Good afternoon, and welcome to Raymond James Financial's second quarter fiscal 2023 earnings call. This call is being recorded and will be available for replay on the company's investor relations website. I will turn it over to Kristina Waugh, Senior Vice President of Investor Relations at Raymond James Financial. Good afternoon, everyone, 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 today is available on Raymond James investor relations website. Following the prepared remarks, the operator will open the line for questions. Calling your attention to slide 2. 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 timing and benefits of our acquisitions and our level of success integrating acquired businesses, divestitures, anticipated results of litigation and regulatory developments or economic conditions. In addition, words such as may, will, could, anticipates, expects, believes, or continue or negative of such terms, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Please note that there can be no assurance that actual results will not differ materially from those expressed in these statements. We urge you to consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q and Forms 8-K, which are available on our investor relations website. During today's call, we will also 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 schedules accompanying our press release and presentation. Now I'll turn the call over to Chair and CEO Paul Reilly. Paul. Good afternoon. Thank you for joining us today. Paul and I are joining you from Orlando, Florida, where we have over 4,000 people attending our Independent Advisors Conference. It's great to see such an upbeat mood and people really having a good time getting back together, as well as all the other educational sessions we have here. Since our founding over 60 years ago, Raymond James has maintained an unwavering commitment to placing clients first through conservative decision-making that keeps us well positioned over the long term. While remaining focused on the long term has not always been easy or fully appreciated in good times, it has served us very well over time. It's in times such as these, when even the financial system itself is challenged, that our philosophy not only carries us through but enables us to thrive. Just a few examples of our differentiated positioning that we have benefited recently from includes Tier 1 leverage capital ratio of 11.5%, over 2 times the regulatory requirement to be well capitalized. 88% of our bank deposits are FDIC insured, including nearly 95% of Raymond James Bank, amongst the highest in the entire industry. A-level rating with all three credit agencies, which Fitch reaffirmed in March at the height of the turmoil. A few weeks later, we were able to renew and upsize our five-year committed revolver with enhanced terms thanks to the fantastic relationship we have with all of our bank partners. We were able to buy back $350 million of shares at what we believe were attractive prices, and we still have $1.1 billion of capacity remaining under our board authorization. In times like these, we are reminded of the importance of keeping a long-term, client-focused approach. Our stakeholders benefit and appreciate the firm's dedication to placing them first. Now turning to our results. Despite the challenging market and high market volatility during the first six months of the fiscal year, we generated record net revenues and record earnings. Reviewing second quarter results starting on slide four, the firm reported record quarterly net revenues of $2.9 billion and net income available to common shareholders of $425 million or $1.93 per diluted share. Excluding expenses related to acquisitions, adjusted net income available to common shareholders was $446 million or $2.03 per diluted share. The increase in interest-related revenues driven by short-term interest rates drove significant earnings growth over the prior year. Net revenues increased 7%, and net income available to common shareholders grew 32%. Despite the challenging market conditions and our robust capital position, we generated strong returns with annualized return on common equity of 70.3% and annualized adjusted return on tangible common equity of 22.3%. Moving to slide 5. We ended the quarter with total client assets under administration of $1.2 trillion. PCG assets and fee-based accounts of $666 billion. $4 billion. With our continued focus on retaining, supporting, and attracting high-quality financial advisors, PCG consistently generates strong organic growth, which is evident again this quarter with domestic net new assets of $21.5 billion, representing an 8.4% annualized growth rate on the beginning of the period domestic PCG assets. During the prior 12 months, we recruited to our domestic independent contractor and employee channels financial advisors with approximately $275 million of trailing 12 production and nearly $38 billion of client assets at their previous firms. Total clients domestic sweep and Enhanced Savings Program balances ended the quarter at $52.2 billion, down 14% from December 2022. The sequential decline reflects the expected cash sorting activity, which was partially offset by the launch of our Enhanced Savings Program. We are pleased with the early success of our Enhanced Savings Program. This product offered to PCG clients through Raymond James Bank is a fantastic option for clients seeking competitive rates while maintaining a high level of FDIC insurance. We believe this product is really unique in the industry and certainly appealing in the current environment. As of this week, Enhanced Savings Program balances have surpassed $4.5 billion. Total bank loans decreased 1% from the preceding quarter to $44 billion, primarily reflecting a modest decline in securities-based loans due to higher interest rate environment. We will touch on this more later on the call, but we plan to remain very prudent with growing our corporate loans over the next several months given volatile market conditions. Moving to slide 6. Private Client Group generated record results with quarterly net revenues of $2.14 billion and pre-tax income of $441 million. Year-over-year asset-based revenues declined due to market declines. However, PCG's results were lifted by the benefit of higher interest rates on interest-related revenues and fees. As Paul Shoukry will explain in more detail, this quarter was negatively impacted by some seasonal expenses as well as elevated legal costs. The Capital Markets segment generated quarterly net revenues of $302 million and a pre-tax loss of $34 million. Revenues declined 27% compared to the prior year quarter, mostly driven by lower investment banking revenues as well as lower fixed income brokerage revenues. The extremely challenging market environment, particularly for investment banking, has strained the near-term profitability of the segment. However, we are focused on managing controllable expenses as near-term revenues are depressed. The Asset Management segment generated pre-tax income of $82 million on net revenues of $216 million. The year-over-year decreases in net revenue and pre-tax income were largely attributable to lower assets in fee-based accounts as net inflows into fee-based accounts into the Private Client Group were offset by market declines. Solid net inflows for Raymond James Investment Management helped boost financial assets under management, which should provide a tailwind in the fiscal third quarter. The Bank segment generated record net revenues