Form 8-K STIFEL FINANCIAL CORP For: Nov 04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2015
STIFEL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
001-09305 |
|
43-1273600 |
|
(State of incorporation) |
|
(Commission |
|
(IRS Employer |
501 N. Broadway, St. Louis, Missouri 63102-2188
(Address of principal executive offices and zip code)
(314) 342-2000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 4, 2015, Stifel Financial Corp. (“Stifel”) reported its financial results for the three months ended September 30, 2015. A copy of the related press release is attached hereto as Exhibit 99.1.
Stifel will hold a conference call on Wednesday, November 4, 2015, at 5:00 p.m. Eastern time. All interested parties are invited to listen to Stifel Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #43107515. A live audio webcast of the call, as well as a presentation highlighting the company’s results, will be available through Stifel’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.
The exhibit is being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
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(d) |
Exhibits. |
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Exhibit Number |
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Description of Exhibit |
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|
|
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99.1 |
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Press release dated November 4, 2015. |
|
99.2 |
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Investor presentation. |
2
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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STIFEL FINANCIAL CORP. |
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Date: November 4, 2015 |
By: |
/s/ James M. Zemlyak |
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Name: |
James M. Zemlyak |
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Title: |
President and Chief Financial Officer |
3
EXHIBIT INDEX
|
Exhibit Number |
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Description of Exhibit |
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99.1 |
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Press release dated November 4, 2015. |
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99.2 |
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Investor presentation. |
4
Exhibit 99.1
STIFEL REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS
Highlights for the three months ended September 30, 2015:
|
|
· |
Net revenues of $591.6 million, increased 13.0% compared with the year-ago quarter. |
|
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· |
Non-GAAP net income of $47.7 million, or $0.60 per diluted common share. |
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· |
Net income of $17.2 million, or $0.22 per diluted common share. |
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· |
Repurchased 1.5 million shares for approximately $65.9 million. |
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· |
On November 3, 2015, the Board of Directors authorized an additional 5.0 million shares for repurchase under the current buyback plan. |
Highlights for the nine months ended September 30, 2015:
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· |
Record net revenues of $1.75 billion, increased 7.4% compared with the year-ago period. |
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· |
Non-GAAP net income of $152.7 million, or $1.95 per diluted share. |
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· |
Net income of $81.2 million, or $1.04 per diluted share. |
ST. LOUIS, November 4, 2015 – Stifel Financial Corp. (NYSE: SF) today reported net income of $17.2 million, or $0.22 per diluted common share on net revenues of $591.6 million for the three months ended September 30, 2015, compared with net income of $39.9 million, or $0.52 per diluted common share, on net revenues of $523.5 million for the third quarter of 2014.
For the three months ended September 30, 2015, the Company reported non-GAAP net income of $47.7 million, or $0.60 per diluted common share. These non-GAAP results exclude merger-related expenses of $30.5 million (after-tax), primarily related to the acquisition of Sterne Agee.
For the nine months ended September 30, 2015, the Company reported net income of $81.2 million, or $1.04 per diluted common share on record net revenues of $1.75 billion, compared with net income of $130.9 million, or $1.72 per diluted share, on net revenues of $1.63 billion for the comparable period in 2014.
For the nine months ended September 30, 2015, the Company reported non-GAAP net income of $152.7 million, or $1.95 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 |
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Nine Months Ended |
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||||||||||||||||||||
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(in 000s) |
9/30/15 |
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9/30/14 |
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% Change |
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6/30/15 |
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% Change |
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9/30/15 |
|
9/30/14 |
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% Change |
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||||||||
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Net revenues |
$ |
591,575 |
|
$ |
523,455 |
|
|
13.0 |
|
$ |
597,751 |
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(1.0 |
) |
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$ |
1,750,308 |
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$ |
1,630,348 |
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7.4 |
|
|
Net income |
$ |
17,179 |
|
$ |
39,903 |
|
|
(56.9 |
) |
$ |
20,888 |
|
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(17.8 |
) |
|
$ |
81,164 |
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$ |
130,886 |
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(38.0 |
) |
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Non-GAAP net income1 |
$ |
47,705 |
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$ |
48,508 |
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(1.7 |
) |
$ |
55,091 |
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(13.4 |
) |
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$ |
152,734 |
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$ |
149,235 |
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2.3 |
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Earnings per common share: |
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Basic |
$ |
0.25 |
|
$ |
0.60 |
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(58.3 |
) |
$ |
0.31 |
|
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(19.4 |
) |
|
$ |
1.18 |
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$ |
1.97 |
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(40.1 |
) |
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Diluted |
$ |
0.22 |
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$ |
0.52 |
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(57.7 |
) |
$ |
0.27 |
|
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(18.5 |
) |
|
$ |
1.04 |
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$ |
1.72 |
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(39.5 |
) |
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Non-GAAP net income1 |
$ |
0.60 |
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$ |
0.64 |
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(6.3 |
) |
$ |
0.71 |
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(15.5 |
) |
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$ |
1.95 |
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$ |
1.96 |
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(0.5 |
) |
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Weighted average number of common shares outstanding: |
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|||||
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Basic |
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69,633 |
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66,691 |
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4.4 |
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68,370 |
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1.8 |
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68,675 |
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66,344 |
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3.5 |
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Diluted |
|
79,759 |
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|
76,681 |
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|
4.0 |
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77,856 |
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2.4 |
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|
78,326 |
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|
76,011 |
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3.0 |
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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.” |
1
“A challenging market environment contributed to a generally slow quarter for investment banking services and fixed income trading, which negatively impacted our results. Our recent acquisitions mitigated the revenue decline in our legacy businesses and also added to our operating expenses. As a result, compared to the 2nd quarter of 2015, revenues declined by $6.1 million while non-compensation operating expenses increased $13.0 million, resulting in a decline in pre-tax operating margin from 15.5% to 12.2%.,” stated Ronald J. Kruszewski, Chairman and CEO of Stifel.
