Stifel Financial Fourth Quarter 2025 Earnings Call - Record 2025 Revenue, Guiding to $6B-$6.35B in 2026 on NII Growth and Expense Leverage

Conference Operator: Good day, and welcome to the Stifel Financial Fourth Quarter 2025 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Joel Jeffrey, Head of Investor Relations. Please go ahead.

Joel Jeffrey, Head of Investor Relations, Stifel Financial: Thank you, operator. Good morning, and welcome to Stifel Financial’s fourth quarter and full year 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 the 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.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Thanks, Joel, and good morning, everyone. 2025 was another record year for Stifel. Firm-wide revenue of $5.5 billion increased 11% and marked the first time we’ve surpassed $5 billion in revenue in our 135-year history. Record performance in Global Wealth Management and our second-highest year of institutional revenue drove these results. Given the volatility we experienced throughout the year, this performance highlights the breadth, quality, and resilience of our franchise. Stepping back, 2025 was a strong year for markets, but it was not without its challenges. Economic resilience, healthy balance sheets, and an improving capital markets activity supported growth, even as volatility, geopolitical risk, and policy uncertainty remained very real. As the environment strengthened during the year, our focus on client service allowed us to capitalize on the improving market trends. That focus is reflected in J.D.

Power ranking Stifel number one in employee advisor satisfaction for the third consecutive year, and the fact that 2025 was our strongest financial advisor recruiting year since 2018. On the institutional side, I’d also highlight the performance of our KBW subsidiary. In 2025, we participated in approximately 75% of depository M&A advisory transactions, measured by deal volume, underscoring our leadership position in financials and the depth of our client relationships across the sector. Building on that momentum, this morning, we announced another depository M&A transaction, representing Stellar in its sale to Prosperity Bancshares. This reflects the continued level of engagement we’re seeing across bank boards and management teams as strategic conversations translate into executed transactions.

Before getting into the details of our results, I want to step back and briefly address our business model because it’s central to understanding Stifel’s competitive position. We do have a $41 billion balance sheet. Approximately 80% of our revenue comes from wealth management, asset management, investment banking, and capital markets, with net interest income representing about 20% of the mix. Our balance sheet exists to serve our clients, not as a standalone business. It allows us to provide individual lending, credit and treasury capabilities to companies in the innovation ecosystem and capital solutions to institutional clients. It’s client-serving infrastructure that supports our core business. This structure gives us meaningful competitive advantage. Unlike independent wealth managers, we can enhance the full client experience through integrated lending and cash management. Because our model is advice-led, we generate the growth and returns on an advice-based business.

That’s why you’ll hear us focus our commentary on the businesses that drive our growth trajectory, global wealth management and institutional. The balance sheet enables those businesses, but it is not itself a separate business line. We use our balance sheet to support our clients when it’s right to do so, while remaining well-capitalized. Our bottom line results reflect an increased scale in operating leverage. Excluding the first quarter legal accrual, we delivered EPS of $7.92, a pre-tax margin of 21%, and for 2025, a return on tangible common equity of roughly 25%. Strong earnings again generated meaningful excess capital, which allowed us to continue investing in the business, grow our advisor-led client-serving platform, acquire Bryan Garnier and the employee wealth business from B. Riley, and repurchase shares.

To put our 2025 performance in proper context, more than 2 years ago, on our third quarter of 2023 earnings call, we discussed our ability to generate... At the time, we looked forward, it was our ability to generate $5.2 billion in revenue and $8 a share in normalized environment. And look, at the time, those targets were viewed as aspirational, particularly given that we were on our way to delivering 2023 revenue of $4.3 billion and earnings per share of $4.68. In 2025, we exceeded that revenue target and essentially reached $8 per share in earnings, despite market headwinds in the first quarter. That outcome reinforces both the durability of our model and the operating leverage inherent in the business.

Stepping back and taking a longer view of our growth, the trajectory of the firm has been consistent and disciplined. Over the last decade, Stifel’s revenues are up 137%, driven by meaningful expansion across both of our operating segments.... In Global Wealth Management, revenue has grown 157% over the last ten years, reaching $3.5 billion. That growth has been driven by sustained advisor recruiting, higher advisor productivity, growth in fee-based assets, and the continued build-out of our client-serving platform, which has improved both the growth and consistency of our results. In our institutional business, revenue has nearly doubled over that same ten-year period, reaching $1.9 billion. That growth reflects diversification across advisory, capital markets, and public finance, deeper industry coverage, and continued investment in talent. That long-term execution is also reflected in shareholder returns.

Since 1997, the S&P 500 is up roughly 9 times. Microsoft, one of the most successful growth companies of our generation, is up approximately 45 times. Stifel, over that same period, is up around 76 times. Even over a more recent horizon, the story is consistent. Over the last 5 years, Stifel stock is up roughly 2.5 times, while Microsoft has roughly doubled and the S&P 500 has not quite doubled. Reflecting that performance and the confidence the board has in the durability of our earnings and cash flows, the board of directors authorized an 11% increase in the common stock dividend beginning in the first quarter of 2026. In addition, the board authorized a 3-for-2 stock split, effective February 26, 2026, for shares of record as of February 12, 2026. This marks the 5th stock split during my tenure.

Taken together, these results reinforce what we’ve believed for a long time, that disciplined growth, consistent investment in our people and platform, and a long-term mindset can create significant value for shareholders across market cycles. With that context on our business model and long-term performance, I’ll now turn the call over to our CFO, Jim Marischen, to walk through our quarterly results and outlook in more detail.

