Stifel Financial Corp (SF) Q3 2025 Earnings Call Transcript

Stifel Financial Corp (NYSE: SF) Q3 2025 Earnings Call dated Oct. 22, 2025

Corporate Participants:

Joel M. Jeffrey — Senior Vice President and Head, Investor Relations

Ronald J. Kruszewski — Chairman of the Board and Chief Executive Officer

James M. Marischen — Chief Financial Officer

Analysts:

Devin Ryan — Analyst

William Katz — Analyst

Steven Chubak — Analyst

Brennan Hawken — Analyst

Michael Cho — Analyst

Presentation:

Operator

Good day, and welcome to the Stifel Financial Third Quarter 2025 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 M. Jeffrey — Senior Vice President and Head, Investor Relations

Thank you, operator. Good morning, and welcome to Stifel Financial’s Third Quarter 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 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.

Ronald J. Kruszewski — Chairman of the Board and Chief Executive Officer

Thanks, Joe, and good morning, everyone. Stifel delivered another record quarter, once again demonstrating the strength of our diversified business model and the leverage it provides in an improving environment. In my nearly 30 years as CEO, Stifel has grown from a regional firm into a global company by consistently reinvesting in our people and our platform. That same mindset, reinvesting to increase relevancy has defined our 135-year history.

This quarter, we achieved record net revenue of more than $1.4 billion and record client assets and produced our third-highest earnings per share in firm history and a record for any third quarter at $1.95. Return on tangible common equity exceeded 24%. Both of our business segments contributed to the performance with another record in Global Wealth Management and the third-best quarter in terms of revenue for our institutional group.

On last quarter’s call, I said we expected a strong second half as optimism builds around lower taxes, reduced regulatory burdens and higher capital spending and technology. And that’s exactly how it’s played out. The S&P 500 is up roughly 15% this year and more than 35% from its lows following the Liberation Day tariffs. The Fed’s first rate cut in September added further momentum.

While valuations are elevated and the nominal equity risk premium has narrowed to near to zero, the underlying economy remains constructive. We’ve also seen something worth noting. And even with yesterday’s pullback, this year, gold and silver have outperformed even as equities have rallied. When risk assets and traditional hedges rise together, it often reflects abundant liquidity and a search for stability. It reminds investors that confidence in markets sometimes outpace confidence in currency, and that’s when discipline and fundamentals matter most.

In that environment, Stifel’s balanced model and disciplined execution continue to deliver results. Turning to slide 2, I think it’s important to put this year’s quarter results into perspective. At our core, Stifel is a growth company. Decades of consistent reinvestment, hiring talented advisers and bankers, making strategic acquisitions and executing on our integrated banking strategy with a focus on risk-adjusted returns to produce steady, durable growth and meaningful operating scale. I find it worth pointing out that our third-quarter revenue alone exceeded our total annual revenue in 2011.

That comparison speaks not only to our growth, but how we’ve achieved it. We’ve grown in a balanced way, expanding both of our core businesses while maintaining a consistent mix between wealth management and our institutional group. Today, wealth represents about 64% of revenue and institutional 36%, essentially the same proportion as more than a decade ago. Equally important is how that revenue has evolved. What was once primarily transactional is now largely fee-based.

Fee-related businesses, asset management, net interest income and wealth and advisory and institutional now account for 62% of total revenue, up from 26% in 2011. That shift has made our earnings more stable, our margins stronger and our growth more durable. Our pretax margin reached 21.2%, more than 800 basis points higher than 2011, and annualized EPS has grown more than fivefold. Our growth has allowed us to raise our dividend every year since we introduced the dividend in 2017. Looking ahead, milestones that we’ve talked about like $10 billion in annual revenue and $1 trillion in client assets are not just in goals, they’re the logical next step in the evolution of our strategy and scale.