of $540 million and pre-tax income of $91 million. Revenue growth was largely due to the continued expansion of the Bank's net interest margin to 3.63% for the quarter, up 162 basis points over the year-ago quarter and 27 basis points from the preceding quarter. The NIM expansion reflected the flexible and floating nature of our balance sheet. Although, as Paul Shoukry will explain, we do expect some headwinds to NIM, which reached very high levels across the industry over the past couple of months. Looking at the fiscal year-to-date results on slide 7, we generated record net revenues of $5.66 billion and record net income available to common shareholders of $932 million, up 4% and 21% respectively over the prior year's record. Additionally, we generated strong annualized return on common equity of 19.3% and annualized adjusted return on tangible common equity of 24.2% for the six-month period. On slide 8, the strength of the PCG and bank segment for the first half of the year primarily reflects the strong organic growth in PCG and the benefit of higher interest-related revenues. Whereas the weaker Capital Markets results reflected the challenging environment for investment banking and brokerage revenues, especially when compared to the record activity levels in the year-ago period. Now I'm going to turn the call over to Paul Shoukry for a more detailed review of the second quarter financials. Paul? Thank you, Paul. Starting on slide 10, consolidated net revenues were a record $2.87 billion in the second quarter. Three percent sequentially. Being able to generate record quarterly revenues during a period when Capital Markets revenues were so challenged across the industry reinforces the value of having diversified and complementary businesses. Asset Management and related administrative fees declined 11% compared to the prior year quarter and increased 5% sequentially due to the higher assets in fee-based accounts at the end of the preceding quarter, partially offset by fewer billable days in the fiscal second quarter. This quarter, fee-based assets grew 5%, providing a tailwind for Asset Management and related administrative fees in the fiscal third quarter. Brokerage revenues of $496 million declined 12% year-over-year and grew 2% sequentially. This year-over-year decline was largely due to lower asset-based trail revenues in PCGs, as well as lower fixed income brokerage revenues in the Capital Markets segment. I'll discuss account and service fees and net interest income shortly. Investment banking revenues of $154 million declined 34% year-over-year and grew 9% sequentially. As experienced across the industry, M&A revenues were particularly challenged this quarter, declining 37% year-over-year and 15% sequentially. Despite a healthy banking pipeline and solid new business activity, there remains a lot of uncertainty in the pace and timings of deals launching and closing given the heightened market volatility. It remains too difficult to say when conditions will become conducive to increase investment banking revenues. Moving to slide 11. Clients' domestic cash sweep and Enhanced Savings Program balances ended the quarter at $52.2 billion, down 14% compared to the preceding quarter and representing 4.9% of domestic PCG client assets. The Enhanced Savings Program added approximately $2.7 billion in new deposits in March, as the offering was only open to net new balances until April. A good portion of these new balances were derived from brand-new clients to the firm following the Silicon Valley Bank collapse, highlighting the attractiveness of this product and Raymond James being viewed as a source of strength and stability. As Paul said, the Enhanced Savings Program balances exceeded $4.5 billion this week, continuing to grow nicely and partially offsetting the anticipated decline in sweep balances, largely due to the quarterly fee billings in April. While it's difficult to parse through the disclosures to make sure we're comparing apples to apples, of the handful of peers who have reported thus far, we estimate year-over-year cash sweep declines for those peers were approximately 35%-45%. This compares to a 35% year-over-year decline in our domestic sweep balances through March. This dynamic of declining sweep balances has really been experienced at roughly the same order of magnitude for most of the firms in our industry. As most of you know, we have been expecting, communicating, and preparing for this sorting activity for quite some time. Looking forward, we expect additional cash sorting activity, although we believe we are much closer to the end of that dynamic than we are to the beginning if rates settle out near current levels, as the average sweep balance per account over the approximately 3.4 million accounts domestically is now less than $15,000. We hope to continue to offset any further cash sorting activity through our diversified funding sources, including the Enhanced Savings Program, TriState's deposit franchise, and other initiatives. When the sorting dynamic does stabilize, we would then expect to grow sweep balances given our strong organic growth in PCG. Meanwhile, to be prudent, we would strive to maintain a strong funding cushion of domestic cash swept to third-party banks, not too much lower than where it ended the March quarter. We would also plan to keep elevated cash balances in the bank segment, which grew from $1.8 billion in December to $5 billion at the end of the fiscal second quarter. While these actions don't optimize net interest margin over the short term, we believe they give us the most flexibility over the long term. Turning to slide 12. Combined net interest income and RJBDP fees from third-party banks was $731 million, up 226% over the prior year quarter and 1% over the preceding quarter, as the sequential decrease in RJBDP fees from third-party banks was more than offset by higher firm-wide net interest income. The bank segment net interest margin increased 27 basis points sequentially to 3.63% for the quarter, and the average yield on RJBDP balances with third-party banks increased 53 basis points to 3.25%. Our long-standing approach of maintaining high concentration of floating-rate rates but also preserve a relatively flexible balance sheet compared to the banks that have much higher concentration of duration risk. Looking forward, we expect combined net interest income and RJBDP fees from third-party banks to decline sequentially in fiscal third quarter due to a decrease in third-party RJBDP fees given the lower average balances with third-party banks. We would also expect the bank segment's NIM to contract from the second quarter given the higher level of cash balances we plan to maintain during this volatile period as well as the impact from higher cost diversified funding sources. As we have always said, instead of focusing on maximizing NIM, we are focused on preserving flexibility and growing net interest income over the long term, which we still believe we are well-positioned to do after the cash sorting dynamic is behind us. Near term, we expect headwinds for the net interest income and RJBDP fees for the reasons I just explained. Moving to consolidated expenses on slide 13. Compensation expense was $1.8 billion, and the total compensation ratio for the quarter was 63.3%. The adjusted compensation ratio was 62.8% during the quarter. The compensation ratio continues to benefit from higher net interest income and RJBDP fees from third-party banks. The sequential increase in compensation reflects higher revenues