Stifel Financial Corp.
Q4 2015 Earnings Call Transcript

Published: 24 Feb 2016

[Operator:]

Good afternoon. My name is Christine and I'll be your conference operator today. At this time, I would like to welcome everyone to the Stifel Fourth Quarter and Full Year 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer session. Thank you. Jim Zemlyak, CFO of Stifel, you may begin your conference.

[James Mark Zemlyak:]

Thank you. Good afternoon. I'm Jim Zemlyak, CFO of Stifel. I would like to welcome everyone to our conference call today to discuss our fourth quarter and full year 2015 financial results. Please note this conference call is being recorded. If you'd like a copy of today's presentation, you may download the slides from our website at www.stifel.com. Before we begin today's call, I would like to remind listeners that this presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not statements of fact or guarantees of performance. They may include statements regarding, among other things, our ability to successfully integrate acquired companies or branch offices and financial advisors; general economic, political, regulatory and market conditions; the investment banking and brokerage industries; our objectives and results; and also may include our belief regarding the effects of various regulatory matters, legal proceedings, management expectations, our liquidity and funding sources, counterparty risks or other similar matters. As such, they are subject to risk, uncertainties and other factors that may cause actual future results to differ materially from those discussed in the statements. To supplement our financial statements presented in accordance with GAAP, we may use certain non-GAAP measures of financial performance and liquidity. These non-GAAP measures should only be considered together with the company's GAAP results. To the extent we discuss non-GAAP measures, a reconciliation to GAAP is available on our website at stifel.com. And, finally, for a discussion of risks and uncertainties in our business, please see the business factors affecting the company and the financial services industry in the company's Annual Report on Form 10-K and MD&A of results in the company's Quarterly Reports on Form 10-Q. I will now turn the call over to the Chairman and CEO of Stifel, Ron Kruszewski.

[Ronald J. Kruszewski:]

