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    SF
    Earnings call· Mar 2026(Q1 FY26)

    STIFEL FINANCIAL Q1 FY26 earnings call SF

    Apr 22, 2026 Source

    Executive summary

    Stifel Q1 FY26 — Record Revenue and Strong Profitability

    Stifel delivered a record first quarter, showcasing broad-based growth across Global Wealth Management and Institutional businesses, despite a volatile market backdrop. The firm's diversified model and strategic restructuring efforts contributed to strong profitability and capital position. Management expressed confidence in a robust FY26, while acknowledging ongoing geopolitical and economic uncertainties.

    Highlights

    5

    • Net revenues reached a record $1.48 billion, up 18% year-over-year (15% excluding nonrecurring gain).

    • Non-GAAP EPS significantly improved to $1.45, up 32% on a comparable basis year-over-year (excluding prior year legal accrual).

    • Annualized return on tangible equity was nearly 25%.

    • Global Wealth Management delivered record first quarter net revenue of $932 million, driven by record asset management revenues.

    • Institutional Group posted its strongest first quarter in history with $495 million revenue, including record investment banking revenue of $341 million, up 44% year-over-year.

    Concerns

    3

    • Net interest income came in at the lower end of guidance and $3 million below consensus, primarily due to slower loan growth and lower nonbank interest income.

    • Equity transactional revenue was down 7% year-over-year, entirely reflecting the European restructuring efforts.

    • The environment has become more uncertain due to escalating geopolitical risk, rising energy prices, widening credit spreads, and increased interest rate uncertainty.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year asset growth
    up to $4 billion
    medium materiality
    High
    Net interest income
    $280 million to $290 million
    high materiality
    High
    Full-year net interest income
    $1.1 billion to $1.2 billion
    high materiality
    High
    Revenue
    $10 billion
    high materiality
    High
    Client assets
    $1 trillion
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Global Wealth Management
    Achieved record first quarter net revenue, driven by strong asset management revenues and increased advisor productivity. Total client assets and fee-based assets were flat sequentially, excluding the impact of the SIA sale, with low single-digit net new asset growth offset by market depreciation.
    Asset management revenue: recordAdviser productivity: growingTotal client assets: $539 billionFee-based assets: $220 billionNet new asset growth (ex-SIA impact): low single digitsRecruited trailing 12-month production: ~$80 million
    		$932 million—essentially flat sequentially—
    Institutional Group
    Posted its strongest first quarter in history, driven by record investment banking performance. Advisory revenues showed significant growth. The pretax margin improved significantly, benefiting from revenue growth and the European equities restructuring.
    Investment banking revenue: $341 millionInvestment banking revenue growth YoY: 44%Advisory revenues: $218 millionAdvisory revenues growth YoY: 59%Equity capital raising: $67 millionFixed income underwriting: $50 millionFixed income underwriting growth YoY: 9%Public finance market share (deal count): nearly 15%Transactional revenue growth YoY: 4%Fixed income revenue growth YoY: 12%Equity transactional revenue growth YoY: -7%Core equity transactional business growth (ex-restructuring): 10%
    		$495 million29%—nearly 20% pretax margin

    Operational metrics

    22
    Annualized return on tangible equity
    nearly 25%
    Q1 FY26

    Reflects strong profitability for the quarter.

    Firm-wide pretax margin
    more than 22%
    Q1 FY26

    Reflects continued robust wealth management margins and improved institutional margins.

    Effective tax rate
    23%slightly below guidance and consensus
    Q1 FY26

    Lower than expected due to improved profitability from non-U.S. operations.

    Compensation ratio
    57.5%down from 58% a year ago
    Q1 FY26

    At the high end of full-year guidance, benefiting from strategic actions.

    Operating non-compensation ratio
    19%
    Q1 FY26

    At the midpoint of full-year guidance, benefiting from strategic actions.

    Tier 1 leverage ratio
    11.4%increased
    Q1 FY26

    Reflects strong capital position.

    Tier 1 risk-based capital ratio
    18.7%rose
    Q1 FY26

    Reflects strong capital position.

