Stifel Financial (SF) Q3 2026 earnings call transcript

Thank you, Operator. Good morning, and welcome to Stiefel's third quarter 2026 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 stifle. 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 Court 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 the earnings release. I'll now turn the call over to our Chairman and Chief Executive Officer, Ron Krzyzewski.

Thanks, Joel. Good morning, everyone, and thank you for joining us. Our results year-to-date and for the third quarter again underscore the strength of Stiefel's diversified business model. We're on track for another record year. Year-to-date revenue of $4.3 billion, up 9%. Earnings per share of $4.33, which is up 57%. And if you exclude the impacts of last year's legal charge, GPS is up 22%, with return on tangible common equity of 24.1%. Revenue and pre-tax margins in both of our operating segments are up here today, and investments we've made in our efficiency initiatives continue to generate strong returns.

The third quarter began with healthy client activity, but conditions got choppier in September as geopolitical tensions, rising energy prices, and renewed inflation concerns led to the Federal Reserve's first rate increase in three years. It was the speed of the moving rate, more than their absolute level of the settled market. Through it all, corporate earnings and employment state support have been the underlying U. S. economy continue to show real resilience. Against that backdrop, we delivered our highest ever third quarter earnings per share of $1.46, up 12% versus the prior year. Net revenue of $1.43 billion was in line with our guidance as another record quarter in our global wealth management segment offset market-driven slowdown in our institutional business.

Our bottom line growth was the result of improved operating leverage as we posted our lowest compensation ratio since the fourth quarter of 2022, which in turn drove a pre-tax margin of 22.5%. The strength of our business allowed us to continue to generate and deploy significant excess capital. In the third quarter, we increased loans by $1.3 billion, and net interest income exceeded our guidance, setting a third quarter record that was essentially in line with our highest ever quarterly total. Additionally, we repurchased 1.6 million shares as our strong capital position enables us to support clients, return capital of shareholders, and invest in growth even when markets are volatile.

That brings me to our recent strategic investment in the AL Technologies. one of the leading business banking fintechs in the United States. Along with our investment, we entered into a long-term licensing agreement with the company. Under this agreement, we will have access to all current future capabilities of the BIOS platform. This will provide our bank with a leading edge white label treasury management platform for our venture fund banking and other commercial clients. This transaction accelerates the build of one of our fastest growing businesses, our venture banking platform. Additionally, this technology broadens our capabilities across our institutional and wealth segments, giving Stifo an AI platform and bringing family office capabilities into our wealth management platform. We believe it is a significant enhancement to our growing venture and fund banking platform.

Slide two should look familiar since we used it about four years ago to point out that we saw the disconnect between our performance and our valuation compared with, in this case, Raymond James and Morgan Stanley, two firms I respect and whose business models look a lot like ours. Since the end of 2016, our earnings per share are up 406%, and tangible book value is up 154%, which is better than either of these pairs. And our return on tangible common equity over the last 12 months is more than 26% and is the highest of the three on this page.

Even so, we traded nine-time forward earnings compared to 10.2 for Raymond James and 13 for Morgan Stanley. Look, even through challenging times, we are growing and have an elite ROTC.

ROTC, simply the numbers don't support the valuation gap that I see. With that, I'll turn it over to Jim.

Thanks, Ron, and good morning, everyone. Non-GAAP earnings per share of $1.46 came in ahead of consensus, as stronger investment banking revenues, higher net interest income, and well-controlled expenses more than offset softer transactional revenue. Total non-GAAP revenues of $1.43 billion were flat with a year ago and 1% below consensus. Investment banking revenue exceeded expectations by $12 million for 4%, as both advisory and underwriting revenue surpassed street expectations.

Net interest income of $302 million came in above the high end of our guidance and $4 million above consensus, primarily due to strong loan growth and higher loan fee income. Transactional revenue came in 10% below expectations and decreased 17% from the prior year. I'll cover the components in more detail when we get to the institutional segment.

Asset management revenue increased 14% from the prior year, driven by market appreciation and net new asset growth, and was essentially in line with consensus.

