Welcome everyone to the quarterly analyst conference call. (Operator Instructions) Mr. James you may begin.

Thank you and welcome everyone. Angel we appreciate your introduction. We think it is quite appropriate that we would have help from above for our industry after what we have been through for the last two years. The quarter, just making some introductory comments if I might, to think about things here and I think that is important I think what I would say is we expected slow improvement in the economy generally as a backdrop for whatever our performance would be. We probably didn’t expect quite as rapid an increase in stock market values as we have experienced which has led many commentators to suggest that certainly the risk of corrections or consolidations in the marketplace is present. Present. I think I agree with that but I do think the general economy is like Byron [Ween] estimated. It might surprise some people in 2010 in terms of improvement. The consumer will take a little longer which means that generally speaking unemployment while it might start down here in the second half is going to be slow to recover. I think small business and even big business has a “show me” attitude about what is going on in terms of where they ought to capital expenditures and whether they ought to add to their employment base or not. So it is not going to be one of these really exciting, V-based recoveries but on the other hand the trends will be generally up. So I think that our numbers kind of reflect that and our business is reflecting that about which I will comment when we get into it. I guess theme one I would make to you because of the market improvement client assets are up dramatically from a combination of all that good early recruiting we did and…

On its base I am looking at net interest sequentially from last quarter and on its base net interest was down $7 million. When we tear into that just a little bit as Tom mentioned the interest on our note issuance last quarter added interest expense of about $7 million this quarter and about $3 million the previous quarter. So if I added that back to what we will call interest earnings from operations which is kind of taking that financing activity away just to look at the ongoing run rate of operating earnings, with respect to interest and you get $86 million in the previous quarter and $83 million in the current quarter; still a decline of $3 million which again doesn’t really comport with all the sequential improvement comments we have been making. If you will remember last quarter we talked about the inception of this multi-bank suite program in the month of September which we completed sometime mid-quarter in the December quarter. That added about $7 million in the December quarter of fee income which is in financial service fees as a line item; not in interest earnings. That recoups some of the spread that has been lost by the interest rate dynamics. As Tom mentioned last time the magnitude of our earnings from that is going to be offset by our bond interest cost. When I add that $7 million into this quarter just ended we actually get $90 million versus about $87 million. There was a little bit of this in the previous quarter. So we actually did the way we would analyze this have a sequential improvement from those interest earnings and related activities from September to December. Not a huge jump but about $3 million. We like to think that as balances grow that will continue.

Do you see any change in spreads or in terms of client deposits in all of your areas? What is going on here with the improved markets you might think you [might have a lot] of cash.

It has actually run about flat to slightly down. We have had some net investment but we have increased client assets coming into the firm. Another dynamic is we were earning virtually nothing on the billions that we had in our proprietary money market funds. As of today about 2/3 of the taxable funds or about $3 billion has moved into the Bank suite program. That still leaves $1.5 billion in the taxable fund and the balance of that amount in the tax-free fund. We will be undertaking steps to convert those to a private label share of someone else’s fund to recoup again part of the lost earnings from that activity as well. So that will additionally help going forward. Most of the decline in net interest income as you can imagine is bank related. From last year interest earnings are down $36 million and $28 million because the banks and Steve can comment on spreads there. They are down from a year ago when we had the record bank quarter. We also had a very strange LIBOR rate. You will remember LIBOR spiked over 4% and we benefited somewhat from that but we had unrealistically and unsustainably high spreads for that quarter as well as very high balances. So we had the best of all worlds. But the spreads are hanging in there pretty well at the bank although our balances are way down and the challenge to that is to grow the loan balances to recapture some of that spread.