    Excess capital
    $560 million
    Q1 FY26

    Amount of capital above the 10% Tier 1 leverage target.

    Shares repurchased
    2.8 million
    Q1 FY26

    Shares repurchased during the quarter.

    Remaining share repurchase authorization
    10.2 million
    Q1 FY26

    Number of shares remaining under the current authorization.

    Fully diluted share count
    163.1 million
    Q2 FY26

    Expected fully diluted share count for the second quarter, assuming no additional repurchases and stable stock price.

    Non-compensation expenses
    $293 millionup 8% year-over-year
    Q1 FY26

    Total non-compensation expenses, excluding a prior-year legal accrual.

    Software loan exposure
    $500 million
    Q1 FY26

    The firm's exposure to software loans, which has been reviewed carefully and shows no broad credit issues.

    CLO book
    $6.8 billion
    Q1 FY26

    Details on the CLO portfolio, highlighting its high rating, credit enhancement, and diversification.

    Client cash balances (sweep)
    increased >$670 million
    Q1 FY26

    Increase in sweep balances during the quarter.

    Client cash balances (non-wealth funding)
    increased nearly $1.2 billion
    Q1 FY26

    Increase in non-wealth client funding, reflecting strong momentum from the venture group.

    Client cash balances (third-party money funds)
    increased nearly $200 million
    Q1 FY26

    Increase in third-party money fund balances.

    Excess deposits available to Stifel Bancorp
    $6.2 billion
    Q1 FY26

    Off-balance sheet deposits available for funding growth, primarily from venture and fund banking.

    European restructuring financial impact
    $100 million
    Annualized

    The combined revenue impact and expected cost savings from the European restructuring and SIA sale.

    Client cash balances (total AUM allocated to short-term cash)
    $60 billion
    Q1 FY26

    Total client assets allocated to short-term cash products.

    Client cash balances (sweep)
    $12 billion
    Q1 FY26

    Sweep balances as part of the total short-term cash, with a portion being advisory cash accounts not subject to sorting dynamics.

    Client cash balances (unsorted transactional cash)
    $7 billion
    Q1 FY26

    Estimate of unsorted transactional cash remaining after accounting for advisory cash.

    Deals & partnerships

    1
    Stifel Independent Advisors (SIA)Sale of Stifel Independent Advisors

    The sale of Stifel Independent Advisors closed in February, contributing to a nonrecurring gain in the quarter's results.

    Risks & headwinds

    6
    Geopolitical and economic uncertaintyOngoing

    Escalating geopolitical risk, rising energy prices, widening credit spreads, increased interest rate uncertainty

    Mitigation: Stifel's diversified business model is not built around trading volatility, providing durability. The firm focuses on client-driven and relationship-oriented businesses.

    Frontier AI models and cyber securityOngoing

    Increased capability for both defending and causing harm; potential for new categories of technology like Mythos

    Mitigation: Emphasizing cyber security as a national security issue requiring a national response; Stifel is in the early process of linking data to new AI tools to enhance client relationships while keeping professionals at the center.

    Liquidity in private credit vehiclesOngoing

    Some funds limiting withdrawals, secondary market participants offering liquidity at significant discounts to NAV

    Mitigation: Stifel's lending philosophy is relationship-oriented, not volume-driven, with virtually no exposure to specific credit situations causing losses. The firm's CLO portfolio is highly rated and diversified, showing resilience to stress.

    Software loan credit issuesOngoing

    Approximately $500 million exposure on a $43 billion balance sheet (not material)

    Mitigation: Careful review of software exposure indicates no broad credit issues, only normal pockets of stress.

    Pace of investment banking realizationRemainder of FY26

    Strong investment banking and advisory pipelines

    Mitigation: Pace of realization will depend on geopolitical and economic factors (energy prices, credit spreads, interest rate uncertainty). Management anticipates a strong 2026 if risks remain within market expectations.

    Seasonal tax payments and cash outflowsQ2 FY26 (April)

    Sweep balances down $1.4 billion, Smart Rate down $400 million in April

    Mitigation: Recognized as a normal seasonal trend due to tax payments, not indicative of a broader issue. Other treasury deposits increased by $700 million, partially offsetting outflows.