as well as the impact of salary increases effective on January 1. Along with the reset of payroll taxes at the beginning of the calendar year, we are very pleased to generate a 62.8% adjusted compensation ratio given these factors and the extremely challenging market environment for Capital Markets. Non-compensation expenses of $496 million increased 25% sequentially. Adjusting for acquisition-related non-compensation expenses and a favorable settlement received in the fiscal first quarter, which are all included in our non-GAAP earning adjustments, non-compensation expenses grew 16% during the quarter. This increase was largely driven by higher legal and regulatory costs, including an unfavorable arbitration award totaling $20 million. Along with higher communication and information processing expenses, which reflect continued technology investments and the seasonal impact of year-end mailings. The bank loan provision for credit losses for the quarter of $28 million largely reflects the charge-off of a C&I loan that's been challenged for several quarters, as well as higher allowances in the CRE portfolio. I'll discuss more related to the credit quality in the bank segment shortly. In summary, we remain focused on managing expenses while continuing to invest in growth and ensuring high service levels for advisors and their clients. While there has been some noise with elevated legal and regulatory expenses this quarter, and there are always some seasonal expenses that hit in the first calendar quarter of the year, none of the non-compensation expenses are coming in too much differently than we expected when we last provided guidance for the fiscal year. Legal and regulatory expenses are inherently difficult to predict. Slide 14 shows the pretax margin trend over the past five quarters. In the current quarter, we generated a pretax margin of 19.4%, an adjusted pretax margin of 20.4%. A strong result given the industry-wide challenges impacting capital markets. On slide 15, at quarter end, total assets were $79 billion. A 3% sequential increase largely reflecting the $3.2 billion increase of cash balances in the bank segment during the quarter. Liquidity and capital remain very strong. RJF corporate cash at the parent ended the quarter at $1.8 billion, well above our $1.2 billion target. A Tier 1 leverage ratio of 11.5% and total capital ratio of 21.4% are both more than double the regulatory requirements to be well capitalized. The 11.5% Tier 1 leverage ratio reflects over $1 billion of excess capital above our conservative 10% target, which would still be 2 times the regulatory requirement to be well capitalized. Our capital levels continue to provide significant flexibility to continue being opportunistic and invest in growth. We were pleased to have our A- credit rating reaffirmed by Fitch in mid-March. In the announcement, Fitch cited the firm's strong capital cushion, significant deposit funding, and access to unsecured debt markets, among other drivers as reason for the rating. Also in April, we renewed our revolving credit facility and expanded it from $500 million-$750 million. Our strong balance sheet and long-standing relationships with our banking partners enabled us to upsize the five-year committed corporate revolver with enhanced terms to further strengthen our contingent liquidity sources. Challenging market environment is a testament to our long-term conservative approach. I know many of our bankers are listening on this call, so I'd like to thank all of you for your continued support and partnership. We also have other significant sources of contingent funding. For example, just to be proactive, given the market uncertainty in March, we increased our FHLB borrowings in the bank segment by only $500 million from December 31st to March 31st. Given our strong cash position, we've already paid $200 million of that down in April. That leaves us more than $9 billion of FHLB capacity in the bank segment. Slide 16 provides a summary of our capital actions over the past 5 quarters. During the fiscal 2nd quarter, the firm repurchased 3.75 million shares of common stock for $350 million at an average price of $93 per share. As of April 26th, approximately $1.1 billion remained available under the board's approved common stock repurchase authorization. I currently intend on continuing our planned repurchases as we discussed previously, particularly as this market volatility has provided attractive opportunities for us, and we don't plan on using as much capital to support balance sheet growth over the next 3-6 months. Lastly, on slide 17, we provide key credit metrics for the bank segment, which includes Raymond James Bank and TriState Capital Bank. The credit quality of loan portfolio remains healthy. Criticized loans as a percentage of total loans held for investment ended the quarter at just 0.92%. The bank loan allowance for credit losses as a percentage of total loans held for investment ended the quarter at 0.94%. The bank loan allowance for credit losses on corporate loans as a percentage of corporate loans held for investment was 1.67% at quarter end. We believe this represents an appropriate reserve. We are continuing to closely monitor any impacts of inflation, supply chain constraints, higher interest rates, any potential recession on our corporate loan portfolio. I know there's been a lot of attention on commercial real estate across the industry given the challenges with property value and interest rates. Let me briefly cover our portfolio. Across the bank segment, we have CRE and REIT loans of approximately $8.8 billion, which represents 20% of our total loans. Our office portfolio is only 17% of these real estate loans. Our office portfolio only represents approximately 3.5% of the bank segment's total loans. Based on the underwriting and origination, along with the most recent appraisals, the average loan-to-value of this office portfolio is somewhere around 60%, which is probably a little bit higher now given pressure on valuations in the industry, but still providing us a lot of cushion on this portfolio on average. Overall, we have deliberately limited the exposure to office real estate, and we underwrote office loans with what we believe were conservative criteria. We continue to monitor each loan closely given the industry-wide challenges. Now I'll turn the call back over to Paul Reilly to discuss our outlook. Paul. Thank you, Paul Reilly. As I said at the start of the call, I'm pleased with our results for the first six months of fiscal 2023 and our ability to generate record earnings during what continues to be a very volatile market. While there is still a lot of near-term economic uncertainty, we are in a position of strength, and I believe we are well positioned to drive growth over the long term across all of our businesses. In the Private Client Group, next quarter results will be favorably impacted by the 5% sequential increase of assets in fee-based accounts. However, we do expect to have some headwinds from lower RJBDP fees from third-party banks given lower average balances. Focusing more on the long term, I'm optimistic we will continue delivering industry-leading growth as current and prospective advisors are attracted to our client-focused values and our leading technology and product solutions. For example, in our current advisor recruiting pipeline, we have several commitments from teams with $5 million-$20 million of annual production. In the Capital Markets segment, while M&A pipelines remain healthy and engagement