As is our custom, we compare results each quarter with consensus estimates. Once again, we exceeded Street expectations across the board. Total net revenue of $1.4 billion, as I’ve said, was about 7% above consensus reflecting broad-based strength in investment banking, transactional activity and net interest income. Earnings per share of $1.95 were 5% ahead of estimates, marking another quarter of strong operating leverage. Investment banking outperformed across both underwriting and advisory, and wealth management activity was stronger than forecast.

Expenses were in line with guidance, and our pretax margin came in at above expectations. In short, we delivered another quarter of record results, balanced contributions across our businesses and continued momentum heading into year-end. With that, let me turn the call over to our Chief Financial Officer, Jim Marishan, to provide more details on our financial results.

James M. Marischen — Chief Financial Officer

Thanks, Ron, and good morning, everyone. Record quarterly net revenue grew 17% year-over-year with gains across the board. Commissions and principal transactions rose 20% as both Global Wealth and Institutional segments improved from last year. Investment Banking revenue was up 33%, our strongest quarter since late 2021. Asset management revenue rose 13% on market appreciation and improved organic growth. Net interest income increased 6% as higher interest-earning assets and lower funding costs more than offset lower asset yields.

Our compensation ratio was 58%, which is consistent with guidance. Our operating pretax margin was 21.2% and operating EPS was $1.95, up 30% from last year. Turning to slide 5, I’ll discuss our wealth business. Global Wealth Management delivered another record quarter with revenue of $907 million and pretax margins of nearly 38%, our highest in almost two years. Transactional revenue reached a record $203 million as clients were active in both equity and fixed income markets, and asset management revenue also reached a record $431 million. We ended the quarter with a record total client assets of $544 billion and record fee-based assets of $219 billion, reflecting continued market appreciation and net new asset growth in the low-to-mid single digits.

Advisor recruiting remained active and high quality. We added 33 advisors during the quarter, including 17 experienced hires with trailing 12-month production of 19 million. Retention remains strong. Our recruiting pipeline is healthy heading into year-end. Productivity benefited from a higher client engagement, record asset management revenue and an expanding suite of wealth and lending solutions.

Moving on to slide 6. Our integrated banking model continues to strengthen our wealth platform. Net interest income was $276 million, which was above guidance as firm-wide net interest margin improved modestly, our cost of funds remained essentially flat. We forecast fourth quarter NII to be in a range of $270 million to $280 million. Client cash levels increased during the quarter with sweep deposits up $640 million and non-wealth deposits up $760 million including strong growth from the Venture Banking team as those deposits increased by more than $1 billion during the quarter. Credit metrics remained solid with the non-performing asset ratio at 49 basis points, provision expense of $8 million and allowance to loans ratio of 81 basis points. On the next slide, I’ll discuss our institutional group.

Institutional revenue was $500 million, up 34% from the prior year. Strength was broad-based across investment banking and transactional revenues. Investment banking totaled $323 million, with gains in both capital raising and advisory. Equity capital raising revenue was $79 million, the best since late 2021, with continued activity in financials and renewed issuance in biotech. Fixed income underwriting was $59 million, up from last year, driven by increased public finance activity.

Stifel remains the number one negotiated issue manager by deal count, and our calendar remains very active into the fourth quarter. Trading results were also strong with equity trading revenue of $58 million and fixed income trading revenue of $123 million, reflecting higher client activity, healthy secondary market liquidity and multiple strategic balance sheet restructuring assignments. Advisory revenue was $179 million, with broad contributions across sectors and early benefits from the integration of Bryan Garnier. Our investment banking advisory pipelines ended the quarter at record levels, providing strong visibility into the fourth quarter and beyond.

Moving on to slide 8. Expenses remained well controlled. Non-compensation expenses were $298 million, up 7% from a year ago, and the adjusted non-comp operating ratio was 19%. The sequential increases in total expenses reflected deal-related investment banking gross-ups. We expect a similar adjusted non-comp ratio in the fourth quarter, which is at the low end of our annual guidance range. The tax rate for the quarter was 26.1%.

