Stifel Financial - Earnings Call - Q3 2025
October 22, 2025
Executive Summary
- Record net revenues of $1.43B, up 16.7% YoY and 11.3% QoQ; non-GAAP diluted EPS of $1.95, up 30% YoY; GAAP diluted EPS available to common of $1.84.
- Both segments executed strongly: Global Wealth Management net revenues reached a record $907.4M (+9.7% YoY), and Institutional Group revenues were $500.4M (+34.4% YoY) with broad-based strength in advisory, underwriting, and trading.
- Stifel beat Wall Street consensus: revenue by ~7.0% and EPS by ~5.7% in Q3 2025; investment banking pipelines and client assets are at record levels, positioning for a strong Q4 (EPS and revenue estimates from S&P Global*).
- Q4 guidance: net interest income of $270–$280M, full-year tax rate 20–22% (Q4 implied 12–14%), and diluted shares ~110.3M; capital return continued with $31.2M buybacks and a $0.46 dividend maintained.
- CEO tone confident: “Record net revenue…$1.95 in EPS…record client assets… Stifel is well positioned to build on its success” and “you get a growth company at value company prices”.
What Went Well and What Went Wrong
What Went Well
- Broad-based beat vs Street: “we exceeded Street expectations across the board… net revenue ~7% above consensus; EPS ~5% ahead” (Operating EPS).
- Global Wealth Management posted record net revenue ($907.4M), record client assets ($544.0B), and record asset management revenues ($431.4M); pretax margin ~37.8%.
- Institutional momentum: advisory $179.3M (+31% YoY), equity underwriting $78.8M (+55% YoY), fixed income underwriting $58.9M (+19% YoY), and strong trading (FI $122.6M, equity $58.3M); non-comp ratio fell to 22.8% and pretax margin rose to 17.8%.
- Quote: “Record net revenue…third highest EPS…record client assets… integrated wealth and banking platform continues to gain momentum” – CEO Ron Kruszewski.
- Quote: “Institutional revenue was $500M up 34%… equity underwriting best since late 2021… public finance #1 by negotiated issues” – CFO.
What Went Wrong
- Provision for credit losses rose YoY to $8.3M (vs. $5.3M), driven by overall loan growth and specific reserves.
- Other income declined YoY (-23.9%) and interest revenue fell (-5.7%) YoY amid lower asset yields, partly offset by lower funding costs.
- Post-quarter sweep cash saw near-term volatility: “through yesterday, down from quarter end by ~$500M+” even as venture deposits grew by ~$1B; day-to-day swings are “several hundred million”.
Transcript
Speaker 0
Good day, and welcome to the Stifel Financial Third Quarter twenty twenty five 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.
Speaker 1
Thank you, operator. Good morning, and welcome
Speaker 2
to Stifel Financial's Third Quarter twenty twenty five 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 Bouchet.
Speaker 1
Thanks, Joe, and good morning, everyone. 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 thirty years as CEO, Stifel has grown from a regional firm into a global company by consistently reinvesting in our people and our platform. That same mindset, reinvesting to increase relevancy has defined our one hundred and thirty five year history. This quarter, we achieved record net revenue of more than $1,400,000,000 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 and technology. And that's exactly how it's played out. The S and P 500 is up roughly 15% this year and more than 35% from its lows following the 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 to zero, 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 sometimes outpace confidence in currency, and that's when discipline and fundamentals matter most.
In that environment, balanced model and disciplined execution continue to deliver results. Turning to Slide two, 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 strategy with a focus on risk adjusted returns to 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, net interest income and wealth and advisory and institutional now account for 62% of total revenue, 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 $10,000,000,000 in annual revenue and $1,000,000,000,000 in client assets are not just in goals, they're the logical next step in the evolution of our strategy and scale.
As is our custom, we compare results each quarter with consensus estimates. Once again, we exceeded Street expectations across the board. Total net revenue of $1,400,000,000 as I've 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 at above expectations. In short, we delivered another quarter of record results, balanced contributions across our businesses and continued momentum heading into year end. With that, let me turn the call over to our Chief Financial Officer, Jim Marishan, to provide more details on our financial results. Thanks, Ron, and good morning, everyone.
