SF - Earnings call transcript Q2 2024 | Stifel Financial Corp.

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Operator

Good day, and welcome to the Stifel Financial Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, i would like to turn the conference over to Joel Jeffrey, Head of Investor Relations. Please go ahead.

Joel Jeffrey

Thank you, operator. everyone Financial's welcome Conference Quarter to Call. like to Second Stifel XXXX I'd the our Zemlyak; today Ron joined call I'm on by Jim Co-Presidents Nesi CFO, Kruszewski; Victor Chairman and our Jim and Marischen. our CEO, and

information our some this we page to posted remind slide forward-looking are and measures. non-GAAP audio in and listeners or would GAAP release, not at presentation our which statements www.stifel.com. deck earnings our on cast state found also to that to This a material can the supplement of I we reproduced be to duplicated, is a refer may an I of rebroadcast financial the for on Earlier that our of non-GAAP morning, and would earnings website, I would release without our throughout disclosed Stifel our consent the on as issued to Financial. be numbers and and of Investor Financial financial and press non-GAAP reconciliation supplement copyrighted presented note Relations basis, release. presentation refer Stifel slide

I CEO, turn Ron? Ron Chairman will our and Kruszewski. the call over now to

Ronald J. Kruszewski

results to result forward history. interest and to second to predicted Wealth taking stronger be except seeing from them client our levels quarter earnings look best Management both totaled decline items everyone showed the our a morning. time as and XXXX the improvement, of well. to activity Growth. represents XX% principal up All in second partners billion, line in quarter revenue the in here strong market Institutional XX% listen Stifel's business. second net operating as increased our Commissions my net improved, revenue with leverage Institutional quarter in Good particularly Joel. transactions income. call. in I'm Thanks, New our conditions for and $X.XX in our and York Thanks XXXX quarter reflected to second for conference pleased this our Stifel's morning as

capital Investment Banking up of increased market XX% XX%. Record as or advisory XX%, and $XX management appreciation. growth Net was declined revenue asset reflecting organic XX%. and up raising growth XX% income interest million was revenue

decreased the record equity both XX% offset the as half than of as and first We of pretax -- However, XX%. our the first was generated quarter an business the although increase illustrated net institutional efficiency improving declines XX%, revenue diversified per increase annualized of in by $X.X our nearly of from year, were share prior first well tangible on second decline in more an NII. XX% guidance. and year, quarterly quarterly which revenue operating earnings half both the model common NII a return predicted as of our of the billion, margin of is The $X.XX, within

consistent and $XXX growth Our support our significant in by gives recent increased the XX retirement to generation raised This cash strategy. highlighted Senior $XXX our us Notes. growth We also is ago financial bank of years million million flexibility.

than fund also more not notes However, expense. of own we in reduces current environment, in can Retirement the the its long-term sense only the that makes retiring liability, our rate is $XX interest these our that of and and now scale growth debt size bank annual million but financially. it therefore, felt eliminates

to review to X. do consensus on The prior our the estimates, we results informative, next which Street to we comparison year While are like also Slide

by came $X.XX $X.XX Street of EPS above net as expectations million. was $XX in Our estimate than The higher revenue

the our at that specific beat. items Looking earnings line drove

]. advisory capital above came revenue revenue. revenue than estimates the The than felt on transactional for income. interest has income. that item was stronger consensus in $XX note came driven First, also in Street stronger fixed The revenue improved million $XX was short net that environment by I'd expectations, underwriting consensus Banking only of primarily million above we raising Investment [

guidance on decline was a the came in quarter's is I higher more the stated still positive, point, we the offset NII decline modest our However, the interest which assets. low range. quarter within in a believe We and result second but note this may NII interest-earning incremental last margin, quarter than of net have slight hit that was by

in expenses $X businesses we of was X in totaled above On line in consensus. consensus, million announcements illustrate XX%, markets. our the Review complementary noncomp earnings ratio the $XXX benefits expense as essentially recent compensation our were while same Street million, with various as The Slide side, operating to

volatility X our offset our and increased able years, the with net business Institutional past we've of to the been income. Fee-based interest businesses the Over our of much of stability

most income. Putting this into quarters, decline in can Looking rebound you now recent the as at the and of the institutional decline interest see the has than year, half income margins X that the pretax first revenues is counter PCG has pretax institutional in NII. in improvement the up offset $XX held income in million the net growth in $XX more context, in million, our

in As revenue help. Institutional forward, will Management expect we we look the Wealth continued improvement and

advisory and Additionally, income offset equity. I are for firms. and return there a on questions on higher result interest assets higher of in net cash and pretax cash achieved all stable should accounts by know tangible sweep incremental interest-earning sorting lot margins common

this address will some of Stifel. Jim the specifics on how While at we view

Rate. for Let as asset sheet both rate side and accounts, me our offering prepared savings of state anticipated on clients just balance our options cycle, for as the by well Stifel this that Smart primarily

to a material point, guidance for As are year. NII to this our such, changing this this the matter. remainder of we see impact not we And underscore relating do not

the our Before financial business. little the global I a our over results, Wealth Jim discuss more of call to want talk success long-term to to I turn about bit Management

year, ranked Study. #X mentioned Satisfaction the I second U.S. in consecutive the Financial segment for the of was As Advisor earlier, Stifel Power J.D. employee

marketing also The adviser turn support. this #X experience, client which of values results and advisers is core ranked culture, Leadership Stifel to in overall, and X products operational categories. first of proves X ranking our in survey continually experience. to the better addition our improving of In and leads respecting further and

on of to to values these our advisers attract client revenue and a exceptional foundation strong history service and our continually platform, provide to people retain growth. enable been Focusing has high-quality

