Good morning, and welcome to Raymond James Financial's fourth quarter fiscal 2022 earnings call. This call is being recorded and will be available for replay on the company's investor relations website. Now, I will turn it over to one,[uncertain] and thank you for joining us. We appreciate your time and interest in Raymond James Financial. With us on the call today are Paul Reilly, Chair and Chief Executive Officer, and Paul Shoukry, Chief Financial Officer. The presentation being reviewed this morning is available on Raymond James investor relations website. On to slide two. Please note certain statements made during this call may constitute forward-looking statements. These statements include, but are not limited to, information concerning future strategic objectives, business prospects, financial results, anticipated benefits of our acquisitions, our level of success in integrating acquired businesses, divestitures, anticipated results of litigation and regulatory developments, impacts of the COVID-19 pandemic, or general economic conditions. In addition, words such as may, will, should, could, plans, intends, anticipates, expects, believes, estimates, or continue, or negative of such terms or other comparable terminology, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Please note there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We urge you to consider the risks described in our most recent Form 10-K on our website. During today's call, we will use certain non-GAAP financial measures to provide information pertinent to our management's view of ongoing business performance. A reconciliation of these non-GAAP measures to the most comparable GAAP measures may be found in the schedule. CEO Paul Reilly. Paul. Good morning, and thank you for joining us today. Before I discuss our fourth quarter and fiscal year earnings, I want to start by acknowledging the heartbreaking devastation our friends and neighbors, as well as over 200 associates on Florida's Central Gulf Coast, bear witness to their pain and loss. I also have been humbled by the resilience of our associates, advisors, and the community there. Fortunately, our Raymond James family impacted by the storm is safe. Just as notable, I can't adequately express my gratitude. Worked diligently from remote locations to continue delivering our service-first promise. Additionally, our associates at our corporate locations in Memphis and Southfield and Denver rose to the occasion, covering for their coworkers and pitching in where they could and working to open to provide a comfortable and clean place to go. When the home office reopened, the camaraderie was obvious and uplifting. We provided emotional and mental health resources to associates, delivered a $500 relief check to all associates in impacted counties, collected 2 semi-trucks of supplies which were sent to our Fort Myers branch system to be distributed by advisors and associates in their areas. We've heard several heartwarming stories from recipients of these essential supplies, which in itself shows how the collective efforts and generous response by raising more than $1 million from corporate, executive leadership, and associate donations to assist the recovery and support of those in need through the Red Cross and our Friends of Raymond James, who directly help associates with needed emergency funds for repairs and recovery. Our response to the storm reflected the long history of Raymond James service culture, and I'm especially proud to represent our team today. Now moving to our results. I'm very pleased with the results for the fourth quarter and fiscal year, especially given the challenging market conditions. Despite the significant decline in equity markets during the year, we still generated record net revenues and record pre-tax income for the fourth quarter and fiscal year. Throughout the fiscal year, we remained focused on the long term and continued to invest in our businesses, our people, and our technology to help drive growth across our businesses. In the PCG with domestic net new assets of 9% over the fiscal year. Furthermore, the Charles Stanley acquisition completed earlier in the year significantly expanded our presence in the U.K., which is a very attractive market for wealth management. In Capital Markets, also achieved in fiscal 2021. Record M&A revenues helped offset the very challenging underwriting environment. We continue to see strong pipelines for M&A as the expertise we've added both organically and through niche acquisitions has been performing extremely well. Our fixed income platform with technology-driven capabilities and a fantastic team with extensive experience dealing with corporates. This business thrives on rate volatility, so SumRidge generated really fantastic results since we closed on the acquisition in July. However, after a record year last year, our legacy fixed income operations serving depositories has been challenged as the Fed intensifies its monetary tightening initiatives. In the bank segment, loans grew 73% year-over-year and 3% during the quarter, reflecting attractive growth across nearly all loan categories. Third-party securities-based lending capability while also diversifying our funding sources. It is in uncertain conditions such as these that remind us of the importance of focusing on and making decisions for the long term. As evidenced this quarter with the sharp increase in short-term interest rates with diverse and ample funding sources, strong loan growth, high concentration of floating rate assets, and ample balance sheet flexibility given solid capital ratios which are well in excess of regulatory requirements. Our long-term approach has really resonated in more volatile and uncertain market environment we've experienced since the onset of the COVID-19 pandemic. In the fiscal fourth quarter, the firm reported record net revenues of $2.83 billion, record pre-tax income $37 million, or earnings per diluted share of $1.98. Net income was negatively impacted by the elevated tax rates this quarter, due primarily to nondeductible losses on corporate-owned life insurance that we utilize to fund