Expenses were, again, well-controlled, and we continue to see the benefits of the efficiency initiatives of the past few years. Our comp ratio of 56.6% was in line with consensus and improved from 57% in the second quarter. Non-compensation expense declined 4% sequentially and beat the street estimate by 3% as lower credit provisions, travel and entertainment, and non-bank reserve expenses contributed to the decline. The effective tax rate was 24.4%, which was slightly below consensus but within our guidance.

Turning to slide four, global wealth management generated record net revenue of $980 million, up 8% year-on-year. Results were driven by record asset management revenue and record third quarter net interest income, partially offset by a decline in transactional revenue.

We ended a quarter with total client assets of $576 billion and fee-based assets of $240 billion, up 6% and 9% respectively, as we benefited from stronger equity markets and net new asset growth. Excluding the impact of the assets associated with SIA, total client assets, and fee-based assets increased 8% and 12% respectively.

Net flows were slightly negative in the quarter, but our recruiting pipeline remains very strong, even with competition for advisors running high. Over the prior 12 months, we've added 90 total advisors, including 28 experienced advisors, with trailing production of $19 million. We increased our loan book meaningfully in the quarter, as we generated nearly a billion dollars in incremental fund banking loans and more than $200 million in residential mortgages.

Based on part of this incremental growth and a stable NIM, in addition to the higher loan fee income in the third quarter, we expect fourth quarter net interest income to be in a range of $295 million to $305 million. As you can see on slide four, we have significantly grown our net interest income since the beginning of 2024 through balance sheet growth as our net interest margin has remained relatively consistent. For the year, we've already grown our loan book by roughly $3.6 billion, which is just shy of our full-year guidance of $4 billion.

Our strong deposit gathering capabilities continue as our combined deposit channels are up roughly $1.6 billion. Given our mix of assets and liabilities, we are relatively rate agnostic, and we've been able to maintain a consistent NIM as our funding mix has shifted. As we look forward, our ability to fund further growth is supported by approximately $2.9 billion of deposits held off balance sheet and roughly $18 billion of money market funds and $7 billion in short-term treasuries.

Turning to slide five, through the first three quarters of 2026, institutional revenue is up 8%, driven by an increase of more than 23% in investment banking. In the third quarter, the segment generated $430 million in revenue, down 14% year-on-year. In the quarter, investment banking revenue in the segment totaled $300 million, down 6% year-on-year. Advisory revenue of $173 million increased 10% sequentially with continued strength in financials, industrials, consumer, and healthcare.

Equity capital raising revenue was $69 million, down 13% from a year ago, though issuer engagement is increasing, led by financials and healthcare.

Fixed income underwriting revenue of $58 million was in line with last year's third quarter results. While higher interest rates weighed on new issue volume in the third quarter, fourth quarter activity is off to a strong start. We remain the number one negotiated issue manager in public finance by deal count, with more than 13% market share year to date.

Overall, we are optimistic about investment banking as our pipelines remain very strong, We're seeing increased engagement from sponsors and improved expectations for depository M&A.

Fixed income transactional revenue of $80 million was down from approximately $123 million last year, primarily due to $9 million in trading marks in the quarter as a result of the sharp move in interest rates in September and $32 million in restructuring and aircraft gains in the prior year quarter. Equity transactional revenue was $41 million, down from $59 million a year ago, primarily due to our European restructuring, slower equity volumes, and approximately $7 million of trading marks in our equity facilitation inventory.

Absent another rate move like September's, we'd expect fourth quarter institutional transactional revenue being a range of $145 to $150 million. Year-to-date, our pre-tax margin of 18.9% is up 530 basis points from the same period a year ago, as we've meaningfully reduced our comp and non-comp ratios, primarily as a result of our international restructuring.

Moving on to expenses. Our improved operating efficiency showed up again in a lower comp ratio for the quarter, which was our lowest since the fourth quarter of 2022. For the full year, we are projecting our comp ratio to be at the low end of our full year comp guidance.