And with that, our CFO, Jim Marischen, our will quarter discuss results. recent most

James Marischen

Ron. morning, Thanks, Good everyone.

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

of revenue net billion year-on-year. quarterly XX% Our over was up $X.X

increase the revenue income. by net year, of first and billion driven interest was was XX%. by was For client revenue up facilitation, lower stronger The advisory, the underwriting trading half offset of partially $X.XX

quarter year-to-date. Higher share and XX% revenues more XX% in EPS growth. up the a than lower was and year Our second the modest count expense from offset prior up

Moving than record Wealth on management Management revenue on pretax our to were strong more our was and a revenue growth segment asset transactional record margins XX% million, revenue. in results. Global $XXX

We platform. continue to to add our new advisers

advisers Slide we total of production low ended billion, our increases XX this total advisers, sequential the fee-based X. client We assets $XXX markets respectively. trailing with experienced with added and our a $XX.X During XX Wealth business of net $XXX million. billion We and assets on and included longer-term of as quarter, the XX-month highlight due Management our the for quarter record grew The were organic growth in drivers to assets digits. equity new single higher growth

majority We revenue, revenues recurring record business this vast Management on our as continue Global consecutive be comprise our Wealth segment's for continue of to the revenue. track to XXnd of year our

Our as recruiting commitment our highest service for J.D. continues again advisers to of our by to be recognized level the once solid was Power.

$XXX year-to-date. began totaled conditions discuss of segment quarter, Revenue On the raising $XXX raising Firmwide, that Group transactional was and market improvement million, strong million Total where XX% XXXX continued. revenue revenue sequentially and year-on-year. led capital the Investment in I'll and the Banking the Institutional while towards revenue both in up next million increases was advisory $XXX increased our end up revenue. of by and XX%, year-on-year in slide, capital the for

expected, XX% the underwriting and contributors. revenue strong Equity to health million quarter As the $XX first as and and period from were in banking. over financials investment lead same underwriting the rebound in up continues care was XX% XXXX of

XQ X% revenue to improved increased revenue book as underwriting income lower offset 'XX Fixed from taxable issuance. helped finance

ranked the in negotiated we $XXX of the was Advisory We and XX% share. market be our municipal were revenue number million, the underwriting nearly was in a continue with leader #X to transactions business quarter as Equity verticals. in industrial since XXXX, revenue of $XX and XXXX. transactional had [indiscernible] financials, quarter our as up strongest first in XX% we million, solid second totaled quarter results the from

Corporate trading remains XX% the year-on-year We continue offerings million activity very income in as in traction rebound with strong of best-in-class well to slow continues electronic high-touch and our our Fixed research. transactional as our solid. business Rate $XXX up gain business from and was Debt to revenue engagement XXXX, as our

and billion our more advisory was industry result the in on quarter. the NIM. On interest deposit and and Additionally, the trading increase discuss deposits. sweep declined of from in we balance a [indiscernible] in increased recent as X, our improvement levels decline during asset of primary costs. yields in half on our in the range decline results a decline The than loan increased of was income interest-earning gains assets by benefited $XXX offset our average million interest-earning the Slide in The of $X bank I'll Net driver NIM cash nearly a lower sheet. focus was

senior obtained to the assets, Given expect we million debt, range. and our savings be that in higher third expectations million interest-earning for modest million by the off as cash quarter $XXX paying $XXX $XXX the sorting in as will the well NII interest

points. reserve Our asset remained at nonperforming basis XX credit metrics and ratio strong. The profile stands

our balances Our impacted points, growth XX credit in C&I. and total the loss fund mortgage banking, and consolidated which loans provision the to totaled was loan for quarter, and by allowance million $X ratio was basis

sweep X be spreads leverage in And to unrealized market. and in capitalized. relates this as increased recent to impact to continues credit Stifel. on the consequently, we costs has the it as higher to to I drawn also deposit basis the well advisory also sheet improve, regarding important sequentially industry, our felt note balance to as CLO the concerns This interest XX.X%. that potential it to bond accounts. points on for portfolio Tier on significant want continue touch losses XX the Our the address tightened issue was capital

been industry for trends sorting much Let that forefront has saying of the the of Stifel cycle. me at start cash by

competitive retention rates savings Our in which Stifel. Smart offer a account, client resulted clients and the to introduced of cash was before Rate within product rise began

rate positioned acceptable risk-adjusted balance insulate us provide In addition, we and margin. interest to from sheet our interest net risk

deposits offset deposits the have sweep cycle Stifel Smart approximately sorted of XX% $XX and of billion billion pre-rate in sweep way, Stifel's Rate deposits rate $XX of Stifel another Rate. $XX Before deposits. Smart billion. Said Today, increases, totaled approximately into sweep has

utilize advisers in for to generate the balances market the and ticketed our to cash growth that point highlight money fund treasury to I'd our yields additional clients. higher Additionally, their alternatives short-term