Kruszewski continued, “In the quarter, Stifel continued to build a premier balanced wealth management and institutional services company. Our operating model provides us tremendous leverage to invest in the future while at the same time providing shareholders a strong return. We are well positioned to take advantage of opportunities as they arrive and offer our clients excellent advice and services.
We expect the Barclays transaction, announced on June 8, 2015, to close on December 4, 2015. We are excited to welcome these highly talented associates to Stifel.”
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions revenues, were $289.7 million, a 10.4% increase compared with the third quarter of 2014 and a 6.7% increase compared with the second quarter of 2015.
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· |
Global wealth management brokerage revenues were $169.3 million, a 7.5% increase compared with the third quarter of 2014 and a 6.6% increase compared with the second quarter of 2015. |
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· |
Institutional equity brokerage revenues were $59.8 million, a 4.1% increase compared with the third quarter of 2014 and a 1.5% decrease compared with the second quarter of 2015. |
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· |
Institutional fixed income brokerage revenues were $60.6 million, a 27.6% increase compared with the third quarter of 2014 and a 16.6% increase compared with the second quarter of 2015. |
Investment Banking Revenues
Investment banking revenues were $118.8 million, which was consistent with the third quarter of 2014 and a 25.2% decrease compared with the second quarter of 2015.
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· |
Equity capital raising revenues were $36.6 million, a 29.2% decrease compared with the third quarter of 2014 and a 31.3% decrease compared with the second quarter of 2015. |
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· |
Fixed income capital raising revenues were $32.4 million, a 101.7% increase compared with the third quarter of 2014 and a 22.8% decrease compared with the second quarter of 2015. |
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· |
Advisory fee revenues were $49.8 million, a 2.3% decrease compared with the third quarter of 2014 and a 21.8% decrease compared with the second quarter of 2015. |
Asset Management and Service Fee Revenues
Asset management and service fee revenues were $130.6 million, a 35.2% increase compared with the third quarter of 2014 and a 8.9% increase compared with the second 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 and revenues from our acquisition of 1919 Investment Counsel in the fourth quarter of 2014.
Compensation and Benefits Expenses
For the quarter ended September 30, 2015, compensation and benefits expenses were $404.2 million, which included $32.2 million of merger-related expenses, compared with $331.4 million in the third quarter of 2014, and $410.0 million in the second quarter of 2015. Compensation and benefits expense included merger-related expenses of $7.2 million in the third quarter of 2014 and $39.6 million in the second quarter of 2015.
Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.9% in the third quarter of 2015, compared with 61.8% in the third quarter of 2014 and 62.0% in the second 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 third quarter of 2015, compared with 5.1% in the third quarter of 2014 and 3.7% in the second quarter of 2015.
2
Non-Compensation Operating Expenses
For the quarter ended September 30, 2015, non-compensation operating expenses were $165.0 million, which included merger-related expenses of $17.4 million, compared with $126.2 million in the third quarter of 2014, and $149.7 million in the second quarter of 2015.
Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2015 was 24.9%, compared with 23.3% in the third quarter of 2014 and 22.5% in the second quarter of 2015.
Provision for Income Taxes
The effective income tax rate for the quarter ended September 30, 2015 was 23.1% compared with 39.0% in the third quarter of 2014, and 45.1% in the second quarter of 2015. The effective tax rate for the third quarter of 2015 was positively impacted by a decrease in the Company’s FIN 48 reserve and adjustments associated with the filing of the 2014 Corporate tax return.
Assets and Capital
Assets
|
· |
Assets increased 0.4% to $9.4 billion as of September 30, 2015 from $9.3 billion as of September 30, 2014. The increase is primarily 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 September 30, 2015, the Company’s Level 3 assets of $116.3 million, or 1.2% of total assets, consisted of $57.5 million of auction rate securities and $58.8 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 6.7% at September 30, 2015. |
|
· |
Non-performing assets as a percentage of total assets as of September 30, 2015 was 0.03%. |
Capital
|
· |
The Company’s Tier 1 leverage capital ratio was 16.4% at September 30, 2015 and Tier 1 risk-based capital ratio was 29.4% at September 30, 2015. |
|
· |
At September 30, 2015, book value per common share was $36.63 based on 68.1 million common shares outstanding. |
|
· |
Stockholders’ equity as of September 30, 2015 increased $254.5 million, or 11.4%, to $2.5 billion from $2.2 billion as of September 30, 2014. |
|
· |
The Company repurchased $65.9 million, or 1.5 million shares, of its common stock pursuant to the current buyback plan during the third quarter of 2015. On November 3, 2015, the Board of Directors authorized the repurchase of an additional 5.0 million shares. Under existing Board authorizations at November 4, 2015, the Company is permitted to buy an additional 6.8 million shares. |
3
Stifel Financial Corp. will host its third quarter 2015 financial results conference call on Wednesday, November 4, 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 (877) 876-9938 and referencing conference ID #43107515. 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.
