Stifel Financial Corp. (SF) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with record-high pipelines and robust recruitment strategies, despite a 10% decline in institutional transactional revenue. The Q&A highlights positive momentum in ECM and deal acceleration in key sectors. Management's cautious but optimistic approach to capital allocation, including an 11% dividend increase, further supports a positive outlook. Although some responses lacked quantitative details, the overall sentiment suggests a positive market reaction, likely resulting in a 2% to 8% stock price increase.
Key Financial Performance
Firm-wide revenue $5.5 billion, increased 11% year-over-year. Reasons for change: Record performance in Global Wealth Management and the second highest year of institutional revenue.
Earnings Per Share (EPS) $7.92, reflecting a pretax margin of 21% and a return on tangible common equity of roughly 25%. Reasons for change: Increased scale and operating leverage, excluding the first quarter legal accrual.
Global Wealth Management revenue $3.5 billion, marking a 157% growth over the last decade. Reasons for change: Sustained adviser recruiting, higher adviser productivity, growth in fee-based assets, and build-out of client-serving platform.
Institutional revenue $1.9 billion, nearly doubled over the last decade. Reasons for change: Diversification across advisory, capital markets, and public finance, deeper industry coverage, and investment in talent.
Fourth quarter revenue $1.56 billion, increased 14% year-over-year. Reasons for change: Record results in Global Wealth Management and a 28% year-over-year increase in institutional revenue.
Fourth quarter EPS $2.63, with a pretax margin of more than 22% and a return on tangible equity of more than 31%. Reasons for change: Strong performance across both operating segments.
Investment banking revenue $456 million in the fourth quarter, up 50% year-over-year. Reasons for change: Higher advisory revenue, equity capital raising, and fixed income underwriting.
Advisory revenue $277 million in the fourth quarter, up 46% year-over-year. Reasons for change: Continued strength in financials and improving traction in technology and industrials.
Equity capital raising revenue $95 million in the fourth quarter, doubled year-over-year. Reasons for change: Led by healthcare, financials, and industrials.
Fixed income underwriting revenue $76 million in the fourth quarter, up 23% year-over-year. Reasons for change: Increased public finance activity and higher corporate issuance.
Global Wealth Management client assets $552 billion at the end of the fourth quarter, with record fee-based assets of $225 billion. Reasons for change: Market appreciation and net new asset growth in the low to mid-single digits.
Recruiting of financial advisers 181 financial advisers added in 2025, including 92 experienced advisers with trailing 12-month production of $86 million. Reasons for change: Increased focus on recruiting and platform attractiveness.
Net interest income Second highest year in 2025, driven by client activity and balance sheet expansion rather than changes in interest rates.
Institutional transactional revenue Declined 10% year-over-year in the fourth quarter. Reasons for change: An 18% decline in fixed income revenue, offset by a 6% increase in equity revenue.
Non-compensation expenses $307 million in the fourth quarter, up 6% year-over-year. Reasons for change: Increased investment banking costs associated with higher advisory and underwriting activity.
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Operating Highlights
Global Wealth Management Revenue: Reached a record $3.5 billion in 2025, marking the 23rd consecutive year of record wealth revenue. Growth driven by sustained adviser recruiting, higher adviser productivity, growth in fee-based assets, and build-out of client-serving platform.
Institutional Revenue: Exceeded $1.9 billion in 2025, up 20% year-over-year. Growth driven by diversification across advisory, capital markets, and public finance, as well as investment in talent.
Venture Initiative: Gained traction, supporting lending activity, deposit flows from venture-backed firms, and fund lending relationships.
Depository M&A Advisory: Participated in approximately 75% of depository M&A advisory transactions in 2025, highlighting leadership in financials.
Institutional Business Momentum: Record pipelines in advisory, equity capital markets, and public finance. Strong activity in financial institutions, health care, technology, and industrial technology sectors.
Operating Leverage: Improved operating leverage with a pretax margin of 21% and return on tangible common equity of 25% in 2025.
Expense Management: Non-compensation operating ratio improved by 140 basis points in 2025, reflecting benefits of scale and revenue mix.