Jim Marischen, Chief Financial Officer, Stifel Financial: Thanks, Ron, and good morning, everyone. The fourth quarter capped another strong year for the firm. Revenue was a record $1.56 billion, surpassing last quarter’s record by 9%, with both operating segments delivering solid results. Global Wealth Management once again led the quarter, delivering another record result, while Institutional Revenue increased 28% year-over-year, marking its second strongest quarter on record. The performance across both segments drove record EPS of $2.63, a pretax margin of more than 22%, and a return on tangible equity of more than 31%. During the quarter, we also announced the sale of Stifel Independent Advisors. Combined with the actions taken earlier in the year, this positions the firm for improved operating leverage going forward. Turning to slide four, I’ll walk through our results relative to consensus estimates in the prior year.

Total net revenue exceeded consensus by $50 million, an increase 14% year-over-year. Investment banking revenue was the primary upside driver, exceeding expectations by $70 million or 18%. Higher advisory revenue was the main contributor, and we also exceeded expectations for both equity and fixed income capital raising activity. Transactional revenue came in 4% below expectations, primarily due to lower fixed income revenue, which more than offset modestly higher wealth management revenue. Within fixed income, the results were slightly below our prior quarter guidance. Asset management revenue was in line with expectations. Net interest income was at the high end of our guidance, but was $2 million below consensus. This was a result of the decline in fee income recognized during the fourth quarter.

Expenses were well controlled, with the compensation ratio and total non-compensation expenses generally in line with expectations, allowing for operating leverage on a higher revenue base. The effective tax rate for the quarter was 14.1%, slightly above both guidance and consensus. During the quarter, we recognized the benefit related to stock-based compensation, which was offset by an unfavorable return to provision adjustment on foreign taxes. Turning to slide five, I’ll start with global wealth management, which remains the foundation of the firm’s earnings, capital generation, and long-term growth. 2025 marked our 23rd consecutive year of record wealth revenue, with total revenues exceeding $3.5 billion, driven by record asset management and transactional revenue, along with our second highest year of net interest income.

Fourth quarter results, they were equally strong, with record quarterly revenue of $933 million, again, driven by strength in both transactional and asset management activity. We ended the quarter with record total client assets of $552 billion and record fee-based assets of $225 million, reflecting continued market appreciation and net new asset growth in the low to mid single digits. Recruiting was a significant contributor to growth in 2025. We added 181 financial advisors, including 92 experienced advisors with trailing twelve-month production of $86 million. This represents more than double the number of experienced advisors added in 2024 and a meaningful increase in trailing production.... Our recruiting pipeline entering 2026 remains strong, and we expect another solid year.

Our client-driven balance sheet activity continues to enhance both earnings consistency and client engagement. As shown on the slide, the economics associated with client-driven balance sheet usage has been relatively unaffected by rate cuts over the past year. Given the floating rate nature of our assets and liabilities, we remain relatively rate agnostic, with growth in net interest income driven primarily by client activity and balance sheet expansion rather than changes in interest rates. For the first quarter of 2026, we expect net interest income to be in the range of $275 million-$285 million. Client cash and funding increased meaningfully during the quarter. Sweep balances increased by $510 million, while non-wealth client funding increased by nearly $1.5 billion.

This was the strongest quarter of growth we’ve seen in our venture activity and reflects continued momentum from investments made in that group. In addition, we saw a more than $1.4 billion increase in third-party money fund balances. As a result, we entered 2026 with significant capacity to support wealth-related and institutional client-driven balance sheet growth, while maintaining a conservative credit risk profile. Turning to slide 6, I’ll discuss our institutional group, which provides meaningful upside as market conditions improve. For the full year, institutional revenue exceeded $1.9 billion, up 20% year-over-year, marking the second strongest year for the segment. Fourth quarter revenue was $610 million, up 28% year-over-year, driven primarily by investment banking. Investment banking revenue totaled $456 million, up 50% year-over-year.

Advisory revenue increased 46% to $277 million, with continued strength in financials and improving traction in technology and industrials. Equity capital raising revenue was $95 million, double the prior year, led by healthcare, financials, and industrials. Fixed income underwriting reached a record $76 million, up 23% year-over-year, driven by increased public finance activity and higher corporate issuance. We remain the number one negotiated issue manager in public finance by deal count. We’re also seeing increased success in larger par value transactions. Investment banking and advisory pipelines into the quarter at record levels, providing strong visibility into the first quarter and beyond. Transactional revenue declined 10% year-over-year due to an 18% decline in fixed income revenue, which more than offset a 6% increase in equity revenue.

The fixed income results were impacted by the government shutdown and timing of gains in prior periods. Turning to slide 7. Expenses remained well controlled during the quarter. Non-compensation expenses totaled $307 million, up 6% year-over-year, primarily reflecting increased investment banking gross ups associated with higher advisory and underwriting activity. As a result, our quarterly adjusted non-compensation operating ratio improved by 200 basis points. For the full year, excluding the first quarter legal accrual, our non-compensation operating ratio improved by 140 basis points, reflecting the benefits of increased scale, improved operating leverage, and a more favorable revenue mix. Compensation expense remained well aligned with revenues, coming in at 58% for the quarter and the full year.

Despite quarter-to-quarter variability, improvement in our overall expense profile continues to be driven by the combination of scale, growth in net interest income within wealth management, and actions taken to simplify business support. Our capital position remains strong and provides meaningful strategic flexibility. The Tier 1 leverage ratio increased to 11.4%, and the Tier 1 risk-based capital ratio rose to 18.3%. Based on a 10% Tier 1 leverage target, we ended the quarter with more than $560 million of excess capital. We repurchased 335,000 shares during the quarter and have 7.6 million shares remaining under the current authorization. Assuming no additional repurchases and a stable stock price, our fully diluted share count for the first quarter is expected to be approximately 109.7 million shares.