Speaker 3
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 twenty twenty one. 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 five, I'll discuss our wealth business. Global Wealth Management delivered another record quarter with revenue of $9.00 $7,000,000 and pretax margins of nearly 38%, our highest in almost two years. Transactional revenue reached a record $2.00 $3,000,000 as clients were active in both equity and fixed income markets, and asset management revenue also reached a record $431,000,000 We ended the quarter with a record total client assets of $544,000,000,000 and record fee based assets of $219,000,000,000 reflecting continued market appreciation and net new asset growth in the low to mid single digits.
Advisor recruiting remained active and high quality. We added 33 advisors during the quarter, including 17 experienced hires with trailing twelve month production of 19,000,000 Retention remains strong. Our recruiting pipeline is healthy heading into year end. Productivity benefited from a higher client engagement, record asset management revenue and an expanding suite of wealth and lending solutions. Moving on to Slide six.
Our integrated banking model continues to strengthen our wealth platform. Net interest income was two seventy six million dollars which was above guidance as firm wide net interest margin improved modestly, our cost of funds remained essentially flat. We forecast fourth quarter NII to be in a range of $270,000,000 $280,000,000 Client cash levels increased during the quarter with sweep deposits up $640,000,000 and non wealth deposits up $760,000,000 including strong growth from the Venture Banking team as those deposits increased by more than $1,000,000,000 during the quarter. Credit metrics remained solid with the non forming asset ratio at 49 basis points, provision expense of $8,000,000 and allowance to loans ratio of 81 basis points. On the next slide, I'll discuss our institutional group.
Institutional revenue was $500,000,000 up 34% from the prior year. Strength was broad based across investment banking and transactional revenues. Investment banking totaled $323,000,000 with gains in both capital raising and advisory. Equity capital raising revenue was $79,000,000 the best since late twenty twenty one, with continued activity in financials and renewed issuance in biotech. Fixed income underwriting was $59,000,000 up from last year, driven by increased public finance activity.
Stifel remains the number one 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 $58,000,000 and fixed income trading revenue of $123,000,000 reflecting higher client activity, healthy secondary market liquidity and multiple strategic balance sheet restructuring assignments. Advisory revenue was $179,000,000 with broad contributions across sectors and early benefits from the integration of Bryan Garnier. Our investment banking advisory pipelines ended the quarter at record levels, providing strong visibility into the fourth quarter and beyond. Moving on to Slide eight.
Expenses remained well controlled. Non compensation expenses were $298,000,000 up 7% from a year ago, and the adjusted non comp operating ratio was 19%. The 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.
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 one leverage capital rose to 11.1% and Tier one risk based capital ratio increased to 17.6%.
Based on a 10% Tier one leverage target, we ended the quarter with approximately $421,000,000 of excess capital. We repurchased about 275,000 shares during the quarter and 7,900,000.0 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 110,300,000.0 shares. With that, Ron, back to you.
Speaker 1
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 these favorable market environments 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 advisors, our recruiting pipeline remain 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, people were recognized by J. D. Power for having the highest investor satisfaction among full service wealth management funds, a reflection of our advisor centric model that trusts our clients. Our institutional business, investment banking pipelines are at record levels of our 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 number one by number of negotiated issues led. We're also seeing increasing synergies between fixed income trading and investment bank, 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 in sort of a 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 at 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 of today and positions us well for the opportunities ahead. With that, please open the call for questions.
Speaker 0
Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to signal to allow your signal to reach our equipment. Again, press star one to ask a question. If you are on the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click send.
And our first question is gonna come from Devin Ryan from Citizens.
Speaker 1
Thanks. Hey. Good morning, Ron. Good morning, Jim. How are you?
Good morning, Devin. I want to start
Speaker 4
with a question on investment banking. Obviously, of been an uneven year, but second best start to a year since 2021. And we look at Stifel today relative to then, you're obviously quite a bit even bigger than that point. So would it be good to hear a little bit 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 the kind of that prior 2021 peak.
And then if you can just give a little more color on the sector supporting that and specifically love to hear about what you're seeing in the depository space as well. Thanks.
Speaker 1
Look, I think we did about $500,000,000 of institutional revenue that annualizes that around obviously $2,000,000,000 and what we did 2,200,000,000.0 at 2021. So that just gives you a sense for that. Even on an annualized basis, we're not at the 2021 level. Of course, the mix has changed. Our capabilities are more than they were in 2021.
So in terms of just, you know, where we are relative to what we can do, you know, we're making progress. And and the market environment certainly is helping as we as we set it good, you know, starting with regulatory add as much as anything else. Clearly, this administration is more open to M and A and even strategic other strategic initiatives than most of the prior. I think I don't think there's much argument about that. So the environment stood.
