I would like to welcome everyone to the Stifel Financial Fourth Quarter and Full Year 2018 Financial Results Conference Call. At this time, I’d like to remind everyone that today’s call may include forward-looking statements.

These statements represent the firm’s beliefs regarding the future events that, by their nature, are uncertain and outside of the firm’s control. The firm’s actual results and financial condition may differ possibly materially from what is indicated in these forward-looking statements.

For a discussion of some of the risks and factors that could affect the firm’s future results, please see the description of risk factors in the current Annual Report on Form 10-K for the year ended December 2017.

I would also like to direct you to read the forward-looking disclaimers in Stifel’s quarterly earnings release, particularly as it relates to the firm’s ability to successfully integrate acquired companies or the branch offices and financial advisors, changes in the interest rate environment, changes in legislation and regulation.

You should also read the information on the calculation of non-GAAP financial measures that’s posted on the Investor Relations portion of the firm’s website at www.stifel.com. This audiocast is a copyrighted material of Stifel Financial Corp. and may not be duplicated, reproduced or rebroadcast without the consent of Stifel Financial Corp.

I will now turn the call over to Stifel’s Chairman and Chief Executive Officer, Ron Kruszewski..

Thank you, Operator. Good morning and thank all of you for taking the time to listen to our fourth quarter and full year 2018 results. Earlier this morning, we issued a press release with our results and we posted a slide deck on our website. Joining me on the call today is our Co-President, Jim Zemlyak; and our CFO, Jim Marischen.

I’m going to run through our full year and quarterly highlights and our business segments. Jim will take you through our revenue and expense lines, as well as our balance sheet. And then I’ll come back with our updated talk on the full year 2019 and my concluding thoughts. Turning to 2018, we achieved our 23rd consecutive year of record net revenues.

Strong growth from our global wealth management segment, particularly in asset management fees and net interest income, more than offset the expected decline in our institutional brokerage business. Our investment banking business are down slightly from the record year posted in 2017, nevertheless had the second best year in our history.

In terms of our non-GAAP operating leverage, our focus on expense discipline has resulted in a full year compensation ratio of 58%; down 320 basis points from 2017 despite continuing invest on people to drive our business. Total non-compensation expenses were up only 9 million year-over-year after adjusting for investment banking growth.

As a result, we generated record non-GAAP earnings per share of $5.28, up 32% from last years’ record and full year pre-tax margins of 19.6%. Also our GAAP earnings per share of 473 increased 121%. I’d also note that we generated non-GAAP return on tangible equity of 24.4%.

Our tax reform helped our quarter results, if you remove the impacts of the lower corporate tax rate in 2018, our EPS was still up 18%, which highlights the benefits we’ve received from the recent investments in our business.

For the full year, we returned nearly 215 million to our shareholders through dividends and a repurchase of nearly 3.4 million shares. This return on capital was in conjunction with growing our balance sheet by 15% or more than 3.1 billion.

We remain confident in our ability to generate significant cash flow and reflecting this our Board of Directors have approved a 25% increase for our quarterly dividend to $0.15 or $0.60 annually per share. Moving on to our quarterly results, we had a fourth quarter as net revenue came in at the top end of our guidance.

Net revenue was our second strongest quarter driven by record asset management revenue, record net interest income and our second strongest investment banking quarter.

Corporate revenue improved sequentially 3% as stronger core business was partially offset by trading losses resulting from the volatility experience during the latter part of the quarter.

Overall, fourth quarter revenue totaled 794 million, a combination of strong revenue and continued expense management through our non-GAAP pre-tax margins of 22% up 180 basis points over the prior year. As a result, non-GAAP earnings per share totaled $1.57, up 7% over 2017.

Quarterly non-GAAP return on equity and return on tangible common equity totaled 16.7% and 27% respectively. During the quarter, we repurchased 2.3 million shares at an average price of $46.64. On the next couple of slides, I’ll go over the results from our two primary segments, starting with global wealth management.

We recorded quarterly net revenue of 509 million, up 8% for 2017. We continue to benefit from record asset management revenue and net interest income, which also drove our full year record wealth management revenue of nearly 2 billion, an increase of 9%. The 14% decline in the S&P 500 during the fourth quarter negatively impacted client asset levels.