Non-compensation expenses totaled $298 million, flat with the same period a year ago, as lower provision and investment-making gross-ups were offset by higher operating expenses.

Our operating non-comp ratio of 19.4% was within our full-year guidance of 18% to 20%. Further, assuming a stable stock price, we expect to see a fourth-quarter effective tax rate in the range of 19% to 22% based on the excess tax benefit related to stock-based compensation.

Turning to slide 7, our capital position remains strong and provides meaningful strategic flexibility. The Tier 1 leverage ratio came in at 10.8%, while the Tier 1 risk-based capital ratio was 17%, reflecting the deliberate deployment of capital into loan growth. Based on a 10% Tier 1 leverage target, we ended the quarter with nearly $360 million of excess capital, and that is after funding $1.3 billion of loan growth and buying back 1.6 million shares during the quarter. Finally we have 6 million shares remaining under the current buyback authorization assuming no additional repurchases and a stable stock price our fully diluted share count for the fourth quarter is expected to be approximately 158.8 million shares. And with that, Ron, back to you.

Thanks, Jim. Before I turn the call over to the operator for questions, let me comment on our outlook. In our wealth management segment, competition for advisors is running at elevated levels. And while our recruiting pipelines remain robust, we're staying disciplined to make sure that our growth generates the appropriate return. We believe AI will make our advisors more productive, not replace them, because clients want experienced advisors in a broad set of adjustment options in uncertain times. Global wealth management has been and will continue to be the foundation of steeple's business, and its recurring revenue provides us consistent predictable growth even in bottom markets. We're on track for another record year in this segment, we may not target to reach our goal of $1 trillion in client assets.

Key component of our wealth segment is People Bank and Trust, which supports our wealth and institutional clients. We've significantly grown our loan and deposit gathering capabilities in recent years as we continue to execute on our long-term strategy to grow net interest income with a stable net interest margin without taking undue credit risk. Our institutional business is a meaningful driver of top and bottom line growth in strong markets. In the third quarter, September's sharp move in rates produced trading marks in our securities inventory, which we don't expect to repeat in the fourth quarter.

In advisory and capital raising, we have strong backlogs and improving client engagement. And going forward, we've seen increased activity levels across our diversified investment bank. Putting everything together, last year's fourth quarter was an all-time record at $1.56 billion in revenue. And we expect to match it this year, even with the volatility that slowed what was a very strong investment banking market in the first half. We also expect earnings per share to be higher, as we've kept our cost discipline and repurchased 6.8 million shares.

So let me close by saying that as I look forward, I'm optimistic. We're mindful of geopolitical risk, higher interest rates, and energy prices, and elevated asset valuation. But healthy client engagement, strong wealth management fundamentals, and an active pipeline of strategic and sponsor-led transactions give us real reason for confidence. People's diversified model, recurring revenue, disciplined capital management have a position to keep compounding value for shareholders regardless of marketing. Thank you.

I feel that a lot of the things, recruiting is strong and has been strong for us. I mean, not only over quarters, over years. I mean, it's hard to look at quarter to quarter. It always has been. But when I look at our recruiting numbers, outlook, what we're hearing, and who we recruit, I feel very good about that business. That's very competitive. Couple that competition with the choppy market that always blows people down. Clients get nervous, markets become more volatile. And we take a long term view. So I get this question every quarter. And every quarter I say that we're a firm that we can have net positive recruiting will continue to do so and I'm I'm optimistic about who we're talking to I wouldn't say that there's a change over the year is that we've probably lowered the absolute number of advisors that we talked to while increasing the trailer 12 coming in meaning we're recruiting higher teams and and I think that's very productive and good.

And finally, as a set for every quarter, I'm continually amazed at one question. MUSE is going to replace all our advisors. On the second meeting I have, I talk about the recruiting competition packages are high as other than. So, but overall, it's a positive for us and positive for our growth pretty long forward.