levels are good, the pace and timing of launching and closing transactions will be challenged until market conditions stabilize. In the Fixed Income space, the depository clients are experiencing declining deposit balances and have less cash available for investing in securities, putting pressure on our brokerage activity. However, SumRidge enhances our position as this business typically benefits from elevated rate volatility and has produced excellent results since joining us. While we expect continued industry-wide challenges over the next couple of quarters, over the long term. We are well positioned across the Capital Markets business for growth given the investments we made over the past five years, which have significantly increased our productive capacity and market share. We will continue to prudently manage expenses in these businesses as the near-term revenues continue to come under pressure. Obviously, we will take more significant actions if the industry headwinds prove to be more long. In the Asset Management segment, financial assets under management are starting the fiscal third quarter up 5% compared to the preceding quarter, which should provide a tailwind to revenues if markets remain conducive throughout the fiscal third quarter. We remain confident that strong growth of assets in fee-based accounts in the Private Client Group segment will drive long-term growth of financial assets under management. In addition, we expect Raymond James Investment Management, which generated solid net inflows this quarter, to help drive further growth through increased scale, distribution, operational, and marketing synergies. In the bank segment, our focus over the next several months will continue to be fortifying the balance sheet with diversified funding sources. While we'll continue to support our PCG clients when their demand for loans eventually recover, we will be very prudent in growing corporate loans given market uncertainty. We believe there will be more attractive opportunities in the future if spreads widen to reflect the higher cost of funding and/or higher premium required for credit risk across the entire banking industry. Just as we did during uncertain market environments in the past, we have been and will continue to be opportunistic in selling certain loans to further de-risk the corporate portfolio, especially when we believe the secondary market prices do not fully reflect the downside risk. Overall, our approach in the bank segment over the next 3-6 months is to build as much dry powder as possible for what we believe will be a more attractive and opportunistic environment for loan growth in fiscal 2024. In closing, we believe we are well positioned with strong prospects for future growth and ample cash and liquidity. Uncertain times like these are when clients need trusted advice the most. I want to thank our advisors and their associates for their continued perseverance and dedication to providing excellent service to their clients each and every day. The strength and stability of our firm is a direct reflection of your commitment. Thank you all for all you do. With that operator, that concludes my remarks, and we'll open up the line for questions. Thank you. If you would like to register for a question, press the one followed by the four on your telephone keypad right now. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment please for the first question. The first question comes from the line of Devin Ryan with JMP Securities. Please proceed with your question. Great. Good afternoon, Paul and Paul. How are you? Good, Devin. Hey, Devin. Good. Good. I hopped on a minute late, I had a question just on the net interest income outlook. I just want to make sure I understood the commentary. Is the expectation that it's going to take a near-term step back and can grow off of whatever that new base is? Paul, are you saying that you'll kind of resume growth off of the fiscal second quarter level? I guess interrelated, I heard that you're going to operate, I think, with higher reserves. Just how much of a drag is that? I guess what would make you comfortable bringing that down? I'll let the other Paul go through the NIM, but I don't think we anticipate right now higher reserves. I mean, reserve cash maybe. We'll be carrying a little more cash. I don't which reserve you're referring to. Yeah, I was referring to the cash reserve. Just the cash. Yeah. There's more cash in the bank. Go ahead, Paul. Yeah. you know, we did increase the cash balances at the Bank just given the volatility in March. We thought it would be prudent. we finished the quarter, you know, up I think $5 billion. we were up $4 billion for the quarter, ending the quarter at $5 billion of cash at the Bank segment. that is a drag on NIM because you're earning closer to 5% on that versus the 7% or so we're earning on new loans that we're putting on the book. we think that's prudent just given the volatility. In terms of the outlook going forward, near term, we do expect a pullback of net interest income and BDP fees when you look at those on a combined basis. We plan on keeping the cash swept to third-party banks at around the current level, just because we think that $9 billion gives us a nice cushion. It also offers clients maximum FDIC insurance, which we all know is really important for clients right now. By doing that, even at $9 billion, those fees are probably going to be down. Average balances will be down 25% sequentially. Those fees will be down, 25%, you know, roughly, you know, depending on what happens with rates and other things. The net interest incomeHaving higher cash balances and then, you know, higher cost of funding that we raised, since launching the Enhanced Savings Program in March. All net together, I think that would result in probably somewhere around the 10% decline, sequentially. As we start growing balances, from there, then that would be probably a good jumping off point. Got it. Okay, great color. I guess maybe just I want to follow up on the same topic. Paul, you just mentioned the Enhanced Savings Program. It looks like you're having some nice success there. I'm assuming that it's still, you know, reasonably early in terms of the advisor penetration. You know, just love to maybe talk about kind of the expectation for growth there. You know, maybe could advisors be more active moving their customers' cash there in the near term, just given that it's new. That could, you know, pressure, you know, the, I guess the rate on the liability side. Do you have data that's just suggesting that the majority of the yield-seeking cash has already moved out of the accounts? Yeah, I would tell you know, when we look at sort of the trends, it looks like a lot of the sorting activity, the higher yield seeking activity has occurred. When we rolled out the Enhanced Savings Program in March, it was actually to new money to the firm, and until we expanded it in April, to, you know, certain security sales and new money to the bank. You know, we raised $2.7 billion of brand new flows to the firm during the month of March, and most of it was, you know, mid-March during the banking turmoil. We were pleased to see that those cash balances come in. Even then, you know, with we're close to $5 billion today of these balances. That represents roughly 10% of the sweep and enhanced yield savings balances, whereas most of our peers are at 50% of their balances being in enhanced yield savings. Our relative cost of funds when you look at those two balances together is still very