Stifel Financial Corp.SFNYSE
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Operator: Good day, and welcome to the Stifel Financial Third Quarter 2025 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Joel Jeffrey, Head of Investor Relations. Please go ahead.
Joel Jeffrey: Thank you, operator. Good morning, and welcome to Stifel Financial's Third Quarter 2025 Earnings Call. On behalf of Stifel Financial Corp., I will begin the call with the following information and disclaimers. This call is being recorded. During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at stifel.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Stifel Financial Corp. does not undertake to update the forward-looking statements in this discussion. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in our earnings release. I will now turn the call over to our Chairman and Chief Executive Officer, Ron Kruszewski.
Ronald J. Kruszewski: Thanks, Joel, and good morning, everyone. Stifel delivered another record quarter, once again demonstrating the strength of our diversified business model and the leverage it provides in an improving environment. In my nearly 30 years as CEO, Stifel has grown from a regional firm to a global company by consistently reinvesting in our people and our platform. That same mindset, reinvesting to increase relevancy has defined our 135-year history. This quarter, we achieved record net revenue of more than $1.4 billion and record client assets and produced our third highest earnings per share in firm history and a record for any third quarter at $1.95. Return on tangible common equity exceeded 24%. Both of our business segments contributed to the performance with another record in Global Wealth Management and the third best quarter in terms of revenue for our institutional group. On last quarter's call, I said we expected a strong second half as optimism builds around lower taxes, reduced regulatory burdens and higher capital spending in technology. And that's exactly how it's played out. The S&P 500 is up roughly 15% this year and more than 35% from its lows following liberation day tariffs. The Fed's first rate cut in September added further momentum. While valuations are elevated and the nominal equity risk premium has narrowed to near 0, the underlying economy remains constructive. We've also seen something worth noting. And even with yesterday's pullback, this year, gold and silver have outperformed even as equities have rallied. When risk assets and traditional hedges rise together, it often reflects abundant liquidity and a search for stability. It reminds investors that confidence in markets can sometimes outpace confidence in currency, and that's when discipline and fundamentals matter most. In that environment, Stifel's balanced model and disciplined execution continue to deliver results. Turning to Slide 2. I think it's important to put this year's quarter results into perspective. At our core, Stifel is a growth company, decades of consistent reinvestment, hiring talented advisers and bankers, making strategic acquisitions and executing on our integrated banking strategy with a focus on risk-adjusted returns that produce steady, durable growth and meaningful operating scale. I find it worth pointing out that our third quarter revenue alone exceeded our total annual revenue in 2011. That comparison speaks not only to our growth, but how we've achieved it. We've grown in a balanced way, expanding both of our core businesses while maintaining a consistent mix between wealth management and our institutional group. Today, wealth represents about 64% of revenue and institutional 36%, essentially the same proportion as more than a decade ago. Equally important is how that revenue has evolved. What was once primarily transactional is now largely fee-based. Fee-related businesses, asset management and net interest income in wealth and advisory and institutional now account for 62% of total revenue, up from 26% in 2011. That shift has made our earnings more stable, our margins stronger and our growth more durable. Our pretax margin reached 21.2%, more than 800 basis points higher than 2011, and annualized EPS has grown more than fivefold. Our growth has allowed us to raise our dividend every year since we introduced the dividend in 2017. Looking ahead, milestones that we've talked about like $10 billion in annual revenue and $1 trillion in client assets are not distant goals. They're the logical next step in the evolution of our strategy and scale. As is our custom, we compare our results each quarter to consensus estimates. Once again, we exceeded Street expectations across the board. Total net revenue of $1.4 billion, as I said, was about 7% above consensus, reflecting broad-based strength in investment banking, transactional activity and net interest income. Earnings per share of $1.95 were 5% ahead of estimates, marking another quarter of strong operating leverage. Investment banking outperformed across both underwriting and advisory and Wealth Management activity was stronger than forecast. Expenses were in line with guidance and our pretax margin came in above expectations. In short, we delivered another quarter of record results, balanced contributions across our businesses and continued momentum heading into year-end. And with that, let me turn the call over to our Chief Financial Officer, Jim Marischen, to provide more detail on our financial results.
