SF - Earnings call transcript Q4 2024 | Stifel Financial Corp.

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Operator

Good day, and welcome to the Stifel Financial Fourth Quarter Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Joel Jeffrey, Head of Investor Relations. 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 earnings Relations Earlier and slide page to website, at posted supplement found be release which this www.stifel.com. financial issued can and on a we our morning, an deck the Investor

basis, cast presented in and our on consent non-GAAP of that note would Stifel is presentation refer release, we be and the state on that supplement Financial a also for Corp presentation our as release. would earnings and forward-looking our our reproduced the non-GAAP information and non-GAAP I to without would numbers cannot or are rebroadcast slide audio I copyrighted to refer listeners reconciliation to our statements duplicated, some throughout GAAP to of material remind financial I of This of press Financial. Stifel disclosed measures.

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

Ronald J. Kruszewski

taking Joel. for thanks year earnings call. morning, time to fourth and and to XXXX conference everyone to full Good quarter listen Thanks, our the

results take outlook, people our tragedy. and into do want Angeles, I who to Los of get I and prayers Before with dealing a ongoing the our send to the minute our thoughts to have been

for the we clients, of and responders in efforts thanking their everyone colleagues join our with Along communities. many first for devastated the

Now our on to call.

by year Global results strong year at generated As revenue record we on X, exceptionally another in see an Stifel you Slide record can Management. from driven XXXX Wealth our as was net

second-highest to in income, the more of which than million from more in in than institutional model offset operating interest difficult environment in the rebound to our business as Federal important net experienced $XXX $XXX large to Reserve in segment, this revenue our of in factor leverage annual part business within decline cut. the we an revenue was ability million we increase the very operating generated realize was our The institutional due XXXX. our as it And rate continues

a increase and margin earnings return equity what our is XXXX a XX%, I'm per common XX% [ not XX% a fact of still operating particularly with environment, our share. Overall, of to business. given more pretax believe in back nearly on ] institutional we our that we generated than equities the a normalized we are in tangible pleased

call that few and normalized pretty as Well, view institutional our on to group our stated played out. to like year XXXX, to expecting highlight we a were we I'd return not And year how last noteworthy the this XXXX I transition to much yet, is year achievements. a levels. productivity

transactional and in First, activity Management client year than record net recorded declines Global Wealth income. assets interest as growth in record more offset another

Second, had capital improvement in raising XXXX advisory was revenue. second strongest our transactional substantial year as and we

for growth. year strongest Second institutional

commercial in avoid long-term in Smart growth the Third, results enabled of we as of of deposit our our strength bank, cash to our the how highlight industry. levels our many manage us plagued maintain product as deposits well our approach early impact story and Rate XXXX to that the implementation the

position much increase which net we insulated against most us floating instruments, well sheet rate remain assets in stronger will balance of XXXX, believe keeping rate we stabilize line bottom that we NII we help our by finally, exited our a in growth. year. And we The through and saw than the margin entered XXXX and further is interest changes,

strong. recruiting in are Looking forward, very pipelines the market wealth on our capitalize the to optimism global positioned well franchise and is continued

this business, believe pipelines -- M&A We and that and conditions tailwinds market demand pent-up due have bank increased capital particularly investment to investment improving raising. Our our for banking there to are whether administration the increased drive result equity. deregulation. business financing on focused and investment and requirements, is the the or as of and U.S. strength new will economy debt Unleashing growth the

will which Additionally, management FDIC, M&A be our bank environment. majority and increased regulatory especially to appoint of agencies. new SEC, X levels administration banks. the from that standpoint, With the for lost deposits, This of market OCC regulators a in look grow cash we assets. interest-earning consolidated our the within wealth the new other it capital commercial and should client will the assets, shouldn't comprise benefit particular, and

be operating enter NII XXXX. of should regulatory Frankly, framework, rate Stifel the combination curve institutional very both of a and interest and for favorable strong environment the for normalization increased the a revenue out we are as

will to $X.XX we as our generating recently our on to note, excess that returns the a best mention with capital our always risk-adjusted to per XX% deploy that continue Board in want We dividend a common On authorized I increase stock do. focus share.

and Moving services growth at look we Legg the Capital XXXX, performance a has of our on that Markets. we the this became In Slide and company to X. always is a since today Mason beginning been of stock. acquisition financial company diversified the be which will are growth we chart, business when Stifel with

the Microsoft. However, to performance from you a been price share the XXX going see time when compared as joined has our can and I perspective, the S&P to back Stifel firm, from

increased years growth nearly since the price S&P XXX outpaced has the Stifel's share has the X X,XXX%, Microsoft that note, the XXX%, in well at growth. which what But around and January than Of less at share XX and represents of last X,XXX% price of about XXXX, of years.

favorably which is up XXX, XX% XXX%, the While frame. S&P and this which XXX% proxy was increase time compares the this during Microsoft, to here, Stifel of my tech increased shares have again

longer-term of the our goals achieving of Look, strategy to capabilities to confidence on top growth understand years. our substantial our XX-plus in through It's business increasing bottom we've past executing reinvesting history and have in our the over our resulted acquisitions our strategy successfully line targeted. and understand important in growth

and our both and billion respectively. Over essentially trillion, $XX to I've client the stated past year, objective assets revenue $X double to

come Well, to targets. probably to I'll should a no quite how that comment say When than back how and you I've have it our received about as passes prolong. we few So achieve to can from impressive business heard a history these say are surprise times. go questions growing these an more Slide as few me asked business. expect I'd And going the we you about we see achieve targets, our I'm on X, of a charts

segments XX volatility, X-year minimize at years revenue the which Our in impact our periods, revenue grown significantly. rate XX%, the annual wealth group our illustrated demonstrates past as our consistency global better of increased a compound institutional of has management have To and year-to-year we the of growth. both over