Thanks, Jim. I'd like to start today's call with my opening comments. First, we are proud to report that 2015 represented our 20th consecutive year of record net revenues. We completed two acquisitions, Sterne Agee in June, which added financial guidance and fixed income capabilities; and Barclays Wealth and Investment Management, Americas in December, which significantly expands our high net worth advisory business. While the challenging market environment impacted fourth quarter activity, we are committed to optimizing our current capital base, managing our expense base, and taking the necessary steps to achieve our key financial targets. We will continue to selectively add capabilities and evaluate opportunities that further our strategic objectives. With a balanced business model, we believe we are well-positioned to take advantage of future opportunities. The market stats are presented on this next slide. And, look, I don't need to go through these numbers with everyone here. I'm sure everyone was aware of the challenging market environment during the fourth quarter of 2015, which, frankly, continues through this day. I'm going to pass through that slide. Now, on today's call, I will address our quarter and annual results and then I'll turn to updates on acquisitions, our approach to acquisitions, our balance sheet growth, and, finally, I will take some questions. Before I turn to the quarterly results, I wanted to mention that the firm has made significant progress in building our wealth management and institutional businesses. We have grown organically and through acquisitions in both businesses. With regard to the institutional growth, we have added a tremendous amount of talent, product and capabilities to our franchise. Following a highly successful 2014, the institutional group was not able to outrun many of the significant headwinds in both its brokerage and investment banking business. These headwinds were building as the year unfolded and directly impacted our results in the fourth quarter. However, our mission has not changed. We continue to take advantage of opportunities and invest for future growth. Our deliberate strategy of conservatively increasing bank and balance sheet leverage is underway. And our execution of acquisitions and their integration is on track. We are a growth company and we'll continue to build into the premier investment banking and wealth management firm. Now let's turn to our financial results. Net revenues for the quarter were $581 million, an increase of 1% over the prior year and a decline of 1.6% from the third quarter. On a non-GAAP basis, net income was $40 million, diluted EPS $0.51, which compares with non-GAAP EPS of $0.75 last year. Comp to revenue for the quarter, I think, it's noteworthy, was elevated at 64.8%. It was up both over last year and last quarter, reflecting increased comp costs associated with the build out of our infrastructure. However, for the year, the compensation ratio was 63% of net revenue, directly in the range of our stated goal of 62% to 64%. Non-comp operating expenses increased 11% over the prior year quarter, yet were flat with the last quarter. The combination of increased comp to revenue and increased operating expenses resulted in a decline of our pre-tax margin to 9.8%, far below our goal of 15%. I would note that those two items, while they depressed our earnings, we did have a lower-than-expected tax rate in the quarter, which positively impacted our results. But net-net, the tax rate did not offset the increased operating expenses and the increase in compensation. Turning to the results for the full year, as I mentioned, 2015 represented our 20th consecutive year of record net revenues. These revenues totaled $2.3 billion, up 5.5% over 2014. On a non-GAAP basis, net income was $193 million, diluted EPS was $2.46. Our non-GAAP pre-tax margin was 13% in 2015, again, below our stated goal of 15% and below the 15.2% achieved in 2014. Let's shift to our top-line activity during the quarter, which I said was impacted by a challenging market backdrop. Total brokerage revenues increased 8.5% to $295 million and increased 2% sequentially. I'll give additional detail on the next slide. Investment banking revenues were down compared to last year and sequentially. I would note that the typically strong year-end quarter, which is usually – in our case we have historically had strong fourth quarters in banking – did not materialize this year and was impacted by heightened volatility and market uncertainty around commodity prices and really global growth in general. Asset management and service fees were $129 million. The increase was mainly due to growth in AUM, 1919 Investment Counsel and Sterne Agee. Now turning to slide the brokerage and investment banking revenues, for the quarter, we had record global brokerage revenues which were up 4% year-over-year. Institutional fixed income in the quarter increased 66% year-over-year, reflecting the benefits associated with the Sterne Agee merger principally in the taxable institutional business. In addition, we are encouraged by the synergies being recognized between the Sterne Agee's depository sales capabilities and combined with KBW's Depository Investment Banking franchise. We've seen a significant increase in this channel. Equity brokerage declined 18.6% year-over-year, again, reflecting the environment. Investment banking revenues were $103 million, down 40% year-over-year, principally driven by weaker advisory fees on a comparable basis. At this time, I would really like to recognize our Public Finance group, which posted record revenues for the year. This is a business that we've invested in, we've nurtured and we've grown both organically and through acquisitions over the last decade. These investments in our growth is highlighted by the fact that we led the nation in 2015 in the number of negotiated issues, serving as sole or senior manager for 811 transactions with a par value of more than $16.7 billion. And we led all firms in the number of issues in the national K-12 financing category, a really great year by our Public Finance group, representing a lot of growth and a lot of partnering, great folks in there. And I want to congratulate those guys for a great year – and ladies. Equity capital raising decreased 15%, generally, I believe, in line with the overall market for the quarter. It was $40 million in the quarter, increased from the third quarter, which was truly challenged, at least in that area. The overall equity market remained volatile in the fourth quarter, creating a challenging environment for issuers, particularly IPOs, which have been a significant contributor to our equity system. The number of priced U.S. IPOs in the fourth quarter of 2015 decreased to 32 from 68 during the same time period. That's really down 53%. For the full year of 2015, the overall U.S. IPO market was down in terms of both number of transactions, which were down 41%, and dollars raised, down 65%. Certainly a difficult year in the IPO market and not starting off particularly strong this year. Quarterly advisory revenues decreased 68% year-over-year to $33 million. I smile as I look back on advisory fees of almost $200 million for 2015 and think that I'm saying that that might be slightly disappointing. And that again goes to the growth that we've made in this company as advisory fees of $200 million, yet feel slightly disappointed. Our fourth quarter results are lower again because those periods had unusually high number of large transaction deals. Looking forward, our equity pipeline remains – the levels remain solid. We continue to be active in obtaining mandates for both new and existing clients. Our activity will always be dictated by market conditions. And they will vary from sector-to-sector. And, as I said, new issue business is at historically low levels – rates (11

[Operator:]

Your first question comes from the line of Dan Paris from Goldman Sachs. Your line is open.