Our share price remains around current levels. We anticipate a full-year effective tax rate of 20% to 22%, implying a fourth-quarter rate of 12% to 14%. The projected decline in the effective tax rate is a result of the excess tax benefit associated with stock-based compensation. Our balance sheet remains well capitalized. Tier-1 leverage capital rose to 11.1% and Tier-1 risk-based capital ratio increased to 17.6%.

Based on a 10% Tier-1 leverage target, we ended the quarter with approximately $421million of excess capital. We repurchased about 275,000 shares during the quarter and 7.9 million shares remaining on our current authorization. Assuming no additional repurchases and a stable stock price, the fully diluted share count for the fourth quarter will be about 110.3 million shares. With that, Ron, back to you.

Ronald J. Kruszewski — Chairman of the Board and Chief Executive Officer

Thanks, Jim. Look, I’m pleased with our overall results and how our teams are executing across the firm. We’re entering year-end well-positioned to capitalize on favorable market — on these favorable market environments supported by continued momentum across both our operating segments. Specifically in our wealth business, another record quarter with record client assets and strong profitability. We continue to attract highly selective advisors, our recruiting pipeline remains robust.

Deposit gathering continues to grow, both through adviser recruiting and the addition of Venture Banking teams, driving strong treasury deposit growth. Earlier this year, as I’ve mentioned before, people were recognized by J. D. Power for having the highest investor satisfaction among full-service wealth management funds, a reflection of our advisor-centric model that trusts our clients [Indecipherable]. Our institutional business, investment banking pipelines are at record levels of our record as our earlier investments continue to drive scale.

We maintain leading market share in financials through our KBW platform and rank in the top 10 in equity capital market fees year to date. In public finance, as Jim said, we remain number one by number of negotiated issues led. We’re also seeing increasing synergies between fixed income trading and investment bank, strengthening client relationships, and expanding our reach. Looking at the markets more broadly, there’s a lot of optimism out there, and I share that optimism, but we all know markets move in cycles.

The best way to navigate them is with discipline, balance, and perspective, qualities that have defined Stifel from the beginning. And in sort of a conclusion, I have a little food for thought. In the past, I’ve illustrated what I believe to be Stifel’s valuation gap compared to both the market and our peers. Instead of repeating those metrics, let me put it this way. At current prices, you get a growth company at value company prices.

I think it’s a compelling valuation. So as we move forward, we’ll keep doing what’s always worked for Stifel, staying disciplined, managing risk and investing for the long term. That approach has built the Stifel of today and positions us well for the opportunities ahead. With that, please open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question is gonna come from Devin Ryan from Citizens.

Devin Ryan

Thanks. Hey. Good morning, Ron. Good morning, Jim. How are you?

Ronald J. Kruszewski

Good morning.

James M. Marischen

Good morning.

Devin Ryan

I want to start with a question on investment banking. Obviously, kind of been an uneven year, but second best start to a year since 2021. And we look at Stifel today relative to then, you’re obviously quite a bit even bigger than that point. So would it be good to hear a little bit more about, I guess, the record investment banking pipeline and how you guys are thinking about the upside for revenues in a more normal environment? I’m not sure if there’s any way to frame it relative to the kind of that prior 2021 peak.

And then if you can just give a little more color on the sector supporting that and specifically love to hear about what you’re seeing in the depository space as well. Thanks.

Ronald J. Kruszewski

Look, I think we did about $500 million of institutional revenue that annualizes that around obviously $2 billion and what we did $2.2 billion at 2021. So that just gives you a sense for that. Even on an annualized basis, we’re not at the 2021 level. Of course, the mix has changed. Our capabilities are more than they were in 2021.

So in terms of just where we are relative to what we can do, we’re making progress. And the market environment certainly is helping as we set it good, starting with regulatory add as much as anything else. Clearly, this administration is more open to M&A and even strategic — other strategic initiatives than most of the prior. I think — I don’t think there’s much argument about that. So the environment stood.