XXXX recent time and the net from average most years, is XXXX X the Over X the from nearly years X.Xx XX% to increased frame our XXXX XXXX. revenue up to

has historical our While operating Wealth largest we've business. experienced segment of both been meaningful the consistent segments, Global our our driver growth in

average the In time Management prior trend X firm-wide And in we past in average equal revenue is years in highlighted. the roughly Wealth in periods fact, the revenue the years each to with Global was the X of the period. consistent this

combined equal in level our to period. as the function growth -- of function financial of revenue the and results assets annual recruiting our highest overall of over is compound in great a culture was offering growth This same service well as which a available, is time client a advisers or successful XX%,

more heavily over than investment of well XX-year revenues in transactional our institutional growth Our average banking businesses. XXX% as the period. increased our this We've franchise invested as

our and several to not by X equally, to than made years. have generate pretax and to average to acquisitions operations of franchise XX.X% been respectively The number relevance has increased the is increased XXX, franchises. equities as leverage if our reinvestment driven and has on has we've in fixed growth, more factor our and past the of of business common in revenue income depth highlight investment efficiencies important into and ability X,XXX% a directors to that more key illustrated Well, are over clients banking tangible margin equity operating our our managing improve our XX.X%, increased the it the both the return breadth grown, revenues within

an period equity points tangible XXX XXX is nearly of pretax on basis margin the XXXX. return common in of to This basis increase XXXX from points and

record, track targets. our in to ability our confident growth achieve our I'm Given

we risk-adjusted returns, on such, will world-class or we seek to continue businesses. and hire focus acquire talent, continue our efficiencies a As we to our will deploy capital will with excess substantial within

question, our longer-term preempt Lastly, time going client we'll the asset and I'm I'm target. revenue to to on Q&A. up a in put not frame sure specific come

However, it's clear that within reasonable I time to are ability growth successfully believe manage targets and our history these our a frame. our businesses from our reach in we of think

numbers. Jim over call the turn to I'll our that, to with go Marischen, over quarterly CFO, our And

James Marischen

Ron. Thanks,

in each as generated prior quarter our set as of our fourth widespread once net surpassed fourth billion, performance meaningful and generated again double-digit which of and prior increased our growth wealth at generated from Looking strength of results, the we line institutional of revenue XX%, increases. by XXXX items year. both our record quarter was our Commissions $X.XX X%. The group transactions principal the management revenue record

our raising growth and management quarter essentially increased a Investment Banking ago revenue. increased from third but reflecting quarterly with Record by revenue was and flat period the organic strong XX%, interest in advisory came same both guidance. market the Net above in increases up driven asset capital by was nearly and XX%, income year appreciation. X%

X, also the estimates. XX% that these and quarter compare the nearly to from consecutive sweep per increased totaled quarter, note which they our by seen you of second results quarter Fourth I'd quarter is increased same see earnings our period balances $X.X the from Slide billion grow. consensus year. $X.XX, last cash how can we've which during On the balances share changed XXXX fourth

net the on revenue $XX every banking line or the Investment came of than nearly million largest above terms the item for more Street total as beat. In revenue revenue in contributor, we was accounting half forecast. revenue, X% beat

we advisory and higher revenue. primary While surpassed fixed driver, equity was expectations for income underwriting revenue also the both

due of fixed ahead to income. XX% beat Street was revenue Transactional significant in a the

fee Net as came to above the margin the as income net guidance interest revenue higher estimate was above Street sweep well interest Management was capture X% in Asset X% and of third-party expectations. as than a deposits. increased high our primarily rate above end Street due the higher

with I'll in our expense compensation expenses below The variance on provision the the well guidance. above was consensus ratio On and higher prior as income in higher for legal Noncomp in slightly due Street positive taxes came to which provision touch and line guidance quarter's XX%, than X% a our the our initial the for number was call, results. Street which side, as our expenses, provided came later. which on last

quarterly transactional margins a Wealth Turning $XXX and our asset was revenue record million to was highest record revenue. management Slide on Global and Management X. XX% pretax second revenue totaled

continue see cash. We increased the led transactional which to engage in to has investors market,

During we X the total quarter, added advisers,

X this $X included production experienced advisers million. XX-month trailing of with

for is As in the fourth slow we've noted quarter typically the recruiting. past, seasonally

However, anticipate assets client assets $XXX [ grew fee-based productive due increases our 'XX ended pipelines success platform. growth The markets strong as and and in assets billion of total continued low recruiting advisers we to the $XXX ] organic and to digits. entered with record higher sequential our were quarter new single We of the million. highly equity net

Moving on X. to Slide

revenue. Wealth generated year of net XXnd Management Our consecutive platform its record

