Ron Kruszewski: Well, we have — first of all, we’ve been repositioning the balance sheet. All right as we have adapted to a new environment where deposits aren’t just free flowing all over the place and trying to keep an eye on various sectors and credit considerations of loans, you’ll see as Jim mentioned, we sold nearly $0.75 billion in syndicated, broadly syndicated loans which were really put on almost just a spread lending type strategy and where we intend to deploy that much more focus to more of a relationship type relationship, deposits, other opportunities that we can provide for the firm. And with all that said, we really haven’t had a diminishing loan demand. We’ve just muted it. So I see today this is a good time to be in the lending business.
And that is what — that’s just I would say relative to before and we see now and as it relates to stock repurchases and the interplay on that, we’ll grow from relatively flat to $2 billion. If we’re up $2 billion that’s call it $200 million of capital, plus our dividend, leaves ample room for additional share repurchases ample.
Jim Marischen: The other thing I’d add to that is the additional liquidity we have available today to fund some of that loan growth. You’ll see we have over $2 billion in third-party sweep banks. And on top of that, we added another $336 million in venture deposits. And so, Ron made the comment, the capacity and our ability to generate loans and the investments we’ve made across Fund and Venture and our continued ability to service our clients with securities-based lending and mortgage is fairly significant. And now there’s a little bit more liquidity supporting that growth as we look forward.
Alex Blostein: Got it. Very helpful. Thank you, guys.
Jim Marischen: Thanks, Alex.
Operator: We will take our next question from Bill Katz with TD Cowen.
Bill Katz: Okay. Thank you, very much. So appreciate the financial guidance and it looks like there’s a margin opportunity as we look ahead into ’24 and probably getting into ’25. Just looking through some of the supplement disclosure you have which is terrific. So thank you for that. And looking at the incremental margin in the Institutional Group, if I did the math correctly, it looks like it was about a 55% incremental margin in the fourth quarter. And just as you look out into ’24 and again into ’25 into the sort of aspirational sort of normalization of $8, how should we be thinking about the incremental margin maybe for Stifel overall and then specifically to the institutional group along that path?
Ron Kruszewski: Yes. I think that our margins will improve obviously as — you almost start with the Institutional side of the business, we as you can see, we essentially broke even on revenues of about $1.3 billion. And contrast that with 2021 which we may always look back at saying that was a really phenomenal year. But that said, it was a $2.2 billion and profitability of $400 million plus. So, with you can almost draw a line between the $1.3 billion and $2.2 billion and see the leverage in earnings that we would expect. And that will drive our margins best laid plans Of Mice and Men. But if we but if the markets cooperate, we’ll see margins that can get back into the mid-20%s, as we see our growth in wealth management continuing.
The offset being that we offset a lot of the weakness in the Institutional business by growing NII to up to almost $1.2 billion. As you can see in our guidance, we would expect some modest declines in net interest income being more than offset by the potential that you’re referring to in our Institutional business.
Jim Marischen: And maybe more a little bit more color on the consolidated level. If you back off the legal accruals from the third quarter year-to-date we’re little over 19% pretax margins today. And that’s including the fact that we were essentially breakeven on the Institutional side in 2023. So you think about back to previous side, Ron talked about 2021 kind of the mid-20% range. We have a higher starting point today given some of the base the NII that Ron had talked about. So you have the potential for incremental margin as the market recovers and normalizes. And if you already catch kind of a good market if you will it could go higher from what we saw in the previous cycle.
Bill Katz: Okay. That’s helpful. And just as a follow-up, not to get too far in the weeds, but I was wondering if you could expand a little bit on the legal charge in the quarter? And maybe Ron, to zoom out you have a pretty good view of this, how you sort of see the regulatory landscape in 2024 obviously with a lot of moving parts including election year, but anything to be mindful of in terms of the outlook here?
Ron Kruszewski: Yeah. I’ll let Jim talk about legal. And then I’ll answer your question.
Jim Marischen: Yeah. The legal charges we were talking about, the accrual was in the third quarter. There was a $67 million accrual that was booked last quarter. It was not something that occurred in the fourth quarter.
Ron Kruszewski: Yeah. What I said in my prepared remarks was, we the fourth quarter had I think a 27% increase if we sort of excluded that legal charge. I was just trying to point we had a pretty good quarter. And we’re seeing that now or just that was to illustrate that. The regulatory environment, I’m not sure that really is changing. I feel that as a, maybe as a headwind for the industry the level of regulatory resolutions seems to be markedly higher than what it’s been in the past. But we’ll see as this plays out hard to predict that. But certainly the off-channel communications was a significant factor for not only Stifel, but frankly everyone that’s been dealing with that.