4
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Three Months Ended |
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Nine Months Ended |
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||||||||||||||||||||
|
(in thousands, except per share amounts) |
9/30/15 |
|
9/30/14 |
|
% Change |
|
6/30/15 |
|
% Change |
|
|
9/30/15 |
|
9/30/14 |
|
% Change |
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||||||||
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Revenues: |
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|
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|
|
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|
|
|
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Commissions |
$ |
194,083 |
|
$ |
167,601 |
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|
15.8 |
|
$ |
184,866 |
|
|
5.0 |
|
|
$ |
562,249 |
|
$ |
510,070 |
|
|
10.2 |
|
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Principal transactions |
|
95,593 |
|
|
94,828 |
|
|
0.8 |
|
|
86,597 |
|
|
10.4 |
|
|
|
281,794 |
|
|
318,312 |
|
|
(11.5 |
) |
|
Brokerage revenues |
|
289,676 |
|
|
262,429 |
|
|
10.4 |
|
|
271,463 |
|
|
6.7 |
|
|
|
844,043 |
|
|
828,382 |
|
|
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment banking |
|
118,753 |
|
|
118,717 |
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|
* |
|
|
158,857 |
|
|
(25.2 |
) |
|
|
400,302 |
|
|
390,848 |
|
|
2.4 |
|
|
Asset management and service fees |
|
130,636 |
|
|
96,638 |
|
|
35.2 |
|
|
119,936 |
|
|
8.9 |
|
|
|
364,442 |
|
|
280,039 |
|
|
30.1 |
|
|
Other income |
|
18,930 |
|
|
4,803 |
|
|
294.1 |
|
|
13,742 |
|
|
37.8 |
|
|
|
44,471 |
|
|
18,745 |
|
|
137.2 |
|
|
Operating revenues |
|
557,995 |
|
|
482,587 |
|
|
15.6 |
|
|
563,998 |
|
|
(1.1 |
) |
|
|
1,653,258 |
|
|
1,518,014 |
|
|
8.9 |
|
|
Interest revenue |
|
43,376 |
|
|
52,096 |
|
|
(16.7 |
) |
|
43,851 |
|
|
(1.1 |
) |
|
|
129,964 |
|
|
141,035 |
|
|
(7.8 |
) |
|
Total revenues |
|
601,371 |
|
|
534,683 |
|
|
12.5 |
|
|
607,849 |
|
|
(1.1 |
) |
|
|
1,783,222 |
|
|
1,659,049 |
|
|
7.5 |
|
|
Interest expense |
|
9,796 |
|
|
11,228 |
|
|
(12.8 |
) |
|
10,098 |
|
|
(3.0 |
) |
|
|
32,914 |
|
|
28,701 |
|
|
14.7 |
|
|
Net revenues |
|
591,575 |
|
|
523,455 |
|
|
13.0 |
|
|
597,751 |
|
|
(1.0 |
) |
|
|
1,750,308 |
|
|
1,630,348 |
|
|
7.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
404,205 |
|
|
331,440 |
|
|
22.0 |
|
|
409,998 |
|
|
(1.4 |
) |
|
|
1,169,896 |
|
|
1,033,478 |
|
|
13.2 |
|
|
Occupancy and equipment rental |
|
53,282 |
|
|
41,611 |
|
|
28.0 |
|
|
48,346 |
|
|
10.2 |
|
|
|
145,798 |
|
|
125,110 |
|
|
16.5 |
|
|
Communications and office supplies |
|
35,678 |
|
|
27,464 |
|
|
29.9 |
|
|
31,114 |
|
|
14.7 |
|
|
|
96,026 |
|
|
78,151 |
|
|
22.9 |
|
|
Commission and floor brokerage |
|
12,430 |
|
|
9,971 |
|
|
24.7 |
|
|
9,124 |
|
|
36.2 |
|
|
|
31,623 |
|
|
28,247 |
|
|
12.0 |
|
|
Other operating expenses |
|
63,632 |
|
|
47,203 |
|
|
34.8 |
|
|
61,098 |
|
|
4.1 |
|
|
|
176,480 |
|
|
143,945 |
|
|
22.6 |
|
|
Total non-interest expenses |
|
569,227 |
|
|
457,689 |
|
|
24.4 |
|
|
559,680 |
|
|
1.7 |
|
|
|
1,619,823 |
|
|
1,408,931 |
|
|
15.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
22,348 |
|
|
65,766 |
|
|
(66.0 |
) |
|
38,071 |
|
|
(41.3 |
) |
|
|
130,485 |
|
|
221,417 |
|
|
(41.1 |
) |
|
Provision for income taxes |
|
5,169 |
|
|
25,673 |
|
|
(79.9 |
) |
|
17,183 |
|
|
(69.9 |
) |
|
|
49,321 |
|
|
87,774 |
|
|
(43.8 |
) |
|
Net income from continuing operations |
|
17,179 |
|
|
40,093 |
|
|
(57.2 |
) |
|
20,888 |
|
|
(17.8 |
) |
|
|
81,164 |
|
|
133,643 |
|
|
(39.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
— |
|
|
(190 |
) |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(2,757 |