Our support business to highly productive and success to them to of a their result our their has long-term best the most manage effectively give serve attract been ability the need clients. they advisers

for trailing revenue has a than net added growth asset of has and XX-month segment XX million. Over fees than income, sources, X advisers been experienced the cumulative our more production as more in our of revenues. $XXX with which interest in revenues This XX% and steady more past such recurring more driven we've than shift significant the account management factor now to years,

led see X, Client rate billion deposits client as Management I'd that deposits. both also note $X commercial bank increases billion $XXX billion cash Wealth $X.X continue deposits, sweep quarter we third-party balances. $X.X to increased to Bancorp an discuss total levels Slide during million available and I'll increase increase in total our in from increased On a the smart results. in by to

X came to of funding our to firm-wide by $XXX in was our increased above million points primarily asset interest-earning increase net costs. basis and in as NIM Net increased due The average interest levels by lower X.XX%. interest [indiscernible] income guidance margin

I quarter's As neutral. is call, bank sheet rate relatively on our balance last noted

expect due to to However, $XXX to pressure on continue million range in first anticipate we of as modest assets last bank quarter rate balance the XXXX quarter in NIM our sheet. we NII cut. our $XXX million some timing could We in following of the to of see to the be the first the repricing grow

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

Our credit C&I was forecast the negatively commitments. the and reserves quarter, and provision by million for impacted totaled unfunded loss on macroeconomic loans $XX increased

allowance consolidated loans to [indiscernible] by ratio total Our basis points.

institutional the Firmwide which sequential group. and was [indiscernible] in $X.X of raising Investment for is led as the to year-on-year. was advisory XX% on $XXX up strong our revenue segment billion we banking million $XXX each by the million, Moving lines. and in increases year increases in again XX%, totaled revenue experienced up Total Full year-on-year revenue capital of and quarter, revenue.

from care was sequentially. million, quarter verticals. and consumer We financials, last strong $XXX revenue in XX% XX% year had Advisory and increase health an of our a

pent-up given market's channel, for We particularly as see our are the for build within transactions in and the administration. the continuing improve backlog financials to more activity KBW M&A-friendly expectation advisory at to demand continues levels

[indiscernible] and XXXX, same manager more for announced finance share. the pipelines by XX% significantly compared #X fourth number market increased that increased based of XXth sole up XX% KBW M&A consecutive had public team senior share Stifel's public in income deal XX% driven led last underwriting finance year. their and market issues #X the strong XX% revenue the to as year of in XXXX ranked ranked or from are revenue value quarter the year-on-year. negotiated and than sequentially a Fixed on time by

which revenue technology million revenue strongest policy, and up shift clients. which transactional our million underwriting $XX period transactional the XX% activity million, depository was market continue in of activity as union increased we income our up over sequentially by Equity care health financials, in with as sequentially in credit $XXX has Fixed benefit increased XX% the from due was of XX% XXXX our is rebound customer driven $XX totaled Equity to to Fed and seasonality. same the up contributors. and were rates

also I'd the during quarter. had we note trading gain roughly a that $XX million

through go On the slide, next we expenses.

third Our was comp-to-revenue with quarter we was our guidance which quarterly call. fourth quarter in that line ratio XX%, in the on our gave

year Our to guidance of was our comp the the mix which of at full ratio XX%, high due revenue. was at end also

legal in The higher noncomp increased well came above higher I million. credit the provisions mentioned in earlier result expectations call, was number leading As variable to of revenues, expenses as Street higher at the as $XXX and costs. costs

from XX.X% the expense increase, for for noncomp year, which ratio in our XXXX. $X.XX the Despite XX.X% operating was the full quarter. It down was was

for tax quarter X.X%. Our rate was the

in As associated anticipated benefit call, I noted given the on tax last quarter's quarter we excess stock-based compensation. a lower tax with rate the

our better price position. I'll election our after the in came November. This in guidance due Slide than to the capital original review XX, we increase experienced additional On share

of a basis $XXX million X XX.X%, X sheet ratio on target, Tier have points continues balance well approximately excess Based Tier XX X by XX% Tier Our leverage capital capitalized. we to sequentially to increased ratio capital. basis and our risk-based be capital leverage to XX XX.X%. increased points

significant GAAP $XXX income We excess we as generated fourth net additional of capital the quarter. also in million of continue levels illustrated to the by that generate

terms by In shares current $XX.X that billion the quarter, average at approximately remaining price XX I shares deployment note repurchased during we roughly $X assets of of XXX,XXX our to on $XXX increased billion. authorization. million roughly with We capital bank an

Absent common call Ron. me additional price, that, earlier, any fully stock repurchases quarter over mentioned the our Ron XXX shares. assuming expect increase share a and stable Board be diluted assumption million to with XX% turn back dividend. in a share the also to the first stock authorized And let count As for we'd

Ronald J. Kruszewski

Jim. Thanks,

XXXX. our by guidance Let me conclude over for going

be said CapEx and had XXXX in a to we running we've appears stronger what few to than well positioned past the I environment years. entered As earlier,

revenue we guiding revenue, anticipate as in of to income. of terms billion and revenue billion In total are operating net growth net $X.XX interest we $X.XX to both

In targeting of terms $X.X range of revenue, $X.XX we to a are billion. operating billion [ ]

continued in cash redeploy expected activity and appreciation. investors as in Institutional revenues growth to to increased expect market client Management income continue revenues particularly and well recruiting business. transactional market banking We and our grow as from the growth benefit Wealth fixed as to revenues, investment assets are into

believe As our relatively of to before, the rate stated we to we assets that are mix agnostic and deposits. we due changes