attractive. Even though we've been able to be more generous to clients on the sweep balances in terms of passing on rates via the sweeps as well. We feel like we're well positioned. Right now what we're really hoping to do is a lot of clients hold money market fund positions and would prefer to have FDIC insurance. A lot of those balances now are moving to the enhanced yield savings, which, you know, we think is a really a win-win for the clients and the firm. Yep. Got it. Okay. All very helpful. I will hop back in the queue. Let others ask. Thanks so much. The next question comes from the line of Kyle Voigt with KBW. Please proceed with your question. Hi. Good evening. Maybe just a first question on the leverage ratio. Obviously sitting at 11.5%. Just curious whether you still feel that that 10% target is a good level to think about as a near term target, especially with the macro environment and kind of the uncertainty, that we're facing with the macro right now? Yeah, you know, that's a hard one to peg with. You know, events like happening today in the press even. You know, we're going to be more cautious until, you know, the industry's sorting down. You know, that we see kind of a level field. We think that the 10% is a good target, but in the short term we're probably not going to be over aggressive to it, especially if we're not growing the bank aggressively. We don't think that's the smart move right now. We will continue to let FHLB balances and mortgage our client balances fund those. Those are the priority. We're not sure it's a good time to get into the, you know, increasing the corporate side of the lending right now, just because of the market. Shorter term, you know, I think the capital ratio is going to be over the 10%, but we're not going to change the goal. During the volatility like we've seen with today's news and other things, we're going to be cautious till we're pretty comfortable the market settles down. The only thing I would add to that is, you know, a lot of other banks have to worry about the impact of unrealized losses on their securities portfolio. We have, you know, some of those as well, obviously. I think we would be north of 10% even if we factored in all of those losses because we kept duration relatively contained on our balance sheet. We're in a position of strength, when you look at our capital ratios and feel like we have a lot of flexibility. Great. Then just maybe a follow up question to that. Just with your stock price where it's at today, obviously in the first quarter, calendar first quarter, you were up the buyback a bit here. Just wondering if you can kind of compare to the current valuation of your stock to maybe any opportunities that you're seeing in the M&A market. If you kind of could expand upon some of those opportunities that you're seeing and what segments you're seeing more opportunity in light of everything that's happened in the banking space as well. That would be helpful. Yeah. We've done a really good job of staying close to the people that we would like to join the firm. Those opportunities are clearly up. That includes the M&A and the private client space. Again, whether they get transactable because of price or other issues or some are more complex than others. Those conversations that kind of went away, some have come back. You know, price adjustments of the buyers and seller aren't always in line in expectation with the market of return. That's not our view, not gonna happen until we see interest rates settle and people get used to it. We think there will be M&A opportunity. We have both the capital and liquidity to handle that. Our balance sheet, as you know, is very leveraged, and we have access. As most downturns, we've been able to take advantage of the market. Our presumption is we would be able to, but again, you know, that all depends on buyers and sellers and opportunities and other factors in the market. Great. Thank you very much. The next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question. Thanks, guys. Good afternoon. Can we start with the outlook for NII? If I heard you correctly, I think you guys have got into down 10% firmwide NII. Can you help with some of the underlying assumptions, in terms of NIM firmwide and maybe how are you thinking about the ultimate amount of cash, that you need to run with on the balance sheet? Obviously, you know, it'd be helpful to know what you're assuming for interest rates for the second quarter underpinning the 10% decline. Yeah. The 10% decline, Alex, includes the RJBDPs as well. It's kind of a combined basis as we show it in the PR and the presentation. You know, that factors in the 25 basis point increase that the market is expecting in May. You know, in terms of the cash that we plan on holding on the bank's balance sheet, we plan on holding more than we need, you know, for during these volatile times. You know, more than we hopefully need during these volatile times just to stay prudent. As Paul said, you know, we're being deliberate in growing corporate loans, and we're being actually opportunistic in selling corporate loans. you know, not much balance sheet growth forecasted, you know, over the next, you know, at least during this period of volatility. In some cases, you know, for example, we've already sold over $400 million of corporate loans that we had rated lower from a credit perspective, and we're able to get near par value for those loans. We had marks on them that were, you know, higher than what the price we were able to get. you know, we don't believe that the market's fully factoring in, you know, potentially the downside risk on certain loans. Just as we've done in other volatile periods, we're sort of being opportunistic, knowing that we're just building dry powder, both capital and hopefully funding dry powder to, you know, accelerate growth when the opportunities look more attractive. Gotcha. Okay. Yeah, combined makes a lot more sense. All right. I appreciate that. My second question was around non-comp expenses. You know, I appreciate that you guys think this is close to what you were budgeting for. If we look at non-comp ex provisions and backing out the $20 million of the arbitration fee, it looks like it was up, you know, almost $30 million sequentially. Maybe help us reconcile what's driving the growth. Just given your outlook for effectively peak rates revenues in a challenging Capital Markets backdrop, when should we expect you guys to become a little bit more aggressive on cost savings initiatives? The first two quarters are always a little bit lumpy in terms of the non-compensation expenses. If you look at it kind of on a combined basis, backing out the acquisition related costs, and backing out, you know, the loan loss provision, which is how we made the guidance. You know, it's around, I think, $830 million for the first six months of the year, which actually trends lower than the $1.7 billion guidance I provided for the non-comp expenses excluding provision. We still, you know, we're not changing that guidance, you know, for the time being because other than legal and regulatory, which is inherently, you know, unpredictable. We had a, you know, $20 million arbitration award, which we were not expecting obviously, this quarter. You know, Most of the other line items are kind of coming in in line with what we forecasted when we provided that guidance. Of course, you know, things change between now and the next 6 months of the fiscal year, we certainly will, you know, update that and let you all know. I think