A little caveat, the government shutdown hasn’t helped IPOs at this point. So I think we all know that. I think the good news is that what’s sitting on the desk not being reviewed will get off those desks. But that’s not too perceived, but that’s true across the street. Look, clearly, financials have been a strength not only in — not only on the capital side, but also what we are doing in fixed income, balance sheet restructuring related to mergers.

And you just look at the lead tables and you can see that as it relates to depository M&A, we’re doing quite well, not only in absolute terms, but relative terms as it relates to market share. And I would note that across the industry, health care, I think, is a lagger, okay? Just not yet stable, but just across the board, health care volumes are not what they were nor what we think they’re going to be. So I view that as upside, clearly technology has been a strength. I think we can do better in technology.

It’s lot of big deals, but it’s a strength. Industrials is a strength. We’ve seen strength there. So kind of across the board with big is obviously doing quite well. And by our second biggest vertical, health care has upside to what we’re seeing. We’re beginning to see I’m not gonna use that word. We’re always talking about great shoes. Let’s not — let’s put that one in the used bin for a while. But certainly, the environments are, is that okay? Jim, I don’t know if you have anything to add.

James M. Marischen

Think that’s Yeah.

Devin Ryan

That’s great. Thanks, Ron. And just a follow-up, just on the credit backdrop. Obviously, several recent credit hiccups in the market, several private credit players and banks disclosing losses, and that’s received some attention. So I’m just curious what you are all seeing in the market right now, how you feel about the position at Stifel just across both the loan book and the CLO exposure as well? Just any other thoughts more broadly. Thanks.

James M. Marischen

Well, look, I think that there’s a lot of commentary you’ve heard whether it’s one-time process more, et cetera, things like that as it relates to the credit. It feels to me still a little idiosyncratic about things that have happened, at least in terms of the two bankruptcies and then one of the asset management. But it’s — it doesn’t feel like a broad-based sector type thing, I would say, that in general, but you give me an opportunity, Devin, just to maybe point out that I think it’s very important to understand, and I know that you do. First of all, Stifel is not a regional bank.

So I’ll give you some commentary as it relates to my view from KBW and all our great bank clients that we talk to. But as you know, many regional banks have a 85% to 90% of their revenues generated by NII. Consequently, lending and the lending environment is very important to their ability to grow. Look at Stifel, as we pointed out many times, a little over 20, maybe a little bit more of our revenue is NII. We’re fee-based and NII with PCG and institutional accounting for the vast majority of our revenue.

And we don’t look nor are we a regional bank. We really drive our revenue growth without greater exposure to credit. Look, when we do grow our loan book, it’s relatively low-risk categories like mortgages or our high network clients, security-based loan, fund banking, in fact, general account for what?

It’s about $3 billion or so, 70% in total of the entire retained loan portfolio.

Ronald J. Kruszewski

Yeah. We fund these loans with deposits from our wealth clients and our Venture business. These are highly complementary for our wealth and institutional business. And, look, your second part of your question regarding CLOs, Devin, I dealt with this question for about it feels like 10-plus years. I think I’ll let Marischen handle it.

James M. Marischen

Certainly. Whenever we get questions on the CLO book, the first thing I’d like to do is point out where in the CLO structure we are investing. Our entire portfolio is comprised of AAA and AA CLOs. So that breaks down roughly 60% in the AAA class and the remaining 40% in the AA class. And I think from there, it’s important to understand how the diversion of cash flows really protect those senior classes. And the key metric to look at in regards to that is the credit enhancement levels.

Our portfolio has a weighted average credit enhancement level of 32%. So it’s pretty significant. And the diversion of those cash flows is what protects the senior class. And so when you think back through time, we have never seen a AAA CLO default, and we’ve only seen one AA CLO default. And that bond was issued prior to the great financial crisis at much lower levels of credit enhancement.

So when you think about the structural benefits here, the operating performance over time through a number of different cycles, we feel very, very comfortable with our exposure in the CLO space and where we’re at there today.