Well, look, first of all, we're going to pay our people competitively. We're going to provide people the place where you can do business, but you can also, you know, do well for our bankers, advisors and everyone else. And the comp ratio is a result of, you know, frankly, driving efficiencies and not being, you know, inefficient on a number of things. And so as we grow our business and become more productive, one of the things that's going to happen is going to lower your comp ratio. And then finally, as you grow our net interest income, frankly, that also drives the comp ratio. It's always at the time of the year that I like to point out that we're pretty consistent of not only driving the cop ratio lower throughout the year, but generally we're conservative at the beginning of the year and we're driving shareholder returns in margin.

Whereas oftentimes you'll see what I always do with fourth quarter price, you know, cop ratio in the quarter is going to be much higher because we have to recruit, but next year will be much better. And so this is very consistent. People over the years, you'll see comparatials generally decline and reach their levels, their best levels in the fourth quarter, which often usually is our best quarter of the year.

We'll come back next quarter to provide some more granular detail on our 2027 outlook. But given our guide that we're going to get to the lower end of the range for 2026, and you think about some of the dynamics that play into 2027, we're generating a lot of deposits today. We're having a lot of loan demand. We're going to continue to grow the bank balance sheet. We're going to continue to grow that interest income. And so that going forward is going to be the biggest driver of where the cop ratio could go. But I would say the jumping off point of where we get to for 2026 is a good kind of thought process, how you think about that going forward in 2027.

Thanks for the question.

Good morning, Jim. How are you?

A fund and venture banking together. You know, I feel we're, excuse the sport analogy, but we're early innings into this growth rate. I talked about some of the things we need to do overall. The overall market, especially in fund banking, I think the market's increased. lot of money that's being raised and refined to refine them and redone it. And so I see that just structurally within the market as a growing up. Within our focus has that, not only there, but on the venture side, is to be providing technology that gets us the business to begin. That's why we did this transaction that I mentioned about this, you know, technology. If you want to look at something similar, you'll see where Valley acquired BlueVide, and I think Chris Ruvo acquired, right, Capital One.

You know, we've taken a different approach in that we want to white label this. But when we looked at our ability to generate significant, I'm talking about significant to drive this business, we needed this technology, a genic account opening, you know, USD, a stable of crypto back to USD, cross-border corporate credit cards, payroll, all of these things we have, what we believe is going to accelerate our ability to get clients and build this business. I've talked about an investor call, and saying we're going to be doing something on this problem, this is what I was talking about. And so I'm very optimistic about this.

And it'll grow faster, at least adventure, certainly faster on the deposit side, four to five to one deposit. And then we'll deploy some of that more in fund banking where the ratio almost slips, It longs to the power. But it's a business and we track and measure referrals to wealth, referrals to banking, mortgages that we're giving to founders, et cetera. So it is a business where we feel we bring all the capabilities of people to this segment of banking. The investments we've made here, and not just in technology, but in people, it's helped us take market share across both fund banking and other venture space.

And you think about a direct output of this, we've been talking about generating around a billion dollars a quarter of deposit growth. With the technology investment in MEO and the capabilities that has to offer, we should see that number increase and that goes live. We have a more competitive treasury product. And I think that is a very scalable deposit generation channel as we look forward.

You know, and it's across our business, all right? We, you know, we, AI, what we're talking about is being able to service clients. In this particular case, we're talking more of a narrow aspect of fund and venture banking. But when you think about what we're going to do and how we're going to grow this business, We're going to do that without opening a single branch or putting any tricks or mortar. None of this is all going to be incremental NII on top of what we already built We built the foundation We just are putting some technology on it and we going to gain market Okay.

Look, I think what happened was we had a very strong core and a lot of engagement. The amount of things that, you know, people are talking about it. and not just as people, it was across the street. And not just as people, but across the street, you ran into a quarter where rates, inflation rates, geopolitical all converged late August into September and slowed activity down significantly, which is to be expected.

You know, you throw that uncertainty into the mix. I add a little bit now that we're within a few weeks of an election that that may change the outlook in the short run. So we've seen what I view as a financial condition-induced cost, if you will, in activity. But when we look at the fact that pay bar getting canceled and it's not the things that are getting done because of financial conditions, I'm optimistic about the business in specific areas. You know, we've had a slowdown in some of the healthcare capital markets that we've seen. We expect that to pick up.