James Marischen: Thanks, Ron, and good morning, everyone. Record quarterly net revenue grew 17% year-over-year with gains across the board. Commissions and principal transactions rose 20% as both Global Wealth and Institutional segments improved from last year. Investment Banking revenue was up 33%, our strongest quarter since late 2021. Asset Management revenue rose 13% on market appreciation and improved organic growth. Net interest income increased 6% as higher interest-earning assets and lower funding costs more than offset lower asset yields. Our compensation ratio was 58%, which is consistent with guidance. Our operating pretax margin was 21.2% and operating EPS was $1.95, up 30% from last year. Turning to Slide 5. I'll discuss our Wealth business. Global Wealth Management delivered another record quarter with revenue of $907 million and pretax margins of nearly 38%, our highest in almost 2 years. Transactional revenue reached a record $203 million as clients were active in both equity and fixed income markets and asset management revenue also reached a record $431 million. We ended the quarter with a record total client assets of $544 billion and record fee-based assets of $219 billion, reflecting continued market appreciation and net new asset growth in the low to mid-single digits. Adviser recruiting remained active and high quality. We added 33 advisers during the quarter, including 17 experienced hires with trailing 12-month production of $19 million. Retention remains strong. Our recruiting pipeline is healthy heading into year-end. Productivity benefited from higher client engagement, record asset management revenue and an expanding suite of wealth and lending solutions. Moving on to Slide 6. Our integrated banking model continues to strengthen our wealth platform. Net interest income was $276 million, which was above guidance as firm-wide net interest margin improved modestly and our cost of funds remained essentially flat. We forecast fourth quarter NII to be in a range of $270 million to $280 million. Client cash levels increased during the quarter with sweep deposits up $640 million and non-wealth deposits up $760 million, including strong growth from the venture banking team as those deposits increased by more than $1 billion during the quarter. Credit metrics remain solid with the nonperforming asset ratio at 49 basis points, provision expense of $8 million and an allowance to loans ratio of 81 basis points. On the next slide, I'll discuss our Institutional Group. Institutional revenue was $500 million, up 34% from the prior year. Strength was broad-based across investment banking and transactional revenues. Investment Banking totaled $323 million with gains in both capital raising and advisory. Equity capital raising revenue was $79 million, the best since late 2021 with continued activity in financials and renewed issuance in biotech. Fixed income underwriting was $59 million, up from last year, driven by increased public finance activity. Stifel remains the #1 negotiated issue manager by deal count, and our calendar remains very active into the fourth quarter. Trading results were also strong with equity trading revenue of $58 million and fixed income trading revenue of $123 million, reflecting higher client activity, healthy secondary market liquidity and multiple strategic balance sheet restructuring assignments. Advisory revenue was $179 million with broad contributions across sectors and early benefits from the integration of Bryan, Garnier. Our investment banking and advisory pipelines ended the quarter at record levels, providing strong visibility into the fourth quarter and beyond. Moving on to Slide 8. Expenses remained well controlled. Non-compensation expenses were $298 million, up 7% from a year ago, and the adjusted non-comp operating ratio was 19%. Sequential increases in total expenses reflected deal-related investment banking gross-ups. We expect a similar adjusted non-comp ratio in the fourth quarter, which is at the low end of our annual guidance range. The tax rate for the quarter was 26.1%. If our share price remains around current levels, we anticipate a full year effective tax rate of 20% to 22%, implying a fourth quarter rate of 12% to 14%. The projected decline in the effective tax rate is a result of the excess tax benefit associated with stock-based compensation. Our balance sheet remains well capitalized. Tier 1 leverage capital rose to 11.1% and Tier 1 risk-based capital ratio increased to 17.6%. Based on a 10% Tier 1 leverage target, we ended the quarter with approximately $421 million of excess capital. We repurchased about 275,000 shares during the quarter and 7.9 million shares remaining on our current authorization. Assuming no additional repurchases and a stable stock price, the fully diluted share count for the fourth quarter will be about 110.3 million shares. With that, Ron, back to you.