Ronald J. Kruszewski

You know Devin, I — maybe I can’t help myself, but probably one answer on this. But look, when I get up and I try to think of things to worry about, alright, which I do, that’s what my job is, I don’t think I ever get up and think worry about about our loan book and [Indecipherable]. Okay? So and I’ve said this like, 10 years, so nothing bad.

Devin Ryan

Yeah. Well, appreciate it. Sorry for giving you the same question 10 years in a row…

Ronald J. Kruszewski

I know. You’re consistent. Hey. Hey. Hey. You’re consistent. Okay? But it’s telling me even our…

Devin Ryan

I think it’s been 20, but yeah.

Ronald J. Kruszewski

All right. Thanks, Devin.

James M. Marischen

Thanks, Devin.

Operator

And our next question is going to come from Bill Katz from TD Cowen.

Ronald J. Kruszewski

Hey, Bill.

William Katz

[Indecipherable] for taking the questions. Apologize for a hoarse voice here. Just to come back to the investment banking opportunity. Ron, you sort of mentioned that you’re already running at a run rate of revs equal to 2021, which was a quite robust year. Could you talk a little bit about maybe how you sort of see the incremental margin — the institutional group margin improve very nicely both quarter-on-quarter and year-on-year? How much more incremental leverage is there to the segment? And then relatedly, how much that might flow to the bottom line? Thank you.

Ronald J. Kruszewski

Look, I think, Jim, correct me. Broadly speaking, I think we did 12% margins in the quarter.

James M. Marischen

The institution is 13.6%.

Ronald J. Kruszewski

Look at how percent…

James M. Marischen

So that’s year to date.

William Katz

That’s how much year to date…

James M. Marischen

Year-to-date, yeah.

William Katz

So 13.6?

Ronald J. Kruszewski

That’s why you’re CFO. That’s really good. So instead of 12, it’s 13.6. Our — we believe that 20 to low 20s is achievable. So when — so think about it as about 10 points of margin, $400 million to $50 million, so annualized $2 billion, so if you’re trying to say as we restructure and right size, including our international operations, which — that’s part of the improvement, we’ve been making improvement there. But when I look at it, snapshot, I think there’s 10 points of incremental pickup. So it’s a couple $100 million free cash.

James M. Marischen

Right. When you think about it, that’s going to be leverage we’re going to get both on the comp ratio as well as the non-comp. Year-to-date, we were about 62% in terms of the comp ratio. That number could get closer down into the 58% range. But where you see some — even more pickup in terms of the type of margin expansion Ron was talking about, you can see within the non-comp side, the led your work, so that was running, call it, about 25% year-to-date as well. So definitely a lot of margin increased capacity there.

Ronald J. Kruszewski

We’re focused on this, though.

William Katz

Yes, it sounds like it. Okay. Another question for you, and thank you for taking the questions. So I want to pick up where you left off. Ron, you sort of mentioned you get a sort of a growth company at a value opportunity. You’ve been pretty prescient in terms of calling that over time. How do we think about maybe capital uses from here? How should we think about either expanding the banking opportunities since the deposits are starting to grow again versus maybe inorganic opportunities, which doesn’t sound high right now versus maybe a step up of capital return through buyback, certainly given the strong balance sheet position? Thank you.

Ronald J. Kruszewski

Bill, it’s always a great question. You’ve asked it numerous times. The answer is always the same, which is the — our capital allocation will be based on opportunity. That opportunity is grounded in our view of what’s the best risk-adjusted returns on capital. So as always, we pay a dividend. We buy back stock. I’ve said this year, they can look at it. Our volume of stock repurchases accelerated when we were in Liberation Day market suppression, if you will, and lower equity values. We said we wouldn’t grow our balance sheet as much as a stock rebounded and we saw more opportunities as the economy improved and lending we allocated more capital to that. And acquisitions are obviously, it’s in our DNA and certainly my DNA as CEO.

