels dedication to earnings us two and our evening. both helping advisors' proud unwavering and clients and Thank our today. you also for and them of last for we affiliation Council call, times. employee for Chairman's independent joining Trip top the hosted Since serving advisors. navigate our our major conferences had uncertain our advisor I'm

our clients. be through continued our the long-term about striving the our also me and have success have what advisors their future. strength founding for It's managing appreciation to confident of multiple of for these shared the cycles that to resulted our and source stability values makes and expressed in and firm success them always in Our commitment a their since

third of Federal our raising months quarterly and and the rates, and generated available turning fiscal the we of or challenging of started Reserve share. billion nine results, $XXX Slide net results. reported revenues since the revenues volatility to net the Now Reviewing interest quarter $X.XX environment X, starting first per for net to Despite record $X.X earnings elevated market common firm income the year. shareholders on million diluted record

was The Excluding significant over interest short-term diluted rates to interest-related shareholders higher adjusted the growth $XXX net by year. per to driven related expenses earnings drove or increase income prior share. acquisitions, $X.XX available common in million revenues

Net revenues provisions increased losses $XX Moody's CECL million, CRE X%, for price models. elevated which our macroeconomic driven million, of income were available weakened impacted and negatively provision assumptions utilized for grew to and Quarterly results index for regulatory matters shareholders of and by predominantly by $XX loan was net in legal significantly credit approximately bank common XX%. the

tangible returns common in is on these especially we leading of base. solid XX.X% on XX.X%. adjusted this annualized common Notwithstanding believe our had quarter and a equity annualized strong capital a equity environment. market items, returns strong We generated tough returns considering with of We a result,

and the $X.XX under trillion, really the $XXX management $XXX and X, of record billion PCG administration fee-based billion. record financial business this Slide of of under our quarter assets shine We quarter. PCG accounts assets client driving strength assets to total ended record Moving assets of with

beginning rate period which strong X.X% our annualized organic again and of growth, With assets. billion, high-quality was PCG with domestic on new the net attracting a of advisers, supporting the consistently on retaining, $XX.X continued domestic this generates quarter growth focus evident assets financial PCG representing

ended contractor new net impacted relationship the in negatively third independent were fiscal our the an by firm count note adviser quarter. with assets in I'll whose However, affiliation

assets This was assets that off The separation advisors of stayed than Raymond was James. asset would the separation, and stronger $X.X negatively for moved believe even which the been XX more the new our do will we impact in planned of metric in advisors our adjusting a after net and with through portion have platform and mutual XX% billion not this this financial profitability. quarter impact

client During production contractor $XXX their firms. trailing previous the assets channels domestic and recruited dollars with to independent nearly of employee advisors approximately prior $XX XX XX-month dollars our months we million and million financial of at

sweep clients quarter with insurance attract XXXX. decline the and enhanced at program domestic this client of to XX% in its payments FDIC billings quarter $XX in offsetting sweep March balances dollars savings competitive savings rate quarterly to largely tax into and cash balances April. and Total The robust a from due significant program fee billion enhanced up continued

the a market. loans Total X% from to quarter $XX reflecting decline modest new bank in corporate tepid origination dollars be decreased the in preceding demand billion continues to as primarily loans

quarterly Slide Group asset due market revenues of billion with record of Year-over-year declined generated income dollars. decline. to net pre-tax million Client X, revenues $XXX Private results Moving and to based $X.XX

the PCT and rates of lifted by interest results benefit higher fees. However were revenues and interest-related

as the prior The strained quarterly the Capital dollars by revenues. of lower environment dollars. income year banking results. market $XXX quarter million challenging The revenues generated million investment extremely particularly $XX net fixed and segment's declined brokerage of compared Revenues loss of lower banking as XX% revenues to for investment mostly near-term profitability segment a well Markets pre-tax the driven has

negatively Analysts Day, compensation and Investor as As impacted well prior explained for amortization, we were the by investments. years, as based share results segment's at growth

near-term revenues controllable managing However we are focused are depressed. as on expenses

pre-tax generated net pre-tax in segment result over of revenues were a increase $XX and Bank revenues Management the and million preceding quarter revenues assets The higher segment The fee-based Asset million largely net dollars. net and million pre-tax of generated income of on $XXX income income dollars dollars of dollars. accounts. million of $XXX $XX The

primarily points funding costs. quarter year-ago decreased as due points basis the for Third the over expected quarter X.XX% higher of XX but quarter XX rose NIM to preceding the Bank segment basis from

