SF - Earnings call 4 2023 | Stifel Financial Corp.

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Operator

Good day, and welcome to the Stifel Financial Fourth Quarter Financial Results Conference Call.

As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to Mr. Joel Jeffrey, Head of Investor Relations at Stifel Financial. Please go ahead.

Joel Jeffrey

operator. you, Thank welcome Full to Stifel Fourth Financial's I'd XXXX everyone Conference and Year Call. Quarter like to I'm joined Jim on CEO, the call today by our CFO, Marischen. Victor our Ron our Co-Presidents, Nesi and and Zemlyak; Jim Kruszewski, Chairman and I earnings Relations Earlier and slide would page to website, at posted supplement found be that release which this www.stifel.com. I financial issued can and on a a would we state our morning, we an deck to throughout presentation the non-GAAP that note Investor basis, GAAP numbers on and release. of disclosures the of reconciliation some as in refer press are our our non-GAAP presented to our I would presentation to slide for earnings also information on release, and refer our financial forward-looking supplement measures. our listeners remind and statements to non-GAAP is not material and without [indiscernible] or rebroadcast Financial Stifel be consent reproduced cast of Financial. may the by This Stifel duplicated, audio the our I over will and Kruszewski. call now CEO, Ron turn to Chairman

Ronald J. Kruszewski

morning, time year our you our To thank for and Joel. call. conference XXXX quarter the taking fourth guests, Thanks, to listen and good to full

approximately with revenue in This year despite United record and in management billion. Stifel major produced X whereby the market geopolitical less financial significant model essentially and discussing Reserve, in that in primarily record environment industry-wide Let's by begin benefits consecutive the investment operating implemented an banks included that in of XXXX Management, slowdown was line successfully revenue year-end increases generated was by activity. net of income, rates results strong Federal Stifel driven interest both ideal. to navigate us record our banking a tightening our [indiscernible] net Global of short-term diversified the by which generated significant of enabled of overall results risks The failure business States. Led $X.X to its tightening net quantitative conditions XXst revenue, increased than by asset inflation conditions in Wealth XXXX, due and to

our correlated directly excess in in these focus our results our business, As our servicing discuss to of returns. are on ways strong our as reinvestment substantial our we'll risk-adjusted later, strategy well deploying consistent generate as that capital clients

generated the XXXX a annual from the and charge constantly dividends increase third amount look back year, the capital our conditions, million, XXXX market since a our Board operating dividend Despite our announce approximately legal approximately of to Last $X.XX changing was tangible $XXX in on repurchase totaling business happy I'm XX% interest growth. the our strategy per the was capitalize since Stifel X to more short-term to up the XXX% made business past as results years. we've our over in has at $X.XX Slide growth market and rates enables than Net on share. On in XXXX in common to substantial investments shares sheet XXXX. authorized that interest grow balance in conditions, X, increase we income activity. on generated excluding of of of of and generate it shares quarter. With deploy and impact in XX%. we of X.X we confidence pretax capital deployment, deployed we together, $XXX no sheet And nonrecurring different. respect the Taken the returns $XXX million as and typically our balance modest follows: common and each million we excess a capital margins year to improving and preferred acquisition million excess common the in equity Underscoring

interest without credit or Importantly, risk. this we've taking excessive achieved growth

past the here time XXXX as Total growth. the we've XXX% be illustrates growth over Institutional on benefits The of recruiting we've XX% XXXX acquisitions, X than not the the Management which revenue double seen in lost share and segments sheet recent recruiting comparison in flat both should Institutional frame. The offset investments per is leverage balance Wealth than from revenue, as XX% in more years earnings business. revenue of to upside years. made important over and led relatively it X potential in the was Additionally, these Institutional Management from to our segments past both have Wealth operating see increasing as up investments more this also we the resulted

market by top for the [ to average our bottom levels, historical would management number lines. and relatively has experience directors investment Specifically, banking of our production was flat since returns Advisory to ] MD per substantial both due growth increased our but XXXX, XX% revenue If we the conditions.