As balance driven to growth income such, we growth. be by net anticipate interest sheet

every [indiscernible] We to Our that results billion of $X.X per growth NII guidance billion estimate to $X billion. $X.XX balance $X.X sheet of approximately $X.XX earnings in share.

billion forecasting in XXXX. Currently, balance we are $X to $X of growth billion sheet

we non-compensation the to had XXXX. keeping In the to We be are the and XX% ratio XX% that guidance terms XX%. same of [indiscernible] compensation we to for XX% estimate expenses,

a margin lower remained was as pretax result operating compensation a the improved our noncomp ratio of flat. XXXX, In ratio

that XXXX, the some leverage revenue line assumption we our ratio. on would compensation in our all increase items Given will anticipate

So see you earnings a can gave target generate ago. if how per share, of few years $X we which you we a can you the do was math, of that all

about guidance will target, to appear is what your Now the is talking you of interesting that since to about per This to enriched be $X next started us target wants what be. thing everyone once earnings know we've happened pretty much giving share. your

we Look, on want how getting I of Once $XX EPS. of within started call of target, incremental questions appear don't be all this perceived be we I to get our our as about to investors to this reach guidance. from

of $XX is generating revenue. $XX view Let way me EPS, relatively got billion math EPS it straightforward. the milestone on we our just how like $X say net as of of Much behind that we a to to

repurchases. billion incremental revenue earnings of margins XX% share for generate a and around of $X some $X.X pretax we per Essentially, per range billion, should $XX assumption share with share to with

variables in our in business. of a as We growth goals reaching track lot given types and company our can the that commitment to feel confident in execute not-too-distant and performance. a ability long-term record But our to record our the clearly of our on reinvest these milestones are and there our track future. Now impact

start with the XXXX, business. as our by capitalize market in environment open are line as we we reinvesting to continue to And well we believe positioned growth So questions. let's we operator, drive improving that, the for on

Operator

[Operator Instructions]

Mike take can Securities. We from our Wells with Brown first question Fargo

Michael Brown

the you growth is to a the guess, bit side. has pipeline the And in for I XXXX wanted industry. that been I soft organic start Ron, guys strong. mentioned on little wealth

catalyst advisers I And get versus the So the increase get to off going make in some of kind to organic you these really move? the expect What's sidelines. of here growth going 'XX? what's guess, to 'XX the them that's to

Ronald J. Kruszewski

great a it's Yes, question.

I think we're that, and the We've compensation, transition engagement flows which game. factors, good been frankly, it dealing a of long as I've client recruiting times, and many has said time, ebbs of doing packages, with lots markets. long-term and include some it

times in XX X years are packages transition pretty this, in Bottom generally XX% in increases consistently. and up we've markets and recruiting increasing. [indiscernible] is fee-based seen on because And based going and of is times XX those during slows trailing line that experience like assets the trailing

where will it the our to. that's is. I look as a be at forward, had of terms numbers pipeline to I 'XX I year and say 'XX, people when today, talking we're I But So look think in look, better recruiting

our you what today. recruiting look I'm so long But are optimistic. support growth stronger And if term,

confident, there's why specific So but give look, flows. guidance. we and don't ebbs I'm That's any

James Marischen

million somewhere year, around $XX add million could of between and probably as of $XX TXX. add XX in the One to advisers, half the see and thing first somewhere to I'd that you that, XX

So your well. something forecast in to as consider

Ronald J. Kruszewski

Sure.

Michael Brown

there drive continues 'XX? 'XX Is me comp to back, the play would just sense markets given look that and I you get just one the go to end the into that the been certainly XX%. has out if capital recovery the remain you the supportive. markets momentum enough stood in that I across and of of is it the for bottom guess, the this you to the end then could And towards the kind level. of bottom eventually XX% comp historical curious make that what judge Stifel. spot below forward guidance, things Great. range, to I XXXX does XX%? leverage franchise, range of Okay. And gears When

Ronald J. Kruszewski

question. the of there's -- in all that And not in like need -- simple right, need because of it's a the Yes, to the and in recruiting and numerous couple the is franchise as this, answer, a is times giving be great in putting just again, this to we've wish And the numbers the and protect acute, various and marketplace. competitive has call, -- times and it's our factors it just It was as you it discussed I it been. primarily calculator, right?

illustration, one in an And really actually with that last NII, consistent happened to comp revenue. But the factor managing stayed declined. a in feel positive I our would it is the that comp contributor we as is say our XX% to leverage that because which ratio year I that's

NII ratio. to that as As we comp flexibility go grow. grows, forward, more expect to have in And our we ability the little a that provides

Also, productivity will also increase. That helps.

right? So We our lot that investments a also our -- some investments, running significant that's and number, made run through. we through of

I'm XX%. position increase our to we're always else. comp net-net, XX% see we comfortable to we So as to can reduce to NII, relative but of going be confident everything competitive leverage cognizant ratio, I'm the with

Unknown Analyst

[Audio Gap]

institutional as recover. XXXX that I revenues been normalized something in the guess, think a And guide to segment bit in. specifically we've more leverage margins. business, Does and where And XXXX, in the that XX% of in X% range kind as business XX% XXXX, Ron, the reflect business we're XXXX in toward this recovering in year, were ]-- better XX% margins, continues you [ XXXX. than that that operating on that about in quite for to tying environment, we

think then to business the what we normalize, And kind are of back that -- of So in get not it's -- margin the if to XXXX in when number want does does normalized I just about revenues? XXXX?

