Raymond James Financial, Inc.

Good morning and welcome to the earnings call for Raymond James Financial fiscal third quarter of 2019. My name is Jessa and I will be your conference facilitator today. This call is being recorded and will be available on the company's website. Now I will turn it over to Paul Shukri, Treasurer and Head of Investor Relations at Raymond James Financial.

Thank you, Jessa. Good morning and thank you all for joining us on the call. We appreciate your time and interest in Raymond James Financial. With us on the call today are Paul Riley, Chairman and Chief Executive Officer, and Jeff Julian, Chief Financial Officer. Following the prepared remarks, the operator will open the line for questions. Please note certain statements made during this call may constitute forward-looking statements. Forward-looking statements include, but are not limited to, information concerning future strategic objectives, business prospects, financial results, anticipated results of litigation, regulatory developments, or general economic conditions. In addition, words such as believe, expect, could, and would, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Please note there can be no assurance that actual results will not differ materially from those expressed in those forward-looking statements. We urge you to consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, which are available on our website. During today's call, we'll also use certain non-GAAP financial measures to provide information pertinent to our management's view of ongoing business performance. Paul Riley, Chairman and CEO of Raymond James Financial. Paul? Thanks, Paul.

Good morning, everyone. Thanks for joining us. As usual, I'm going to give a brief summary of our results for the third quarter 2019, and then I'll turn the call over to Jeff. We'll give more detail, and then I'll come back to discuss our outlook and open up for questions. Overall, I am pleased with our results for the third quarter. Despite some elevated expenses and decline quarter. Quarterly net revenues of $1.93 billion increased 5% over the prior year's fiscal third quarter and increased 4% over the preceding quarter. We generated quarterly earnings per diluted share of $1.80, lifted by higher private client group fee-based assets and higher net interest income, primarily at Raymond James Bank, compared to a year ago period. We ended the period with record results at 16.1%. And while it isn't a metric that we use, the world does seem to be moving towards measuring and reporting on return on tangible common equity. And if you looked at our discussion in our last analyst and investor day in June, our adjusted return on tangible equity on annualized basis for the preceding quarter would have been approximately generated record net revenue during the first nine months compared to last fiscal year. Now turning to the segment results, in the private client group we generated net revenue of $1.35 billion and pre-tax income of $140 million during the quarter. Revenue growth of 6% over both the prior year's third quarter and the preceding quarter was largely driven over March of 2019. of 2019 even in the increasingly competitive recruiting environment our We believe the decline in cash balances was slightly elevated this quarter as the conversion of the money market sweep option in June caused advisors and clients to increase their allocation to other investments, such as positional money market funds. Cash sweep balances have decreased in July recognition events for advisors, and increased advertising expenses reflected in the other segment. This resulted in similar sequential increase in business development expenses that we experienced in the year-ago period, which Jeff will touch on. The capital market segment. and M&A revenues. As you recall, the M&A had a record first half of the year, and even after this quarter has a record all time. We believe that the M&A pipeline remains very strong, and the timing of closing is inherently lucky, but we're optimistic about this business. 3% over March of 2019. Overall, the growth of financial assets under management continues to be largely driven by equity market appreciation and positive inflows associated with the increased utilization of fee-based accounts in the private client group segment, which is more than offset the net outflows experienced by Caroline Towers' advisors given the extremely challenging market for actively managed products. In the bank, base loans to our private client group. RJ Bank's net interest margin modestly expanded to 337 basis points in the fiscal third quarter, up seven basis points over a year ago third quarter, and two basis points over the preceding quarter. Jeff will get into more detail on what affected the NIM. Importantly, the credit quality of the bank's loan portfolio remains strong, including the growth during the quarter. So overall, a strong quarter, a record first nine months for the fiscal year. Now I'll turn it over to Jeff who will provide more color on the financial results. Jeff?