[Daniel Paris:]

Hey, Ron. Good afternoon. This year was obviously characterized by investing in the business on the back of two deals and ultimately being able to support a lot bigger balance sheet. So I just want to get a sense of where you are in terms of this investing. Is the non-comp base in 4Q that we saw a good run rate? And maybe just adjusting for only two weeks of Barclays in the run rate, but just trying to get a sense of where we are in the cycle.

[Ronald J. Kruszewski:]

Well, look, Dan, first of all, we made significant investments in our infrastructure. And, as I've said, I believe two things. One, we had a lot of non-comp expenses in consultants. This concept on the regulatory front was expensive. I don't think it's any secret that the DFAST requirements are very expensive. We took them very seriously, because, frankly, to not comply would eviscerate our entire strategy of how we grow. So we made a significant effort to comply. That resulted in a lot of non-comp OpEx like consultants and getting everything in order. Those expenses I believe go away. We do have the Barclays now that we have to roll in. We're already growing. It's hard to always try to say this is the number. But I believe that the infrastructure of people, our overhead as a percentage of net revenues, is probably at levels that I haven't seen since 2004. And the answer is that the overhead structure that we've built support a much larger firm and a bigger balance sheet. So it's almost like build it and they will come. We've spent the expenses and you'll see the balance sheet growth. And, hopefully, if the markets rebound, I like our position in the marketplace.

[Daniel Paris:]

If we think about some of those puts and takes of stuff like CCAR, stress testing costs going away but some of the Barclays stuff coming in the run rate. Is this a good jumping off point for non-comp?

[Ronald J. Kruszewski:]

Well, look, I guess that I want to and maybe I'll put out with a run rate. I'm not prepared to give an estimate of non-comp expenses as I sit here right today. So I'm not going to answer that question although I do want to get that so that you could model. And so I really can't answer that. Remember Barclays, in terms of the fourth quarter, was only here for three quarters of a month. And so, I think, there is – the Barclays' transaction we told you we think contribution margins are. But, look I'll take it as a note to try to provide a little more guidance on non-comp OpEx before the next call. Fair enough?

[Daniel Paris:]

Fair enough. And then maybe just last one along the same lines. Obviously, we don't know what the final DOL rule is going to look like. But as part of the investment spend that you've done this year, has some of that contemplate changes to the way you're going to need to run the business post-DOL? Or are we waiting and there's a risk that we'd see another round of expense build on that?

[Ronald J. Kruszewski:]

Look, we're not waiting. We're not waiting. But I think, frankly, I've been watching and the products that I see that are similar to what we're thinking about. It's more some of the issues, Dan, that are going to surround in many ways the best interest exemption. And I testify that I felt it was unworkable. They said there were changes. I don't really want to anticipate that because there are some products that will make sense on the advisory front. I think that what everyone is waiting for is to determine whether or not you can actually have an infrastructure spend or frankly whether you can even operate in an environment that the best interest exemption might have suggested under the prior rule. So, frankly, we've thought about it. We've looked at it. We've considered a number of things. We have decision trees as to what we think is economically feasible versus not economically feasible. But, frankly, I want to get to final rule because I've been told that a lot of the things that I personally testified about were not going to be issues. Because the best interest exemption in many, many ways is not workable. And if you can't do that then it's going to mean a lot towards investors and how you approach self-directed brokerage IRAs in general. That's my belief but it's hard to speculate on something I haven't seen yet.

[Daniel Paris:]

Understood. All right. Thanks for taking my questions.

[Ronald J. Kruszewski:]

Yeah.

[Operator:]

Your next question comes from the line of Chris Harris from Wells Fargo. Your line is open.

[Christopher M. Harris:]

Thanks. Hey, Ron.

[Ronald J. Kruszewski:]

Hey, Chris.