We cost continue higher sources more third-party suite of funding the add cost and shifted lower diverse banks. funding to to

walk Shoukry through benefits firm Bank will While clients NIM, this this negatively the us impacted and overall. the Paul how segment's both

on Looking fiscal common and year-to-date $X.X shareholders prior at results up $X.X we available revenues Slide billion the respectively net of X, net of record records. dollars, to dollars X% billion generated the over record year's XX% income and

aren't firms We industry our records far generate seeing year. many other in this so

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

the the the for and interest-related TriState successful in banking months reflect despite period weaker the the growth the to reflects Capital, capital X Slide When revenues. higher acquisition. Client compared record integration of income nine results challenging PCG levels environment On markets and the brokerage revenue incremental fixed the strength benefit and Private from year Group, segments of of investment revenues primarily the strong activity the organic in year-ago SumRidge first the for Bank of

of now quarter turn results. over And to Paul Paul? detailed I'll our it more third Shoukry a financial review for

Paul Shoukry

anchored the capital Starting revenues this were sequentially. Group record the which Client XX, record record value the third consolidated during by Paul. businesses reached business were market so $X.XX and X% a the reinforces a quarter. complementary when of the industry Private across client to Slide quarterly having X% year able diverse on you, period challenged assets net quarter and revenues generate billion prior over Being revenues Thank up dollars in

the to accounts X% in along administrative quarter due additional year Asset day higher sequentially fee-based one billable the assets quarter. fees management increased declined to quarter and prior the end X% related compared with fiscal of the the and and at preceding third

asset This and a management in quarter grew for quarter. the related new to tailwind fees administrative fee-based assets providing a fiscal fourth X% record

fees revenues brokerage largely revenues segment to million sequentially. This as shortly. in X% fixed as asset-based and net income I'll accountant interest income discuss revenues dollars Brokerage and of year-over-year in the declined Capital $XXX decline lower well lower year-over-year was PCG. trail due XX% Markets service

revenues million of declined dollars XX% $XXX year-over-year sequentially. banking and X% Investment

As quarter. experienced continue revenues underwriting industry M&A the be across this both challenged to and

investment that activity. a and pipeline environment improving and are to solid we is the see continue business We optimistic new healthy banking

uncertainty of timings given heightened pace in and deals launching the However and volatility. a market there of remains the lot closing

the to the results So while significant fiscal we quarter, not expect improvement six over in months. better fourth may next XX see we

in domestic quarter. Slide quarter enhanced and billion of new competitive dollars ended their PCG client domestic over Moving Advisors XX% this cash at serve the clients our up XX, cash program sweep the $XX preceding saving assets. dollars representing enhanced to offerings. savings deposits X.X% $X.X program balances approximately attracted continue billion clients to and leveraging The effectively quarter

source due sweep A large product fee brought of viewed cash in week to as this dollars has cash the and to The attractiveness of firm savings modestly highlighting total ESP to and enhanced portion X.X of advisors this $XX.X partially being been in a dollars coming grow billion the the billings new strength by billion program largely James in in Raymond the decline quarterly of offsetting exceeded balances approximately to stability. continuing July. balances the

on cash and than activity a beginning said months. seen the sorting to the we end the last are over dynamic like several I we certainly past to quarter's it the of are call, closer As deceleration the feels we have of

end not declare However, to that the are of ready dynamic. we

and will with need We interest more balances rates. stable time

a than surface. strong increased sweep grew banks funding quarter These to balance we large to Bank balances deployed a balances opportunities cushion be $X.X sheet. at $XX.X when growth This growth of last us balances enhanced balances quarter program Raymond more giving expected for third-party allowed billion faster as James billion, with attractive off saving third-party

has sweep of swept solution sheet, being segment's clients with cost dynamic negatively the off the funding it firm's optimizing this balances geography flexibility. also impacted deposit because attractive NIM an Bank provides of ultimately while While lower the the balance

support ample attractive capital growth. funding we and forward, Looking to have loan