non-additions. Quarterly adjusted net income available to common shareholders was $459 million, or $2.08 per diluted share. Year-over-year and sequential revenue growth was driven primarily by the benefit of higher short-term interest rates offset declines in asset management and related administrative fees, and total brokerage revenue, largely due to declines in equity markets. Quarterly net income available to common shareholders increased 2% compared to the prior year's fiscal fourth quarter, reflecting higher tax rates. Sequentially, quarterly net income grew 46%, driven primarily by the benefit from higher short-term interest rates to the net interest income and RJBDP fees from third-party banks, along with lower bank loan provision for credit losses on loans arising from the acquisition of TriState Capital Holdings. Annualized return on common equity for the quarter was 18.7%. An adjusted annualized return on tangible common equity was 24.1%. An impressive result. Let's see the slide 5. We entered the quarter with total client assets under administration of $1.09 trillion, PCG assets in fee-based accounts of $586 billion, and financial assets under management of $174 billion. Equity market declines in the quarter, including a 5% sequential decline in the S&P 500 index, negatively impacted client asset levels. We ended the quarter with 8,681 financial advisors in PCG, a net increase of 199 over the prior year period, and 65 over the preceding quarter by transition of advisors to our RIA & Custody Services division, where we typically retain the assets, but we don't include the advisor in our counts. In the fiscal year, we had 222 financial advisors move to RCS, 166 of which came from one firm. Adjusting for these transfers, the numbers of financial advisors increased 421 year-over-year. A really strong result. Our focus on supporting advisors and their clients, especially during uncertain and volatile markets, led us to strong results in terms of advisor retention. Over the trailing twelve-month period ending September 30, 2022, we recruited to our domestic independent contractor and employee channels, financial advisors with nearly $320 million of trailing twelve production and approximately $43 billion of client assets at their previous firms. Highlighting our industry-leading growth, we generated domestic PCG net new assets of nearly $95 billion over the fiscal year ending September 30, 2022, representing 9% of domestic client assets at the beginning of the period. Fourth quarter domestic PCG net new assets growth was 8.3% annualized. Total client domestic cash sweep balances declined 12% to $67.1 billion or 7% of domestic PCG assets under administration. Paul Shoukry will discuss this more later, but I'd like to highlight that these are lower cost deposits as we have not yet utilized high yield savings accounts to preserve balances. Total bank loans grew 3% sequentially to a record $43.2 billion, reflecting attractive broad-based growth at both Raymond James Bank and TriState Capital Bank. Moving to slide 6, the Private Client Group generated record was $871 million. While asset-based revenues declined, the segment's results were lifted by the benefit from both higher short-term interest rates. The Capital Markets segment generated quarterly net revenues to $399 million and pre-tax income of 60 million, mostly driven by lower investment banking revenues and fixed income brokerage revenues, largely due to the volatile and uncertain markets. The asset management segment generated net revenues of $216 million and pre-tax income of $83 million. As net inflows into fee-based accounts in the Private Client Group were offset by fixed income and equity market declines. The bank segment, which includes Raymond James Bank and TriState Capital Bank, generated quarterly net revenue of $428 million, which is a record result, and pre-tax income of $123 million. Net revenue growth was mainly due to higher loan balances and significant expansion of the bank's net interest margin to 2.91% for the quarter, up 50 basis points from the preceding quarter. Once again, reflecting the flexibility and floating rate nature which have continued to be solid. Looking at the full year fiscal 2022 results on slide 7, we generated record net revenues of $11 billion and record pre-tax income of $2 billion, both up 13% over fiscal 2021. Additionally, we generated strong annualized return on common equity of 17% and annualized adjusted return on tangible common equity of 21.1%. Moving to the fiscal year segment results on slide 8. Private Client Group, Asset Management, and Bank segments generated record net revenues, and the Private Client Group produced record pre-tax income during the fiscal year. Again, reinforcing the value of our diverse and complementary businesses. Now for more detail review of the fiscal fourth quarter results, I'm gonna turn the call over to Paul Shoukry. Paul? Revenues of $2.83 billion grew 5% year-over-year and 4% sequentially. Asset management fees declined 6% compared to the prior year's fiscal fourth quarter and 10% compared to the preceding quarter. In line with the guidance we provided on last quarter's call based on fee-based assets. Equity markets declined further during the quarter, resulting in a 3% sequential decline in Private Client Group assets and fee-based accounts. This decline will create a headwind for asset management and related administrative fees in the fiscal first quarter, which I expect to be down. Brokerage revenues of $481 million declined 11% compared to the prior year's fiscal fourth quarter and 6% compared to the preceding quarter. As lower activity and asset-based trail revenues in PCG, as well as decrease in revenues in the quarter. As Paul touched on, we expect this to be a tough environment for our legacy fixed income business, as depository clients have quickly transitioned from having excess deposits to investment securities to experiencing deposit runoff as a result of the Fed's. Investment banking revenues of $217 million declined 3% compared to the preceding quarter, a solid result given the challenging and uncertain market environment. While