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 too perceived, but that's true across the street. Look, clearly, financials have been a strength not only in, you know, not only on the capital side, but also what we are doing in fixed income, balance sheet restructuring related to to mergers.
And and you just look at the at the lead tables and you can see that as it relates to depository M and A, we're doing quite well, not only in absolute terms, but relative terms as it relates to market share. And I would note that across the industry, health care, I think, is a lagger, okay? Just not yet stable, 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. Think we can do better in technology.
It's 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 by our second biggest vertical, health care, upside to what we're seeing.
We're beginning to see I'm not gonna use that word. We're always talking about great shoes. Let's not let's let's put that one in the in the the used bin for a while. But certainly, the environments are is that okay? Jim, don't know if you have anything to add.
Think that's Yeah.
Speaker 4
That's great. Thanks, Ron. 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 are 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. Yes.
Speaker 1
Well, look, I think that there's a lot of commentary you've heard whether it's one time process more, etcetera, 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 two bankruptcies and then the one of the asset management. But it's it doesn't feel like a broad based sector type thing, I would say, that in general. But but, you know, you give me an opportunity, Devin, just to maybe point out that I think it's very important to understand, and know that you do. First of all, Stifel is not a regional bank.
So I 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 many regional banks have a 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 pointed out many times, a little over 20, maybe a little bit more of our revenue is NII. We're we're fee based and and I with PCG and institutional accounting for the vast majority of our revenue.
And, you know, we don't look nor are we a regional bank. We we we really drive our revenue growth without greater exposure to credit. You know, look, when we do grow our loan book, it's relatively low risk categories like mortgages or our high network clients, security based loan, fund banking, in fact, general account for what?
Speaker 3
It's about 3,000,000,000 or so. Percent in total of the entire retained loan portfolio.
Speaker 1
Yeah. We fund these loans with deposits from our wealth clients and our venture business. These are highly complementary for our wealth and institutional business. And, you know, look, your second part of your question regarding CLOs, you know, Devin, I dealt with this question for about it feels like ten plus years. I think I'll let Harrison handle it.
Certainly. Whenever we get questions on the CLO book, the first thing I'd like to
Speaker 3
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, 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 30%. 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.
Speaker 1
Devin and I maybe I can't help myself, but probably one answer on this. But look, when I get up and I try to think of things to worry about, alright, which I do, that's what my job is, I don't think I ever get up and think worry about about our loan book and. Okay? So and I've said this like, ten years, so nothing bad.
Speaker 3
Yeah. Yeah. Well, appreciate it. Sorry for giving you
Speaker 4
the same question ten years in a row.
Speaker 3
I know. You're consistent.
Speaker 1
Hey. Hey. Hey. You're consistent. Okay?
But it's it's it's telling me even our I think it's been 20, but yes.
Speaker 3
All right.
Speaker 1
Thanks, Devin. Thanks, Devin.
Speaker 0
And our next question is going to come from Bill Katz from TD Cowen.
Speaker 1
Hey, Bill.
Speaker 5
For taking the questions. Apologize for a hoarse voice here. 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 you talk a little bit about maybe how you sort of see the incremental margin, the institutional group margin improve 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? Thank you.
Speaker 1
Look, I think, Jim, correct me. Broadly speaking, I think we did 12% margins in the quarter.
Speaker 3
The institution is 13.6%. Look at how percent. So that's year to date.
Speaker 1
That's I'm year to date. So 13.6. That's why you're CFO. That's really good. So instead of 12, it's 13.6.
Our you know, we believe that 2020 to low twenties is achievable. So when so think about it as about 10 points of margin, 400 to $500,000,000 so annualized $2,000,000,000 So if you're trying to say as we restructure and right size, including our international operations, which that's part of the improvement, we've been making improvement there. But when I look at it, snapshot, I think there's 10 points of incremental pickup. So it's a couple $100,000,000 free cash.
Speaker 3
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 the non comp. Year to date, we were about 62% in terms of the comp ratio. 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 Ron was talking about, you can see within the non comp side, the led work, that was running, call it, about 25% year to date as well.
So definitely a lot of margin increased capacity there.
Speaker 1
We're focused on this, though.
Speaker 5
Yes, it sounds like it. Okay. Another question for you, and thank you for taking the questions. So I want to pick up where you left off. Ram, we 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 should we think 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? Thank you.