highest billion had at in and quarterly this rebound Management of revenue strong Looking quarter. strong improvement. of our pickup continued as from third quarterly the our we combination revenue Wealth third revenue was $X.XX a results, a revenue nearly drove the Net Institutional

operating we of ratio of excludes model, sequential our onetime quarter. the able $X.XX and XX% was the flexibility third a in at which were compensation taken in XX% increase EPS maintain to the reserve our significant Given operating which quarterly EPS, legal generate

compensation primarily than public much result a lower expenses business Street $XX from at We inverted driven legal came weakness $XX rebound beat expectations table to curve. revenue million and income to higher the came was banking and but fixed higher to occupancy markets, by partially higher advisory million consensus. revenue the revenue in above and begun look revenue in costs was at offset X. Non-comp consensus with by as Street in that on Investment remained $XX estimates. Total higher a net income quarter that comp in tied stronger on bank finance. the million our reflected yield revenue failures line rates loan of Street in an as has fixed by our Total loss provision. and each The $XX consistent above higher of Rates higher expenses of to expenses The surpassed expectations, as Slide expense were variance were Transactional forecast, as XX% Moving due ratio higher expectations. the million was capital than primary to lines

our business. Jim Management Wealth about turn call to over I quarterly through talk the I Before our to wanted go to results,

the segment long-term the is of a near-term success. our upside growth to our of our Institutional engine our discussion of business, been is much want of I has cornerstone focused on firm Global Stifel's and emphasize that While Wealth

As entrepreneurial XX respecting of XX% revenue have this revenue stated consecutive with continually them of to invested of fundamental success. we Management Wealth revenue has the In X this effort, while bureaucracy segment of recurring advisers recruiting, growing clients high-quality increased record the strategy on points. Since advisers Slide increased recruit spirit to these the posted level years Global serving resources, has of our our XXXX, has has as our XXX% been our percentage previously, has provide Management assets focus and Wealth to in technology advisers client enable to and been XX%. level thrive. our to our growth result and of Again, support and from reduce service. extraordinary our illustrates

efforts growth ] the trailing of cumulative million. XXXX, our elements of of approximately more financial Since added advisers we've recruiting been one end XX with key the Our efforts. of production $XXX [ have than XXX

to see continue XX% increased momentum the We by our added number our as increased 'XX we to in nearly of compared XXXX. to recruiting in as advisers platform efforts

back in over with to that, our revenue to franchise. segment quarter discuss to has driven continues and the our margins Marischen me call while institutional by be most we upside as let turn been success see So And gets Jim and long-term historical and growth Wealth to significant norms, recent our our Management results.

James Marischen

and Thanks, everyone. good Ron, morning,

the at our Looking quarter results of Slide on details fourth X.

was revenue that facilitation, of The offset partially quarterly trading revenue net income X% increase net lower up by stronger Our was and $X.XX and interest underwriting revenue. client billion year-on-year. was advisory driven by

to sequentially expenses, as as XXX% which addressed Our noncomp lower due EPS well higher earlier. up was revenues Ron operating

Moving segment on results. Global Management million. Wealth to was our $XXX revenue

were margins Our pretax XX%.

was X% driver by our revenue record as recruit ability strong from revenues. XXXX. year, of management $X.XX of and our as For client record has This and asset assets. driven up net growth transactional increase the to well Primary interest billion full advisers net revenue our been income was

advisers fee-based in more During $XXX grew markets assets client included XX advisers. We growth production due $XXX of the trailing of to assets were as total of million. increases ended a net and $X.X higher mid-single XX-month organic billion, the The XX This the quarter, we sequential with with quarter billion. added new experienced digits. total than assets of equity

Sweep recognized movement cash changing is asset of income than back into million the the the the statement. resulted few is at lower and banks. back recognized half the revenue to in highlight sweep we solid where dollars Moving in into simply where deposit X, NII. in This being Net on NIM rather management the of as a cash our ]. larger balances [ bank interest was guidance Slide the trends of bank costs, on $XXX the movement by million average Program, revenue of of The higher impacted income geography deposits was third-party

given earlier. I'd some cash sweep in say see outflows are more X is to accounts early we has That While cash now the as than outflows outflows to the Sweep with quarter sorting also typically of of Program banks. compared quarters behind note timing $X.X payments. in we billion not the just us, tax the $X.X said, that were balances in billion third-party year flat ready essentially from

expectations $XXX be to our a net In to in the we terms $XXX for of quarter, income million. interest first of range million project

basis and points. only remains reserve profile XX strong. Nonperforming ratio credit metrics asset Our stands at