our pipelines are strong, there remains a lot of uncertainty given the heightened market volatility. Therefore, our best guess right now is that we could achieve a similar level of average quarterly investment banking revenues in fiscal 2023 that we experienced over the last two quarters. Obviously, a lot of variables can and probably will end fiscal 2023. That would still represent a much higher level of investment banking revenues than we generated prior to the pandemic, as we have made significant investments to the platform over the past few years, which has significantly increased our productive capacity and market share. Revenues were up 28% sequentially, primarily due to higher affordable housing investment banking revenues, which achieved record results in fiscal 2022. Moving to slide 11. Clients' domestic cash sweep balances ended the quarter at $71 billion, representing 7% of domestic PCG client assets. As of this week, these balances have declined to just under $64 billion, reflecting the quarterly fee payments, which were paid in October, as well as additional cash sorting activity during the month. These cash sweep balances do not include high-yield savings balances nor do comparisons across the industry. Most of the decline in our sweep balances were experienced in anticipation of the excess deposits over the past couple of years. As we have been explaining for at least a year now, we anticipated a significant decline in these cash balances as the Fed started increasing short-term interest rates. We kept the CIP balances invested in the Raymond James Bank deposit sweep program continues to be a relatively low-cost source of stable funding. Now with the addition of TriState Capital Bank's independent deposit franchise, we have a more diversified funding base. While this additional funding source may not have been as important, the importance of having multiple funding sources. Turning to slide 12. Combined net interest income and RJBDP fees from third-party banks was $606 million, up 200% from the preceding quarter. This strong growth reflects the immediate impact from higher short-term rates, given the limited duration and high concentration of floating rate assets on our balance sheet. While it can sometimes seem appropriate to take more duration and bet on rates, our long-standing approach to maintain a high concentration of floating rate assets is proving to be a significant tailwind in this rising rate environment. You can see on the bottom portion of the slide, the bank segment's net interest margin increases substantially 50 basis points sequentially to 2.91% for the quarter. The average yield on RJBDP balances with third-party banks increased nearly 100 basis points to 1.85%. Both the NIM and average yield from third-party banks are expected to increase further. These projections will obviously be impacted by the actual deposit beta we experience. As we have done this cycle, we will continue to put clients first and focus on staying on the more generous end of the spectrum for our clients. Around 25%, with the most recent increase in September having a deposit beta of about 35%. Less than the 50% we expected, but still much more generous to clients than the vast majority of our competitors. Moving to consolidated. The total compensation ratio for the quarter was 62.1%, which has decreased from 67.5% in the preceding quarter. The adjusted compensation ratio was 61.5% during the quarter. This higher net interest income and RJBDP fees from third-party banks. Non-compensation expenses of $456 million, which includes $13 million of acquisition-related expenses included in our non-GAAP earnings adjustments, decreased 3% for both TriState Capital and SumRidge Partners, which sequentially added just over $25 million of incremental non-compensation expenses, excluding the bank loan loss provision for credit losses. The bank loan loss provision for credit losses decreased to $34 million, primarily due to the $26 million initial provision associated with the TriState Capital acquisition in the fiscal third quarter. This quarter's bank loan provision primarily reflects sequential loan growth, along with a weaker macroeconomic outlook on the disciplined management of all compensation and non-compensation related expenses, while still investing heavily in growth and ensuring high service levels for advisors and their clients. Slide 14 shows the pre-tax margin trend over the margin of 21.8% and an adjusted pre-tax margin of 22.8%. Really excellent results. Just to get ahead of it, I know many of you will ask me if we will update our 19%-20% pre-tax margin target that we laid out at our Analyst and Investor Day in May, since we exceeded it this quarter. While that is certainly a reasonable ask, given the market uncertainty and ongoing cash sorting dynamic, we think it's appropriate to wait at least a few more months to update all of our targets. With that being said, I think our solid results this quarter highlight the interest rates and our consistent focus on being disciplined on expenses. On slide 15, at quarter end, total assets were $81 billion, a 6% sequential decrease, primarily reflecting the decline. Liquidity and capital remain very strong. RJF corporate cash at the parent ended the quarter at $1.9 billion, well above our $1.2 billion target. The Tier 1 leverage ratio of 10.3%, the regulatory requirements to be well capitalized. The spot Tier 1 leverage ratio at the end of the quarter is actually closer to 10.5%. Our capital levels continue to provide significant flexibility to continue being opportunistic and invest at 28.7%, up from 27.5% in the preceding quarter, primarily due to nondeductible losses on the corporate-owned life insurance portfolio. Going forward, we still believe around 24%-25% the effective tax rate increases as we experienced this quarter and last quarter, and vice versa when equity markets increase. Slide 16 provides a summary of our capital actions over the past five quarters. Since the closing of the TriState acquisition on June 1, through October 26, we have repurchased approximately 2.1 million common shares for $200 million or