XX, firm-wide by Turning X% million, to down from XX% to third-party and banks fees was offset decrease $XXX up the the interest banks. prior income The sequential year net higher and income Slide RJBDP RJBDP interest was preceding combined from compared quarter. partially in quarter third-party fees over net

we a of saving our are X.XX%. to which XX with average quarter, these higher-than-anticipated XX was and third-party interest If enhanced banks balances to yield margin RJBDP increased The revenues, basis so X%, net Bank program anticipated interest-related decreased growth last of of the better-than-expected points of with sequentially segment's decline for basis X.XX% balances. we decline points a call, the recall, on you just XX% in function a partly earnings pleased

While there to lower the X% RJBDP from banks impact income expect fiscal be variables the we currently fourth actual are fees combined net many in interest and will third-party results, around Bank quarter compared partially third-party interest of as contraction expect the to the banks. fiscal fees net segment's RJBDP income by we third some an to from in increase that offset quarter, be further

and income concentrating long-term, RJBDP fees said, over more preserving near-term, maximizing of well-positioned on and do. are we net always instead on NIM are we the focused believe have to interest the flexibility we over As which growing we

Moving billion, the on to pleased markets. during ratio XX.X% consolidated expenses the $X.XX quarter Slide for with, ratio are compensation XX.X%. and the environment adjusted compensation was for was was expense very challenging given quarter, The we which capital especially the compensation XX, total

million of $XXX Non-compensation sequentially. increased expenses XX%

mentioned The items $XX for million Paul hit for for As that provision of provisions approximately matters and quarter of loan matters regulatory of earlier, $XX credit of included bank provisions regulatory up several and and million. legal the losses made legal quarter. a this was elevated all million $XX

on call. closed other not still detail and of out some the be process, were disclosed, and able items those will much this of in and those publicly to therefore, are more provide we, in items Some

and Additionally, credit The index, price quarter, for commercial the in assumptions million in particular, and provision for real this I'll quarter higher the in more quality valuations increased credit included losses for seasonally price in Bank $XX allowances. which office segment the reflecting to XX the quarter discuss higher the loan over index, Moody preceding estate million related of resulted largely shortly. weaker CRE expenses. event-related bank the conference

than summary, has for coming two noise and the much some while legal the regulatory as non-compensation last expected over are legal inherently In regulatory and in predict. with and differently we all we quarters, provisions other there past too But expenses been none matters elevated the provided methodology loan difficult guidance CECL expenses are losses year. you using the for when fiscal to of know,

expenses clients. while in managing Importantly, ensuring and remain their service on focused levels for and invest growth high to advisors continuing we

a over a five margin of pre-tax strong generated we Slide adjusted XX quarters. XX.X%, the the capital industry-wide and a trend impacting current XX.X% In given past an markets the quarter, pre-tax challenges and pre-tax margin margin the provisions. aforementioned result of shows

Liquidity cash $X.X the decrease, slide lower cash capital at client and parent $X.X billion target. and balances total the RJF a at well corporate at billion, assets $XX On quarter XX, CIP during above quarter ended were our the billion, quarter. X% strong. end, remain largely reflecting sequential very

ratio both be leverage two over well-capitalized. Tier XX.X% regulatory total X the requirements target, of capital ratio The reflects to capital regulatory which than and to ratio are be conservative X XX% XX% double of more our of leverage excess $X the The billion requirement times XX.X% Tier well-capitalized. be would still above

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

We of sources funding. also contingent significant have

We $XXX in facility, have which the in nearly and billion of FHLB a credit revolving April, renewed was million and recently Bank capacity upsized segment. $XX

a our past the over five provides of actions Slide capital summary XX quarters.

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

as Board's intend the repurchases, As stock approved million currently have XX, discussed on XXXX, and available continuing repurchase common under $XXX authorization, planned we of we previously. our July approximately remained

as key Bank Capital of segment, XX, includes James our Criticized percentage TriState percentage Slide Bank. total just at the on quality solid. at for for Raymond of The just Lastly, held is metrics ended total for credit portfolio allowance investment losses loans a we and loans The the credit quarter of loan credit X.XX%. held bank ended X.XX%. as which the quarter a Bank loan provide for loans investment

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

a rates. $XXX As we value. quarter, par an continues loans time we of the the when there's have and the across million believe estate of the of at time challenge done property industry values real from on attention reward, XX% approximately corporate be price of There attractive average proactively risk to during to interest an sold we given with commercial lot around

So let me briefly cover our portfolio.

we Bank approximately CRE of segment, the loans. Across loans of REIT which XX% billion, represents and have $X.X total

$X.X estate, what is criteria. with industry-wide to underwrote limited we only each loans X% portfolio loan billion, we Bank office approximately total closely office given the and segment's deliberately conservative to believed we Overall, But Our we monitor challenges. exposure representing of office loans. have will the continue real the were

Paul? Paul discuss Reilly turn our call back will the over I Now, to to outlook.