But as I’ve said, the level that cash flows and future earnings are trading at, which as I’ve said before, people come to me and say, what do you think at 20 times adjusted EBITDA? And I think, well, I don’t think that. And so that we’ve been more muted. But look, we are — we understand the importance to our shareholders, managing our capital, buying back equities. I think it’s — I think the stock is compelling and that should support buybacks.

But we’re also going to grow the bank because that supports — the integrated bank supports our wealth and institutional businesses. So those are investments, buybacks or financial transaction, growing the balance sheet as strategic and builds franchise value. We’ll always look at our dividend and we’ll consider acquisitions when they think they add accretively to our return on investment. So can’t give you any numbers on that because I don’t know what they are. It will depend on the opportunities that they present themselves.

William Katz

Okay. Thank you.

Operator

And our next question is going to come from Steven Chubak from Wolfe Research.

Steven Chubak

Hi, good morning, Ron. Good morning Jim. Thanks for taking my questions.

Ronald J. Kruszewski

As always.

Steven Chubak

Always appreciated. Well, I did want to start off with a question on the FICC brokerage business. The performance was quite impressive this quarter. It was also pretty strong last quarter. You cited some enhanced revenue synergies with the banking side of the business and was hoping you could just unpack some of the sources of strength a bit further and whether those synergies support a higher run rate, if you can contextualize that a bit more would be really helpful.

James M. Marischen

We’ve been looking in the last few quarters, even at ourselves, at strong fixed income performance. And then we’ll say, hey, we want to caution, it’s not sustainable. It was, let’s say that. What I think is happening is that the integration of a lot of the things that we’ve done over the years from Sterne Agee through — the Empire through some of the smaller acquisitions.

And then importantly, Vining Sparks combined with the pickup in depository environment, which has a normalization of the yield curve and then M&A activity, which often the restructuring of M&A will lead in an M&A moment to restructuring the balance sheet of either in the target or the combined company. And so what we’ve seen is what we talk about. The reason we do these deals is to increase our relevance so that we’re able to have a seat at those tables. So instead of just doing advisory, we’re also helping restructure balance sheets. We’re talking to financial officers as the yield curve adjusts not only normalize, but appears at least on the short end of it coming down. Frankly, our relevance is equaling more revenue.

Ronald J. Kruszewski

I think that’s fair. Obviously, we’ve talked about some of the transactions. Obviously, we had some of the gains in the prior quarter related aircraft, that’s in the balance sheet restructuring transaction we’re talking about here. If you’re thinking about it from a pure run rate perspective, I would think about it along the lines of the traditional transactional revenue around $100 million run rate for the fourth quarter prior to layering on any of those, I guess, what we call last quarter recurring, nonrecurring items. So I think that’s…

James M. Marischen

Your guidance has always proven them as well.

Ronald J. Kruszewski

It’s a good way to think about it. Yes. That’s fine.

Steven Chubak

And a two-parter for my follow-up, and I recognize both questions are unrelated. But the first is just on the recruitment trends. And nice to see the uptick in FA ads and recruitment levels. I was hoping you could speak to what’s driving some of that strength, whether you’re seeing continued succession of or ceding of share from the wirehouses or if you’re seeing just more opportunities with some of the regional brokers? And then was hoping for an update on sweep deposit trends in the month of October.

Ronald J. Kruszewski

I’ll do the first. I’ll let Jim do the second, so Jim can think about sweep deposit. Look, recruiting is robust. We’ve talked about the reasons. We’ve talked about it’s a confluence of events. We’ve built a great platform. We’ve built a great service platform. We have good technology. We’ve made sure that we’re competitive on the front because I felt when we were losing, it was not capabilities, it was more financial related.

And recruiting is an ongoing thing. It’s like reading a novel of you know, or reading more piece, you’re you’re halfway through it. Start over, and then you got a lot more to do. It’s an ongoing everyday thing that we’re doing.

We have a great — we’re a great alternative for a lot of advisers that are looking for a firm that puts advisers first and has a culture of a wealth management firm with banking and has underwriting capabilities. So there’s not a lot of us out there like that. We certainly are one of them, and we’re attracting a lot of people. Now we just need to execute. So I have been and continue to be optimistic about that part of our business.