approximately $96 per share under our board authorization. As of October 26, 2022, approximately $800 million remained available under the board authorization. We remain committed to offset the share issuance associated with the acquisition of TriState, as well as the share-based compensation dilution. Therefore, we expect to repurchase, on average, $250 million per quarter in fiscal 2023, or $1 billion total for the fiscal year. Of course, we will continue to closely monitor market conditions and other capital and cash needs as we plan for these repurchases over the coming quarters. I do want to emphasize this $1 billion objective for fiscal 2023. Lastly, on slide 17, we provide key credit metrics for our bank segment, which now includes Raymond James Bank and TriState Capital Bank. The credit quality of the loan portfolio remains healthy, with most trends continuing to improve. Criticized loans as a% of total loans held. Loan allowance for credit losses percentage of total loans held for investment ended the quarter at 0.91%, down from 1.27% at September 2021 and nearly flat sequentially. The year largely reflects the higher proportion of securities-based loans boosted by the acquisition of TriState Capital Bank. Securities-based loans, which account for approximately 35% of net loans, are generally collateralized by marketable securities. If you look at the bank loan allowance for credit losses on corporate loans held for investment as a percentage of the total corporate loans, it was 1.73% at quarter end. Compared to most other banks, we believe this represents a healthy reserve, but we are continuing to closely monitor any impacts of inflation, supply chain constraints, and a potential recession on our corporate loan portfolio. Now I'll turn the call back over to Paul Reilly to discuss our outlook. Paul? Thank you, Paul. As I stated at the start of our call, I'm pleased with our results. While there are many uncertainties, I believe we're well. Results will be negatively impacted by the expected 4% sequential decline of asset management fees and related administrative fees that Paul described earlier. Focusing more on the long term, I'm optimistic we'll continue delivering industry-leading growth as current and acquisitions. Additionally, the segment will also continue to benefit from higher short-term interest rates, although we expect cash sorting will continue as the Fed increases short-term interest rates. In the Capital Markets segment, the M&A pipeline remains strong. I am confident we are well-positioned for growth given the significant investments we've made over the past five years. In the fixed income space, the favorable environment we've experienced over the past couple of years has shifted. Depository clients once flush with cash, less cash available for investing in securities. This dynamic will lead to a challenging environment in fiscal 2023. While this headwind exists, we expect SumRidge Partners to enhance our current position in the rapidly evolving fixed income and trading technology market. In the Asset Management segment, the financial assets under management are starting the fiscal year lower due to the decline in equity and fixed income markets. However, we are confident that strong growth of assets and fee-based accounts from the Private Client Group segment will drive long-term growth of financial ally Carillon Tower Advisers to help drive further growth through increased scale, distribution, operational, and marketing synergies. The bank segment is well positioned for rising short-term interest rates, and we have ample funding and capital to grow the balance sheet prudently and its relationships with its clients, which coupled with our strong capital and funding, should foster its ongoing growth. Most importantly, the credit quality of the bank's loan portfolio remains strong. As always, I want to thank all of our advisors and associates. Just as you've observed over the past two years, which have been filled with tremendous uncertainty and challenges, we will stay rooted in our commitment to take care of advisors and clients, making decisions for the long term and maintain a strong and flexible balance sheet. We will drive results for our associates, advisors, and shareholders, just as we have for the past 60 years. With that, operator, will you please open the line for questions? Thank you very much. If you would like to register a request. If your question has been answered, to withdraw your registration, press one followed by the three. One moment, please, for our first question. I'll proceed with our first question on the line from Manan Gosalia with Morgan Stanley. Go right ahead. Hi, good morning. Good morning, Manan. I was wondering. Good morning. Hey, I was wondering, can you talk about what your assumptions are for deposit betas in your NIM guidance for next quarter? Because it looks like, you know, even with a 75 basis point increase in the Fed funds rate in November and a significantly higher average Fed funds rate next quarter versus the prior quarter, I think you guided your NIM rising only 25 basis points or so. I guess the question is, you know, what are you baking in for deposit betas? And is there some element of conservatism embedded in there? You know, as you know, Manan, we do like to, you know, provide conservative guidance, and that 3.15%, admittedly is somewhat conservative. It's always factoring end of November tends to lead those type of increases as we saw last quarter. You know, we had 50 basis points sequential increase two quarters ago in the NIM. 40 basis points this quarter, and we're guiding 25 basis points, but certainly could be higher than that going forward. You know, we were expecting deposit beta to, as rates kind of continued to increase, to get closer to 50%. On the last incremental increase for us it was 35%, and cumulatively it was 25%. We've been really leading most of the industry, focusing on clients and sharing and being generous with clients, as the rates have increased. Where when you look at competitors, we're certainly well ahead of most of our competitors on the sweep rates. Got it. On