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

Exhibit 99.1

 

April 30, 2020

FOR IMMEDIATE RELEASE

Media Contact:  Neil Shapiro (212) 271-3447

Investor Contact:  Joel Jeffrey  (212) 271-3610

www.stifel.com/investor-relations

 

STIFEL REPORTS FIRST QUARTER 2020 RESULTS

 

•

Net revenues of $913.0 million, increased 18.5% with the year-ago quarter.

 

•

Net income available to common shareholders of $81.7 million, or $1.07 per diluted common share.

 

•

Non-GAAP net income available to common shareholders of $91.9 million, or $1.20 per diluted common share.

 

•

Annualized return on average tangible common shareholders’ equity (1) was 17.4%.

 

•

Non-GAAP annualized return on average tangible common shareholders’ equity (1) was 19.5%.

 

•

The Board of Directors declared a $0.17 quarterly dividend per share, an increase of 13% from the prior quarter.

 

•

The Company repurchased $56.2 million of its outstanding common stock.

ST. LOUIS, MO – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $81.7 million, or $1.07 per diluted common share on net revenues of $913.0 million for the three months ended March 31, 2020, compared with net income available to common shareholders of $96.9 million, or $1.22 per diluted common share, on net revenues of $770.4 million for the first quarter of 2019.

For the three months ended March 31, 2020, the Company reported non-GAAP net income available to common shareholders of $91.9 million, or $1.20 per diluted common share. The Company’s reported GAAP net income for the three months ended March 31, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“Given the impact of the current healthcare crisis on the economy and our daily lives, I’d like to say how proud I am of my Stifel partners and associates who have shown resolve, creativity, and teamwork to achieve the dual objectives of promoting the safety of our people while delivering essential and exceptional service to our clients. Our results in the first quarter illustrate the value of our diversified business as we generated our second highest quarterly revenue despite the sudden and dramatic change in the economy following the COVID -19 outbreak. Record Global Wealth Management revenue and our second strongest quarter for our Institutional Group was driven by record brokerage revenue as well as strong investment banking, net interest income and fee-based revenue. Given the operating conditions in the quarter, I believe that our brokerage results deserve special praise. In a matter of days, and with a focus on employee safety, we rapidly deployed our business continuity plan that resulted in more than 90% of our employees working remotely and enabled our Institutional Group to go from eight primary trading desks to more than 180 separate trading locations. This underscores the value of the investments we have made over the years in both people and technology,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, “The next few months have a high level of uncertainty, which can drive a wide range of economic outcomes. Longer term, we believe the world and our economy will overcome this pandemic. Looking forward, Stifel is well positioned because of its diversified business model, solid and liquid balance sheet, and our associates’ commitment to excellence.”

 

Financial Highlights (Unaudited)

 

Three Months Ended

 

($ in 000s, except per share data)

 

GAAP 3/31/20

 

 

GAAP 3/31/19

 

 

% Change

 

 

GAAP 12/31/19

 

 

% Change

 

 

 

Non-GAAP (2) 3/31/20

 

 

Non-GAAP (2) 3/31/19

 

 

% Change

 

Net revenues

 

$

913,034

 

 

$

770,420

 

 

 

18.5

 

 

$

944,251

 

 

 

(3.3

)

 

 

$

913,213

 

 

$

770,420

 

 

 

18.5

 

Net income applicable to Stifel Financial Corp.

 

$

86,589

 

 

$

99,207

 

 

 

(12.7

)

 

$

130,690

 

 

 

(33.7

)

 

 

$

96,777

 

 

$

106,864

 

 

 

(9.4

)

Preferred dividends

 

 

4,844

 

 

 

2,344

 

 

 

106.7

 

 

 

4,843

 

 

n/m

 

 

 

 

4,844

 

 

 

2,344

 

 

 

106.7

 

Net income available to common shareholders

 

$

81,745

 

 

$

96,863

 

 

 

(15.6

)

 

$

125,847

 

 

 

(35.0

)

 

 

$

91,933

 

 

$

104,520

 

 

 

(12.0

)

Earnings per diluted common share

 

$

1.13

 

 

$

1.25

 

 

 

(9.6

)

 

$

1.68

 

 

 

(32.7

)

 

 

$

1.26

 

 

$

1.35

 

 

 

(6.7

)

Earnings per diluted common share available to common shareholders

 

$

1.07

 

 

$

1.22

 

 

 

(12.3

)

 

$

1.62

 

 

 

(34.0

)

 

 

$

1.20

 

 

$

1.32

 

 

 

(9.1

)

Compensation ratio

 

 

63.2

%

 

 

59.5

%

 

 

 

 

 

 

60.0

%

 

 

 

 

 

 

 

62.5

%

 

 

59.0

%

 