XX our to Our points. basis total the credit consolidated ratio and loss provision for totaled loans $X.X was million quarter, allowance

continue balance quarter, $XXX opportunities. provide that charge-offs sheet or sold quarter, fee we to would primarily note C&I in were credit, the deposit certain reserved was exposure, that also we it saw the for an loan opportunistically ] During we focus million reduction individual as income an previously. allocations to to other balances broadly during C&I tied I as [ fully approximate syndicated also portfolios

our or and rally basis of XX-year the reflecting well declined To in be the highlight numbers by during unrealized XX.X%. to quarter. the in capitalized. sequentially capital Lastly, XX treasury to points Tier tightening put XX% credit the and bond continues X leverage to million our the portfolio. I'd decreased losses also balance spreads, losses $XXX unrealized improvement bond, nearly in this like sheet to

raising its slide, third totaled Investment XX% was advisory capital in the XX% in the results Institutional benefited delays both negatively both verticals. I continued sequentially increases revenue represented had as next was from quarter, Group, $XXX that which quarter segment in million, significant had closings. health we industrial, year-end quarter. discuss fourth Transactional Firm-wide solid revenue by the which technology years. and our Investment revenue strong as as increase and quarter impacted a banking strongest in although at sequential the seasonality, million the $XXX was $XXX our from Total we Advisory again Banking and from revenue was which care Business On up highlight I'll X.X quarters. experienced our million

uncertain. remains timing the close, to deals these expect to continue We

the pipelines momentum Equity and $XX seeing our sustained in but the the in up the activity was totaled our strongest revenue revenue quarter remains business quarter our since highest strong, revenues remain fourth we XX% quarter, of which to However, years. in market of X levels, quarter, million in are timing XXXX. very prior from quarterly the build $XX the begin our Equity totaled represented million transactional dependent. rebound much

offerings sorry, million of our increase of $XX continue gain from continue by $XXX revenue. We Much transaction, driven was to third generated $XX with net the research. high-touch of increase we engagement increase million in quarter. a as and an Fixed traction Transactional revenue to the Income gain electronic I'm best-in-class trading in the strong million, our

underwriting to to are nearly rates market municipal the more be beginning XXXX. revenues #X given in stable the to up Fed a and open as in as negotiated continue in be sequentially We banks outlook to more our trade continue ] business increased we dovish see we transactions portfolios, share the was activity increased their as Underwriting the as deposits. XX% and number ranked market are [ of investment XX% leader starting

On go slide, through expenses. we the next

investment Our our provision line comp which related $XXX the in to totaled the in loss ratio quarter and revenue to transactions million. banking forecast. excluding was was expenses credit XX%, approximately Non-compensation with fourth expenses, operating

the excess lower The was XX.X%. related effective The on the tax as XX.X%. quarter Our rate compensation. increase our of in the impact at of rate during and due a noncomp stock-based tax to percentage was came benefit tax OpEx primarily share in revenue price

discuss third we million turn position. In back shares. let capital more Before X.X repurchased me I Ron, over the the call quarter, than to our

nearly have our authorization. on million We XX remaining

leverage X We capital approximately of $XXX target. on Tier have excess based million XX% a

making this Additionally, amounts the acquisitions count price, remain recently quarter illustrated as excess assuming call And $XXX a XXX through we dividend. our net of done of stock fully for income share substantial we'd share in Ron. the business, repurchases reinvesting and deploying the capital, by through continued to XXXX with focused, strong and million. and to generate me we've be risk-adjusted over increased repurchases diluted as stable our share well let generating returns that, We and cash any assumption expect Absent turn shares. first additional million to as back

Ronald J. Kruszewski

Thanks, Jim.