third-party bank deposits, we saw through this earnings season that many banks were relying more on wholesale funding. I guess the question is, what are you seeing in terms of demand from third-party banks? Where should we expect that third-party bank fee rate to go if the Fed stabilizes at 4.5%? Is there a possibility that you're able to earn a higher spread on those deposits as you renegotiate your contracts next year than the typical? I think absolutely. You know, the demand's way up. You know, as you pointed out, if you look at almost all of our competitors, if you really looked at just what's happened to cash sweeps, we're all in the same ballpark. It's just most of the other firms have gone into high yield savings to supplement their cash or to money market sweeps. We haven't done that. We may, but to date, we feel like we have ample low-cost funding with our sweeps. We do see the demand going up, which will impact rates. Paul, I'll let you address the rate dynamics. Yeah, I mean, at the trough in the last year or so, the demand from third-party banks was obviously 20 basis points or so from the peak spreads, you know, a couple years prior. We're quickly seeing that demand resume. That's the first step. Now we're starting to see prices and the economics improve on the spread. Again, you know, peak spread two years ago, you know, pales in comparison to the base rate improvement that we get from the Federal Reserve on those balances. Net net, a significant tailwind though on those balances. It sounds like in terms of the fee rate, you could be at the. If you compare the end of this rate hike cycle, should we expect a fee rate above the two percentage points that you saw last cycle? Yeah. I I mean, we're already guiding just for this upcoming quarter to 2.5% as an example. As an example. Correct. Yep. All right. Perfect. Thank you. Thank you very much. We'll proceed with our next question on the line from Gerald O'Hara with Jefferies. Go right ahead. Great. Thanks. Perhaps just a little bit of context or color on the advisor recruiting market. I know it's obviously been another kind of challenging quarter from a volatility standpoint. Would just love to get a little bit of color as to what you're seeing industry-wide in terms of you know those dynamics. I think I've been now, what, over a dozen years in this job, and everybody always asks me the recruiting, you know, market seems to be getting more competitive. My response is it's kind of always been competitive. You know, even in 2009, we thought recruiting our best year would go off because of the great dislocation, but it actually resulted in our best couple of years until the recent few years. It's still very active. It's very competitive. You know, it continues to be such. As you can see with our kind of 400 advisors added this year if you adjust for, you know, the RIA channel, the people that moved our advisor count. We've had another very, very strong year. You know, really the largest teams we've ever recruited continue to come in. The average is going up also. Not just market, but just the attraction of our platform for high net worth and all throughout our history. We're still a big part of our strategy. We think it'll still be strong. Backlog is strong. You know, don't probably won't last forever, but looks pretty good in the short to midterm. Fair enough. You know, we obviously saw an increase from 2Q to 3Q on the non-comp side of expenses. That actually came off a little bit in 4Q. Can you perhaps maybe help us think a little bit about how that you know, kind of run rate might look going into the next couple quarters? Yeah, Jerry O'Hara. Most of the sequential increase was really attributable to having a full quarter of results for both TriState Capital and Sumridge, which sequentially added about $25 million of non-compensation expenses. That was the primary driver of the sequential increase which we expected. Looking forward, you know, I think if you look at this quarter as a baseline, and I think there's around $410 million of non-compensation expenses when you adjust out for the loan loss provision and for some of the acquisition related expenses that we break out in our non-GAAP schedule. Looking forward, I would say $1.7 billion in fiscal 2023, which off the $410 million base represents somewhere around 1.5% growth sequentially each quarter in 2023. Most of that growth will really be coming from our technology investments. We're still heavily invest across the firm, so that's gonna continue to be a significant focus for us going forward. You're gonna see kind of on a year-over-year basis growth in business development expenses as the first half of fiscal 2022, travel and conferences obviously were still suppressed by the COVID pandemic. You'll see- Great. Thanks for taking my question this morning. Thank you very much. We'll get to our next question on the line from Alex Blostein with Goldman Sachs. Go right ahead. Hey, guys. Good morning. Thanks for the question. Maybe first just focusing on some of the bank dynamics. I guess if we look at the last cycle, bank NIM peaked at around 3.5%. You know, not to pinpoint you to any specific quarter, but I guess when you zoom out a little bit and taking your conservative posture on the deposit betas, but it doesn't sound like they're going up about 50%. If you think about TriState now in the mix, that's more loan-yielding and the absolute level of rates is higher. Should we be thinking closer to 4% bank NIM once the Fed is done? Or how are you thinking about that sort of run rate, on the other end of that cycle? Yeah. There's a lot of moving parts. I would say one of the differences now versus in the last cycle is that our concentration of securities-based loans are higher. Now that has a typically has a lower NIM associated with actives, but typically a lower NIM through cycles relative to corporate loans. There's a lot of moving parts there. I think just like I shared with Manan on the BDP fees, I think this time around, I mean, rates are expected to be higher than they were last cycle, just the base rates. You know, given the loan mix has higher rates, a lot of