Thank you, Paul. On the revenue side of the P&L, I'm Virtually all line items had only minor variances from your consensus model this time, which is pleasing to see, I guess, in that we've gotten the story across accurately, particularly with the new line items from a year ago. So I'm going to limit my comments to adding color to a couple of the larger dollar changes from the preceding quarter. The first is our largest revenue line item with the asset-based fee revenues. We saw that nice double-digit gain of 12%. which was exactly in line with the growth in the PCG fee-based assets in the March quarter, which is the relevant time period as these are billed quarterly in advance. Implication there, of course, is that the 4% growth in these assets for the current quarter, the June quarter, should be indicative of Q4 growth in that line item, although it won't always be a perfect correlation like it was this time. The other large variance dollar-wise was investment banking revenues, which again, I think all of you estimated fairly closely. The sequential decline, of course, was more due to the fact that we had a record M&A quarter in March, not that this current quarter was weak. It was just coming off of a record, which was a hard act to follow. So that was actually down. M&A revenues were down $40 million for the quarter. The details, of course, are in the press release on page 11, if you have the same pagination as I do, in the capital markets P&L. The bottom line for revenues is that the total net revenues of $1.927 billion, up 4% sequentially, were just smack on line pretty much with the consensus model. On the expense side, I've got really two positives and two negatives to talk about. I'll just go in the order they're presented in the P&L. Compensation, our comp ratio was up to 66.3, which is a little higher than it has been in recent quarters. There are a couple of factors involved in that. One, of course, is that drop in M&A revenues that we just talked about and that have a very high incremental margin as you add the productivity from those bankers. Second would be we're starting to see a little bit of the effect of the fairly aggressive hiring we've done over the last year or so in the compliance supervision areas. This falls into the PCG segment predominantly. That hiring pace, of course, has slowed by now, but we're getting the full effect of the previous hiring now in our P&L. A third factor is the independent contractor portion of our private client group segment, which is somewhat larger than the employee portion, as you can see by the relative FA counts in the press release. It actually grew faster on a percentage basis, even though it's larger to start with, it grew faster on a percentage basis this quarter than the employee side did as well. that has a much higher payout attendant to those revenues, which is going to have an impact on the comp ratio. And all these things are part of the reason that we didn't really change our target at the most recent Analyst Investor Day last month. We left that at 66.5, so we're still under that, of course, for the quarter and for the year. Communications and information processing, that's continuing to trend well below where we had guided at the beginning of the year. We had talked about it averaging in the high 90s or so for the year. It looks like it's going to be more to low to mid 90s or low 90s on average. not that we're necessarily spending significantly less than we anticipated, but it's really that more of it's being spent on large capitalizable projects than we had expected. And you can sort of see that if you look at the fixed asset detail of our balance sheet in our case, you can see that we have a capitalized software number that's grown pretty steadily over the course of these last few years, and of course the amortization of those comes into the P&L guidance that we give in the current period and future periods. But I will also mention here that in keeping with our principle of conservatism, I would tell you that we only capitalize what we have to. When we're assigning useful lives to the sometimes purchased, sometimes developed software, we do try to air toward the low end of any reasonable range. But future amortization, of course, is going to continue to be a factor in earnings. And then business development, well above our guidance. I think we had talked about this somewhat exhaustively a year ago. We had a similar experience, but for different reasons. At that time, we said, you know, we really kind of expect this line item to average between 45 and 50 million per quarter for the year. And it would be on the low end of that in the first two quarters and the high end of that in the second two quarters. I think our annual guidance is still pretty accurate on that, but the range is just wider than we thought. In the first two quarters, we were below the 45 million. And this quarter, we're well above the top end of that little range. So really, I think our guidance is right that the range is probably more like 40 to 55 rather than 45 to 50. The things impacting this quarter, of course, as Paul already mentioned, we had multiple FA recognition events as well as our largest conference of the year. And then we also this year had and we're expecting a similar number in that advertising line for this coming quarter. So bottom line, I think that we'll be right on it for the fiscal year, just like I said, a wider range than we had initially anticipated. And the other positive for the quarter was the bank loan loss provision. We actually had Several criticized the loans pay off during the quarter and the effect of that more than offset the provision related to the $550 million of net loan growth that we had during the quarter. And you can actually see that decline in criticized loans. If you look at the bank detail again on my page 16 of the release where we have some of the bank statistics, they were down about $50 million for the quarter. Net interest, which Paul touched on a little bit, the bank net interest margin actually improved a little bit by two basis points. And again, on page 17 of the release, there's detail about the bank's net interest margin. But one of the main factors was when we changed from crediting clients' cash balances based on their aggregate assets with the firm to based on their aggregate cash balances with the firm. The bank turned out to be the primary beneficiary of that as they are generally the first bank in our waterfall and they have, so people that have small accounts or smaller cash balances are almost always in our bank first. So they've got the majority of the small accounts and which obviously engender a lower crediting rate than the larger balances, so they actually had a nicer decline in cost of funds than we experienced in the overall firm. Another factor in that, though, you may see a decline in the yield on the corporate side of loans, and that has to do with LIBOR. really LIBOR being predictive of a Fed rate cut and moving down pretty substantially during the quarter. And our commercial loan portfolio is largely tied to LIBOR. All the loans hadn't repriced, but those that did and the new ones that came on were tied to a LIBOR that had moved, whereas our cost of funds side, other than this change in methodology, had not really changed. So the slight improvement was really the net of those two things for the quarter. I will comment that our spread on funds swept to unaffiliated banks still remains about where it was, a little under 200 basis points. And that, I will remind you, is reflected in account and service fees, not in net interest. Cash suite balances dropped 8.5% in the quarter. I think we talked about this again at the recent analyst day where we had given our sales force and clients about four months notice that we were going to be eliminating the money market fund sweep and as that date in June approached, a number of people took the opportunity to reposition to generally, mostly to positional money market funds. So those came out of sweep balances. That did take effect on June 11th. And although the total sweep balances are down, the one that we track really probably the most closely right now is our JBDP line of that, which finances our bank's growth and happens to also be our most profitable sweep option. That actually grew a little bit because of this conversion. that I mentioned, net of the runoff to other investments in positional funds. As Paul mentioned, we continue to see some runoff of sweep balances, although it's moderating a little bit now, which going forward obviously will affect both account and service fees and possibly, to a lesser extent, net interest earnings going forward. So we'll have to see if some of the speculation is right that you know, that hopefully we're getting near a bottom in terms of people who are moved, what they would call investable cash, and our sweep balances really are constituted primarily of what we would call operational funds. Common question we get, of course, is what would the impact of a Fed rate cut be? You know, I would just tell you that We intend to maintain our competitive position at or near the top of our peer group in virtually all of the strata of account sizes. So our impact's gonna be largely dependent on what the competition does, but as I mentioned to Analyst Day, my best guess is that if there's a 25 basis point rate cut next week, that there'd be something between a 60 and 80% deposit data. associated with that, which would mean a 15 to 20 basis point decline to clients, but would have a modestly negative impact to the firms that follow that deposit data. In our case, we'd compress our spread by 5 to 10 basis points. And again, as we remind you, each basis point is about $1 million a quarter to us. So 5 or 10 basis points, you can do the math. So I'll wrap it up just talking about the segment results on page 8 of the release. I mean, for the quarter, three of our four primary operating segments showed sequential improvement in both revenues and pre-tax income. But I would call our three steadier performers in terms of operating segments, PCG, asset management, and the bank, Our most volatile segment by far is capital markets, and they were down because they came off their record M&A quarter in March. So they actually showed just a slight decline. month results you see revenue improvement in all four primary operating segments and pre-tax improvement in all except PCG which has been bearing the brunt of the negative impact of these declining cash sweep balances. We continue to to finance the growth of the bank and those cash balances are coming out of external banks where that spread would go to the private client group. And they're also bearing obviously some of these elevated expenses and comp that we talked about in business development. So bottom line is for nine months when you look at the year over year improvement we have had a little bit of help from interest rates during that period, and we certainly have had some help from the market, although remember the beginning of this year we had a pretty severe decline in December and 14% decline in the S&P, so we didn't really have three good quarters of fee billings. We really only had two out of the three, yet we're still showing pretty nice improvement year over year. With that, I'll let Paul talk a little bit more about the outlook for Q4.

