Good morning and welcome to Raymond James Financial’s Third Quarter Fiscal 2022 earnings call. This call is being recorded and will be available for replay on the company’s Investor Relations website. Now, I will turn it over to Kristie Waugh, Senior Vice President of Investor Relations at Raymond James Financial.

Good morning, everyone. And thank you for joining us. We appreciate your time and interest in Raymond James Financial. With us on the call today are Paul Reilly, Chair and Chief Executive Officer and Paul Shoukry, Chief Financial Officer. The presentation being reviewed this morning is available on Raymond James Investor Relations website. Following the prepared remarks the operator will open the line for questions. Calling your attention to slide two. Please note certain statements made during this call may constitute forward-looking statements. These statements include but are not limited to information concerning future strategic objectives, business prospects, financial results, anticipated timing and benefits of our acquisition, our level of success and integrating acquired businesses, divestitures anticipated results of litigation and regulatory developments, impacts of the COVID-19 pandemic or general economic conditions. In addition, words such as may, will, should, could, plans, intends, anticipates, expects, or believes or negative of such terms or other comparable terminology, as well as any other statement necessarily depends on future events are intended to identify forward looking statements. Please note that there can be no assurance that actual results will not differ materially from those expressed in the forward looking statements. We urge you to consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q and Forms 8-K, which are available on our Investor Relations website. During today’s call, we will also use certain non-GAAP financial measures to provide information pertinent to our management’s view of ongoing business performance. A reconciliation of these non-GAAP measures to the most comparable GAAP measures may be found in the schedules accompanying our press release and presentation. Now, I’m happy to turn the call over to Chair and CEO, Paul Reilly. Paul?

Good morning. And thank you for joining us today. I know with our recent acquisitions, the numbers are a little more complicated, but I am pleased with our results for the fiscal third quarter and the first nine months of the fiscal year, despite challenging market conditions we have continued to invest in our business, our people and technology to help drive growth across all of our businesses. In the private client group, excellent retention and recruiting of financial advisors contributed to industry leading growth with domestic net new assets of 9.4% over the trailing 12 months period. In the capital markets business, while investment banking revenues were negatively impacted by continued market volatility during the quarter, we continue to see strong pipelines. As the expertise we have added both organically and through niche acquisitions has performed very well. In fixed income we completed the acquisition of SumRidge Partners just after the quarter on July 1, which will enhance our platform with technology driven capabilities, and a fantastic team with extensive experience in dealing with corporate. In June, we completed the acquisition of Tristate capital holdings, including Tristate capital bank, and Chartwell Investment Partners, adding $11.8 billion of loans and $9.4 billion in financial assets under management. In addition to Tristate’s contribution to our loan portfolio, Raymond James bank grew loans at an impressive 8% during the quarter reflecting attractive growth across almost all loan categories. So as we always do in any market cycle, we continue to invest for the long term, always putting the client first. And while the decrease in fee base assets from the equity market declines during the quarter will negatively impact asset management and related administrative fees in the fourth quarter we are well-positioned for increases in short term rates, given our attractive growth…

Thank you, Paul. Starting with consolidated revenues on slide 10. Quarterly net revenues of $2.72 billion grew 10% year-over-year and 2% sequentially. As a management fees grew 13% over the prior year's fiscal third quarter, and declined 3% compared to the preceding quarter in line with the guidance we provided on last quarter’s call. As a result of the steep declines in the equity markets during the quarter, private client group assets and fee base accounts ended the fiscal third quarter down 11% compared to March 2022, creating a significant headwind for asset management revenues in the fiscal fourth quarter. Brokerage revenues of $513 million declined 7% compared to the prior year's fiscal third quarter and 9% compared to the preceding quarter. The decline in brokerage revenues was largely due to lower asset based trail revenues in the private client group, as well as decreased brokerage revenues in the capital market segment. I know some other financial services firms posted year-over-year increases in institutional fixed income brokerage revenues. But remember, we intentionally do not have a meaningful presence in a much more volatile interest rate commodities and currency trading businesses, which benefited many of those larger firms this quarter. I'll discuss accounting service fees and net interest income shortly. Investment banking revenues of $223 million declined 5% compared to the preceding quarter. While our pipelines are strong, there's a lot of uncertainty given the heightened market volatility. Given the market environment, we are really pleased with the investment banking results this quarter. And our best guess right now is that we could achieve a similar result in the fiscal fourth quarter if the markets remained relatively resilient over the next couple of months. Moving to slide 11 clients domestic cash sweep balances ended the quarter at $75.8 billion down 1%…