the is increase which roughly than Institutional that in which Let for is of decline the for from current consensus me $XXX outlook XXXX the conclude million, will up $XX of which by and million expectation our about $XXX be, net expected increase will estimate. will Street a current Wealth net revenue Management combined estimates billion, million offset primary our $X.X for was income. in more discussing by terms The XXXX. driver The revenue interest the XXXX

the to to total that net revenue be Overall, of billion billion ]. in period XXXX. in net interest to can will to range great impacting interest the we we banking of pressure billion This increase in considering that income wealth the see as industry, you $X.X from includes guiding $X.XX current the the net believe margin multiple opportunity be As see an by of our factors on are [ the we interest-bearing expectation make billion. assets. Simply $X.X offset table, an $X can

the believe EPS cuts the of be net believe institutional, wouldn't to XX% of our to heard the growth nonoperating apply the banking. an react uncertainty rate XX%. environment" be rate of recent anticipate effect earnings will Considering as a operating elections We and particularly will in accurate the we operating transition description be that "normalized will and compensation that there our XXXX revenue, don't noncomp the X I the the year changes. Personally, in will I our X a to term number ratio I've optimistic. we have estimate that's investment improvement timing I expect to Federal XX% grow cuts conservative the in results. remains We consensus operating XXXX, relatively the noncomp environment. Street realistic. for of regarding we the rate the and believe will these given While to this, industry-wide XX% XXX that, and operating range XX%, in remain Reserve the equity is and X upset to be that will X% revenue, approximately that that and is on more presidential a pickup would The S&P in how cuts make likely of investment with banking positive But meaningful of markets for X believe S&P weakness

Lastly, did share in velocity we cautiously are we exit that results to see quarter, earnings the in XXXX. next more significant Last at $X potential potential for environment. per $X discussed of how touch billion into the the market I optimistic say guidance beyond must XXXX, in and revenue normalized on we years. few looking not want giving for we I while XXXX, are a

cooperate line numbers historical to in that be What we that year, possible reaching our significant questions. wealth $X profitable And will strategy consistent growth improves, outperformance while for of please management to some it's is productivity of client banking, our would believe line market to in investment continuing which being of shareholder also require a with with achievable continue operator, continue the continued markets bottom of value. market-leading that, don't premier of For The This open return and drive franchise legacy if growth businesses. certainly an management Stifel is well bank. the growth. these the our assets, future trillion as as levels build to sheet is operating positioned need our balance middle we XXXX environment we wealth is to such in believe a any goal with

Operator

take our with Ryan We'll from Instructions] [Operator JMP Devin question first Securities.

Devin Ryan

interest guess, on, Good current kind X. morning, And betas. is, points? are you? move you and on we guys question, X that are money rate Jim, first the question Ron curve, half second start is for be at do x least of of over the want deposit and forward the and so to, how markets, know I the just to about obviously, movement assuming Great. how with want thinking And cash the basis First just XXX over smart should rates

of so expecting piece what you kind are really And sweep for just deposit the equation? the of

Ronald J. Kruszewski

think that I funds. half approximately smart highly Well, of in Fed are our, correlated to and effective rate, is

going you on betas the up. down Jim, were sort be the way to... think are want driven deposit competitive don't if on by I way of question factors, on as know the I just to they

James Marischen

effect correlation is competition.The nature, curve. money end because the market mutual bonds. And essentially treasury the is the to its Fed the mean by are I funds of short of competitions that, and No. Funds of tied those

so the And beyond cuts the that. of way on near see on XXX% you'll beta down first couple and probably

Ronald J. Kruszewski

smart Yes, for rate.

I get And versus think, I comfortable giving beta a is Devin, them you're sweep think to deposit transactional expect I what not more what will balances. I'm with which sure be we balances, decline. to savings those you to on would balances that happen balances. trying

Devin Ryan

it the it But modest be way modest would on was like out?

Ronald J. Kruszewski

both It ways modest, was actually.