Total client assets declined 7% from record levels in the third quarter to 270 billion. Fee based assets declined 6% and ended the quarter at 90 billion. However, while a less client asset levels will weigh on asset management revenue in the first quarter of ‘19, we are encouraged by the increased client activity for the start of the year.

Wealth management compensation ratio in the fourth quarter declined 40 basis points year-over-year and the non-comp ratio also decline 90 basis points as the growth in bank revenue and our focus on expense management continue to generate positive results.

Improved revenue on lower expense ratio resulted in pre-tax margin of 37.1%, up a 130 basis points year-over-year. We finished the year with 2301 advisor, a net addition of 57 during 2018. In the fourth quarter, we had three net additions of the size of recruitment a typical low in December.

Overall, we continue to see positive momentum in our recruiting efforts as the number of global financial addition remained strong and our backlog of recruits remained (inaudible). Baring a significant changes in the market, we expect a strong recruiting year in 2019.

Moving to the next slide, our institutional group posted its second strongest year of net revenue of more than 1 billion.

I am extremely pleased with these results as we saved a number of headwinds in this business in 2018 including the implementation of method, the expected slowdown of municipal issuance and the ongoing weakness in the market environment for fixed income training.

Despite these issues, the improvement in our equity advisory and underwriting revenues which reflected our ongoing investment in to these businesses limited the impact of the aforementioned headwind on our 2018 institutional result.

For the fourth quarter, our institutional business generated revenue of 287 million, up 17% sequentially as both our equities and fixed income segment showed double digit sequential improvement.

Equity net revenue increased by 14% sequentially as strong advisory and improved brokerage revenue more than offset and expected a decline in underwriting revenue following strong third quarter result. Our fixed income business rebounded from a seasonally slow third quarter, as all business lines showed double digit improvement.

In terms of our investment banking pipeline, they remained strong and at similar levels to where we started 2018. Advisory revenue improved sequentially in the fourth quarter.

I do want to note that as we’ve grown our capabilities we are seeing and more noteworthy transactions, for example, we represented Chemical Bank to announce merger of the (inaudible) Financial Corp. and our restructuring work on the (inaudible) transaction are all again noteworthy transaction.

While length quarter results can be choppy due to the timing of deal closing, I like what our teams are doing across the Stifel platform. Equity underwriting revenue came in at 52 million as we benefited from the investments we made in to the business, particularly the 144A which had a strong quarter.

Given our current pipeline, we are optimistic about the outlook for our equity underwriting business in 2019. Debt underwriting improved 48% sequentially, while industry wide municipal issuance was flat sequentially and down significantly from record level a year ago.

Stifel ranked number one nationally in a number of senior managed negotiated new issues. Our backlog so far in the first quarter of ‘19 is stronger than the same period a year and we would expect improved results in 2019 as compared to 2018.

In terms of our institutional brokerage results, this remains a challenging business as we adopt our product offering to meet the changing market.

We are happy to announce that we closed the acquisition of First Empire on January 1, but we did not disclose the terms of the transaction, we would expect it to be modestly accretive of our fixed income brokerage revenue in the first quarter.

Overall, we’d expect institutional brokerage revenue in the first quarter to be up modestly versus our result in the fourth quarter. On the next few slides, our CFO, Jim Marischen will review specific expense line as well as our balance sheet and then I’ll return with my closing thought..

Thanks Ron and good morning everyone. So starting with brokerage and asset management revenues, despite the market sell-off and increased volatility, we generated total firm-wide brokerage revenue of 249 million and asset management fees reached a record 210 million.

Global wealth management brokerage revenue and fees of 367 million increased 2% sequentially, driven by a record asset management result and relatively stable brokerage revenue. A note that client cash balances increased by 1 billion at the end of the quarter to just over 16 million.

However, due to an improvement in equity market so far in January, the majority of this cash has been reinvested. Regarding our institutional business, brokerage revenue benefitted from seasonality as that was partially offset by trading losses in the quarter. Our institutional equity trading revenues totaled 49 million.

Commission revenue improved sequentially due to seasonality, but this was partially offset by increased trading losses in the quarter due to market sell-off. Particularly late in the quarter, our fixed income brokerage benefitted from higher seasonal activity as trade volumes were up 8% sequentially.

These market conditions help drive the 10% sequential increase in revenues. Moving on to the next slide, we take a look at our investment banking revenue. For the full year, our revenue was down 3% from 2017 record results as growth in advisory revenue was partially offset by lower underwriting revenue.

