Stifel Financial Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Devin Ryan - Citizens - Analyst : More so on the question on advisor recruiting. I've heard some commentary, Ron. But obviously, there's been a number of acquisitions in this space over the past year. On the flip side, your market's been volatile, which aren't always the best time for people to think about moving. So you're just -- with some of those cost curves, would love to maybe get a sense of what it looks like in terms of advisors and motion right now. And how -- if you could just, maybe drilling a little bit more on the recruiting pipeline and your expectations for 2025? Obviously last year, advisor headcount declined a little bit for reasons that you guys spoke about. I think that was more of an aberration. But just your expectation for growth this year, just given some of those cross currents?

Question: Devin Ryan - Citizens - Analyst : Yeah. That was great project. Appreciate it. Good to hear so well. And then the -- just quick follow up for Jim, I guess. On the wealth commissions, those were a bit softer than we modeled. Was that just trailing commissions declining or some hesitancy with the volatility? I'm just trying to get a little bit of a sense of what happened in the first quarter and then that trajectory as we look at over the course of the year.

Question: Devin Ryan - Citizens - Analyst : Got it. Okay. All right, I'll leave it there. Thank you both.

Question: Michael Brown - Wells Fargo Securities, LLC - Analyst : Ron, just to maybe follow up on the organic growth question from Devin. You alluded to a change and a shift in approach to recruitment, and it does seem like it's been supporting success with big teams and from the wire houses. So maybe some light on this, can you just expand on what that shift has meant and do you expect to see continued success from some of those bigger teams? Thank you.

Question: Michael Brown - Wells Fargo Securities, LLC - Analyst : Okay. Great. Makes sense. And then you can just maybe change gears and unpack your comments on the M&A activity in the bank space. That's an area where the deregulation is happening. The Capital One Discover deal has gotten approval. That seems to remove our regulatory overhang, but we are seeing lower share prices, shifting interest rate backdrop, those present headwinds. So what's the view there in terms of that consolidation trend? Is it perhaps a strong -- is it as strong as it was coming into the year? And do you think we can see those announcements coming through in '25? And then, just given that deregulation tailwind, are you expecting a shorter time frame between announced and closed on those deals?

Question: Michael Brown - Wells Fargo Securities, LLC - Analyst : Great. Thank you so much for all the color there.

Question: Alexander Blostein - Goldman Sachs - Analyst : Another one on recruiting. Just again related to the adjustments you made to your approach to stay more competitive. Is there any particular section in the market that's more receptive to the changes you made and the changes you're seeing in your recruiting pipeline? And I know you talked about building out the independent channel in the past. I'm not sure if that center part of the changes you're making or you're still largely focused on the employee channel?

Question: Alexander Blostein - Goldman Sachs - Analyst : Got it. Okay. Understood. And then in terms of the outlook. Obviously, appreciate the challenges with trying to predict the next several months given all the uncertainty. So maybe key banking out of it. But when it comes to NII, maybe give us your updated thoughts on near-term outlook for Q2 and for the full year. And as part of that, I was hoping you could hit on where cash balances stand in April. Obviously, lots of volatility, but there's also taxes and so. Maybe some of the core buckets, you know, sweep deposits as well as start point bank sweeps that are where that stands so far in April. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 1:30PM, SF.N - Q1 2025 Stifel Financial Corp Earnings Call

Question: Alexander Blostein - Goldman Sachs - Analyst : Yeah, it's balanced. Totally get it. Thanks, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 1:30PM, SF.N - Q1 2025 Stifel Financial Corp Earnings Call

Question: Steven Chubak - Wolfe Research - Analyst : So wanted to ask a follow up on some of the trends that we saw at the bank, specifically around the NIM. The contraction was admittedly probably the highest among the banks that we track. It looks like the primary culprit was securities yields. I was hoping you could unpack the timing related impacts that you are alluding to earlier. Just wanted to get a sense as to how big of a drag that was on the NIM in the quarter and how you're thinking about just managing duration, bigger picture, just given some of the expectations for increased steepening of the curve.

Question: Steven Chubak - Wolfe Research - Analyst : No, it's a fair point and then certainly did see that in the liability side. You guys did a nice job of managing deposit pricing. Just for my follow up, I did want to drill down into public finance. It may be fixed income more holistically. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 1:30PM, SF.N - Q1 2025 Stifel Financial Corp Earnings Call So the public finance outlook, just given the murky policy picture, how much of the strength in activity do you believe is durable versus temporary? And then on fixed income brokerage, just given the strength in volumes and volatility, the revenues there were a little bit lighter than we had anticipated and was hoping you could unpack that as well.

Question: Steven Chubak - Wolfe Research - Analyst : That's great color. Thanks so much for taking my questions.

Question: Bill Katz - TD Cowen - Analyst : So I'm just trying to come back to some of the math, if that's okay. If I simply annualize your first quarter revenues, I get below the low end of your initial guide, your current guide, which you are not changing at the moment so I appreciate all the moving parts. But as I think about your commentary into the second quarter and what's been going on the macro perspective, it seems like revenues may tip down potentially just given the different business component pieces, if you will. So just trying to understand what's your macro framework as you get to the second half of the year, particularly if you still think the S&P is going to hover at current levels here. I'm just trying to figure out where the incremental drivers of opportunity might be. Thank you.

Question: Bill Katz - TD Cowen - Analyst : That's very helpful. And maybe just on capital measure, I appreciate the interplay between the decision to repurchase stock versus grow the bank balance sheets. How do you think about M&A more broadly for the firm at large, just given a lot of volatility and some deals around you? Any areas of particular focus that might be of interest as you think about inorganic opportunities? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 1:30PM, SF.N - Q1 2025 Stifel Financial Corp Earnings Call

Question: Bill Katz - TD Cowen - Analyst : Okay. Thank you for taking both questions.

Question: Christopher Allen - Citi - Analyst : One thing I wanted to ask on is just the fix broker channels to 2Q flat to up. And just if you could remind us what level of, as I said, brokerage is tied to offset underwriting and what is the separate buckets there? [Muni's], I think is the key driver of trading, but I think rates is most important. And just to try think about the different outlooks and what is tied to underwriting under recovery, and what can continue to perform without underwriting [combat] near-term.

Question: Christopher Allen - Citi - Analyst : Thanks, guys. Appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 1:30PM, SF.N - Q1 2025 Stifel Financial Corp Earnings Call