Thank you, Paul. As I said at the start of our call, I'm pleased with our results. And while there are many uncertainties, I believe we are well-positioned to drive growth across all of our businesses. In the private client group, next quarter results will be negatively impacted by the expected 11% sequential decline of asset management and related administrative fees that Paul described earlier. However, focusing more long term, our recruiting pipelines remain strong and combined with solid retention I'm optimistic we'll continue to deliver industry leading growth as advisors are attracted to our client focused values and leading technology platform. The segment will also continue to benefit from higher short term interest rates. In the capital market segment, the M&A pipeline remains robust, but the pace and timing of closings will heavily be influenced on market conditions. Over long term, I am confident we are well-positioned for growth as a significant investments we made over the past five years in our platform and increased our team and productive capacity. In the fixed income space, we expect some rich partners to enhance our current position and the rapidly evolving fixed income and trading technology marketplace. In asset management segment, while financial assets under management are starting the fiscal fourth quarter lower due to equity markets, we are confident the strong growth of assets and fee based accounts in the private client group segment will drive long term growth of financial assets under management. In addition, we expect Caroline Tower advisors with its new edition of Chartwell Investment Partners to help drive further growth through increased scale distribution, and operational and marketing synergies. And the bank segment is well-positioned for rising short term interest rates, as we have ample funding and capital to grow the balance sheet prudently. And most importantly, the credit quality of the bank segments loan portfolio remains strong. As always, I want to thank our advisors, and all of our associates for their perseverance, and dedication to providing excellent service to their clients each and every day. With that operator, I'm going to open it up for questions. Thank you.

Thank you. [Operator Instructions] The first question comes from Gerry O’Hara of Jefferies. Please go ahead. Gerry O’Hara: Great, thanks. And good morning. I was hoping you might be able to just help unpack a little bit of the comments around the cash shorting in the quarter and just sort of maybe give us a sense of what you saw and perhaps what we might expect in that dynamic. Thank you.

Thanks, Jerry. Good morning. Actually, the cash balances in the quarter stayed relatively resilient as you saw only down about 1% for the quarter. Now in the month of July we have seen a decline in client cash balances were at about $73 billion now, almost half of that was from the quarterly fee billings, which all come out in the first month of the quarter. And then the other portion kind of reflects the cash sorting that we've been expecting for quite some time now as rates start to increase. And just to put into context, just a year ago, we were at $63 billion of total client cash balances, which were elevated from the pre-COVID days. So I don't think it should be surprising to see some cash shorting as rates increase going forward. Gerry O’Hara: Great, thanks. And then maybe just a follow up on expenses. Paul, the appreciate the sort of commentary around the growth of the business and the quarter being typically something of a high watermark, but can you maybe help us just sort of think about how that might trend on a run rate basis over the next couple quarters given obviously, sort of increased T&A and some of the other sort of normalization expense pressures that we're seeing, apologies if I missed it, but I think that'd be helpful.

Certainly. Business development expenses were much higher this quarter. Last quarter, seems like an eternity, but we were still dealing with Omicron. So people really weren't traveling at the beginning of the quarter. This quarter, we have our biggest advisor conference for the independent adviser business. So we -- that and this is a quarter we've had it historically, even pre-COVID, which is why it usually is the high watermark quarter and people are starting to travel again. There is a lot of pent up travel out there. People wanting to see each other in person again. So I think when you look at just stepping back and looking at non-compensation expense in the aggregate, on a GAAP basis, it ended up $469 million for the quarter. Now about $47 million of that were non-GAAP adjustments related to acquisitions. So that gets us down to on an adjusted basis for non-GAAP, a non compensation expenses, about $422 million. We still have two more months of Tristate capital to reflect there. So that's about $10 million, if you look at their $15 million run rate, but some of the expenses this quarter were elevated. So maybe a good sort of jumping off point plus or minus a few million dollars as we look at the next couple of quarters.

