RJF - Earnings call 4 2023 | Raymond James Financial, Inc.

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Kristina Waugh

Good afternoon and welcome to Raymond James Financial's Fourth Quarter and Fiscal 2023 Earnings Call. This call is being recorded and will be available for replay on the company's Investor Relations website. I'm Kristie Waugh, Senior Vice President of Investor Relations and thank you for joining us today. 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 our Investor Relations website.

Following the prepared remarks, the operator will open the line for questions. Calling your attention to Slide 2. made call statements statements. constitute certain note, during may this forward-looking Please timing our statements limited success litigation prospects, regulatory objectives, in not but integrating financial conditions. developments benefits information anticipated These anticipated are and strategic acquired to, businesses; include, results level and acquisitions our concerning divestitures, future results, or and of economic of of business general

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

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

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

Paul Reilly

our lot Good evening, of and in time of a last today. for these weeks joining spent thank front advisers. you I've few in us

Private great Group over clearing there the then firm. and our success to assets they positive the with XX% division how now, attending RIA top-producing on of that nature great the Again, the firm. And our it's in about traveling First, and see advisers and our the division feel conference, Great also. business growth enthusiasm a trip. see and independent is their Client to our of RCS

than revenues environments of was first, and year net we included words consecutive value lived on environment, market during net to day true staying revenues and values our earnings and focus associates. starting future. Reviewing fourth billion $X.XX are we Slide banking share. stability X. That's dedication and to different core. We our $X.XX and a volatility common out These advisers about independence last clients integrity, on shareholders and fiscal term. our $XXX interest in per of Now of record by our page, tough The what by rising achieved more rates, with challenging and are turning the the Despite in income generated we act very they a economic our year. rapidly record This quarter to diluted day results quarterly think which the regional success me results, long available third core continued or times in net confident provides firm results. makes reported record and heightened million crisis, for put

year equity quarter strong XX.X% of of base. on of equity return fiscal A on disclosed provision off-platform an tangible $X.XX returns common with fourth incremental expenses the $XX interest-related related particularly net income including quarter increasing in our over significant result, during SEC impact the negatively impacted in annualized the with to revenues were by net adjusted to related the diluted sweep return revenues increase Excluding per results million revenues share. for annualized drove revenue per matters, $XXX provisions strong prior XX.X%. management regulatory asset The was for $X.XX great available an previously industry communications. or common given shareholders legal to million and diluted growth an and adjusted This generated on resulted capital and elevated provision X%. Quarterly share. We acquisitions, common

on advisers, growth, focus affiliation which our PCG rate continuing management by assets PCG fee-based X% the net the assets domestic beginning driven and year-over-year $X.XX supporting Slide our total strong of the billion. With to trillion, representing all assets. the market administration a growth options, assets again PCG with high-quality quarter, under organic new accounts We along appreciation. client organic client with of period, generates financial $XX.X asset retaining, financial consistently growth attracting billion was year, fourth strong on this was $XXX fiscal billion annualized under assets and based in growth on and of Moving quarter of of domestic X, of ended in evident with $XXX a

annual industry. year, leading the domestic which a growth assets in fiscal For new is net X.X% the reflected result rate, a billion $XX of

our During nearly the trailing and which their $XX to recruited approximately employee These assets not results client billion do advisers RIA RCS, $XXX business, firms. had with financial another year, channels, previous we of our and and production include of results. XX to fiscal recruited year custody domestic contractor in independent services million strong

due regrettable factors NNA target the at levels quarter, partially loans of rate largely Total These FDIC financial enhanced uncertainty. cash The our and savings suite attrition suite X%. decline June continue a domestic its advisers quarterly savings to giving ended client enhanced attract the of importantly, clients' balances maintain low very robust at to coverage program XXXX. down $XX to bank billion loan preceding rates billings our billion, to contribute cash More markets, insurance from rising and continued offsetting of compared and about X.X%. Total macroeconomic to significant X% to to demand and program reflecting we quarter annual muted with competitive fee growth quarter activity. a $XX in increased the sorting balances this X%

by investment quarter and fixed Capital revenues a net $X revenues. prior X, of segment driven lower by XX% million of revenues to brokerage the pretax quarterly net loss lifted results the mostly Markets with of declined revenues generated and billion of revenues million. $XXX record fees. The and asset-based income to and were higher quarterly pretax interest-related Group and and million. $XXX rates of generated results income Revenue Year-over-year, Client Moving $X.XX strong interest Slide compared year banking Private benefit on

revenues pleased we were sequential to quarter. and improvement in However, see M&A a this advisory

results improved for net results a declined compared XX segment basis XX% had debt of revenues we X.XX% underwriting to million James year. challenging with of Management market of business investment due And controllable and higher net beginning generated quarter net to X the as fiscal were points grow which of finance quarterly sequentially. [ revenues billing $X.X in mix during $XXX The are of million on as year revenues inflows of assets the remain $XXX share-based Asset and quarter pretax segment increases public million banking, fiscal a growth largely well segment income period ago compared years explained for $XXX generated of the primarily quarter, prior income in depressed. The of $XXX profitability net higher the result previously, investments. managing the focused PCG deposits. on fee-based particularly near-term billion net impacted We net negatively million. accounts the strong preceding segment income in our revenues Management points as basis segment results. extremely the from of are the compensation over cost in fourth and bank The Additionally, amortization at preceding generated million. Fourth and $XX to near-term Raymond and of as pretax The pretax NIM environment, flows of and inflows the quarter strained has ] by quarter bank of Investment expenses a