Ronald J. Kruszewski

your want me I be what Not to you assume quite answer why I question. to sure can -- -- that's do XXXX

Devin Ryan

and 'XX normalized would the a even segment upside guidance which reflecting normalizing we are towards revenue is XXXX that, kind investment still is at, of Or margin? I'm imply or there's number really getting a what of still the to. quite getting that institutional just bit I'm Yes. beyond

Ronald J. Kruszewski

Yes. in -- is margin, Look, about billion dropped about to talking to I'm we've pretty $X.X And you what to about But let take revenue $X.X about we been I'll $X pretty say from, said, happen. Jim, $X.X about and can add which no conservative what $X.X talking billion rebounding we say, what's say. the institutional that begin that getting would and color much earnings retracement And billion, I'll Devin, he to to our getting with even we to billion as said power. that about that to would we thought normalize. talked talked

Okay, necessarily extraordinary view didn't a normalized not factors It viewed our it means forward as lot I XXXX into of mean pulled that was that environment, that's operating ceiling. having a normalized. as just time an a lot of that business time, doesn't frame. I that it's

which, target part. the in get be I looking that look, what as any the would that for institutional But mind would not for XX%. credit business by towards and I say around normalize most get institutional, and in the are there some should benefits. my margins we're margin bank we We as look, keep wealth, that way, So those in NII does

can is it markets, And how real question The be, out. is does going in XXXX to higher. good play be

and have We economy.

the M&A, money will, equity amount M&A to normalization pent-up deregulatory that private and discourage that a environment, of an to need return curve, companies of We huge a limited a supply, versus of encourage factors, of set if rate partners. including to administration you have appears a

to That's M&A. going raising to drive going capital drive that's

can absent certainly plays or So laying year, out we pretty this I'm event the can conservativeness happen, always we're having we what we a some that that forecast, then and can XXXX as extraneous out, good But same geopolitical exceed if have. some be now.

James Marischen

think in guiding we'd call about you environment of XXXX, additional million ] be to, the As normalized it, $XXX [ revenues. essence, in

there Any international theoretically is some efficiencies margin. across operations, enhancement with so to going be to able to really be that And Canada. and of we'd a both we're from obtain XX% get our trying Europe of to function the

which acquisition Obviously, efficiencies XXXX. Bryan steps talking takes really And point we achieving upside will some There's there Garnier, recently about the to improve at various the any taking to internationally it in of the there profitability. to see announced close we're we're XX%.

Devin Ryan

Yes.

as demand. color, well, guys. outlook, loan I relatively healthy resilient great Obviously, very there That's it. NIM appreciate outlook Okay. good

dig for demand capacity me looks the within come You've you're current then obviously loan you Let demand just what channels? into broadly, as funnel kind today? And would just your the of then kind loan where to more seeing well? of from? frame lending And widened how like

Ronald J. Kruszewski

Jim?

James Marischen

Yes.

of So you similar And look more billion. it'd back I posture XXXX, $X same. the loans to we XXXX, to than we defensive be more grew in as a think look

a little to as lending. The retail see I is the harder fund think you're as well predict. going to a focus both lending on banking and lending venture retail

the hundred million dollars We in portfolio past mortgage several grew our in year.

growth securities-based as see a most terms of are again, of loan recently think the some can in in I little And loan tick continued harder see SBL was But you determine. going the we're perspective, an look But up lending, we our growth there. saw there. So from growth to to to allocated capital we XXXX. where to areas bit those forward that

Operator

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

William Katz

guidance so you thank much and And color. for your

we I credit wonder explicitly erosion if count, just of sort sort how Or Is there about share of of rate you you there we curious, think the I but Jim, a the the I forecast. for sort book. normalized items deployment? you flat of the it bit for then all just lending bank -- sort about capital Just of opportunities? could was was some at [indiscernible] press to I of about this that didn't point? provision little in think And was XXXX. other release how in how your you tax are think talk given the mentioned do that curious, think

Ronald J. Kruszewski

Jim are answer. Jim, that, other -- asking than that, expand us our guidance answer to you Before you but

James Marischen

that's and forecast. the of we the I'll as the kind Well, quarter, was referenced the guide elevated, about on we But -- the provision you macroeconomic touch forward. provision slightly think talked quarter, expense during in a

And so basically, [indiscernible] upon that.

with So but the on XX% that's we're how loaded stable to try is a that what impact good the a predict think accounting works into where stock Again, fourth just quarter, forecast to really had the that [indiscernible]. way price effective is will rate. back going not about XX%, tax given would to [indiscernible] expect going, around be maybe it. I the

Ronald J. Kruszewski

of purposes, for that We're tax distributing number we years issued a stock ago.

rise pretty in And our so this a was the consistent. more as last is have price stock you And year performance in significant. is as with even long

if number here, even deduct at a historical purposes of prices tax held So stock were prices. that lower issued will we that grants higher at just have we for

I And these [indiscernible]. and Jim what at that's said, think next look year we would say, levels, why

William Katz

for of as It then relatedly, sort And seems follow-up, cash a growth bank client is mentioned you the like focus the that. bit. a just has of maybe incorrect primary curious, 'XX maybe improved on little

seasonal the how I think unpack to the of [Audio dynamic Gap]. to end year and wanting the