On a pro forma basis, reflecting the recently approved 3-for-2 stock split, that equates to approximately 165 million shares. And with that, Ron, back to you.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Thanks, Jim. As we look ahead to 2026, the setup is constructive. Client engagement remains high, strategic activity is picking up, and capital is beginning to move more decisively. At the same time, we remain mindful that risks are ever present and that the market conditions can change quickly. Our focus remains on disciplined execution, serving clients, and building durable performance through the cycles. Our advisor-led integrated model continues to differentiate Stifel. We’re attracting high-quality advisors, deepening client relationships, and seeing clear evidence that a platform combining wealth management advice, institutional capabilities, and balance sheet support creates value that clients recognize and that advisors appreciate. Before turning to guidance, I want to briefly highlight how our businesses are positioned as we enter the year. Our wealth business entered 2026 with strong momentum....

Recruiting engagement and pipelines remain robust, with experienced advisors attracted to Stifel’s platform, technology, and integrated model. Fee-based asset flows remain elevated, with fee-based assets up 17% from the end of 2024. Revenue, as always, seems to be true, follow assets. Our venture initiative continues to gain traction, supporting lending activity, deposit flows from venture-backed firms and their stakeholders, and fund lending relationships. Elevated client asset levels continue to represent opportunities, supporting lending initiatives and providing flexibility for future investment, alternative allocations, and opportunistic deployment by our clients. We’re also seeing increased momentum across our institutional business with record pipelines. A few areas are worth noting. We continue to see strong momentum in advisory, supported by active pipelines and increasing client engagement. Equity capital markets activity is off to a strong start to the year, with issuance active across sectors and products.

We continue to see a pull forward in the new issue calendar where possible. Pitch and mandate levels are increasing, and while there have been some volatile sessions, markets are functioning well with strong investor engagement. Financial institutions’ activity is robust across banks, insurance, and financial technology, as evidenced by the Old National Bancorp offering, which we priced on Monday, which was upsized based on demand at attractive spread levels. And of course, I’ve already mentioned our recently announced this morning, M&A transaction. Healthcare has experienced one of the strongest January new issues in several years, with a growing backlog of biotech IPOs that is helping drive broader market momentum. Technology and industrial technology remain active, driven by AI and infrastructure investment, with large transactions in energy, infrastructure, services, and defense being well received by the market.

Our public finance backlog remains strong, and a normalization of the yield curve is a positive development for our fixed income rates and credit businesses, compared to the headwinds created by the sustained inversion of the yield curve following the Fed’s rate hikes beginning in 2022. Taken together, these trends across wealth and institutional position us well to continue executing our strategy, gaining share, delivering operating leverage, and compounding earnings with discipline through the cycle. So this brings us to our guidance for 2026. Total net revenue is expected to be in a range of $6 billion-$6.35 billion. I would note that this reflects the impact of the SIA sale and the closing of our European equities business, which together represented $100 million of annual revenue.

So our guidance does not include that $100 million of revenue, which we had last year. We think that this, that, these changes will be offset by improved expenses and improved margins. Net interest income is forecasted to be between $1.1 billion and $1.2 billion, supported by approximately $4 billion of balance sheet growth. We have lowered our expense ratios to reflect increased operating leverage. The compensation ratio is now in a range of 56.5%-57.5%, and non-compensation operating ratio is 18%-20%. So what does this mean for Stifel going forward? Simply put, our long-term track record of disciplined execution gives me confidence that we can once again double this business over time. Yes, I still believe we’ll reach $10 billion in revenue and $1 trillion in client assets.

No, I’m not going to give you a timeframe. With that, operator, please open the line for questions.

Conference Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. Again, press star one to ask a question. We’ll pause for a moment to assemble the queue. We will take our first question from Michael Brown with UBS.

Michael Brown, Analyst, UBS: Great, good morning.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Morning.

Michael Brown, Analyst, UBS: Thanks for taking my question. So, Ron, maybe just to start on recruitment here. So what factors do you think will kind of shape recruitment in 2026? And then can you maybe just give an update on how you’re approaching recruitment of the high net worth advisor space, specifically? And maybe just one last follow-up there. How are you thinking about productivity expansion from the experienced advisors that you’re bringing onto the platform? Maybe you could touch on the B. Riley advisors that you brought over. Have you noticed a pickup in the productivity from that advisor cohort specifically? Thank you.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Yeah. Well, your last question first. I for sure have noticed a productivity increase in B. Riley. Now some of that’s market, but a lot of it is just platform technology products. You know, we have a well-developed, you know, platform. We have an integrated, you know, lending and credit model, all of which helps us, you know, deal with clients across a broad spectrum of their financial needs, and that equates to higher productivity. As it relates to recruiting, look, past is prologue. I get this question all the time. I feel like I’ve answered it for 28 years, and we continue to recruit. What I would say has changed over the years is the level of teams that come in. I think I’ve said in previous calls that, you know-...

A few years ago, we would say, "Oh, you know, we hired 10 people doing $7 million," and now we’re saying, "Well, we hired one team doing $7 million." And it’s really how our focus as we’re recruiting people who do a mix of business. They do advisory, for sure, but they also will do brokerage. They’ll also participate in lending activities and in deposits. So it’s a broad mix of clients that we like to look at. But to answer your question, recruiting strong. If anything, you know, I’m thinking about even increasing our allocation to recruiting, because I think our platform and where we are allows us to really gain even more market share, if we choose. So that’s on my mind.