[Christopher M. Harris:]

Hey. So you highlighted the challenging macro in Q4 and we know Q1 isn't off to a great start for really anybody. Wanting to get your thoughts then. If revenues kind of stay here, how aggressive do you guys want to be on the cost side of the business? I know there's puts and takes, right. You've invested so much and you don't want to lose talent. And there's risk to underinvesting. And then if there is some leverage on the cost side, maybe what costs might you want to focus on?

[Ronald J. Kruszewski:]

Well, I think, the first thing that I want maybe you all to do is to recognize within a range of however you want to do it, I do it, okay. So I'm going to try to answer your question. But recognize again that a lot of our infrastructure spend and our capital base support a much larger balance sheet. Okay. And we have limited the growth in our balance sheet. And so, I've always said that we're being compared based upon an unlevered balance sheet. And I run these numbers levered. And I know that we had the opportunity to do it. We went from $9 billion to $13 billion in one quarter. I stated we'd be at $15 billion. So to answer your question, the first thing we do is look at where are we on a levered basis. And then where are we compared to various peers and what they're doing and how do we feel about this. And I don't feel that we really have necessarily an expense problem. Now if this is the new normal and there are no IPOs or two (44

[Christopher M. Harris:]

Got it. Okay. Understood. And then as it relates to growing the balance sheet from here, I think, you'd referenced maybe $15 billion by this summer. How should we be thinking about the composition of that growth, whether it's in loans or securities? I think in the past, you'd kind of talked about a 50%/50% mix as being optimal. Is that reasonable given where we are? I know you'd mentioned it depends on where spreads are and your appetite for risk and so on. So, any guidance you could provide there would be great.

[Ronald J. Kruszewski:]

You just answered your own question, Chris. I mean you want to come over here and tell me what to do based upon – I mean I'm all ears, okay. I mean I think that we consistently, as I've said, looking backwards, we have felt that the investments that we've made in the investment portfolio, in security-based loans and some of the investments that we have made have provided very attractive risk-adjusted return and ROEs that are accretive. I mean because we're always allocating capital to whatever we do. We take proper interest rate hedges. And so everything we do is with a mind toward risk-adjusted returns and doing things appropriately. As I sit here today, I don't know really how – I know we have a lot of opportunities. I believe that we've shied away from the credit market in terms of loans. I believe that we're seeing credit spreads and terms and covenants and things like that that are making that more attractive on a relative basis. But the only way I can answer it is the way I always answer it, is that I believe as long as we can deploy capital at an acceptable ROE, whether that be in bonds or loans, then adjust it for risk. That's what we'll do. The risk-adjusted density, I can't answer. Not because I don't want to, because I just don't know.

[Christopher M. Harris:]

Okay.

[Ronald J. Kruszewski:]

Kind of know it when you see it.

[Christopher M. Harris:]

All right. Thank you.

[Operator:]

Your next question comes from the line of Hugh Miller from Macquarie. Your line is open. Hugh M. Miller - Macquarie Capital (USA), Inc. Hi. Thanks, Ron, for taking my questions.

[Ronald J. Kruszewski:]

Sure. Hugh M. Miller - Macquarie Capital (USA), Inc. Sure. First question, you kind of made a comment in the prepared remarks about kind of the Barclays transaction that has been, I guess, a positive in your ability to attract some of the other advisors from larger peers. Can you give us some more color on what you're seeing there? I'm not sure if you were able to quantify that in terms of how many reps you've been able to kind of see since then come onboard. What are you seeing there? And what's your expectation on your ability to kind of see growth in the financial advisor head count?