Paul Reilly

Thank you, Paul.

of advisors and drive the long-term there as attracted with be the client-focused favourably earnings values are accounts. leading start long-term, well challenging And growth our As strength solutions. ability X% believe across the continue first I'm the and And the position of positioned of be XXXX to optimistic our over I next growth generate still will are said I delivering and at product results the fiscal call, our in results our Private and a during for I'm prospective a the over we quarter are months of to industry-leading fee-based Client nine economic near-term while sequential businesses. all by in impacted pleased and technology is uncertainty, record current what assets to we continues will increase Group of And environment. to

pace there In cash stabilize, balances brokerage and levels. market cash an more there six see some a securities, by M&A to we the balances in hope and improvement for continue Capital optimism, rates activity. heavily Markets investment is timing would the pick declining good expect once and are and start signs banking, putting likely for over the We pipeline available and in pressure have while transactions engagement to influenced segment, are income reason on have depository fixed up experiencing XX to of of But be we we months. conditions that and improvement. our next could the to less space, clients In deposit healthy investing

So the we've our near-term made the while business market the investments share. well the some given capacity capital over years are have challenges increased we believe productive there positioned and growth long-term, five significantly and markets for is last over

Obviously, continue to proved continue have more long-term. if to near-term under had revenues more these the we'll industry pressure. significant to to will take businesses manage come be in We prudently once expenses as action

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

the growth In focus next continue addition, sources balance In several Raymond assets and our be with marketing fortifying client will to over demand. segment, the growing distribution, we sheet prudently operational increased to James scale, help expect support to months synergies. funding and bank further Management drive Investment and the through diversified

payoffs securities-based loan the decelerate those the rates. current and has loans seen corporate little eventually been clients for to have expect loan in tepid. get We demand with With as growth recover market, activity level of comfortable

has improved lots However, with we and yield capital. believe sitting third-party environment ample cash banks the with of

We once are lend well activity to up. picks positioned

times advisors and have to service when to especially growth need we given to liquidity. our want their to providing each their advice and prospects ample this clients and for competitive excellent every perseverance closing, businesses for trusted clients take in I and our strong the thank continued dedication future of positioning our in capital day, these strong our associates uncertain most. In time all and

for you for what Operator, please open And you questions? all will the do. you line that, Thank with

Operator

And Thank line ahead. Steven question from you our go Please very of Chubak Research. comes Wolfe with the first much. Instructions] [Operator

Unidentified Analyst

one road. Steven strategy for But here, Hey, the potentially down lock sheet some balance sorting of capacity the we're given in have here. higher Michael peak loans on yield Paul. that It's to is in opportunities highlighted this, on duration guess rates, Paul adding you the on the that something you're some on you I and off-balance start the the going more the reinvestment starting fact to capitalizing just maybe picture, actively? I'm and funding off considering here I'm cash, improving sheet and near yield

Paul Reilly

that I on think betting interest you've known rate us play don't we long enough game. the

bank a we though us made sheet. this of maybe we floating through years in rate trying and make at got looking and duration criticized get certainly we of served interest for in But it of things. rate balance sheet kind to we're And mortgages other some to couple balance not even It's bet like again, have easy a year. our and an So last terms well, overall.

Unidentified Analyst

I that's your And ECM. of was side, for as just and helpful. a the peers hearing a we as highlighting? should how other activity to raising better you Okay, but at were or maybe to the you that know XXXX, my have the been Is play? thinking factors what be outlook But relative markets mix peers your shoots, business Ray J weaker during said the relatively recovery you. that of we're function follow-up, for switching at highlight in green expect capital lot DCM Thank a capital results well potential quarter. there in about

Paul Reilly

we a see quarter. that get rush are different in a deals, for everything both mean, see quarters, we've we Yes, timing but closed level, new been factors, just of shoots this mix positive we've big our activity number businesses But all transactions don't are backlog, had already the done. the we've I I of green in had to but all to of think boat. the same

a expected. a the longer they tell So of little like our our all cycles would or business and bankers improve, expect we although what history us than take lot just that we to

along. the So industry think positioned. improves. it to We'll this. we're on track play We're all going Hopefully in I along

clients We But them for lot a interested, last a to year. the for come, lot of those have of we've had mandates.