I know the line item was higher than people maybe anticipated. But I think you also have to remember if you compare it to the '19 and '20 numbers that was about 3% of revenue in those in that quarter. It's about 2% of revenue this time. I mean so we've grown significantly. I think we're managing the costs very well. So just based on those percentages I don't think we're back to where we were. You can see we're managing expenses, but our big conferences, and our biggest advisor events have occurred in this quarter. So it's not a typical so -- Gerry O’Hara: Understood. Thanks for taking my questions this morning.

Thanks, Jerry.

Thank you.

The next question comes from Alex Blostein of Goldman Sachs. Please go ahead.

Hey guys, this is Michael on for Alex. So I think we kind of want an update on the timing and size of how you're thinking about swapping TSEs deposits with [RJBDS] deposits. Any updated color you can give us would be great. Thanks.

I will first let Paul talk about that. But I think you guys we can deploy cash on either bank. And it's really almost irrelevant whether it's in Tristate or Raymond James bank versus the sweeps. So we have a lot of options and flexibility to maximize the earnings on cash as banks are looking for bank sweeps, again, where they weren't before. So it's a question. I know, you all keep asking. We've already made some progress on that. But part of it really depends on Tristate's clients, they're operating for their clients, and they have depository relationships there too. But we're making progress. And Paul let you get into a little more of the detail. But I think strategically as you go forward, you should look at how much it's deployed and not necessarily in which franchise. So Paul?

Thank you. think you've covered it very well, Paul, and we've already supplemented their deposit base with about a billion dollars of our deposits and we have plans to supplement with another billion. But as Paul said, they're running an independent business, they have their clients. We want to certainly honor those their relationships with their clients. And frankly, over the next few years, those deposits in those diversified funding sources could be very valuable to us as an organization overall. So we're not focused on the short term accretion of a standalone business. We're really focused on maximizing flexibility in earnings for the organization overall.

Great, thanks. So it sounds like the kind of initial commentary you guys gave when the acquisition was closed. Is this kind of what we can still expect?

I'd say the trend is that way, right? So we could change based on where we can deploy the cash and what they need. But so far we're on the kind of the plan.

All right, great. And then maybe one quick follow up. You guys gave us the guidance for the fiscal fourth firmwide NIM. Maybe you can help us think about like a good jumping off point for NII and flush that out a little bit. Thanks.

I mean, we gave you kind of the biggest component with the NIM average, for the quarter for the fiscal fourth quarter. We're expecting it to be about 2.7%, which would be almost 30 basis points higher than the 2.4%, that it averaged this particular quarter. So and we've had some nice growth and earning assets, both from Raymond James bank on a standalone basis, which grew 8% sequentially. And then of course, adding on Tristate. So I think those kind of gives you the main inputs to calculating net interest income, and then the BDP fees, which are substantial as well, they average 88 basis points this quarter. The cash had swept over to third party banks. And we said that with the rate increase that was announced yesterday, and some assumptions around deposit beta, that we expect that to increase to 1.7% on average for next quarter. So really significant tailwinds coming from net interest income, and RJBDP fees from third party banks. And I think the important thing is here is we've been criticized for quite some time for not taking more duration. I know a lot of our peers have done that. But our long standing approach of staying flexible and not trying to time, the rates, the markets and the bond curves is going to serve us very well in this rising rate environment.

Great. Thank you guys.

Thank you. The next question comes from Steven Chubak of Wolfe Research. Please go ahead.