Generally is deposits operational the speaking, firm-wide as represent per balance average cash, sweep $XX,XXX. account roughly

On of more average hand, cash, an balance Smart of is Rate $XXX,XXX. representative the other investment with account

incremental advisory believe of those In we product that focused the have the accounts, and much higher-yielding needs. we this liquidity size through of as not deposits of $X,XXX our short-term impact X.X% is primarily of to we the and to sweep alternatives low deposits material. to deck. and our disclosed being account within the our our slide in We potential compared sweep source our platform, provide as pay is to total maintained efforts utilized of our as are fees fee-based advisory average believe only to issue mitigated terms to Consequently, fee-based Stifel of intended, meet which a percentage in clients, risk designed sweep accounts cash in assets, that represents cash given relatively deposit assets

net income To illustrate this, we our changing interest guidance. are not

OpEx at of of we costs through year $XX to and incurred at during Comp-to-revenue note which was banking we next On the I the nearly expenses, to gave second revenue as of quarter approximately effective our Non-comp a expenses international again that the slide, high of The beginning the came $XXX the totaled XX.X%. guidance our provision would the year. investment go rate in severance was million that tied our XX.X%. quarter during end ratio tax excluding we expenses. related credit XX%, quarter, full operating percentage loss in transactions, efficiency in operations. at Noncompensation the initiatives was million. the

let position. our over the I to Before discuss call Ron, me back capital turn

bank million last On $XXX that call, the retiring off ability maturing of Last to of week, given possibility our we were July, we this in Notes Senior quarter's paid debt. its growth. in the its indicated growth and fund

to reduced we've Notes, Given of we our ensure buyback we the ample the our this levels accept conservative the Senior activity approach in fact liquidity. and quarter that first than had was time retired more

down quarter. result, XXX,XXX significantly a quarter from in prior the was As repurchases the shares of share our

quarter, the we the end second remaining approximately XX our of million of on As have authorization. shares

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

Additionally, quarter we continue cash excess GAAP as illustrated of income substantial by net generate our of to amounts million. $XXX second

over strong this a stable turn quarter Absent done returns focused risk-adjusted fully well assuming that, deploying through let repurchases. acquisitions share making count the any price, expect business, reinvesting and million when in to Ron. the stock and we'd for to be additional on shares. generating remain the We third call with diluted share XXX have repurchases through assumption back capital as share as me And

Ronald J. Kruszewski

Thanks, Jim.

the future. remainder playing by of conclude the and year we about are why see me we how optimistic out Let talking the about

above of and year. for half for the us with the Our in full annualized roughly of Street line midpoint put estimates the guidance year our the results first

last the for risks. of its said year outlook the certainly remainder is not quarter, I As without the

However, trends well operating given a second and positioned in leverage for seeing the strong the are current market our we we that are we the believe half. business, in

that over $X $X client share, in our we milestones our long-term and to believe in billion will in annual on trajectory assets near-term reach revenue of milestone and Additionally, exit be we per billion as as $XX we of $X well XXXX, revenue. annual trillion as a

line of XXXX. improve. at of our results, we items our as guidance We see slide, arrows revenue market least revenue not have half that right the on will as to not you match, exceed, all the can from changed conditions our believe if continue for But first side the

driven are On trade to our Rates far fixed so and securities resilient more income. equity banks been the year both this transactional and business improve is activities, side, underwriting Wealth In opportunities Management increased investment our their have seeing as continues portfolio. results to by in banking,

also the advisory from up. continue pick results from capital As of raising, closings we look increased at second the year, levels as activity continued improve, but half solid we anticipate performance to

revenues off for Given quarters priced Management locked revenue asset X trailing in XXXX. that most of quarter Asset our essentially we've levels, of

In interest we're guidance for income, our NII. terms as articulated, previous maintaining net of Jim

ratio we narrowed guidance the have reflect half range had we've side, expense the the On the compensation to in conservatism the first for our of that year.

