EX-99.1 2 sf-ex991_6.htm EX-99.1 sf-ex991_6.htm

FOR IMMEDIATE RELEASE

STIFEL REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS

Highlights for the three months ended June 30, 2016:

 

·

Net revenues of $652.1 million, increased 9.1% compared with the year-ago quarter.

 

·

Net income of $9.8 million, or $0.13 per diluted common share.

 

·

Non-GAAP net income of $52.3 million, or $0.69 per diluted common share.

Highlights for the six months ended June 30, 2016:

 

·

Net revenues of $1.3 billion, increased 9.8% compared with the year-ago quarter.

 

·

Net income of $36.8 million, or $0.48 per diluted common share.

 

·

Non-GAAP net income of $95.6 million, or $1.26 per diluted common share.

ST. LOUIS, August 2, 2016 – Stifel Financial Corp. (NYSE: SF) today reported net income of $9.8 million, or $0.13 per diluted common share on record net revenues of $652.1 million for the three months ended June 30, 2016, compared with net income of $20.9 million, or $0.27 per diluted common share, on net revenues of $597.8 million for the second quarter of 2015.

For the three months ended June 30, 2016, the Company reported non-GAAP net income of $52.3 million, or $0.69 per diluted common share. These non-GAAP results primarily exclude merger-related expenses associated with the Company’s acquisitions.

For the six months ended June 30, 2016, the Company reported net income of $36.8 million, or $0.48 per diluted common share on record net revenues of $1.3 billion, compared with net income of $64.0 million, or $0.82 per diluted share, on net revenues of $1.2 billion for the comparable period in 2015.

For the six months ended June 30, 2016, the Company reported non-GAAP net income of $95.6 million, or $1.26 per diluted share. A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed below under “Non-GAAP Financial Measures.”

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

(in 000s)

 

6/30/16

 

 

6/30/15

 

 

% Change

 

 

3/31/16

 

 

% Change

 

 

6/30/16

 

 

6/30/15

 

 

% Change

 

Net revenues

 

$

652,145

 

 

$

597,751

 

 

 

9.1

 

 

$

619,974

 

 

 

5.2

 

 

$

1,272,119

 

 

$

1,158,733

 

 

 

9.8

 

Net income

 

$

9,771

 

 

$

20,888

 

 

 

(53.2

)

 

$

27,055

 

 

 

(63.9

)

 

$

36,826

 

 

$

63,985

 

 

 

(42.4

)

Non-GAAP net income1

 

$

52,292

 

 

$

55,091

 

 

 

(5.1

)

 

$

43,354

 

 

 

20.6

 

 

$

95,645

 

 

$

105,031

 

 

 

(8.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.15

 

 

$

0.31

 

 

$

(51.6

)

 

$

0.40

 

 

 

(62.5

)

 

$

0.55

 

 

$

0.94

 

 

 

(41.5

)

Diluted

 

$

0.13

 

 

$

0.27

 

 

$

(51.9

)

 

$

0.36

 

 

 

(63.9

)

 

$

0.48

 

 

$

0.82

 

 

 

(41.5

)

Non-GAAP net income1

 

$

0.69

 

 

$

0.71

 

 

$

(2.8

)

 

$

0.57

 

 

 

21.1

 

 

$

1.26

 

 

$

1.35

 

 

 

(6.7

)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

66,792

 

 

 

68,370

 

 

 

(2.3

)

 

 

67,579

 

 

 

(1.2

)

 

 

67,186

 

 

 

68,189

 

 

 

(1.5

)

Diluted

 

 

75,982

 

 

 

77,856

 

 

 

(2.4

)

 

 

76,086

 

 

 

(0.1

)

 

 

76,084

 

 

 

77,624

 

 

 

(2.0

)

 

1

A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.”


 

1

 

Chairman’s Comments

“We are pleased with the results from the second quarter as we posted a second  consecutive quarter of record revenue and increased adjusted EPS by 21% sequentially, despite a less than ideal market environment.  The diversity of our business model was again illustrated by a rebound in investment banking activity and growth in our bank, which more than offset the sequential decline in brokerage revenue from the first quarter’s record levels. Although the market environment remains challenged, as macro level events  in the first half of 2016 led to spikes in volatility that weighed on investor and corporate activity, we believe that Stifel remains well positioned to capitalize as the markets improve,” stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

“In the past month, we have sold off the lower margin legacy businesses from the Sterne Agee acquisition, raised preferred equity, and refinanced higher cost debt. These actions have further strengthened our already strong balance sheet and will facilitate our continued efforts to optimize our capital base and increase shareholder returns.”