Ronald J. Kruszewski

based that that capital themselves that some excess look of stock to then we XX% meaning thinking repurchases, opportunities building balance talk in capital sheet deploy put that you have in you and growth, to at we be conclude how our we're okay, and present increase the that to you about best about will will And then us. you dividend you capital, put our some upon that

more ago, with even I've seasonal. we've capital but And me years made commercial anything was that tell say I'll back now going. [indiscernible] very of we're X, really relates getting Jim years no had I really I It's -- it -- say the few really build, business it can pleased As been that when, because but and deposits or we it's a the go today, wouldn't investments venture to few. in X

James Marischen

see a to Nice consecutive for quarter. second

seen a the have bit last We that pull back or X. little week in

Some of around from moves kind a basis. of day-to-day that

deposits. swings some see day-to-day it could pulled in on out back has but a basis there, and You $XXX million

platform had $XXX the If we you venture the to back go million we quarter, the on deposits brought additional to fourth during quarter. over of

million or million quarter. We've the of, been more a in it, call lines $XXX $XXX

you're if million just be in forward, that, deposits the a to bringing we look I number. a end had terms that strong might on. of slightly trying million rate year better think run as $XXX of But to we $XXX

gives in of you stand where So I cash least think of kind through update kind balances. of of an we yesterday terms that at

Operator

comes question Sachs. Blostein with Goldman from next Our Alex

Alexander Blostein

I little think do asking look you mean you an to in while. think either the with in in next for business? dynamics us the business banking the about it's this put your help years. the this think for anything the in frame forces cycle, or can back for for definitely division that and of in XXXX, business explicit provide how if the at in current about any kind and us to investment widely KPIs expected about pretty play, you peak else I XXXX opportunity revenues this serMDs where a number couple In markets terms capital I into set of 'XX. of to peak look if this. talked on not you at We've you banking improve But to guess

Ronald J. Kruszewski

Yes.

You look then what expecting -- segment product maybe the it level we're and we at and as level started it today. and at the

So environment to first going of all think the better. a is lot I be

got a sort all as of IPO, of remember, know. a of said lot this that had backwards size, that You had SPAC we for you you I the drove phenomenon a the -- business our banks to lot was

think one to if capital I good of markets. the chance like of I'd things I'd the the which raising has administration is you So to like do jobs make -- act, the a see will, reenergizing

So Jim though, going consumer be have I'm thinks what about numbers. about any in It's by to of where I and our he is to say, I'm our we of numbers. and and would seen cap not kind going can health really growth, really put a tech. driven, what financials, care, try not in talk that a

said, trying it's markets to what's Health that We But we bet 'XX. say industrials of me good had understand I'll think would going to has ask the bit certainly reluctant look year looks here Alex, Secretary and a strong. you altogether, I'm better going little some happen be be a I cetera. the et to today, to than it's strong, than say a you and financial on capability environment. numbers in XXXX. to have If consumer I that. put with breath as care to going But we a new -- feel more look taken

James Marischen

So SPACs we questions a transaction, and at Garnier related and ] level be [ of banking I XXX with ]. say, number And on the at in revenues of MDs, to XX bringing M&A XXXX. some specifically bankers. [ made Ron the some ECM we'll in the whatnot talked an to of to lot the would your of disclose the about But investments and But did as of MDs terms substantial for end Bryan pretty we've of leading year. just additional

see investments here I announced vertical, do a given get today across the pipeline about And to platform across year similar XXXX, Xx levels today, those we what was different saw we've as reaching in M&A think ago. we and the various we our sit financial our what it industries, here we think all as made is

idea we're at some you gives it of So what looking today.

Ronald J. Kruszewski

And point fair more underline I that, to was we're the raising team capital the a little think on want ECM, said, our I I XXXX. putting a at just that's when just think of But Announced. Jim you on bit is which the that market-driven, field. that focus capability-driven look what I

market. is can You And reaching at M&A. look levels of M&A those peak

to a Alex, So it's said. going Jim look, do ECM. I just that's be think what environment just underscoring good for And

Alexander Blostein

helpful That's really color. Yes.

XX-ish in of banking and expense. percent last growth. expense couple comp Second reserves. It loan pretty like the question, been noncomp for sort gross-ups just of When guys years normalize year-over-year growth for you around not looks consistently and investment have you

that similar for growth. how can pace to Your expense bend little? to curve sort I cost something of a XXXX. for think this Any sort guidance about this framework implies, of you think, What's driving of

else that could help think the to longer-term us expense? of guys through provide for expectations sort you anything So

Ronald J. Kruszewski

in the variable rent, of revenue noncomp fixed there. many some the some components of ways, is are But revenue. which in future we the that also some items leverage big drives the believe fact of components, drives is and that the because non-comp, Look, there communications and and quotes

pretty at no no that. the it -- one We pandemic But we always one was was where really and and saw conferences curve hard look doing you that. consistent. all was when So during in traveling doing we're if the

do the see we're you that going And we you'd not and way really could a might wrong bending year, as some well. see a but bend for revenues

So consistent. I think been we've pretty

investing acquisition really done balance client important It's think mix good noncomp managing job at. revenues. of and that relative to an and years over we've margins something the look between I we a and

James Marischen

And if very you of and expenses. $XX legal very Those They're drill we down had, numbers we are into reported, to predict. hard it, the million what XQ call episodic.

that from at XX.X%. operatio that you be number look an If you'd from right you that exclude at perspective, and

those leverage costs. kind essentially it's bottom time, some And so But predict going of costs some those operating to to at of absent that expenses, fourth shows and over potential that quarter, in are again, look And of hard when the op hit our you of types show core episodic of was range periodically at the if they our the the up. P&L.