funding this lower-cost consequentially will We suite minutes, program more discuss savings continue add diverse and with funding shifted of further. sources to In banks. higher-cost to Shoukry a a few our enhanced third-party Paul

this while an the While bank offer depositive also segment a providing advisers the negatively still attractive clients. higher alternative offset so bank to overall NIM, there in third-party is fees, for their firm RJBDP positive net impacted an

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

compared investment of acquisition, fourth over results. banking for When period, generated PCG the common the segments and Client and XX.X% fiscal the levels common ago review we X, tangible despite Shoukry successful record growth brokerage the reflects and interest activity of Paul benefit equity primarily in more the to Capital detailed now environment integration turn which organic on bank strong Slide the year. On of in quarter short-term year June our it Group, the the and capital from the strength for I'll Additionally, SumRidge incremental challenging benefit rates. fixed revenues returns for completed from to XX.X% weaker adjusted returns in of strong the of the XXXX. And TriState of reflect Paul? of equity higher of for income fiscal the results year a on markets revenues Private we

Paul Shoukry

in you, accounts Slide at up management consolidated a grew $X.XX quarter to administrative Thank sequentially record the the and Paul. quarter, XX% Asset quarter. and fees on revenues The year X% assets end and the Starting year the the prior fee-based X% due to compared preceding over net fourth the related X% higher XX, and of prior were sequentially. billion

revenues service of will headwind the of M&A increased segment first fees in XXXX. Brokerage public revenues discuss in and assets and the brokerage million Capital finance. $XXX as declined driven fees higher related Year-over-year, brokerage Sequentially, higher quarter by XX% X% a This quarter as I'll fixed fee-based Banking quarter, fiscal administrative of and and revenues our net solid offset be the declined X% $XXX interest the were X%, revenues year-over-year were advisory increase revenues flat a and million shortly. Investment by predominantly which in income was for lower well management year-over-year. income asset for PCG. sequentially. account Markets

that and see M&A optimistic a to for investment improving, is healthy continue banking business new and cautiously are pipeline We environment we solid activity. the

However, in concerns. heightened geopolitical closing the and and lot launching uncertainty of deals a timing market of pace given and there volatility remains the

quarter, to see improvement hoping better fiscal So while the over XX lower remains primarily quarter, to due to we million were compared fiscal next for interest affordable due slipped investments. a revenues XX% not may strong, $XX XXXX for several X The in revenues are but rates. we from down to results next housing to of higher the closings prior the months. Other pipeline that business significant year

PCG enhanced client the quarter at X.X% billion strength into source compared cash of and competitive this viewed portion our coming Raymond stability. advisers, $XX.X a quarter. as grew Slide highlighting attractiveness this cash domestic A assets. the firm enhanced leveraging balances deposits of by the to Advisers cash representing and ended the effectively, serve of total program in and domestic being new quarter program large of offerings. The James cash down sweep billion, their ESP to been preceding the to continue to clients has approximately savings Moving saving Clients' X% $X.X product and XX, brought

taken advantage as has of pace of fee $XXX offset now have enhanced for more understandably sweep Through the clients decelerated. into of this savings in balances quarterly billings, eligible as program month down balances approximately week, product, and many expected. ESP As by the than the growth of the October, flows Monday million was are ESP this

are the we the to We end the continue to we closer believe of beginning. dynamic are sorting than to cash

rates James billion until savings Raymond $XX.X to were of would clients. Sweep quarter more surface. by stabilize, further at we enhanced us banks giving However, yield-seeking surprised balance balances growth behavior deployed opportunities be balances strong be large off has when for to attractive end, program at funding balances see cushion allowed growth the not a Bank with The sheet. third-party

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

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

Combined offset RJBDP preceding higher firm-wide RJBDP Nearly Slide third-party XX. income in fees third-party to was the interest income quarter fees banks as sequential $XXX from net decrease banks. from interest Turning immediately was a net million. from flat in by

recall, last call, we interest-related on X% these you decline If anticipated sequential our revenues. earnings in a

X.XX% for bank higher-than-anticipated on decreased pleased interest points are partly we basis segment's yields RJBDP margin third-party a with the the balances. The sequentially quarter. better-than-expected So function of XX net was results to which

yield RJBDP points XX third-party basis on While X.X%. to increased the balances average banks with

fee income are While fourth fiscal quarter to there interest just quarter. that based results, spot quarter balances net actual as that's RJBDP the fiscal third-party lower the will we from compared changes and expect in to fees around short-term interest many on X% this and banks to Absent first be variables the impact rates, any currently after combined billings

of more flexibility concentrating this the over the the experienced more quarter. always guidance RJBDP instead stabilize than As on the positioned quarters, believe term, again still to X if cash focused and preserving during we maximizing rest current are anticipated the levels assets we well which over be term, grow fees may to interest over prove we past bank sweep we conservative But and/or once if around long balances have income growing on the net said, are of and NIM near do. as

our overearn some would you clients has expectation always rate higher-yielding earnings been interest a experienced in early interest normalization on on the As income many may as of recall, redeploy alternatives. then to of industry and their that environment cash rising