that comparison was, you know, looks bigger because of the $30 million last year, last quarter, you know, recovery that we non-GAAP too. We think they're in line. Yeah, legal fees certainly were higher. That settlement was higher. That's really driving, and that's kind of lumpy. We think the run rate and the guidance is still in the ballpark from what we can see. With that being said, while it's coming in line with what we expected, we're also, given the market environment, going to be very deliberate in managing, you know, all those expenses while still investing in growth and high service levels. Got it. Thank you. Yep. The next question comes from the line of Bill Katz with Credit Suisse. Please proceed with your question. Great. Thank you very much. Appreciate you taking the question this evening. Maybe stepping back, and perhaps it's just too soon to tell. As you think about some of the structural changes that may evolve for the banking industry on the side, the other side of the banking collapse and maybe your early stage conversation with the regulators, how do you see the evolution for regulatory capital or leverage ratios? Does that affect your 10% bogey? Maybe how you think about long-term growth in earning assets and the NIM associated with that? Well, first on capital, I think even at 10%, we're well set over what anyone is, you know, our competitors and other things. We're, you know, we think that's still a very conservative target. Can't see any regulations that would make anything even close to that. We'd still have buffer there. We're not worried about capital. Like everything given the environment, we've been focused on liquidity. That's why we rolled out the Enhanced Savings Program and are very heartened that, you know, even after the quarter, we paid our $1.2 billion in, you know, Asset Management fees come out of there. We had tax payments that, you know, usually go over $1 billion. Our cash balances are still steady. On the liquidity side, the question is just how much do we have to raise in the higher yielding programs. You know, we feel good about our liquidity and not even touching our, really our FHLB advances or that $9 billion dollar buffer. Third then becomes is when you start investing in that order. When do you start investing in the growth and assets and in the bank. That we're just gonna have to decide. We're not gonna be really aggressive. Where we see opportunities, we'll take them. If we see M&A opportunities we think are good, we'll act on them. We just don't think given the banking market, rising rates, and if people are predicting an, you know, a recessionary environment, it's the time to be very aggressive in growing corporate loans. You know, I would say our growth plans are not really to expand the balance sheet much in this next quarter. I think you asked a question about the future NIM prospects for the industry. You know, I think, you know, the banking industry is pretty efficient. You know, the good news is we already have, you know, a very conservative level of capital. I think we're well, as Paul said, well positioned for those changes. To the extent the capital rules do change or increase, and certainly that the cost of the average deposit in the industry, as all the big banks were saying, even the largest banks are saying that's increasing as well. You would expect all else being equal for spreads to expand across the industry to preserve a reasonable NIM, and a reasonable return on equity for the industry. You know, to the extent that we can be patient now and wait for more attractive opportunities at least a more stable environment, we think that'll serve our shareholders well over the long term. I think if you really look at the industry over the last few years, certainly deposits were extremely cheap, you know, and rates are going up. Honestly, spreads weren't really what you'd expect it historically given, you know, the types of loans folks were making. It's natural in this kind of environment where people are being careful and the cost of funds are higher, that I think spreads are gonna expand. We believe that. We can't say when, but we believe that'll happen, and that's why we'll be a little more prudent, you know, in this next quarter or two with the balance sheet as we watch what happens in the market. We've shown also in the other times whether we sold off COVID loans or other things during those periods. We found, you know, we've shown we can expand the balance sheet pretty quickly, so we're not worried about that. We're just worried about making sure we do it in the right environment. Just a quick follow-up and just to jump on one point there. As you think about maybe, Paul, if you could just unpack. I think I understand the difference between the sort of bank versus the third party sweep impact. But maybe unpack maybe where we are on a spot basis for the NIM. And as you think about this year, how to think about maybe earning asset levels because I hear a couple different things. You know, cautious loan growth, maybe some runoff in the corporate loan portfolio from sales. Maybe some shrinkage on the investment securities book. How to think about maybe framing where the end of year might be in terms of your associated with that? Thanks. Yeah, hard to know where we're gonna be. A lot can change, as we've learned in the last month or 2. A lot can change certainly in the next 6 months. We're gonna, as Paul said, we're gonna be there for our clients in the Private Client Group business. You know, half of our loans are securities-based loans and mortgages. To the extent, you know, demand picks back up over the next 6 months. Now, they've been pressured in a higher, in a rising rate environment. You know, demand could come back if clients get used to the new normal in terms of rates, and we wanna, you know, be there to support them. As Paul Reilly said, we'll also be more conservative in sort of growing corporate loans, at least until, you know, we have a better conviction around the risk-adjusted returns in growing that book. In terms of the jumping off NIM, and I would expect just with the higher cash balances and the higher cost of funding. Which again, our patience has served us well with the higher cost of funding as well because, you know, again, like I said, we only have 10% of our sweep and enhanced yield savings balances in the Enhanced Savings Program. Many of our competitors are at 40% or 50%. We have a lot of, you know, ability to grow those balances. As we grow those balances, it would pressure NIM. You know, we think there's probably 20 basis points or so of pressure in the upcoming quarter, maybe up to 30 basis points. Depending on what happens with the rate increases. That's due to the higher funding sources and the elevated cash balances that we plan on holding on the balance sheet. Thank you so much. The next question comes from the line of Manan Gosalia with Morgan Stanley. Please proceed with your question. Hi. Good afternoon. Hey, Manan. Hey, Manan. Can you take us through what happened with cash sorting in March and maybe since then? I ask because you noted in your press release last month that cash balances as of March 21st were near $51 billion. It looks like about $1.5 billion flowed out in the last week if you exclude the Enhanced Savings Program. You know, maybe take us through what you were hearing from FAs and customers back then and, you know, what gives you the confidence that this will slow from here? I would say just jumping to kind of, where we are today, you know, for