Let me come back, we expect rates at some point during this year to begin escalating which will actually have a favorable impact over time for us as it increases because as you know even the private clients where we have a lot of these client assets we have benefited at the bank by the low rates but the private client group essentially hasn’t earned much, as Jeff pointed out, in the general investment of some of these assets. That will get better as rates increase and you will see perhaps not a restoration of the total amount of interest net earnings in the future that we have enjoyed in past periods but you will see a pretty dramatic increase which will help private client margins. As you know during the quarter the private client margin actually increased dramatically sequentially from the prior quarter which is what we expected to have happen. We expect it to happen more. The reason I say that is essentially the productivity per financial advisor is still about 16-17% beneath where it was a year earlier. The only reason for that is the individual investor isn’t back in full force and the impact of these increased assets hasn’t totally restored the income levels. It is getting there now. You are going to see kind of built in an increase in product client group margins unless or until you have a correction in stock market values. So the outlook there is good. The other factor that affects private client group which has been the tremendous recruiting in prior periods, actually you saw a slight decrease of total financial advisors at the firm over the last quarter. As you know there are normal factors, I am reminded by our guys, the debt retirement that conjoin with trimming…

(Operator Instructions) The first question comes from the line of Daniel Harris – Goldman Sachs.

You mentioned earlier in the call the decision at some point to start growing the loans at the bank. I was wondering as you think about that where you see the most opportunity. Is it in residential or is it in the commercial and CRE space where you see you might grow loans going forward?

As you see over the last three quarters and this most recent quarter our loan portfolio was down about $140 million following two quarters where we were down roughly $500 million. So the activity levels in terms of us growing the portfolio, that effort really started in earnest at the end of the September quarter but as you know it takes a little while to build that momentum up. We did 18 transactions in our corporate portfolio that represented about $200 million of new funded loans. The residential business has been a little bit more challenging where we moved from an environment where there were a lot more sellers than there were buyers. That dynamic has changed. We are actively looking for some new channels for some new residential loans. We have a couple of things that are closing this quarter but we are also not going to sacrifice credit quality for just putting on new loans for the sake of doing that. The primary market right now is still very light but we are very active with all potential participants that we have been doing business with and once again we have really kind of started turning that aircraft carrier around as Tom alluded to. We would think we would be roughly flat to trying to be up slightly this quarter. I would tell you the activity in the capital markets we were notified this week of a couple of payoffs and pay down’s we are getting as a result of borrowers accessing the high yield market. So once again we are not going to sacrifice quality just for the sake of putting loans on but we do think we will be able to eventually grow the loan portfolio in the next few quarters.

Before you go off that subject there is one other item you need to consider here. We still have this application and the convert to a commercial bank from a S&L which the government has chosen to move very slowly with and has concerns about ARS activity and things like that but no problems with respect to the quality of the bank activities or the financial stability of the holding company and results or anything like that. There is no real incentive for a regulator to approve anything that has any risk associated with it of making a mistake in an environment like the one we have been through. While you can empathize with them a little bit even though it is frustrating from our standpoint because it caused us to again go through this gross up activity at the end of September that we described to you. So part of the problem is if we are going to have to continue to comply with OTS regulation it is important that we do add more residential mortgage loans here and so that will affect our judgment too. It isn’t just where are things available that meet our quality and return standards because we are going to be guided by what goes on there. I wish I could be more definitive but this is outside our control. I don’t know what is going to happen there.

Staying within the bank but moving over to the securities portfolios as you look out to March or April with the government cash back involvement in the mortgage market how do you think about your securities portfolio? I think most of it is agency MBS. Does that change your view in terms of maturity or type of security you are borrowing or how you are thinking about the mix of securities and loans?

We really haven’t been buying any securities. There have been a couple of Jennie Mae and agency bonds we have bought over the last 12 months but in the December quarter we didn’t buy any new securities at all. The private label portion of our securities portfolio continues to get paid down on a monthly basis and as Tom mentioned we have had some improvement in that negative mark-to-market by about $20 million in the December quarter. In terms of the impact of the GSEs pulling back their purchases and support of the mortgage market I don’t think that is going to have a lot of impact on our existing portfolio. Right now we are really more interested in deploying our liquidity into loans. I’m not sure exactly how that is going to play out.

As you look forward here to the spring and potential transition how are you thinking about any changes going forward for the firm or do you think it is just still the same business strategy we have had for the last few years?