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

related for leverage fourth our bank industry noise Combined an confident for in ] impact million above to year quarter now million, Tier of of the there share. of more over X reserved the we previously assets of quarter. over we growth $X.X margin for XX.X% in and their [ $X.XX the earlier, and legal well with requirements this with reflects be which quarter target. The billion, in to clients. Slide during well matters In regulatory of conservative for our impacting in quarter sequential diluted related annual a trend while quarter, increased the adjusted and markets challenges mentioned our prior of end, credit given X% than result the Corporate quarters. the quality decreased X strong of legal the double I'll current per parent $XX XX% ratio remain $X.X ensuring fully industry-wide elevated segment generated close target billion, shows $X.X more ended expenses we provision capitalized. advisers million the communications XX XX.X% fiscal capital X remain to aforementioned cash Xx still focused total for of at at expenses, were at provision and third has those that requirements Liquidity billion regulatory the $XX came capitalized. reinforcing the Slide year, provisions on million pretax the be more The the levels the high quarter Reilly in very increase. service provision Paul the sweep loan in the past legal provisions. On XX, adjusted that Tier we to compared margin to some and capital XX.X%, XX.X% expectation be continuing the of leverage loss capital regulatory the to nearly credit billion well above quarter, excluding quarter capital provision billion, been off-platform while on $XX.X incremental quarter strong. pretax the $XX included margin regulatory summary, than managing very pretax losses regulatory in SEC the non-compensation would matter. The total to are $X loan $X.X and bank are and this ratio both disclosed RJF resulting ratio excess As invest XX.X% the shortly. In preceding and provisions a discuss are fiscal a and

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

funding. have We also contingent significant sources of

capital summary billion in the past revolving FHLB a We X bank of a XX quarters. the over million facility capacity have nearly and $XXX credit segment. Slide $X.X actions our provides of

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

$XXX common Board's million XXXX, approximately approved XX, stock the authorization. October available repurchase under remained of As

platform any discussed. the the While as share-based repurchases we fourth the self-imposed given dilution committed knowledge SEC of to matter, the didn't just complete compensation quarter to we planned our previously our acquisition and in to Capital be prudent, repurchases from remain we due restrictions, offset TriState to aforementioned

closely is Lastly, Bank. of The loans investment total credit as for Criticized and loans our corporate of segment, interest at a reserve ended bank percentage provide a are any loans as corporate corporate on losses investment of to solid. Bank allowance Raymond loan quality our an but investment quarter continuing the quarter loan supply total potential quarter ended credit loans and as this bank inflation, the at portfolio. was X.XX%. The believe for recession loan The percent Capital losses held on represents of which credit percentage held constraints, Slide for loan James includes on We metrics of for X.XX%. X.XX% rates credit impacts total appropriate allowance XX, the portfolio a held we TriState we key higher at for a monitor bank for chain loans end.

estate to commercial and real Given the portfolio. industry-wide office more specifically, we challenges, monitor the closely continue portfolio

limited loans X% prudently the of office bank's segment's loans. which have We total the exposure to represents just

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

Paul Reilly

you, Thank Paul.

the growth both X% activity. interest-sensitive position be Private to will earnings at sequential accounts. quarter sorting the the segment of ongoing and and given bank assets fee-based over across Client all with complementary the while our in call, challenging record headwinds said for believe fiscal there term, still in our strength strength are decline of conditions. long pleased in our and impacted we some the record near-term Near results in from to next and we is drive the And I diverse this I positioned PCG am Group, start uncertainty, fiscal well negatively to of cash are businesses. In our term the results The of XXXX results market economic I year generate highlight businesses. again a once earnings even As the ability expect by

as values client-focused industry-leading our advisers product current we are prospective to I and am attracted and solutions. optimistic will continue and However, leading technology growth delivering

less of pipeline recruiting the as and there's in still last adviser reason space, conditions influenced and improvement fixed Markets over engagement experiencing and up and likely saw a in months. And expect for months market the are be are over dynamics we the by pipeline. In has of while activity have X putting M&A next of pressure to segment, investing income balances declining to brokerage X record Depository quarter, significantly continue to our to teams expect rates see investment in deposit with good healthy persist. balances activity levels. pick there heavily cash clients XX stabilize, start Capital But hope transactions on for numbers some to in available securities, the picked timing improvement. we have Our we We cash pace optimism, would once and large banking, and we activity. last up an year the signs the the can of this

quarter financial given So Management we business to under while should headwind made are believe in which is are the investments drive assets compared the there segment, Private of We management financial revenue. create segment of our preceding some fee-based and accounts growth share. In Asset assets assets near-term market the under a capital the Group fiscal positioned growth management. years, the that we've well starting growth which have significantly quarter, in markets X% capacity over for past Client long-term the increased X down to will the remain strong confident challenges, productive