Brokerage Revenues

Brokerage revenues, defined as commissions plus principal transactions, were $308.5 million, a 14.6% increase compared with the second quarter of 2015 and an 3.2% decrease compared with the first quarter of 2016.

·

Global wealth management brokerage revenues were $172.2 million, an 8.4% increase compared with the second quarter of 2015 and a 0.5% decrease compared with the first quarter of 2016.

·

Institutional equity brokerage revenues were $55.0 million, a 6.1% decrease compared with the second quarter of 2015 and an 11.7% decrease compared with the first quarter of 2016.

·

Institutional fixed income brokerage revenues were $81.3 million, a 56.6% increase compared with the second quarter of 2015 and a 2.7% decrease compared with the first quarter of 2016.

Investment Banking Revenues

Investment banking revenues were $133.1 million, a 17.3% decrease compared with the second quarter of 2015 and a 32.3% increase compared with the first quarter of 2016.

·

Equity capital raising revenues were $37.6 million, a 32.1% decrease compared with the second quarter of 2015 and a 47.3% increase compared with the first quarter of 2016.

·

Fixed income capital raising revenues were $28.8 million, a 27.8% decrease compared with the second quarter of 2015 and a 3.7% increase compared with the first quarter of 2016.

·

Advisory fee revenues were $66.7 million, a 4.8% increase compared with the second quarter of 2015 and a 40.9% increase compared with the first quarter of 2016.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $144.6 million, a 20.5% increase compared with the second quarter of 2015 and consistent with the first quarter of 2016.

Compensation and Benefits Expenses

For the quarter ended June 30, 2016, compensation and benefits expenses were $460.0 million, which included $50.1 million of merger-related expenses. This compares with $410.0 million in the second quarter of 2015 and $411.1 million in the first quarter of 2016.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.8% in the second quarter of 2015, compared with 62.0% in the second quarter of 2015 and 63.6% in the first quarter of 2016.

Non-Compensation Operating Expenses

For the quarter ended June 30, 2016, non-compensation operating expenses were $176.3 million, which included merger-related expenses of $18.4 million. This compares with $149.7 million in the second quarter of 2015 and $164.9 million in the first quarter of 2016.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2016 was 24.2%, compared with 22.5% in the second quarter of 2015 and 25.0% in the first quarter of 2016.

Provision for Income Taxes

The effective income tax rate for the quarter ended June 30, 2016 was 38.1% compared with 45.1% in the second quarter of 2015.

 

2

 

 

Assets and Capital

Assets

·

Assets increased 50.5% to $15.2 billion as of June 30, 2016 from $10.1 billion as of June 30, 2015.

·

At June 30, 2016, the Company’s Level 3 assets measured at fair value on a recurring basis of $60.0 million, or 0.4% of total assets, consisted of $52.1 million of auction rate securities and $7.9 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 1.6% at June 30, 2016. At June 30, 2016, the Company had $562.8 million of held-to-maturity securities classified as Level 3 assets not measured at fair value on a recurring basis.

·

Non-performing assets as a percentage of total assets as of June 30, 2016 was 0.37%.

Capital

·

Shareholders’ equity as of June 30, 2016 decreased 1.0% to $2.49 billion from $2.52 billion as of June 30, 2015.

·

During the six months ended June 30, 2016, the Company repurchased 2.8 million shares of the Company’s common stock for approximately $95.1 million.

·

At June 30, 2016, book value per common share was $37.41 based on 66.6 million common shares outstanding. This represents a 2.9% increase from June 30, 2015.

·

At June 30, 2016, the Company’s Tier 1 leverage capital and Tier 1 risk-based capital ratios were 11.5% and 20.9%, respectively, compared to 18.3% and 29.4%, respectively, at June 30, 2015.