) |
|
* |
|
|
Net income |
$ |
17,179 |
|
$ |
39,903 |
|
|
(56.9 |
) |
$ |
20,888 |
|
|
(17.8 |
) |
|
$ |
81,164 |
|
$ |
130,886 |
|
|
(38.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per basic common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.25 |
|
$ |
0.60 |
|
|
(58.3 |
) |
$ |
0.31 |
|
|
(19.4 |
) |
|
$ |
1.18 |
|
$ |
2.01 |
|
|
(40.1 |
) |
|
Loss from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(0.04 |
) |
|
* |
|
|
Earnings per basic common share |
$ |
0.25 |
|
$ |
0.60 |
|
|
(58.3 |
) |
$ |
0.31 |
|
|
(19.4 |
) |
|
$ |
1.18 |
|
$ |
1.97 |
|
|
(40.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.22 |
|
$ |
0.52 |
|
|
(57.7 |
) |
$ |
0.27 |
|
|
(18.5 |
) |
|
$ |
1.04 |
|
$ |
1.76 |
|
|
(39.5 |
) |
|
Loss from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(0.04 |
) |
|
* |
|
|
Earnings per basic diluted share |
$ |
0.22 |
|
$ |
0.52 |
|
|
(57.7 |
) |
$ |
0.27 |
|
|
(18.5 |
) |
|
$ |
1.04 |
|
$ |
1.72 |
|
|
(39.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Basic |
|
69,633 |
|
|
66,691 |
|
|
4.4 |
|
|
68,370 |
|
|
1.8 |
|
|
|
68,675 |
|
|
66,344 |
|
|
3.5 |
|
|
Diluted |
|
79,759 |
|
|
76,681 |
|
|
4.0 |
|
|
77,856 |
|
|
2.4 |
|
|
|
78,326 |
|
|
76,011 |
|
|
3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percentage not meaningful. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
(in thousands, except per share, employee and location amounts) |
||||||||||||||
|
|
9/30/15 |
|
9/30/14 |
|
% Change |
|
6/30/15 |
|
% Change |
|||||
|
Statistical Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share |
$ |
36.63 |
|
$ |
33.92 |
|
8.0 |
|
|
$ |
36.35 |
|
0.8 |
|
|
Financial advisors 2 |
|
2,846 |
|
|
2,096 |
|
35.8 |
|
|
|
2,823 |
|
0.8 |
|
|
Full-time associates 3 |
|
6,865 |
|
|
5,944 |
|
15.5 |
|
|
|
6,819 |
|
0.7 |
|
|
Locations |
|
391 |
|
|
360 |
|
8.6 |
|
|
|
398 |
|
(1.8 |
) |
|
Total client assets |
$ |
208,085,000 |
|
$ |
172,742,000 |
|
20.5 |
|
|
$ |
208,628,000 |
|
(0.3 |
) |
Business Segment Results
|
Summary Segment Results (Unaudited) |
|||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||
|
(in 000s) |
9/30/15 |
|
9/30/14 |
|
% Change |
|
6/30/15 |
|
% Change |
|
|
9/30/15 |
|
9/30/14 |
|
% Change |
|
||||||||
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Wealth Management |
$ |
357,306 |
|
$ |
317,241 |
|
|
12.6 |
|
$ |
343,382 |
|
|
4.1 |
|
|
$ |
1,030,097 |
|
$ |
921,671 |
|
|
11.8 |
|
|
Institutional Group |
|
232,125 |
|
|
215,160 |
|
|
7.9 |
|
|
258,538 |
|
|
(10.2 |
) |
|
|
729,269 |
|
|
720,849 |
|
|
1.2 |
|
|
Other |
|
2,144 |
|
|
(8,946 |
) |
|
124.0 |
|
|
(4,169 |
) |
|
(151.4 |
) |
|
|
(9,058 |
) |
|
(12,172 |
) |
|
25.6 |
|
|
|
$ |
591,575 |
|
$ |
523,455 |
|
|
13.0 |
|
$ |
597,751 |
|
|
(1.0 |
) |
|
$ |
1,750,308 |
|
$ |
1,630,348 |
|
|
7.4 |
|
|
Operating contribution: 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Wealth Management |
$ |
97,227 |
|
$ |
94,026 |
|
|
3.4 |
|
$ |
93,975 |
|
|
3.5 |
|
|
$ |
290,049 |
|
$ |
262,800 |
|
|
10.4 |
|
|
Institutional Group |
|
25,853 |
|
|
29,500 |
|
|
(12.4 |
) |
|
41,942 |
|
|
(38.4 |
) |
|
|
100,124 |
|
|
117,812 |
|
|
(15.0 |
) |
|
Other |
|
(51,128 |
) |
|
(45,649 |
) |
|
(12.0 |
) |
|
(43,122 |
) |
|
(18.6 |
) |
|
|
(144,619 |
) |
|
(137,034 |
) |
|
(5.5 |
) |
|
|
$ |
71,952 |
|
$ |
77,877 |
|
|
(7.6 |
) |
$ |
92,795 |
|
|
(22.5 |
) |
|
$ |
245,554 |
|
$ |
243,578 |
|
|
0.8 |
|
|
As a percentage of net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Wealth Management |
|
57.1 |
|
|
55.9 |
|
|
|
|
|
57.1 |
|
|
|
|
|
|
56.6 |
|
|
56.8 |
|
|
|
|
|
Institutional Group |
|
62.0 |
|
|
61.2 |
|
|
|
|
|
61.9 |
|
|
|
|
|
|
62.2 |
|
|
61.5 |
|
|
|
|
|