Devin Ryan

Yes.

fair. That's Okay.

some there. still think Ron, And question what what financial it's taking And well that firm, organic of now? drive employees? get like you either You is, if thoughts, advisor would figured is growth, it I very at get How the as guess it employee independent of as around the you're whether Independent the is all? advisor grow more to see of to evolution then And that a overall objective firm, much just love relative years for of small, this to the compelling it I to from amount. than maybe fair if kind on financial I less independents I'd contractors headcount. is looks X% guys you do steps X say of your an of

Ronald J. Kruszewski

Yes.

what question, which our growing independent your we relative been. finished platform answer to capabilities. opportunity employee be for provide There no independents to that would technology an focus just our with, is to channel. to our channel the think There like and I simply platform, utilize and particular a on you the it would compelling is hasn't

deal demand of with dictates. as sort and will that We supply

the the and platform, independent though this focus our want just channel. model that's firm we the is because been model. diversified you'll I are a the over on the see simply a a nothing have XX employee good over capabilities of And We and been more, last alternative. What channel. employee been has has years focus tailored historically, say to the against with the our employee years to that it's is lot it's it's

growing. see at indifferent way business. So frankly the I can both the I'm we look

Operator

our Blostein from take Goldman next with We'll Sachs. question Alex

Alexander Blostein

NNA. bit same-store it's and been organic business what's you and quarter. I around NNA your for question maybe Can recruiting kind talk about for little you of broader growth for contribution year talk the sales, outlook that 'XX? ] First OFA the [ heard mid-single-digit new a a the for rate in what been from

James Marischen

results digits, the say number were The saw full mid-single asset I net with consistent year. the across in the in XXXX. each saw we in of the would what was the relatively over we quarters fourth quarter consistent new

there. of I a even and side fairly fairly it's net think say balanced. driving I existing think is the I addition between And assets particularly wouldn't mix it's new advisers either

Ronald J. Kruszewski

same-store me, Management Yes. don't helped sales. the slow Certainly, half overall last sector. in the business the have Alex, I year front Wealth look, of of And the in the think I

they would in higher the be say, would 'XX forward me XXXX same-store And today a to expect ask XXXX. 'XX. I We XXXX. to markets it performance I in with generally than some rocky where got the see though, was in you If I versus off increase look start versus and in that outlook, our for relatively good XX speaking, over just to sales are equity 'XX

Alexander Blostein

into into question, out you on interplay capital look wanted second That's the year. to dig I got well management you. just as next My helpful. as

you the So, appetite bit out course little growth versus of like maybe XXXX. look we've your for what was loan seen better over it as sounded perhaps a

expand means what a for just that So bit little maybe out repurchases tease on just and for share well? XXXX that as

Ronald J. Kruszewski

syndicated syndicated All of just keep considerations all we $X.XX new the and it. the loans, muted first eye that Well, we an see, all, a trying can the on put strategy, haven't been we have to we almost aren't more over where lending sold we deposits deploy credit really repositioning of spread as a a flowing free sheet. on firm. And we've that diminishing demand. loans, adapted broadly as sectors relationship environment balance we nearly of right, all various place were to other loan much We've type to in, type focus a Jim where opportunities intend you'll deposits, and have, mentioned, for really and relationship, with said, more just to just which had provide that billion

So I in be see today, this is the a good time business. lending to

and relatively see And up now so of room plus If billion. relates from interplay grow leaves before, million $X the repurchases, capital ample it, we'll on share it that, as call billion, $X our additional we're ample. $XXX that's, repurchases to for to relative dividend, we flat to and stock

James Marischen

today loan growth. we I'd fund the that liquidity The some to that to other of is thing have add additional available

in You'll deposits. in see we of added billion another venture And $X banks. sweep $XXX third-party that, have we over on million top

service we the and the securities-based clients there's investments to capacity bit And so And comment supporting as Ron growth a mortgage continued and and with our to we've our loans little our across lending fairly look and generate ability made that significant. and more made ability forward. is Venture the Fund liquidity now

Operator

We question Cowen. Katz our will Bill take next with TD from

William Katz

Okay.

there's we a probably into 'XX ahead 'XX. into and opportunity getting like look So it appreciate margin guidance, financial and the looks as

And $X, about fourth which looking XX% math just it margin Institutional again of supplement Group, I maybe and was the have, sort a the did the like through normalization to into margin of 'XX about the be at is we margin the in looking of 'XX along incremental into Just aspirational in Stifel incremental path? quarter. into the specifically it should some how for sort if disclosure for that out incremental and correctly, the thinking group And overall the you the of look then terrific. you looks as institutional

Ronald J. Kruszewski

Yes.