Michael Brown, Analyst, UBS: Okay, great. And just, as a follow-up, just to change gears a little bit and shift over to the institutional side. So very strong investment banking results this quarter. Clearly saw a lot of strength coming through on the financial side, and particularly in advisory. As we now move into 2026, are you starting to see the activity really broaden across the platform? And, where is maybe the deal momentum accelerating the most in your observation?

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Well, I think that as we went into 2025 in the, in the sector, at least on advisory, that picked up first, and that we, you know, we just had a tremendous year, was in, was in financial institutions, primarily depositories, although we’ve done a lot in fintech. But, where we see we see that continuing, for one, but we see, an increase now in activity, in healthcare. Healthcare, at one point, was one of our largest sectors, and we’re seeing equity capital markets transactions and other transactions in, in healthcare. You know, and if I I can sort of say the same story again and again, when I talk about industrials, tech, and consumer. I would say that as we looked last year, those businesses started to pick up in the fourth quarter.

Now if we, you know, would keep geopolitical risks at bay and let the market function, you know, normally, I see a lot of business to be done, not just in FIG, but in industrials, telecom, tech, healthcare, and consumer.

Jim Marischen, Chief Financial Officer, Stifel Financial: I’d also add to that, sponsor activity is really not all the way back, but is noticeably improving. You know, we still, there’s still a runway for significant growth related to sponsor activity if markets hold up through the remainder of 2026. So that’s definitely an area of growth as well.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: A lot of people like to use the term, you know, the private equity unlock, you know, and we’ve been talking about that for years. You know, when will private equity begin to unlock some of these companies? And we’re seeing signs of that. Certainly, robust market valuations are helping that. But when you think, bring all of this together, it’s a very conducive environment as we sit here today.

Michael Brown, Analyst, UBS: Great. Thank you, Ron and Jim, and good luck to the U.S. Ski Team.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Hey, you got it. All right, I like that. I’m gonna bring some medals home.

Conference Operator: We will take our next-

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Stifel U.S. Ski Team, by the way. Let’s get the name right.

Conference Operator: We will take our next question from Steven Chubak with Wolfe Research.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Hey, Steven. Good morning.

Steven Chubak, Analyst, Wolfe Research: Hey, guys. Good morning. Thanks for taking my questions. So maybe to start just on the ECM outlook. And Ron, everyone recognizes the strength of the advisory franchise, particularly in fin services. If I look at advisory fee share, it kept pace with the bulge bracket peers. DCM fee share was also consistent with the bulges. I’d say the more surprising stat was the magnitude of ECM share gains. Full year revenue growth, I think, outpaced that group by about 40 percentage points. And just want to better understand what’s driving some of that share strength in ECM relative to your large peers, and your confidence level that ECM fees should continue to build this year, given the pipeline commentary, and you were alluding to a strong start to 2026 as well.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Well, Jim, go back to 2021 and look at our ECM fees while I, while I answer this question. Give them, give them something to look up even while we, we do this. But, yeah, I think that it’s nice of you to point out that, that we’ve done that. I, I view it as the firm. We were talking, before we got on the call about some recent deals that we’ve done in both, fixed income and equities, where we have been lead left with some rather large firms to our right and as co-managers, and Stifel has been on the left, which five years ago didn’t happen. It just didn’t happen. And so on those deals alone, obviously, we’re gaining market share because we’re getting more economics on those deals.

What I see happening is not, you know, some, you know, seismic shift in all this. It’s just that we are moving up in our participation levels, and we’re doing more deals that go to the just the level of capability that we brought to the firm. You know, and 10 years ago, like, our institution business was half of what it is today, and we didn’t have as many MDs, we didn’t have the capabilities, we didn’t have the debt, we didn’t have the ability to lead left, you know, a $500 million subordinated deal with the large firms to our right. All of those things speak to the fact that we’re we are really achieving our goal, which is to be a premier wealth management and middle market, if you will, investment banking firm. You’re seeing it.

Thanks for pointing it out.

Jim Marischen, Chief Financial Officer, Stifel Financial: ECM revenues back in 2021 for the full fiscal year were $230 million. So we were above that in what we produced in 2025.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Okay. In ECM.

Steven Chubak, Analyst, Wolfe Research: Pretty extraordinary.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Yeah, we we’ve exceeded 2021, but we don’t think—in 2021, I think we were running at 105% of capacity. And today, I think we’re running at 50% of capacity. And that’s an important, you know, don’t quote me on those numbers. That’s off the top of my head. But people always want to know what capacity actually means. But I feel that we have a lot more ability to do things because, instead of being, a 5% co-manager, we’re a book manager. Same deal, just higher economics. And, and that’s, that’s what you’re seeing.

Steven Chubak, Analyst, Wolfe Research: All right. Well, rest assured, we won’t reflect those numbers you just quoted in the model around capacity. But I did want to ask you on-

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: They might, they might break your models.

Steven Chubak, Analyst, Wolfe Research: the comp guidance.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: What?

Steven Chubak, Analyst, Wolfe Research: I did want to ask on the comp guidance, and if I look over the last two years, the revenue guides come in better than the midpoint of the outlook range that you guys have provided. The comp ratio, however, has come at the higher end. The guidance for 2026 contemplates pretty meaningful comp leverage, a 50% incremental margin. I just want to better understand how much of the comp improvement in 2026 is attributable to the restructuring and business exits versus the, let’s call it, improved business as usual comp discipline. What gives you confidence that this time will be different and the comp leverage will come through, just giving continued elevated competition for talent?