I will note, as I always do, when I get to November. But during the fourth quarter, it slows down. Half of the — I mean, they shut down the ACAT system in December. So if that’s known on the screen, you should know that too and I think…

James M. Marischen

And then in regards to an update on sweep cash, through yesterday, we were down from quarter end, probably about $500 million plus in terms of balances. But I would say that those balances are moving several $100 million on a day-to-day basis. I’d also highlight that we did generate another $1 billion of deposit growth across the Venture Group. Given the additional investments made in those new team members as well as the strong recruiting that Ron talked about, while it won’t always necessarily be on a straight line, we do expect cash balances to continue to grow through the end of the year.

Steven Chubak

Great color. Thanks so much for taking my questions.

Ronald J. Kruszewski

We’ve hired some more leaders too that have helped. I just note that we’ll name names, but, yeah, it’s all part of a flywheel type thing. You gotta have a platform. You have to have products, and you also have to have the leadership that can go, you know, track the people. And we’ve invested in all of those areas.

Steven Chubak

Well said. Thanks for the additional color, Ron.

Ronald J. Kruszewski

Yeah.

Operator

And our next question is going to come from Brennan Hawken from Bank of Montreal. Please go ahead.

Ronald J. Kruszewski

Good morning.

Brennan Hawken

Good morning, Ron and Jim. Thanks for taking my questions. Ron, you spoke to valuation gap, which you have spoken to fairly consistently over the years, but the valuation caps have also been persistent. And the interesting thing that’s different about the current environment versus recent years is that there’s seen as maybe a window for large firms to begin to acquire firms and roll up certain spaces. And the wealth space is an area where a lot of large firms want to grow.

And Stifel is an attractive asset. Right? You’ve got an employee-oriented wealth firm, which fits well with a large entity. Many investors believe that you can make for a good target. But we all know wealth firms are sold, not bought. So could you maybe share your views on that and how you’re thinking about it?

Ronald J. Kruszewski

Did you just ask me about selling the firm?

James M. Marischen

Welcome back, Brennan.

Ronald J. Kruszewski

Yeah, it’s — first of all, I appreciate the compliment. But we’ve got a [Indecipherable] it is for many firms that would want to be into our space. There’s not very many alternatives. So a company that’s got 24% return on tangible equity margins and a great culture and great technology and all of those things. And, yes, maybe my persistent valuation gap comes from the way I answer this question all the time, which is, you know, we see no need to sell other than maybe the short-term pop in a share price, which then eliminates a 135-year-old firm and a firm that’s gaining market share as we have over the years. I got asked this question in 2011. Why won’t you sell? You’re an attractive asset. Everyone coming out of the financial crisis. You know, people want to invest, and we’ve grown the firm as I showed in the slide significantly. And maybe some of the questions will go surrounding when the CEO is running out of energy and they want to sell. Well, I ain’t the case here. Okay? So I’m not looking to do anything. I get — we get phone calls once in a while. I always say, well, can I run it? So the combined thing that says, what?

So then that’s there. But I’m kind of kidding there. My point is that we’re in a good spot. We’re gaining market share. You should own our stock with a valuation discount, which has been proven by our historical growth, both in revenue, earnings per share, profitability, and relevance. We are a growth company. Our results show it, and we trade like a company that really can’t grow and more of a value plan. I’ll say it, I’ll continue to say it. It doesn’t matter, but it’s a fun way to end the calls every once in a while.

Brennan Hawken

Fair enough. Thanks, Ron. And then love to hear about some trends that you’re seeing in advisory. So you guys have — sponsors are a fairly big cohort for your advisory business. What are you seeing in your backlogs as far as that group of market participants? Are we starting to see some return there? It looks like your advisory revenue was better than the public data. So it suggests maybe some smaller advisory — sponsor-oriented deals might have been part of it. Is that the case? And how are you thinking about that cohort going forward? Thanks.