bank we through to funding segment, drive we to focused and James help with scale, marketing prudently synergies. In investment demand. remain client diversified the expect fortifying increased further sources the assets on balance management support addition, operational distribution, growing In growth and sheet Raymond

and loan growth. are securities-based seen starting have decelerate payoffs to We experience

to for of clients corporate We level has current in recover activity been expect comfortable market, as rates. With these tepid. loan little growth loans the get demand the with

capital clients improved and associates line all prepared third-party XXXX, growth. fiscal once and day, well our believe service us we in uncertain to Thank you have businesses, questions? and However, open ample well every lend advisers has our lots you positioned closing, dedication especially for trusted our advice positioning future for in to cash with clients the positioned and sitting strong each and increases. In Operator, activity liquidity and most. continued banks need providing their drive to capital thank all with along are of on you to spreads our entering we ample competitive their the want for to will perseverance do. That I when times our concludes excellent remarks. of

Operator

from Dan comes with question first Fannon Our Instructions] Jefferies. [Operator

Daniel Fannon

also, the platform, for talked it I about backlog industry our there the like maybe more movement. some and context hoping expand upon record advisers size could of scope was you around And you is seems joining that?

mentioned You low the year. very for being attrition

recently, any movement in of more across you platform Just more the mentioned, attrition adviser wondering as terms across uptick you're industry. if seeing your

Paul Reilly

Well, good question.

see from competitive. first, given been X%. I so that, same last around that slightly very, That's think stayed we're but kind the it's in of year, very the up happy the still attrition ballpark, market rounding has to

data. If number industry-wide you what adviser team. down at size you about is industry movement of if seeing seeing we're of seeing look of advisers, XX% what But the we're we're data, not believe in a terms in

pickup of $X this saying the them to so we especially the had we at through X kind really that's we've all, been in look big final just has many we're So not never so last when that we've to once we're the bank backlog, pipeline, $XX million come generating months, had never down time a negotiating platform in million are the but a added to at to teams revenue, assets, one the lines. last close advisers. many that where of XX number $XX And billion at going of of in month,

well as committed people as that have haven't -- -- we So announced.

larger with at teams the in a been that It's I pickup this slower a year. very say number significant end of from year teams But and activity. just a between of would just last that little year, it's last pipeline. this it's are the So year large

Daniel Fannon

noncomp or if to around levels, noncomp think a about question we this you fiscal year to we in and and even a profitability think the maintain about pull expense the Or about as you expenses, capital think profitability think or environment? remains markets just should improve these somewhat potentially then more should expense? you're revenue levers how and/or And challenged depressed coming looking guess, that I activity

Paul Shoukry

mean in the generated it for in I that $XXX there. Really, business our this and attractive, continued Day that markets we adding growth a expenses opportunistic think business about or Yes. we have group long as we're expenses, investing to $XXX invest our retention comp the groups expenses were environment, We look specifically, to throughout year, great we related expenses advertising and Analyst at so term. you of the dozen million platform if or a MDs, it year. most health even of the it's segment explained or expense, particularly other through so we're comp losses capital have that in this was of and we the deferred to care million still difficult

So or entire of related. was segment the more than the loss deferred really growth related comp

ago, continue and manage when them for the expect the year expenses, about and level talked of laid year the cetera. et grow. loan those expense to We non-compensation to from at it we that it be provision, we put close to deposits will a the this FDIC we firm, very more growth as legal whether a well to costs because $X.X billion target bank, we overall, continue and very this lot expect are So out insurance growing continue we expenses, regulatory excluding the loss

being can year continue expenses controllable net-net, advisers a year. non-compensation their levels would clients. and after on this very year by that for manage very and to expect impacted negatively we focused while were to But benign grow we ensuring expenses regulatory the managing support still last high legal while they So also

Operator

from Kyle Our next Voigt with question comes KBW.

Kyle Voigt

$X.X above billion capital, target. XX% with just that excess the nearly So of

You regulatory mentioned XXXX, we how suspension pace excess about Paul, should knowing per the to repurchases repurchases of in expect guess quarter $XXX Or and last much that about million about $XXX balance the the no bit run catch-up, think were quarter fiscal repurchases still due quarter when capital in should little to the given think the you I matter. million have given of sheet? a there we a rate? on we

Paul Shoukry

think that the I capital foremost, I to with almost to which really, inception, in we've framework been would you excess when start think just and is, following capital invest excess capital, prioritization about use since the growth. first our

then because there we opportunities find And the the -- over we feel and And So since there bullish the some not just across to we we're prospects like pretty we which for dialogue, on between front, we the the dividend, are first M&A can but that also growth, be foremost, fit, opportunities there strategic on extent really but buyers in is sellers. But acquisition XX% time. across pricing would a gaps we Paul through of continued then now pipeline, active play catch-up at also good to right our do that talked have buyback PCG, is businesses. are looking invest can't any in challenging this do buybacks. quarter. all then that and organic now only growth, about didn't have and have ongoing earnings. And to our and we the XX% right And which fits on we're capital cultural given good good

million offset think in with acquisition associated X I about to TriState $XXX have of more we issuance share-based years the compensation.