Ronald J. Kruszewski: Thanks, Jim. Look, I'm pleased with our overall results and how our teams are executing across the firm. We're entering year-end well positioned to capitalize on favorable market -- on the favorable market environment, supported by continued momentum across both our operating segments. Specifically, in our Wealth business, another record quarter with record client assets and strong profitability. We continue to attract highly selective advisers and our recruiting pipeline remains robust. Deposit gathering continues to grow, both through adviser recruiting and the addition of venture banking teams, driving strong treasury deposit growth. Earlier this year, as I've mentioned before, Stifel was recognized by J.D. Power for having the highest investor satisfaction among full-service wealth management firms, a reflection of our adviser-centric model and the trust our clients place in us. In our institutional business, investment banking pipelines are at record levels as a record -- as our earlier investments continue to drive scale. We maintain leading market share in financials through our KBW platform and rank in the top 10 in equity capital market fees year-to-date. In public finance, as Jim said, we remain #1 by number of negotiated issues led. We're also seeing increasing synergies between fixed income trading and investment banking, strengthening client relationships and expanding our reach. Looking at the markets more broadly, there's a lot of optimism out there, and I share that optimism. But we all know markets move in cycles. The best way to navigate them is with discipline, balance and perspective, qualities that have defined Stifel from the beginning. And sort of in conclusion, I have a little food for thought. In the past, I've illustrated what I believe to be Stifel's valuation gap compared to both the market and our peers. Instead of repeating those metrics, let me put it this way. At current prices, you get a growth company and value company prices. I think it's a compelling valuation. So as we move forward, we'll keep doing what's always worked for Stifel, staying disciplined, managing risk and investing for the long term. That approach has built the Stifel today and positions us well for the opportunities ahead. With that, please open the call for questions.
Operator: [Operator Instructions] And our first question is going to come from Devin Ryan from Citizens.
Devin Ryan: I want to start with a question on investment banking. Obviously, kind of been an uneven year, but second best start to the year since 2021. And we look at Stifel today relative to then, you're obviously quite a bit even bigger than that point. So it would just be good to hear a little more about, I guess, the record investment banking pipeline and how you guys are thinking about the upside for revenues in a more normal environment? I'm not sure if there's any way to frame it relative to kind of that prior 2021 peak. And then if you can, just give a little more color on the sector supporting that and specifically, I love to hear about what you're seeing in the depository space as well.
Ronald J. Kruszewski: Well, look, I think we did about $500 million of institutional revenue that annualizes that around obviously, $2 billion and what we did $2.2 billion in 2021. So that just gives you a sense. We're not -- even on an annualized basis, we're not at the 2021 level. Of course, the mix has changed and our capabilities are more than they were in 2021. So in terms of just where we are relative to what we can do, we're making progress. And the market environment certainly is helping us as we said it would, starting with regulatory attitude as much as anything else. Clearly, this administration is more open to M&A and even strategic -- other strategic initiatives than was the prior. I think I don't think there's much argument about that. So the environment is good. A little caveat, the government shutdown hasn't helped IPOs at this point. So I think we all know that. I think the good news is that what's sitting on the desk not being reviewed will get off those desks. But that's not only true for Stifel, that's true across the Street. Look, clearly, financials have been a strength, not only on the capital side, but also what we are doing in fixed income, balance sheet restructuring related to mergers. And just look at the league tables, and you can see that as it relates to depository M&A, we are doing quite well, not only in absolute terms but in relative terms as it relates to market share. And I would note that across the industry, health care, I think, has been a lagger, okay, just not yet Stifel, but just across the board, health care volumes are not what they were nor what we think they're going to be. So I view that as upside, clearly technology has been a strength. I think we can do better in technology. It's a lot of big deals, but it's a strength. Industrials is a strength. We've seen strength there. So kind of across the board with big is obviously doing quite well. And our second biggest vertical, health care have upside to what we're seeing. And we're beginning to see -- I'm not going to you use that word, but they always talk about green shoots, let's not -- let's put that one in the used bin for a while. But certainly, the environments are -- is better, okay? Jim, I don't know if you have anything to add.
Devin Ryan: Yes. That's great. And just a follow-up just on the credit backdrop. Obviously, several recent credit hiccups in the market, several private credit players and banks disclosing losses and that's received some attention. So I'm just curious what you're all seeing in the market right now, how you feel about the position at Stifel just across both the loan book and the CLO exposure as well? Just any other thoughts more broadly.