example. We ended the quarter with, you know, sweep balances and Enhanced Savings Program balances at $52.2 billion. You know, you fast-forward to where we are today, we're right around $52 billion in sweep and Enhanced Savings Program balances. That reflects, you know, the fee billing that we do quarterly, which was, you know, over $1.2 billion, and also, you know, annual income tax payments. We feel comfortable and confident that, you know, the sorting dynamic is closer to the end than it has been to the beginning. As I said on the comments, the average cash per account in the sweep program now is right around $15,000, which is, you know, sort of a low point as far as we look back and have that data. You know, we're confident, but that things are closer to the end, but we don't know how much longer, obviously, that dynamic will continue. Meanwhile, we'll continue to offer attractive products to our clients that give them, you know, good yields and get them good FDIC coverage to, you know, keep deposit balances as strong as we can. I think you asked the FA reaction. Theirs has been, look, their job was to invest idle cash, and they put it in money markets, and they didn't leave the system. They put it in money markets, and they put it in treasuries and CDs to get yields. They said, "Just give us the yield. We like the program." Once we rolled it out, you know, we've had money flowing in. Our job is to manage just how much of it we really need. It's in the system. We have a very good product, and we're just gonna have to balance that given operations. We feel very comfortable at our levels right now, and with the reserves we have on top that we really haven't touched. You know, I think it's gonna be just the process of managing how much the higher cost funds you need given, you know, the movement in the market, so. One other metric that I think is pertinent on this topic is sort of the deposit, aggregate deposit beta, you know, since rates started rising. Really, you have to look at it both at the sweep program and also adding the Enhanced Savings Program balances. On a spot basis, that aggregate deposit beta has only been for us 25%-30%. We've been, which is lower than the competitors that we've seen so far. Again, they have a much higher mix of the higher cost funding at this juncture. That's with us being able to be more generous to our clients than most of our competitors in the sweep program. You know, to the extent that we have to raise, some incremental higher cost deposits, you know, 25%-30% aggregate deposit beta at this point is much lower than I think we all expected at this point in the cycle. You know, we have a lot of kind of capacity and bandwidth to add, you know, higher cost funding while still generating attractive returns. That's helpful. Maybe as a related question then, can you talk about the person takes on the third-party bank fee rates from your, as we think over the next few quarters, after the Fed starts hiking rates? I'm assuming that deposit betas will continue to rise and be a drag, but I guess at the same time, the demand for these deposits will also likely be strong. Is there some offset from the 12.5 basis points or so of spread that you make on that portfolio? There's no doubt. I mean, there's huge demand for deposits in the system. you know, the extent you have cash, it's, you know, banks are hungry for it. The question is, yeah, what happens with rates? You would assume with that demand, the spread should increase, right? Yeah. If the Fed stops raising or you have a recessionary cash returning out of the markets back into, you know, the regular sweep programs, the deposit programs, Our prediction is you would get, you know, those spreads would increase, but, you know, we're not there at this point today. It's really hard looking forward right now. I, you know, if we want to look forward a year or so, we feel a lot more comfortable than next quarter just because we've been in the middle of since March of a very dynamic market. It sounds like if balances are relatively flat, your third-party bank fees should also be relatively flat beyond the second quarter. Yeah. Well, you have to look at the average. Average balances will be down 25% even if we keep them flat with where they ended the quarter. Beyond that, you know, it'll just depend on where the balances will drive it more so than the spread that we earn from the third-party banks, I guess, is the easiest way to describe it. Yeah. Yeah. Got it. Okay. Just a quick clarification on the office portfolio. You mentioned an LTV of 60%. How much of that is based on new appraisals versus valuation at the time the loan was made? It's a little bit of both. Both on the, to the extent that we have new appraisals, that's factored into it. I mean, I think you can assume, as I said in the prepared remarks, that, you know, valuations are probably lower now than even, you know, that new appraisal date. Still have a reasonable cushion, and underwrote those properties conservatively. You know, we also expect there to be some challenges if the economy continues to soften, particularly for real estate. In that percentage too, you know, to the extent you have REIT loans where even our experience in 2008 and 2009 was that, you know, those diverse portfolios came through pretty well. When you have single property loans, you're more idiosyncratic, you just have to watch. Our total mix of commercial office is relatively low for any bank. Great. I appreciate it. Thanks for taking my question. Thanks, Monty. The next question comes from the line of Jim Mitchell with Seaport Global. Please proceed with your question. Hey, good evening. just maybe circling back on the Enhanced Savings Program, maybe a clarification, Paul? Are you saying in March you had restrictions that required net new money, and now those restrictions are off? If that's the case, how do you dial that back if you want to? Is it just price or just wanna make sure I understood what you're saying on the Enhanced Savings Program? Yeah, the restrictions are where all we open it up for sales of certain securities for people that wanted to move from money markets back into cash. Right. The only reason they moved into money markets was the spread. We've opened that up, and we have two choices. We can say, you know, we've given time limits. If we need more, we can extend the time limits, or if we want to, you know, cut it off, we can cut it off. You can always do that with rate and let it find and seek its own level. You know, we have all those options, and we're just watching the balances. We're comfortable at these cash balances. We're actually comfortable lower, but, you know, we're Raymond James. We always seem to be accused of having excess capital and excess balances. you know, we'll just dial it back or stop it or, you know, if we open it up to other securities type, if you really need it, there's treasuries, there's CDs, there's other things that have stayed on the system seeking yield. We have a lot of flexibility. It just depends how much we need. Is this strategy from here if, you know, if and when we start to see sweep balances stabilize, and it sounds like at least the outflows are slowing a little bit in April. We'll see if that continues. If that does stabilize, do you sort of? Is this a level of deposits that you're comfortable with? You would sort of stop or slow the Enhanced Savings if you could stabilize all-in cash levels at these, at current levels? Is this the defending levels that you're thinking about? Yeah, we think, you