And a Obviously, with we, can that may of we the think side back that was as see, you on business, essentially the XXXX, you about with phenomenal saying year. as margins $X.X we contrast broke was a almost our in profitability I said, Institutional billion. that will start improve. always revenues of billion $X.X the it which at look But that really of plus. $XXX million even

So between the a margins we'll $X.X growing if $X.X our with, and will almost markets would mid-XXs% cooperate, we the of and business ] And get weakness draw earnings offset in see growth and of billion The the we you but can in line see plans drive [ if best to that we expect. the can offset men. But $X.X the in see that the mice billion we, almost as wealth late that Institutional lot margins our to billion. by into back NII a that being continuing. up management leverage

modest we see by net can guidance, you're in in income you in potential As that being referring our offset the interest more expect business. Institutional our would than some to declines

James Marischen

more, maybe level. color consolidated a And more little the bit on

essentially on breakeven in third the margins today. institutional the that's side over the XX% we off legal were quarter, including pretax little a And we're from you the fact year-to-date, accruals If XXXX. that back

the to range. previous talked of think kind about mid-XX% side, about XXXX, Ron you So back

base, a about. the that Ron higher point starting talked given have of We today, some the had NII

what the the previous could kind in have good recovers and market, for margin cycle. the you normalizes and from as will, of market go a if you So already you if potential saw catch it incremental higher we were

William Katz

of That's bit far the And weeds, obviously, too a parts, quarter? but a helpful. of but this, mindful be in see to wondering charge to Ron, could you have in zoom landscape to lot expand of I not get legal a outlook good the the of including if on you 'XX Okay. moving as maybe, here? sort pretty And year, how follow-up, the view a out, election little terms was in regulatory of anything just in you the

Ronald J. Kruszewski

about let legal Jim I'll your talk then Yes. and question. I'll answer

James Marischen

There occurred Yes. charges about, were the The in $XX was we million booked in was accrual third was that quarter. accrual It the quarter. last a fourth the that legal not talking was something quarter.

Ronald J. Kruszewski

my plays that certainly, feel off-channel been to was Stifel, not higher the communications with for environment, remarks everyone that. we're think, prepared sort was of significant The was a or had, seems said markedly industry, legal I we pretty resolutions dealing What predict a headwind trying fourth quarter, charge. this the that just for of we, not that. it's quarter XX% level excluded as the point I maybe frankly, factor But illustrate a, regulatory hard as that be a changing. had to if I I been than and as past. but out, what the to increase the in a now, just that. sure in really Yes. seeing we I'm the that only that's to was But good regulatory see that is we'll

Operator

our take Research. Steven We'll Chubak with question from Wolfe next

Steven Chubak

remarks? is point, given both assuming brokerage, that specifically wanted you you're Didn't some guidance. that catch Jim, in the just this [indiscernible] for I the you, start jumping tailwinds if prepared unpacking I'm from coming the the of FICC to So off 'XX reasonable $XXX And to equity missed assumptions sorry fee year? and the you underpinning this, alluded if off if cited so market million, I in appreciation the a

James Marischen

Fed's business that specific continue So the fixed the of the the think of I the balance bank income, unwinding they to Obviously, activities. run with on as to some see with in people losses sheets. stance, increased that unrealized conversations we're having of levels change

basis. and Going use a banks probably lesser on forward, you'll HTM see rely on

you're we do feel it's that fixed But this and the jumping happened positive what reasonable a anticipate that we trends little off activity, the that to starting continue. bit. across look to discounted like, at being see to conservative, are more fourth a seeing We and do starting area. in but You're maybe little until income some see bit very to at point, we're quarter point a

Ronald J. Kruszewski

add made I provides meaningful in And both and end think SBA hires we've as our buyers. some calls, ] we in space, I the previous origination Jenny product to many which with would of in and and talked [ that about the that deals in space,

ramped And that's material us. than wasn't, so a less not for up, opportunity that getting just that's and