    What to watch in Q2 FY26

    5

    Net interest income

    Q2 FY26
    CurrentLower end of guidance, $3 million below consensus in Q1 FY26
    Target$280 million to $290 million

    Why it matters

    NII is a significant revenue component, and its trajectory impacts overall profitability, especially given Q1's miss and the Q2 guidance.

    For the second quarter, we expect net interest income in the range of $280 million to $290 million.

    Q&A highlights

    5

    How will AI affect advisor demand and pricing, and will agentic AI tools further reduce cash sweep balances, impacting revenue streams?

    AI will enhance advisor productivity by assisting with mathematical tasks and uncovering opportunities, acting as a tailwind for advice rather than a headwind. While cash optimization tools may emerge, transactional cash will not disappear, and Stifel is less impacted than peers due to prior balance sheet adjustments and diversification. The firm has unpulled levers like account fees if needed.

    “So to answer your question, what will happen, I believe, at least on the adviser side, is that this will make our advisers more productive. It will unearth potentially and it will more opportunities, more ideas, more things on tax savings idea, more on state, more things that will help our advisers do what they do, which is generally be the financial adviser to not only individuals but to families. So I see this as a tailwind to advice, not a headwind.”

    asked by Devin Ryan · answered by Ronald J. Kruszewski

    2 min read6 chapters

    Detailed Narrative

    01

    AI Strategy and Cyber Security Concerns

    Stifel is actively integrating AI to enhance productivity for advisors, investment bankers, and support teams, aiming to strengthen client relationships. Early results are positive, with a focus on leveraging data. However, CEO Ron Kruszewski expressed concern about frontier AI models like Mythos, highlighting the increased capability for both defense and harm. He emphasized that cyber security is the industry's most critical issue, requiring a national response, viewing it as a matter of national security.

    02

    Lending Philosophy and Credit Exposure

    The firm's lending philosophy is relationship-oriented, not volume-driven. Stifel had virtually no exposure to recent credit issues like Tricolor or Medallia. Regarding private credit, the company noted liquidity concerns in some funds but stated that underlying assets haven't changed. Stifel's software loan exposure is approximately $500 million on a $43 billion balance sheet, which is not material, and a careful review indicates no broad credit issues as suggested by headlines.

    03

    Legislation and Market Structure Stance

    Stifel plans to offer stablecoins and build capabilities for tokenized equities. However, the firm advocates for existing regulatory frameworks to apply: yield-paying stablecoins should be treated as deposits or money market funds, subject to full bank regulation. Tokenized equities should adhere to all regulations of the underlying asset, emphasizing that technology changes delivery, not obligation, and investor protection principles must remain consistent.

    04

    European Restructuring Impact

    The firm completed a strategic restructuring of its European equities business, which contributed to a significant improvement in institutional pretax margins, up nearly 1,300 basis points year-over-year. This involved unwinding market-making and sales trading in local European markets to focus on leveraging U.S. capabilities through an advisory platform, particularly for European clients seeking access to U.S. capital markets.

    05

    Capital Position and Allocation

    Stifel maintains a strong capital position with a Tier 1 leverage ratio of 11.4% and a Tier 1 risk-based capital ratio of 18.7%. The company holds nearly $560 million of excess capital based on a 10% Tier 1 leverage target. During the quarter, Stifel repurchased 2.8 million shares, with 10.2 million shares remaining under authorization, reflecting a disciplined approach to capital allocation and a belief that its stock is undervalued.

    06

    Deposit Growth and Funding Strategy

    Despite slower loan growth in Q1, client cash balances increased meaningfully, with sweep balances up over $670 million and non-wealth client funding up nearly $1.2 billion, driven by the venture group. The firm has significant funding capacity, including $6.2 billion of excess deposits available off-balance sheet, primarily from commercial treasury deposits, to support its full-year asset growth target of up to $4 billion.

    AI-generated summary of the company’s earnings call. Not investment advice.