SF
#You just answered your own question, <UNK>.
You want to come over here and tell me what to do based upon, I mean I'm all ears.
I think that we consistently, as I have said, looking backwards, we have felt that the investments that we have made in the investment portfolio and security-based loans and some of the investments that we have made have provided very attractive risk-adjusted returns and ROEs that are accretive.
And because we're always allocating capital to whatever we do, we take proper interest rate hedges and so everything we do is with a mind toward risk adjusted returns and doing things appropriately.
As I sit here today, I don't know really how ---+ I know we have a lot of opportunities.
I believe that we have shied away from the credit market in terms of loans.
I believe that we are seeing credit spreads and terms and covenants and things like that that are making that more attractive on a relative basis.
But the only way I can answer it is the way I always answer it, is that I believe as long as we can deploy capital at an acceptable ROE, whether that be in bonds or loans, then adjust it for risk; that is what we will do.
The risk adjusted density, I can't answer, but not because I don't want to, because I just don't know.
You kind of know it when you see it.
The amount of interest that we have received from what I would characterize it as many of these high net worth teams from many large firms has exponentially grown.
It is a direct result of the perception that what our platform is and our ability to service clients, which I always felt was reality, but the perception that we could retain and hire the Barclays people has helped.
So we have seen a lot of capabilities.
I was thinking some, I want to make this comment a little bit and it goes to a lot of what's going on in the marketplace on those big deals.
I get a lot of people who say, oh there were, when we got around to it, there were 150 advisors at Barclays and 50 of them left or 60 of them left and what happened.
And I always say it in reverse, I say: you know, from my perspective, they didn't even know who Stifel was.
I had a shot at about 10 of them and recruited 100 of them.
And I think that that's kind of what's happening now.
When I first walked in there, I always remembered, as I'm sure some of them are listening on this call and smiling.
They looked at me and said, see you.
And then we were able to recruit them.
And because of that and the investments that they brought us and some of the capabilities that they brought us in terms of how they view the marketplace, there are many platforms that we've built into our technology ---+ and simply word-of-mouth.
We have a number of people say, well wait a minute.
If you can do that, then I need to talk to you.
Those phone calls are up, forget the percentage.
Because when you go from a low number to a percentage, it's huge.
And we are seeing it.
If we have any concern today, you are dealing with market multiples.
You are dealing with production that may be elevated and deals and so it is always hard in down markets.
But I will tell you, that our place in the marketplace, as a relates to options for people looking for a home, was significantly enhanced by both the Barclays transaction in perception and in capabilities on what we added.
So look, we are seeing a lot.
These are interesting teams to recruit.
Maybe I will end with that.
Are you talking about new recruits.
Maybe I'll characterize it this way.
We get a lot of interest.
We have not changed our pencil and our back of the envelope, the way we do things.
We are going to be a lot more successful, but as I have said, the street deals that pay some of the multiples that you read about, my pencil breaks when I start writing those down.
It just does not work.
And so what we are seeing is ---+ we certainly have raised our level because we're talking to a lot of different people.
But we're nowhere, we're really nowhere near what's [SAR], so still some of the shareholder destroying type stuff that goes on, I do not understand it and we're not going to do that.
So to the extent that ---+ I just believe the people who are looking for a place where they want to work, we are here and we are getting the right people.
So we are not the highest [deal] on the street, never have and not going to be.
If you work at a bank, you'd find some of these things interesting.
I think our loan duration is down.
I think we've seen real opportunity in the loan portfolio.
That's why we've added to the loan portfolio.
We look at everything based upon allocated capital, so if you have zero risk weighting, that doesn't mean you need zero capital.
You need 7%, 7.5%, 8%.
I'm just picking the number.
You need tier 1 capital because you need capital and so you have to allocate that.
If you have a C&I loan, you have to look at the fact that you need risk-based, it's risk-based capital of 100%.
How do those returns work.
How does that risk work.
All versus capital and risk.
And so what I have seen, we have always felt security-based loans relative to the floating-rate nature of their duration, the fact that we understand the collateral and the capital allocated, is a great asset class.
The yields are not as high necessarily on an absolute basis of say a C&I loan, but on a risk-adjusted basis, we like that asset class.
As I've said, we are beginning to see risk-adjusted spread and covenants.
You've got to remember, you can't just lose sight of the fact of terms.
But we're beginning to see things that can make that asset class, what I would generally define as C&I, as maybe being attractive.
Again, what I would say to you and what I want to say to the shareholders, is if we were simply looking to drive pretax earnings, we would just level the balance sheet tomorrow.
There is net interest spread in almost anything, but we do not look at it that way.
