Stifel Reports Second Quarter 2015 Financial Results
ST. LOUIS, MO -- (Marketwired) -- 08/10/15 --
Highlights for the three months ended June 30, 2015:
- Record net revenues of $597.8 million, increased 6.7% compared with the year-ago quarter.
- Non-GAAP net income of $55.1 million, or $0.71 per diluted common share.
- Net income of $20.9 million, or $0.27 per diluted common share.
Highlights for the six months ended June 30, 2015:
- Record net revenues of $1.2 billion, increased 4.7% compared with the year-ago period.
- Non-GAAP net income of $105.0 million, or $1.35 per diluted share.
- Net income of $64.0 million, or $0.82 per diluted share.
Stifel Financial Corp. (NYSE: SF) today reported net income of $20.9 million, or $0.27 per diluted common share on record net revenues of $597.8 million for the three months ended June 30, 2015, compared with net income of $43.6 million, or $0.58 per diluted common share, on net revenues of $560.1 million for the second quarter of 2014.
For the three months ended June 30, 2015, the Company reported non-GAAP net income of $55.1 million, or $0.71 per diluted common share. These non-GAAP results exclude merger-related and other non-recurring expenses of $34.2 million (after-tax).
For the six months ended June 30, 2015, the Company reported net income of $64.0 million, or $0.82 per diluted common share on record net revenues of $1.2 billion, compared with net income of $91.0 million, or $1.20 per diluted share, on net revenues of $1.1 billion for the comparable period in 2014.
For the six months ended June 30, 2015, the Company reported non-GAAP net income of $105.0 million, or $1.35 per diluted share. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."
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Three Months Ended
------------------------------------------------------
% %
(in 000s) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- ---------- ---------- ----------
Net revenues $ 597,751 $ 560,105 6.7 $ 560,982 6.6
Net income $ 20,888 $ 43,600 (52.1) $ 43,097 (51.5)
Non-GAAP net
income(1) $ 55,091 $ 49,290 11.8 $ 49,940 10.3
Earnings per common
share:
Basic $ 0.31 $ 0.66 (53.0) $ 0.63 (50.8)
Diluted $ 0.27 $ 0.58 (53.4) $ 0.56 (51.8)
Non-GAAP net
income(1) $ 0.71 $ 0.65 9.2 $ 0.65 9.2
Weighted average
number of common
shares outstanding:
Basic 68,370 66,302 3.1 68,006 0.5
Diluted 77,856 75,641 2.9 77,359 0.6
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---------------------------------------------------------
Six Months Ended
------------------------------------
%
(in 000s) 6/30/15 6/30/14 Change
------------ ------------ ----------
Net revenues $ 1,158,733 $ 1,106,862 4.7
Net income $ 63,985 $ 90,983 (29.7)
Non-GAAP net
income(1) $ 105,031 $ 100,728 4.3
Earnings per common
share:
Basic $ 0.94 $ 1.38 (31.9)
Diluted $ 0.82 $ 1.20 (31.7)
Non-GAAP net
income(1) $ 1.35 $ 1.33 1.5
Weighted average
number of common
shares outstanding:
Basic 68,189 66,167 3.1
Diluted 77,624 75,665 2.6
---------------------------------------------------------
Chairman's Comments
"Our record second quarter results demonstrate the strength of our platform. On June 5, 2015, we completed the acquisition of Sterne Agee, and as a result, our second quarter includes approximately one month of Sterne Agee's financial results. We are pleased to welcome our new associates to Stifel," stated Ronald J. Kruszewski, Chairman and CEO of Stifel.
Kruszewski continued, "We remain excited about partnering with the professionals at Barclays to continue to grow our Global Wealth Management business. We are committed to investing in and helping grow the Barclays franchise over the long-term, and creating a best-in-class platform to serve our clients. We remain on track to close the transaction in the 4th quarter of 2015."