Depository M&A, I think, is secular. Friends, because of technology, deposit data, you know, stating the need for scale, and the political realities of being able to get something done between now and 28, if there would be a change in administration. That's going to drive activity, and we don't see that change. So I think this quarter will sell a little bit more.

It's off to a good start if we see it. It sounds like, you know, you had to turn the calendar page on that in September. But that's how I would see it.

Right.

So I'll touch on sweep cash. You know, one item, we didn't touch on this in our prepared remarks, but one thing we'd highlight, with the sale of SIA, we still kept those assets on our platform and serviced them for a period of time. So that cash was still within our ecosystem and our balances of cash, that's probably a half a billion dollars that came out of our sweet balance in terms of activity in the third quarter. So I just highlight that when you're looking at the – When we close. When we close and fully move those assets off our systems.

So the other thing I would say, just generally speaking, we typically see a seasonal uptick in deposits in the fourth quarter. We'd expect that trend to continue. We've talked about other things that are going to drive deposit growth in the future. Obviously, Ron already touched on the investment in Meow, what we can do there in terms of generating additional deposits in that channel. But overall, we've got nearly $3 billion of deposits available to fund future growth. We've got $18 billion sitting in money market funds. We've got $7 billion in short-term charges. We can go attack those and bring those. So those are all the cash and cash equivalents within our ecosystem. Now, some of those things on money funds would be a little bit more, a little bit higher cost, but those are deposits in our ecosystem that we can go get.

And so we feel very comfortable overall where we're at from a deposit generation strategy and perspective. I think the other thing I'd say is as we've seen a remix of our deposits, our NIM has been relatively stable. We've grown NII and had a stable NIM even though we've seen this kind of reshuffle, remix of deposits. I think that fact is a little underappreciated at times.

Yeah, and I would underscore that. I just feel that as... as a lot of focus on a small part of our funding base we can fund this in less we see tremendous ability to generate deposits and deploy loans and maintain a new uh some of the repricing that's going going to be going on as the deposit just everyone knows this it's economics as as deposit-based reprices, so is the asset size going to reprice. And you're seeing it through our stable myth, and you're going to see that throughout the industry. There's just somehow there's a belief that if you reprice cash, the industry is just going to collapse because you can't make any more net interest income.

And I find that to be somewhat not consistent with economic theory. But that's for another day.

Look, I think you can. And I think we've been trying to say that we have, at least in fixed income, we have transactions that are non-recurring recurring. That's the way I say it. They just don't seem to recur quarterly, okay? But so we last quarter had almost $32 million in restructuring an aircraft. Both departments are up and running. They're doing business. The rate environment, as you can imagine, in any time to restructure into an aircraft, that impacts the, you know, getting something done during that quarter. So, you know, that leaves fixed income, $95 to $100 million today at run rate. We're growing that business. We're growing business equities around $50 million. I think equities tends to be more challenging, you know, but I think we can grow it.

You're seeing a decline to completely restructured Europe. But I don't do $160 million. I mean, that's a blink of an eye. That's nothing. $10 million on a, you know, or $40 million on a $6 billion revenue base. And we've got a lot of people. I find that to be rounding error.

Well, I think as it relates to your first question, yeah, I'm going to be very, we're going to be very thoughtful about, you know, paying market multiples that are significant multiples of ours in terms of EBITDA and capital required to run businesses. So I just would think that that's shareholders when they want us to look at the acquisition landscape. We want to grow. But we want to grow and be the firm that has, you know, higher than 20% ROTC, which isn't common in the banks.

Certainly, banks only come in margins that are robust. We're running this for shareholder value, not just for growth. As it relates to your second question, I think it's a good one in that when we are looking at acquisitions, there is an attractive one out there, it's called our own stock.