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Well, first of all, I mean, we’ve been in our range, and albeit we’ve been at the top end of our range, and I think if you step back a little bit, you know, we don’t operate in a vacuum when it comes to talent, right? It’s very easy to say, "Oh, our model is X, and this is what we’re going to do." And if you run just pure numbers, you will, you know, you would see comp leverage as productivity goes up. That’s just sort of to be expected. And as you bring new recruits that you’re you might be paying, you know, recruiting, you’re going to bring those people online. And what I would say, Steven, if you go to most of the street, what you’ve seen is an uptick in the comp ratio over time.

You know, you look at your own universe, and we’ve remained very consistent. And what that is, is it’s us trying to manage our growth, while not, you know, giving up our margins. We’ve had... If steady state people stayed here and we weren’t recruiting, we’d be driving our comp ratio lower. Now, that’s because of a lot of the investments we’ve made since 2020, across the board. We’ve recruited a lot of people. You know, growth in recruiting puts upward pressure on the comp ratio. We’ve managed it very well. All that said, I’ll let Jim talk about it. We’re doing a couple things with the sale of SIA and the European-

Jim Marischen, Chief Financial Officer, Stifel Financial: Right

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: - restructuring, which alone, left in a vacuum, drive comp ratio lower.

Jim Marischen, Chief Financial Officer, Stifel Financial: Right. So, so, again, yeah, I’ll focus on the sale of SIA and the European reorg here. And Ron talked about in his prepared remarks, as well as we’ve noted in the slides, you’re talking about $100 million of revenue here. In terms of compensation expense, you know, both of those groups were well north of our consolidated 58% comp to revenue total. And I would say most people understand generally where the comp ratio hovers around for an independent FA model. That ratio is probably a little bit lower for European equities, particularly since we have retained some U.S. distribution capabilities there, kind of in the after reorg. But when you think through those things, that can give you a ballpark idea of where those comp savings are. Now, I’ll, I’ll just touch on the non-comp related to those two entities as well.

You know, the independent channel is obviously going to be more heavily weighted towards comp, so there’s not a whole lot of non-comp savings there. You back off related to the SIA sale. But when you look at that in combination with the European reorg, that could take a good $20+ million out of non-comp when you look at 2026 compared to 2025. And then I’d just kind of highlight that, you know, when you look at our expense guide, as Ron kind of reiterated, both of those things then do contemplate additional investment across our existing businesses. But it can give you somewhat of a decent understanding of how we came up with those new ranges, absent the normal course of just higher net interest income or the normal operating environment, but specific to these two transactions.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: I think it’s a great question.

Steven Chubak, Analyst, Wolfe Research: Very helpful, though.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: I’m comfortable with our comp ratio. We also take opportunities, just like every firm does. We take opportunities to recruit and build our capabilities, and that goes the other way on the comp ratio. So we tend to be conservative, but you got to admit, we at least deliver it within our range.

Steven Chubak, Analyst, Wolfe Research: Fair enough, and usually, towards the higher end of the guidance. I appreciate that, and thanks for taking my questions.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Thanks.

Conference Operator: We’ll take our next question from Devin Ryan with Citizens JMP.

Devin Ryan, Analyst, Citizens JMP: Great. Good morning, Ron. Good morning, Jim.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Good morning.

Jim Marischen, Chief Financial Officer, Stifel Financial: Morning.

Devin Ryan, Analyst, Citizens JMP: Hey, stay on financial advisor recruiting. Obviously, coming off of a good year. Ron, it should be good to get your perspective around kind of the future of advisor mix in the industry between kind of employee, independent RIA. Obviously, a lot of discussion over the last, you know, decade plus around tailwinds towards independent. But recently, we’ve seen pretty healthy and maybe accelerating or re-accelerating net new assets within some of the leading employee firms. So just love to kinda hear what you think about maybe whether we’re getting to an equilibrium of how many people want to be independent. Obviously, you have your chips on the employee channel, but at the same time, I also appreciate that you’re taking advisors from the wirehouses as well.

Maybe you grow independent of what the wirehouses are doing. Just love to get a thought on kind of the broader, you know, kind of remixing potential of advisors.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Yeah, it’s a tough question. I mean, you know, in terms of remixing. What I would say is that the initial, you know, competitive landscape of private equity... Remember, a lot of this, a lot of this, gasoline to get this done was provided by private equity dollars. And I would say that, you know, they started with a bang, on, you know, being able to, pay less in transition and, and sell the way you can be independent and, and all of that. And you got a lot of, you got a lot of initial, flows, and then, then it got quite competitive. And, so now I think that, you know, that plus rates coming down are a double kind of whammy.

A lot of the economics in the independent channels on the rate is, you know, on the cash side. And as that comes down, that puts pressure on that. So what I see is the overall in the competition, I see the ability to, you know, to recruit at significantly higher levels. These PE firms are... You know, they want 20% IRRs. The math just doesn’t work as many people think. And then the concept of trading paper. You know, we’ll pay cash, and many private equity firms say, "Well, wait, we just valued at this. We’ll give you paper." That slowed down. That’s all I can say. Now, the independent channel, it’s absolutely, it’s like the do-it-yourself channel and investors. Some people are just gonna use discounters, and some are gonna use advice.

Some people, advisors really like the employee model. They don’t have to worry about a number of things. Their profit margins are 60%. So I see, to answer your question, I see a general slowing of what, you know, if you had 100 people, and I’m making up, 70 were going independent and 30 were going employee, I would see those numbers going. 70 is lower, and more will come to employee for all the dynamics I just said. Now, that’s my view of the world. You know, some other people may have a different view.