Speaker 1
Bill, it's always a great question. You've asked it numerous times. The answer is always the same, which is the you know, our capital allocation will be 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, they 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 a stock rebounded and we saw more opportunities as the economy improved and lending we allocated more capital to that. And acquisitions are obviously, it's in our DNA and certainly my DNA as CEO.
But as I've said, the level that cash flows and future earnings are trading at, which you know, as I've said before, people come to me and say, do you think at 20 times adjusted EBITDA? And I think, well, I don't think that. And so that we've been 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 or financial transaction, growing the balance sheet as 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 can't give you any numbers on that because I don't know what they are. It will depend on the opportunities that they present themselves.
Speaker 5
Okay. Thank you.
Speaker 0
And our next question is going to come from Steven Chubak from Wolfe Research.
Speaker 6
Hi, good morning Ron. Good morning Jim. Thanks for taking my questions.
Speaker 1
Always.
Speaker 6
Always appreciated. 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 and 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 would be really helpful.
Speaker 1
We've been looking in the last few quarters, even at ourselves, at strong fixed income performance. And then we'll say, hey, we want to caution. It's not know, sustainable. It was 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 Stern AG through Empire through some of the smaller acquisitions.
And then importantly, Sparks combined with the pickup in depository environment, which has a normalization of the yield curve and then m and a activity, which often the restructuring of m and a will lead in the in in an m and a moment to restructuring the balance sheet of either in the target or the combined company. And so what we've seen is is what we talk about. 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 sheets. We're talking to financial officers as the yield curve adjusts not only normalize, but appears at least on the short end of it coming down.
And frankly, our relevance is equaling more revenue.
Speaker 3
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 aircraft, that's in the balance sheet restructuring transaction 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 $100,000,000 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 That's
Speaker 1
a UCOL. I think that is. So you your guidance has always proven them as well. It's a good way to think about it. Yes.
That's fine.
Speaker 6
And a two 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 ads and recruitment levels. I was hoping you could speak to what's driving some of that strength, whether you're seeing continued succession of or ceding of share from the wirehouses or if you're seeing just more opportunities with some of the regional brokers? And then was hoping for an update on sweep deposit trends in the month of October.
Speaker 1
I'll do the first. I'll let Jim do the second, so Jim can think about sweep deposit. Look, Recruiting is robust. We've talked about we've talked about the reasons. We've talked about it's a confluence of events.
We've built a great platform. We've we've built a great service platform. We have good technology. You know, we've we've made sure that we're competitive on the front because I felt when we were losing, it was it was not capabilities. It was more financial related.
And, you know, recruiting is a is an ongoing thing. It's like reading a novel of you know, or reading more piece. You know, you're you're halfway through it. You know, start over, and and then you got a lot more to do. It's 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, you know, first and and has a culture of 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 I have been and I continue to be optimistic about that part of our business.
You know, I will I will note as I always do when I get to November. But during the fourth quarter, it slows down. Half of the I mean, they shut down the ACAT system in December. So if that's known on the screen, you you should know that. But I think
Speaker 3
And then in regards to an update on sweep cash, through yesterday, we were down from quarter end probably about $500,000,000 plus in terms of those balances. But I would say that those balances are moving several $100,000,000 on a day to day basis. I'd also highlight that we did generate another $1,000,000,000 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.
Speaker 6
Great. Thanks so much for taking my
Speaker 1
question. And and we've also pretty fun. You know, we've we've hired some some more leaders too that that that have helped. I just, you know, note that We'll name names, but, yeah, it's it's all part of a flywheel type thing. You gotta gotta have a platform.
You have to have products, and you also have to have the leadership that can go, you know, track the people. And we've invested in all of those areas.
Speaker 6
Well said. Thanks for the additional color, Ron.
Speaker 1
Yeah.
Speaker 0
And our next question is going to come from Brennan Hawken from Bank of Montreal. Please go ahead.
Speaker 7
Good morning, Ron and Jim. Thanks for taking my questions. Ron, you spoke to valuation gap, which you have spoken to fairly consistently over the years.
Speaker 3
But but the valuation caps have also been persistent.
Speaker 7
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
Speaker 1
of large firms want to grow.
Speaker 7
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
Speaker 1
a good target. But
Speaker 7
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?
Speaker 1
Did you just ask me about selling the firm?
Speaker 3
Welcome back, Brandon. Yeah. You
Speaker 1
know, I yeah. It's first of all, I appreciate the compliment. I but we've got a Are you kidding? I mean, it is for for many firms that would want to to be in into our space.