I have got Paul Reilly in here also who is will be replacing me as CEO on May 1 and increasingly is involved in all of the activities here on a management level. All I can say from my standpoint is the transition thus far has gone extremely well. In terms of his rapid learning curve and in terms of all of our business activities, in terms of his continuing to manifest and understanding for as well as an endorsement of the general values and policies we have here at the business. It is interesting that for the first time since we have stopped worrying about survival you are seeing demand for the use of our existing capital again and we are having to go through some of these decisions about do we invest more in Latin America, how aggressive are we on the recruiting front and we are going to deal with all of these things in our long-range planning meeting in February of our Board of Directors which is always fun. We definitely get a divergence of opinions represented at these meetings. We actually have an operating committee meeting later today. These kinds of discussions are ongoing. I would tell you from my standpoint I don’t see a lot of changes but things will be done differently. That is sort of what happens when you change CEO. I think the basic precepts are going to continue to be followed. We certainly share amongst all our senior management team a view that there is tremendous opportunity in our business not only to restore rates of return on equity that we have enjoyed in the past and get back some of the operating margins we had but also to capture share in almost every single one of these businesses. I know Steve certainly shares the fact that we would like to return to a little more normal banking environment where people spend a lot more time worried about adding new loans than they are about protecting the value of existing ones. So we have a lot of that but Paul is here so I will ask Paul to comment if he has anything to add.

Let me briefly say that first I am here because I believe in the strategy, direction and really the values of the firm. As I tell people internally the biggest difference on May 1st is it will be the day after April 30th. This isn’t about drastic changes. It is maybe about tweaks or looking at different things a little bit differently but we share the same values and direction. Tom and I consistently agree on 90% automatically. Then we debate that and he has certainly got a lot of experience and I will continue to lean on that too as we continue past.

The next question comes from the line of Devin Ryan - Sandler O’Neill.

I believe you said that productivity per financial advisor is down 16-17%. Can you quantify or qualify how much of that is related to the new hires that haven’t ramped up yet? What I am trying to get a sense of is there a large amount of revenues from more recent hires that isn’t reflected yet in the results?

As you compare year-over-year the only comment I would make to you is that we had a lot of new hires in prior periods too. So I would say the quality of the hires we are making hasn’t declined. So we are still adding above average producers in general at the firm with the exception perhaps of the [fit] division where we have these brokers in banks who tend to range all over in production but I would say on average you have a little lower production in some of those positions. I don’t think that is really the major factor. Certainly we had some built in ramp from the hires over the last year that still will be ongoing this year. I really think this is just a major deficit in terms of recovering the levels that existed on prior assets. Since the asset levels have recovered to a large degree I actually think that we have a great opportunity to see that difference recovered here within the next 12 months. That is a substantial increase in commission activity by itself without some increment from new hires or them reestablishing prior productivity levels. Chet is here too and he is still running all the retail operations. Chet you are probably the best one to comment on this.

I agree, the late productivity is more impacted by continued fear in the marketplace on the part of retail investors. People are starting to get their legs under them again and some confidence but there is still a great deal of apprehension about a second leg down or some double dip or some other impact that would put them through another decline in asset values and there is fear out there. Consequently there are large cash reserves building. There are people waiting to see what is going to happen. The commission part of our business has not recovered anywhere nearly as robustly as the fee part of our business has. So we have that to look forward to and I think with the increased productivity potential of the people we have recruited which is much higher than our averages were before. There is a great deal of leverage built into our system.