Devin Ryan, Analyst, Citizens JMP: Yep, I appreciate that, Ron. Just good to get your perspective there, so thank you. A follow-up, probably more for Jim here, just on kind of the net interest income guide and some of the underlying assumptions would just like to unpack a bit. So the $4 billion-

Jim Marischen, Chief Financial Officer, Stifel Financial: Right

Devin Ryan, Analyst, Citizens JMP: ... of loan growth, can you just talk about kind of where you see that coming from? What are some of the buckets that you expect to see, kind of the net growth? And then, you know, just talk about some of the differentials in yields that you’re seeing across the different loan categories today. And then as you think about kind of that $4 billion, could there be upside, obviously, you know, $600 million or so of excess capital today that’s gonna grow, or you’re gonna create a lot of excess capital over the next year? So just how we should think about potential upside cases to the $4 billion, and then the liability side as well, if you just touch on that, kind of in terms of what you’re expecting.

You’ve seen kind of couple quarters of nice growth in sweep cash, so I’d love to get some sense there as well.

Jim Marischen, Chief Financial Officer, Stifel Financial: Right.

Devin Ryan, Analyst, Citizens JMP: Thanks.

Jim Marischen, Chief Financial Officer, Stifel Financial: All right. I think that was about four questions, but I’ll, I’ll start taking them one at a time here.

Devin Ryan, Analyst, Citizens JMP: They’re all connected.

Jim Marischen, Chief Financial Officer, Stifel Financial: The first of which are the $4 billion in growth. I’d say, you know, you look back at what we’ve done historically, I think flow banking will be a large portion of what you see in our balance sheet growth here. You know, that’s probably 130 to 160 basis points in yield higher than what you see on the average loan portfolio. We’ll continue to add mortgage. We’ll, you know, we’ll do what we can as securities-based lending. We’ll do selective commercial lending, and obviously we’re supporting our venture group as well. But those yields, you know, I think you can look at the yield table and kind of see consistently where those are coming out.

But if you take a step back and think about the guide in general, you know, we’re talking about $275-$285 million of NII in the first quarter, and then $1.1 billion-$1.2 billion for the full year. I think when, you know, we make comments about being relatively rate neutral, the key assumption here then is that $4 billion balance sheet growth, which I touched on kind of what the mix could look like there. But we’re, you know, we’re generally assuming linear growth, so you can basically plug, call it $2 billion of average interest earning assets into your model. And I would also say, when you touch on the liability side, we’re assuming that all that growth will be funded with Treasury deposits rather than, you know, sweep or smart rate.

So, you know, we’re talking about a cost of funds slightly better than where we see smart rate today. We’re not really modeling in any changes in interest rates, even though, you know, I just said we’re kind of agnostic to interest rates. And so you bake that all together, we’re somewhere around a 320 basis point net interest margin for the year. And so again, the key is gonna be the mix of those assets and being able to deliver on that growth. And so we provide a range.

It’s a large range, but you can kind of annualize the first quarter and think about that $2 billion of average interest earning asset growth, and the fact that we’re really not baking any other kind of fee income related to our assumptions here, that, you know, we feel like we’re being, you know, fairly conservative in the guide there.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: ... Let’s see. The other questions were liquidity and capital. Is that right?

Jim Marischen, Chief Financial Officer, Stifel Financial: I didn’t go there, but if so, you could always expand, but no, I think we’re good.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Planning. All right. We’re planning.

Jim Marischen, Chief Financial Officer, Stifel Financial: Yeah, I did see you have excess capital here beyond to, you know, to kind of fund the $4 billion, I guess, is the point. So, just like the upside case to-

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Sure.

Jim Marischen, Chief Financial Officer, Stifel Financial: Potentially growing loans even more.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Right.

Conference Operator: We will take our next question from Brennan Hawken, with BMO Capital Markets.

Brennan Hawken, Analyst, BMO Capital Markets: Hey, good morning. Thanks for taking my question. You just touched on this a little bit in the questions from Devin. But the CNI loan growth that we saw here this quarter seemed to come on in the back end of the quarter, and it also seemed to come on the asset beta was a little bit greater than we would have expected. Of course, there’s some front-end sensitivity, but it seems like the spreads are coming on a little tighter. Could you speak to how much of that was new loans versus, like, a remix in the portfolio? And how should we be thinking about the spreads in that book here as we go forward?

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: So, the asset beta, you got to remember the commentary we gave on fee income. We really didn’t have any of those fees showing up, which, you know, obviously can distort some of your yield calculations. The yield calculation annualizes that, you know, one-off type fee over the entire year. It and again, it distorts the yield a little bit. We just went from, you know, last quarter, we had a handful of million dollars of fees to, you know, not a whole lot of those, you know, less than, you know, maybe $100,000 or so in the quarter. So it was a pretty big change there. We had a reclass of loans out of held for sale back into the retained portfolio. That was probably $200 million, but not overly material.

But that was driving some of that growth as well. But again, I would just kind of focus on our commentary related to fee income as the biggest driver and the delta between your expectations and the beta on the asset yields.

Brennan Hawken, Analyst, BMO Capital Markets: Got it. Okay, thanks for that. And then, there’s, you know, whether justified or no, there seems to be a decent amount of concern around private credit markets. I’m curious what you’re seeing within your CLO book. You know, how are you thinking about that? I know you, you guys buy it to high quality. You got a lot of subordination, but, you know, can you speak to any trends that you’re seeing there? Thanks.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Look, minuscule, I mean, none. I just really none. Some of our CLO book had very, very little exposure to some of the names. But as we look at it, and I’ve always been very comfortable with both the subordination and what goes on in that book, and a lot of our sponsored finance loan book, you know, we sold. So, just to answer your question directly, really, no, we don’t see any issues there.