Operator

comes Steven Wolfe Our question Research. next Chubak from with

Steven Chubak

potential on particular, to revenue has from it a with an Vining especially thinking trading with previous full the business. can the about we just Sparks, approaching seen The what record gains? depositories number the That the haven't as of absence ask $XXX revenue increased to at started in wanted the engagement generate really improve. just potentially the performance you're FIG for in of since normal in steepening some environment curve, recent it's FIG and contribution year the a business we how from environment the million, look I sparking further

Ronald J. Kruszewski

remarks in that said growth some saw he but color, Jim give let in I'll that business. I think his he

words put in fixed were I you to numbers said you especially what income, think it. your in

made some origination in So Finding products business, structured investments call in our our which of on Spark business, and hires all made business, Jenny the look, our into then some depository business we the securitization so are and business. go we SBA made of it that investments. We've type the side

coming curve of with of many seeing Finding you're I things balance environment think our what normalization ways, an relative of and to a the number the yield And on that credit with little for happened and bodes and In together rates spreads was a income. sheet. bank fixed challenged the timing Sparks well some

and is now had we talent great the the a the good of But we're integration. reaping news all We benefits kept that.

would good it's to see in didn't capabilities I that think do you to in is put environment. part us capabilities some I and we look, that allow -- what market it a be of is, I So environment, think of part it And better that. the able in show those is a you'll place

James Marischen

banks an that obviously, our just to trading engage by for I'd in that environment supplement And biggest rates you business, saying, think is the if for activity, see right? bodes start well I us.

past some The other just I we trading throughout this have gains did year. say, speaking, would thing generally is

lumpier trading as growth the rate nature, gains potential, the of you so but some think we're I wouldn't and talking think episodic business, run those necessarily And I are about core in about a those. little

Ronald J. Kruszewski

get that on I how you taking see but this how balance at to and want -- we us a importantly, our of our reiterate you manage we're seeing risk we And just when you sheet. look don't to when just business, lot risk. importantly, on Yes. businesses manage

we're You a don't and sheet. see of on it putting taking slice us getting our something because transactions done balance

high. and returns in income, the a be didn't are publicly, our business right? I I we risk just had phenomenal mention remiss fixed So if on that also all year principal the income would within risk-adjusted quite And fixed

not as transactions, call-out really of those but number market America this things. public our you're team talking and schools we all call about the in in become deals, housing #X in relevant, when to of a maybe on being across deserves and biggest finance share And financing

in look forward positive. has is done also that team And our job. segment Our that very a phenomenal

Steven Chubak

sweep That's level Jim, And hoping cash, really to trying ask of you seen NII of the underpinning growth XQ. you balances magnitude January? on the the great given to the I really are the in you down could reduction so is what sweep far guidance that that color. in have And year. you've deposit sweep January here for noted in was just growth and cash I I'm explicitly for actually since coming we quantify my that follow-up, help saw

James Marischen

exact linear X about give around million ago, at a terms balances reported So I million sweep to January. January. but dollars generally speaking, you the hundred over here and a I'm they weeks XXXX. of of we dollars. up the where sit going probably feel be are end number, lot. an try good predict of step up Again, moves some down they'll in a of balances those in of not -- to in couple But a number were couple That won't hundred

Ronald J. Kruszewski

-- people a did January, of experience, investor that a the engaging into reallocation, number is in loss my if is regetting things happen, dynamics, as for In in in year. new investors they sees January, generally, start decline the market tax balances selling.

I into much wouldn't put So that, too Steve.

James Marischen

of all in And Okay. that of loan deposits. build the the I'll balances, say our are And talking $X the just kind performance billion is the that the other question incremental smart talked were and in we a suite about predict. of you including forecast. growth for across to be would $X NII funded 'XX underpinning see we venture of about that to If of by terms forecast is could we more we're rate fully billion

Operator

next with Hawken UBS. question Brennan Our from comes

Brennan Hawken

Ron, the makes I'm the help actually your outlook revenue you maybe a ratio, which happened segments hoping bit. missed you the for growth. though sense a of me beat given us on but expectation of of what because forward, fourth moving in comp leverage by could comp quarter the referenced both firm-wide sort lot unpack

unpack caused you disconnect? So what maybe could that

James Marischen

I accrual to could across you a admin pool. of want more what's But left right? based that the formulaic, and that. speaking, and you reflected loaded in the the Ron, in segment. that year, good in more jump that's a generally the So as of that of is late the portion you're institutional year, base, there, admin that in folks commission of kind historically see the what's and in back-end And over models filling fills supplement for in fill buckets the just jump

Ronald J. Kruszewski

we it's So Jim to And we at look I senior had the -- that got it's okay? question. I hard be asked question finally the same is forecast, bonuses saying I signaled XX%. that that funded. appreciate I our at think thought we'd myself, linear.

to pointed you Historically, but normal. comp of the I we That's try trending out, it's feature something though, I a in have seen kind more discern fourth quarter. a in leverage wouldn't little any think question. fair that.

Brennan Hawken

cheers Fair enough. -- And okay. on that accrual

Ronald J. Kruszewski

of kind if I Jim, he a what at bad we found had December say would to me. and

So I'm enough. not but sure fair what he was saying, okay,

Brennan Hawken

Great.