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions revenues, were $269.3 million, a 2.1% decrease compared with the second quarter of 2014 and a 4.0% decrease compared with the first quarter of 2015.
- Global wealth management brokerage revenues were $158.8 million, a 1.1% decrease compared with the second quarter of 2014 and a 0.5% increase compared with the first quarter of 2015.
- Institutional equity brokerage revenues were $58.6 million, a 3.8% decrease compared with the second quarter of 2014 and a 5.3% decrease compared with the first quarter of 2015.
- Institutional fixed income brokerage revenues were $52.0 million, a 3.2% decrease compared with the second quarter of 2014 and a 14.4% decrease compared with the first quarter of 2015.
Investment Banking Revenues
Investment banking revenues were $161.0 million, an 11.2% increase compared with the second quarter of 2014 and a 28.7% increase compared with the first quarter of 2015.
- Equity capital raising revenues were $55.5 million, a 15.7% decrease compared with the second quarter of 2014 and a 13.3% increase compared with the first quarter of 2015.
- Fixed income capital raising revenues were $41.9 million, a 124.2% increase compared with the second quarter of 2014 and a 57.0% increase compared with the first quarter of 2015.
- Advisory fee revenues were $63.6 million, a 5.4% increase compared with the second quarter of 2014 and a 28.7% increase compared with the first quarter of 2015.
Asset Management and Service Fee Revenues
Asset management and service fee revenues were $119.9 million, a 27.3% increase compared with the second quarter of 2014 and a 5.3% increase compared with the first quarter of 2015. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets.
Compensation and Benefits Expenses
For the quarter ended June 30, 2015, compensation and benefits expenses were $410.0 million, which included $39.6 million of merger-related expenses, compared with $355.3 million in the second quarter of 2014, and $355.7 million in the first quarter of 2015. Compensation and benefits expense included merger-related expenses of $1.5 million in the second quarter of 2014 and $3.4 million in the first quarter of 2015.
Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.0% in the second quarter of 2015, compared with 63.0% in the second quarter of 2014 and 62.5% in the first quarter of 2015. Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, as a percentage of net revenues was 3.7% in the second quarter of 2015, compared with 4.5% in the second quarter of 2014 and 4.1% in the first quarter of 2015.
Non-Compensation Operating Expenses
For the quarter ended June 30, 2015, non-compensation operating expenses were $149.7 million, which included merger-related expenses of $15.1 million, compared with $130.4 million in the second quarter of 2014, and $135.2 million in the first quarter of 2015.
Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2015 was 22.5%, compared with 22.4% in the second quarter of 2014 and 23.2% in the first quarter of 2015.
Provision for Income Taxes
The effective income tax rate for the quarter ended June 30, 2015 was 45.1% compared with 41.4% in the second quarter of 2014, and 38.5% in the first quarter of 2015. The effective tax rate for the second quarter of 2015 was impacted by losses recognized by our foreign subsidiaries that are taxed at a different rate than our U.S. subsidiaries.
Assets and Capital
Assets
- Assets increased 5.9% to $10.1 billion as of June 30, 2015 from $9.6 billion as of June 30, 2014. The increase is primarily attributable growth attributable to acquired assets from our acquisitions and an increase in the loan portfolio at Stifel Bank, offset by a decrease in Stifel Bank's investment portfolio and financial instruments owned, at fair value.
- At June 30, 2015, the Company's Level 3 assets of $127.7 million, or 1.3% of total assets, consisted of $49.7 million of auction rate securities and $78.1 million of partnership interests, private company investments, private equity, and fixed income securities. The Company's Level 3 assets as a percentage of total assets measured at fair value was 6.3% at June 30, 2015.
- Non-performing assets as a percentage of total assets as of June 30, 2015 was 0.13%.
Capital
- The Company's Tier 1 leverage capital ratio was 18.3% at June 30, 2015 and Tier 1 risk-based capital ratio was 29.4% at June 30, 2015.