different variables, but I don't think we can call 3.5% necessarily a ceiling. I don't think we're also ready to say that it could achieve 4% either. I think we need to kind of see where cash sorting and cost of deposit trends play out. Got it. All right. Fair enough. Just staying on the balance sheet theme for one more minute. You guys obviously had the right call on not extending duration, you know, a year or two ago and keeping the balance sheet fairly floating. But if you look at what's going on today, securities yields are quite attractive. And, you know, maybe there's a little bit more upside, but that's a fairly good return on invested capital, as you kind of look at what the market rates are today. What are your thoughts about building securities portfolio from here, maybe extending duration a little bit just to lock in what looks like pretty attractive rates of return? Yeah. We're not against the securities portfolio, but, you know, our first thing is to fund our growth in loans, and securities becomes the next part of it. We agree they're attractive. You know, after building the balance sheet, we're not ready to call that, you know, we've reached peak rates and we're gonna start locking in. I think at least in the near term, we're gonna be flexible as the Fed probably has a couple of rate hikes, and then we'll look at it. You know, as things settle down, we may balance them a little more. Our first funding is for growth, and then any excess funding, which we're certainly happy to put in securities, because you're right, they have a very good spread right now. Yeah. I think kind of looking forward, we really built up the securities portfolio in the last couple of years as there's very little third party bank demand, so we kind of brought it onto the balance sheet as an accommodation. Now it's up in securities to really run off over the next year to fund that loan growth that Paul talked about. Some of that loan growth has duration as well. I mean, you saw the mortgage portfolio grew sequentially during the quarter pretty nicely. There's duration obviously associated with that portfolio that gives us that same type of protection. To the extent that we take duration, our preference has been to take it to support client relationships. To the extent that we have excess kind of cash beyond the loan growth, then we would certainly invest in securities because it is a good return. As is the cash we sweep off the third party banks as well. Right now we have a lot of different options, and that's just the power of the flexibility that we have with the cash balances and the flexibility that we preserve, frankly, through the last couple of years. Got it. All right. Thanks. I won't ask the pre-tax margin question. Just a reminder, there was a plus at the guidance next to 20% when you guys gave it last time. I just wanted to make sure that it's still there. Yes, it was over 20. Yeah. Told you so. Question on the line from Steven Chubak, Wolfe Research. Go right ahead. Hi, good morning. Hey, Steve. Hey, Steve. I wanted to start with a question on FIC. You alluded, Paul, to some of the headwinds to the business. It's been run rate the last couple of quarters at about $100 million. This most recent quarter you noted included some SumRidge Partners contribution as well. As the Fed continues to remove excess liquidity from the system, do you anticipate further pressure on this $100 million baseline, or is that a fair run rate that we can underwrite looking out to next year? You can see the dynamics are they have a great fixed income franchise, but really in that banking space, it's, you know, very strong. They're focused on the same dynamics the whole industry is. As cash tightens, they're gonna fund loans first and securities second, just like us. Yeah, that could have pressure. Now, there's other parts of the business that'll certainly have pressure on that run rate if it gets tighter. Again, on the other hand, they are just, you know, really killing it right now. But they're, you know, everything's in their favor, but everything's a headwind for that banking, you know, part of the franchise that we're so good at. It could come under more pressure also. Great. Just for my follow-up, maybe on the comp ratio. Certainly a nice positive surprise, especially relative to the guidance. I understand, Paul, or can appreciate your reluctance to update the 19%-20%+ margin target. But wanted to get a sense as to how we should think about your philosophy around comp, given so much of the revenue growth is gonna come from less compensable areas. You know, what's a reasonable expectation for where the comp rate should be running if rates stay higher for longer? Well, you know, where we have been, even with our advisors and associates, we paid them what we think is fairly on their production, and we haven't paid on interest. Now, interest went away. We didn't change their payouts and comp. Obviously, it affects management's comp. You know, our plan right now is generally, to the extent there's more interest spread and margin comp will go down. To the extent that normalizes or goes the other way, the ratio will go up. But there's no change fundamentally in how we're paying right now or like in any cycle, probably outsized, you know, for I don't know throughout how long that stays, year, two years, quarter, you know. But it will return. But our comp philosophy is the same. You should see improvement of spreads if interest spreads improve. Yeah. I think the one thing I would add is, you know, the compensation philosophy kind of from the outside of the sort of advisor force that Paul was talking about was to help to share the success of the firm with our associates. You know, we are in a high inflation environment. Whereas we're entering year-end, we are leaning into being generous to our associates and sharing in the success with our associates, just as we always do. Those year-end increases won't really be reflected until the second fiscal quarter, the first calendar quarter of the fiscal year, and that's when payroll taxes reset, of course. As Paul said, you know, the interest spreads have been a