 

3

 

Conference Call Information

Stifel Financial Corp. will host its second quarter 2016 financial results conference call on Tuesday, August 2, 2016, 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 #89108255. 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’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc., and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. 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. and Stifel Trust Company Delaware, N.A. offer 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

 

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in thousands, except per share amounts)

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

 

 

 

3/31/16

 

 

 

 

% Change

 

 

 

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Commissions

 

$

182,104

 

 

 

 

$

183,770

 

 

 

 

 

(0.9

)

 

 

 

$

197,930

 

 

 

 

 

(8.0

)

 

 

 

$

380,034

 

 

 

 

$

364,073

 

 

 

 

 

4.4

 

Principal transactions

 

 

126,426

 

 

 

 

 

85,543

 

 

 

 

 

47.8

 

 

 

 

 

120,948

 

 

 

 

 

4.5

 

 

 

 

 

247,374

 

 

 

 

 

186,275

 

 

 

 

 

32.8

 

         Brokerage Revenues

 

 

308,530

 

 

 

 

 

269,313

 

 

 

 

 

14.6

 

 

 

 

 

318,878

 

 

 

 

 

(3.2

)

 

 

 

 

627,408

 

 

 

 

 

550,348

 

 

 

 

 

14.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising

 

 

66,412

 

 

 

 

 

97,368

 

 

 

 

 

(31.8

)

 

 

 

 

53,304

 

 

 

 

 

24.6

 

 

 

 

 

119,716

 

 

 

 

 

172,486

 

 

 

 

 

(30.6

)

Advisory fees

 

 

66,713

 

 

 

 

 

63,639

 

 

 

 

 

4.8

 

 

 

 

 

47,354

 

 

 

 

 

40.9

 

 

 

 

 

114,067

 

 

 

 

 

113,082

 

 

 

 

 

0.9

 

      Investment banking

 

 

133,125

 

 

 

 

 

161,007

 

 

 

 

 

(17.3

)

 

 

 

 

100,658

 

 

 

 

 

32.3

 

 

 

 

 

233,783

 

 

 

 

 

285,568

 

 

 

 

 

(18.1

)

Asset management and service fees

 

 

144,567

 

 

 

 

 

119,936

 

 

 

 

 

20.5

 

 

 

 

 

144,532

 

 

 

 

 

0.0

 

 

 

 

 

289,099

 

 

 

 

 

233,805

 

 

 

 

 

23.6

 

     Other income

 

 

17,405

 

 

 

 

 

13,742

 

 

 

 

 

26.7

 

 

 

 

 

7,231

 

 

 

 

 

140.7

 

 

 

 

 

24,595

 

 

 

 

 

25,541

 

 

 

 

 

(3.7

)

Operating Revenue

 

 

603,627

 

 

 

 

 

563,998

 

 

 

 

 

7.0

 

 

 

 

 

571,299

 

 

 

 

 

5.7

 

 

 

 

 

1,174,885

 

 

 

 

 

1,095,262

 

 

 

 

 

7.3

 

     Interest Revenue

 

 

65,780

 

 

 

 

 

43,851

 

 

 

 

 

50.0

 

 

 

 

 

62,786

 

 

 

 

 

4.8

 

 

 

 

 

128,607

 

 

 

 

 

86,588

 

 

 

 

 

48.5

 

Total Revenue

 

 

669,407

 

 

 

 

 

607,849

 

 

 

 

 

10.1

 

 

 

 

 

634,085

 

 

 

 

 

5.6

 

 

 

 

 

1,303,492

 

 

 

 

 

1,181,850

 

 

 

 

 

10.3

 

     Interest Expense

 

 

17,262

 

 

 

 

 

10,098

 

 

 

 

 

70.9

 

 

 

 

 

14,111

 

 

 

 

 

22.3

 

 

 

 

 

31,373

 

 

 

 

 

23,117

 

 

 

 

 

35.7

 

Net Revenue

 

 

652,145

 

 

 

 

 

597,751

 

 

 

 

 

9.1

 

 

 

 

 

619,974

 

 

 

 

 

5.2

 

 

 

 

 

1,272,119

 

 

 

 

 

1,158,733

 

 

 

 

 

9.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Compensation and benefits

 

 

460,023

 

 

 

 

 

409,998

 

 

 

 

 

12.2

 

 

 

 

 

411,113

 

 

 

 

 

11.9

 

 

 

 

 

871,136

 

 

 

 

 

765,691

 

 

 

 

 

13.8

 

Occupancy and equipment rental

 

 

58,746

 

 

 

 

 

48,346

 

 

 

 

 

21.5

 

 

 

 

 

57,255

 

 

 

 

 

2.6

 

 

 

 

 

116,002

 

 

 

 

 

92,516

 

 

 

 

 

25.4

 

     Communication and office supplies

 

 

37,426

 

 

 

 

 

31,114

 

 

 

 

 

20.3

 

 

 

 

 

36,660

 

 

 

 

 

2.1

 

 

 

 

 

74,086

 

 

 

 

 

60,348

 

 

 

 

 

22.8

 

Commissions and floor brokerage

 

 

12,145

 

 

 

 

 

9,124

 

 

 