Jim, in terms of how much we're doing, I'll leave that to you. Right. So the pace of buyback did decline some in the quarter. You know, the thing I'd highlight is, you know, we did grow loans at $1.3 billion a quarter, in addition to buying back $1.6 million a year. So we deployed a fair amount of capital. We brought our capital issues down. Our excess capital still stands at a strong level of about $360 million. So we have flexibility to do both, to grow the loan book as well as buy back our shares. We've got plenty of authorization left on what we currently are authorized to buy back. So you continue to see us very active in that.

You just look at the share count on a year-to-date basis and get a sense of how many shares we've taken out. And it's been pretty meaningful to that number.

Yeah, but that's a good point. We, you know, it's just looking at numbers. If you use the 10% leverage ratio, we could have not grown our loan book and bought back another, you know, yeah, 200 something million dollars. But what our loan growth, we think, is adding to our franchise and our return on tangible and all of that. So that's a good use of capital. Dividends is a good use of capital. So the investment we made in technology, well, which isn't an acquisition of investment, that's a great use of capital. But as an absolute, you know, acquisition of something, I just feel that if I came out and told you we're buying something at, you know, 15 to 18 times EBITDA, you would not, the street wouldn't react well.

So we're not. So we're lying there.

Yeah, I mean, in a lot of ways, it's different math in advisor recruiting as it relates to capital and capital ratios are. We look at that more from a return on invested capital. We're, you know, hiring people. We're amortizing acquisition costs over 10, you know, 10 years, call it. And, you know, sometimes it's easy just to do that because you're kicking a lot of that expense down the road.

And so, you know, by coming up and saying, well, you know, based on our recruiting, our top ratio is going up. well then, you know, that might signal that we're either being aggressive in recruiting or maybe we're overpaying a little bit. But that's hard to see in the short run. We have done this for nearly 30 years, and we've, you know, built this firm from $100 million in revenue, and we're at $6 billion with a 24% ROTC, and that's because we're capital disciplined. And I going to keep saying that and if that means that we pass on things that don meet our capital returns well then shareholders should be that should be a premium not a discount to shareholder valuation my opinion Great.

Well, I think we are utilizing AI more productivity tools. I've got something on back office, me using AI tools to settle trades or something like that. I haven't seen that, but none of them are self-clearing, so that's not possible anyway. But in terms of tools and being able to help advisors maybe have less assistance, I guess, that's possible. We're not taking that approach. We're using AI as a tool to help us, and it's a powerful tool for meeting prep, meeting follow-up, analysis, discussion. There's a whole bunch of things. But we're combining that with humans, and I actually see the need for more people, not less.

So I don't know. I don't – it's not sure if I'm in a recruiting pitch and I say, hey, look, I can add a little bit more to your recruiting, but you can't have an assistant because you've got to use a AI bot. I think I'm going to go down in my recruiting ability. I just do. But that's just, again, the private equity firms are dealing more in the independent and RAA space.

So I don't really know. But AI is clearly a productivity enhancer. We're making significant investments. We're getting a lot of our tools. We're putting new tools in place. And I think it's a tailwind to what we're doing. I'm not going we're not going to reduce people and recruit up recruiting but we're not doing that not now we're everything within our wealth business it's also in the employee channel I've been saying all of SAA but we're no longer in the independent space at all okay that makes sense and just maybe coming back to your guidance so it seems like you're going to be south of the $6 billion number for the full year on your top line net revenue number, and you're guided to NII bouncing back, rising a little bit more, and that you have a little bit of a recovery on the transaction side due to lack of mark-to-market, and you talk to the better investment banking backlog.

Yeah, well, look, we expect to have, we had a record, record quarter, we expect that to be in that range. This is still not a hugely robust environment. That can change. Let's see how the elections go and what happens after that. There are going to be a lot of repositioning of things that will happen post the election.