[Ronald J. Kruszewski:]

Look, the amount of interest that we have received from what I would characterize as many of these high net worth teams from many large firms has exponentially grown. And it is a direct result of the perception that what our platform is and our ability to service clients, which I always felt was reality. But the perception that we could retain and hire the Barclays' people has helped. We've seen a lot of capabilities. I was thinking of something. I want to make this comment a little bit and it goes to a lot of what's going on in the market with those type of deals. But I get a lot of people who say oh, you know, there were – when we got around to it, there were 150 advisors at Barclays and 50 of them left or 60 of them left and what happened? And I always say it in reverse. From my perspective, seeing how they didn't even know who Stifel was, I got a shot at about 10 of them, and recruited 100 of them, okay. And I think that that's kind of what's happening now. All right. When I first walked in there, I always remember. I'm sure some of them are listening on this call and smiling. They looked at me and said, see ya. And then we were able to recruit them. And because of that and the investments that they brought us and some of the capabilities that they brought us in terms of how they view the marketplace. There are many platforms that we've built into our technology and simply word of mouth, we have a number of people say well, wait a minute, if you can do that then I need to talk to you. Those phone calls are up – forget the percentage. Because when you go from a low number to a percentage it's huge. And we are seeing it. If we have any concern toady it's you're dealing with market multiples. You're dealing with production that may be elevated and deals. It's always hard in down markets. But I will tell you that our place in the marketplace as it relates to options for people looking for a home was significantly enhanced by both the Barclays transaction in perception and in capabilities on what we added. So look, we're seeing a lot. These are interesting teams to recruit all. Maybe I'll end with that. Hugh M. Miller - Macquarie Capital (USA), Inc. Sure. And I guess just a quick follow-up on that is that you kind of started to allude to it about the challenging market multiples and production (50

[Ronald J. Kruszewski:]

Are you talking about new recruits? Hugh M. Miller - Macquarie Capital (USA), Inc. Yeah. Just as you're bringing on some of these people that are now interested, that may be higher producers and you consider kind of where the market is at in terms of upfront recruiting awards. Are you still seeing opportunities to be able to move forward?

[Ronald J. Kruszewski:]

I think maybe I'll characterize it this way, okay. We get a lot of interest. We haven't changed our pencil and our back of the envelope the way we do things. Okay. We're going to be a lot more successful. But, as I have said, the Street deals that pay some of the multiples that you read about, my pencil breaks when I start writing those down. It doesn't work. And so what we're seeing is we certainly have raised our level because we're talking to a lot of different people but we're really nowhere near what are still some of the shareholder destroying type stuff that goes on. I don't understand it and we're not going to do that. So to the extent that I just believe that people who are looking for a place where they want to be and want to work, we're here. And those – we're getting the right people. So we're not the high deal on the Street, never have and not going to be. Hugh M. Miller - Macquarie Capital (USA), Inc. All right. That's certainly helpful. And just I had a couple of questions just getting back to the Bank. As we take a look, you mentioned kind of the differences in risk-weightings between securities and loans. When we take a look at kind of the loan yields versus the securities portfolio, a couple of things there. First, the securities portfolio has seemed to have gone up considerably quarter-over-quarter. Is that just a function, kind of, of the duration being extended there and where you're seeing opportunities to invest? And how do we think about the gross yields on securities-based loans versus C&I loans and call it that 3% loan yield that you're seeing right now on the loan portfolio? How should we be thinking about that given the increase in credit spreads and as we think about 2016?

[Ronald J. Kruszewski:]