 

 

33.1

 

 

 

 

 

11,732

 

 

 

 

 

3.5

 

 

 

 

 

23,876

 

 

 

 

 

19,193

 

 

 

 

 

24.4

 

     Other operating expenses

 

 

68,012

 

 

 

 

 

61,098

 

 

 

 

 

11.3

 

 

 

 

 

59,301

 

 

 

 

 

14.7

 

 

 

 

 

127,313

 

 

 

 

 

112,848

 

 

 

 

 

12.8

 

Total non-interest expenses

 

 

636,352

 

 

 

 

 

559,680

 

 

 

 

 

13.7

 

 

 

 

 

576,061

 

 

 

 

 

10.5

 

 

 

 

 

1,212,413

 

 

 

 

 

1,050,596

 

 

 

 

 

15.4

 

Income before income taxes

 

 

15,793

 

 

 

 

 

38,071

 

 

 

 

 

(58.5

)

 

 

 

 

43,913

 

 

 

 

 

(64.0

)

 

 

 

 

59,706

 

 

 

 

 

108,137

 

 

 

 

 

(44.8

)

     Provision for income taxes

 

 

6,022

 

 

 

 

 

17,183

 

 

 

 

 

(65.0

)

 

 

 

 

16,858

 

 

 

 

(64.3

)

 

 

 

 

22,880

 

 

 

 

 

44,152

 

 

 

 

 

(48.2

)

Net income

 

$

9,771

 

 

 

 

$

20,888

 

 

 

 

 

(53.2

)

 

 

 

$

27,055

 

 

 

 

 

(63.9

)

 

 

 

$

36,826

 

 

 

 

$

63,985

 

 

 

 

 

(42.4

)

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.15

 

 

 

 

$

0.31

 

 

 

 

 

(51.6

)

 

 

 

 

0.40

 

 

 

 

 

(62.5

)

 

 

 

$

0.55

 

 

 

 

$

0.94

 

 

 

 

 

(41.5

)

     Diluted

 

$

0.13

 

 

 

 

$

0.27

 

 

 

 

 

(51.9

)

 

 

 

$

0.36

 

 

 

 

 

(63.9

)

 

 

 

$

0.48

 

 

 

 

$

0.82

 

 

 

 

 

(41.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

66,792

 

 

 

 

 

68,370

 

 

 

 

 

(2.3

)

 

 

 

 

67,579

 

 

 

 

 

(1.2

)

 

 

 

 

67,186

 

 

 

 

 

68,189

 

 

 

 

 

(1.5

)

     Diluted

 

 

75,982

 

 

 

 

 

77,856

 

 

 

 

 

(2.4

)

 

 

 

 

76,086

 

 

 

 

 

(0.1

)

 

 

 

 

76,084

 

 

 

 

 

77,624

 

 

 

 

 

(2.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical Information

  

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

6/30/16

 

 

6/30/15

 

 

% Change

 

 

3/31/16

 

 

% Change

 

 

Statistical Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Book value per share

 

$

37.41

 

 

$

36.35

 

 

 

2.9

 

 

$

36.37

 

 

 

2.9

 

 

Financial advisors 2

 

 

2,838

 

 

 

2,823

 

 

 

0.5

 

 

 

2,849

 

 

 

(0.4

)

 

       Full-time associates

 

 

7,185

 

 

 

6,952

 

 

 

3.4

 

 

 

7,100

 

 

 

1.2

 

 

Locations

 

 

400

 

 

 

398

 

 

 

0.5

 

 

 

401

 

 

 

(0.2

)

 

       Total client assets 3

 

$

237,510,000

 

 

$

190,241,000

 

 

 

24.9

 

 

$

232,013,000

 

 

 

2.4

 

 

 

2        Includes 667, 736, and 688 independent contractors at June 30, 2016, June 30, 2015, and March 31, 2016, respectively.

3

On July 1, 2016, we sold the independent contractor business acquired with the Sterne Agee transaction in June 2015. As of June 30, 2016, there were 540 independent contractors included in the disposed business unit and $11.5 billion of total client assets.

