Stifel Financial Corp.
Summary Results of Operations (Unaudited)
(in thousands, except per share amounts)
For the Three Months Ended
3/31/10 3/31/09 Change 12/31/09 Change
--------- --------- ------ --------- ------
Results of operations data:
Total revenues $ 314,371 $ 222,332 41.4% $ 323,399 (2.8)%
Net revenues $ 312,030 $ 219,981 41.8% $ 319,467 (2.3)%
Net income $ 23,740 $ 13,177 80.2% $ 24,668 (3.8)%
Earnings per share:
Basic $ 0.77 $ 0.49 57.1% $ 0.82 (6.1)%
Diluted $ 0.68 $ 0.44 54.5% $ 0.71 (4.2)%
Weighted average shares
outstanding:
Basic 30,720 26,772 14.7% 30,209 1.7 %
Diluted 35,025 30,198 16.0% 34,706 0.9 %
--------- --------- ------ --------- ------
Stifel Financial Corp.
Summary Results of Operations (Unaudited)
(in thousands, except per share amounts)
For the Three Months Ended
-------------------------------------------------
3/31/10 3/31/09 Change 12/31/09 Change
--------- --------- -------- --------- -------
Revenues:
Principal transactions $ 117,420 $ 97,278 20.7% $ 116,410 0.9 %
Commissions 105,035 74,610 40.8 99,285 5.8
Asset management and
service fees 38,877 24,933 55.9 37,732 3.0
Investment banking 34,221 15,504 120.7 50,545 (32.3)
Other income 4,171 115 * 4,349 (4.1)
--------- --------- -------- --------- -------
Operating revenues 299,724 212,440 41.1 308,321 (2.8)
Interest revenue 14,647 9,892 48.1 15,078 (2.9)
--------- --------- -------- --------- -------
Total revenues 314,371 222,332 41.4 323,399 (2.8)
--------- --------- -------- --------- -------
Interest expense 2,341 2,351 (0.4) 3,932 (40.5)
--------- --------- -------- --------- -------
Net revenues 312,030 219,981 41.8 319,467 (2.3)
--------- --------- -------- --------- -------
Non-interest expenses:
Compensation and
benefits 206,242 147,840 39.5 201,263 2.5
Occupancy and
equipment rental 24,858 17,867 39.1 26,430 (5.9)
Communications and
office supplies 14,418 11,845 21.7 15,342 (6.0)
Commissions and floor
brokerage 5,744 4,360 31.7 6,249 (8.1)
Other non-interest
expenses 21,203 15,914 33.2 28,869 (26.6)
--------- --------- -------- --------- -------
Total non-interest
expenses 272,465 197,826 37.7 278,153 (2.0)
--------- --------- -------- --------- -------
Income before income
taxes 39,565 22,155 78.6 41,314 (4.2)
Provision for income
taxes 15,825 8,978 76.2 16,646 (4.9)
--------- --------- -------- --------- -------
Net income $ 23,740 $ 13,177 80.2% $ 24,668 (3.8)%
--------- --------- -------- --------- -------
Earnings per share:
Basic $ 0.77 $ 0.49 57.1% $ 0.82 (6.1)%
Diluted $ 0.68 $ 0.44 54.5% $ 0.71 (4.2)%
Weighted average number
of common shares
outstanding:
Basic 30,720 26,772 14.7% 30,209 1.7 %
Diluted 35,025 30,198 16.0% 34,706 0.9 %
* Percentage is not meaningful.
Stifel Financial Corp.
(in thousands, except per share, employee and location amounts)
March 31, March 31, December 31,
2010 2009 Change 2009 Change
----------- ----------- ------ ----------- ------
Statistical
Information:
Book value per share $ 29.50 $ 23.19 27.2% $ 28.86 2.2%
Financial advisors ** 1,900 1,394 36.3% 1,885 0.8%
Full-time associates 4,518 3,560 26.9% 4,434 1.9%
Locations 294 230 27.8% 294 --%
Total client assets $95,319,000 $54,854,000 73.8% $91,342,000 4.4%
** Includes 168, 176 and 166 independent contractors at March 31, 2010 and
2009 and December 31, 2009, respectively.
