Stifel Financial Corp. (NYSE:SF) Q4 2022 Earnings Call Transcript

Ronald Kruszewski: Look, I think the strategy is to remain what we’ve been doing, okay? I get a lot of questions. I think it’s a great question about locking in rates. That always gets me nervous just to tell you that, that’s embedded in that is an interest rate bet. And we €“ the way we look at it is we’re kind of naturally hedged anyway though. If the rates do get cut, at some point, they will. I’m not sure, the market might be anticipating that sooner than what we think. I think the Fed will be a little bit longer in maintaining rates. It’s my personal view. But when it comes to saying that we’re going to remix the balance sheet to try to predict the future yield curve, no, we’re not thinking that way. If rates do get cut, that will compress NIM naturally, not as much as you would think.

The deposit betas are near 100 on the way down. And so we would see that. But the other thing that happens is that in that kind of environment, cash goes up. Our cash balances go up and our short-term cash available goes up. So what we think is, even though we might get some NIM compression, we’ll increase NII. So that’s how we think about it. A bet of locking in rates, I’ve listened to that over decades, and sometimes it works and sometimes it doesn’t.

James Marischen: Maybe one other thing to add there, too, is if we did see some stability in rates and even a declining rate environment, that could also be a catalyst for our Institutional group. Obviously, the rapid rise in rates over the last year has not been helpful for origination activity, and I think that activity in general.

Ronald Kruszewski: More activity in the depositories.

James Marischen: Yes. So that could help as well.

Michael Anagnostakis: Great. Thanks, again.

Operator: Thank you. And that does conclude the question-and-answer session. I’ll now hand it back over to you.

Ronald Kruszewski: Well, that was very productive, very good question. I appreciate that thoughtful. We want to thank everyone for listening. We feel we had a very successful 2022. We look forward to continuing to build this franchise in 2023 and the years beyond and look forward to reporting to our shareholders after our first quarter. So have a great day, and thank you.

Operator: Thank you. That does conclude today’s conference. We thank you for your participation. Have an excellent day.