beyond we to back be and and $XXX price obviously get million the be we offsetting is attractive, doing have about have we'll to So if we And offset which to opportunistic capital dilution. that. would But year. forward, excess then which have currently the then we a a going that deem dilution we commitment about

Kyle Voigt

just step at growth expected. I XXXX moved and normalized should we went to than the the the guess think over by in that in guess some full came admin unusual for there just as over than fiscal year, or to which lower a some a want follow-up, about And although grew higher-than-expected or XXXX medium look touch then and if quarter. in to sequentially back I fiscal the admin there look comp comp a to raises a in that basis? on PCG bit term, we segment is acquisitions just line the that out on I more rate similar within comp take line XX%, how we lower were think admin effect that period. a

Paul Shoukry

I in of You goes of bring mean, full the include of Charles that Charles XX% all growth we it. advisers board in touched that comp as a as growth the support admin staff well. there that well for comp on all PCG their investments, compensation -- admin does the into on Stanley's as year

on, in we platform very year. the numbers raises of generous and higher in in financial reflected well. that's and passing invest we associates had are the this top pointed these year, form that the with last on out, as success you in we So the of as

we item, forward, are, year line experienced would reduction this focused factors. growth again, a in continued rate this we on growth expect aforementioned of what be from it expected the certainly to Looking sort given in -- the

Operator

comes Brennan with question next from UBS. Hawken Our

Unknown Analyst

This ask the is filling sheet the loan first for and Rubin, in Ben as of about quarter? And year several fiscal versus my growth about I Brennan. NII the then the you loan in balance I sheet We time see in look maybe your sheet XXXX, also composition thinking first loan to type is balance interpret consumer guess first growth growth some how for to want next on side in are does what the did of quarters. guide the on underwriting? commercial book. book question balance the we

Paul Shoukry

corporate very muted, to mortgage loan in of the while driven side given in terms a lot portfolio and that's James we pretty being look about and particularly expect modest And now, being the based much of were the growth, pleased the to just we both TriState it during environment over as and residential pretty, decelerate higher next volume rates now. factors. But we we securities-based NII in the Yes. The guide loans demand see and months, optimistic are Bank loan the the near-term X mortgages. given was still Raymond securities-based on factors quarter growth XX forward by on

over cases as think, the would The stabilized months. as in expect, last doubling of first those have you rise, I the repayments really rates the accelerated almost XX payment, is some will significantly balances

has TriState of they bringing on we in see lot from that side, advisers. transitions Capital so new starting existing on stabilized, recruiting origination. And the essentially benefit call And and or a what to new are clients

about optimistic forward portfolio XX going the are we over So that months. next

Paul Reilly

business. cash open for certainly demand. the adequate and the it's really capital, just more in add, than would and we just I buffer are We've the loan

are the were as but widening we hopefully, a grow saw market, is it, it's So are from commercial out. more And of for SBLs the obviously to to again, continue the last being and the mortgage deals to But it's business repaid quarter. The open muted loans indication started coming market. that spreads very slow slow. to go a

So we that the business. find open comfortable saw this we're loans with. to for We quarter, have just we're

Unknown Analyst

net my follow-up, then about And first new Dan's assets. question of for I'll what kind back on touch

lumpy it of quarter if give there kind growth to have net in single should me some X%, adviser if recent have any more the adviser that a it's back in mid-single-digit was color here? any wondering guys you this, whether and from Or impacted were revert printing if the the call appropriate? -- So new below bit range the that market, percentages asset departures may we digits or was high it, can high is been does once quarter is you was noise, single-digit improve it the just let's some years. I not

Paul Reilly

in -- you a mean for quarter, I the think at it's I adviser as in been of look year a terms lot of count. dynamic we ways

that program talked we the us assets term, one program. XX% costs as and a had was platform, in in XX% we long and about it we it last profitability billion but from that advisers, right advisers, XX kept we the $X.X we think think previously from of I exited

look $X this that. you big month, If a again, bank crude. a are projects There advisers, of like XX adding a billion just program lot and number just

very, we optimistic we're markets. to happens get can the in to a number, very but that double quarters. will had big of we So capital well, to do kind But couple what and the markets. on a the recruiting we still of It's whether digits expect up be depending

have know you bad So ] I [ don't call. if any

Operator

Our Chubak next Research. with Wolfe question comes from Steven

Steven Chubak

revenue alternative third-party pricing any seeking those from incremental sweeps. the know any to that third-party better pricing you banks what out a we better trended banks, you given extent wanted some to larger client the proportion So those did banks revenue It spread on in peers. provide a from improved improved your on swept We lot also of some question And liquidity. whether than that, There's saw spread have from benefit came are partner your with quarter. than cash start guidance off boost? sources at of what demand to a of benefit in of of for