people add first So really your banking. are transact the market? question to in the did to is want question to when able on I something

be loans. than bets in we capital keeping think we more making there's our right as the don't are spreads we'll And interest grow that the Although in a right we time seeing again, loans, to at an rate plays, able widen opportunity cash and spread strategy. duration on make by

Unidentified Analyst

All right. taking… for Thanks

Operator

comes question KBW. with next Voigt line the Our your of question. proceed from Kyle Please with

Kyle Voigt

balances and cash built that billion and With evening. balance to taken balances. good you back much for or noting already third question you yet prepared incentives first having current from remarks liquidity Hi, growing reduce taking you place now of some near-term do to the any of deposits party steps in ESP grow Maybe over any to sheet, in anticipate have the ESP $XX have levels? further on your adequate steps those

Paul Reilly

again, we from that advisors bring we ESP the and is to help No, Kyle. program a assets created in Hey, serve really, clients. their clients product to

strategy this we up asking And client us demand FDIC some what's us our And driving clients. growth to advisors and constraints for is, so, really, course, offer with product of first are to available there's to ESP of given capacity and foremost, their insurance. million keep $XX

based So there's with network down demand needs. balance on those constraints capacity But need loans Long-term, of so and for opportunity sheet and near-term when gives grow us looking that. we'll, of to this to confident know balances sort there's our client we're associated we're we'll funding ample the the resurfaces. we a not manage banks

Paul Shoukry

because which had can adjustment or gives an you program stop us easy some an for rate, easy if you too It's adjustment for you adjust it the it's And slow can you to And down. us. attrition.

but of hasn't slowed, So, has it now sorting at right you but reports. as cash everyone's stopped look if

program long advisors the have our open to We leave will continue capacity. we to as as

Kyle Voigt

Understood. SBL And into followup, little demand hoping I we a was my then for bit. could dig

remained flat During a to the that were looks were quarters like declining. few after we it Day, hopeful point quarter-on-quarter a of like back was you nearing demand Investor where SBL and come balances starting seemed

resurgence then any just, side, any seeing wondering is SBL overall, So of securities? just leading troughed? balances thank against borrow you And equity you. willingness on incremental might you demand be demand having indicators, guess have here to can then and on the that SBL believe if market the impact talk I recent about finally if you those client's first, So given kind

Paul Reilly

a really We as borrowing downs in slowed of and seen Yes, in we certainly last, down. kind XX of, pay up think have pay particularly I have expected June, and increased which pay those six even downs to months, the July, is the picked rates saw deceleration really over what downs costs but increased.

think baseline. this going optimistic markets We're we a so sites the smart is trot good months, to stay these do demand we not enough to of sort level floor. we'll we over see off or six that pickup resilient, a And relatively of of the forward. are a levels that call XX if But next kind of a this

Kyle Voigt

Great, thank you.

Operator

comes The the Sachs. of question. with with proceed next line from Blostein question Alex Goldman your Please

Alexander Blostein

thanks. I go guidance Hey, been this want to quarter, And revenue balances today. rate cash good you your seem Paul, be time, slowing sorting it to same pointed here got as stabilized. this We out, is X% cash afternoon, from down. to hike another the on down at back Hey, has

guidance. to this of bank us part assumptions trying RJBDP well at on party And third the behind an give just as can I'm you the as banks? understand that, at as update So balances

Paul Reilly

to X% Alex, actually guide. guided question, down down hopefully of a but up lot being quarter, X%. it ended Last XX% A pieces conservative we and that is