Review of Business Highlights
First Quarter Highlights
For the three months ended March 31, 2010, we posted net revenues of $312.0
million, a 42% increase over the first quarter of 2009 and a 2% decrease
from the fourth quarter of 2009. We experienced revenue growth across all
revenue line items over the first quarter of 2009. Net income of $23.7
million, or $0.68 per diluted share, increased 80% over the first quarter
of 2009 and decreased 4% from the fourth quarter of 2009.
Revenues
-- Principal transactions revenue of $117.4 million increased 21% over the first quarter of 2009 and increased 1% over the fourth quarter of 2009. -- Commission revenue of $105.0 million increased 41% over the first quarter of 2009 and increased 6% over the fourth quarter of 2009. -- Asset management and service fees revenue of $38.9 million increased 120% from the first quarter of 2009 and increased 3% from the fourth quarter of 2009. -- Investment banking revenue of $34.2 million increased 56% over the first quarter of 2009 and decreased 32% from the fourth quarter of 2010. Capital raising revenues increased $19.8 million to $25.3 million from $5.5 million for the comparable period in 2009 and decreased 27% from the fourth quarter of 2009. Strategic advisory fees decreased 11% to $8.9 million from $10.0 million for the comparable period in 2009 and increased 45% from the fourth quarter of 2009. -- Net interest increased 63% to $12.3 million from $7.5 million for the comparable period in 2009 and increased 10% from the fourth quarter of 2009.
Non-interest expenses
-- Compensation and benefits expense increased 40% to $206.2 million
from the first quarter of 2009 and increased 3% over the fourth
quarter of 2009, primarily due to increased production and
headcount associated with the expansion of our Global Wealth
Management ("GWM") and Institutional Group (formerly Capital
Markets) ("IG") segments. For the three months ended March 31,
2010, compensation and benefits expense includes transition pay
of $19.3 million, or 6% of net revenues, which primarily consist
of upfront notes, signing bonuses and retention awards in
connection with our continuing expansion efforts, compared to
$12.2 million, or 6% of net revenues, for the comparable period in
2009 and $15.4 million, or 5% of net revenues, for the fourth
quarter of 2009.
-- Non-compensation operating expenses of $66.2 million increased 33%
from $50.0 million for the comparable period in 2009 and decreased
14% from the fourth quarter of 2009 primarily due to the
aforementioned expansion of our GWM and IG segments.
Provision for income taxes
-- For the quarter ended March 31, 2010, our provision for income taxes
was $15.8 million, representing an effective tax rate of 40%, compared
to $9.0 million for the comparable period in 2009 and $16.6 million
for the fourth quarter of 2009, representing effective tax rates of
41% and 40%, respectively.
Stifel Financial Corp.
Summary Segment Results (Unaudited)
(in thousands)
For the Three Months Ended
------------------------------------------------
3/31/10 3/31/09 Change 12/31/09 Change
--------- --------- ------ --------- ------
Net revenues:
Global Wealth
Management $ 197,195 $ 114,164 72.7% $ 184,704 6.8%
Institutional Group 113,292 105,472 7.4 133,305 (15.0)
Other 1,543 345 347.7 1,458 5.8
--------- --------- ------ --------- ------
Net revenues $ 312,030 219,981 41.8% $ 319,467 (2.3)%
--------- --------- ------ --------- ------
Operating contribution:
Global Wealth
Management $ 36,932 17,234 114.3% $ 32,967 12.0%
Institutional Group 27,456 26,034 5.5 37,816 (27.4)
Other (24,823) (21,113) 17.6 (29,469) (15.8)
--------- --------- ------ --------- ------
Income before income
taxes $ 39,565 $ 22,155 78.6% $ 41,314 (4.2)%
--------- --------- ------ --------- ------
Global Wealth Management Segment
First Quarter Highlights
-- Net revenues of $197.2 million, an increase of 73% and 7% over the
first quarter of 2009 and the fourth quarter of 2009, respectively.
Our Global Wealth Management segment consists of the Private Client
Group ("PCG") and Stifel Bank & Trust ("Stifel Bank") reporting units.