Stock Split and Dividend Increase: Authorized an 11% increase in common stock dividend and a 3-for-2 stock split effective February 2026.
Business Model Focus: Emphasized adviser-led integrated model combining wealth management, institutional capabilities, and balance sheet support to differentiate Stifel.
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Risk or Challenges
Volatility and Geopolitical Risk: The company acknowledges that volatility and geopolitical risks remain significant challenges, which could impact market conditions and client activity.
Policy Uncertainty: Policy uncertainty is highlighted as a persistent risk, potentially affecting strategic decision-making and market dynamics.
Fixed Income Revenue Decline: Transactional revenue was impacted by a decline in fixed income revenue, which could pose challenges to maintaining revenue growth in this segment.
Government Shutdown Impact: The government shutdown negatively affected fixed income results, indicating vulnerability to political disruptions.
Interest Rate Sensitivity: While the company claims to be rate agnostic, changes in interest rates could still influence client activity and balance sheet expansion.
Economic and Market Conditions: The company remains cautious about the potential for rapid changes in market conditions, which could disrupt client engagement and strategic execution.
Regulatory and Compliance Costs: The firm faces ongoing regulatory and compliance costs, which could impact profitability and operational efficiency.
Strategic Execution Risks: The company acknowledges that disciplined execution is critical, and any lapses could hinder its ability to achieve growth targets.
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Guidance & Outlook
Revenue Projections: Total net revenue for 2026 is expected to be in the range of $6 billion to $6.35 billion. This guidance excludes $100 million of revenue from the sale of Stifel Independent Advisors and the closure of the European equities business.
Net Interest Income: Forecasted to be between $1.1 billion and $1.2 billion for 2026, supported by approximately $4 billion of balance sheet growth.
Expense Ratios: The compensation ratio is expected to be in the range of 56.5% to 57.5%, and the non-compensation operating ratio is projected to be 18% to 20%.
Wealth Management Growth: Recruiting pipelines remain robust, with experienced advisers attracted to Stifel's platform. Fee-based assets are up 17% from the end of 2024, and elevated client asset levels are expected to support lending initiatives and future investments.
Institutional Business Momentum: Record pipelines in advisory and equity capital markets activity are noted. Financial institutions activity is robust, and health care has experienced strong January new issues. Technology and industrial technology sectors are active, driven by AI and infrastructure investments.
Public Finance and Fixed Income: The public finance backlog remains strong, and normalization of the yield curve is expected to positively impact fixed income rates and credit businesses.
Long-Term Growth Target: The company aims to double its business over time, targeting $10 billion in revenue and $1 trillion in client assets, though no specific time frame is provided.
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Shareholder Return Plan
Dividend Increase: The Board of Directors authorized an 11% increase in the common stock dividend beginning in the first quarter of 2026.
Share Repurchase: The company repurchased 335,000 shares during the quarter and has 7.6 million shares remaining under the current authorization.
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Key Q&A
Q:What factors will shape recruitment in 2026, and how is the company approaching recruitment of high net worth advisers?
A:The company has noticed increased productivity from advisers, particularly from the B. Riley cohort, due to their well-developed platform and integrated lending and credit model. Recruitment remains strong, with a focus on hiring teams that handle a mix of advisory, brokerage, lending, and deposit activities. The company is considering increasing its allocation to recruitment to gain more market share.
Q:Where is deal momentum accelerating the most in the institutional side as the company moves into 2026?
A:The company sees continued strength in financial institutions, particularly depositories and fintech. There is also increasing activity in healthcare, industrials, tech, and consumer sectors. Sponsor activity is improving, and private equity is beginning to unlock companies, creating a conducive environment for deals.
Q:What is driving the share strength in ECM relative to large peers, and will ECM fees continue to build in 2026?
A:The company has gained market share by moving up in participation levels and leading deals with larger firms as co-managers. ECM revenues in 2025 exceeded 2021 levels, and the company believes it is operating at 50% capacity, indicating room for growth. The company is confident in its ability to continue building ECM fees.
Q:What is the company's approach to compensation guidance and managing comp leverage in 2026?