Ronald J. Kruszewski: Yes. Well, look, I think that there's a lot of commentary you've heard whether there's [indiscernible] more, et cetera, things like that as it relates to the credit. It feels to me still a little idiosyncratic about things that have happened at least in terms of the 2 bankruptcies and the asset management. But it's -- it doesn't feel like a broad-based sector type thing. I would say that in general. But you give me an opportunity, Devin, just to maybe point out that I think it's very important to understand, and I know that you do. First of all, Stifel is not a regional bank. So I'll give you some commentary as it relates to my view from KBW and all our great bank clients that we talk to. But as you know, many regional banks have 85% to 90% of their revenues generated by NII. Consequently, lending and the lending environment is very important to their ability to grow. Look at Stifel, as we've pointed out many times, a little over 20, maybe a little bit more of our revenue is NII. We're fee-based and NII with PCG and institutional accounting for the vast majority of our revenue and we don't look nor are we a regional bank. We really drive our revenue growth without greater exposure to credit. Look, when we do grow our loan book, it's relatively low-risk categories like mortgages to our high net worth clients, security-based loan, fund banking. In fact, Jim, those account for what...
James Marischen: It's about $3 billion or $4 billion. 70% in total of the entire retained loan portfolio.
Ronald J. Kruszewski: Yes. So we fund these loans with deposits from our wealth clients and our venture business. These are highly complementary to our wealth and institutional business. And your second part of your question regarding CLOs, Devin, I've dealt with this question for about -- it feels like 10-plus years. I think I'll let Marischen handle it this time.
James Marischen: Certainly. Whenever we get questions on the CLO book, the first thing we'd like to do is point out where in the CLO structure we are investing. Our entire portfolio is comprised of AAA and AA CLOs. So that breaks down roughly 60% in the AAA class and the remaining 40% in the AA class. And I think from there, and it's important to understand how the diversion of cash flows really protect those senior classes. And the key metric to look at in regards to that is the credit enhancement levels. Our portfolio has a weighted average credit enhancement level of 32%. So it's pretty significant and the diversion of those cash flows is what protects the senior class. And so when you think back through time, we have never seen a AAA CLO default, and we've only seen one AA CLO default. And that bond was issued prior to the great financial crisis at much lower levels of credit enhancement. So when you think about the structural benefits here, the operating performance over time through a number of different cycles, we feel very, very comfortable with our exposure in the CLO space and where we're at there today.
Ronald J. Kruszewski: Devin, and maybe I can't help myself, but to answer on this. But look, when I get up and I try to think of things to worry about, right, which I do. That's what my job is. I don't think I ever get up and think worry about our loan book and CLOs, okay? So -- and I've said this for long 10 years. So no to that.
Devin Ryan: Yes. Well, I appreciate it. Sorry for giving you the same question 10 years in a row.
Ronald J. Kruszewski: You're consistent, okay? It's telling me even...
Devin Ryan: I think it's been 20, but yes.
Operator: And our next question is going to come from Bill Katz from TD Cowen.
William Katz: Just to come back to the investment banking opportunity. Ron, you sort of mentioned that you're already running at a run rate of revs equal to 2021, which was a quite robust year. Can we talk a little bit about maybe how you sort of see the incremental margin, the Institutional Group margin improved very nicely, both quarter-on-quarter and year-on-year. How much more incremental leverage is there to the segment? And then relatedly, how much that might flow to the bottom line?
Ronald J. Kruszewski: Look, I think, Jim, correct me. Broadly speaking, I think we did 12% margin in the quarter.
James Marischen: Institutional 13.6%.
Ronald J. Kruszewski: That's year-to-date. So 13.6%. That's why you are CFO. That's really good. So instead of 12%, it's 13.6%. We believe that 20 to low 20s is achievable. So when -- so think about it as about 10 points of margin on the $400 million to $500 million, so annualized $2 billion. So if you're trying to say, as we restructure and rightsize, including our international operations, which that's part of the improvement as we've been making improvement there. But when I look at it, snapshot, I think there's 10 points of incremental pickup a couple of hundred million bucks...