PCG had net revenues of $187.4 million, a 70% increase over the first
quarter of 2009 and a 6% increase over the fourth quarter of 2009.
Stifel Bank had net revenues of $9.8 million, a $6.1 million increase
over the first quarter of 2009 and a 27% increase over the fourth
quarter of 2009.
-- Commission revenue increased 84% over the first quarter of 2009 and
increased 5% over the fourth quarter of 2009.
-- Principal transactions revenue increased 56% over the first quarter
of 2009 and increased 10% over the fourth quarter of 2009.
-- Asset management and service fees revenue increased 56% over the first
quarter of 2009 and increased 3% over the fourth quarter of 2009.
-- Net interest increased $5.6 million to $11.0 million from $5.4 million
for the comparable period in 2009 and increased 21% from the fourth
quarter of 2009.
-- Investment banking revenues, which represents sales commissions on
investment banking underwritings, increased $3.2 million from the
first quarter of 2009 and decreased 8% from the fourth quarter of 2009.
-- For the three months ended March 31, 2009, compensation and benefits
expense was 63% of net revenues compared to 64% for the first quarter
of 2009 and 63% for the fourth quarter of 2009.
-- Income before income taxes of $36.9 million increased 114% over the
first quarter of 2009 and increased 12% over the fourth quarter of
2009.
-- During the fourth quarter of 2009, we entered into an agreement
providing for the sale of Stifel Bank's branch office. The
transaction, which is subject to regulatory approvals and certain
closing conditions, is expected to be completed during the second
quarter of 2010.
-- We added 6 PCG offices and 46 Financial Advisors during the first
quarter of 2010 as part of our ongoing footprint expansion efforts.
-- Stifel Bank's investment portfolio of $549.1 million increased
$495.5 million from March 31, 2009 primarily due to purchases of
agency mortgage-backed securities, as we continued to expand our
investment strategy at Stifel Bank during 2010.
-- Stifel Bank's retained loan portfolio at March 31, 2010 of
$341.7 million increased 87% from March 31, 2009, driven by the
addition of stock-secured loans acquired in the UBS transaction.
-- Bank deposits at March 31, 2010 of $988.2 million increased 115% from
March 31, 2009, driven by the addition of customer deposits acquired
in the UBS transaction.
Global Wealth Management Summary Results of Operations (Unaudited)
(in thousands)
For the Three Months Ended
------------------------------------------------
3/31/10 3/31/09 Change 12/31/09 Change
-------- -------- -------- -------- --------
Revenues:
Commissions $ 79,587 $ 43,216 84.2% $ 75,584 5.3%
Principal transactions 59,871 38,437 55.8 54,136 10.6
Asset management and
service fees 38,668 24,831 55.7 37,477 3.2
Net interest 11,034 5,407 104.1 9,065 21.7
Investment banking 5,302 2,070 156.2 5,730 (7.5)
Other income 2,733 203 * 2,712 0.8
-------- -------- -------- -------- --------
Net revenues 197,195 114,164 72.7 184,704 6.8
-------- -------- -------- -------- --------
Non-interest expenses:
Compensation and
benefits 124,738 72,629 71.7 116,988 6.6
Other non-interest
expenses 35,525 24,301 46.2 34,749 2.2
-------- -------- -------- -------- --------
Total non-interest
expenses 160,263 96,930 65.3 151,737 5.6
-------- -------- -------- -------- --------
Income before income
taxes $ 36,932 $ 17,234 114.3% $ 32,967 12.0%
-------- -------- -------- -------- --------
As a percentage of net
revenues:
Compensation and
benefits 63.3% 63.6% 63.3%
Other non-interest
expenses 18.0% 21.3% 18.9%
Income before income
taxes 18.7% 15.1% 17.8%
* Percentage is not meaningful.