But look, as it relates to the guide, there are a couple of things we did. Some of it's accounting. For instance, we were conservative on the sale of SIA. We reported a 50-plus million dollar gain on that, and we put it in on board because we just thought that that probably shouldn't be important. we were doing at the beginning of the year that was in our thought process of revenue same with our restructuring of Europe that we you know we were doing off run rate revenues both of those items increased our margins increased our return on tangible equity but probably took out of our run rate 70 75 million dollars revenue so if you add that in you're back close to 6 billion now of our range.

Now why weren't we above that range? I would point, I think, I think we thought the fixed income would have a better year, the rate environment, everything that's happened, some of the marks we took muted those returns, but I'm optimistic about that business too. So I feel we're at the the rain, but what we said in January and, you know, we could put them about rounding.

If you look, I mean, look at our GAAP numbers, our GAAP numbers, they just, you know, we reported, we reported some of those revenues in GAAP and not, we took them out of non-GAAP.

When I say, and I think this is good, and I'll let Jim go in, but I don't see if he disagrees with me. It looks to be good. But when we say 145 to 150, that's kind of our run rate absent, these marks on the inventory absent you know the one just with you we've tried to tell you isn't always recurring so that's not necessarily the fourth quarter that's just trying to say look we've got a little bit of noise here and this is what we see settling out the fourth quarter generally is seasonally better we'll see that that seasonality often, you know, needs to depend on, you know, the election. We also get, we get checks, you know, for our, you know, the old NIPAA type thing where we get research checks.

That always helps too. So that wasn't meant to be just a fourth quarter look. That's just trying to to reset the your all expectations of what sort of the normal, if there is such a word, run rate in institutional transactional revenue.

I, first of all, I agree with what Ron said, and I'd add to that. The European restructuring has an impact on this, on what is a normalized run rate. That probably took out five or $6 million a year over year comparison when you look in the fourth quarter. And so, that's going to have an impact on that absolute number on, you know, what we did with those restructuring activities. So, you have to take that into consideration when you're looking at these numbers year over year.

Did you ask me? Did you just ask me by myself? That is a very indirect way of doing it, yes. I just give you a very direct clarification, okay? So that's it. Hey, I don't mind. Look, that's a fair question. That's just a long way of asking it. But it's a very fair question. Look, where, okay, so you, wherever it is, we're going to, with those two, I don't want I'm not doing anything, but most financial institutions, we're going to scale into someone that has a lower growth rate and a lower return on tangible equity.

And because of scale, that doesn't make sense to me. If I'm going to scale, then I'm going to scale into someone that's got higher margins, higher return, higher growth rate. So, you know, I understand a quarter can stand on its own, but we've put on that slide since 2016.

So, don't check those numbers. So, why? Who's growing faster? So, I hear you. I, I, now if your question is, do we, do we get a higher multiple even though we combine with someone with lower financial metrics? I, the answer is no, but I understand the question. It's fair. I don't mean to suggest it's not a fair question.

I'm sorry.

I'm going to come on your call and ask the same question. That'll be fun.

But what is it? Most, most, and I'm just taking a moment here because most, most institutions that try to, you know, to combine for scale in a people business and in a culture business, a business that's as long and establish as people with our growth rates. Not like we're not growing. We'll find out that those lead to dis-economies of scale, not economy of scale. I'll leave you with that thought.

Thanks, Ron.

No, that, well, I mean, we appreciate everyone. I really often, I want to compliment all of our analysts. I like thought-provoking questions. I like questions that I want people to be comfortable asking. I want you also to be comfortable in my answers if you ask the questions, but I really do appreciate the fact that our AOLs community takes the time to think about things that are outside design. And to our shareholders, what I would say is that our business model of people really can put almost in three buckets. First and foremost, we want to serve our clients and we want to put all our resources to providing the best products, services, and advice that we can on the table.

The benefit of serving our clients well falls into two buckets. One that our associates and partners can do well, and second is that our shareholders, not second, but equally our shareholders do well. And that's how we manage the place. So we do not manage it to maximize employees at the expense of shareholders. And frankly, we're not going to maximize shareholders at the expense of employees. Both of those are not good long-term ways to run a human capital financial services firm. But with that, I look forward to reporting in the fourth quarter, and thank you for your time.