- At June 30, 2015, book value per common share was $36.35 based on 69.3 million common shares outstanding.
- Stockholders' equity as of June 30, 2015 increased $347.1 million, or 16.0%, to $2.5 billion from $2.2 billion as of June 30, 2014.
Conference Call Information
Stifel Financial Corp. will host its second quarter 2015 financial results conference call on Monday, August 10, 2015, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.
All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (888) 876-9938 and referencing conference ID #43107467. A live audio webcast of the call, as well as a presentation highlighting the Company's results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.
Company Information
Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. The Company's broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. offers trust and related services. To learn more about Stifel, please visit the Company's web site at www.stifel.com.
Forward-Looking Statements
This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
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Summary Results of Operations (Unaudited)
Three Months Ended
-------------------------------------------------------
(in thousands,
except per share % %
amounts) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- --------------------- -----------
Revenues:
Commissions $ 183,770 $ 164,371 11.8 $ 180,302 1.9
Principal
transactions 85,543 110,717 (22.7) 100,205 (14.6)
---------- ---------- ------------------- ---------
Brokerage revenues 269,313 275,088 (2.1) 280,507 (4.0)
Investment banking 161,007 144,815 11.2 125,089 28.7
Asset management
and service fees 119,936 94,230 27.3 113,869 5.3
Other income 13,742 8,745 57.1 11,800 16.5
---------- ---------- --------------------- -----------
Operating revenues 563,998 522,878 7.9 531,265 6.2
Interest revenue 43,851 46,115 (4.9) 42,736 2.6
---------- ---------- --------------------- -----------
Total revenues 607,849 568,993 6.8 574,001 5.9
Interest expense 10,098 8,888 13.6 13,019 (22.4)
---------- ---------- --------------------- -----------
Net revenues 597,751 560,105 6.7 560,982 6.6
---------- ---------- --------------------- -----------
Non-interest
expenses:
Compensation and
benefits 409,998 355,267 15.4 355,693 15.3
Occupancy and
equipment rental 48,346 43,237 11.8 44,170 9.5
Communications and
office supplies 31,114 25,858 20.3 29,234 6.4
Commission and
floor brokerage 9,124 9,248 (1.3) 10,069 (9.4)
Other operating
expenses 61,098 52,076 17.3 51,750 18.1
---------- ---------- --------------------- -----------
Total non-interest
expenses 559,680 485,686 14.8 490,916 14.0
Income before income
taxes 38,071 74,419 (48.8) 70,066 (45.7)
Provision for
income taxes 17,183 30,819 (44.2) 26,969 (36.3)
---------- ---------- --------------------- -----------
Net income $ 20,888 $ 43,600 (52.1) $ 43,097 (51.5)
---------- ---------- --------------------- -----------
Earnings per common
share:
Basic $ 0.31 $ 0.66 (53.0) $ 0.63 (50.8)
Diluted $ 0.27 $ 0.58 (53.4) $ 0.56 (51.8)
Weighted average number of common shares
outstanding:
Basic 68,370 66,302 3.1 68,006 0.5
Diluted 77,856 75,641 2.9 77,359 0.6
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-----------------------------------------------------------
Summary Results of Operations (Unaudited)
Six Months Ended
---------------------------------------
(in thousands,
except per share %
amounts) 6/30/15 6/30/14 Change
------------ ------------ -------------
Revenues:
Commissions $ 364,073 $ 336,614 8.2
Principal
transactions 186,275 221,399 (15.9)
------------ ------------ -----------
Brokerage revenues 550,348 558,013 (1.4)
Investment banking 285,568 280,077 2.0
