Stifel Financial Corp. Q1 FY2026 earnings call

In the first quarter, net revenues of $1.48 billion were up 18% from a year ago. Excluding non-recurring gains, core revenue grew 15%. Earnings per share were $1.48 on a gap basis and $1.45 on a non-gap basis. Annualized return on tangible equity was nearly 25%. Global Wealth Management delivered record first quarter net revenue. Our firm-wide pre-tax margin was more than 22%. Across Stifel, seeing real benefit from AI investments, but concerned about cyber security with frontier models like Mythos. Steeple's lending philosophy not built around chasing yield. On stablecoins, will offer but if paying yield is like a deposit. On tokenized equities, will build capability but regulatory framework should follow underlying asset.

Global Wealth Management generated $932 million in net revenue, the strongest first quarter in history, driven by record asset management revenue and growth in net interest income. Ended the quarter with total client assets of $539 billion and fee-based assets of $220 billion. Net interest income came into the lower end of guidance due to slower loan growth. For the second quarter, expects net interest income in the range of $280 to $290 million. Our institutional group posted its strongest first quarter in history. Revenue was $495 million, up 29% year over year, driven by record first quarter investment banking. Investment banking revenue totaled $341 million, up 44% year over year. Advisory revenues increased 59% to $218 million. Equity capital raising was $67 million. Fixed income underwriting of $50 million was up 9% year over year. Institutional pre-tax margins improved nearly 1,300 basis points year over year.

Expect 2026 to be a good year. Second quarter net interest income expected in the range of $280 to $290 million. Maintain full year guide of up to $4 billion in asset growth.

Escalating geopolitical risk, energy prices rise, credit spreads widen, interest rate uncertainty increases. Frontier AI models pose cyber security risks. Private credit vehicles have liquidity issues. Concerns about software loan credit but exposure not material. Uncertainty around regulation of stablecoins and tokenized equities.

Q: Devin Ryan with Citizens Bank asked about AI impact on advisors and cash sweep.

A: Ron said AI helps advisor productivity as a tailwind to advice, not a headwind. Jim said of the $60 billion AUM in short-term cash, $12 billion is in advisory cash accounts, and Stifel has diversified and not overly concerned about cash sweep impact.

Q: Mike Brown with UBS asked about recruitment and IPO window.

A: Ron said competitive environment has some changes but strategy remains disciplined, and IPO window has delays due to volatility but is a healthy market.

Q: Steven Chuback with Wolf Research asked about AI impact on sweep cash and pricing model.

A: Ron said business model will adjust, Stifel has no account or inactive account fees currently.

Q: Brandon Hawkin with BMO Capital Markets asked about NII.

A: Jim said non-bank NII was down $3 million in the quarter, and second quarter NII guide is driven by asset growth in the bank.

Q: Alex Blasting with Goldman Sachs asked about bank growth and repurchase.

A: Jim said deposit growth is strong, and Stifel has excess capital and capacity for share repurchases.

Q: Bill Katz with TD Cowen asked about April client engagement and activity pacing.

A: Ron said client engagement remains strong, and April has seasonal outflows due to taxes.