In terms of our fourth quarter results, our investment banking revenue totaled 201 million, up 19% sequentially. We generated advisory fees of a 111 million in the quarter, as we saw an uptick in revenue in multiple verticals including industrials, healthcare, financials, and technology.

Our capital raising revenue was 90 million, and it was down 3% sequentially as (inaudible) our equity underlying business declined from a very strong third quarter as market volatility increased.

A nearly 50% sequential increase in fixed income underwriting earnings nearly offset the decline in the equity underwriting as our public finance activity showed solid improvement. The next slide focuses on our growth in net interest income which totaled 127 million. This represented a 19% increase from the fourth quarter of 2017.

Our consolidated net interest margin was 247 basis points, which was up 1 basis points sequentially due to a 2 basis points increase in our bank net interest margin to 289 basis points. This was in the lower end of our guidance, as the large in-flow of client cash balances negatively impacted the bank’s net interest margin.

The sequential increase in the bank was the result of an increase in short term rate, and we do expect further momentum in the first quarter as the majority of the three month LIBOR increase will be reflected in the current quarterly results as the CLO portfolio reset during the first few weeks of 2019.

During the quarter, we grew our total bank assets by approximately (inaudible) which primarily in cash balances that I will discuss further in the next slide. Average yield in our loan portfolio increased by 23 basis points during the quarter, and our investment portfolio yield increased by 13 basis points.

The average yield and our liability increased 17 basis points sequentially. Deposit data of our (inaudible) program is approximately 50% in line with our competitors. That said we continue to expect deposit rate to rise due to competition. On the next slide, we detail Stifel Bancorp.

Total bank assets increased to 17.8 billion as average interest earning assets increased sequentially to nearly 16.9 billion. This was primarily attributable to higher cash balances, as we saw more client deposits with the bank during the last weeks in December.

Overall, cash and loan balances increased by 1.2 billion and 207 million respectively, while investments decreased 625 million. Total bank loans increased 22% year-over-year to roughly 8.7 billion driven by the 36% growth in commercial loans due in part to our acquisition of Business Banc, which closed in the third quarter.

Our provision for loan loss expense decreased sequentially to 5.2 million from 6.9 million due to lower loan growth. The allowance for loan losses as a percentage of loans increased sequentially to a 100 basis points. Overall, our credit metrics remained solid as the non-performing asset ratio was 14 basis points.

The asset quality metrics compares very favorably to the overall market which reflects our conservative approach to credit as reflected in yield on asset with in our banks. Let me talk a little bit about how we view our bank assets, and particularly our CLO portfolio.

In general, we think of our bank assets in three buckets; loans, CLOs and other investment security. The first two are relatively similar as the risks are tied to the credit quality of loans. With distinguishing CLOs from the C& I portfolio is the structural credit support.

Rather than reporting a loan loss provision of 1% to 2% for future credit events, (inaudible) direct loan our AA and AAA CLOs have structural credit subordination to lower charges to give us on average a cushion of 29% for future credit [loan].

The underlying collateral of these securities are commercial loan to primarily large cap public and private companies. We stress up the security to (inaudible) area that are at least five times greater than what was experienced in the financial crisis of 2008, and even though there was some (inaudible), we don’t see any losses in our portfolio.

In terms of our CLO performance in the fourth quarter, overall our portfolio generated solid performance as we do not see a material impact for our financial statements.

While there was a widening of credit and liquidity spreads in the quarter, the impact to us was immaterial as not only our CLO is highly rated, we hold them available for sale and held to maturity. So in general we feel very good about our CLO portfolio.

In terms of our investment holding in the bank, we finished the quarter at 7.3 billion, which decreased roughly 2% year-on-year as declines in mortgage backed securities in the quarter more than offset an 8% increase in asset-backed securities. Moving onto the next slide, we review our expenses.

For the full year, excluding the impact of the investment banking transaction for us, our non-GAAP expenses were essentially flat, as lower compensation cost offset a slight increase in non-comp operating expense.

We talked a lot about our focus on expense discipline and our 2018 expenses and this is where the progress we’ve made in the past few years. In terms of our quarterly non-GAAP expenses results, our compensation ratio was 56% in the fourth quarter, and we achieved our targeted full year compensation ratio of 58%.

