Stifel Financial Corporation

Joel Jeffrey, Head of Investor Relations. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Stifel Financial's second quarter 2025 conference call. I'm joined on the call today by our Chairman and CEO, Ron Krzyzewski, our President, Jim Zimlak, and our CFO, Jim Marishen. 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.stifel.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 you 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 Crescesi.

Thanks, Joel. Good morning and thanks to everyone for taking the time to listen to our second quarter earnings conference call. On our last earnings call back in April, I noted that uncertainty around tariffs and the so-called big beautiful bill had created headwinds for the market. But I said then that if we got clarity on these issues, conditions could improve quickly. That's exactly what happened. Investor sentiment improved significantly in the last two months of the quarter. as greater clarity on tariff and tax policy emerged. The S&P 500 rallied 1,000 points since our last call, fueling record client assets and wealth management and sparking a rebound in M&A and capital markets activity. As a result, we exited the quarter with far more momentum than we started the quarter with. If conditions hold, we're positioned for a strong second half. Our second quarter results included a very challenging April, yet we still delivered over $1.28 billion of net revenue and $1.71 in core EPS, which was the best second quarter in our history, and return on tangible common equity of 22%. Our balanced model continues to deliver across market cycles. Global Wealth Management posted its strongest second quarter ever with record client asset levels and higher net interest income. Our institutional business was resilient with a 7% year-over-year revenue increase, record fixed income revenue, and a late quarter pickup in investment banking. In global wealth, Steeple ranked number one overall in the J.D. Power Advisor Satisfaction Study for the third straight year and was ranked number one in five of the six categories measured as follows. Compensation, leadership and culture, operational support, products and marketing and technology. That recognition reflects our commitment to advisor support. It's not just a cultural point, it's a recruiting advantage. This was our strongest recruiting quarter since Q4 of 2015, with 82 new advisors added, including 36 through B. Riley and 21 experienced advisors, representing 51 million in trailing 12-month production. Strategically, we completed our acquisition of Brian Garnier, a European boutique investment bank with deep expertise in healthcare and technology. As Jim will discuss later, this acquisition supports our broader effort to reposition our European operations, de-emphasizing sales and trading while expanding our focus on advisory and investment banking. Combined with ongoing efficiency initiatives, This positions Europe to contribute more meaningfully to the firm's long-term profitability. Moving on to the numbers. Our record second quarter net revenue grew 6% year over year with gains across the board except for a modest decline in advisory. Commissions and principal transactions rose 11% with gains in both global wealth and institutional. With respect to investment banking, the quarter started very slowly in April but ended strongly. Asset management revenues rose 6%, reflecting both market appreciation and improved organic growth. Net interest income was up 8% on higher interest earning assets and lower funding costs. Our compensation ratio was 58%, consistent with the high end of our full year guidance as we continue to accrue compensation conservatively. Operating pre-tax margin was 20.3% and operating EPS was $1.71. up 7% from last year. Before I turn the call over to Jim, I'll walk through our two core business segments and why we're optimistic about the rest of 2025 and beyond. In wealth management, we continue to gain a momentum. Ranking number one overall in J.D. Power isn't just a badge, it's a recognition of our foundation which drives results. Since 2020, we've added nearly 800 financial advisors with 420 million in trailing 12-month production. Recruiting accelerated in 2025. In the first half alone, we brought in 66 experienced advisors with 63 million in production. That includes a major team from B. Reilly and 30 organic recruits with 43 million in production, many in the million-dollar-plus category. For perspective, in all of 2024, we added 50 experienced advisors with 37 million in production. These highly productive advisors bring more client assets, and those assets are increasingly fee-based, which drives more stable recurring revenue from asset management and net interest income. We ended the quarter with record total client and fee-based assets of $517 billion and $206 billion, respectively. The sequential increases were due to stronger equity markets and strong asset inflows, including the advisors from B. Reilly. I'd note that our net new assets improved each month during the quarter, with annualized June net new assets coming in around 5%. Looking ahead, we're confident in continued growth. While recruiting can vary from quarter to quarter, we expect a strong second half, with new advisors transitioning clients to our platform. Our clients continue to hold over $15 billion in money market funds and $6 billion in short-term treasuries. providing potential equity resource for steeple deposit. Now let me move to the institutional group. Total revenue for the segment was $420 million, which was up 7% from the prior year. Firm-wide investment banking revenues totaled $233 million, driven by year-on-year and sequential increases in capital raising revenues. Fixed income underwriting revenue was $54 million, and increased 18%, sequentially driven by a solid increase in public finance activity. CFO continues to rank number one by the number of negotiated issues led as sole or senior manager. Equity capital raising totaled $46 million in the quarter. The market effectively shut down for six weeks following Liberation Day with only a handful of pipes and advisory-linked deals. Activity returned mid-May alongside tariff relief, and we entered the third quarter with meaningfully stronger conditions. While industry-wide ECM fees were in line with the first half of 2024, the mix shifted. Financials and fintech were strong. Healthcare was down more than 50%. We're seeing early signs of a broader IPO recovery and follow-on activity remain sponsor-driven, with private equity continuing to lead issuance. As M&A paths narrow, late-stage private placements, continuation vehicles, and IPOs are increasingly being used to create liquidity. Advisory revenue was $127 million. We continue to get strong contributions from financials despite the increased volatility early in the quarter. In the second quarter, we also got solid contributions from industrials and industrial services. We're also seeing improvement in healthcare and technology, and overall, the accelerating activity levels bode well for the second half of the year and into 2026. Taking a step back and looking back at our acquisition of KBW, now more than 10 years ago, we made a deliberate decision then to preserve the KBW brand within Stiefel. That integration has been a resounding success with nearly all of the original KBW investment banking managing directors still with KBW Stiefel. The sustained focus and successful integration have helped us build a franchise with deep expertise and longstanding client trust. That commitment is now paying off. In 2025, we revised on 84% of total disclosed bank and thrift deal value. an extraordinary market share and a testament to the strength of our platform and positions us as the first call in Bank M&A. Bank M&A, frankly, is accelerating, and the strategic needs for larger banks to combine is also increasing. Given the improved market dynamics, we expect the trend to continue, and I'm confident in our ability to participate and lead at every level. As to our trading businesses, equity transactional revenue totaled $61 million, which was up 16% year on year, driven by increased market volatility. Fixed income revenue of $129 million was up 21% year on year, with increased contributions from our rates, aircraft, and municipal businesses during the quarter. Before I turn the call over to Jim, I want to briefly comment on AI, particularly the promise of agent-based models. We view AI not just as a tool for back office automation, but as a platform to enhance how we serve clients, manage data, and accelerate insights. We are systemically reviewing workflows across the firm where intelligent agents can amplify our professionals' productivity and decision-making. We've already seen early wins in areas like investment banking analytics and advisor support, examples where the right AI tools can create real leverage. That said, we're clear-eyed about the role of technology. It enhances what our people do. It doesn't replace them. Our business is built on trust, relationships, and judgment. AI will help us work faster and smarter, but should not replace the human side of Steeple. Now let me turn the call over to Jim to walk you through the details of our second quarter results. Jim?