Great. Thanks, Jeff. Well, first, in the private client group segment, we're entering the fourth balances and increased allocations to other investments and certainly whatever happens to interest rates. Overall, we continue to experience very good financial advisor retention and recruiting. In fact, although we may not hit our record for last year, we may come pretty close and our recruiting pipeline is really extremely solid. in M&A, the pipeline is very, very strong, and I think we're optimistic in that area. Fixed income results have improved the last two quarters, and the rate environment is generally still conducive for trading activity, especially as interest rates move. However, we did go through the process of rightsizing the fixed income business somewhat, and expenses during the year, so that certainly has helped their margins, and should continue to. The asset management segment entered the fourth quarter with financial assets under management up 6% year-over-year and 3% sequentially, which should also help billings. Increased utilization of fee-based accounts in the private client group as well as good return performance in Carillon Towers should help here. The Raymond James Bank, we started the fourth quarter with record loan balance. I think the bank remained very, very disciplined in its loan portfolio. I see that a number said that our credit was non-core, but when we added two expenses in the last couple of quarters, they certainly were considered core. I think it was just a measure of good credit discipline. And so I think we feel very good about the bank's positioning. Our capital levels obviously remain very strong with the total capital ratio for the quarter 25%. We continue to deliberately deploy our capital. In the third quarter, we purchased a little over a million shares for $85 million. And through the first nine months of fiscal 19, we've purchased 7.7 million shares for $591 million and an average price of $76.70 per share. It leaves us with $373 million of availability under the $505 million share repurchase authorization, which was increased by the Board of Directors in March of 2019. We'll continue to be proactive in offsetting share-based compensation dilution while remaining opportunistic with incremental repurchases. Following the last two investments last year, Silver Lane Advisors and Clarivest will continue to be very active in pursuing opportunities to grow our business and larger ones, but only if they can meet our criteria of the strong cultural fit, a good strategic fit, and something we can integrate at a price that's reasonable. We're working very, very hard on this and continue to follow the same guidance we've been giving you. So overall, we've entered the fourth quarter of fiscal 2019. We have a lot of tailwinds, record number of private client group advisors, record PCG fee-based assets at 5% higher than the start of the preceding quarter, record high spreads on cash balances, record net loans at RJ Bank, and a strong pipeline for financial advisor recruiting at M&A. But we certainly have headwinds, including declining cash balances I'm going to turn it over to Jessa and open the line for questions. Jessa?

