Brennan Hawken: Yes. That’s more in line with trend. Great. Thanks very much.
Operator: We will take our next question from Alex Blostein with Goldman Sachs.
Alexander Blostein: Hey guys, good morning. Just a question around your comments as far as loan growth demand goes. So it sounds like for the last couple of quarters, and we’ve seen that you guys have been sort of reluctant to extend the balance sheet a little bit. Now it seems like you want to lean in a little more. Can you just characterize a little bit on your comments around the sort of the high-quality demand that you referred to which buckets is that likely to drive growth? And then around the same topic, the bank – the fund banking loan, I know has been an area of focus, but that’s been down. So what’s kind of been driving the decline? And how do you guys expect to sort of bridge the gap to loan growth? Thanks.
Ronald Kruszewski: Yes. I’ll let Jim give a little detail. But from my perspective, we’ve had and continue to have strong loan demand, primarily in our consumer type areas. And yet what we said that we were going to do was remix our balance sheet a little bit. So you’re – while you see some loan growth, we’ve been not running our balance sheet as much. We have sold some broadly syndicated loans. We don’t renew deals that were necessarily just part of a group. We want to be lending more holistically and achieving more fee income, not just net interest income from our relationship. So you’ve seen a sort of remixing of that. I think that we’re getting – we’ve seen a lot of that, and maybe we’ll see now just net loan growth, which has been going on. It just won’t be offset as much by the fact that we just frankly, haven’t renewed some loans, I would say.
James Marischen: I think it’s fair. Obviously, we’ve made a number of investments across both fund banking and our venture banking efforts. And those are still bearing fruit. On the fund banking side, we have been transitioning more to lending on a bilateral basis, as Ron had mentioned, basically allowing us more opportunities for other fee income or other deposits. And that’s been a driver of more of the short-term changes you’ve seen there. And I think as we go forward, we see a fair amount of capacity from both the fund and venture banking teams.
Alexander Blostein: I got you. Thanks. And on the face side of things, there’s been maybe a little bit more chatter around rising competition for recruiting and the pay packages. And I know that’s always part of the framework, and it’s always competitive. But have you noticed any directional changes just the degree of competition and economics that are provided in the channel? And as you thought think about Stifel’s net new asset contribution, can you help us characterize the mix between recruits versus same-store sales? Thanks.
James Marischen: Obviously, we’ve not broken out a mix between recruits and same-store sales. I think it’s one of those things where at what point do you consider someone no longer being recruited? Is it after six months? Nine months? Or 12 months? Where do you break it and where do you look at that? Obviously, we think we are holding our own in terms of net new assets, particularly when you look at your total assets and your total fee-based assets and the way those percentages changed period-over-period, both sequentially and year-over-year, others are reporting higher net new asset numbers but total assets that are managed, which drive fees generally are moving in very competitive directions with peers there.
Ronald Kruszewski: Yes. And look, I always look at I’ve commented before that I don’t want to say the obsession, but a lot of the net new asset metrics, I can’t always draw a line between that and revenue growth and profitability. I’ll stick by our growth, like I said, almost in our view, to double our assets under administration to $1 trillion, and our historical growth and our historical improvement in productivity by person are the metrics that I really look at, and I feel very good about those.
Alexander Blostein: Got it. And just a cleanup for Jim on the back of Brennan’s question as well. The $1.3 billion that moved to sweep. What’s the revenue yield on that? And just where does that show up because I don’t think it’s in your wealth business?
James Marischen: Well, it shows up within Global Wealth Management because it’s going to show up in the asset management line. It was de minimis for the quarter. The fee capture rate on that is significantly lower than what we get on third-party sweeps. Just given the inherent interest rate on those deposits relative to the sweep. So you’re talking something around 10 basis points or so because it’s basically an amount you’re taking off the top of the yield. And there’s a lot less room there to do that on venture deposits relative to sweep deposits. That’s relatively de minimis. It’s in fee income.
Alexander Blostein: Yes. Got it. Okay. But the point being is like you can move it back to the bank whenever you want if there’s loan growth, you could use the fund loan growth?
James Marischen: Correct.
Alexander Blostein: Got it. Okay.
James Marischen: Correct. We just wanted to make sure people understood that’s an additional $1.3 billion not shown on Page 9 of the supplement to fund loan growth as we go forward.
Ronald Kruszewski: I have a feeling next quarter. It’s not going to be in that foot, okay? On the number of questions for Jim.
Alexander Blostein: All right. Thanks, guys.
Operator: We will take our next question from Chris Allen with Citi.
Ronald Kruszewski: Hey, Chris.
Christopher Allen: Hey. Good morning, everyone. Maybe just a quick one on Global Wealth Management brokerage revenues, obviously, a nice quarter, both commissions and principal transactions. Maybe just some color just on the commission, what was driven by mutual fund trails kind of what’s the outlook and principal transaction is more appetite for credit or rate-related products there?