know, we're at a level, you know, even when we were at the end of the quarter when we dropped below 50, we were fine. We'll keep it till we have extra in this environment. We'd rather if more flows in, we'll keep it for a while. You can always, again, lower rate and have it flow out to other yielding instruments. Yeah, we're not trying to get it back into the 70s, that's for sure. We had excess too much cash then, but there was no place to put it. You know, I think somewhere in the 50s level, we'll try to. You know, we would start slowing it down. Right. Okay, great. Thanks for the clarifications. The next question comes from the line of Brennan Hawken with UBS. Please proceed with your question. Good afternoon. Thanks for taking my questions. One, just it sounded like from Paul Shoukry's comments on comp ratio, that if, you know, unless we see some kind of substantial change in Capital Markets environment, that, you know, the comp ratio is probably, this is probably a reasonable zone to think about until that inflects. Number one, is that right? If we do see a recovery in the Capital Markets revenue, you know, what kind of order of magnitude would you expect it, to feed through, and pull down that comp ratio? Yeah, I mean, it's a mix. It's always complicated because the revenue mix matters when you talk about our comp ratio. You know, we expect PCG revenues to be up given the higher fees, assets in fee-based accounts. That has a higher compensation ratio associated with it than our NII does, obviously. Again, to the extent Capital Markets revenues rebounds to healthier levels, not even record levels, but that they were enjoying the last couple of years, but just healthy levels, then that would be, you know, that would result all else being equal and an improvement to the comp ratio. Again, it's just hard given the revenue mix. I think 63% roughly for us historically has been very low. You know, and that's been helped by the high levels of interest income and BDP fees that are not directly compensable to the producers. You know, I think the revenue mix going forward will dictate, you know, what the result will be. I think anywhere close to 63... Even our guidance was 66% or lower just a year ago, you know, a little bit more than a year ago. That would have been historically a pretty attractive place to be. I'm not saying that's where we're gonna get to, but if we can stay anywhere close to this range, we'd be pleased with that. Got it. Okay. Yeah, that makes sense with the 10% decline in NII and RJBDP. One more on cash and deposit dynamics. I'm sorry, it's been a real dead horse to beat here, but you gave the trends quarter to date program, which is really helpful. Could you also speak to like overall trends in cash quarter to date? You know, if what we're seeing in the Enhanced program would be selling out of the purchase money fund and into the deposit program. You know, wouldn't then we see you moving in the direction of the peers? You know, Paul Shoukry, I think you commented a few times on how you're at 10 and peers are at 50. Does that mean you're going to converge to that level? Would you be pulling on some of those price and other levers that you referenced before to prevent that from happening? Thanks. You know, the number one thing in the banking business, I think maybe people forgot over the last decade, is liquidity and protecting, you know, stable deposits. That's number one. That's, it really depends on the deposit level. To the extent, you know, we've given kind of a general target to you on, you know, the deposit levels. You just, you have to compete with rate to grow them unless market conditions change. We don't know when that will happen. If the market keeps doing that, my guess is ours will go up over 10 and theirs will go up over 50 because to get, you know, those deposits repriced and you're repricing more, that's going to be a trend for everybody. It'll be industry wide. If it's idiosyncratic, you know, for one institution for some reasons that they need a lot more, it's going to go up higher. A lot of that's market dynamic. I think the biggest thing people forget when we limited kind of the money we put into banks for many years at 50%, and then when TriState joined, we upped it. We have less leverage. You know, about 70% of our deposits go roughly to our banks. We have competitors at 90. If you're up, and it's not a criticism there, but if you're at 90, you got to be more aggressive for funding. We have more of a buffer. We'll just watch it and play it by ear and, you know, and watch it closely and do what we have to do to make sure we maintain liquidity. The outcome will be how much of higher cost deposits we have to have. We're not doing it just to raise costs. We're only going to do that if we need it. The only other thing I'll add to that is, you know, we have over $40 billion of purchase money market funds, or our clients have over $40 billion of purchase money market funds on the platform. All the cash, you know, really stayed within the system to the extent that. You know, we earn very little on those purchase money market funds as a firm. To the extent that our clients, you know, prefer to have the FDIC insurance at the attractive rate that we would be willing to offer that we are offering today, it could really be a win-win for the client and, you know, for the firm, because now that cash, even though it's higher cost funding relative to our sweeps, can generate more economics than it staying in the purchase money market fund. You kind of have to look at the holistic picture to determine whether or not it's really a win-win. As Paul said earlier, we always strive to look for those win-win opportunities for both clients, advisors and the firm. Part of the comfort we've had is just our nature. When you looked at Raymond James Bank history, to have about 95% of the deposits insured, we went way out of our way and paid money in programs to make sure they were insured. Just as a matter of course, we weren't worried about, you know, we weren't worried about uninsured deposits the 2 years ago when deposits were flush. Typical for us, we just look down range and say, okay, for the premium, it's worth it to have for clients to be protected. I think it keeps our funding sources more stable. Okay. thanks for that color. That's helpful. Also for the added points on your philosophy. could you touch on the point about overall cash trends quarter to date beyond just the Enhanced? Yeah. As I said, we are today right around where we ended the quarter. We're right around $52 billion of sweep and Enhanced Savings Program balances. I think the, you know, Enhanced Savings Program balances are over $4.5 billion. Again, to be flat in the month of April, with the tax payments and the quarterly fee billing, we think is a good result and, you know, hopefully portends well for the dynamic going forward. Yep. Sorry, I missed that. Thanks for hitting on it for me again. No worries. There are no further questions at this time. I'll now turn the presentation back to the Yeah. Good. Thank you all for joining us. I know you're all busy given all the dynamics in the market, so obviously, you know, uncertain market. Again, I think the conservative way we've run the firm really puts us in good shape. We are at our conference with 4,000 advisors here, and they're pretty excited, so it's nice to be here. Thanks for joining us. We'll talk to you all soon. That does conclude today's conference. We thank you for your participation and ask you to please disconnect your line.