Asset management
and service fees 233,805 183,401 27.5
Other income 25,541 13,983 82.7
------------ ------------ -------------
Operating revenues 1,095,262 1,035,474 5.8
Interest revenue 86,588 88,950 (2.7)
------------ ------------ -------------
Total revenues 1,181,850 1,124,424 5.1
Interest expense 23,117 17,562 31.6
------------ ------------ -------------
Net revenues 1,158,733 1,106,862 4.7
------------ ------------ -------------
Non-interest
expenses:
Compensation and
benefits 765,691 702,257 9.0
Occupancy and
equipment rental 92,516 84,019 10.1
Communications and
office supplies 60,348 50,696 19.0
Commission and
floor brokerage 19,193 18,277 5.0
Other operating
expenses 112,848 99,764 13.1
------------ ------------ -------------
Total non-interest
expenses 1,050,596 955,013 10.0
Income before income
taxes 108,137 151,849 (28.8)
Provision for
income taxes 44,152 60,866 (27.5)
------------ ------------ -------------
Net income $ 63,985 $ 90,983 (29.7)
------------ ------------ -------------
Earnings per common
share:
Basic $ 0.94 $ 1.38 (31.9)
Diluted $ 0.82 $ 1.20 (31.7)
Weighted average
number of common
shares outstanding:
Basic 68,189 66,167 3.1
Diluted 77,624 75,665 2.6
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Statistical Information
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(in thousands, except per share, employee and location amounts)
% %
6/30/15 6/30/14 Change 3/31/15 Change
------------- ------------- ------ ------------- ------
Statistical
Information:
Book value per
share $ 36.35 $ 33.18 9.6 $ 34.83 4.4
Financial advisors
(2) 2,823 2,085 35.4 2,097 34.6
Full-time
associates 6,952 5,881 18.2 6,274 10.8
Locations 398 361 10.2 368 8.2
Total client
assets $ 190,241,000 $ 173,383,000 9.7 $ 188,616,000 0.9
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Business Segment Results
----------------------------------------------------------------------------
Summary Segment Results (Unaudited)
----------------------------------------------------------------------------
Three Months Ended
------------------------------------------------
% %
(in 000s) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- ------- ---------- -------
Net revenues:
Global Wealth Management $ 343,382 $ 307,247 11.8 $ 329,410 4.2
Institutional Group 258,538 255,670 1.1 238,607 8.4
Other (4,169) (2,812) (48.3) (7,035) 40.7
---------- ---------- ------- ---------- -------
$ 597,751 $ 560,105 6.7 $ 560,982 6.6
---------- ---------- ------- ---------- -------
Operating contribution:
(3)
Global Wealth Management $ 93,975 $ 89,098 5.5 $ 98,847 (4.9)
Institutional Group 41,942 42,312 (0.9) 32,331 29.7
Other (43,122) (49,583) 13.0 (50,369) 14.4
---------- ---------- ------- ---------- -------
$ 92,795 $ 81,827 13.4 $ 80,809 14.8
---------- ---------- ------- ---------- -------
As a percentage of net revenues:
Compensation and
benefits
Global Wealth Management 57.1 55.9 55.6
Institutional Group 61.9 61.6 62.6
Non-comp. operating
expenses
Global Wealth Management 15.5 15.1 14.4
Institutional Group 21.9 21.9 23.8
Income before income
taxes
Global Wealth Management 27.4 29.0 30.0
Institutional Group 16.2 16.5 13.6
---------- ---------- ----------
15.5 14.6 14.3
---------- ---------- ----------
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-------------------------------------------------------------
Summary Segment Results (Unaudited)
-------------------------------------------------------------
Six Months Ended
---------------------------------
%
(in 000s) 6/30/15 6/30/14 Change
------------ ------------ -------
Net revenues:
Global Wealth Management $ 672,792 $ 604,430 11.3
Institutional Group 497,145 505,647 (1.7)
Other (248.