This is essentially in line with expectations.

Non-GAAP operating expenses excluding the loan loss provision and expenses related to investment banking transactions of roughly 162 million was slightly above the high end of our range, and with all the excess expenses resulted additional revenue generated travel expense and a one-time data processing expense.

Excluding these factors, we would have been close to the middle of our guidance range.

In terms of our share count, our fully diluted share count was down roughly 750,000 shares sequentially, as a result of our repurchase activity that more than offset the additional shares from our fourth quarter impact on the shares issue that was associated with the Business Banc acquisition.

We expect our fully diluted average share count for the first quarter of 2019 to be approximately 79.5 million shares, excluding further share repurchases.

Moving on to our balance sheet; we finished the quarter with 24.5 billion of assets in our consolidated balance sheet, which was up 760 million from the prior quarter and firm-wide interest earning assets increased to more than 20.5 billion.

Because of this the sequential increase was driven by our ability to sweep additional cash into the bank as a result of our additional bank charter. The bulk of the additional cash deposits in the bank came in late during the quarter and they would have had better results.

This was the part of the strategy that we outlined last quarter, and will generate net interest margins of 300 to 310 basis points for 2019. We began to use these funds to reflect higher cost of (inaudible) borrowings and to replace CDs that mature in the first quarter.

As a result, we expect to see average interest earning assets decline to approximately 3Q ‘18 levels and net interest margin of the bank to increase to between 300 and 305 basis points.

Also, supporting (inaudible) adoption of new (inaudible) kind of standards in the first quarter, we’ll be closing up our assets and liabilities for approximately $600 million to $700 million. We finished the quarter with a tier 1 leverage ratio of 9.3% and a tier 1 risk based capital ratio of 18.2%.

Our tier 1 ratios were impacted by strong growth in retained earnings, our share repurchase activity during the quarter, and continued balance sheet growth. Book value per share of $43.04 increased by $1.79 in the quarter. Now let me turn the call back to Ron for his thoughts on the outlook for 2019..

Thanks Jim. Before I get into our guidance for 2019, I want to spend a minute talking about the progress we continue to make in 2018 and the disconnect with our equity market valuation.

As you can see from the metrics on this slide, we not only generated our 23rd consecutive year of record net revenue, but as I’d previously stated, we increased our operating leverage and grew pretax income by nearly 18% and earnings per share by 32%.

Margins again 20%, full year return on common intangible equity were nearly 15% and 24%, all up significantly from our prior year’s record. Importantly, the only numbers on the table that show a decline are in our share price and valuation multiples.

Now I understand that market multiples and specifically financials contracted meaningfully during the year as the market is forward looking.

However, due to the improvement in our business and our longer term outlook, I believe our stock represents a strong value and we will continue to deploy our capital with share repurchases, as this currently represents the best risk-adjusted return.

With that let me move on to our outlook for 2019; last quarter, we gave more specific revenue guidance than we historically do as we wanted to get everyone on the same page in terms of our outlook.

As you can see, we came in at the high end of our guidance in the fourth quarter and for the full year of 2018, as our investment banking, asset management and net interest income all posted strong results and our expense discipline resulted in a record EPS for the quarter and the full year.

Before going into our 2019 guidance, I want to note that we don’t intend to update our full year guidance going forward. We will continue to give guidance on a quarterly basis as we have in the past. In terms of our revenue guidance for the full year of 2019, we’re estimating 3.05 billion to 3.35 billion.

We forecast net interest income of 530 million to 550 million. On the expense side (inaudible), we forecast the compensation ratio of 57% to 59%; our non-comp operating expenses are targeted at 20% to 22% of net revenues.

Let me give you a few specific on our underlying assumptions; the lower end of our revenue guidance incorporates a modest decline in the S&P 500 in 2019, as well as modest declines in brokerage and investment banking revenue.

These declines are offset by an increase in clients cash balances, continued recruiting strength, and expect the net interest income growth. The high end of our revenue range assumes a mid-single digit improvement in both the S&P 500 and our brokerage revenue, as well as the high end of the range to our asset growth.

The biggest variable for our results will be our investment banking revenue, as this is episodic in nature and volatility in the market can have an impact on revenue. That being said, the high end of the guidance assumes investment banking revenue growth in the high-single digits to low-double digits.

