Stifel Financial Corp. (NYSE:SF) Q3 2023 Earnings Call Transcript October 25, 2023

Stifel Financial Corp. misses on earnings expectations. Reported EPS is $0.6 EPS, expectations were $1.29.

Operator: Good day, and welcome to the Stifel Financial Third 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, Head of Investor Relations. Please go ahead.

Joel Jeffrey: Thank you, operator. I'd like to welcome everyone to Stifel Financials’ third quarter conference call. I'm joined on the call today by our Chairman and CEO, Ron Kruszewski; our Co-Presidents, Victor Nesi and Jim Zemlyak; and our CFO, Jim Marischen. 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 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 Stifel Financial Corp and may not be duplicated, reproduced or rebroadcast without the consent of Stifel Financial. I will now turn the call over to our Chairman and CEO, Ron Kruszewski.

Ron Kruszewski: Thanks, Joe. To our guests, good morning, and thank you for taking the time to listen to our third quarter conference call. Let me start by saying that given the market conditions and what I consider to be one-time extraordinary non-recurring legal expenses, Stifel generated a solid quarter. Our operating results of $1.05 billion in net revenue and $1.18 of operating EPS excluding the aforementioned legal reserves are essentially the same as our numbers last quarter and in the third quarter of 2022. I will address the legal reserves momentarily. But frankly, our results over the past seven quarters can be summarized by increased wealth management and NII, offset by institutional declines which result from subdued industry-wide activity.

As such, I feel like I'm stuck in the movie Groundhog Day, where Bill Murray's character wakes up and experiences the same day over and over. Though thankfully, my alarm doesn't wake me up each morning to the song, I've got you babe. But seriously, since the end of 2021, it feels like every quarter, we talk about the optimism for near-term results based on green shoots and investment banking activity, the potential for delayed M&A deals to finally close the market stability when the Fed stops raising rates and then cuts, and declining cash sorting. Look, we are well positioned when institutional conditions improve. However, when these conditions actually do improve is open for debate. History tells us that while the catalysts for improvement vary, my experience has been that institutional activity tends to improve slowly and then ramps up suddenly.

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