institutional to our half, revenue in optimistic we are building still While segment. for levels, we second are particularly the XXXX back our

results which As such, we've of tightened for optimism still the the year. our guidance to in XX.X% reflects second half our to revenue stronger XX%,

initiatives In some for addition to second strong our some expectation from a the benefit half, see efficiency we of implemented. have we should

mentioned, a As rightsized we our operations. million severance charge as Jim took international quarter we $XX in the

path decisions it a these easy, impacting never towards on without our are improved revenue our believe growth. puts While we stronger business profitability

has leverage built to our bank, and really our the Let of asset I that its in proven is I've revenue by generate about operating added increased future management business me to finish strong that of the made returns business, growth results. as am market our been. ability stability the saying and Investments as ever We've we've ever-changing optimistic world-class resulted much diversified conditions. have despite of a

in generate, our Given always, to continue the focus on excess return we a capital our business shareholders with to capital we'll as high and risk-adjusted returns. reinvest

operator, please that, for questions. up lines With the open

Operator

first Instructions] with [Operator Devin our take Ryan question Citizens JMP. We from can

Devin Ryan

of on First question, cash Ron. commentary, some the sorting just

the for would And close curious, I'm a cash such and transactional also, to more there. know do brokerage flavor at then of Why the probably potential just the Does about any at move? a and spoke I with weeks. did you about between you it competitive they low you it on cash house think be comments do Was that? moves levels Stifel difference questions all? were the we're You I great? the sorting. couple end appreciate fee-based getting think past guys have influence over little And wire really the on

Ronald J. Kruszewski

doing. are people what We your doing. they're last or like what And you take know want exactly don't first. I'm what frankly, or are reading to why question

or comments higher their I into it's cash You that cash the advisory platform. read read rates. is that transactional all eligible not that for operational that, part means is Look, of not,

I not ones but little rate, they're So bit read where increasing I to and other that. read a high the the up yield. just

I What just lot and know. there's really questions. doing. generally we're speaking, So have I to would what of I don't as doing a though, been been relates it has Stifel know we say higher. that

and -- the very ] still a of institutions We deposits are at [ were .XX have our don't deposits. a on end low of very, sweep sweep paying lot

looking and And wait have I to some the really from so option They "X.XX" some coming look, I But it. where is as that's see cash. that's this a are at pressure clients higher of where it. it of people think alternatives so for need minute.

have operational brokerage think run provide we've largely to and that both a cash, We what in That's topic talk been business advisory. our and suddenly have for doing. all about. in transactional to put we we've became what mitigated place you the products And

sometimes I we've to But So happened, as -- what's really, look up. see as around cash, are account at this mature, in normal it bonds it relates moves think moves you'll Those sweeps and and this correctly, operational an levels. coming a Jim account, mentioned, to so when prior even what and gets $X,XXX average reallocated. managed is it all the you it's that with

because low and would between In of And of transactional rate say, advisory. the similar metrics very the fact, brokerage cash environment. levels I are

really just all look. took that know questions. your I that's how So but we I reverse, answered don't -- it in

Devin Ryan

maybe appetite and question A the what Yes, be spreads in just would you're bit would ability just want into about on really It and and Jim, the balance get you guys of thinking helpful. market an to then just for growth sheet new expand and in on sheet sheet just market? the just where to seeing to great the for balance in? the loans update balance that a potential lean

James Marischen

No. Yes.

we balance have the on sheet. capacity obviously, So to additional generate our loans

well I categories if hundred fund we've grew mortgage, talked at think growth loans, of if look We about in you with think in fund those the attractive the to order, growth million for you returns All obviously, continue at growth look capacity you dollars. carrying, excess look banking, we're growth the to last liquidity our the CLO as a to the risk-adjusted be capital the couple normal we we're grew at that you I portfolio. at look going categories us. see investments the And quarters, at over given continue to as there. this several

If you numbers asset look carrying million the cash. growth at were result we of that coming didn't pure quarter, up current in $X over because most of

cash of So into loans. was reallocating most that from

as So as on as the that portfolio as incremental forward, you CLOs. will well see sheet, as deposits bring more more we on balance we be grow pickup going even loan

Ronald J. Kruszewski

our to X.X Yes. going that supplement I'll your to a of dynamics of And to the your been and the it's less. NIM to but what years to And not we've now than issue -- of and loans I frankly, have, what we highly being the thought we it Devin, from relates position and balance getting sorting part looking and almost our we we sheet sheet. position that sorting issue in is want what first cash because be then as a know, see were the becoming balance straight and cash is -- limit suddenly because, we back and would were different it appetite not the one X. volatile points growth up forgot XXX And in we Today, increasing volatile -- here. for that get less a said question, basis less that as didn't anticipated perceived in that go primarily grow at where I was it understanding and I'll because we generating

lower. numbers significantly lower. of appears certainly, not on but increase the -- to rate out going ever, be The I'm significantly prospect based to it recent rule a

dynamic in In think says stability that and believe we now yet manage a our some confident I'm overall, created fact, an the assets we September, adding rate where in we the has not it we more see decreases. our can ability are happened NIM. you'll manner risk in about this of that camp