A:The company aims to manage growth while maintaining margins, balancing recruitment costs with productivity gains. The sale of SIA and European restructuring are expected to lower the comp ratio. The company remains consistent in its comp ratio despite industry-wide increases and is confident in delivering within its range.
Q:What is the company's perspective on the future adviser mix in the industry between employee and independent RIA models?
A:The company believes the initial growth in the independent channel, driven by private equity, has slowed due to competitive pressures and lower rates. The employee model remains attractive due to its simplicity and profitability. The company expects a shift towards more advisers choosing the employee model.
Q:What are the company's assumptions for net interest income (NII) growth in 2026?
A:The company assumes $4 billion in loan growth, primarily from fund banking, mortgages, securities-based lending, and selective commercial lending. Growth will be funded with treasury deposits, and the company expects a net interest margin of around 320 basis points for the year.
Q:What trends is the company observing in its CLO book and private credit markets?
A:The company sees no material issues in its CLO book, with refinance and redemption activity occurring as expected. The structure of the CLO book provides sufficient subordination and diversion of cash flows, ensuring stability.
Q:What is the company's strategy for capital allocation, including M&A and returning capital to investors?
A:The company increased its dividend by 11% and is cautious about acquisitions due to high valuations. It focuses on balance sheet growth, recruiting, and maintaining shareholder value. The company avoids deals that dilute return on equity and prioritizes accretive opportunities.
Q:What is the company's outlook for bank M&A in 2026 and beyond?
A:The company expects increased bank M&A activity due to the need for scale, profitability, and technology investments. The company is well-positioned with experienced bankers and strong client relationships, making it a trusted adviser in the industry.
Q:What is the company's approach to financial adviser recruiting and potential allocation increases?
A:The company is considering increasing its allocation to recruiting, focusing on hiring teams that bring immediate value in lending, cash balances, and fee-based business. The company aims to leverage its strong platform and reputation to attract top talent.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numerical details or clear metrics in several areas, such as the exact capacity utilization in ECM, the precise impact of comp leverage improvements, and the detailed assumptions behind the $4 billion loan growth. Additionally, responses about the future adviser mix and private credit markets were more qualitative and lacked quantitative backing.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advisors action
Asset line
Bank level
CFO result
Microsoft
SP
Tier leverage
accrual
advice
client balance
client platform
company
consistency
context
contributor
durability
employee
engagement
equity income
expansion
funding
generation
group
income result
income wealth
industrials
lending
line expectation
margin return
period
profile
rate interest
ratio Tier
record segment
resilience
return equity
sale
scale leverage
sheet client
stock split
trajectory
upside
volatility
SF Transcript
Stifel Financial Corp. (SF) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call reveals strong financial performance with record-high pipelines and robust recruitment strategies, despite a 10% decline in institutional transactional revenue. The Q&A highlights positive momentum in ECM and deal acceleration in key sectors. Management's cautious but optimistic approach to capital allocation, including an 11% dividend increase, further supports a positive outlook. Although some responses lacked quantitative details, the overall sentiment suggests a positive market reaction, likely resulting in a 2% to 8% stock price increase.
Stifel Financial Corp. (SF) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call highlights strong financial performance, including record revenue and profitability improvements. The Q&A session reveals a positive outlook on investment banking and wealth management, with manageable risks in credit exposure. The firm shows potential for margin expansion and strategic capital allocation, while maintaining independence and focusing on growth. Despite some uncertainties, the overall sentiment is positive, with a likelihood of stock price appreciation.
Stifel Financial Corp. (SF) Q2 2025 Earnings Call Transcript
Neutral7-30
Stifel Financial Corp. (NYSE:SF) Q1 2025 Earnings Call Transcript
Positive4-24
The earnings call reveals strong financial performance with an 8% increase in net revenue and 11% increase in operating EPS. The dividend increase and share repurchase program highlight shareholder returns. Despite legal charges, asset management and investment banking revenues hit record highs. The Q&A session showed optimism in advisor recruiting and M&A activity. Although there are concerns about regulatory issues and public finance, the overall sentiment is positive, supported by optimistic guidance and strategic initiatives. Without specific market cap, the stock reaction is likely positive, possibly within the 2% to 8% range.
SF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