Yeah. You should work at a bank. You'd find some of these things interesting. I mean so look, I mean I think our loan duration's done. I mean I think we've seen real opportunity in the loan portfolio. That's what we've added to the loan portfolio. We look at everything based upon allocated capital. So if you have zero risk-weighting that doesn't mean you need zero capital. You need 7%, 7.5%, 8%. I'm just picking a number. You need Tier 1 capital because you need capital and so you have to allocate that. If you have a C&I loan, you have to look at the fact that you need risk-based – it's a risk-based capital of 100%, how do those returns work, how does that risk work, all versus capital and risk. And so what I've seen, we've always felt security-based loans relative to the floating rate nature, their duration, the fact that we understand the collateral and the capital allocated is a great asset class. The yields are not as high necessarily on an absolute basis of, say, a C&I loan. But on a risk-adjusted basis, we like that asset class. As I said, we're beginning to see risk-adjusted spreads and covenants. Remember, you can't just lose sight of a fact of terms. But we're beginning to see things that can make that asset class, what I would generally define, as C&I as maybe being attractive. Again, what I would say to you and what I want to say to shareholders is if we were simply looking to drive pre-tax earnings, we would just lever the balance sheet tomorrow. There's net interest spread in almost anything, but we don't look at it that way. We leverage the balance sheet risk-adjusted and allocated capital to every position we put out there. That's how we look at it. Sometimes we're transfer pricing to do certain things. But at the end of the day, that's what we do. And I would say the environment in the last quarter was very attractive to adding to our investment portfolio risk-adjusted. Hugh M. Miller - Macquarie Capital (USA), Inc. Okay. And thank you. And then last for me, if conditions are unchanged given kind of what you're seeing right now for covenant spreads, returns in the Bank, how much of the growth that you mentioned in the bogey of $15 billion by mid-2016 is just a function of kind of pent up demand given that you're trading sideways for some time? As we think about the back half of 2016 and beyond, if conditions are kind of unchanged, would we anticipate that that growth rate or pace would continue? Or is that unlikely to happen?

[Ronald J. Kruszewski:]

Well, again, we're going to grow the Bank prudently. Okay. We had a lot of pent-up demand in the Barclays transaction, which took us from $9 billion to $13 billion. In any credit interest rate cycle, that growth is almost not a good risk-adjusted return, because you're making a bet in that cycle, whether it'd be interest rate yield curve steepness or credit spreads. So we want to grow the Bank prudently. What I would say to you is, I think, I've said a lot of times. The relative size to our Bank relative to our wealth management business and relative to our institutional business and relative to our muni finance business and relative to everything we do, we have plenty of opportunities to grow the Bank. Our need – and we have a lot of deposit funding – our need is to continue to be disciplined in the Bank growth. And, hopefully, knock on wood, you look at our Bank performance and our NPLs and non-performing assets and the credit statistics up to this point, I think, we've done what we've said. Hugh M. Miller - Macquarie Capital (USA), Inc. Okay. Thank you very much.

[Operator:]

Your next question comes from the line of Steven Chubak from Nomura. Your line is open.

[Steven J. Chubak:]

Hi. Good evening.

[Ronald J. Kruszewski:]

Hey, Steven.

[Steven J. Chubak:]

Hey, Ron. So one of the things I just wanted to get a better handle on is where your capital management priorities lie at the moment. The challenges of, based on the commentary in your prepared remarks, that you're really leaving the door open to I suppose the three levers that most of us are thinking about, which is growing the Bank, accelerating the share repurchase activity, and considering some more deals. And just want to get a sense as to given what's happened to your share price and the challenging environment, where your priorities lie today?

[Ronald J. Kruszewski:]

I mean, obviously – I mean, from my perspective, well, we can never say about this. But I certainly has proven by the number of shares we bought back at levels higher than where we are today, I think, that that is an attractive use of capital. We do capital projections and capital planning. And we look at share repurchases. We look at capital deployment. We are probably – in terms of deployment, I would say, we're a little more cautious than normal. Normally, your best opportunities for deals come in environments like this. So you tend to overpay in good environments and you tend to do good deals in bad environments. But that said, there's a lot of banks on the Street. So I would say we're maybe a little more cautious on that front. But, look, we're going to drive our returns, our return on equity, our margins, our pre-tax margin and our EPS, all our levers that drive shareholder value. And we're going to do all of them as the individual largest shareholder in this place would do himself, that's me. So I'm going to it and do it appropriately. So, all of those levers are available. None of them are excluded. And, really, I don't know that any one of them is necessarily favored, although I would admit, our stock price is at levels that seem – I'll leave it there – seem something.

[Steven J. Chubak:]

All right. Maybe just a follow-up on a couple of the expense questions from earlier. I recognize that you're probably going to give us some more detail on the non-personnel side in future calls, but just wanted to get a sense as to how much of the elevated expense is tied to the regulatory investments that you've made and whether it's DFAST and the like? How much of that has been front-loaded and should decline over time and how much of that's going to be reflected in the run rate going forward?