(11,204) (3,215) 5)
------------ ------------ -------
$ 1,158,733 $ 1,106,862 4.7
------------ ------------ -------
Operating contribution:
(3)
Global Wealth Management $ 192,823 $ 168,774 14.2
Institutional Group 74,273 87,222 (14.8)
Other (93,492) (90,295) (3.5)
------------ ------------ -------
$ 173,604 $ 165,701 4.8
------------ ------------ -------
As a percentage of net
revenues:
Compensation and
benefits
Global Wealth Management 56.4 57.2
Institutional Group 62.3 61.7
Non-comp. operating
expenses
Global Wealth Management 14.9 14.9
Institutional Group 22.8 21.1
Income before income
taxes
Global Wealth Management 28.7 27.9
Institutional Group 14.9 17.2
------------ ------------
14.9 14.9
------------ ------------
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Global Wealth Management Summary Results of Operations (Unaudited)
Three Months Ended
------------------------------------------------
% %
(in 000s) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- ------- ---------- -------
Revenues:
Commissions $ 125,121 $ 112,205 11.5 $ 116,214 7.7
Principal transactions 33,682 48,335 (30.3) 41,781 (19.4)
-------- -------- ----- -------- -----
Brokerage revenues 158,803 160,540 (1.1) 157,995 0.5
Asset management and
service fees 119,734 94,187 27.1 113,666 5.3
Net interest 37,454 35,839 4.5 37,924 (1.2)
Investment banking 15,128 11,132 35.9 10,326 46.5
Other income 12,263 5,549 121.0 9,499 29.0
---------- ---------- ------- ---------- -------
Net revenues 343,382 307,247 11.8 329,410 4.2
---------- ---------- ------- ---------- -------
Non-interest expenses:
Compensation and
benefits 196,234 171,724 14.3 183,243 7.1
Non-compensation
operating expenses 53,173 46,425 14.5 47,320 12.4
---------- ---------- ------- ---------- -------
Total non-interest
expenses 249,407 218,149 14.3 230,563 8.2
---------- ---------- ------- ---------- -------
Income before income taxes $ 93,975 $ 89,098 5.5 $ 98,847 (4.9)
---------- ---------- ------- ---------- -------
As a percentage of net
revenues:
Compensation and
benefits 57.1 55.9 55.6
Non-compensation
operating expenses 15.5 15.1 14.4
Income before income
taxes 27.4 29.0 30.0
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---------------------------------------------------------
Global Wealth Management Summary Results of Operations
(Unaudited)
Six Months Ended
-----------------------------
%
(in 000s) 6/30/15 6/30/14 Change
---------- ---------- -------
Revenues:
Commissions $ 241,335 $ 225,202 7.2
Principal transactions 75,689 95,638 (20.9)
-------- -------- -----
Brokerage revenues 317,024 320,840 (1.2)
Asset management and
service fees 233,400 183,317 27.3
Net interest 75,378 71,101 6.0
Investment banking 25,228 22,263 13.3
Other income 21,762 6,909 215.0
---------- ---------- -------
Net revenues 672,792 604,430 11.3
---------- ---------- -------
Non-interest expenses:
Compensation and
benefits 379,477 345,892 9.7
Non-compensation
operating expenses 100,492 89,764 12.0
---------- ---------- -------
Total non-interest
expenses 479,969 435,656 10.2
---------- ---------- -------
Income before income taxes $ 192,823 $ 168,774 14.2
---------- ---------- -------
As a percentage of net
revenues:
Compensation and
benefits 56.4 57.2
Non-compensation
operating expenses 14.9 14.9
Income before income
taxes 28.7 27.9
---------------------------------------------------------
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Stifel Bank & Trust (Unaudited)
Key Statistical Information
----------------------------------------------------------------------------
(in 000s, except % %
percentages) 6/30/15 6/30/14 Change 3/31/15 Change
----------- ----------- ------- ----------- -------
Other information:
Assets $4,786,248 $5,039,556 (5.0) $5,289,349 (9.5)
Investment
securities 1,907,282 2,915,235 (34.6) 2,599,854 (26.6)
Retained loans, net 2,626,508 1,773,853 48.1 2,505,007 4.9
Loans held for sale 183,991 119,477 54.0 188,783 (2.5)
Deposits 4,313,940 4,654,937 (7.3) 4,834,042 (10.8)
Allowance as a
percentage of loans 0.98% 0.97% 0.96%
Non-performing
assets as a