Non-comp. operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Wealth Management |
|
15.7 |
|
|
14.5 |
|
|
|
|
|
15.5 |
|
|
|
|
|
|
15.2 |
|
|
14.7 |
|
|
|
|
|
Institutional Group |
|
26.9 |
|
|
25.1 |
|
|
|
|
|
21.9 |
|
|
|
|
|
|
24.1 |
|
|
22.2 |
|
|
|
|
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Wealth Management |
|
27.2 |
|
|
29.6 |
|
|
|
|
|
27.4 |
|
|
|
|
|
|
28.2 |
|
|
28.5 |
|
|
|
|
|
Institutional Group |
|
11.1 |
|
|
13.7 |
|
|
|
|
|
16.2 |
|
|
|
|
|
|
13.7 |
|
|
16.3 |
|
|
|
|
|
|
|
12.2 |
|
|
14.8 |
|
|
|
|
|
15.5 |
|
|
|
|
|
|
14.1 |
|
|
14.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
Includes 755, 139, and 736 independent contractors as of September 30, 2015, September 30, 2014, and June 30, 2015. |
|
3 |
Excludes independent contractors. |
|
4 |
A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.” |
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stifel Bank & Trust (Unaudited) |
||||||||||||||
|
Key Statistical Information |
||||||||||||||
|
(in 000s, except percentages) |
|
9/30/15 |
|
9/30/14 |
|
% Change |
|
6/30/15 |
|
% Change |
|
|||
|
Other information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
$ |
4,619,093 |
|
$ |
4,977,194 |
|
(7.2) |
|
$ |
4,786,248 |
|
(3.5) |
|
|
Investment securities |
|
|
1,749,590 |
|
|
2,720,860 |
|
(35.7) |
|
|
1,907,282 |
|
(8.3) |
|
|
Retained loans, net |
|
|
2,706,074 |
|
|
1,988,076 |
|
36.1 |
|
|
2,626,508 |
|
3.0 |
|
|
Loans held for sale |
|
|
179,588 |
|
|
104,277 |
|
72.2 |
|
|
183,991 |
|
(2.4) |
|
|
Deposits |
|
|
4,116,814 |
|
|
4,552,522 |
|
(9.6) |
|
|
4,313,940 |
|
(4.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance as a percentage of loans |
|
|
1.13% |
|
|
1.18% |
|
|
|
|
0.98% |
|
|
|
|
Non-performing assets as a percentage of total assets |
|
|
0.03% |
|
|
0.07% |
|
|
|
|
0.13% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
Institutional Group Brokerage & Investment Banking Revenues (Unaudited) |
|||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||
|
(in 000s) |
9/30/15 |
|
9/30/14 |
|
% Change |
|
6/30/15 |
|
% Change |
|
|
9/30/15 |
|
9/30/14 |
|
% Change |
|
||||||||
|
Institutional brokerage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
$ |
59,769 |
|
$ |
57,408 |
|
|
4.1 |
|
$ |
60,701 |
|
|
(1.5 |
) |
|
$ |
180,318 |
|
$ |
182,847 |
|
|
(1.4 |
) |
|
Fixed income |
|
60,588 |
|
|
47,471 |
|
|
27.6 |
|
|
51,959 |
|
|
16.6 |
|
|
|
177,383 |
|
|
167,145 |
|
|
6.1 |
|
|
Institutional brokerage |
$ |
120,357 |
|
$ |
104,879 |
|
|
14.8 |
|
$ |
112,660 |
|
|
6.8 |
|
|
$ |
357,701 |
|
$ |
349,992 |
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment banking: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital raising: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
$ |
33,332 |
|
$ |
41,517 |
|
|
(19.7 |
) |
$ |
47,400 |
|
|
(29.7 |
) |
|
$ |
123,151 |
|
$ |
146,913 |
|
|
(16.2 |
) |
|
Fixed income |
|
26,134 |
|
|
12,773 |
|
|
104.6 |
|
|
33,140 |
|
|
(21.1 |
) |
|
|
80,003 |
|
|
38,116 |
|
|
109.9 |
|
|
Capital raising |
|
59,466 |
|
|
54,290 |
|
|
9.5 |
|
|
80,540 |
|
|
(26.2 |
) |
|
|
203,154 |
|
|
185,029 |
|
|
9.8 |
|
|
Advisory fees: |
|
49,142 |
|
|
50,939 |
|
|
(3.5 |
) |
|
63,189 |
|
|
(22.2 |
) |
|
|
161,773 |
|
|
170,068 |
|
|
(4.9 |
) |
|
Investment banking |
$ |
108,608 |
|
$ |
105,229 |
|
|
3.2 |
|
$ |
143,729 |
|
|
(24.4 |
) |
|
$ |
364,927 |
|
$ |
355,097 |
|
|
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
Includes net interest, other income, and asset management & service fees. |
8
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 nine months ended September 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 nine months ended September 30, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.