[Ronald J. Kruszewski:]

Well, look, I mean I think, as I've said – Steven, I said I think that the personnel and the capabilities is front-loaded. I think I've already said that as we look at our overhead as a percentage of net revenues, we measure it not only as a segment but by area. And so we have a historical perspective. And, in general, our overhead structure relative to the revenue of the firm is elevated. But that's what we set out to do. So, as I've said, we spent an additional $16 million in IAA compliance and all our risk systems and technology and I've given all those numbers. So a lot of those expenses are front-loaded. We did have a lot of one-time what I would call non-comp OpEx, consulting and all of that, that does go away. That was to help us get to where we wanted to be. But I believe that a lot of the expenses that we put in place was done, as I said to all the shareholders, with the express intent of being able to prudently from a regulatory and risk management and just overall evaluation perspective prudently grow this company beyond – firstly, $10 billion is a line in the sand, but certainly much larger than that. So we've put in a lot of infrastructure. And now we need to build the firm into that to a certain extent. I don't see additional personnel hires needed, certainly, at this level of revenue at all. And, again, that just goes to how we look at the business.

[Steven J. Chubak:]

Got it. And just one more for me. Recognizing that the investment banking backdrop currently is certainly challenging, the one area where some of your advisory peers have highlighted increased activity is on the restructuring side. And just given the fact that you have Miller Buckfire under your umbrella, just wanted to get a sense as to whether you anticipated growing contribution from that particular business?

[Ronald J. Kruszewski:]

Well, of course, I do. I mean it's -

[Steven J. Chubak:]

Maybe you can quantify it for us.

[Ronald J. Kruszewski:]

We have that. Of course, I do. It's always ironic to talk about how good it is for companies to need to restructure. But in that business, it's true. And so I mean that – we don't have Miller Buckfire to the logo. I mean we do, I guess. But we want to participate in restructuring space. We've done some very noteworthy transactions, as I said. And I can't disclose what we might be working on. But, as you know, we've got deals award for being the advisor to the city of Detroit. This comes to mind for me as well as a very significant, not only noteworthy of the marketplace, the largest, but also indicative of our intellectual capital that resides within Miller Buckfire. So, of course, I would like to participate in an inquiry. I always feel a little uncomfortable picking that business.

[Steven J. Chubak:]

I understand. And, Ron, it might be helpful if you could at least quantify what that business contributed during the last crisis or at least going through the last cycle. So just to give us a range as to what peak revenues are, maybe what the trough levels are which is likely over the last couple of years given the low levels of default.

[Ronald J. Kruszewski:]

Well, look, we merged with them at trough levels, right, and their peak level which was, I guess, 2009, 2010, 2011, I don't think is relevant but it might be but I don't – I guess that I hear you in terms of that. When we merged with them we were at a trough. And I think there's more opportunity today. I can ask Victor to give a historical run. But I think most of the restructuring firm show our revenues back in peak levels that even they don't think they're going to get to today. At least I hope they don't get to in 2009 and 2010. So I don't know – obviously I don't disclose restructuring advisory revenues. I guess I'll consider whether we should do that. We don't disclose revenues by product type either. So, at this point, I really can't answer your question.

[Steven J. Chubak:]

Well, I appreciate the effort and thanks for taking my questions.

[Ronald J. Kruszewski:]

You got it.

[Operator:]

There are no further questions at this time. Mr. Ron Kruszewski, I turn the call over to you.

[Ronald J. Kruszewski:]

Kruszewski.

[Operator:]

Thank you.

[Ronald J. Kruszewski:]

It's all right. No one can pronounce it. So to our shareholders, look, I believe that these are interesting times, certainly interesting times for me. I'll leave you like I always do. The reality sometimes of what's going on versus the market's perception are completely different. This is one of those times. See you.

[Operator:]

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.