Operator

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

Steven Chubak

the appreciate thoughts your on sweep I the the topic really dynamics. Certainly, the deposit at moment. is

we've the deficient offering been that that following questions just getting a expose are maintaining to just of, at hopefully, the to in Are yield competitive And sweep disadvantage, folks to guess, scrutiny? understand confident adviser. trying not Stifel. wires the not competitiveness the you is sweep you of the to remarks least of recent to being, to your overall your put is the One at sweep I least the does the potential context moves relative at bed comfortable pricing the for for offering time issue, regulatory you

Ronald J. Kruszewski

sure to your first, question need Again, last really there's recognize, a lot of the regulatory not aspects. We of differences.

of it have. fee-based manage fees, a have various First than relates accounts, we got we we generally wire products. don't. on, that charge to have can and brokerage, of And The that account pull lower that speaking, our how houses, short interest for it had they platform The long always our broad instance, is we accounts. we levers fee-based a for as impacts discretionary nondiscretionary of and you've all, lot the question

So look, are competitive? we

competitor. a we're Yes,

we to getting We recruiting We if clients competitive. wouldn't people, be be have be we're not competitive. wouldn't

you we'll all of product So when of be go And clients' a our competitive. into to remain experience. we're consider for course, clients that the competitive. the And competitive we things offer

very, very the has something been on X.X on last that been years. we're So laser-focused issue we've this for confident. laser-focused And

James Marischen

I the were peer in came from where on to we're that competitiveness, you X% of we up some when already And think of the moving program. idea news at. they're of larger that sweep competitiveness the certain yesterday, accounts the at And already out offering rates, of you our the of that's terms if look X% think reports indicative

money have alternatives, market funds. particularly on mutual to the number we of addition platform, our across In products

Ronald J. Kruszewski

-- our have -- issue that the just other a you parties not that, thing don't sure Steven, offering it services fees But as listed as don't to we're rates people as pressure and on, don't interest -- platform is, yes, platform I'm I'll be whether even and on we subsidizing issue. I an low one no we you not platform. your rates only think an well, there issue through there a you option. if because say, can't I that's And -- and there's do say you

that seemed so issue. So we have I to don't that in -- point speak. we because But gotten out lost have really that analysis, some of to the

all not that's say that. So about I have to

Steven Chubak

Understood.

sure are going to Well, I'm have topic. this questions Okay. others on

the to the really I'm guidance the at least to near of Slide recruiting of guidance of hoping XX, you some higher So NII simply could the ratio just the also near the some going switch other where of we gears of off end. journey potentially mark-to-market Is I factors? years? are unchanged, pressure the in comp upward higher COVID the revenues just speak consensus or mix? was the And on helpful drivers Are shows to in packages it comp. coming due range, to end there the rolling

Ronald J. Kruszewski

COVID recruiting packages?

Steven Chubak

where hired more in terms you recruitment. folks lenient were just Yes, XXXX, during 'XX banker of aggressive you

Ronald J. Kruszewski

more have a about Management. packages didn't that Well, feel thought here certainly did to Wealth I've business, that. said changed did that. I do from the and We I sorry, we you we a staffing. materially nor haven't ability platform of is been XXXX, opportunity I'm that think we and significantly revenue, we I generate the over billion an built issue into program that And were have supports $X.X we even in talking recruiting issue not revenue that the that --

little reason that tightening second we're are will that is think as we the is track as well, range we on answers a that where So we question the our to be. bit

that equity are And $X.X it retracing recovery that hockey business. and our really at went billion we it's comp to within the all to we're year Look, the if happen a just annualized $X.X where revenue as think here. positive, of forward from retracing therefore, think you revenue. if all out this We're billion narrowing it of We our type with returns, our range, of back. we platform. in the the stick which be on to plays expect in We the generating part this curve high realistic conservative business, so rates, would capital on not view doing look year. rebuilding the high of we being of of don't We improvement see I a business. our investing kind negative. in don't return of that optimism decline. maintaining We're I -- is And tangible share range, we're and

James Marischen

that I'd This able we for comp first down add to the sloping to months, group million comp Obviously, up upward revenue role X our year, either is And NII or year in year-to-date. the results. NII XX% institutional a big a a to leverage, little for bit. NII a plays last down. hold but $XX were in challenging environment

absorbed that about absorbed to months, of think comp over that we equates and you X that about we X it. So points margin, the first how

in rebound the Some of that businesses. subsidy decrease is and in the other

factors but I here, point a able we're I'd moving of model business and a material to not the to see diversified stability of swings up different obviously in there's so a lot think business how environments. number And of

Steven Chubak

-- in squeeze And going quick one more just one. I'm to

given tough to Certainly just drove to what sweep the see, a costs but was decline lower Just reconcile. bit in deposit encouraging quarter-on-quarter? deposits

James Marischen

costing that deposits It type to higher sheet. basically moved that type Yes. balance related We It not all sweep are sweep. deposits reciprocal to we deposits use quarter. ICS more off was was deposit, related a in

but basis. sequential of points a fluctuation that's of couple that a what a so And it's change, drove on basis

Ronald J. Kruszewski

that. do flexibility that have to We

So...