So from our quarter. we were to last pleased very outperform guide

type think of guidance Just given prudent give the around conservative to uncertainty, it's these things. we always

lot you're there So and puts takes. are right, of a

significantly so We fee are just BDP the balances quarter-over-quarter. expect be portion would to up up because

that that over income because up. as raise expect would BDP to from would the cost we'll And of be we quarter resilient somewhat banks. have during the the expect we move bank, party all fees to the quarter. those bank quarter, then third balances So as to of raised there third interest as course balances, ESP And those we the the conversely, a long full at just of we impact the lower we balances pressure stays with the

geography we when we So that X% come one best and that's going over we things fees hoping months, change where some But from down the those the up guidance BDP and of guess balances that other. dramatically which both can again, forward, to if put exceed that involved there's couple next with hold. our we're But NII. between can in things that together, the

in you we're billings mean, balances terms a that would of the July, what of what due balances expect, I we but And in the sort quarterly in stabilized. did in see month to outside July, have the so really which fee decrease deceleration the grow. seeing we sweep seen of of is billings, cash, kind of a have far the quarterly quarterly sweet mean, of fee were absolutely shorting balances to those from of ESP fee activity. the really stable a those I continued of cash and billings balances declines outside fairly outside the

Alexander Blostein

Okay, sense. that makes more

to come Paul, so up getting on Senior here. will investment is question to revenue your in back XX sort Second it around Paul pipeline comments I guess, sounds better six the guys and of months banking hear like you are hopeful that

aggressively to sort you in really business a the effectively revenue need implying room scenario that of the capital scenario profitability for of quarters? there see the you investment couple range or expense manage to will is in profitable And $XXX-ish this revenues base are then if So million that's even banking picture more be kind markets? next better breakeven to or much become that to of bring that in to

Paul Shoukry

Well actually pretty there. got well us both

calling Paul. You're than older me

tell. it's I that really think hard to

would it will improving, it I returns. see that think I really would don't If make could at what our start don't be say you'll in lot everybody, different position so market the look you backlog but a I when with things it know the you it goes market and

part are that we we recruited and of of So those and do have a are they with kind investments lot We capacity. people did invested lot us now. more acquisitions of

place already in and more, think really we building. we've and term it we we costs team trying keep yes years in some to will the but would continue that looked longer five we're only spent So do trimmed

think be very I they'll productive. very,

hopefully shoots everyone's and turns it's for. that green So trees into worth hoping

dollar the I unknown. that's to right? the unknown it Clients really up would the just as more will that's could. getting, point picks us are engaged, we positioned. we not the market months gave have tightly well it million was of got six answer. think we we think But is the industry before wide manage thought Paul the hiatus, It start of we and kind can't think if but question I certainly or ever cost we're capacity term as longer but XX permanent We I once just really to a

Alexander Blostein

you you. got thank both. right, I All

Operator

The next UBS. question. of your Brennan from question line with proceed comes Hawken with the Please

Brennan Hawken

Thanks for question. taking my

you you you had that that we're we've some how quarter, senior. you, expect should going not said Paul, assume the we a could we totally second on I is next this should all in charges go But now So the it you were I resolved. they're say know resolved to limited Paul, -- row therefore and commented to is won't see was into so because quarter understandable we junior in we and right not into all or go a think probably quarter that? about charges some third go what bleed

Paul Reilly

there so from unusual we're certainly could history. reserves additional this was at for $XX mean us million drop they'll back in that hoping we quarter be that the or I big quarters, that additional you our if reserves there probably be look will be off and saw Yes, future pretty obviously

for but for tell, look at this was relative will quarter you for average time sort to So quarter an as what obviously, of us. reserve elevated obviously

Brennan Hawken

M&A different that a give you led wondering decision contractor relationship direction? then color independent you enough. the by the okay the impacted go them kind a what that quarter, could or in that spoke little And ending with of the to what about bit was and fair counterparty of Yes, you this either around of was if to I

Paul Reilly

Yes strategy it just the I talk independent their a contractor would and have or firms we ours advisors could they things, our just that and on advisors, and and wanted think firm, what think ahead an I the we better again we based going another to not supported at of said their contractor they to kept they went other think based stuff, about it I profitability a we're do they as and what we on thought but had our do and a and then we, was and looking us independent move lot firm home choice. strategy normal thought

negative we strategic think profitability the our -- profitability and said there's change. as don't a And both differences it of to that call impact that in just that on businesses our we so we

So both we're we bets directions making right. we're and both the our going in think

Brennan Hawken

Okay, thank for the you color.

Operator

line The question. of Securities. Mitchell with Jim Global comes Please proceed the your next from with question Seaport

James Mitchell

a still All at around can the you to get speak reinvest maturity how little thanks, just runs so maybe a quickly to and book? the can It's thoughts Paul, a bit over AFS afternoon. get to X%, little portfolio your right off great chance to talk you of just profile yielding good you that high on about, rates?