 

5

 

 

Business Segment Results

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

(in 000s)

 

6/30/16

 

 

6/30/15

 

 

 

 

% Change

 

 

3/31/16

 

 

% Change

 

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

386,039

 

 

$

343,382

 

 

 

 

 

12.4

 

 

$

379,805

 

 

 

1.6

 

 

$

765,843

 

 

 

 

$

672,792

 

 

 

 

 

13.8

 

Institutional Group

 

 

260,920

 

 

 

258,538

 

 

 

 

 

0.9

 

 

 

241,276

 

 

 

8.1

 

 

 

502,196

 

 

 

 

 

497,145

 

 

 

 

 

1.0

 

Other

 

 

5,186

 

 

 

(4,169

)

 

 

 

 

224.4

 

 

 

(1,107

)

 

 

(568.4

)

 

 

4,080

 

 

 

 

 

(11,204

)

 

 

 

 

136.4

 

 

 

$

652,145

 

 

$

597,751

 

 

 

 

 

9.1

 

 

$

619,974

 

 

 

5.2

 

 

$

1,272,119

 

 

 

 

$

1,158,733

 

 

 

 

 

9.8

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

105,053

 

 

$

93,975

 

 

 

 

 

11.8

 

 

$

93,335

 

 

 

12.6

 

 

$

198,387

 

 

 

 

$

192,823

 

 

 

 

 

2.9

 

Institutional Group

 

 

42,414

 

 

 

41,942

 

 

 

 

 

1.1

 

 

 

29,194

 

 

 

45.3

 

 

 

71,705

 

 

 

 

 

74,273

 

 

 

 

 

(3.5

)

Other

 

 

(131,674

)

 

 

(97,846

)

 

 

 

 

34.6

 

 

 

(78,616

)

 

 

67.5

 

 

 

(210,386

)

 

 

 

 

(158,959

)

 

 

 

 

32.4

 

 

 

$

15,793

 

 

$

38,071

 

 

 

 

 

(58.5

)

 

$

43,913

 

 

 

(64.0

)

 

$

59,706

 

 

 

 

$

108,137

 

 

 

 

 

(44.8

)

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

56.6

 

 

 

57.1

 

 

 

 

 

 

 

 

 

58.3

 

 

 

 

 

 

 

57.4

 

 

 

 

 

56.4

 

 

 

 

 

 

 

Institutional Group

 

 

58.8

 

 

 

61.9

 

 

 

 

 

 

 

 

 

62.4

 

 

 

 

 

 

 

60.5

 

 

 

 

 

62.3

 

 

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

16.2

 

 

 

15.5

 

 

 

 

 

 

 

 

 

17.1

 

 

 

 

 

 

 

16.7

 

 

 

 

 

14.9

 

 

 

 

 

 

 

Institutional Group

 

 

25.0

 

 

 

21.9

 

 

 

 

 

 

 

 

 

25.5

 

 

 

 

 

 

 

25.2

 

 

 

 

 

22.8

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

27.2

 

 

 

27.4

 

 

 

 

 

 

 

 

 

24.6

 

 

 

 

 

 

 

25.9

 

 

 

 

 

28.7

 

 

 

 

 

 

 

Institutional Group

 

 

16.2

 

 

 

16.2

 

 

 

 

 

 

 

 

 

12.1

 

 

 

 

 

 

 

14.3

 

 

 

 

 

14.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

 

(in 000s)

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

 

 

 

3/31/16

 

 

% Change

 

 

 

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

127,241

 

 

 

 

$

125,121

 

 

 

 

 

1.7

 

 

 

 

$

131,554

 

 

 

(3.3)

 

 

 

 

$

258,794

 

 

 

 

$

241,335

 

 

 

 

 

7.2

 

 

Principal transactions

 

 

44,938

 

 

 

 

 

33,682

 

 

 

 

 

33.4

 

 

 

 

 

41,411

 

 

 

8.5

 

 

 

 

 

86,349

 

 

 

 

 

75,689

 

 

 

 

 

14.1

 

 

    Brokerage revenues

 

 

172,179

 

 

 

 

 

158,803

 

 

 

 

 

8.4

 

 

 

 

 

172,965

 

 

 

(0.5)

 

 

 

 

 

345,143

 

 

 

 

 

317,024

 

 

 

 

 

(8.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

144,360

 

 

 

 

 

119,734

 

 

 

 

 

20.6

 

 

 

 

 

144,352

 

 

 

0.0

 

 

 

 

 

288,712

 

 

 

 

 

233,400

 

 

 

 

 

23.7

 

 

Net interest

 

 

54,246

 

 

 

 

 

37,454

 

 

 

 

 

44.8

 

 

 

 

 

51,767

 

 

 

4.8

 

 

 

 

 

106,055

 

 

 

 

 

75,378

 

 

 

 

 

40.7

 

 

Investment banking

 

 

9,502

 

 

 

 

 

15,128

 

 

 

 

 