|
|
Three Months Ended September 30, 2015 |
|
Nine Months Ended September 30, 2015 |
|
||||||||||||||
|
(in 000s, except per share amounts) |
Non-GAAP |
|
Adjustments |
|
GAAP |
|
Non-GAAP |
|
Adjustments |
|
GAAP |
|
||||||
|
Net revenues |
$ |
591,607 |
|
$ |
(32) |
|
$ |
591,575 |
|
$ |
1,753,051 |
|
$ |
(2,743) |
|
$ |
1,750,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
372,023 |
|
|
32,182 |
|
|
404,205 |
|
|
1,094,664 |
|
|
75,232 |
|
|
1,169,896 |
|
|
Non-compensation operating expenses |
|
147,632 |
|
|
17,390 |
|
|
165,022 |
|
|
412,833 |
|
|
37,094 |
|
|
449,927 |
|
|
Total non-interest expenses |
|
519,655 |
|
|
49,572 |
|
|
569,227 |
|
|
1,507,497 |
|
|
112,326 |
|
|
1,619,823 |
|
|
Income before income taxes |
|
71,952 |
|
|
(49,604) |
|
|
22,348 |
|
|
245,554 |
|
|
(115,069) |
|
|
130,485 |
|
|
Provision for income taxes |
|
24,247 |
|
|
(19,078) |
|
|
5,169 |
|
|
92,820 |
|
|
(43,499) |
|
|
49,321 |
|
|
Net income |
$ |
47,705 |
|
$ |
(30,526) |
|
$ |
17,179 |
|
$ |
152,734 |
|
$ |
(71,570) |
|
$ |
81,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.69 |
|
$ |
(0.44) |
|
$ |
0.25 |
|
$ |
2.22 |
|
$ |
(1.04) |
|
$ |
1.18 |
|
|
Diluted |
$ |
0.60 |
|
$ |
(0.38) |
|
$ |
0.22 |
|
$ |
1.95 |
|
$ |
(0.91) |
|
$ |
1.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percentage of net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
62.9 |
|
|
|
|
|
68.3 |
|
|
62.4 |
|
|
|
|
|
66.8 |
|
|
Non-compensation operating expenses |
|
24.9 |
|
|
|
|
|
27.9 |
|
|
23.5 |
|
|
|
|
|
25.7 |
|
|
Income before income taxes |
|
12.2 |
|
|
|
|
|
3.8 |
|
|
14.1 |
|
|
|
|
|
7.5 |
|
Investor Relations
Sarah Anderson
(415) 364-2500, [email protected]
9
3rd Quarter 2015 Financial Results Presentation November 4, 2015
Disclaimer Forward-Looking Statements This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks, assumptions, and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel, Nicolaus & Company, Incorporated and their subsidiaries (collectively, “SF” or the “Company”). These statements can be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” and similar expressions. In particular, these statements may refer to our goals, intentions, and expectations, our business plans and growth strategies, our ability to integrate and manage our acquired businesses, estimates of our risks and future costs and benefits, and forecasted demographic and economic trends relating to our industry. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-looking statements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws. Actual results may differ materially and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ are included in the Company’s annual and quarterly reports and from time to time in other reports filed by the Company with the Securities and Exchange Commission and include, among other things, changes in general economic and business conditions, actions of competitors, regulatory and legal actions, changes in legislation, and technology changes. Use of 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 an additional measure to aid in understanding and analyzing the Company’s financial results for the three and nine months ended September 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 periods 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 financial performance.
Chairman’s Comments "A challenging market environment contributed to a generally slow quarter for investment banking services and fixed income trading, which negatively impacted our results. Our recent acquisitions mitigated the revenue decline in our legacy businesses and also added to our operating expenses. As a result, compared to the 2nd quarter of 2015, revenues declined by $6.1 million while non-compensation operating expenses increased $13.0 million, resulting in a decline in pre-tax operating margin from 15.5% to 12.2%. In the quarter, Stifel continued to build a premier balanced wealth management and institutional services company. Our operating model provides us tremendous leverage to invest in the future while at the same time providing shareholders a strong return. We are well positioned to take advantage of opportunities as they arrive and offer our clients excellent advice and services. We expect the Barclays transaction, announced on June 8, 2015, to close on December 4, 2015. We are excited to welcome these highly talented associates to Stifel."
Market Overview Note: Volumes are in million $, except trading volumes which are in million shares. Source: Dealogic, SIFMA, Bloomberg, Strategic Insight Simfund and KBW Research.
Financial Results
Stifel Financial Corp. Results Three months ended September 30, 2015 Adjustments consist primarily of 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. Results presented for the three months ended September 30, 2014 and June 30, 2015 are non-GAAP. _________________________________________________________ (1) (2) (2)
Non-GAAP Legacy vs. New Businesses - Summary New Businesses Contributed $36.7 million to Total Net Revenues in 3Q15 vs. 2Q15 Note: New Businesses include Oriel Securities, Sterne Agee, Merchant Capital, new Private Client branches, and 1919 Investment Counsel.