James Marischen: Right? When you think about it, that's going to be leverage we're going to get both on the comp ratio as well as in non-comp. Year-to-date, we were about 62% in terms of the comp ratio, and that number could get closer down into the 58% range. But where you see some even more pickup in terms of the type of margin expansion that Ron was talking about, as you can see within the non-comp side of the ledger where that was running, call it, about 25% year-to-date as well. So definitely a lot of margin increased capacity there.
Ronald J. Kruszewski: We're focused on this, Bill.
William Katz: Yes, it sounds like it. Okay. Another question for you. So I want to pick up where you left off, Ron, you sort of mentioned you get a sort of a growth company at a value opportunity. You've been pretty prescient in terms of calling that over time. How do we think about maybe capital uses from here? How we should be thinking about either expanding the banking opportunities since the deposits are starting to grow again versus maybe inorganic opportunities, which doesn't sound high right now versus maybe a step-up of capital return through buyback, certainly given the strong balance sheet position?
Ronald J. Kruszewski: Bill, it's always a great question. You've asked it numerous times. The answer is always the same, which is the -- our capital allocation will be based on opportunity. That opportunity is grounded in our view of what's the best risk-adjusted returns on capital. So as always, we pay a dividend. We buy back stock. I've said this year, and you can look at it, our volume of stock repurchases accelerated when we were in Liberation Day market suppression, if you will, and lower equity values. We said we wouldn't grow our balance sheet as much as the stock rebounded and we saw more opportunities as the economy improved in lending, we allocated more capital to that. And acquisitions are -- obviously, it's in our DNA. It's certainly my DNA as CEO. But as I've said, the level that cash flows and future earnings are trading at, which as I've said before, people come to me and say, what do you think at 20x adjusted EBITDA? And I think, well, I don't think that. And so we've been more muted. But look, we are -- we understand the importance to our shareholders, managing our capital, buying back equities. I think it's -- I think the stock is compelling, and that should support buybacks. But we're also going to grow the bank because that supports -- the integrated bank supports our wealth and institutional businesses. So those are investments, buybacks are a financial transaction, growing the balance sheet is strategic and builds franchise value. We'll always look at our dividend, and we'll consider acquisitions when they think they add accretively to our return on investment. So I can't give you any numbers on that because I don't know what they are will depend on the opportunities as they present themselves.
Operator: And our next question is going to come from Steven Chubak from Wolfe Research.
Steven Chubak: Always appreciate it. Well, I did want to start off with a question on the FICC brokerage business. The performance was quite impressive this quarter. It was also pretty strong last quarter. You cited some enhanced revenue synergies with the banking side of the business. I was hoping you could just unpack some of the sources of strength a bit further and whether those synergies support a higher run rate, if you can contextualize that a bit more, it would be really helpful.
Ronald J. Kruszewski: We've been looking in the last few quarters, even at ourselves at strong fixed income performance. And then we'll say, hey, hey, we want to caution you it's not sustainable, let's say that. What I think is happening is that the integration of a lot of the things that we've done over the years from Sterne Agee through Empire through some of the smaller acquisitions. And then importantly, buying Sparks combined with the pickup in depository environment, which has been a normalization of the yield curve and then M&A activity, which often the restructuring of M&A will lead in an M&A moment to restructuring the balance sheet of either the target or the combined company. And so what we've seen is what we talk about. And the reason we do these deals is to increase our relevance so that we're able to have a seat at those tables. So instead of just doing advisory, we're also helping restructure balance sheet. We're talking to financial officers as the yield curve adjusts and not only normalize, but appears at least on the short end to be coming down. And frankly, our relevance is equaling more revenue.
James Marischen: I think that's fair. Obviously, we've talked about some of the transactions. Obviously, we had some of the gains in the prior quarter related to aircraft, some of the balance sheet restructuring transactions we're talking about here. If you're thinking about it from a pure run rate perspective, I would think about it along the lines of the traditional transactional revenue around $100 million run rate for the fourth quarter prior to layering on any of those, I guess, what we call last quarter, recurring nonrecurring items. So I think...
Ronald J. Kruszewski: You call -- so your guidance is always has proven a bit low.