With there. hires the made we've

is that think that I reasonable off it place. a just So jumping underscores think I

Steven Chubak

equity the market And great. That's that appreciation are assuming? you guys

Ronald J. Kruszewski

asset fees? For management

James Marischen

took I our we of think in that. market internal increase internal the up I can follow I is, forget some expectations, appreciation account. just our what on percentage some but mean I Yes. exact of

Steven Chubak

And the fair Great. amount looking year. legal non-comp But roughly I of noise the that had a about since guidance. Okay. past non-comp at charge, non-comp a the know just growing The 'XX. on actually there core can was guide legal, we implied just from this 'XX contraction what trends, those ex have high tell. bit implies been at of a single-digit CAGR you

driving history? just the control least at want relative the recent So better in understand year, expense I to coming what's to

Ronald J. Kruszewski

our so fourth there's we're net some first all, about in always revenue, quarter. of of noise percentage talking Well, okay? And

the the quarter make higher. always be As really to years, that always, there's see if to look, they're And all trend see expenses cutoff pushed you that historically just, leverage year. we over of we if that fourth And you'll for tends go in model. above the you our is a on back I you'll mean sure in.

mid-XXs% the expect So that raise as revenues rebound. I the down where of percentage our getting ] come model. expense the we that's as That's revenues, to into noncomp increase, see margins why we leverage will in because [ while

Steven Chubak

Okay.

dollars will at with leverage? is that of ratio noncomps least the operating expectation, increase but the So though, the will some in improve the

James Marischen

look fourth if you statement-related Yes. of And specifically some there's travel you seasonality the you expenses. When some the fourth in well at as see elevated quarter, there. levels about entertainment as quarter, typically think

some hard in Those And when of kind third-party normalized the those annual comparing quarter. rate run predict. lumpy. some that a had you're are fourth were in legal things somewhat also of the those elevated think are the basis. normalizing We about fourth in results an on expenses to you quarter, Those

you to about In the getting really is levels guidance our talked in Ron increases the that addition range. to what's revenue

Operator

Chris We'll from Citi. next question take our with Allen

Christopher Allen

can a investment pipeline. dig on little just the you bit in banking Maybe

whether give some I if is Maybe specific activity side? on that's wondering any at wonder all you're signals filtering or all banking that if seeing trading some Just side. see obviously, across color see up? starting bank through I income fixed activity specifically verticals you're on the verticals? the just to start us improvement picking to the you mean,

Ronald J. Kruszewski

some done about is a deals engagement Well, while in for tone because just here. that I'm in been for of improving. mean, shoots sure. cautious I talking we've definitely the getting frankly, and improvements Chris, quite and the green all

asked being FEG the care, is see just I We tone Tech. better. and industrials, much the So about health certainly where

kind is compare to at to continue. it's want broad-based time XXXX whatever M&A almost pretty over XX% you just and down our like we of down environment through in a which raising here, been this frame a relates So going as look make when that comment it pipeline. want with we've more it business is to I generalized recession to to much not XX%. And capital equity

steep and curve and simply, improved are So do. to as to of comment face the we're see X% And to timing now seeing and we engagements that, in down, I going quickly. the delayed see try to don't we, as fact, of lot you're improved going basis there's consensus improving. And been puts at a certainly, our the financial is improved pretty activity damper strategic inflation the on and the our will that's in a want the activity. be. improvement that in a been certainly There's lot pipelines go see as start to we very points to engagement But XXX definitely of think how year, considerations of stabilizing the have and that business. I rising That I clear. decisions that's Fed

Operator

Brennan UBS. We with will take our next Hawken question from

Brennan Hawken

third-party the balances. bank Curious, growth a it was in nice pretty

like capture whether that you guys was or loan Or growth, where as allocated so this an see client loan of sold excess asset your seeking the and decision to driven not was yield? out So by action, curious didn't such more FDIC?