Given our guidance for the first quarter of 2019 bank net interest margin, we are comfortable with our full year guidance of 300 to 310 basis points. For our first quarter expense guidance, we expect our comp ratio to be at the high end of our annual guidance due to seasonality and our non-comp range to remain in the 154 million to 160 million range.

Lastly, we continue to expect to generate more than 500 million of capital in 2019, before dividends and share repurchases. We currently have 9 million shares remaining on our existing repurchase authorization, and as I said earlier, we continue to be (inaudible) a very good use of capital on a risk-adjusted basis.

So in conclusion, 2018 was another record year for Stifel. As I look forward, I’m highly optimistic about our ability to continue to grow and add value to our clients and our shareholders.

Our market conditions may impact short term results; our businesses are well positioned, they continue to grow and our ability to return excess capital to shareholders has never been stronger.

Lastly before I open the call to questions, I just want to thank all of my partners at Stifel as it’s their hard work and dedication that was the primary factor in another year of record results for our firm. So with that operator, please open the line for questions..

[Operator Instructions] Your first question comes from the line of Devin Ryan with JMP Securities. Devin, your line is open..

First question just in wealth management, Ron I know you’re going to be opportunistic about recruiting financial advisors and you’re not going to force anything. But you’re pretty upbeat about what 2019 could look like there, and I think that’s kind of important to the growth story here.

So we’d love to just get a little bit sense of or more context around how you would judge success there in the kind of growth, is it few percent increase in (inaudible) advisor headcount or upper single digit increase to net new assets or what should we be thinking about as potentially being kind of a good outcome in wealth management growth?.

Devin, I never put out numbers like that in terms of number of IPOs or number of recruitment. It is just not something that we do.

I will say that as I said in the past calls, that we had muted activity in the way we approach recruiting during the DOL times with fiduciary standard for reasons that I’ve explained in the past, and as we cut off of that and started back being more focused on recruiting, our pipelines and our activity and our home office business and our just overall sense of recruiting is positive, because I’ve seen it in a long time, and I’ll just stay with that.

We’ll see how the numbers come out, but I am optimistic as to our recruiting efforts. We have always been a very effective recruiting firm..

And another question here, just in the bank, I know the part of the opportunity to spend NIM over time is increasing the percentage of loans within the mix, and I’m just curious just given some of the volatility in the quarter with spreads and maybe increasing concern on credit, even though we’re not seeing much is that still the plan, and maybe even on kind of CLOs are you’re seeing more interesting opportunities there, given what happened with spreads? And just the last piece, just to clarify does the guidance still assume kind of the current yield curve in terms of what you guys are modeling for 2019 on NII?.

For your last questions first is yes, we’re using the existing yield curve; we’re not trying to project changes in the yield curve.

A lot of our NIM expansion as I’ve said on the last call is more on the liability side, as we’ve swapped more deposits and were able to replace federal home loan bank borrowings and CDs with deposits as a result of our having a second charter that allows us to sweep more. That’s the biggest impact.

There will also be a benefit as loans replace investments on an ongoing basis, but as you see we’re not forecasting a lot of balance sheet growth, and so we’re comfortable at 300 to 310 basis points based on the fact as I just gave to you..

And then just last one here on capital and then on the share price, I agree with kind of your sentiment on the stock and (inaudible) a comment buy there’s not really a better use of capital at the moment in share repurchases.

So I’m just curious how kind of M&A opportunities, particularly in wealth management fit within that, there’s obviously one deal in the market over the past quarter, I don’t know if there’s more out there.

But what’s the threshold to think about doing M&A versus share repurchases particularly where the stocks trading right now?.

Well as I said we’re generating a lot of cash, we increased our dividend, and the (inaudible) rate is - we’ll look at acquisitions as we always do, and we look at acquisitions as the hiring of future cash flows.

The (inaudible) is really simple, when I look at acquiring future cash flows and then I look at our own stock that’s one of the best acquisitions that I say. So you are going to have to be that hurdle rate versus doing another acquisition.

Strategic considerations of course aside if we have some real strategic reasons to do something, but our hurdle rate right now as I see the most attractive acquisitions in terms of future cash flows as our own stock..

Your next question comes from the line of Steven Chubak with Wolfe Research. Steven, you’re line is open..