Jim Marischen, Chief Financial Officer, Stifel Financial: I think one thing I would add to that is, you know, we’ve actually seen a fair amount of refinance and redemption activity across the CLO book. You know, the structures, given the credit subordination and diversion of cash flows and whatnot, if there are any credit issues here, we end up getting paid off, and so the structure works as intended. We’re not seeing any material change in any of our key metrics and really no concerns.

Brennan Hawken, Analyst, BMO Capital Markets: Okay, thanks for taking my questions.

Conference Operator: We will take our next question from Bill Katz with TD Cowen.

Devin Ryan, Analyst, Citizens JMP0: Great. Thank you very much for the expanded commentary and taking the questions this morning. Maybe big picture down. You mentioned sort of the loan growth, and that’s pretty straightforward. Ron, how are you thinking about maybe strategic use of capital? A fair amount of M&A going on around you, just obviously from the banking side, but also some of your peers have been sort of pretty active. Maybe just update us on your thinking of where you might be interested versus maybe returning that capital to investors. Thank you.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Well, you know, we increased the dividend, right? So the dividend’s up 11%. The, as I’d say in every call, you know, the break-even analysis, if you will, between stock buybacks and deploying capital, whether on the balance sheet or acquisition, moves around, and we’re always looking at that. Broadly speaking, you know, we’ve said that we see balance sheet growth of about $4 billion, and so round numbers, that’s $400 million of capital plus the dividend. That still leaves us a lot of capital to do some things with. And I would say that while we see almost everything, a lot of everything seems pretty richly valued, not just at the point in time, but frankly, forward projections on things that, you know, may have me usually take pause.

And I’m pretty conservative, and if you know our history, we generally do not participate in, you know, really good markets. Okay? That’s just not our style, and we’ll be there, and if the right deal comes along, and it makes you money as a shareholder and builds our client relevance and is accretive to our new people and to the existing people in the firm, that has been a formula that has worked for us for 28 years, and done a lot of deals. The fact to just go out and do a deal to become larger and maybe dilute that return on tangible equity, return on equity, it’s just not in our mindset. So, plenty of opportunity. I tend to not answer the phone as much when the markets are at these levels.

Devin Ryan, Analyst, Citizens JMP0: ... Hi, that’s helpful. Just as a follow-up, maybe a 2, 2-parter to keep up with my, with my peers here. First one is, just in terms of the margin, how much of the margins, if you separate maybe the, so the, the, repositioning of SIA and the European footprint. As you look forward, how much of the incremental margin comes from the investment banking opportunity versus the wealth management? I was looking particularly at the wealth management business. That seemed to be a little sticky on the margins again, on how much of the merger charge was in there, or the prospective impact. And then unrelatedly, the second question is: can you give us a sense of any activity levels into the new quarter, just in terms of client cash dynamics? Thank you.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: I’m not quite sure I understood the question. I generally say that I think for the year, our institutional margins combined came in around 17%.

Devin Ryan, Analyst, Citizens JMP0: Mm-hmm.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: When we look at what we’re doing, there was a drag in our European operations. You know, I’d like to think that those margins are in the low 20s%.

Devin Ryan, Analyst, Citizens JMP0: Right.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: So that’s maybe 5 points more on, you know, $2 billion of revenues, round number last year. So that’ll give you some sense of what we see as we’re, you know, making sure that we’re optimizing that business, okay? And I think that business can- I think those can even be higher. But we’ve have a lot of new hires and a lot of investments. So we’re 17. We’ve talked- when we gave our $8 number, I think that we said that if we got to 18%, that would be one of the triggers of helping us recover to where, you know, we, our interim target was. As it... So, you know, that’ll give you a sense. Wealth.

Wealth is a very profitable business, you know, margins of 35, 36, 37%, is just a very good business that’s been consistent over time. So I’m not sure I see anything diminishing that. Jim, on cash?

Jim Marischen, Chief Financial Officer, Stifel Financial: Yeah. So in terms of liquidity, we saw total sweep and smart rate balances increase. You know, as of year-end, it was about $26.6 billion. I look back over the last week, and that number has been relatively steady to say, down $200 million. Most of that fluctuation we’ve seen has been in sweep. It is somewhat hard to say exactly where those balances will move on a day-to-day basis, and a lot of that’s just going to depend on client activity. Generally speaking, I will say we expect to see some outflow of cash through tax season, and then a build in the latter half of the year, as we’ve historically seen. But I would also highlight, you know, within venture and other treasury deposits, we had a record quarter of growth in 4Q. It was $1.5 billion.

I’m not sure if that’s exactly the right run rate to model going forward. I’d say at this point, it’d probably be reasonable to expect around, call it $750 million-$1 billion of incremental deposits on a quarterly basis. And, lastly, I’ll just highlight, you know, we just had recently made some, some new hires within kind of the healthcare life sciences group, as well as in energy tech. Those folks are just getting started, and, you know, they’re going to continue to add to our capabilities here.

Devin Ryan, Analyst, Citizens JMP0: Thank you.

Conference Operator: We will take our next question from Michael Cho with J.P. Morgan.

Michael Cho, Analyst, J.P. Morgan: Hi, good morning. Thanks for taking my question. I just wanted to touch on bank M&A. You highlighted it a few times on the call and clearly an uptick and kind of nice momentum looking into 2026. I mean, but if we think about the bank M&A runway and maybe beyond 2026, I was wondering if you could maybe remind us how we might kind of frame the multi-year tailwind and maybe in terms of sizing and maybe pace of that opportunity for Stifel.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Yeah, I think, Look, I don’t think there’s really any question. I don’t want to talk about any specific banks or anything like that. That’s not appropriate. But in general speaking, you know, there’s a lot of banks that are going to need to combine for scale, profitability, the technology investments, the challenges on deposits, and loan origination. And you have, there’s just a lot of institutions that are probably thinking, you know, how are we gonna compete? And they’re gonna wanna do it through scale, and you got valuations that are allowing conversations to occur. And on the converse side, the buyers are thinking the same thing.

