00:00So, Stephen, I'll start with you because I sort of teased this segment as saying we were going to talk
00:04about what's next now that we're seeing this deal officially closed.
00:08It was announced back in January. So that's my first question. Now that we are over the finish line here,
00:14what is the vision for the future?
00:16Well, it's amazing. When we announced this in January, we were so excited about the opportunity.
00:21When you think about things like equity capital markets and M&A advisory, U.S. Bank covers 90 percent of
00:27the Fortune 1000.
00:28We have longstanding relationships with a lot of these companies. We serve them in multiple ways.
00:33We have not been able to serve them directly in the equity capital markets and M&A advisory.
00:38So we were super excited about that going into the announcement.
00:42Post-announcement, as we've worked even closer together to get to today, to get to the close, we've uncovered so
00:48many more opportunities across our businesses,
00:51across our fund services business, where we're massively serving the ETF space, as is BTIG, across corporate trust, across wealth
00:58management.
00:59We just have so many products and segment and client segments that we're going to be able to much better
01:04serve with BTIG's capabilities.
01:06And BTIG has so many clients that we're going to be able to offer the legacy U.S. bank capabilities
01:11to.
01:11Well, Anton, you were saying in the commercial break that you're already getting targets, as I would imagine.
01:18And you think back to March, BTIG mapping out that plan to hire as many as 100 investment bankers in
01:24the coming years.
01:25So beefing up in that area.
01:27What's at the top of your to-do list now that the deal again has closed?
01:31Well, I think it's, look, BTIG's been in a growth mode for, you know, many years.
01:36And so really it's a continuation of what we started just with the accelerant of the relationship with U.S.
01:43bank.
01:43So being one firm allows us to be more meaningful to our clients.
01:49As Stephen mentioned, all the cross-sell that we have between the different products.
01:53The thing that's been great about this partnership that's been going for over a decade leading up until today's deal
01:59is that we really picked up things where they left off.
02:02So we were their partners in equities and banking.
02:05And so that just amplifies today.
02:08Well, I'm curious about that.
02:09I mean, you sat across the table from them, I'm sure, on a lot of different occasions here.
02:13I mean, you are kind of known, BTIG is kind of known as being kind of that high-touch type
02:17of firm.
02:18And I am curious about how this integrates into a much larger ecosystem like U.S. Bank Corp.,
02:23not just because of the difference in products, but also certainly the difference in style.
02:29I mean, I'm happy to take that.
02:30So, well, we've been working together for, like I said, over a decade.
02:34So we've gotten to know each other very well.
02:36Hundreds of people at our firm, and we only have hundreds of people,
02:39work with counterparts at U.S. Bank over that time period.
02:44So now, so it's really just a continuation of the work that's been done
02:48in terms of partnering with those client opportunities.
02:51But now as one firm, people will see us as one firm.
02:54And so I think we're already seeing it.
02:56The clients are very excited, and we're getting great response.
03:01They expect more from us, and we'll be able to deliver.
03:04And the beauty of the model is, of the two models,
03:07is that these are very complementary capabilities that BTIG is bringing to the U.S. Bank ecosystem.
03:12So you don't have an overlap where we weren't in any form of equity trading,
03:18let alone high-touch equity trading.
03:19So it's very complementary, and it's really just adding these new,
03:23these additional capabilities to our existing client set.
03:26So is this like part of like a bigger sort of build out into the capital market space,
03:31into just deal-making overall?
03:34Absolutely.
03:35I mean, this is, we are a nearly, roughly $700 billion asset-sized bank,
03:40and so it's a bit overdue for us to have these capabilities.
03:43When you look at our existing capital markets revenue,
03:46which has been a huge build from a standing start to about $1.4 billion last year,
03:51it's about 4% of our overall revenues.
03:53When you look at the broader banking landscape,
03:55we have a lot of runway to grow that as a percentage of our overall revenues going forward.
03:59I am curious, I mean, it's a billion-dollar deal, a lot of stock,
04:02but also, I mean, there is sort of an earn-out in this as well.
04:06I am curious, is there any way you can discuss what sort of those performance metrics are going to be
04:10to sort of fill that gap, what was it, $275 million or so?