This is actually Sharon filling in for Stephen this morning. So my first question is good IB result which was encouraging given some of the market headwinds this quarter, and your public fee backlog is actually up pretty significantly year-on-year.

Just wondering if you could speak to kind of what you’re hearing from corporates, and sort of, is that the primary driver of the confidence in hitting the lower end of your revenue target range in the year?.

We’re starting the year and we’re starting the year as you just noted with - you’re looking at it a different way, but with a nice backlog and a nice backlog of business. And as I’ve said, I think that what I’m most encouraged about is the type and the notability of some of the transactions that we’re doing.

As we’ve grown the investment bank, our deals are larger, the fees are larger, that in turn can make it more episodic, a little more lumpy. So I’m not really sure how to answer your question, but as I sit here today, and I look at the outlook, we don’t see a recession.

I certainly don’t in 2019, and based on my view of the data, our backlog is good, and therefore I’m comfortable with the guidance we’ve given..

And then just on the bank growth, you noted that you grew the bank over $800 million in the quarter, and a lot of that was noting that driven by some of the increases in client cash in the quarter.

But just given some of the strong growth we saw to close out the year, (inaudible) 1 billion bank growth for the year still kind of the right level, trying to think about how that capital generation should be spread across buyback, dividend and capital necessary to support the bank growth in 2019?.

That’s a good question, if you want to look at how you deploy capital, as we’ve said, we can do dividends and we increased our dividends, we can buy return capital to shareholders to stock buybacks, and I’ve indicated that that is an attractive option at this point.

We can do acquisitions, which I’ve said has to clear the hurdle of buying our own cash flow back to stock repurchases, and the last is growing the bank, because that uses capital just as the other options do.

At this point based on our view of the market credit cycles, where we think we are versus the other options, we are targeting balance sheet growth to be a little more muted, because of these factors all playing together. So I’m comfortable with flat to up 1 billion, and that can change of course as market conditions change.

But today when you look at the various ways that we can increase shareholder value, we’ve targeted that growth at $1 billion..

And then just on the trading outlook, the results in the quarter showed some better momentum.

Just hoping you could update us on the outlook for the year, just in terms of equities given some of the pressures from (inaudible) and then on fixed just given the flattening yield curve impact on munies?.

Trading spend has been a challenging for a few years now, and we’re certainly not projecting a robust growth in trading. I don’t think anyone has, as it relates specifically to the next quarter, we’ve seen and it will be interesting to see, but we’ve seen seasonality in (inaudible) actually almost flip-flop that’s what we think in that attempt.

Our business might be slower in the first quarter. It picked up in the latter half of the year. We expect that again based on just what we’re hearing and seeing, and fixed income has had an uptick as we see. But these are all short term I think phenomenon, so our overall view is that trading are not growing robustly.

We think trading is in a nice sort of - I guess to say, use their own word, a nice trading range for trading, and so I don’t see significant declines nor do I see significant uptick from 2018..

And then one last real quick one, I think you noted that the expectation is for deposit costs to continue to increase even assuming normal rate hikes from here.

I was just wondering the extent to which that’s embedded in your [new] guidance for the year?.

I think what we’re saying was that we haven’t seen a lot of activity in the last rate increase, and I expect there’s a little bit of a lag affect there. After that occurs, based on the fed’s most recent statements, we have projected deposit cost that are in line with what the fed is projecting to do, but not above that.

So I didn’t mean to imply that the deposit rates would just increase, with no further increases by the fed. But again deposit competition is higher than it has been in the past, and so we’ll have to watch and see what the competitive dynamic and how it evolves in 2019.

But our guidance is consistent with both what we think the fed will do and what our competitors are doing..

Your next question comes from the line of Alex Blostein with Goldman Sachs. Alex your line is open..

First, I was hoping to zone in on the liability remix and the opportunity you guys see (inaudible).

So can you walk us through maybe the pace of CDs rolling off of the course of 2019, and how that’s going to be replaced with the balance sheet deposits? And just a reminder, in terms of the cash rebalances, where they stand today that are off balance sheet will be helpful?.

Yes. I’ll let Jim answer that..

In our 10-K you’ll see kind of some of the amortization schedule with deposits. But I will say as when you look at the cash balances on balance sheet at year-end, the bank had about 1.3 billion, 1.4 billion of deposits.