Noteworthy Items September 30, 2015 Non-GAAP net revenues decreased $6.1 million from June 30, 2015 Challenging market environment: Legacy business down 8% ($42.8 million) New Businesses added $36.7 million Additional net revenue items Net revenues include Stifel Bank $14.7 million gain on sale of Acacia loans. Net revenues include a mark-to-market loss on an investment of $7.4 million Non-compensation operating expenses New business: $9.3 million more than prior quarter New GWM business added $5.1 million, primarily related to Sterne Agee New FICM business added $4.2 million, primarily related to Sterne Agee Legacy business: $3.8 million more than the prior quarter Building infrastructure for growth (IT, Compliance, Enterprise Risk Management, Audit, and Operations) Stifel Bank increased $2.1 million due to provision for loan losses Taxes FIN 48 adjustment: $4.1 million Share repurchase Opportunistically repurchased 1.8 million shares at an average price of $44.66 per share (1.5 million repurchased during the quarter) Authorized an incremental 5.0 million shares for repurchase bringing the total authorized buyback up to 6.8 million shares
Note: In millions, except diluted EPS and share data. Q3 2015 Non-GAAP Results vs. Estimates
Stifel Financial Corp. Results Nine months ended September 30, 2015 Adjustments consist primarily of 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. Results presented for the nine months ended September 30, 2014 are non-GAAP. _________________________________________________________ (1) (2)
Source of Revenues
Brokerage & Investment Banking Revenues
Non-GAAP Non-Interest Expenses Three months ended September 30, 2015 _________________________________________________________ Excludes adjustments for duplicative items associated with the integration of acquired businesses (merger-related expenses). Transition pay includes amortization of retention awards, signing bonuses, and upfront notes.
Non-GAAP Non-Interest Expenses Nine months ended September 30, 2015 _________________________________________________________ Excludes adjustments for duplicative items associated with the integration of acquired businesses (merger-related expenses). Transition pay includes amortization of retention awards, signing bonuses, and upfront notes.
Non-GAAP Segment Comparison Excludes the other segment. _________________________________________________________
Global Wealth Management
Stifel Bank & Trust (an operating unit of GWM) Note: Actual amounts presented above are as of period-end and yields are based off of quarter-to-date averages. Investment securities includes available-for-sale and held-to-maturity securities. Includes loans held for sale. Figures include intercompany balances. _________________________________________________________ Stifel Bank & Trust (Unaudited) Key Statistical Information Three Months Ended 3/31/13 % Change % Change (in 000s, except percentages) Net revenues $ 23,879 16,018 49.076039455612438 22,551 5.8888741075783777 Income before income taxes 17,236 11,403 51.153205296851702 15,977 7.8800776115666267 As of 9/30/15 As of 9/30/14 As of 6/30/15 % Change Actual ($) Yield (%) Actual ($) Yield (%) Actual ($) Yield (%) Q315 v Q314 Q315 v Q215 Assets Cash $22,173 0.26 $,142,444 0.39 $,116,387 0.19 -84.433882789025859 -80.948903228023752 Investment securities (1) 1,749,590 2.2999999999999998 2,720,860 2.39 1,907,282 2.2599999999999998 -35.697169277360835 -8.2678911665920403 Bank loans (2) 2,706,074 2.99 1,988,076 4.82 2,626,508 3.11 36.115218935292212 3.0293454274649081 Total interest earning assets 4,477,837 2.68 4,851,380 2.73 4,650,177 2.68 -7.6997266757087681 -3.7060954884082906 Other assets (non-interest earning) ,141,256 ,125,814 ,136,071 12.273673835980098 3.8105106892725122 Total assets $4,619,093 $4,977,194 $4,786,248 -7.1948370909391919 -3.4924015638136594 Liabilities Deposits $4,116,814 0.16 $4,552,522 0.15 $4,313,940 0.17 -9.5706951004300471 -4.5695118615465216 Other liabilities (non-interest bearing) ,145,382 18,728 58,553 676.28150363092686 148.29129165029974 Total liabilites $4,262,196 $4,571,250 $4,372,493 -6.760820344544709 -2.5225197616096815 Net interest margin 2.5299999999999998 3.1 2.52 Allowance for loan losses $27,707 $18,996 $23,923 45.857022531059172 15.817414203904193 Allowance as a percentage of loans 1.1299999999999999 % 1.18 % 0.98 % Non-performing loans $3,907 $1,042 274.95201535508636 $1,042 274.95201535508636 Other non-performing assets 0 173 -,100 173 0 Non-performing assets $3,907 $1,215 221.56378600823047 $1,215 221.56378600823047 Non-performing assets as a percentage of total assets 0.03 % 7.0000000000000007E-2 % 0.13 % Stifel Bank & Trust (Unaudited) Key Statistical Information Three Months Ended 3/31/13 % Change % Change (in 000s, except percentages) Net revenues $ 23,879 16,018 49.076039455612438 22,551 5.8888741075783777 Income before income taxes 17,236 11,403 51.153205296851702 15,977 