04:14Yeah, it's, you know, BTIG's financial forecast for the next few years,
04:18and they hit on that financial forecast.
04:20That's what the earn-out is tied to,
04:23and we're going to have all the resources of both organizations behind making sure we hit those targets.
04:28Well, I do want to talk a little bit about the experience of getting this deal, again, across the finish
04:34line.
04:35As I mentioned, you think about U.S. Bancorp, already the largest regional bank,
04:39and we know that when it comes to M&A across industries,
04:43you know, antitrust concerns have been a big focus point in any sort of deal that is announced.
04:49I'm just curious, you know, the personal experience that you two had actually getting this deal closed.
04:55Well, we've received all of our, all the regulatory approvals from the various regulators around the world
05:00who regulate the institutions, and I think that speaks for itself.
05:06These are two complementary businesses and very minimal overlap.
05:10I am curious just about the idea, Anton, with regards to sort of mid-sized broker-dealers
05:16and whether we're kind of seeing the end of an era, particularly as some of those companies start to mature.
05:21Is this kind of the next phase where we're going to start to see them absorbed into some of these
05:26bigger, broader,
05:28if you will, financial services companies?
05:29You know, I don't know if it's the end of an era.
05:31I think we were just growing to a size where it made sense, and U.S. Bank didn't have the
05:37capabilities that we had.
05:38So it was more of a, I think, a unique fit.
05:43And clearly with that partnership, we've had a lot of experience working together.
05:47So I wouldn't say it's an end of an era.
05:48I think it's just more of a natural progression for BTIG and U.S. Bank.
05:54Well, let's talk a little bit about the era that we're in when it comes to banking overall.
05:58And this is a segue into private credit.
06:01And, Stephen, I am curious.
06:03I mean, I think about U.S. Bank.
06:04My understanding is that you have about $50 billion in loans to non-bank financial institutions.
06:11We've all seen and lived through the headlines about the SaaSpocalypse,
06:14all the software existential questions being worked through right now.
06:18I mean, how are you feeling about that portfolio when you think about credit quality?
06:22What's your comfort level right now?
06:24We feel very good about our exposure.
06:27When you look at our NDFI exposure, the overwhelming majority of it we're in.
06:33We're a senior lender in a structured credit facility where there's significant credit enhancement underneath us.
06:42So regardless of what happens to that space, and we do feel good about the space in general,
06:48we feel very good about our credit exposure.
06:50And we feel good about those firms continue to grow.
06:53We serve those firms not just from a lending standpoint, but also across our investment services platform,
07:00our broader banking platform, as well as our treasury management platform.
07:03So we interact with these firms in a lot of different respects.
07:08And we see them continue to grow.
07:09In spite of the headlines, they continue to grow their businesses.
07:13And we've seen some of the best growth we've seen from that client set the last few months.
07:20At the same time, some of these headlines were emerging.
07:22Well, I'm curious.
07:23When we look at the headlines, whether it's coming out of private markets or you look at,
07:26obviously, in public markets, we're at record highs.
07:30We're right now in the midst of probably what's going to be one of the biggest years for both M
07:34&A activity as well as IPO activity.
07:36I mean, what does it look like from your view as to what that pipeline is going to be,
07:40specifically for the combined U.S. bank, BTIG?
07:44Well, from a banking and M&A standpoint, our pipeline has never been bigger.
07:49You know, we've had significant growth year over year on our banking business.
07:55And certainly our pipeline, the types of assignments, the number of assignments, the fee opportunity in those assignments has never
08:05been close to this.
08:06So we think it's a great opportunity for us to work together with U.S. banks, 45,000 commercial banking
08:14relationships and connectivity there.
08:17Those are opportunities that we didn't have in front of us ever before.
08:21And that pipeline foots with some of the data that we're seeing when we're pulling clients.
08:25We do an annual CFO survey of several thousand CFOs across from small companies to mega, multi-billion dollar mega
08:34caps.
08:34And we conducted that annual survey back in April.
08:37Forty-nine percent of the CFO survey said they plan to engage in an M&A, an acquisition in the
08:43next year.
08:43So, you know, we're hearing that anecdotally and in the data from our CFOs, our CFO clients, and BTIG is
08:51seeing that in their pipelines.
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