There's not very many alternatives. So a company that's got 24% return on tangible equity margins and a great culture and great technology and all of those things. And, yes, maybe maybe my persistent valuation gap comes from the way I answer this question all the time, which is, you know, we see no need to to sell other than maybe the the short term pop in a share price, which then eliminates a hundred and thirty five year old firm and a firm that's gaining market share as we have over the years. I got asked this question in 02/2011. Why won't you sell?
You're an attractive asset. Everyone coming out of the financial crisis. You know, people wanna invest, and we've grown the firm as I I showed in the slide significantly. And, you know, and and maybe some of the some of the questions will go surrounding, you know, when the CEO is running out of energy and they wanna sell. Well, I ain't the case here.
Okay? So I'm I'm not looking to do anything. I get we get phone calls once in a while. I always say, well, can I run it? So the combined thing that says, what?
So then that's there. But I'm kinda kidding there. My point is 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.
Relevance. We are a growth company. Our results show it, and we trade like a company that really can't grow and more of a value plan. I'll say it. I'll continue to say it.
It doesn't matter, but it's a fun way to end the calls every once in a while.
Speaker 6
Fair enough. Thanks, Ron.
Speaker 7
And then 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
Speaker 3
are
Speaker 7
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? Thanks.
Speaker 1
First of all, I thought our reported numbers are consistently above what you would try to anticipate in the public data. And I think that is because we do, you know, we do small and mid cap deals as well, and that's that's that's been true not just last quarter, but for years. So that's the case. Right.
Speaker 3
In terms of pipeline, we're seeing strength across the board. Every single vertical, every single product. We've built a company here really to take advantage of the markets when it when it is accommodative,
Speaker 1
and we're starting to see that. And so we're optimistic as we look forward to, you
Speaker 3
know, fourth quarter and 2026.
Speaker 1
Yeah. It's a good pay. Let's let's let's not underestimate the importance of the environment. We're doing well. I share 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 optimists. Great. Thanks for taking my questions.
Speaker 0
Okay. And if anyone would like to ask a question, please press star one on your telephone keypad Our next question is going to come from Michael Chow. I
Speaker 1
just wanted to follow-up
Speaker 8
corporate on M and A discussion that we're just having. There's some news about the Stifel's independent advisor business. I mean, I recognize it's a small part of the business and something people maybe strategically deemphasized for some time, but maybe it's a good time. I was hoping maybe I could 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?
Speaker 1
Well, I mean, a fair question. Yes. Nothing's nothing's announced on on this. So you you can appreciate my, you know, inability to talk in any specifics. Okay?
That said, you know, I think that I think that the the article that was written, and I I don't I'm not really gonna comment on the article of the context. And I think that the context in the article that sort of I didn't talk to the reporter, but I I I thought, wow. They've got a little bit of bite the history and the way we think about the business. Correct. I I think that it's it's very it's it's immaterial to us.
Okay? And it doesn't really change what we believe we will grow. So I look. I guess I can't really answer your question. I hope you appreciate that.
Yes. A lot of the thought process was captured well, so I will say that. Okay. Great. No.
Fair
Speaker 8
enough. It's 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're talking about maybe $1,000,000,000 of loan growth into the '5.
Just kind of curious any updates in terms of balance sheet growth from here? Any key segments you might call out
Speaker 1
to be outside of venture banking? Right.
Speaker 3
In some of our prepared remarks, talked about the confirmation of the goal of getting to $1,000,000,000 of loan growth for 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 will continue to see what you've seen historically. You're going to see continue to see fund banking being a large contributor there. We continue to add one to four family residential loans. And then again, as we talked about, you'll continue to see some additional venture balances there as well.
That's much more of a deposit generation play more than the loan growth growth received from that.
Speaker 1
Great. Thank you.
Speaker 0
And there are no further questions in the at this time. I will turn the conference back over to Joel Jeffries for any additional or closing remarks.
Speaker 1
I appreciate you asking for my opinions, but I'm going to turn it over to Ron to have his closing remarks. I guess, so I'll tell you what you were going say. We thank you all for you know, attending and your interest in Stifel. You know, I'll reiterate what we set up the call. We we talked about the back half of the year being, you know, 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 big re going 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 have a great remainder of the day and holidays and everything until we so we meet again. Thank you.
Speaker 0
And this concludes today's call. Thank you for your participation. You may now disconnect.