Operator

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

Alexander Blostein

questions of guess, So just the, so the the I staying on or a [ more weeks on week couple of ], clarification. a first, topic

on of deck, read that rate based dynamics advisory And might that plans the saying you're of to regulatory on of I pointed thinking cash already $X on kind and you're no that the that. in paying sweep X% the kind evolves, to But Did billion So change as well? ... how roughly you your evolve that. ultimately, there's

Ronald J. Kruszewski

you but be into normal $X,XXX I cash It's Alex, Let sweep every cash not here. mentioned view normal sweep of there. average tiering. That's is that's what Tier want if at And our you What as we of of balances. there's me that operational rate X%. I operational our balance sweep a product. I was The our deposits in to that is said X%, highest our goes view portion heard. sure stop what that not

at, just saying were go -- I where rates. they on clear are So people some let's want be already But there. to we

sweep deposit X% for Our up pays [indiscernible]. including everything, to

Alexander Blostein

Got it.

helpful clarification. That's Okay.

guess on building I So it. just

are So and that sweep from obviously activity. not, the line to from fall BI there fiduciary fund, under small small right? And and in operational [ Rate that Because like investment or still obligation balances I'm or cash different? it's because while between Does red that understand just fiduciary in insulate whether you money are the guys customer rate operational is a could preclude that way of the some ]. this is their it. operationally, right? industry nature, normal performing having not the trying described How under that, under as [indiscernible], transactional does deposit you they market Smart the or

Ronald J. Kruszewski

I that's reasonable. Look, pay a fees -- X% for the understood. of know to Most about making part X%, reasonable and okay? That's operational platforms questions, be to I'm platform platform have ever very we into need to a percentage interpretation to regulatory to allocate cautious advisory will cash cash. needs have that

us and take what law just putting that's need have As -- for charge and or we it's or competitive. highest long they to And we And would -- you advisers with biggest a there's the just the as your have then competitive what a -- that rate -- is choice. wrong the charge can mean, a reasonable. to let's to highest do, leave. says not be and the assets that. fees charge if no in product for fee. is you says competitive a what understood, advice provide There nothing happy whole and Reg do EPS it have and says client they BI clients we the so leave grow I just have we that -- competitive aren't driver the thesis need you product certainly or not that lowest is that's that's it's the It's

very it when where are. think we're we I in, So comfortable all boil with you

Alexander Blostein

I got Great. you.

Okay.

Let's as of recruiting thing about kind maybe a it's a just quarters being know talk tougher from in more of the make competition with Maybe on. I little cash whole bit results particularly industry Stifel providers more move pressure of aggressively from for the some for of the if inorganically? from recruiting see been a or whole relative couple to If to opportunity, environment. all, there. the do something into some of last perhaps priced bit -- this at higher over of either market aggressively some relative private kind that I bit more doing a it packages, you to perhaps what firms, guess, lean the more

Ronald J. Kruszewski

adviser, is think This full there. with change. said that ever the for ongoing perspective, view, from They're cash. a could I you was cost competition long always supplementing was will and low recruiting Well, by competition and maybe it independent, impacts you service I've because my supplement always client dynamics from changing the to platform lot of employee look, higher that compensation migration that part were for and time very just a it a one subsidizing that speaking, Broadly of there there's recruiting. options in

we X.X will industry. think this speaking. to us As beneficial that on changes, that for change to economics of which from platform. side competitively that X.XX change the dynamic low which view be That will will I very the

Operator

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

William Katz

on sweep nature of one -- and elementary have excuse question. the maybe do cash more this the I

even better. hands fixed bit so and forth. of third-party the If does but on trying little -- yields? I transactional sort get sort or look to if cash to for rest guess, the X% of under Rate appreciate you the bank? cash pressure either outside Just you income there you But of swept of deposit around how to sweep and Smart a my account, around were upward of sweep so, sense stack up? cash that kind a idle, makes are did that and yields when I have keep the it just Or the fiduciary that put sweep X% rates on

Ronald J. Kruszewski

tremendous higher-yielding are savings sorting give which seen of into place we've funds, tried Bill, a and the And look, ticket the treasuries. and seen part all cycle we've products money to options. competitive an increase in And dynamic. short-term increase cash watched of sweep we of in put to move pre-rate our to those encourage say we we've XX% that in deposits of

deposits asset we balance we as so can on we would it, of if deposits vast look because sitting we to sheet. we'll pool yields, as So liquidity that do the the with vast, eye have more attracting a raise that from we off at deploy feel choose we side, --

of dynamics will more to cash one the -- of attract things be rates onto the all increasing dynamic being the platform, So equal.

believe dealt going -- the regulatory is not we I in with I'm some you all the we offer all the have So what when and look, don't we it, I competitive platform But know us. do that on feel think understand costs a comfortable. that fair into that four fair -- of inside a very that I of on go that aspects, Again, have consider what what's product that firms I can't walls

how the something So elementary. it's one something read hard multiple do businesses. think to manage And with know actually which answer facets, trying very how the and your know I what experienced not It's to I'm to this It's teams complex is convey all management -- of I here. where to question.

have today. a of navigated We've and and in are And I management of changes we've long been market we through would and where all it doing like one the think to kinds I ahead conditions them, of those gotten feel many market and that's time, of teams. we're

William Katz

helpful. very for That's And then maybe one Jim.