Hey, Paul, since you ended on that response, talking about your decision to manage the bank in such a way where you have more shorting gearing, I know that serving you quite well, certainly in this upcoming tightening cycle. At the same time, the market is starting to price and rate cuts, beginning in '23. And the last fed easing cycle, the decision to maintain that sensitivity did create a fair amount of earnings volatility. You cited some peers that have overextended themselves taking on too much duration. I happen to agree with that statement. And I think that they're getting punished as a result in this type of environment. But there's also a balance that could be struck, where you maintain some healthy mix of fixed versus floating rate assets. Curious if that's something you'd be amenable to, to protect that earnings right downside if and when the Fed begins easing?

Yes, Stephen, you remember this well, because you're very close to it. 2015 we had no securities at all on the bank's balance sheet. And so we do, we have been more balanced and diversified in that regard. And I think we plan on continuing to be more balanced and diversified. But almost all of our deposits are floating rate deposits. So to take on much more duration would essentially be making a bet between and a mismatch between the assets and the deposits. So our focus is to your point be more diversified. And we are much more diversified than we were just five or six years ago with our securities portfolio. And we also have jumbo mortgages on the balance sheet that has some duration to it, tax exempt loans, etc. But we will I think you should expect us to continue to be exposed, more exposed to the short end of the curve, just given the nature of our deposit base, which is floating.

Really helpful caller, Paul, and for my follow up just on some of the deposit beta commentary. If I think about how you guys manage deposit costs last cycle, you tend to be more in line with the industry in terms of overall beta. So far, you've been running a little bit ahead of peers. I believe the word used on the call was generous with deposit rates, what beta should we be modeling beyond the fiscal third quarter? And what's driving the decision to be more competitive on pricing this cycle? Is that reflective of some of the cash already headwinds you cited or something else?

Yes, I just think that, look, we knew a bunch of rate increases were coming, right. So and a lot of people you can take to a process, you can maximize your return. But our belief when everybody was talking about how much cash and there was too much cash is that as businesses grew and rates went up and you can see what's happened in the public markets where people haven't had access, there would be more demand for cash. And we're seeing that in the bank suite program, even the biggest banks coming back into the bank suite program, which tells you, everyone's looking to liquidity. So our view was, we could be more aggressive. We'd have chances on further increases to modify or not to be as aggressive if we could see a cooling down or going the other way but as to make sure that we first treated clients fairly, but we did a good job of retaining cash balances. And then we've lived through cycles when cash was really tight in the industry. And some people are already putting out high yield savings and other CDs and deposits to fund now, right. So they're sweetbreads may be lower, but they're also adding higher cost deposits. So we're just trying to look long term on it. Take care of clients. And yet we know in a rising rates that they keep rising, we always had time to adjust. So Paul, I don't know if you want to comment on changing beta or not. It's hard to hard to tell until we have a rate setting committee. It'll certainly be what it was, at least historically, and maybe a little higher.

I think you've covered it well, Paul.

Thanks, Paul and Paul, appreciate you taking my questions.

Thanks Steve.

Thank you. The next question comes from Kyle Voigt, KBW. Please go ahead.

Hi, good morning. The first question is on PCG segment expenses. Total segment revenues dropped 15%. Compensable revenues dropped 10%. But when you look at the PCG administrative comp expenses, they were up 22% year-on-year. I know some of that may be related to inorganic growth, I guess when you look year-on-year, you haven't have the organic growth rate for those expenses. And any more color as to kind of what's driving that level of growth both year-on-year or even the $17 million sequential increase we saw in that line item. Thank you.

Yes. So that was actually a good catch. Because what we haven't specifically drawn out in the numbers is that we've all been concerned about our associates and the impact of inflation in this environment. And a number of firms have done kind of across the board comp adjustments are common across the board salary adjustments, and we decided to take a different course, which we did this quarter is to give really just a off cycle bonus to our lower paying associates to help them cope with the inflationary costs of gasoline, housing, and everything else and not do an automatic salary adjustment really for two reasons is salaries are forever. But more importantly, is we wanted to do it thoughtfully across all of our associates in our year end process, which is actually a number of months is to make sure that people are rewarded accordingly and that the salaries are benchmarked to market and instead of just doing a raise now that it's hard to do an unraised for those who should know. We gave kind of a onetime bonus and that really hit the segment. But it really is taking care of our associates doing an unbelievable job. We've been great. Our turnover certainly been up but it's been lower than the industry. They've been doing a good job for us. And we felt we owed them to do this, which should take them to the year end until we get to our normal cycle adjustments. Paul, I don't know if you want to go through any more in terms of numbers or anything else. But that was the biggest impact of that number.