Paul Shoukry

pointed banks a growth growth with effectively powder I focus on with Paul balances think The able as bank's our balance savings as And renew, really as of you at renew as performance a week. terms. FDIC are third-party discussed many that And from absolutely correct. enhanced as more maintaining in balances, the the of to we dynamic, us that's banks, flexibility only on see possible. demand approach that puts more in program banks out, giving earlier. And contracts insurance give sheet, long-term our the flexible much favorable is of sweep clients await you third-party that kind which as more we is dry the than focused increasing better reflection the that just peers by Steve, is

sheet offer One So that to of picture possibly a the we long-term and coverage approach products. a managing of as bigger that various played as sort balance a what FDIC really role, to played our just much can us role. maintaining clients is flexible

Steven Chubak

my deposit cited. you trends, follow-up, had I the some for of to that And drill Paul, October wanted terms in down of

mix. sweep in some spread maybe changes payout? the could the impact disaggregating sensitivity adviser revenue was the granularity deposit provide and to Given the ESP deposit hoping help of I additional levels and of size you

Paul Shoukry

payout, are [indiscernible] you adviser Or the say you quarterly are When fee billings? you the to referring what

Steven Chubak

I get Fee ESP that. and about just Quarterly levels deposit was which disaggregated sweep the given sensitivity. really ], billings care to hoping I less the honestly, [

Paul Shoukry

of million ago, $XXX $XXX to couple yesterday. a down days day. this million, but positive were a we as mean So day does day we bounce had I from around

Paul Reilly

and $XXX numbers high not had we low at coming are end, to, used and out. so in quarter million -- a balances we the we're At

Paul Shoukry

we up million is million month. to probably program -- $XXX $XXX But enhanced so far the savings this

be the the sweep And expected better billings balances earlier -- much so quarterly have well. than would net the doing are given to we month which, offset frankly, that would fee that this obviously we the as had

pleased situation two cash $XXX billings, our But, it's quarterly or now. of net-net we're those it considering again, change right can be So add with today for billion fee the $XXX down you million to when $X.X components, pretty day-to-day, tomorrow. to

going it So to we're monitor closely.

Paul Reilly

comfort ahead change flexibility so to to been all has with we it. really that the much able us. thing Important see But as so the use borrowing I if banks mix haven't have we we could money can been that go a for mean, we're teleporting we earnings, to lot wanted ] you higher where be and fact net-net. with still of costs, the have we on just ESP, third-party not need. And have but there deposit [ we what

Operator

America. question comes with from next Our Bank Mark McLaughlin of

Mark McLaughlin

money color hoping in savings could market account you cost and around was more with and mix I specifically us the pickup yield? deposit provide some

Paul Shoukry

Yes.

balance in in mean, biggest is does around we somewhere think just I terms the because So covered X%. factor of sort deposit that enhanced savings cost program of I the us. cost, that for growth the

picking shift total probably cost effectively. the saving And X.X the XXX-or-so, so mix client of enhanced to program cash balances to points the extent percentage those up balances, that of you're

probably at through So more higher bank savings cost geography was raise you higher third-party have a the and the to the biggest enhanced lot that's NIM then deposit in segment deposits. But costs. And the is again, done to growing lot suite of I factor program shifted that lower-cost saw due largely the A intentionally really deposits the of we why of what the is contract essentially us say because balances would effectively, the higher banks. cost sequentially

to that industry pointed with third-party at so better corresponding we segment. the why, to segment than you see PCG the fees, than bank least up sequentially, but in trends, And shows were out, as on generate the And the benefit that's NIM and the better contracting sequential which basis. firm expected Steve shows at the able

Mark McLaughlin

adoption for RCS what between on versus transition is I platform. on for the was been? joining of mix Also my outside the advisers the existing follow-up, platform feedback curious how and advisers was the

Paul Reilly

quarter have the the up we've has and the recruiting increase and in much a growth, the in independent have the assets, people picked think seed above So the or if for the market. where to they're down It's and has the they're here switch come platform, [indiscernible] couple noise advisers RCS, gotten just outside the slowed and opened growth to the as to growth ] when people and of of again, think the for which the employer we to more movement year now I format, RIAs long-term platform assets that count. But internal been division, RIA want think the significantly. the our not do people from firm, the assets We're drop them When operate our great. outside, the of I as move them the [indiscernible] bigger the opening players wanted we advisers has straight count proof Hopefully, I in that welcome that first in the affiliation the technology RCS it NNA will they're and from right? can to point from of go registered, out over been of division. the that so count [ one most we of have they're robust adviser the XX% options, over went stayed, last but of had adviser years we initial we part switch more who they which now probably it, but is

Operator

Global. Mitchell Our Seaport comes with from Jim next question

James Mitchell

starting mean, decelerate decelerating. growth talked I Maybe, I you to guess, Paul, lot about ESP a sorting,

stabilize. start You or next maybe and potentially have through guess beyond those I on revenues for when and of revenue, to on see see first the not kind the but terms third-party you help stabilizing? things some look asking we of benefits quarter rate do guidance, puts can if pricing quarter the start to us we specific in sensitive I'm takes If think you sweeps. guidance