Stifel Bank & Trust Key Performance Indicators
(in thousands)
March 31, December March 31,
2010 31, 2009 Change 2009 Change
----------- ----------- ------ ----------- ------
(Unaudited) (Unaudited)
Other information:
Assets $ 1,115,329 $ 1,142,008 (2.3)% $ 503,282 121.6%
Investment
securities $ 549,121 $ 578,488 (5.1)% $ 53,627 924.0%
Retained loans,
net $ 341,718 $ 333,547 2.4 % $ 182,841 86.9%
Loans held for
sale, net (1) $ 72,179 $ 91,117 (20.8)% $ 31,108 132.0%
Deposits (2) $ 988,263 $ 1,047,211 (5.6)% $ 459,305 115.2%
Allowance as a
percentage of
loans (3) 0.47% 0.51% 1.47%
Non-performing
loans as a
percentage of
assets 0.10% 0.12% 0.41%
* Percentage not meaningful.
(1) Includes loans of $31.0 million and $33.1 million held for sale as part
of the branch sale at March 31, 2010 and December 31, 2009,
respectively. The sale of the branch was announced during the fourth
quarter of 2009.
(2) Includes deposits of $18.9 million and $20.8 million held for sale as
part of the branch sale at March 31, 2010 and December 31, 2009,
respectively. The sale of the branch was announced during the fourth
quarter of 2009.
(3) Excluding acquired loans of $177.5 million and $171.0 million, the
allowance as a percentage of gross loans totaled 0.94% and 0.99% as of
March 31, 2010 and December 31, 2009, respectively.
Institutional Group (formerly Capital Markets) Segment
First Quarter Highlights
-- Net revenues of $113.3 million, a 7% increase over the first quarter
of 2009 and a 15% decrease from the fourth quarter of 2009. Our
Institutional Group segment consists of our Equity Capital Markets
("ECM") and Fixed Income Capital Markets ("FICM") reporting units.
ECM had net revenues of $61.7 million, a 31% increase over the first
quarter of 2009 and a 21% decrease from the fourth quarter of 2009.
FICM had net revenues of $51.6 million, a 12% decrease from the first
quarter of 2009 and a 7% decrease from the fourth quarter of 2009.
-- Institutional brokerage revenues were $83.0 million, an 8% decrease
from the first quarter of 2009 and a 4% decrease from the fourth
quarter of 2009. ECM institutional brokerage revenues of $38.7 million
increased 5% from the comparable period in 2009 and remained
relatively unchanged from the fourth quarter of 2009. FICM
institutional brokerage revenues were $44.3 million, a 17% decrease
from the first quarter of 2009 and a 6% decrease from the fourth
quarter 2009.
-- Investment banking revenues were $28.9 million, a 115% increase over
the first quarter of 2009 and a 36% decrease from the fourth quarter
of 2009. ECM investment banking revenues were $22.6 million, a 123.5%
increase over the first quarter of 2009 and a 42% decrease from the
fourth quarter of 2009. FICM investment banking revenues were
$6.3 million, a 90% increase over the first quarter of 2009 and a
2% increase over the fourth quarter of 2009.
- Capital raising revenues were $20.0 million, a $16.6 million
increase over the first quarter of 2009 and a 31% decrease from
the fourth quarter of 2009. ECM capital raising revenues were
$14.1 million, a $13.4 million increase over the first quarter
of 2009 and a 39% decrease from the fourth quarter of 2009. FICM
capital raising revenues were $5.9 million, a 116.3% increase
over the first quarter of 2009 and a 7% increase over the fourth
quarter of 2009.
- Advisory fees were $8.9 million, an 11% decrease from the first
quarter of 2009 and a 45% decrease from the fourth quarter of 2009.
ECM advisory fees were $8.5 million, a 10% decrease from the first
quarter of 2009 and a 45% decrease from the fourth quarter of 2009.
FICM advisory fees were $0.4 million, a 29% decrease from the first
quarter of 2009 and a 39% decrease from the fourth quarter of 2009.
-- For the three months ended March 31, 2010, compensation and benefits
expense was 59% of net revenues compared to 59% for the first quarter
of 2009 and 55% for the fourth quarter of 2009.
-- For the three months ended March 31, 2010, income before income taxes
increased 6% over the first quarter of 2009 to $27.4 million and
decreased 27% from the fourth quarter of 2009.
-- Net margin for the three months ended March 31, 2010 was 24% compared
to 25% for the first quarter of 2009 and 28% in the fourth quarter
2009.
-- We added 40 and 11 revenue producers in our ECM and FICM reporting
units, respectively, during the three months ended March 31, 2010.