I would tell you we are still seeing some move of assets to fixed income in spite of the fact you would have thought the market performance would have gotten a lot of our people back into equity. I would say that a number of our elderly clients, and I can relate to them because I am one of them, the fact is they are looking at those assets and they are saying gee I don’t know if I want to go through the probability that one of these could happen again in my lifetime now that I am 65. Consequently I am going to move more assets to fixed income because I was really under-diversified by demand. I would tell you the clients define that because of prior performance. Now a 10-year period of no real increase or equity value you have to sit back and say to yourself, I would say by the way being a friend that means the next 10 years are going to be good. That’s right. They would conclude that I may only live five more years and even if I live 10 years I don’t want to go through another one of these gyrations. I sort of empathize with that point of view. I know what has happened historically and that is people will continue to invest in equities. I will remind everybody that we forget too soon. When you look back last March there wasn’t a real market for a lot of equity. I always described the behavior of what the stocks were doing as a safe and freefall, falling off the top of a building. There was no way to interrupt it. There was no logic to it other than physical laws. No one should have pushed it off of the roof of the building. The fact is when you see that, that is what causes people uncertainty because they realize it wasn’t rational what happened and they don’t want to be subject to that.

You had commented that the bank appears to be on the road to higher profit. Maybe there is some lumpiness in the provisions going forward but can I extrapolate from your comment that it is your expectation the provisions going forward on average should be lower than what we saw this quarter? Essentially no big surprises in volatility or above normal in any one quarter.

Just a couple of additional points on that. In residential loans we did have an increase in past dues but it was relatively nominal in the aggregate about $1 million in terms of loan balances being higher in terms of our past due. The percentage looks a little bit higher in terms of past dues to total loan as a result of loan balance declines but just so you know the less than 90 day past dues in the residential portfolio are actually down quarter-over-quarter so these loans we would like to think are working their way through the pike. We are continuing to be very cautious in the residential portfolio in terms of another leg down or a double dip in housing. On the corporate side of our portfolio we saw pretty marked improvement across the board but we still remain extremely cautious on commercial real estate. Out of all of this the new deals we did in the quarter out of the 18 I think two were real estate related. So predominately corporate, commercial or industrial focused at this point. All that being said we know over the last 4-5 quarters we have been very aggressive in terms of how we are reserving and charging loans off. As Tom mentioned we would like to think we are starting to head into a more normalized environment. But we are also not here to predict what the next few quarters are going to look like because as you know our portfolio and loan loss reserves and charge offs can be lumpy just given the large nature of some of our credit exposures, particularly in our corporate portfolio.

A great example of [inaudible]. I am really proud of you Steve.

The next question comes from the line of Christopher Nolan – Maxim Group.

The decline in non-performing assets from the prior quarter was that mostly seen in the commercial real estate portfolio or brokered or what?

We actually had an increase in residential non-performers of a little over $10 million so the corporate and commercial real estate portfolio in terms of the non-performers actually were down quite a bit. We were down roughly the total reduction was a little over $20 million in non-performing reduction. It was pretty broad. We had some pay downs and one of our commercial real estate loans actually paid off entirely that was non-performing. We had some upgrades of some loans both one corporate loan that was non-performing was put back on accrual status and we have had a couple of upgrades in the commercial real estate portfolio that were upgraded as well. We did have some charge off’s that lowered the balance of non-performing loans so all of those things factored together resulted in a net reduction in non-performers [inaudible] commercial real estate space though.

As a follow-up did the regulatory changes in terms of recognition of non-performers where the loan is performing but the underlying collateral is worth less than the loan…NPA growth from one quarter to the next?

That had no impact on our results.

Positive or negative do you see any sort of impact from the proposed Obama tax on financial institutions? I am saying benefit from the standpoint you see some talent coming over from the larger banks to Raymond James? I know you commented at length on it and I am completely sympathetic with it. I am just trying to get it more distilled.

I really don’t think that it is large enough to impact that very much. It is more of the comp issues and the disaffection that has grown amongst employees, not just financial advisors, with the large institutions that didn’t perform not just because they were large but because the performance was subpar during this period and certainly didn’t conform to their prior opinion that they were situated on a lot of stability. In fact they may have been on rocks of stability but the seawater was rising. So I think there is some of that still going on. They are not really convinced of the commitment in some of these institutions is at the level it ought to be and that some of the institutions have totally lost credibility. I won’t specifically mention them but if you look at where you have the biggest outflows of financial advisors you might get a feel for that. It is also true in the investment banking and public financials at those firms. They have similar levels of discontent arising from the performance. It is just that now that things have stabilized and it looks like a vast majority of firms have gotten rid of TARP, and that is in this special class of those who would be competitors to us. There is just not going to be as much movement but there will continue to be net loss from those firms during this coming year. That is not to say there will be. They are going to start worrying next about margins in their different business units when they get past the survival mentality also. You may see continued activity in terms of exiting certain businesses or you may see a board of directors in some foreign country sitting down and saying we really don’t want to be in that business. We don’t understand that business very well. We haven’t had very good managers in the business. We want out. We would certainly benefit from of that if that happened.