Paul Shoukry

of sorting fully know that I for I transparent lot pretty tell been you to firms but cash anyone last a months stabilize you guys. with the will be trying across exactly industry. to try the can think XX convince don't really you have of we to when XX

that gives position we're in now to with sheet a banks the the balance attractive opportunities strong really and in with end our at data dry declare about we the pursue that almost to funding beginning capital the come. growth. of grow what space numbers. we last not in the billion to because we're going there when we'll to the third-party that so to the of end $XX an to And months, sort And are have think feel point, have us we are a position a we will and dynamics said be in seeing cash But least your of term, the that. But the of of other firms the excited in X support strength longer capital closer we're powder lot sorting like several in that attractive have is not the position with we to of that that lot dynamic of months until

to So good we're few great always years, in last balance a strived maintain a criticized position it pretty puts reflection now. for that long-term but of it us when we've over a being it's client position. focus, sheet Again, in the even flexible the that

Paul Reilly

securities is cycle that's rates a have the it think the and of to and I is closer appears sorting really that really to think you money interest to also. you Fed and I to stabilize, -- rates. the raise call stabilize. for of starting it again, end raise I able competitors, hits then think, will fed ultimately rates rates Jim, mean funds, doing the higher us really have dynamic that when the market be that it If to in was the risk stabilize I

James Mitchell

on what changes a maybe you I mentioned macro. side, some And guess follow-up credit You to reserves, comfortable. you big feel additions said that? just the pretty

pretty Just feeling trying given provision been the about has that credit there, how you're growth to loan through flattish. story think

Paul Reilly

and of try period, sure to ahead tough to -- pretty well this the the risk, different are try adding well, but could [indiscernible]-- credits always we stay tough. we're a think see you like to we through reserves are as we make We like the credit proactive credit often to we're very in ahead what's be did credit their 'XX on of one impact Maybe we've reserved change sometimes pretty our didn't we a we control kind that in macroeconomic models COVID, that to outlook has movements. were thing starting off some if an The on models, we continue our is us. But they of movies, based the don't we one-off so of trade-offs and like have and do to cycle risk loans, credit trade-off sold basis. we yield and profile,

manage that's we've an been extra used credit. that to tool So

but the other people and think things like pretty control, good But economy we buying, it seems down, as as may, issues. if even slow if So we're we'll got it are feeling of long employed pretty get through well. spins out which now we've they

James Mitchell

are more rather concerns additions specific than the So internally? macro-driven

Paul Shoukry

in of of number quarter were are possible. items as reserves Yes. with I get sort would say the also when additions front a a I where Paul of to sequentially. of try said, additional flat There this we, loans it charge-offs specific amount, think were modest

the when as good feel of market we we nothing Paul get as portfolio especially ahead is said. overall, -- about the dramatic, it So to but try we as unpredictable is, things, environment

Paul Reilly

this It quarter has [indiscernible] last wasn't did bigger outlook than quarter. quarter, macro impact big For a the it change macro a this

Operator

JMP Securities. Ryan next question with Devin from Our comes

Devin Ryan

want you its bit did of can some underwriting be income briefly? businesses It the fixed our just debt seasonality have there. better touch some So quarter to best had time. on in But obviously a than a result peers. little Do

lower depressed conditions if brokerage levels? for to then from curious pretty or of guess, deals some the fixed just already that's I a seeing bit tough So bit improve And little step conversely, whether maybe level. income idiosyncratic you're took little actually from a starting a business business that

could on see better well. you horizon whether catalyst drive just any the that as So results there

Paul Reilly

pretty big also. deal debt was the a income the quarter certainly, We have the fixed activity did up. think I in

and client long-term was rotation. we're that of the pickup part in where So it's the

turn We big kind underwriting. for hard a of have the big

rate both, too. it's as the Paul say had I of depositories little it, of impact. And excess deal interest of about So stabilizing kind I for -- the a just bit the would certainly without talked cash, but an with lack waiting base they're

for look mortgage as ] have [ in So whether they've the has while, spreads I up is been franchise And or AAA trading that at of [ certainly, the now. stuff rates are high higher spreads, the but right been in are or pick in People than ] slow. there not just a because you munis spreads has that think weighed out. general, been part our securities -- waiting certainly activity to very

given of extremely [ well have interest to just see they've we rates. The this business at to think to I know been a And more ahead has rates is they I stabilize. going and little joining would lower, stabilized to so addition what environment. big interest when since going think in are where maybe waiting are business, then, feel it's too going until really up lot been So expect well to tough But of outlook not traditional done rate somewhere impossible. to for a better. in people a like be great interest lows ad you're us it it get a hard a ] picks been It's a

Devin Ryan

the the of the deals just characterize just acquisitive how firm capital of And has just growth you last been is opportunities how the changed because just cost across of around clearly M&A the And then higher given on have of you're years more just guys M&A. over now? all much you then would for the at seeing and follow-up the buybacks. comments obviously opportunistic flow broadly, several where calculation appetite maybe appetite that just moment, corporate here. and I But briefly capital kind of hear right

Paul Reilly

first, is capital cost I of think impacting that, deals.