Thank you. At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Craig Siegenthaler from Credit Suisse. Please go ahead.

Hey, thanks. Good morning, everyone. Good morning. Craig? So I just wanted to ask a question on the bank after the recent decline in interest rates. But From your seat, how do you compare the relative returns between deposits allocated to the Raymond James Bank and also third-party banks? And also, how do you determine the size of the Raymond James Bank?

Well, we look at return on our equity no matter where we put it. see a very similar strategy as we go forward that you've seen over the last few years, both in size and how we deploy.

Got it. And just as my follow-up, we saw a little bit of a slowing in the break-rate broker trend in the March quarter, partly due to the backdrop, including the government shutdown. But I'm just wondering, have you seen a pickup in the migration of advisors away from wirehouses and smaller broker-dealers? given the improving equity market backdrop we've seen year to date?

Honestly, we haven't seen a lot of slowdown. So we are, again, a pace to be near

Your next question comes from the line of Steven Schubach from Wolf Research. Please go ahead. Steve?

Steve? Hello. Are you on mute? Yeah, sorry. I was muted. My apologies. Someone was coughing in the background earlier, so I figured I'd play it next. Appreciate some color on the high comp accrual in the corridor. I'm just wondering, in terms of the revenue outlook, If I look at street expectations, just given the forward curve, people are anticipating, I think rightfully so, continued fee momentum helped by strong organic growth. But the Fed easing cycle, which is beyond your control, will weigh on NILI and spread revenue. As you think about your ability to maybe hold the line on comp, is that something that's achievable given the expectations What do you think about your philosophy if the growth from here is primarily driven by fee income versus NII? It depends on what you're projecting.

If you're projecting Fed rate cuts, then I think you're right in not assuming that NII is going to be a revenue driver. If you're projecting maybe one cut only or no cuts, then it's going to be dependent on how well we're able to hold on to or grow cash balances.

I understand. Just as a follow-up, in the case of non-comp inflation. You've made a lot of investments in systems and technology over the last couple of years. That's clearly helped accelerate organic growth. Is there any potential to flex that as the NII backdrop becomes a bit more challenging?

I think we always have the opportunity certainly on revenue outlook in the medium term. And if we see those trends in other areas of the business, we're gonna have to look at more cost discipline for sure. But you're right, a lot of our somewhat elevated expenses are to get on and to stay ahead of our advisor growth. So whether that's support or compliance supervision or systems, it's had a big payoff on that

Just one follow-up for me on account and service fees. You quoted the spread on off-balance sheet cash of 200 basis points. It looks like some inter-quarter volatility in terms of the movement and balances impacted the calculated fee rate. I'm just wondering, given where the balances exit the quarter in June, what's the right jumping off point for account

Depends how you want to model client cash balances, but that's the line item that will be most impacted by whatever fluctuation you want to assume in client cash balances. We've had runoff. Obviously, that's had a negative impact on that line item because the external bank sweeps are the ones that are impacted first because we're going to continue to finance the growth of Raymond James Bank as long as we can. get the remainder, if you want to call it that, then to the extent that keeps dropping, that's going to be the line item affected more than net interest earnings. All right, thanks very much.

