Stifel Financial Corporation

And welcome to the Stiefel Financial Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Joel Jeffrey. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Stiefel Financial's Second Quarter Conference Call. I'm joined on the call today by our Chairman and CEO, Ron Kruszewski, our Co-Presidents, Victor Neesey and Jim Zemlack, and our CFO, Jim Marisham. Earlier this morning, we issued an earnings release and posted a slide deck and financial supplement to our website, which can be found on the investor relations page at www.stiefel.com. I would note that some of the numbers that we state throughout our presentation are presented on a non-GAAP basis, and I would refer to our reconciliation of GAAP to non-GAAP as disclosed in our press release. I would also remind listeners to refer to our earnings release, financial supplement, and our slide presentation for information on forward-looking statements and non-GAAP measures. This audio cast is copyrighted material of Stiefel Financial Corp. and may not be duplicated, reproduced, or rebroadcast without the consent of Stiefel Financial. I will now turn the call over to our chairman and CEO, Ron Krzyzewski.

Thanks, Joel. To our guests, good morning, and thank you for taking the time to listen to our second quarter conference call. We recorded solid results in the second quarter as strength in wealth management was offset by the industry-wide slowness in our institutional business. I don't want to be repetitive, but as I've said, it is important to point out that over the years, Stiefel's business model has proven its ability to navigate these types of markets and still generate solid returns. Simply put, wealth management is consistent and provides balance to the cyclical institutional business, and the institutional business could be at cyclical lows. Overall, revenue came in at a little over $1.05 billion with non-GAAP EPS of $1.20. Despite a challenging environment, we generated pre-tax margin of 19% and return on tangible common equity of 17%. And we had some positive developments in the quarter worth highlighting. First, J.D. Power ranked steeple number one in its annual employee advisor satisfaction survey. We also generated our 10th consecutive record revenue quarter in global wealth management. Recruiting was strong in the quarter, and we're seeing further signs of improvement in the third quarter. Capital raising revenue was its highest since the fourth quarter of 2021, and book value and tangible book value per share increased 6%. Turning to the next slide, comparing our second quarter results to consensus estimates, I would note that revenues came in at approximately $20 million below. This was the result of four advisory transactions, which totaled approximately $18 million in fees, which were anticipated but did not close this quarter. I should note that we expect these deals to close in the third quarter. Our transactional revenue was ahead of the street by $4 million as wealth management and institutional equity revenues were slightly above estimates. Net interest income came in $3 million below the street estimate, primarily due to a modest sequential decline in average interest-earning assets. On the expense side, our non-comp expenses were 4% above the street estimate. This was driven primarily by increased FDIC insurance and investments in brand marketing. Taking together these items, primarily the delay in advisory closings, resulted in our results being 13 cents shy of consensus estimates. As I said earlier, wealth management had another record quarter. One of the major drivers of our success is the culture and service we provide our advisors. In this effort, we have continually invested in resources, support, and technology to reduce bureaucracy and enable our advisors to thrive. This strategy was validated by our number one ranking in the most recent J.D. Power survey of overall employee advisor satisfaction. Noteworthy is the fact that our overall score was more than 32% higher than the average score in the J.D. Power survey. Since 2019, we've consistently improved in the survey, culminating in not only our overall number one ranking this year, but also in the fact that we ranked number one in four of the six categories surveyed, leadership and culture, products and marketing, operational support, and compensation. And I should also mention that we ranked number two in professional development. The survey is especially meaningful because the results are derived from the feedback from our own advisors. You've heard me say that Stiefel has a unique culture that puts the financial advisor first. To have our strategy validated with this award is not only satisfying, but it illustrates why we've had great success in bringing in high-quality advisors onto our platform. And I should note that this will help recruiting going forward. Now, let me turn the call over to Jim Marishen to discuss our most recent quarter results.