Institutional Group Summary Results of Operations (Unaudited)
(in thousands)
For the Three Months Ended
------------------------------------------------
3/31/10 3/31/09 Change 12/31/09 Change
-------- -------- ------- -------- -------
Revenues:
Principal transactions $ 57,549 $ 58,840 (2.2)% $ 62,275 (7.6)%
Commissions 25,448 31,395 (18.9) 23,701 7.4
Capital raising 20,004 3,429 483.4 28,768 (30.5)
Advisory fees 8,914 10,006 (10.9) 16,047 (44.5)
-------- -------- ------- -------- -------
Investment banking 28,918 13,435 115.3 44,815 (35.5)
Other income * 1,377 1,802 (23.6) 2,514 (45.2)
-------- -------- ------- -------- -------
Net revenues 113,292 105,472 7.4 133,305 (15.0)
-------- -------- ------- -------- -------
Non-interest expenses:
Compensation and
benefits 66,304 62,518 6.1 73,584 (9.9)
Other non-interest
expenses 19,532 16,920 15.4 21,905 (10.8)
-------- -------- ------- -------- -------
Total non-interest
expenses 85,836 79,438 8.1 95,489 (10.1)
-------- -------- ------- -------- -------
Income before income
taxes $ 27,456 $ 26,034 5.5 % $ 37,816 (27.4)%
-------- -------- ------- -------- -------
As a percentage of net
revenues:
Compensation and
benefits 58.5% 59.3% 55.2%
Other non-interest
expenses 17.3% 16.0% 16.4%
Income before income
taxes 24.2% 24.7% 28.4%
* Includes net interest and other income.
Statement of Financial Condition Highlights (Unaudited) Total assets increased 60% to $3.2 billion at March 31, 2010 from $2.0 billion at March 31, 2009. The increase is primarily attributable to increased receivables, including the Reg T loans added as part of the UBS transaction, trading inventory, financial instruments, bank loans, including the stock-secured loans added as part of the UBS transaction, loans and advances to financial advisors and the recognition of goodwill and intangible assets associated with our acquisition of UBS, which was completed in the fourth quarter of 2009. Our broker-dealer subsidiary's gross assets and liabilities, including trading inventory, stock loan/borrow, receivables and payables from/to brokers, dealers and clearing organizations and clients, fluctuate with our business levels and overall market conditions. The increase in assets is primarily attributable to the growth of our company, both organically and through the acquisition of UBS. Total stockholders' equity increased $281.6 million, or 45%, to $912.4 million at March 31, 2010, principally due to proceeds from our two equity offerings, net income, and amortization of stock-based awards. At March 31, 2010, we reported total securities owned and investments at fair value of $1.3 billion, which included securities categorized as level 3 of $88.1 million. Our level 3 assets include auction rate securities, of which the auctions have failed, with a fair value of $75.7 million at March 31, 2010. Conference Call Information Stifel Financial Corp. will hold a conference call on Thursday, April 29, 2010, at 10:30 a.m. Eastern. This call will be Web cast and slides can be accessed on the Investor Relations portion of the Stifel Financial Corp. website at www.stifel.com, as well as on all sites within Thomson/CCBN's Investor Distribution Network. Questions may be posed to management by participants on the call, and in response, the company may disclose additional material information. To participate in the question and answer portion on the call, please dial 888-676-3684 and request the Stifel Financial Corp. earnings call. The subjects to be covered may also contain forward-looking information. Company Information Stifel Financial Corp. operates 294 offices in 42 states and the District of Columbia through its principal subsidiary, Stifel Nicolaus and Company, Inc., and 3 European offices through Stifel Nicolaus Limited. Stifel Nicolaus provides securities brokerage, investment banking, trading, investment advisory, commercial and retail banking 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. To learn more about Stifel, please visit our company's web site at www.stifel.com. Forward-Looking Statements This press 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 press release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this press 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 the acquired companies; a material adverse change in the 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 with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Stifel disclaims any intent or obligation to update these forward-looking statements.
Contact Information: For further information contact: James M. Zemlyak Chief Financial Officer (314) 342-2228