For institutional. ask my about second, a I'd to little love

number suggests. of So things than fourth data one, public normally the was -- quarter one your stronger the lot advisory just a

think there of couple you was And What have that the in of And do from do concerns might that's price. I the that that lot think quarter? So you it upon investors today? represented performance pipeline of you implications the could the more a poor some smaller or deals heard to a based broken recent be... advisory be? about we've private this also think IPOs, going continue

Ronald J. Kruszewski

in doing first what -- not I to track do actual in results we're in -- on we're performance we times. activity. I for don't our more a feel reported coming generate to to all, of middle you're think services see our lot our try And market. that will relying tend only and And just those the I time transactions. that reported or to good always undershoot think just see when I between as I of gets correlation -- try us,

Some know the don't answer I'm to sure up. that. get picked not I

me the a surprise I'm reported and but at thing. that the your question, So trying -- same Again, these numbers not results, come correlation where a from? understand to see I understand that if trying to do look say I'm I sure and do I'd because answered market of [indiscernible]. But doesn't I that's and don't lot

Brennan Hawken

got just it. enough under It's Like the right? Fair radar,

Ronald J. Kruszewski

more also picked not which just get to tend deals, We up. do private

Brennan Hawken

what I by that's Yes, meant that.

IPS? thoughts lot on Then sense. any a makes broken the that of So implications of

Ronald J. Kruszewski

the In what?

Brennan Hawken

whether have recently that price have IPOs might an that broken The impact? or not and

Ronald J. Kruszewski

relatively positive. it's Well, not it's balance, on

And natural I taken maybe price healthy. being progression. some a some I think It of it's It's be here. can valuations the -- there's a lot discovery. of are it's out of the things that think

remains You'd business lot has to fact But there side tremendous a capital that be rather capital performance. and that of positive raised a into amount equity is see private done M&A. needs encouraging environment the and raising of be the an that's in to

So I I deals should, broke about here to eye view that on, price. it but keep as something a I that not sit with concern -- I I an maybe don't but few particular need do don't. any we

Brennan Hawken

make looking public. a option more could versus viable sell Fair. to mean, sponsor if it's I And a the M&A

Ronald J. Kruszewski

Yes.

not, and companies process able the I into at to the big of -- investors grow want young So capital being I the hope companies though, to entire to overall IPO market. raise in participate for

highest see the government for to not our that capital soapbox I'm has United dealt be a States to level at that. I and issue our the with. markets, now, want but think I

Operator

Our from next comes Michael question Cho with JPMorgan.

Y. Cho

wanted And advisory squeezing productivity. in to me on here. I just touch

Just a follow-up.

you think I ], XXX [ excluding MD count of referenced [indiscernible].

think what from disclosed a I down you just prior. that's little bit

this levels some in 'XX think change we I have mean, MD anything [indiscernible] that of in I about about M&A think there? productivity out we levels I called And into or benchmark call MD 'XX, improvement to reaching then So when at saw is out 'XX. think productivity terms you think areas point into Like the when might 'XX. what

it's I think fair.

is banking the too cited evolve with relative about rate are of higher in you in it But the of continuing longer higher you it, in markets well. us potentially the of versus pipeline that relative the environment pipeline. start how we with levels about you enough. answer as And envision terms metric packages when But the seeing would accounts us think of I can And maybe recruiting sense. a today, there productivity then strong that recruiting you're of we does. where That okay? Fair gave your to some 'XX? question second help without you a to again. for at pipeline reach specific. kind levels, part when the think getting just think recruiting, think of Yes. managing No, makes I the frankly, comparison us part you contain

Ronald J. Kruszewski

on okay? how characterize Yes. think we're time, very I competitive I almost We now competitive, that. very are right at on invested look would feel is so that return on impact as the our return capital, recruiting every what over our I landscape it does high. investment, Look, situation that very things is meaning disciplined

deal increases the in revenue cost tangible growth. putting going And These the just perennial we by and because happen. are competitive, the like on may where putting at having to alter into of get our return That we CapEx -- to ultimately, in equity isn't you're don't spreadsheet, really don't lose times fixed some people XX% like down, want marginal just Excel market. dilute I

we right transition there's much of And sort a over I look environment it markets. our and not governor, now, at we So if base, would very you time. say adjust a competitive to with today, it's deals tend will, if

terms tend to overperform in we a markets pullback, recruiting. maybe of or moderate little as have a So bit you of

Operator

you. our closing concludes you turn Kruszewski, This will to back remarks. session. Thank question-and-answer the any Mr. I for conference

Ronald J. Kruszewski

mean even I questions and analysts on good, XXXX. the this hour the the calls I just the I'm we want forward we've long of don't next an to But And appreciate and and okay? exceeded ever I no, feel think we call, to complement I looking thorough did. all and of I all maybe few and might interest. have XXXX very into were that

-- we we We competitive my as have do -- have environment, peers. all the good a and

market the Thank we reporting savings share. raising to to people time And sit that, fulcrum capital share, going you and we environment need forward We only next are people your fair to and between the I not that M&A to all activity look capital and have at environment. increase investment get attention. to our everyone, that and and intend with quarter. corporate improve, and you, our but market the intend for and

Operator

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

now may disconnect. You

Stifel Financial (SF) 29 Jan 252024 Q4 Earnings call transcript