A large chunk of that is going to be replacing borrowings and CDs really in the first quarter, and so as Ron mentioned, that’s going to be the big driver of what you’re going to see in terms of the guidance that we talked about of 300 to 305 basis points of NIM in 1Q as well as the full year guidance of 300 to 310 basis points..

But just in terms of off balance sheet cash in the bank sweep can we get those?.

I think in the press release you can see there’s 2.9 billion that’s swept to third-party banks, and we can obviously take a good chunk of that maybe another up to close to $1 billion. But again as we continue to recruit advisors, you’re going to see those balances continue to grow..

And to get segue to my next question, Ron you obviously talked about a very strong recruiting pipeline, can you expand on the sources of the growth and maybe help us think about what that means in terms of kind of customer assets that your pipeline currently represents?.

Again I don’t give numbers, but I don’t like doing that as it relates to (inaudible) any numeric goals on deals or recruitment. But just look over time, when we add advisors they bring client cash, they bring AUM, and they bring revenue, that’s why we do it.

I think the major message that I’m trying to give to you Alex is that we had a period of time where we slowed down recruiting, and I think probably for our own making, we’ve reviewed if not growing organically.

And that’s just not the case; we’re going to be growing very strong organically, and I don’t see it, and as I look at our pipeline in our conversations, and the people that are visiting the firm, I feel very good about this..

And then the last quick question really just a bit of a timing clean up.

When you guys talk about a pretty robust pipeline in investment banking, both I guess sounds like ECM and to some degree DCM, any impact from a government shutdown we really need to consider, so later Q1 and then really kind of ramps up in the back half?.

I think there’s no question that the government shutdown delayed deals. So I would expect that across the industry, you will see first of all what otherwise have been, you’re going to see less equity underwriting revenues just merely for the fact that the government wasn’t shutdown, the SEC wasn’t getting prospectuses to the pipeline on the ECM side.

As we look at it, we think it delayed, but we don’t think it impacted our pipeline..

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

As you probably know there’s a lot of attention being paid to credit and credit quality these days, even though credit quality really just remains outstanding, kind of the across the board everywhere.

But in light lot of that, I’m wondering if you guys could just maybe take a minute and talk a little bit about the profile of your C&I loan book? And I think you made a comment a little bit earlier about where you think it should hold up quite well and where’s your economic environment, so maybe you can expand on that a little bit, why do you think that’s the case?.

I understand what you’re saying Chris, and it feels like we might be late in the credit cycle and what’s going to happen.

But I’d just point to our NPAs which are 14 basis points and our overall review of loans, we are like every bank, we review loans, we categorize loans, we look at what our loan loss provision should be versus our outlook on these loans, and as we look today, we think our C&I portfolio is very solid in terms of credit quality..

An unrelated question on the topic of (inaudible), I think a lot of people are characterizing 2018 as kind of a year of discovery for this regulation, wondering, if you’d agree with that statement, and if you do, what do you think the impact of this might be as we think about 2019 and beyond? And as you sit here today is it going to change how you think about managing the business or perhaps not so much?.

Well, I’ll go with your first comment, which was the year of discovery, and it’ll be interesting to see how it evolves. I don’t think anyone knows yet other than I still believe it will be under some pressure. A lot of it will depend on the SEC’s approach to the characterization of our research payments.

So as you know, they have a no action which says that you can do it relating to European accounts, but it still violates the (inaudible) act to do it for all research. I think the SEC, I’m not sure how the weigh in on that, that will be an impact that maybe something to see.

And that would mean that you could have a full implementation of (inaudible) across all accounts whether or not their European or not. I believed all that that you’re going to continue to see what we’ve seen, which is the squeezing of the number of firms that are in the research game.

We intend to be there, as we look at it, we believe we have a strong product and we add value, we add alpha and we will be one of the players in the fee pool for research payments. My belief is of that ‘19 will be somewhat ‘18 as I sit here today, but let’s see, I really don’t know, Chris. I don’t think anyone does..

This concludes our question-and-answer session. I will now turn the call back over to Ron Kruszewski for closing remarks..

Thank you operator, and thank you everyone. We again are very pleased with another record year, and we look forward to continuing to update all of our shareholders and associates on upcoming calls. And with that, have a great day..

This concludes today’s conference call. Thank you for your participation. You may now disconnect..