You know, they’re thinking they, they need to, you know, acquire or be acquired, on, on many, on many fronts. So I think that the banking industry is, is in a period of consolidation, but and may be driven as much by the fact that it was very hard to do, any consolidation from the period 2020 to 2024 in the previous administration. They did... You know, you can remember all those transactions, it would take years, to get approved, and that put a damper on boards talking. So, I-- So look, I think there’s a lot to do. What I like, from my perspective, is that we’ve been, you know, we merged with KBW back in 2013, and, you know, virtually all of the MDs that we’re calling and have relationships with clients are still with us.

We have that core group of bankers that have deep relationships, not only with management, but in the boardrooms. We’re in a good position as a trusted advisor on getting these deals done. So I’m not going to predict how many banks or what the volume is going to be, because I really don’t know. I would say the trends are that you’ll see more than average. Most importantly, we’re just in a really good spot with the consistency, the fact we have a separate sales force, that we trade. Everything that we’ve done has put us in a good position. You saw it last year, and we’re starting this year off with a nice transaction. So I’m confident about this.

Jim Marischen, Chief Financial Officer, Stifel Financial: Great. I appreciate all the color. If I could just switch to the wealth side. Ron, I think you made a comment earlier in the call, touched on maybe increasing allocation to recruiting. I was hoping you could just flesh that out a little bit. Do you mean in terms of more recruiting dollars or higher incentives? Is that something that’s already in the guide, you know, the 2025 guide, and is that something that should actually accelerate NNA into 2026? Thanks.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: I mean, it’s a great question. I’ve I’m looking at these numbers, I’m looking at what drives our results. I’m looking at the number of hires that we’ve hired, number of teams that we have hired, the mix of business they bring in, how some of these teams come in, and then we immediately see it in lending and in cash balances and in fee-based business. And I just, you know, made the general comment that as I sit here, I think I said that maybe after this call, I’ll sit down with with Mr. Zemlyak and just say, "Look, everyone’s asking me about, you know, utilization of capital and where do we wanna put our dollars." You know, we can, we can buy back stock.

We’ve already increased our dividend, look at acquisitions, do a number of things, but one, the other one, increase the balance sheet. The other one is to get after recruiting a little bit more. We have been generally a shop where we want people to come to us. We don’t make a huge amount of outgoing phone calls. Advisors join us because they want to. That’s very effective, by the way, because you get people who want to be with us. But we might be able to pick up the phone here and there, and that’s what I’m thinking about, because we have a great platform. We are a traditional wealth management firm, that people love it here, and we need to press that advantage a little bit.

Jim Marischen, Chief Financial Officer, Stifel Financial: Great. Thanks, Ron.

Conference Operator: We will take our next question from Alex Blostein with Goldman Sachs.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Alex, you made it, I think.

Michael, Analyst, Goldman Sachs: Hey, guys. You actually have Michael on for Alex this morning. Just one question from us.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: Tell Alex I said hello, will you? Gee.

Michael, Analyst, Goldman Sachs: Appreciate the color on the expense outlook from here. I think we spent some time talking about it, but on the non-comp, I think the guide implies something like 10% year-over-year growth next year. Can you walk us through the incremental areas of growth embedded in there? It sounded like there might be some wiggle room on that, depending on how top-line results come in over the course of the year.

Jim Marischen, Chief Financial Officer, Stifel Financial: So, you know, first I would say we are taking our guide down. We’re taking it down a full percentage point, down to 18%-20% on an adjusted basis for, you know, as a percentage of revenues. Obviously, there are some timing things associated with the sale of SIA. There are some things that take time to recognize some of the cost saves associated with European reorg. There are certain things we’ve talked about in the past, things like, you know, we’re running kind of our cloud migration and data center process at the same time now. We do see some potential cost savings related to that, but that’s probably more of a 2027 event. So there’s a number of things related to that or that are coming into that guide.

When you look at kind of where we’ve come in at from a margin perspective, it’s, you know, you take comp and non-comp together, you’re seeing a pretty nice increase in overall pre-tax margins. We’ve gotten a few questions related to the non-comp, or we’ve seen a few questions so far this morning, but, you know, our guide is implying already higher margins for 2026.

Michael, Analyst, Goldman Sachs: Great. Thank you.

Conference Operator: Gentlemen, there are no further questions at this time. I will now turn the conference back to Mr. Kruszewski for any additional or closing remarks.

Ron Kruszewski, Chairman and Chief Executive Officer, Stifel Financial: No, I would say that, thank you, everyone, for joining. As we embark on 2026, I feel that the firm and its capabilities and our ability to grow from here, frankly, never been better. We have a better platform, broader product mix, an increasing profile, doing attracting larger teams, doing larger transactions. It feels that, you know, the way what we’ve done to build out the capabilities of the firm through talented people, is continuing to work, and I expect 2026 to be a continuation of the same. So look forward to reporting back to everyone for the first quarter. And I’m gonna end with two things.

One, I’m gonna say that the Indiana Hoosiers are the national champions, and go Stifel U.S. Ski Team. But, I’ve not been able to brag about Indiana in my 60+ years of being alive, so I’m taking it right now. So go, Hoosiers! Congratulations, everyone. Thanks for your time. Take care.

Conference Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.