Yes, I mean, I guess you quantify the impact of that bonus, Paul?

Total for the firm is about just under $15 million for the firm and PCG takes the majority of it just because they're by far the largest business and have the most associates.

Got it. That's helpful. And then my follow up is just on the advisor account. You noted that there was a switch of 188 advisors with most of them from one firm moving to your RA division. Can you just help us understand how large those switches were from an AUM standpoint? And then any more color on the switch? Can you kind of remind us of the change in economics when migrations like that happen? Thank you.

First, strategically we've set up and really bolstered our RIA offering just because it was and it has been the fastest growing segment in the industry. And the good news is when people have switched to RIA they haven't gone to any of our custodian, competitors. They've most, almost virtually 100% of stayed at Raymond James. So it's been a good retention tool. This was really one big firm whose business model has changed. We know what's coming. We are planning on it for a year. The good news is again, they stay with Raymond James, their assets are custodial with us. But in the RA model, they're not FINRA licensed in a way we count advisors are producing advisors who have a FINRA license, but once they go into the RA space, we can't count that anymore. So if you look at it, since really, a year and a half, it's been about 250 advisors, there was a big group that moved at the end of the year, relatively big, but it's usually three or four advisors a quarter. And this was a one off movement that really focused on kind of a changing business strategy for them. So I think it was, it's not certainly business as usual. It's one of the largest firms on the platform that went RIA and we don't see people will continue to move, but it's not a different than the movement between the rest of our channels.

Thank you. The next question comes from Jim Mitchell, Seaport Research. Please go ahead.

Hey, good morning. Paul, maybe just on the Tristate deal now that it's closed. I think since you announced the deal, obviously, rates are a lot higher. You've had looks like better longer out the Tri state. So is there any way to think can you least give us maybe a sense of accretion benefits? Is it more than you expected? And is the timing sooner? Is that the way to think about it? If there's any kind of greater specificity that would be helpful?

I think you're right, Jim. All of the sort of some of the major factors, including interest rates, which is a significant factor, are increasing much faster than we originally anticipated which is a great tailwind. But most importantly, is that Tristate has been doing a fantastic job serving their clients through the announcement and through the closing and integration and they have been able to continue growing their business like nicely with their clients. And we're frankly, a lot of our efforts are staying out their way because they're doing such a great job with their client relationships and they're handling a lot of change all at once, dealing with their clients. So that's been all more positive than we originally anticipated, and a great kudos to the Tristate capital team for being able to pull that off. Now, with that being said, our earnings base is going to be higher and a higher rate environment as well. So the accretion dilution analysis is a function of both the numerator and the denominator being our earnings base. So it's hard to compare apples to apples. And frankly, Paul and I aren't really concerned about the short term accretion. We're looking at this, we determine the success of a transaction over the next 5 to 10 years. And what that really entails is keeping their franchise and their client relationships in tech, which is going extremely well. It's great to have the interest rate tailwinds. And it's great to see the growth that they're having. But again, we're not overly focused on what the near term accretion is going to be. But we're extremely excited by the success that they've had thus far in early innings.

But I guess it sounds like, go ahead.

It is better and we're pleased. Right.

So it sounds like you're saying there's not a lot of there's no real negative surprises on the expense side or anything that the upside and revenues is falling to the bottom line?

Yes, that's correct.

Okay. And then on the buyback, is that you said a few quarters is that the right pace that you think you can do say? The next three or four quarters you can kind of offset the dilution or the issuance?

I think we're going to be up. We're going to be patient. Yes, we're going to be patient. That sounds like a reasonable timeline, but depending on other capital needs, balance sheet growth, other factors, we could do it faster or slower than that. But we're going to be, as I said, from the start, and as Paul said, from the start, we're not going to be in a rush to buy it back, it kind of gets us to the same place a year from now whether we do it quickly, or we do it in a more deliberate manner.