significant benefit to our compensation ratio down to this kind of 62% range. Okay. Anything on the admin cost side that we need to be mindful of? I do think the admin comp was running a little bit higher than we had anticipated, or at least based on what some of the napkin math would suggest when you try to back out some of the non-compensable portions of revenue. Yeah. I mean, that reflects the full quarter of results from both TriState Capital and Sumridge. I think this baseline going forward is a good baseline to start off with. Again, we will increase salaries across the board, and we're leaning into being generous with that, given the competitive labor environment, the inflationary pressures, and the success that we're having as a firm. We really wanna share that success with the associates who've made it all possible. We're also continuing to hire in all of our businesses to support and continue the great growth that we've had across our businesses. That would really be reflected throughout fiscal 2023. Helpful color. Thanks for taking my questions. Thank you very much. James there? Mr. Mitchell, your line is open for your question. Hello. Can you hear me? I can hear you now. Client cash, I should say. Can you remind us of the historical average for cash levels? You know, maybe a low and high range. Just trying to think through where that starts to bottom out. It's a pretty wide range. I think the peak of that range. Markets decreased substantially. I would say the trough was somewhere in that 5% range, maybe a little lower than 5%, in 2019. To your point, we're at 6%. I think the 25-year historical average is probably in the 7- Have to, you know, more aggressively defend cash balances and deposits to fund the balance sheet and Yeah. Absolutely. I mean, if they get low. Right now we've been fortunate and have managed it well. As you know, we've been focused on the flexible balance sheet. You know, you need cash to operate the business. It's another, so we just haven't implemented it, haven't felt like we need to. If we see cash getting to levels that concern us, we will do that. We also have TriState Capital, who is a very good source of funding. They've got a very strong net funding operation, which was one of the reasons for the acquisition, which I don't think few understood. You said, "Well, so much cash, why would you have it?" You know, I think it was a year ago we were talking about our concern about cash in the future. We've got alternatives now. Absolutely you need cash to run this business and you want to be able to service your client cash. At some point, you know, we look at our AdvisorChoice platform. They're still in the system. We just haven't kept them in a pure cash form. Great. Thanks. Thank you very much. We'll get to our next question. On the line is from Devin Ryan with JMP Securities. Go right ahead. Good. Most questions have been asked. Want to come back to the balance sheet a bit here and just think about your mix and maybe follow up on Alex's question. Just your deposits obviously becoming more scarce here. When you think about the mix moving forward, are there, you know, beyond you maybe thinking about the securities book. You know, are there other areas, maybe in the loan book or just more broadly, where there's room for optimization and maybe areas to drive the risk-adjusted NIM higher from here, you know, all else equal? Well, there probably always is. Yeah. I mean, you know, part of what we're doing is we're going through our budgeting broader bank business. You know, TriState is an independent business with its third party platforms. The question is, you know, between that and Raymond James Bank, where do you allocate capital in the portfolio really to optimize partly the balance sheet from our standpoint, but really to allow, you know, free allocations make sense both for those businesses and for us. There always is in the periods of rapid transition right now it's a little bit harder to do it, but we're in a lot of discussion on it. I would say just to reinforce that we really don't manage the balance sheet to really maximize NIM. You know, we do it to maximize risk-adjusted returns. You know, we believe that securities-based loans both at Raymond James and to our own clients and at TriState Capital to their independent clients is the best risk-adjusted return. So that is kind of the priority to the extent that the demand is. Then we look at the other loan categories. We like the mix that we have right now with 35% of our loans in securities-based loans. So that's kind of how we're thinking about it. Yeah. Okay. Thanks, Paul. A follow-up here. Just wanna talk a little bit about the investment banking house. You're gonna, you know, err on the side of conservatism just given the uncertainty in the market. Just wanna make sure I understand how you're thinking about it. You know, you have equity issuances is gonna be market centric, but market stabilize that probably would improve. Your M&A business is, you know, structurally larger. Feel like maybe could remain a bit under pressure if rates remain higher. Just trying to think about how much of, you know, maybe this more muted near-term outlook is just purely market centric versus, you know, maybe the flip side would be maybe every business doesn't snap back to where it was, you know, over the last year or two, because rates are higher. There's some other structural dynamic in the markets has changed. I just wanna kind of parse through both the cyclical versus anything that may be a little bit more prepared, for, you know, a continued period. I think if you look at, I'll go in reverse order in the fixed income business. I mean, the challenge for traditional fixed income business in a rising rate market is that business will do well. You know, people have been buying shorter term. As they start buying longer term, it's more profitable for us too. You gotta get rates to a point where people think rates are there to really start doing that. Certainly the increase in rates will help, but we're just at a pause really till that happens. I think that's more timing. M&A is a little harder. Backlog's