Our next question comes from the line of Jim Mitchell from Buckingham Research. Please go ahead.

Hey, good morning. Just maybe you talked about a recruitment process could be close to last year's record. But when I look at year-over-year net growth, it's about a little less than half of last year's growth. So I'm just trying to – are you sort of indicating that second half, I guess, additions could be a lot stronger?

Or am I missing something, I guess, in that analysis? So when we looked at it, I know you guys look at FAA count. We looked at trailing 12s recruited. And, you know, I mean, a lot of the runoff of advisors are people that don't make it in the business, people that retire. You know, reasons they leave, in a lot of cases, their assets stay here with their team or with some other advisor. So it's really the asset growth that's more important. And with our recruiting metrics and records, we're talking about really the gross production rate, as Paul said. Okay, thank you.

So it's just a high-quality FA you're bringing on. Is there a way to think about the timing of last year's versus this year's? If last year was close to a record, do you have 75% of the assets and fees over, or is it still 100%, 50%? Just trying to think of how much more you have from last year's recruiting class versus the new kind of recruiting for only 12 months you're getting this year.

six months you know to a year we get a majority of them and it may trail for a little bit while after and then the growth is really due to their growth of production you know most all these teams that we recruit aren't just because they have assets it's because they're looking to grow so it's so individualized but you're going to see you're going to see momentum as you've seen in the past of assets are still coming over from our recruiting and those you know we keep

If you have a last year's record production year, you know, we got to benefit a lot of those assets coming in this year. And this year is the same way with next year's assets. Right. Okay.

And, Jeff, maybe you want to just follow up on deposit. You know, your deposit costs were down eight basis points quarter over quarter. Obviously, the change in the relationship pricing was driving that. Is that all impacted in this quarter? Is there some little?

border, and or is there some other dynamic that contributed to the lowering of these points? That's substantially all of it. It didn't happen exactly at the beginning of the quarter, but that's about what we modeled in as the impact, so I wouldn't assume any future benefit from that. And I do think, especially when you look at the banks, that

Okay, great. Thanks.

Your next question comes from the line of Bill Katz from Citi. Please go ahead.

Hi, good morning. This is Brian Wu. I'm for Bill Katz. I appreciate the comments on client cash sorting. Any update you can provide on client cash in July? We've continued to see, I think,

through today run off mainly into positional money market funds. The big part of that as Paul mentioned is that the beginning of every quarter we have positions it for the next quarter. So that number coming out in fees is about $700 to $800 million at the beginning of each quarter right now. So that's really been the primary reason we see a decline so far in July. But we see that every quarter, and again, it builds back up over the course of the quarter.

Got it. And how should we think about the funding mix for the bank if client cash continues to run off?

It's entirely possible that our bank's going to be entertaining other funding sources aside from our suite program over time. We've already looked at some. desk a secondary market CD we're looking at all immediate or looking already at alternative funding sources at the bank level preparing for the eventuality that sweet balances are not available given our internal limitations or in in general to continue to support the growth of the bank and you know we don't if we do the math or whether it makes more sense for us to continue to grow the bank with external funding sources. I think the answer is going to be the latter, but we don't know that for a definitive fact yet. So we are exploring alternative funding sources

we're exploring.

Great. Thank you for taking my question.

Our next question comes from the line of Chris Harris from Wells Fargo. Please go ahead.

Thanks, guys. How do you think interest rate cuts will affect the customer cash balances? I ask that question because a lot of people think it would actually help to stabilize those balances and just wondering if you guys would agree with that. our premise,

that it will help stabilize balances, at least by the second rate cutters.

The first one may not have a big impact, or maybe even the second one, but beyond that, if there are that many rate cuts, then I certainly think it'll minimize the differential that they can get elsewhere. All right, that's great. And my follow-up question relates to the bank. Excellent credit quality again this quarter. Bigger picture, how would you guys characterize the risk profile of the bank today? Specifically wondering how you think the loan portfolio, the risk profile of that compares to, say, how the loan portfolio looked in 2007. And, you know, back in pre-08, 09,

portfolio in 2007 which is extremely a good source of business for us. Most of our mortgages now originated versus purchase and we have extremely good credit quality within our client base as you can imagine and we have a tax exempt portfolio which we I think it's more diversified and probably on average much better quality than it was in 2007. And remember, we survived 2008-09 without particular ugly, with no real ugly hiccups. So to be in even better shape now, I think we're very well positioned.

Your next question comes from the line of Devin Ryan from JMP Securities. Please go ahead.