The next question comes from the line of Steve Stelmach – FBR.

Could you circle back on your thoughts on financial regulatory reform. I wasn’t real clear where you stood on the issue. I appreciate the candor.

I am for financial reform by the way. I really am. That is the point I was making. I appreciate the one liner though. We need more of those now.

On the bank margins the banks have [been] a little higher clearly than last year. [inaudible] a little higher or by some higher margin. At this point what do we need to see to get that margin to at least stabilize? Is it short term rates or are we looking for something else?

Just making sure we are on the same page in terms of our reported results here because it may have got lost there, our net interest spreads over the last couple of quarters have actually been very stable. When you take out the effect of the excess cash balances that are in the bank that started in the September quarter and then continued on in the December quarter. We have that excess cash now outside of Raymond James bank and in the other banks that are in the multi-bank suite program. So you take all that out our net interest spreads were roughly 3.37% last quarter and that was one basis point higher than the prior quarter. What we are seeing right now that is going on, the incremental business we are doing in the corporate portfolio is actually accretive to margins but as Tom mentioned we are seeing more demand than there is supply. We have seen where we were for many quarters where there were very high LIBOR floors with much higher spreads we are seeing that start to come in just slightly and we are seeing more buyers and therefore our allocations in the primary deal will be cut back. Still that being said the incremental business we are doing is actually a net positive to spreads in the corporate portfolio. On the residential side it has been somewhat stable but maybe slightly down in terms of loans that are coming up for reset. They are coming off of their initial 5-year fixed rate period and then they are resetting to the reset rate which is slightly lower than what it was before. The net/net of that is we think our margins are going to be somewhat stable. In the bank we would be negatively impacted by rising short-term rates but I think that would be offset at the rest of the firm. It is not a big impact though because most of our assets are floating rate and we would benefit in the corporate portfolio it really wouldn’t be an impact. It would impact our residential portfolio from rising rates.

I would conclude that absent all the problems in the economy the fact is what we are doing and you can look at it on an individual loan basis all the way through just generally what is going on in loan classes, etc. the rates of return on equity currently are not where they ought to be given anything like these spreads. So as you see some normalization occur if that is the correct outlook you are going to see higher rates of return on equity and Steve certainly likes double digits. He gets real fired up. There is a lot of latent potential on that front as well as from ramping up lending balances.

On capital allocation the bank I think began higher capital last year. It seems like you are pretty close to where you want to be in terms of capital. Incremental capital, where do you think it goes? Is it on the retail side? Institutional? Back to the bank?

Well I didn’t mention our proprietary activity. We expect to be making some transactions on the proprietary front as the demand or capital, so we continue to look at outside private equity investments as part of our overall rate of return kind of investing but also assisting in the investment banking activities we have got. So there is some demand from that sector of the business and I would tell you we are seeing pretty good transactions. So potential transactions. I think there is going to be good opportunity there for us. As a practical matter as you know we limit our capital allocation to those kinds of assets unlike some of our higher learning institutions did prior to the market decline and then the illiquidity they are now bemoaning. I think we are going to continue to have some demand there and on that front where we will put some money. I think we are going to have enough capital generated from retained earnings and from existing sources. That $300 million addition was actually a good idea. It wasn’t just totally for a buffer fund in the event of continuing difficult times. I think we have enough capital actually to allocate things like additional foreign offices if we decide to do that or to make a smaller firm acquisition. There is certainly bank lines out there we are not even bothering currently to utilize that we could utilize or new ones we could establish for specific purposes in the event we want to do something. We have been told that by some of our banks. So I don’t really see a shortage of capital. It is just we are going to be tough. If you look, for example, at the merchant markets at these levels you have to be a little concerned that if there is a decline anywhere as China recently indicated there is reason for concern in some of those markets that have run up a lot. We have to be very careful in terms of how we deploy capital even where we think we see great opportunity. We are not going to be just rushing off a cliff to do these things. We are looking at a lot of things again though and it will be subject, as I said, to the long-range planning meeting. I think a lot of the recovery, for example, in PCG, doesn’t really require capital commitment of anything like what we have been making over the last couple of years. So I think we are going to be fine.