James Marischen: It's a good way to think about it.
Ronald J. Kruszewski: Yes. That's fine.
Steven Chubak: And a 2-parter for my follow-up, and I recognize both questions are unrelated. But the first is just on the recruitment trends. And nice to see the uptick in FA adds and recruitment levels. I was hoping you could speak to what's driving some of that strength, whether you're seeing continued succession or seeding of share from the wirehouses or if you're seeing just more opportunities with some of the regional brokers. And then I was hoping for an update on sweep deposit trends in the month of October.
Ronald J. Kruszewski: I'll do the first. I'll let Jim do the second. So Jim, think about sweep deposit. Look, recruiting is robust. We've talked about the reasons. We've talked about it's a confluence of events. We've built a great platform. We've built a great service platform. We have good technology. We've made sure that we're competitive on the front because I felt when we were losing, it was not capabilities. It was more financial related. And recruiting is an ongoing thing. It's like reading a novel or reading more in peace. You're halfway through it. You don't start over and you got a lot more to do. It's an ongoing everyday thing that we're doing. We have a great -- we're a great alternative for a lot of advisers that are looking for a firm that puts advisers first and has a culture of a wealth management firm with banking and underwriting capabilities. So there's not a lot of us out there like that. We certainly are one of them, and we're attracting a lot of people. Now we just need to execute. So I have been and continuing to be optimistic about that part of our business. I will note, as I always do when I get to November, recruiting in the fourth quarter slows down half of the -- I mean, they shut down the ACAT system in December. So that's known on the Street, you should know that too. And I think...
James Marischen: And then in regards to an update on sweep cash, through yesterday, we were down from quarter end by about $500 million plus in terms of those balances. But I would hesitate and say that there are -- those balances are moving several hundred million dollars on a day-to-day basis. I'd also highlight that we did generate another $1 billion of deposit growth across the venture group. Given the additional investments made in those new team members as well as the strong recruiting that Ron talked about, while it won't always necessarily be on a straight line, we do expect cash balances to continue to grow through the end of the year.
Ronald J. Kruszewski: And we've also -- we've hired some more leaders too that have helped. I just note that I won't name names, but it's all part of a flywheel type thing. You got to have a platform. You have to have products and you also have to have the leadership that can go attract the people, and we've invested in all of those areas.
Operator: And our next question is going to come from Brennan Hawken from Bank of Montreal.
Brennan Hawken: Ron, you spoke to a valuation gap, which you have spoken to fairly consistently over the years. But the valuation gap has also been persistent. And the interesting thing that's different about the current environment versus recent years is that there's seen as maybe a window for large firms to begin to acquire firms and roll up certain spaces. And the wealth space is an area where a lot of large firms want to grow. And Stifel is an attractive asset, right? You've got an employee-oriented wealth firm, which fits well with a large entity. Many investors believe that you can make for a good target. But we all know wealth firms are sold, not bought. So could you maybe share your views on that and how you're thinking about it?
Ronald J. Kruszewski: Did you just ask me about selling the firm?
James Marischen: Welcome back, Brennan.
Ronald J. Kruszewski: Yes, it's -- first of all, I appreciate the compliment. We've got a great asset [indiscernible] I mean for many firms that would want to be into our space, there's not very many alternatives of a company that's got 24% return on tangible equity and margins and a great culture and great technology and all of those things. And yes, maybe my persistent valuation gap comes from the way I answer this question all the time, which is we see no need to sell other than maybe the short-term pop in a share price, which then eliminates a 135-year-old firm and a firm that's gaining market share as we have over the years. I got asked this question in 2011. Why wouldn't you sell you're an attractive asset, everyone coming out of the financial crisis, people want to invest. And we've grown the firm, as I showed in the slide, significantly. And maybe some of the questions will go surrounding when the CEO is running out of energy and they want to sell. Well, the case here, okay? And so I'm not looking to do anything. We get phone calls once in a while. I always say, well, can I run it for the combined thing. They said, what? So that's there. But I'm kind of kidding there. My point is that we're in a good spot. we're gaining market share, you should own our stock with a valuation discount, which has been proven by our historical growth, both in revenue, earnings per share, profitability and relevance. We are a growth company. Our results show it. And we trade like a company that really can't grow in more of a value play. I'll say it, I'll continue to say it doesn't matter, but it's a fun way to end the calls every once in a while.