good. Clients are good. You know, it's even now, right now it's up for us and it's up in Europe for the industry. You know, if you look at European dynamics with rates and inflation, everything, you go, "Well, how could that be?" I mean, there's still cash, there's still strategic investor continuing to grow it. We believe in it. That one's harder to predict. I mean, it's been stronger, I think, than most people have predicted. The backlog's still strong, but when people close or not or when that stops is just. That's a tough one. When you come off of the last peak forever, which it probably isn't. Again, we're still very, very high on that business. That one's kind of hard to say what triggers it to continue or what triggers it to slow down or stop for a while. Thank you. Proceed to our next question on the line with Kyle Voigt from KBW. Go right ahead. Hi, good morning. Just given the level of shortage right now and the pressure that may put on total available funding as you look out a couple years, I just completely understand the cautiousness. Just two follow-ups on that. What is the current duration of the AFS portfolio, and how much of that portfolio would run off per year if you didn't reinvest at all in the portfolio? Can you also remind us, are there specific minimums that you need to hold in terms of the CIP and the RJBDP? You know, I would say in the securities portfolio, the average duration is somewhere around four years, now with the securities portfolio. If you think about kind of a normal distribution, you might have somewhere around 20%-25% runoff a year. Probably back-end loaded a little bit. Again, we're gonna use a lot of that to fund the loan growth as current plans. There is a baseline for CIP of cash balances there. If you kind of look back at 2019, I think there's probably $2.5-$3 billion of cash there for a variety of reasons. Maybe that's kind of a good way to think about the floor there for those balances. Really with BDP, that's a function of providing clients FDIC insurance, trying to maximize their FDIC coverage as much as we possibly can given all the constraints and the demand from third-party banks. Is there, I guess, given their clients' allocation and that you only have, you know, a certain number of charters that you can provide FDIC insurance with yourself? Is there a certain amount of minimum there, I guess, on the third-party bank side? Is it a few $ billion that needs to be held there, or is it some number that's smaller than that? No, really, the way we think about the minimum on the BDP balances is essentially providing some level of funding buffer. But we don't wanna overextend the funding as we've seen in the industry. It's challenging when you overextend the funding to your own banks and you don't have a buffer there. One of the things that we're thinking through is what do we want that buffer to be now that some of you are aware of? We think that's much too conservative. We're kind of currently now that we've completed the acquisition of TriState Capital, understanding their balance sheet, we're currently in the midst of determining what the appropriate buffer is. We're gonna just, as we always do, err on the side of conservatism there as well. Understood. That's really helpful. I just have another if at all. I'm not sure. I think it was a 5% sequential increase. Again, that bounces around based on benefit accruals that we adjust for, particularly at the end of the fiscal year, making sure we're fully and other things. From natural growth and the changes to the accruals, et cetera. Okay. Understood. Thank you. Thank you very much. Help us here with our final question for today is on the line of Bill Katz with Credit Suisse. One for Bill. Thank you for taking my question. Most questions have been asked, but I did have one follow-up on the loan mix. Paul and Paul, are you seeing any shift in demand for the SBL? It looks like on an end-of-period basis they dipped a little bit. The resi was pretty resilient. I understand your long-term outlook is quite positive for the balance sheet. I think. Yeah. Some of that SBL dip was really payoff. A lot of people use that as gap funding. Part of the mortgage demand where people went from SBL to, you know, pay those off and as they mortgage it there for our clients. I think TriState is, you know, growing their market share with new relationships too, has a huge opportunity. I think SBLs over time are still even short term and longer term, still very, very positive. The question becomes is people are less likely to borrow. I still think that business is doing well. I think you saw a blip this quarter really on that. Great. Thanks. If I just had one more follow-up. As a percentage of AUA, you still gap closing over time? We've just never been as aggressive in pushing debt, you know, through our organization. I mean, you know, so our product SBL is even a relatively new product for us compared to our competitors. Hire them to present or even branch managers with quotas. Because of that, our debt concentration historically has been lower than certainly our wirehouse competitors. You know, we continue to gain share, but we do it more through natural means than the advisors. Our constant is going up, but we're just not aggressive in that haven't been. It's just part of the culture for a long time. Great. Thank you. Makes sense. Thank you very much. Mr. Reilly, that was the final que- Although, you know, very strong end of the year. You know, it's this environment outside of the equity markets and interest rates and cash sorting and everything else, it's hard to call. You know, that's when we really appreciate the flexibility we have in the balance sheet happen. As you get GDP and you get people still raising rates and inflation, you know, it's gonna be an interesting quarter, a couple of quarters. But that's when it, you know, you can see that clients say 97% satisfied with their advisors is pretty high rate. We'll talk to you soon. Thank you very much. Thank you, everyone. That does conclude the call for today. We thank you for your participation. You may disconnect your lines. Have a good day, everyone.