Paul Reilly

year a the the a of portfolio run on and it and billion I mean to maturity maybe runoff it that so time is off. average takes probably -- four Yes going or somewhere current we so range to We're in at year levels. $X.X for some see

take that balances, as in you'll time. will some a that it we because And frankly And significant portfolio client pretty demand securities party increase really there cash recall. period, COVID had we during wasn't banks. over third grew from So

balance to accommodate took risk. sheet very, we we balances. majority on duration didn't to it Paul indicated short-term and own kept treasuries, of Unfortunately, much those vast our take too the those, as So in cash very

runoff, look bank's around on spreads which reinvest lot XX% them. yields bank and repayments in left now And so we higher grow balance balance of to loans, will forward, sheet liquidity of somewhere be to higher that a Paul said, we're those let have as combined, the the really as the so securities again, which us should debt sheets going portfolio

several will of be tailwind a that the for over next us hopefully. kind nice years, So

Paul Shoukry

Right. And starts I kind further you NII the can growing then more, -- stabilize, about to you and you when maybe think bank starts declines. you are of how know, down combined in that guess I like just a be balances think coming still think little NIM quarter this or five, not catch about, after down that once up that feel as do flat and do don’t I up ESP rapidly down,

Paul Reilly

higher higher investment is sort balance third than The in those to await the a spread move off clear, of cash we of while we balances, loans. assets EIP and making is be just to And yielding ESP still when banks, sheet cost we party fungible. and raise balances, cash

So but a positive huge for us. net positive, net a it's a still net, not still it's

until the offer we have So clients And third gain cash clients. more we a attractive, product we that place opportunities. with to allows from advisors better investment that's party wallet share essentially banks their

involved of geography a and it obviously but terms a consolidated we in from look shows in lot at up what BDP of There's fees, NII, basis.

the advisors, and time. balance win over a really sheet the a for win gives a and lot win for firm, of grow a capacity it's the clients, to us for So the

to to thinking So And, and nice to Client the interest that's returns clients, then demand loans, that about loans it. for will both the be when corporate extent net loans, our income. there a Group kind certainly tailwind how we're then of Private

Paul Shoukry

or it's for there there's If cash the the ever still a Feds rates And raising that dynamics, we it happen, believed that ends. an for you the both impact curved and know. now, people upward a until once rates, on over ones haven't I competition board but year is which some other should does we industry-wide as look going predict stabilizes, but dynamic as if that spreads way, the think that's, improve, to don't go does and long

them. not balances. ESP make we're spread the a cheap, on we operating, of we They're off know, but So still

is harm it's clients the raising them and and make So so a money no little NII and positive we too. there for

Paul Reilly

some rate guide clear, is provided based is, one last got action. BDP just X% fees the on I've and clear over I really and because guide, NII today's this we that on be the comment be to just is on email our questions to So

So we, Fed the going we're rates not guidance as cutting like on to sure the trying not based not curve forward anytime not certainly sure totally but I'm to Paul said, we buy curve, the we're anything I'm give if or factor in forward that, soon.

James Mitchell

Perfectly fair. Thanks, Paul.

Operator

comes [Operator Please from with Cyprys Stanley. the line proceed Instructions] And question. the Morgan with Michael of your next question

Michael Cyprys

Thanks and for how you you. recruiting might marketplace Hey, good the you that provide taking be to I the the might question. color see pipeline? hoping for evolving Thank characterize how advisors today on was some afternoon. you able

Paul Reilly

question So years every in been mean almost I think I've firms I now CEO. the competitive. the for gone over since we kind costs it's somewhat, of have market. XX It's I gotten certainly up years. quarter -- think The this I've I think are all

positive it's in and cases comparative. not as So bidder but certainly position the being we using its these our have maintained selection, highest

news as You you independent high especially competing so broker, good employee to continue dealer firms well. very channels, all we have the for the have the clients, compete end the aggregators for us of and at their

two to probably pipeline the the last continue large ago. very of versus is years over strong. the just We number we teams change is years biggest The that talked

is pipeline and it's every up it picking quarter so but slow very each quarter competitive. the So great, pick optimistic, been It's continued start. to we're up is

Michael Cyprys

Great, thanks.