(37.2

)

 

 

 

 

8,410

 

 

 

13.0

 

 

 

 

 

17,911

 

 

 

 

 

25,228

 

 

 

 

 

(29.0

)

 

Other income

 

 

5,752

 

 

 

 

 

12,263

 

 

 

 

 

(53.1

)

 

 

 

 

2,311

 

 

148.9

 

 

 

 

 

8,022

 

 

 

 

 

21,762

 

 

 

 

 

(63.1

)

 

Net revenues

 

 

386,039

 

 

 

 

 

343,382

 

 

 

 

 

12.4

 

 

 

 

 

379,805

 

 

 

1.6

 

 

 

 

 

765,843

 

 

 

 

 

672,792

 

 

 

 

 

13.8

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

218,553

 

 

 

 

 

196,234

 

 

 

 

 

11.4

 

 

 

 

 

221,416

 

 

 

(1.3)

 

 

 

 

 

439,968

 

 

 

 

 

379,477

 

 

 

 

 

15.9

 

 

Non-compensation operating expenses

 

 

62,433

 

 

 

 

 

53,173

 

 

 

 

 

17.4

 

 

 

 

 

65,054

 

 

 

(4.0)

 

 

 

 

 

127,488

 

 

 

 

 

100,492

 

 

 

 

 

26.9

 

 

Total non-interest expenses

 

 

280,986

 

 

 

 

 

249,407

 

 

 

 

 

12.7

 

 

 

 

 

286,470

 

 

 

(1.9)

 

 

 

 

 

567,456

 

 

 

 

 

479,969

 

 

 

 

 

18.2

 

 

Income before income taxes

 

$

105,053

 

 

 

 

$

93,975

 

 

 

 

 

11.8

 

 

 

 

$

93,335

 

 

 

12.6

 

 

 

 

$

198,387

 

 

 

 

$

192,823

 

 

 

 

 

2.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

56.6

 

 

 

 

 

57.1

 

 

 

 

 

 

 

 

 

 

 

58.3

 

 

 

 

 

 

 

 

 

57.4

 

 

 

 

 

56.4

 

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

16.2

 

 

 

 

 

15.5

 

 

 

 

 

 

 

 

 

 

 

17.1

 

 

 

 

 

 

 

 

 

16.7

 

 

 

 

 

14.9

 

 

 

 

 

 

 

 

Income before income taxes

 

 

27.2

 

 

 

 

 

27.4

 

 

 

 

 

 

 

 

 

 

 

24.6

 

 

 

 

 

 

 

 

 

25.9

 

 

 

 

 

28.7

 

 

 

 

 

 

 

 

 

 

 

       Stifel Bank & Trust (Unaudited)

 

 

 

              Key Statistical Information

 

 

 

 

 

 

 

 

(in 000s, except percentages)

 

6/30/16

 

 

 

 

6/30/15

 

 

% Change

 

 

3/31/16

 

 

% Change

 

 

 

 

Other information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

9,430,534

 

 

 

 

$

4,786,248

 

 

 

97.0

 

 

$

8,310,224

 

 

 

13.5

 

 

 

 

Investment securities

 

 

4,579,752

 

 

 

 

 

1,907,282

 

 

 

140.1

 

 

 

4,147,647

 

 

 

10.4

 

 

 

 

Retained loans, net

 

 

4,588,600

 

 

 

 

 

2,626,508

 

 

 

74.7

 

 

 

3,737,209

 

 

 

22.8

 

 

 

 

Loans held for sale

 

 

250,725

 

 

 

 

 

183,911

 

 

 

36.3

 

 

 

132,900

 

 

 

88.7

 

 

 

 

Deposits

 

 

7,881,219

 

 

 

 

 

4,313,940

 

 

 

82.7

 

 

 

7,218,100

 

 

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of loans

 

 

0.86

%

 

 

 

 

0.98

%

 

 

 

 

 

 

0.94

%

 

 

 

 

 

 

 

Non-performing assets as a percentage of total assets

 

 

0.37

%

 

 

 

 

0.13

%

 

 

 

 

 

 

0.28

%

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in 000s)

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

 

 

 

3/31/16

 

 

% Change

 

 

 

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

54,864

 

 

 

 

$

58,649

 

 

 

 

 

(6.5

)

 

 

 

$

66,376

 

 

 

(17.3

)

 

 

 

$

121,240

 

 

 

 

$

122,738

 

 

 

 

 

(1.2

)

Principal transactions

 

 

81,488

 

 

 

 

 

51,861

 