Just about out capital Maybe Tier capital of in pace ratio that we versus in any could cash very should priorities, X de ratios is How percentage of between now you, priorities put buyback you inorganic behind flow here? leverage and/or terms are the opportunities? maybe your of think and from free novo pay good. debt that of maybe

James Marischen

Yes.

mentioned today. $XXX the as we million capital we call, of excess So have on

terms of and within that to going buyback. ability bit about the buyback loan little in bank That in the the said, in a price be can increased will capital terms is deploy our bank. portfolio. capital to has growth it of capacity some dependent, capital be A the talked linear. done not of lot be allocating we've to generated Obviously, with the just So

or of terms process we payouts formulaic terms a in in price. don't And so have of

may some you will we point in buyback be capital time, the increase over be will And We future. opportunistic. see but at some in active the

Operator

take Hawken our question with Brennan next We'll from UBS.

Brennan Hawken

my ago, props here. got about peers the I'm same years my flagged risk all and and on you you to though, did actually going to have spoke first and sweeps. sweep And I about this, Ron, that X take the question the for option we some potential risk give

So tip there to on question. my of cap first. the But

Sorry...

Ronald J. Kruszewski

in I'd did with No, the about thank about and we is, you. products talk we this. to remember, I add put deal only talk did it, We it only thing it. not to but

you thank but remembering. -- for So

Brennan Hawken

Yes, yes, yes, course. of

understanding that it's of And Smart a buying rates Rate for Rate But clients is you've offering. as like accounts. be seen. held fund. item that So And market a in take-up you offering money had the Smart compelling certainly, cannot evidenced like sort that's by advisory my your a the ticketed flagged

that address to action. yet. the report excluding given actually had overnight. the changes not doing lesser haven't fact It made we that any particularly seems I'm I So a this be issue, understand sure really how a They one press that would

other advisory have moved a all wires more to The compelling two rate.

a advisory. though It as distinction brokerage this and -- there's drum seems between

really issue. an And And model, this fiduciary fiduciary. is is firm squarely in so therefore, a employee a the

is above and the believe fiduciary of similar direction a client's when moving you a in that is far own not to the it some that putting frictional you obligation. interest their distinction wires, maybe cash to firm how not bothering as So it's these as -- draw have the

Ronald J. Kruszewski

Look, a you're the reasonable. conflating the lowest -- fiduciary cost everywhere. It's possible obligation is

meet have obligation. that We We an obligation.

that you terms been I'm adjusted. not that take You have read else. extreme The sure properly can fees don't to of platform has -- all and everything disclosed. to needs in that cash be advisory the I

read, a is that read cash operational not for industry for what to saving, the of advisory been used which, and has me, reservoir this anyway. fact, how transaction, which I the In eligible based is that's lot is I've cash

haven't. -- how really done I they've know if that. I don't So

large suggests And firm again, was not that there were press doing reports last that. a night

to only are, we thing. right. making I'm competitive. doesn't And competitive we're don't that the I the really. trying nature again, So understand -- it trying I'm -- that's of And sure all

crazy and that's these it love rate, things specific of rule, Smart doing rules from should that regulatory as not Now about we account, to advisory in that about available, the Rate of that. some relates offer an are some but to Smart there would it be advisory, prevent arcane one aspects. us

So we offer yet money money we product. ridiculous, great -- We Rate move Smart start what ticked advisory had as funds. we sort to to happened would a choice, our obligation But those our fiduciary has in offering can much thinking when just be the of accounts. instead, can't, we those our are about

James Marischen

to are identical yielding Rate almost equivalent Smart ticketed sweep advisory and ticketed what's of money is. accounts. advisory is accounts And money funds balance funds the the roughly of the And is interesting what of balance cash

that is can you see sorted some Ron already So as indicated. there, over cash of

Ronald J. Kruszewski

these that's Look, the the -- side. is it's are on various everyone, and understand the question. going first to the would very side, every look I platform just fiduciary to questions, of everyone brokerage first asking I'm at this the side, this call. to you -- encourage question be the all sure aspects

implications. have which of All

we so X we X that done feel that of have have competitively. to deal buckets those And we appropriately We and have with.