So it's two things.

pricing. First, it's

cycles of So through. to come isn't The -- so and have the we price other unusual adjust higher in that buyers, cost empathy M&A pricing has this is slowest with the M&A for that look saying, our to the which is well, I and significantly been bankers. down, capital slower is

As rate cost is -- impacts I was not, whatever, a we look higher just the we look free a or on thing of pricing, risk of same at M&A or debt. firms you when and things, more the X it's too, at debt to. for the mean, you layer have has and lot it especially it X where

M&A see both the up. in we back that business, it's So

and an It say it same in prices the run impacting all see most has is unless we even capital, when impact you with it, I'd have the numbers, replace it a firms. so thing it bit. excess tougher And we makes our that So adjust people now little you it. are of But can see people from quarter. don't and it I in cost be lot lending a waiting, pricing doing a the of deals the think the is gap, but quarter fourth We lot which that to different. capital expect next to backlogs

it's price, falls, lower new be just pick harder up. capital to of or really prices, factors cost out Our long of enough to going one okay, the the going people it's to and waited take go, those

overnight. think see our X- to gonna that's that let's So it XX-month or adjusts M&A if don't happen of the think it's we but I a starting we just market give why not business outlook more see to in is that,

Operator

question comes Cyprys Michael with Stanley. from final Morgan Our

Michael Cyprys

capital Basel Just a proposals III proposal. the the on including the game end rules. some bank from regulators, We've question seen banking

impacting Just you're your set billion given curious the that Capital under $XXX how opportunity the see for you Markets business, asset threshold.

opportunity $XXX over level. But you probably coming to grow the years, then could for yourselves. that you you eventually sure the cross look if you curious hope out get I'm Just billion set and as

potentially how be business, you think for areas might markets impacted? capital your think that? about do think you that preparing Just more impacting about you which do How

Paul Reilly

Well, of a things. couple

to It's assets the acquisition. big time because a billion the people jumps that $XX is hit TriState billion. I forget one going And growth. of our First, our to in and $XXX lot take of think of X%

bank. another acquire to plans no have We

perfect took of [ drive other family. acquire looking asset it significantly to we're was for ] Almost join not fit X to we looking TriState, franchise. anything the But fact, size. doesn't else us do our which banking years the In

So a I'd then you we -- say, to think have and certainly, comply. you cross X-year, got to we've year get

it -- much So longer. and couldn't be

$XXX cited, most I So you all billion. -- are of there the that rules

time so to that. And have we do think I

reporting the studies that's requirements, Now having $XXX which do said on so impacted impact the doing be to the cross internally that, when we're capital expectations, the of billion. in already going requirements everything change, we technology, regulatory

in So hiring the some help. inside This ]. of is we people. have and years both We've been outside thing kind [ X

So million before almost it for we're $XXX granted, know not became we old But we'll taking rule, said, you $XXX grow. billion. change a billion the as they the $XXX and

but it always. So still in future rules a those of lot has now, down brought the right I think significantly that's for higher us, lift, for

Paul Shoukry

that And to thing time just to add line. one

one the through be on the balance client sheet -- it of is the accommodated because really the is things we cash of One reasons long during to balances around portfolio. be expect securities there we COVID will that did

portfolio. to that out example, essentially bank's year, we growth for so funded securities a of for And the over expect next of with that the be mature lot loan

don't growth assets. the because those as repositioning get from even growth much loan of you net So a it's

Paul Reilly

we Paul, it's balance still Thanks sheet. grow sheet, portfolio, balance loan expect a good clarification the but because being not off funded just on to that's bank

Michael Cyprys

broadly how by banks certain that impacted these about for banks? either point, just step on do in in, years. impacting more back products, many rules the your for pull set you you are a set opportunity rules for the rules certain that guys the from lot biggest Markets think you that or areas Capital or as you Where see apply opportunity And to given a do for follow-up of the reprice business

Paul Reilly

acquiring at that I income significantly impact asset businesses businesses asset think really or markets capital don't look fixed our businesses you if size. management or

-- sheet, acquiring those M&A, businesses, really -- would ago, billion we X it in [ billion or especially is Keegan a the had they a fixed when impact Today, X bank less X ] when under acquiring a -- inventory. today, joined inventory. us operate we're what had we operated we've years we even we billion we well because Morgan in of So income, balance inventory, have

a to don't trajectory, space It's banking lot focus. our to that in businesses the I a talked that's altering think $XXX of lot room side not acquire billion. we without those that the about really there's So balance -- sheet, and I of -- really impacts

Operator

for call remarks. back now closing Q&A turn This I Paul to session. Reilly concludes the our will

Paul Reilly

really the been have I really been first, quarter. the of good outside it still So It's kind regulatory a outstanding quarter appreciate very of charge, time. is a would but

so easy people an managing the been so and going markets we won't expenses, have We've down for then of have year, we market, assume it lot our to and interest capital of always focused do but it be come will uncertain but managing is think, done. to even markets, a every And business I in an be outperformed kind we've of say we're in enough always, we especially because year. Market competitive expenses. doing be into in work our we're capital just nice what rates cash still it to would and we've and

doing to especially have quarters plan that. few continue the that, do We been to and over last

we see to support So those. growth can

call appreciate with the all you time So you and we'll us, to joining spent the and soon. talk you

Operator

you conference concludes today's This for Thank participation. call. your

You may now disconnect.

Raymond James Financial (RJF) 25 Oct 232023 Q4 Earnings call transcript