Sure, but I think the plan is around your timeframe. But again deploying capital, if you had big bank growth that was very profitable, you had an acquisition, you had something else, you could redeploy some of that capital, but the plan right now is, and there's no plans on any of that right now. But I mean, the plan would be to kind of stick to that course. But we'll watch it if the economy really turns down sharply that you may slow it down. I think everything being equal, that's the plan. Right. Makes sense. Thank you.

Thank you. The next question comes from Devin Ryan, JMP Securities. Please go ahead.

Hey, good morning, guys. How are you?

Great, Devin.

Hey Devin.

Hey. Most have been asked here. But I do want to dig in a little bit more on advisor recruiting kind of out of the pipeline remains strong. But there's been a lot of change in the environment. And so I'd love to give them more context on some of the trends you guys were seeing there. So one hand you have markets down. I am assuming production down, but higher interest rates. The businesses more profitable at the firm level. So what do you guys, I guess, seeing what were our expectations shifting at all on the adviser side? And then competitively what are you seeing, and then the fact that markets are choppy, and sometimes it's hard for advisors to leave when they are inundated in talking to clients. And so I'm just curious kind of schematically how the advisor recruiting pipeline is evolving, and what you guys are seeing competitively in the market?

Devin, I think that first, it's always been competitive. If you'd look at our kind of our record growth it's probably not all, it's not really just an advisor count. But it's the size of the businesses that are been joining our platform, very, very large teams, ones just a few years ago, we would never see and I really, it's kind of a testament to the platform that was built in the high net worth and ultra high net worth space. And I think when Alex Brown joined us, they brought kind of a lot of knowledge and focus to us on building the platform for the entire firm. So the recruiting is going very well. It goes in cycles, the independent channel was kind of on fire, the employee channels been the one this year that's doing really, really well. And I think that's more the sign of the economy is where people are joining and the risk they're taking, we have not seen a slowdown, we thought we would see more people typically when advisors commit in the pipeline. It'll slip. We thought we'd see a lot more slippage. And we haven't really maybe a little more. So advisors are still coming. Once they make that decision, we rarely see them decide not to leave their firm. So the pace is still very, very good. It's competitive, it's always been competitive. We always seem to have in certain spaces, certain competitors, really jumped out in the market. But I think we pay a fair transition assistance. And I can't say it's the highest in the market. But we compete very well because of the value proposition. So, so far, so good. It's been if we had any concerns about it, it still looks very, very solid right now.

Great, thanks, Paul. The follow up here, let me come back to something we talked about in late May at your analyst day. And you guys spoke about kind of a focus on new non-compensable revenues and expanding those and I think your admin extension, being one in pilot, the business consulting group, and I know there's others. Interesting opportunity, it feels like from the outside, but once it gets involved around I guess one, hobbies are going in the early days and then two, could these actually become material financial contributors a few years out I appreciate you have to scale them there has to be adoption, but there's a goal to have them become meaningful revenue drivers was more just around kind of differentiation the platform adding more service and creating kind of more stickiness to the advisor relationship because you're kind of more integrated with them. Thanks.

I think it's almost the latter than the former. I think that strengthening the platform by offering those services, it makes the platform more attractive and people easier to transition. The uptake on the services has been much better than we thought. Even existing advisors who have big businesses, whether they're having like everyone's the war on talent, or someone gets sick, and like has to be out of the office or we're finding an uptake of those services and they're very, very happy with it. So we're in the early scaling days, and I doubt it's going to be a line item, like brokerage revenue, but it's going to be something that certainly is going to positively impact the margins for those businesses. And so it's early. We're still scaling on but so far, it's very, very good. But we're just a few quarters really into it. But the reception even of existing advisors is higher than we thought.

Yes, appreciate that. It was sort of late, but thanks to the caller, and I'll leave it there. Thanks, guys.

Thank you. And our final question comes from Manan Gosalia of Morgan Stanley. Please go ahead.