Great. Good morning, everyone. Devin? First question just on private client commissions. So they increased 2% from last quarter. We were thinking that it could have been something a little bit better than that just with trailing commissions increasing from the move higher in average dealings. about 1%, so I'm just curious if there was any lag in there. Sometimes I know the accounting can be a little bit funky, or was it just lighter

The people we're recruiting are heavy users of fee-based alternatives. It's just been a continuing trend. You've seen that. If we map that for the last two to three years, I think you'd see a pretty steady decline in the commissionable activity in TCG. No real change there.

Got it. Thanks. And then just to follow up here on M&A opportunities, I know we touched on this a bit at the Investor Day, but even since then, there's press out that USAA may be looking to sell their wealth management business. I know that's a different business, but just something notable, activity in financials, investment banking. So I'd just love to get a little bit of perspective on your corporate business. kind of balancing views that are out there that we may be late cycle versus long-term opportunities that would come along.

But Devon, I would describe us as as active as ever, looking at all sorts of opportunities and I would view the market so they just aren't good fits for us, and some just culturally aren't good fits. But I would say the biggest, there's more interest, but I think the pricing has to reflect kind of reality and not peak because they think there's going to be a cycle change.

So those are the challenges, but we're very active in talking to folks. Another silver lining to the market correction whenever it comes, along with increased cash balance.

I guess just on that point, I've always had the impression that Raymond James doesn't need to be the high bidder, especially in wealth management, because your retention tends to be quite a bit better. So the earnouts over time, the seller may actually do better even at a lower price. So how does that play in, and is that an accurate thought process?

Well, I don't know. We've never tried to be the high bidder. especially at the high end. Our retention agreements are substantially – offers are substantially lower than some other firms, and yet people still join us. I would say when it comes to M&A, it depends. If it's a public company or something, it's hard to be not near the high bidder. And I'd say there are some that are private that, you know, we always ask ourselves, We were first choice spiritually, second by price in the line with a number of other people, but somebody had a bid that was 30 to 50% higher. You can't beat outlier bids just to win a deal. for shareholders, not just to be bigger. Yeah.

Great. Thank you.

Thank you.

Our last question comes from the line of Alex Bloestein from Goldman Sachs. Please go ahead. Hey, good morning. Thanks.

Well, question to you regarding some of the earlier comments you made on the call, and that kind of echoes your comments at the investor day as well, just around the more competitive recruiting practices out there. How do you guys think about that affecting your guys' franchise? Should we think about the cost to bring in new financial advisors going up over time for Raymond James or you guys are going to try to stay disciplined which may ultimately result in slightly lower net new asset growth?

people that join us are joining us for the right reason. It's not just the biggest check and certainly we think what we offer is very fair to the advisor and long term they can do just as well and we think we can help them with their practice and it's hard when you really want someone to stay disciplined but we stay disciplined and just say, you know, overall it's the right thing to do for the advisors that are here. We really Right, that makes sense. A couple follow-ups for Jeff.

I guess on the rate sensitivity, you talked about a 25 basis point cut is 5 to 10 basis points, I guess, compression and the NIM. Are you guys talking about the bank NIM only, or are you talking about the overall company NIM? And if it's just the bank, maybe it's the vast, vast majority, but it would be helpful to get the full picture.

It would be felt partly by the bank, and it would be helpful They both feel it, those two segments.

Right. And then the last, just to clean up, in terms of bank funding sources, just to follow up to one of the earlier questions, of the $14 billion that sits in third-party banks today, how much of that is ultimately still available to be moved to RHA before triggering any restrictions?

Well, so far that's been more of an internal restriction than a market, so most of our competitors put a lot more of their cash sweeps. I do think you're seeing one of the benefits of our discipline that we've had, you know, you've read a number of firms have had restrictions on what they could do because they've leveraged up their sweeps so much. It's, you know, it's set other trigger points and whether it's buying back stock or flexibility. So we still have room. So, you know, we're getting closer to our internal numbers, but, you know, we have the ability much in our bank that they don't go through the waterfall, etc. Those numbers are a little less than half of that $14 billion could still be directed to our bank and also without triggering some penalty rates because we do have some contractual commitments which are running off over time here with some third-party banks that we won't fall below certain. I guess a safe number to

Super, great. Thanks very much, guys. Is that it? Well, great. So we appreciate you all joining us, and I think we're, as I...

Thank you. This concludes today's conference call. You may now disconnect.