The next question comes from the line of Hugh Miller – Sidoti.

Do you know what the cost implications at the bank from the expected rise in OREO properties you alluded to in the press release?

It is still a relatively small and manageable number of properties that are currently in non-performing that will be working their way into foreclosure and into OREO. It is a manageable number. I don’t have a figure for you. It shouldn’t be a huge impact to our overall earnings and we have budgeted and are planning for an increase in OREO expense both in the actual ongoing management of those properties and also as we have seen in the past we have taken some charges, we didn’t have any write down of OREO in the December quarter but we have had a write down of OREO properties in prior periods. So we are factoring that into our operation.

I know there was a question asked before about provision levels on a go-forward basis. I was wondering if you could talk a bit about barring any type of double dip in the economy and with where we are yet you are still cautious on the CRE cycle as we move forward but how comfortable you are with the notion that September’s NPA levels could represent a peak as we look back a year from now?

Absent having a lumpy…we could have a couple of loans go on non-accrual that could be a big number and have another spike. Obviously we don’t feel like we have anything like that identified or has already been put on non-accrual. We are still at risk for having something like that fall out of bed, so to speak, and have to be put on non-performing and it still could impact the numbers and as I mentioned we did have $10 million increase in non-performers in our residential portfolio. I think there is still some risk we could have an increase so it is hard for me to handicap what that is going to look like going forward. Obviously we would like to think we have seen the peak in the September quarter but that may not be the case.

With regard to the equity capital markets business, obviously you have been doing some opportunistic hiring. It seems as though you are positive on the outlook with regard to increased activity as we head further into 2010. Can you talk about I guess following the hiring you have done how you feel about the opportunity to not only benefit from any increase in activity but also just maybe gaining some market share as we move forward?

On the equity capital markets front clearly there aren’t as many players in the small and mid cap space. As activity picks up generally the big funds will be less apt to participate in some of these smaller transactions they have been involved in lately and then they just sort of go away after the deal. It is sort of incredible what happens in these time frames. I think if you look at our SBU groups with our largest businesses being energy, real estate, financial services, we have a pretty good healthcare practice, these are going to be vibrant areas for additional finance going forward and we are trying to expand our consumer presence and some of the other activities which we think are mainly [inaudible] currently that will pick up. So I actually think we have a good chance to increase the space and our market share if the market is as attractive as it is now and you see the private equity firms where we have a massive effort in terms of calling on that marketplace, etc. for IPOs and just generally we are seeing people…I had somebody in my office this week who made an appointment to come in to ask me how the equity markets were working and what his timeframe ought to be and where his hurdle rate of activity needed to be to do a public offering. That just demonstrates to me anecdotally that we are beginning to come out of this very quiet period and while it is still a little fragile just because it is hard to tell whether you are going to have a correction here or not, I actually think we are going to see a pretty good ramp up in business for all these firms in this business and…

The next question comes from the line of Joel Jeffrey – KBW.

In terms of the fewer opportunities you are seeing on the commercial loan purchases, is that really being driven by larger banks generating fewer loans at this time or is it just more competition for the loans?

I would say more the former than the latter. But we have had our allocations cut down on several deals we have done in the last few months quite substantially in terms of us committing 25 and getting 12 but the deal flow is slower right now kind of in our sweet spot in terms of credit quality. Once again we are hoping that the overall economic environment and capital markets will continue to fuel M&A activity and therefore deal flow for us. There are opportunities in the secondary market. We have added to certain positions and taken on a few new things in the secondary market but as Tom alluded to earlier prices have moved up substantially kind of across the broad senior loan market probably 30 points in the last 12 months.