Ronald J. Kruszewski

First of all, I thought our reported numbers are consistently above what you would try to anticipate in the public data. And I think that is because we do small and mid-cap deals as well, and that’s been true not just last quarter, but for years. So that’s the case. Right?

James M. Marischen

In terms of pipeline, we’re seeing strength across the board. Every single vertical, every single product. We’ve built a company here really to take advantage of the markets when it is accommodative and we’re starting to see that. And so we’re optimistic as we look forward to fourth quarter and 2026.

Ronald J. Kruszewski

Yeah. It’s a good — hey, let’s not underestimate the importance of the environment. We’re doing well. I share a lot of my peers and competitors are doing well.

I just feel from my perspective that we’re gaining market share. And we see a very nice growth pattern, growth picture in front of us, just like I saw in 2011. So that’s why we’re optimists.

Brennan Hawken

Great. Thanks for taking my questions.

Operator

Okay. [Operator Instructions] Our next question is going to come from Michael Cho. Please go ahead.

Michael Cho

Hi, good morning. Thanks for taking my question. I just wanted to follow up on the corporate M&A discussion that we’re just having. There’s some news about the Stifel’s independent advisor business. I mean, I recognize it’s a small part of the business and something people maybe strategically deemphasized for some time, but maybe it’s a good time. I was hoping maybe I could just get your broader perspective on some key considerations around this prospective exit of this segment and how you think Stifel will be better positioned longer term from this reshuffling of the business?

Ronald J. Kruszewski

Well, I mean, a fair question. Yes. Nothing’s announced on this. So you can appreciate my inability to talk in any specifics. Okay? That said, I think that the article that was written, and I don’t — I’m not really gonna comment on the article of the context. And I think that the context in the article that sort of, I didn’t talk to the reporter, but I thought, wow, they’ve got a little bit of bite, the history and the way we think about the business. Correct. I think that it’s very — it’s immaterial to us, okay? And it doesn’t really change what we believe we will grow. So look, I can’t really answer your question. I hope you appreciate that. Yes. A lot of the thought process was captured well, so I will say that.

Michael Cho

Okay. Great. No, fair enough. It’s just a quick, small follow-up, Jim. Just on balance sheet growth outlook from here. You called out Venture Banking during the quarter. And I think maybe last quarter, you’re talking about maybe $1 billion of loan growth into the end of ’25. Just kind of curious any updates in terms of balance sheet growth from here, any key segments you might call out to be outside of Venture Banking? Thanks.

James M. Marischen

Right. In some of our prepared remarks, we talked about the confirmation of the goal of getting to $1 billion of loan growth for the back half of the year, and we still feel confident in that. When you think about the component line items that are comprising that growth, I think you will continue to see what you’ve seen historically. You’re going to continue to see fund banking being a large contributor there. We continue to add one to four family residential loans. And then again, as we talked about, you’ll continue to see some additional Venture balances there as well. So, that’s much more of a deposit generation play more than the loan growth received from that, so.

Michael Cho

Great. Thank you.

Operator

And there are no further questions in the queue [Phonetic]. At this time, I will turn the conference back over to Joel Jeffrey for any additional or closing remarks.

Joel M. Jeffrey

I appreciate you asking for my opinions, but I’m going to turn it over to Ron to have his closing remarks.

Ronald J. Kruszewski

I guess, so I’ll tell you what you were going to say. We thank you all for attending and your interest in Stifel. I’ll reiterate what we said in the call. We talked about the back half of the year being — where we could see some nice pickup in activity driven by the environment. We see that. Let’s get the government shutdown done, so we could get some big re-going on some of the capital market transactions. But the environment is good and the company, Stifel is well-positioned. So I look forward to reporting to you our fourth quarter and full year results and everyone have a great remainder of the day and holidays and everything until we meet again. Thank you.

Operator

And this concludes today’s call. Thank you for your participation. You may now disconnect.