So, your funding you that deposits a about deposits into about how the sweet ultimately reinvesting that you're ESP how those work? the and some to consideration do just putting deposits thinking you think those other how just versus sort of on followup sources? balances, does and of curious of question take when ESP And duration

Paul Reilly

for We well, Yes, launched us. it product new a it's relatively in March.

learn and and we'll it sorts with more things. as experience rates we have So stabilize, those as of more

deployment, so to are uncertain when think of you're where cushion rate we maybe about how and we and a and bigger we kind a So around product want environment there, with a so volatile in new try dealing you deposit we have look today. funding even at cushions more always

that of ago, high now need third of still in than billion third around $XX the balances up holding of party a $XX about, We've had balances we to north a are cash environment. normal we're just $XX talked balances more six of and target banks billion very party months and billion, they or

so next of opportunity funding better really understanding the several months have have And sort cushion the of to history product we significant the kind balances. of saving and and a enhanced over the reinvestment of

Paul Shoukry

the you most you markets, look at assets, elsewhere, cash think FDIC, came so it the at, I treasuries, also secure insurance. just with with viewed can balances people be of secured money if look FDIC really, as play, ESP and yield cash to from more I happened was the more it it think, balances I mean,

came the not from it's So it products. of equities out into ran everybody like

at not are and also to we are Paul and product said, levels at competing. cautious can I more at levels. mean, the look certainly of more we're percentage record -- you if to and -- but used as our we're move So it cash, new assets the are understand closer we with so always in historic are than

little So just now. haven't again, volatility, but big why That's but have we we deposits, quarter, more a understanding will see in we'll have that slowed we the it right cushion down could see. a

Michael Cyprys

Great, thank you.

Operator

the And Securities. our proceed line Devin question. last from question with Ryan JMP Please of comes with your

Devin Ryan

firm. be so sized reasonably a a one do was could And here. ask so was M&A independent sale recent of mulling for it much. Good around it public want keep thought Paul. thanks Paul there, But I broker corporate Great, interesting. at the covered that press I'll most that I about just evening, and we to obviously saw and

what valuations be to of specifically, where would just And so might James kind hear you around seeing it marketplace the without little that's well a some getting into seem environment about in Raymond be up well. are because to for getting be great details the Confidence conditions better with could it'd interested degree better for as recovering improving that stocks as guys and of in your you just M&A. guys is marketplace bit a

to looking if what today, right now just you like opportunities are you about year a that talk can, marketplace relative what seeing So to ago? in the guys is pipelines of love

Paul Reilly

Devin. Thanks

always you be their well, you're space stay of to see especially ever as alluding where them article changes, in Development us that as Group our so first had fit but we course the of focus want head hasn't a said to would we've it the I not And only so didn't know hired we in Client a we've changed. does call. sale, And and the certainly it if Corporate private believe do Now But we and new didn't know just our Practice, not are down. help all close to. we we the firms Private slow that for past, the really we

has to really us also M&A other joined the strategy on focused is continue Suraj who and [ph] we So keep then that on with opportunities.

better to looked We've are thought that we with that we in adjustment. couldn't all we've fit there. because which not those has And pre, And dialogue the versus off, at firms market, some place, few that's unusual to so and the management M&A are again, And ancillary come in but at the assets pricing like M&A. had for SumRidge, We've in a been asset eyes the holes a looking continue gotten way practice. pricing really not valuations positive, we much huge fill off us. talked all, has technology and and for we talked ball space, other up think with market, at

fact, we to family. the the market, always the really people tougher assume the better In opportunity to add

able So, integrate to it, has a fit, it's price. culture be again, and strategic, to then be

three too, closed have, working And but, a always and disciplined went price pretty close we're away. didn't while, so so we're for we we quickly. And so any where we we

notes. the So

Devin Ryan

much, guys. so All right, good stuff. Thanks

Paul Reilly

Devin. Thanks,

Operator

Reilly, turn the call are Mr. back no questions. you. further to there I'll And

Paul Reilly

we'll growth you busy shape, but time thank everyone, the it's a the our for and really and with franchise business in to see return that can a returns. in asset market know joining. and in earnings, that businesses. growth I our continue a return always I great we you Capital have Markets we when feel like with but certainly we're other recruiting growing Yes, tough They'll is market, great we can believe

and we'll joining you next So for to thanks quarter. talk

Operator

thank conclude your the ask We today. disconnect and you that for please participation for you does line. conference call your That

Raymond James Financial (RJF) 26 Jul 232023 Q3 Earnings call transcript