Ronald J. Kruszewski

at of parcel look part balances you I'd We to if at I take valve the, will, on clarify the [indiscernible] want and that, this. be some The comments as to think control sweep how right? love just there's, I we right? part Street's moment we of to bank program, a to third-party the, what sweep looking our all all view on do.

So deposits. we're our allocating if we, it's where just

sheet balance third-party Stifel. than making No will, if and back bring best it. we is say could So that There, have or to diverted And is one of increase choosing not to that. needed the that on that you the us to is banks. as decision around other now we're those deposits just way turn sheet balance on

third-party sweep look at, have opinion, to at you need you and in to combined. So deposits my look

James Marischen

the sales of as in as upon sweep sweep, prepared push bank. decision elevated general we that back some talked And of remarks, dollars about some the was the some of the loan Yes. the just based well cash to balances of

revenue it's in up again, rather revenues location. income similar asset either a in than in getting the So NII, associated with just management statement, the return moves but that showing you're

Brennan Hawken

it. reference But referenced you by of growing number Institutional made made and be can business. [ then thought to the in have ] at I just appreciate have there noticed movement just to maybe the been but you through of Ron, the some the have of drove by have that down by the that that the not guys And was given right? And looking you Appreciate trading that, X, itself? bit, all year. like MDs just what past much know sort we would large some were that in So focus, we hires a the actually under of I recruiting that bond And surface would flattish?

Ronald J. Kruszewski

could been same the It's have Yes. would, question. [ Look, it And I had mean down ]. X I then ], up X [ you've okay?

our is of think a those leveling since most of have XX%, that there's MDs we we that MDs okay? here. we been do some, of what we up out. see, see say, And, are capability XXXX, And terms look, I in it lot banking in

I only we that want quickly share, we're our to not XXXX not going want to money. viewpoint And think that we market is levels. make back

we're balancing those. so And

doesn't very becomes, strategic that you decision big is robust to really going problems. a it hire what can, market. happen, to And think other it's if You causes that be a into

being need balanced as well, our we're everyone are, down significant and activity very drop are shareholders, including improvement services, we will positioned here for capable in we capable we do market, as So always this sit but we to in very we have rather the today well bankers, EPS.

Brennan Hawken

Got record, for it. minus. It the symbol what was matters, flattish. And wasn't the the plus or

Ronald J. Kruszewski

equity, have have private to I want return Management return pause in been this private that the to also And alternatives just, money things know. and in little partners, of need equity limited okay? realizations bit. to of funds I invested go I Wealth a on on we that's question you we lot one know. new They to raise our but back needs this capital. and also, And the see to remember, activity. a drives and that side, I, our other look, the think clients the

get a lot as to done. are that of So things can requiring I some see transactions

sort back. can recycle the equity private that capital of So

on these You years. can't there XX for investments sit

topic have broad And of so the we capital limiteds. to lot of a see returning discussions around to definitely

Brennan Hawken

signs prospective of since up? that more that, pick mentioned another that, here. I'd in question to a activity Or have well? Like expectation the was the love On you [Audio you've [indiscernible] Ron, throw Gap] leading indicators as

Ronald J. Kruszewski

can to. I want me expand that Definitely. if you

Brennan Hawken

mind. love don't if I'd you to

Ronald J. Kruszewski

new no. when up is to your hard Again, to M&A, haven't go fund the It's in capital. strategic private equity, spread widens between interest as markets, you're offer one. last and realizations you have just one consummated bid the of not as No, ability expectations but the rates no. in returning drivers raise a

And expectations lot on across again, that's, an that markets. a that tighter, just going is of driving overall market frankly, bid that offer is And improved and tone discussions and in the speaking in to on, the there's which so this. market, environment

external we that's why shock So, absent any see system, to improvement the here.

Operator

questions have not queue. do the any We in further

Ronald J. Kruszewski

improving good. our environment will listen into as be an Well, to to everyone talking you in Look year go thank about results. time for to XXXX believe to want what XXXX. I the very I through taking and we to the forward

So next time. you, day. thank and Have good forward for to we everyone, quarter. a communicating your again look

Operator

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

may You disconnect. now

Stifel Financial (SF) 24 Jan 242023 Q4 Earnings call transcript