We leverage the balance sheet risk-adjusted and allocated capital to every position we put out.
That's how we look at it.
Sometimes we are transfer pricing to do certain things, but at the end of the day, that is what we do.
And I would say the environment in the last quarter was very attractive to adding to our investment portfolio risk-adjusted.
Again, we're going to grow the bank prudently.
We had a lot of pent-up demand and the Barclays transaction, which took us from $9 billion to $13 billion.
In any credit and interest rate cycle, fast growth is almost not a good risk adjusted return because you're making a bet in that cycle, whether it be interest rate deal curves, steepness or credit spreads.
So we want to grow the bank prudently.
What I would say to you, as I think I've said a lot of times, the relative size to our bank, relative to our wealth management business and relative to our institutional business and relative to our immunity finance business and relative to everything we do, we have plenty of opportunities to grow the bank.
Our need ---+ and we have a lot of deposit funding.
Our need is to continue to be disciplined in the bank's growth and hopefully, knock on wood, you look at our bank performance and our NPLs and non-performing assets and the credit statistics, up to this point, I think we've done what we've said.
Hi, <UNK>.
Obviously, coming from my perspective, I don't know what I can ever say about this, but I certainly have proven by the number of shares we bought back at levels higher than where we are today, I think that that is an attractive use of capital.
We do capital projections and capital planning and we look at share repurchases.
We look at capital deployment.
We are probably, in terms of deployment, I would say we are a little more cautious than normal.
Normally your best opportunities for deals come in environments like this.
You tend to overpay in good environments and you tend to do good deals in bad environments, but that said, there is a lot of angst on the streets, I would say.
We're maybe a little more cautious on that front.
We're going to drive our returns, our return on equity, our margins, our pretax margins, and our EPS all our levers that drive shareholder value and we are going to do all of them, as the individual largest shareholder in this place would do himself, and that's me.
So I'm going to do it and do it appropriately.
So all of those levers are available.
None of them are excluded and, really, I don't know that any one of them is necessarily favored, although I would admit our stock price in this slump at levels that seems, I will leave it there, seem sun burnt.
I think as I said, <UNK>, I said I think that the personnel and the capabilities is front loaded.
I think I've already said that, as we look at our overhead as a percentage of net revenues, we measure it, not only as a segment, but by area and so we have a historical perspective.
And in general, our overhead structure relative to the revenue of the firm is elevated, but that is what we set out to do.
As I've said, we spent an additional $15 million in IA and compliance and all our risk systems and in technology and I have given all those numbers.
A lot of those expenses are front loaded.
We did have a lot of one-time, what I would call non-comp OpEx, consulting and all of that that does go away.
That was to help us get to where we wanted to be.
But I believe that a lot of expenses that we put in place was done, as I've said to all of the shareholders, with the express intent of being able to prudently, from a regulatory and risk management and just overall evaluation perspective, prudently grow this Company beyond ---+ personally $10 billion is a line in the sand, but certainly much larger than that.
We have put in a lot of infrastructure and now we need to build the firm into that to a certain extent.
I do not see additional personnel hires needed, certainly, at this level of revenue at all.
And again, that just goes to how we look at the business.
Well, of course I do.
We have that and of course I do.
It's always ironic to talk about how good it is for a company to need to restructure but in that business, that's true, and so we don't have <UNK> Buckfire for the logo.
I mean we do, I guess, but we want to participate in the restructuring space.
We've done some very noteworthy transactions, as I've said.
And I can't disclose what we might be working on, but as you know, we got [deals] award for being the advisor to the city of Detroit.
This comes to mind for me as what was a very significant, not only noteworthy in the marketplace on the largest, but also indicative of our intellectual capital that resides within <UNK> Buckfire.
Of course, I would like to participate in that increase.
I always just feel a little uncomfortable pitching that business.
We merged with them at a trough level.
Right.
And their peak level, which was I guess, 9, 10, 11 ---+ I do not think is relevant.
But might be, but I don't ---+ I guess that I hear you in terms of that, but when we merged with them, we were at a trough and where and I think there's more opportunity today.
I can ask Victor to give historical run, but I think most of the restructuring firms would show revenues back in peak levels that even they don't think they're going to get to today.
At least I hope they don't get to in 9 and 10.
So obviously, I don't disclose restructuring advisory revenues.
I guess I will consider whether we should do that.
We do not disclose revenues by the product type either.
At this point, I really can't answer your question.
You got it.
<UNK>.
It's all right.
No one can pronounce it.
So to our shareholders, I believe that these are interesting times, certainly interesting times for me.
I will leave you like I always do, the reality sometimes of what's going on versus the market's perception are completely different.
This is one of those times.
See you.