 

 

 

 

57.1

 

 

 

 

 

79,537

 

 

 

2.5

 

 

 

 

 

161,026

 

 

 

 

 

110,587

 

 

 

 

 

45.6

 

Brokerage revenues

 

 

136,352

 

 

 

 

 

110,510

 

 

 

 

 

23.4

 

 

 

 

 

145,913

 

 

 

(6.6

)

 

 

 

 

282,266

 

 

 

 

 

233,325

 

 

 

 

 

21.0

 

Capital raising

 

 

56,100

 

 

 

 

 

82,690

 

 

 

 

 

(32.2

)

 

 

 

 

44,895

 

 

 

25.0

 

 

 

 

 

100,995

 

 

 

 

 

147,707

 

 

 

 

 

(31.6

)

Advisory fees

 

 

67,523

 

 

 

 

 

63,189

 

 

 

 

 

6.9

 

 

 

 

 

47,354

 

 

 

42.6

 

 

 

 

 

114,876

 

 

 

 

 

112,632

 

 

 

 

 

2.0

 

Investment banking

 

 

123,623

 

 

 

 

 

145,879

 

 

 

 

 

(15.3

)

 

 

 

 

92,249

 

 

 

34.0

 

 

 

 

 

215,871

 

 

 

 

 

260,339

 

 

 

 

 

(17.1

)

Other 4

 

 

945

 

 

 

 

 

2,149

 

 

 

 

 

(56.0

)

 

 

 

 

3,114

 

 

 

(69.7

)

 

 

 

 

4,059

 

 

 

 

 

3,481

 

 

 

 

 

16.6

 

Net revenues

 

 

260,920

 

 

 

 

 

258,538

 

 

 

 

 

0.9

 

 

 

 

 

241,276

 

 

 

8.1

 

 

 

 

 

502,196

 

 

 

 

 

497,145

 

 

 

 

 

1.0

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

153,371

 

 

 

 

 

160,077

 

 

 

 

 

(4.2

)

 

 

 

 

150,618

 

 

 

1.8

 

 

 

 

 

303,989

 

 

 

 

 

309,488

 

 

 

 

 

(1.8

)

Non-compensation operating expenses

 

 

65,135

 

 

 

 

 

56,519

 

 

 

 

 

15.2

 

 

 

 

 

61,464

 

 

 

6.0

 

 

 

 

 

126,502

 

 

 

 

 

113,384

 

 

 

 

 

11.6

 

Total non-interest expenses

 

 

218,506

 

 

 

 

 

216,596

 

 

 

 

 

0.9

 

 

 

 

 

212,082

 

 

 

3.0

 

 

 

 

 

430,491

 

 

 

 

 

422,872

 

 

 

 

 

1.8

 

Income before income taxes

 

$

42,414

 

 

 

 

$

41,942

 

 

 

 

 

1.1

 

 

 

 

$

29,194

 

 

 

45.3

 

 

 

 

$

71,705

 

 

 

 

$

74,273

 

 

 

 

 

(3.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

58.8

 

 

 

 

 

61.9

 

 

 

 

 

 

 

 

 

 

 

62.4

 

 

 

 

 

 

 

 

 

60.5

 

 

 

 

 

62.3

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

25.0

 

 

 

 

 

21.8

 

 

 

 

 

 

 

 

 

 

 

25.5

 

 

 

 

 

 

 

 

 

25.2

 

 

 

 

 

22.8

 

 

 

 

 

 

 

Income before income taxes

 

 

16.2

 

 

 

 

 

16.3

 

 

 

 

 

 

 

 

 

 

 

12.1

 

 

 

 

 

 

 

 

 

14.3

 

 

 

 

 

14.9

 

 

 

 

 

 

 

 

 

Institutional Group Brokerage & Investment Banking Revenues (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in 000s)

 

6/30/16

 

 

 

 

6/30/15

 

 

 

 

% Change

 

 

3/31/16

 

 

% Change

 

 

 

 

6/30/16

 

 

6/30/15

 

 

% Change

 

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

55,008

 

 

 

 

$

58,551

 

 

 

 

 

(6.1

)

 

$

62,273

 

 

 

(11.7

)

 

 

 

$

117,281

 

 

$

120,548

 

 

 

(2.7

)

Fixed income

 

 

81,344

 

 

 

 

 

51,959

 

 

 

 

 

56.6

 

 

 

83,640

 

 

 

(2.7

)

 

 

 

 

164,985

 

 

 

112,777

 

 

 

46.3

 