Hey, good morning. I apologize if you've already covered this. But my question is done on third party bank deposits. And what we're seeing from other banks this quarters that deposit growth is flowing and even shrinking in certain cases. And that would mean that the demand for your deposits from third party banks is likely to increase even further from your, can you talk about how you're thinking about that, and also the $14 billion or so you have in the CIP program. I recognize that you have a need for those deposits for your own business now. But I was wondering how nimble you can be between CIP third party bank deposits and your own bank?

Great question Manan. We can be very flexible with the deposits to your point. The CIP balances on the balance sheet are really overflow balances for when we weren't able to sweep the third party banks because they didn't have the demand. And so as that demand picks up, which it has been picking up, still early days, but we're definitely seeing a change in tone even from the big banks who historically have not been as eager to get those type of deposits. We're starting to see significant demand from those banks as well. So as we start seeing those, that demand pickup, we wouldn't be able to sweep more from CIP to those third party banks, all else being equal. So but we do have a lot of flexibility. It's great to see the demand come back. We knew the demand would eventually come back. And so that's why we wanted to stay flexible with those deposits.

But can you also be flexible between third party bank deposits in your own bank, depending on what level of loan growth you're seeing at your own bank?

Yes, absolutely. I mean, the $25 billion, that's what third party banks now and the $14 billion that's with client interest programs and that has declined somewhat since the beginning of July as I said in the comments, but those deposits over time can be a good portion of a very large portion of those deposits over time could be used to fund the balance sheet growth to the extent that we find good risk adjusted returns on the balance sheet and to the extent that we can grow loans to our private client, group clients, etc. So yes, but again, we have a lot of flexibility and a lot of capacity.

Okay, great. And then my second question is just, how are you thinking about SBA loan growth? You have your own offering, and now also Tristate, which you're managing as a separate business, but it still gives you exposure to a similar loan product. And as we see this pressure and volatility across both equity and fixed income markets, how should we think about loan growth in that segment given that rates are moving higher and that loan book has a low credit risk? Is there plan to meet all the demand you have for that portfolio and maybe slow some of the growth and CNI and CRE as recession risks rise? Or I just wanted to get a sense of like how you're prioritizing loan growth in this environment and what you're seeing in terms of demand?

Well, first it's a good question. If you look at what's going to happen in rising rates, I think that it's still a cheaper source of borrowing for most clients. So we anticipate that rates get higher and higher and higher maybe people don't borrow but in this environment, it's still a very effective way of low cost way to borrow. From our standpoint we love two things about SPL one is the liquidity because it's callable. Secondly, it's very secured, and it's low risk, and it has, frankly, the best spreads right now but also it supports clients. So we continue to focus on that segment, we can speed up any part of the loan segment, we've done it before, I think we're one of the few banks that sold by COVID loans to reduce risk on the balance sheet. And there are times we have taken different parts of the portfolio and slowed it down for a while. Most of the portfolio even CNI as a very liquid portion and the term B loans, and so we do manage the balance sheet. So we're very happy that SPL loans are in demand and growing and we plan to support that and we'll look at the relative contribution of each item depending on where we see the risk return tradeoffs long term in the market. If we're offering, the market starts offering risky credit only, then you slow down that segment. So the TriState markets very different from our certainly. Our markets, internal their markets external to other firms. And so those are very separate, run separately, but we'd like the SPL loans in both categories, and both banks and have the capital and the cash, the funding too which is important. We have a lot of flexibility and funding.

Great, thanks for taking my questions.

And that was our final question. Turn the call back over to our speakers for any closing remarks.

Yes, I want to thank everybody for attending and I know numbers were a little bit more difficult with a lot of the acquisition related expenses and changes. So I appreciate the effort I know but the questions and the write ups, you put a lot of time into it. So I want to thank you and again, as always take our advisors and associates for all they've done to generate these numbers. So it's easy to present them when they're doing such a great job. So thank you and we'll talk to you next call.

Thank you. This does conclude the conference for today. We thank you for your participation and ask that you please disconnect your lines. Thank you and have a good day.