Brennan Hawken

I data But we're very frequently. and fluid, fully situation appreciate is getting Great. very the points

the that be So indicated flat bit, you providing thanks on will think, quarter end is limited that though I XXX in share gears at misunderstanding? third the that maybe already I Jim, expectation your million. the even of had rebuild we the for Shifting quarter mean maybe Does perspective a expect should cash? buybacks count third retired period Or that. to debt little you am roughly for with want in

James Marischen

anything in what assumption of change to repurchases. what would not two about specific like. assumes give is remarks, be stock number and your the put repurchases. in. plans would in we What just no We've could price buyback not no prepared you And are look That indicating those an for That's our the additional what idea fluctuations. included you said our absent

Ronald J. Kruszewski

Right. the -- outside said you your on He stock price will gives that okay? it. share me, decrease and diluted the he shares then number Jim now, gives our an our base in increase purchases same increase here's layer

that same the base stock do, prices. do can thing share you two variables impact and our the with XXX repurchases that and we So that million a okay? of start base will We

Operator

[Operator Chris next with Instructions] Allen comes question Citi. from Our

Christopher Allen

a bit. gears to switch Wanted little

I at talked this about Maybe talk point. here. think for about could enough deposit rates outlook we've if you growth the from

impact there cash You noted is sorting declining. that the

for there's if you've I and growth wondering loans loan growth in kind loan from here? know appetite factors going of relationship any the forward? clients aligning past what's Just with the talked constraining other about with on about deposit

Ronald J. Kruszewski

I tremendous no. said for have I've -- -- mean always I demand think we that we loans.

growth do our constraining uncertainty of forward on that and proper sheet curve. it's -- of the properly all sorting with side a balance limit funding, here of liability One say, which the again, of the look, boiled And is the curve foundational cash what and a and one to couple is -- has we funded how deposits yield the of -- inversion years together, foundation yield the clearer the picture factors we that ago, has the get we're asset basis of been and until going the on said we of side. and

into, say always would how getting into a where think, which what to factor about. visibility sheet in into some sheet. talk entire can yes, of able the have are profitable just we to way, can today, We the got I that grow. position if running And is of build balance is constraining risk-adjusted point I that today the balance see, there industry answer one, be, sort past being that, we will of we is The you

relationship was on lending that, of that might deposits well a But and income. of constraining because a spread And you had bit you rent did it but that spread only variety looking you -- the a We almost to just we're factor lender clients now is washing not as that were lender. that not and so the to lot. a you were be were get basis you what relationship that to build were doing little

or have when business, you treasury an more sheet, other going whether evaluating we're we're So lot what overall those putting do all it's in it's doors wealth to a are term that or in balance ability to our of on relationship. or banking if will, things and

how which opportunities the comfortable growing economic us a we for it, just to with us tremendous with say. that that's But all. It's even has growth at of for and into. talk -- getting that's So amount would environment about internally, ability I that's overall is a grow. we're The what not problem

James Marischen

particularly the with And quarter, up as talked relationships, has of when were pace million. that probably already those those $XXX of third produce about. of deposits, lending, Last some fund picked venture additional Ron banking, think And you the quarter. another in those up

to another liquidity of we're of sheet overall fund growth. and the provide we've continue to source So of to going fruits seeing made balance there, some investments the that's

Christopher Allen

on topic. just one, another And a different

but bit, outlook environment down on activity to And the the slowed thinking marks little you moving Just robust pretty continues FIC here. quarter? trading on trading, any forward? from during about We color trading how the are look know credit a rate

Ronald J. Kruszewski

that to balance of asset picking us look to make decisions lot environment up the the talk think sheet, trying same on about side correlated our forward to what for reasons that rating might Yes. bank it's on a I rate's we know I like and thing -- is activity the Same the see allows of that line. of we to risk, trying related how those We portfolios on and what to are that, things. We reposition in advise And help tests their positioned stress help which help do. doing on around how interest on banks and that. rate portfolios the strategies directly various we against strategy, is what on we are to portfolios. understand their is

on, -- in A, because of expanding of lot is some picking I we see were is up in not a outflow and the environment. that absent we and trend in going lot that cautious, marketplace, uncertainty there trend see a XXXX, the that in very trading of what But change the and that the good. economic deposits, business think And people big of was

James Marischen

sure. But in For do I bit a we see would some seasonality the historically, a of quarter. highlight, -- third typically

in picked then the up fourth back and Some that's slowdown there, quarter. kind of

you in during as as I those And that forward some consideration. would of But as we the of of kind quarter gains into your in the the some to for into that did remind you of well. look So rest played have take thinking just forward mind things numbers, XQ the year. results keep you're

Ronald J. Kruszewski

my on my to viewpoint marketplace. of quarterly parameters CFO count I overall on put the always

Operator

It appears additional remarks. I any have at the turn Kruszewski, further no this we or Mr. will conference questions back time. you for closing to

Ronald J. Kruszewski

thank XXXX. improve. Well, uncertainty that the say you as, see perfectly. We And the come what the into off of velocity for will still would is table, we're -- exit to continue pronouncing remainder my about where believe name year the the excited I we markets

sign forward on I will reporting to you, taking to our we Thank quarter to and year. both the our you off. and mid- And look think us, third thank milestones everyone, way talked after time are long-term that And about. I to we you. the we've for listen back this to

Operator

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

now disconnect. may You

Stifel Financial (SF) 24 Jul 242024 Q2 Earnings call transcript