Institutional brokerage

 

 

136,352

 

 

 

 

 

110,510

 

 

 

 

 

23.4

 

 

 

145,913

 

 

 

(6.6

)

 

 

 

 

282,266

 

 

 

233,325

 

 

 

21.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment banking:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

27,018

 

 

 

 

 

49,550

 

 

 

 

 

(45.5

)

 

 

18,930

 

 

 

42.7

 

 

 

 

 

45,947

 

 

 

93,837

 

 

 

(51.0

)

Fixed income

 

 

29,082

 

 

 

 

 

33,140

 

 

 

 

 

(12.2

)

 

 

25,965

 

 

 

12.0

 

 

 

 

 

55,048

 

 

 

53,870

 

 

 

2.2

 

Capital raising

 

 

56,100

 

 

 

 

 

82,690

 

 

 

 

 

(32.2

)

 

 

44,895

 

 

 

25.0

 

 

 

 

 

100,995

 

 

 

147,707

 

 

 

(31.6

)

Advisory fees:

 

 

67,523

 

 

 

 

 

63,189

 

 

 

 

 

6.9

 

 

 

47,354

 

 

 

42.6

 

 

 

 

 

114,876

 

 

 

112,632

 

 

 

2.0

 

Investment banking

 

$

123,623

 

 

 

 

$

145,879

 

 

 

 

 

(15.3

)

 

$

92,249

 

 

 

34.0

 

 

 

 

$

215,871

 

 

$

260,339

 

 

 

(17.1

)

 

4

Includes net interest, asset management and service fees, and other income.


 

8

 

Non-GAAP Financial Measures

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the three months ended June 30, 2016. 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 core 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. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP amounts primarily exclude acquisition related expenses which management believes are duplicative and will be eliminated and other expenses which in management’s view are not representative of on-going business.

A limitation of utilizing these non-GAAP measures 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 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 GAAP measures for the three months ended June 30, 2016 to the aforementioned expenses on a non-GAAP basis for the same period.

 

 

 

 

 

 

(000s)

 

Three months ended June 30, 2016

 

Six months ended June 30, 2016

 

GAAP net income

 

$ 

9,771

 

$

36,826

 

 

 

 

 

 

 

 

 

Duplicative expenses:

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

Cost synergies

 

 

3,132

 

 

8,024

 

Restructuring costs

 

 

222

 

 

481

 

Total duplicative expenses – compensation and benefits

 

 

3,354

 

 

8,505

 

Non-compensation operating expenses

 

 

 

 

 

 

 

Cost synergies

 

 

11,378

 

 

19,512

 

Total duplicative expenses - non-compensation operating expenses

 

 

11,378

 

 

19,512

 

Total duplicative expenses

 

 

14,732

 

 

28,017

 

Acquisition-related expenses:

 

 

 

 

 

 

 

Compensation and benefits

 

 

10,806

 

 

22,084

 

Non-compensation operating expenses

 

 

1,298

 

 

2,721

 

Total acquisition-related expenses

 

 

12,104

 

 

24,805

 

Stock-based compensation expense

 

 

35,976

 

 

35,976

 

Amortization of intangible assets

 

 

5,854

 

 

6,563

 

Total adjustments

 

 

68,666

 

 

95,361

 

Provision for income taxes

 

 

26,145

 

 

36,542

 

Non-GAAP net income

 

$

52,292

 

$

95,645

 

 

 

 

 

 

 

 

 

Duplicative expenses – Expenses related to items that will run-off as we integrate the acquired business into the Company. These expenses included salaries and benefits, rent, licenses and subscriptions. Management considers these a cost of the acquisition and not representative of the costs of running the Company’s on-going business; therefore, the duplicative costs are included as adjustments to arrive at non-GAAP net income.

Acquisition-related expenses – Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees and legal costs. These costs were directly related to the acquisition and are not representative of the costs of running the Company’s on-going business.

Stock-based compensation expense – On June 30, 2016, the Company’s Board of Directors removed the continuing service requirements associated with restricted stock units that were granted to certain employees of Barclays in December 2015. As a result of the modification, there are no continuing service requirements associated with these restricted stock units, and accordingly, all unrecognized expense related to these awards were expensed in the second quarter of 2016. The Company views the expensing of restricted stock units related to the acquisition and not representative of the costs of running the Company’s on-going business.

Amortization of intangible assets – Amortization of intangible assets acquired.

 

9

 

 

Investor Relations

Joel Jeffrey

(212) 271-3610, investorrelations@stifel.com

 

10