Brennan Hawken: Fair enough. And then I'd love to hear about some trends that you're seeing in advisory. So you guys have -- sponsors are a fairly big cohort for your advisory business. What are you seeing in your backlogs as far as that group of market participants? Are we starting to see some return there? It looks like your advisory revenue was better than the public data, so it suggests maybe some smaller advisory -- sorry, sponsor-oriented deals might have been part of it. Is that the case? And how are you thinking about that cohort going forward?
Ronald J. Kruszewski: First of all, I think our reported numbers are consistently above what you would try to anticipate in the public data. And I think that is because we do small and mid-cap deals as well, and that has been true not just last quarter, but for years. So that's the case.
James Marischen: Right. In terms of pipeline, we're seeing strength across the board, every single vertical, every single product. We've built the company here really to take advantage of the markets when it is accommodative, and we're starting to see that. And so we're optimistic as we look forward to fourth quarter and 2026.
Ronald J. Kruszewski: Yes, it's a good, hey, let's not underestimate the importance of the environment, and we're doing well. I'm sure a lot of my peers and competitors are doing well. I just feel from my perspective that we're gaining market share, and we see a very nice growth pattern -- growth picture in front of us, just like I saw in 2011. So that's why we're optimistic.
Operator: [Operator Instructions] Our next question is going to come from Michael Cho.
Y. Cho: I just wanted to follow up on the corporate M&A discussion that we're just having. There's some news about the Stifel's independent adviser business. I mean I recognize it's a small part of the business and something Stifel maybe strategically deemphasized for some time, but maybe it's a good time. I was hoping maybe to just get your broader perspective on some key considerations around this prospective exit of this segment? And how you think Stifel will be better positioned longer term from this reshuffling of the business?
Ronald J. Kruszewski: Well, I mean, a fair question. nothing announced on this. So you can appreciate my inability to talk in any specifics, okay? That said, I think that the article that was written, and I don't -- I'm not really going to comment on the article other than context. And I think that the context in the article that sort of -- and I didn't talk to the reporter, but I thought, wow, they got a little bit of the history and the way we think about the business, correct. I think that it's very -- it's immaterial to us, okay? And it doesn't really change what we believe we will grow. So look, I can't really answer your question. I hope you appreciate that yet. A lot of the thought process was captured well. So I will say that.
Y. Cho: Okay. Great. Fair enough. I guess just a quick small follow-up, Jim, just on balance sheet growth outlook from here. You called out venture banking during the quarter. And I think maybe last quarter, you were talking about maybe $1 billion of loan growth into the end of '25. Just kind of curious any updates in terms of balance sheet growth from here. Any key segments you might call out maybe outside of venture banking?
James Marischen: Right. In some of our prepared remarks, we talked about the confirmation of the goal of getting to $1 billion of loan growth in the back half of the year, and we still feel confident in that. When you think about the component line items that are comprising that growth, I think you'll continue to see what you've seen historically. You're going to continue to see fund banking being a large contributor there. We continue to add 1 to 4 family residential loans. And then again, as we talked about, you'll continue to see some additional venture balances there as well, but that's much more of a deposit generation play more than the loan growth perceive that.
Operator: And there are no further questions. At this time, I will turn the conference back over to Joel Jeffrey for any additional or closing remarks.
Joel Jeffrey: I appreciate you asking for my opinions, but I'm going to turn it over to Ron to have his closing remarks.
Ronald J. Kruszewski: Josh, what you're going to say. We thank you all for attending and your interest in Stifel. I'll reiterate what we said at the call. We talked about the back half of the year being where we could see some nice pickup in activity driven by the environment. We see that. Let's get the government shutdown done so we could get some regoing on some of the capital market transactions. But the environment is good and the company, Stifel is well positioned. So I look forward to reporting to you our fourth quarter and full year results. And everyone, have a great remainder of the day and holidays and everything until we meet again. Thank you.
Operator: And this concludes today's call. Thank you for your participation. You may now disconnect.