7.8800776115666267 As of 9/30/15 As of 9/30/14 As of 6/30/15 % Change Actual ($) Yield (%) Actual ($) Yield (%) Actual ($) Yield (%) Q315 v Q314 Q315 v Q215 Assets Cash $22,173 0.26 $,142,444 0.39 $,116,387 0.19 -84.433882789025859 -80.948903228023752 Investment securities (1) 1,749,590 2.2999999999999998 2,720,860 2.39 1,907,282 2.2599999999999998 -35.697169277360835 -8.2678911665920403 Bank loans (2) 2,706,074 2.99 1,988,076 4.82 2,626,508 3.11 36.115218935292212 3.0293454274649081 Total interest earning assets 4,477,837 2.68 4,851,380 2.73 4,650,177 2.68 -7.6997266757087681 -3.7060954884082906 Other assets (non-interest earning) ,141,256 ,125,814 ,136,071 12.273673835980098 3.8105106892725122 Total assets $4,619,093 $4,977,194 $4,786,248 -7.1948370909391919 -3.4924015638136594 Liabilities Deposits $4,116,814 0.16 $4,552,522 0.15 $4,313,940 0.17 -9.5706951004300471 -4.5695118615465216 Other liabilities (non-interest bearing) ,145,382 18,728 58,553 676.28150363092686 148.29129165029974 Total liabilites $4,262,196 $4,571,250 $4,372,493 -6.760820344544709 -2.5225197616096815 Net interest margin 2.5299999999999998 3.1 2.52 Allowance for loan losses $27,707 $18,996 $23,923 45.857022531059172 15.817414203904193 Allowance as a percentage of loans 1.1299999999999999 % 1.18 % 0.98 % Non-performing loans $3,907 $1,042 274.95201535508636 $1,042 274.95201535508636 Other non-performing assets 0 173 -,100 173 0 Non-performing assets $3,907 $1,215 221.56378600823047 $1,215 221.56378600823047 Non-performing assets as a percentage of total assets 0.03 % 7.0000000000000007E-2 % 0.13 %
Institutional Group
Acquisition Updates
Sterne Agee Integration Update Fixed Income integration complete Private Client conversion and integration complete Trust Company integration and Asset Management migration to 1919 Investment Counsel well under way Successful cross selling with other Stifel divisions Issued 1.4 million shares of Stifel common stock Highlights
Barclays Update October 30, 2015 Balance Sheet Advisors & AUM Pre-tax Margins Approximately $1.2 billion of on-balance sheet assets Approximately $900 million of client loans held through Barclays clearing firm Approximately $2.0 billion of client cash Revenue¹ $210 - $230 million Shares Issued Approximately 1.3 million (net of taxes) 20% - 25%, after amortization of retention Approximately $40 - $60 million 95 - 105 advisors $25B in AUM Closing December 4, 2015 Based on April 2015 trailing twelve month production.
Non-GAAP Deal Integration Costs _________________________________________________________ Assumes an effective income tax rate of 40.0%.
Financial Condition
Capital Structure (in thousands, except ratios) _________________________________________________________ Debt to equity ratio includes the debentures to Stifel Financial Capital Trusts and Senior Notes divided by stockholders’equity.
Other Financial Data _________________________________________________________ Includes 755, 139, and 736 independent contractors as of September 30, 2015, September 30, 2014, and June 30, 2015, respectively. Excludes independent contractors. (1) (2)
Financial Performance Trends
Key Financial Targets Stifel is Positioned to Significantly Benefit From 3 Key Factors Integrating Acquisitions: Sterne Agee and Barclays Optimizing Current Capital Base, and Poised for Revenue Growth in a Rising Interest Rate Environment Note: Targets noted above are based on Non-GAAP results.
Growth Drivers
Optimizing Capital Through Growth ($ in millions) Pause 43% CAGR Stifel has resumed growth and has the potential to further leverage existing capital base Note: (1) Total asset growth expected to occur by 12-31-15 is comprised of approximately $2 billion from the Barclays transaction and $1 billion of organic growth. (2) This represents the potential growth that could occur by leveraging the balance sheet to a 17.5% Tier 1 Risk Based Capital ratio . (1) (2)
Impact of a Rising Interest Rate Environment Projected Increase in Annual Pre-Tax Earnings from a 100 BPS Rise in Short-Term Rates ($ millions; as of September 30, 2015) Key Assumptions: Based on static balances as of September 30, 2015 and an instantaneous change in short-term rates. Ultimately, the amount earned by clients and kept by the firm will be based on market/competitive pricing, etc. The firm is expected to retain 40 bps of the first 100 bps increase on Stifel and Barclays deposits and pass the remaining 60 bps to clients Barclays loan and client cash balances estimated as of September 2015.
Operating Model Potential Stifel is Positioned to Significantly Benefit From 3 Key Factors Barclays + 4th Quarter Growth Fully Leveraged Growth¹ 100 bps Rate Increase Note: (1) This represents the potential growth that could occur by leveraging the balance sheet to a 17.5% Tier 1 Risk Based Capital ratio . Potential Incremental Earnings Annualized EPS $1.25 to $1.55 $0.35 to $0.45 $0.55 to $0.65 $0.35 to $0.45
Q&A