percentage of total
assets 0.13% 0.10% 0.13%
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----------------------------------------------------------------------------
Institutional Group Summary Results of Operations (Unaudited)
Three Months Ended
------------------------------------------------
% %
(in 000s) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- ------- ---------- -------
Revenues:
Commissions $ 58,649 $ 52,166 12.4 $ 64,088 (8.5)
Principal transactions 51,861 62,382 (16.9) 58,423 (11.2)
---------- ---------- ------- ---------- -------
Brokerage revenues 110,510 114,548 (3.5) 122,511 (9.8)
Capital raising 82,690 73,327 12.8 65,321 26.6
Advisory fees 63,189 60,356 4.7 49,443 27.8
---------- ---------- ------- ---------- -------
Investment banking 145,879 133,683 9.1 114,764 27.1
Other (4) 2,149 7,439 (71.1) 1,332 61.3
---------- ---------- ------- ---------- -------
Net revenues 258,538 255,670 1.1 238,607 8.4
---------- ---------- ------- ---------- -------
Non-interest expenses:
Compensation and benefits 160,077 157,500 1.6 149,411 7.1
Non-compensation
operating expenses 56,519 55,858 1.2 56,865 (0.6)
---------- ---------- ------- ---------- -------
Total non-interest
expenses 216,596 213,358 1.5 206,276 5.0
---------- ---------- ------- ---------- -------
Income before income taxes $ 41,942 $ 42,312 (0.9) $ 32,331 29.7
---------- ---------- ------- ---------- -------
As a percentage of net
revenues:
Compensation and benefits 61.9 61.6 62.6
Non-compensation
operating expenses 21.9 21.9 23.8
Income before income
taxes 16.2 16.5 13.6
----------------------------------------------------------------------------
----------------------------------------------------------
Institutional Group Summary Results of Operations
(Unaudited)
Six Months Ended
-----------------------------
%
(in 000s) 6/30/15 6/30/14 Change
---------- ---------- -------
Revenues:
Commissions $ 122,738 $ 111,411 10.2
Principal transactions 110,587 125,762 (12.1)
---------- ---------- -------
Brokerage revenues 233,325 237,173 (1.6)
Capital raising 147,707 138,685 6.5
Advisory fees 112,632 119,129 (5.5)
---------- ---------- -------
Investment banking 260,339 257,814 1.0
Other (4) 3,481 10,660 (67.3)
---------- ---------- -------
Net revenues 497,145 505,647 (1.7)
---------- ---------- -------
Non-interest expenses:
Compensation and benefits 309,488 311,734 (0.7)
Non-compensation
operating expenses 113,384 106,691 6.3
---------- ---------- -------
Total non-interest
expenses 422,872 418,425 1.1
---------- ---------- -------
Income before income taxes $ 74,273 $ 87,222 (14.8)
---------- ---------- -------
As a percentage of net
revenues:
Compensation and benefits 62.3 61.7
Non-compensation
operating expenses 22.8 21.1
Income before income
taxes 14.9 17.2
----------------------------------------------------------
----------------------------------------------------------------------------
Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
Three Months Ended
------------------------------------------------
% %
(in 000s) 6/30/15 6/30/14 Change 3/31/15 Change
---------- ---------- ------- ---------- -------
Institutional brokerage:
Equity $ 58,551 $ 60,865 (3.8) $ 61,803 (5.3)
Fixed income 51,959 53,683 (3.2) 60,708 (14.4)
---------- ---------- ------- ---------- -------
Institutional brokerage 110,510 114,548 (3.5) 122,511 (9.8)
Investment banking:
Capital raising:
Equity 49,550 58,500 15.3) 44,591 11.1
Fixed income 33,140 14,827 123.5 20,730 59.9
---------- ---------- ------- ---------- -------
Capital raising 82,690 73,327 12.8 65,321 26.6
Advisory fees: 63,189 60,356 4.7 49,443 27.8
---------- ---------- ------- ---------- -------
Investment banking $ 145,879 133,683 9.1 114,764 27.1
---------- ---------- ------- ---------- -------
----------------------------------------------------------------------------
---------------------------------------------------------
Institutional Group Brokerage & Investment Banking
Revenues (Unaudited)
Six Months Ended
-----------------------------
%
(in 000s) 6/30/15 6/30/14 Change