Arising like a phoenix is the high yield bond market and public securities and the fact is as you might expect a number of borrowers are concerned about having too much commitment to bank loans that have shorter terms when they can go out further with less terms and conditions and the good ones qualify to do that. The fact is some of these companies are quality credit, the DD type credit quality companies, but often because of size and not because of quality of the company. They are looking at this and saying maybe it is worthwhile to pay the premium to get the term commitment and have more flexibility with respect to using banks and future financings.

Rates haven’t been terribly…LIBOR is 100 basis points plus 400 you are looking at a floating rate of 5% or something like that.

If you go out even like we did and do an 8 or an 8.50 that is not much premium to pay for that much more freedom. I think that is part of the cause. I also really believe and you need to keep this in mind that the companies have really battened down the hatches. They have cut costs and gotten rid of employees. They have improved their balance sheets and they can pay back bank lines even if they intend to go back into the bank markets when things pick up. So we had some of that happening right now too. You add that to the natural disinclination of any financial institution to make a loan that has any risk associated with it, real risk of non-payment, you are not going to get a lot of it. I would not blame it all on banks not making loans. They are not making loans because demand is declining too. As we see business pick up that will reverse. I expect that to happen but it is not going to be an overnight process.

I would also add I think we have talked about this before that about 1/3 of our corporate borrowers have an institutional relationship with the firm either research and/or equity capital markets. In the December quarter about 75% of the deals we did were actually with firm clients. You will probably see that percentage of our borrowers that have another relationship with the firm increase over time. We think that is obviously good client selection tool and we won’t be exclusively doing that but it will be a larger percentage of our new business will be other relationships with the firm.

In fairness that also reflects the fact that issuers are more sensitive to trying to make relationships with people who have equity offering capability and also can join that with lending capability and looking to maintain a group of relationships that are all similarly capable so they don’t have to maintain ten relationships. They are more sure that those financial providers stay on top of the stocks, the right research and are just as sensitive to making sure the overall capital balances are right at the firm as the issuer is. So I think that is going on all over the world and it certainly hasn’t slowed down as a result of what we have just been through.

As a follow-up to that, given what you said about the relationship aspect of this and I realize this could be a complete seat change in strategy but would you ever consider building out a [inaudible] capability to take care of this?

Oh yes. We have talked about that on numerous occasions. That is mainly a consequence of what size we are in and what new products or processes we are adding at the bank. That is in the foreseeable future I would tell you. We would do some of that for our client base. It is almost competitively necessary that we begin to consider doing that.

Lastly, when you talked about the impact of higher interest rates on the private client business and the increase in net interest income how should we think about that falling to the bottom line? Would the comp ratio on client go down or is this sort of all factored into the advisor’s comp rate?

I don’t think the comp ratio would change too much. The advisors share modestly and some of the advisors and some of the products share some of the interest spread but that is not going to impact the comp ratio too much. We are trying to get our hands around better sensitivity analysis of interest rates but the positive impact on the private client group would be more than the negative impact on the bank of a modest rise in interest rates. So we think that the first couple of raises would be a net positive to the overall firm although again we have again a positive on one hand and a negative on another segment so it wouldn’t be as dramatic as it would have been in the past before we had the bank.

I actually think that where you are going to see comp ratio go down a little bit is mainly in the GNA section of the PCG as the productivity levels are restored and indeed they increase above prior levels. That will lower some of the overall costs but it is not going to be a tremendously large factor from either source I would tell you.

There are no further questions at this time.

We would like to thank all of you for participating. We look forward again to continuing seeing manifestations of the overall longer term trends that we are forecasting will occur here. Thanks so much. If you agree with some of the comments I made don’t be afraid to get on the pulpit. Thanks very much.

This does conclude the conference. You may now disconnect.