---------- ---------- -------
Institutional brokerage:
Equity $ 120,548 $ 125,439 (3.9)
Fixed income 112,777 111,734 0.9
---------- ---------- -------
Institutional brokerage 233,325 237,173 (1.6)
Investment banking:
Capital raising:
Equity 93,837 113,343 (17.2)
Fixed income 53,870 25,342 112.6
---------- ---------- -------
Capital raising 147,707 138,685 6.5
Advisory fees: 112,632 119,129 (5.5)
---------- ---------- -------
Investment banking $ 260,339 257,814 1.0
---------- ---------- -------
-------------------------- ------------------------------
Non-GAAP Financial Measures
The Company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share as additional measures to aid in understanding and analyzing the Company's financial results for the three and six months ended June 30, 2015. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company's results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance. These non-GAAP amounts primarily exclude acquisition related expenses which management believes are duplicative and will be eliminated, stock-based compensation and other expenses which in managements view are not representative of ongoing business.
A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share and the same respective non-GAAP measures of the Company's financial performance should be considered together.
The following table provides details with respect to reconciling net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share on a GAAP basis for the three and six months ended June 30, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.
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Three Months Ended June 30, 2015
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(in 000s, except per share
amounts) Non-GAAP Adjustments GAAP
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Net revenues $ 597,751 $ - $ 597,751
Non-interest expenses:
Compensation and benefits 370,357 39,641 409,998
Non-compensation operating
expenses 134,599 15,083 149,682
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Total non-interest expenses 504,956 54,724 559,680
Income before income taxes 92,795 (54,724) 38,071
Provision for income taxes 37,704 (20,521) 17,183
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Net income $ 55,091 $ (34,203) $ 20,888
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Earnings per share::
Basic $ 0.81 $ (0.50) $ 0.31
Diluted $ 0.71 $ (0.44) $ 0.27
As a percentage of net revenues:
Compensation and benefits 62.0 68.6
Non-compensation operating
expenses 22.5 25.0
Income before income taxes 15.5 6.4
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Six Months Ended June 30, 2015
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(in 000s, except per share
amounts) Non-GAAP Adjustments GAAP
------------- ------------- -------------
Net revenues $ 1,161,445 $ (2,712) $ 1,158,733
Non-interest expenses:
Compensation and benefits 722,640 43,051 765,691
Non-compensation operating
expenses 265,201 19,704 284,905
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Total non-interest expenses 987,841 62,755 1,050,596
Income before income taxes 173,604 (65,467) 108,137
Provision for income taxes 68,573 (24,421) 44,152
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Net income $ 105,031 $ (41,046) $ 63,985
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Earnings per share::
Basic $ 1.54 $ (0.60) $ 0.94
Diluted $ 1.35 $ (0.53) $ 0.82
As a percentage of net revenues:
Compensation and benefits 62.2 66.1
Non-compensation operating
expenses 22.9 24.6
Income before income taxes 14.9 9.3
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(1) A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
(2) Includes 736, 140, and 134 independent contractors as of June 30, 2015, June 30, 2014, and March 31, 2015, respectively.
(3) A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
(4) Includes net interest, other income, and asset management & service fees.
Investor RelationsSarah Anderson (415) [email protected]
Source: Stifel Financial Corp.