 

 

 

Non-compensation ratio

 

 

24.2

%

 

 

22.6

%

 

 

 

 

 

 

22.8

%

 

 

 

 

 

 

 

23.4

%

 

 

22.0

%

 

 

 

 

Pre-tax operating margin (3)

 

 

12.6

%

 

 

17.9

%

 

 

 

 

 

 

17.2

%

 

 

 

 

 

 

 

14.1

%

 

 

19.0

%

 

 

 

 

 

1

 

Net Revenues

Net revenues were $913.0 million for the first quarter of 2020, an 18.5% increase from the first quarter of 2019 and a 3.3% decrease from our record fourth quarter of 2019. Net revenues, compared with the first quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower advisory fee revenues and net interest income. Net revenues, compared with the fourth quarter of 2019, reflected significantly lower advisory fee revenues and a decline in capital raising revenues, partially offset by an increase in brokerage revenues, asset management and service fees, and net interest income.

The operating environment, notably in March, was impacted by the spread of the COVID-19 virus which caused a sharp contraction in global economic activity and increased market volatility. The decline of asset prices, reduction in interest rates, widening of credit spreads, lending and counterparty credit deterioration, market volatility, and reduced investment banking activity had the most immediate negative impacts on the Company’s first quarter results. At the same time, high levels of client trading activity related to market volatility significantly impacted brokerage revenues.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $349.8 million, a 34.8% increase compared with the first quarter of 2019 and a 20.8% increase compared with the fourth quarter of 2019.

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Global Wealth Management

 

$

179,879

 

 

$

153,194

 

 

 

17.4

 

 

$

174,000

 

 

 

3.4

 

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

70,195

 

 

 

38,881

 

 

 

80.5

 

 

 

45,989

 

 

 

52.6

 

Fixed income capital markets

 

 

99,688

 

 

 

67,406

 

 

 

47.9

 

 

 

69,563

 

 

 

43.3

 

Total institutional brokerage

 

 

169,883

 

 

 

106,287

 

 

 

59.8

 

 

 

115,552

 

 

 

47.0

 

Total brokerage revenues (4)

 

$

349,762

 

 

$

259,481

 

 

 

34.8

 

 

$

289,552

 

 

 

20.8

 

 

•

Global Wealth Management brokerage revenues were $179.9 million, a 17.4% increase compared with the first quarter of 2019 and a 3.4% increase compared with the fourth quarter of 2019.

 

•

Institutional equity brokerage revenues were $70.2 million, an 80.5% increase compared with the first quarter of 2019 and a 52.6% increase compared with the fourth quarter of 2019.

 

•

Institutional fixed income brokerage revenues were $99.7 million, a 47.9% increase compared with the first quarter of 2019 and a 43.3% increase compared with the fourth quarter of 2019.

Investment Banking Revenues

Investment banking revenues were $179.5 million, a 10.9% increase compared with the first quarter of 2019 and a 35.3% decrease compared with the fourth quarter of 2019.

  

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

 

 

3/31/19

 

 

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

10,314

 

 

 

 

$

8,223

 

 

 

 

 

25.4

 

 

$

9,278

 

 

 

11.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

60,195

 

 

 

 

 

27,859

 

 

 

 

 

116.1

 

 

 

64,384

 

 

 

(6.5

)

Fixed income capital markets

 

 

32,887

 

 

 

 

 

20,863

 

 

 

 

 

57.6

 

 

 

48,181

 

 

 

(31.7

)

Institutional Group

 

 

93,082

 

 

 

 

 

48,722

 

 

 

 

 

91.0

 

 

 

112,565

 

 

 

(17.3

)

Total capital raising (4)

 

 

103,396

 

 

 

 

 

56,945

 

 

 

 

 

81.6

 

 

 

121,843

 

 

 

(15.1

)

Advisory fees (4)

 

 

76,072

 

 

 

 

 

104,895

 

 

 

 

 

(27.5

)

 

 

155,331

 

 

 

(51.0

)

Total investment banking

 

$

179,468

 

 

 

 

$

161,840

 

 

 

 

 

10.9

 

 

$

277,174

 

 

 

(35.3

)

 

•

Global Wealth Management capital raising revenues were $10.3 million, a 25.4% increase compared with the first quarter of 2019 and an 11.2% increase compared with the fourth quarter of 2019.

 

•

Institutional equity capital raising revenues were $60.2 million, a 116.1% increase compared with the first quarter of 2019 and a 6.5% decrease compared with the fourth quarter of 2019.

 

•

Institutional fixed income capital raising revenues were $32.9 million, a 57.6% increase compared with the first quarter of 2019 and a 31.7% decrease compared with the fourth quarter of 2019.

 

•

Advisory fee revenues were $76.1 million, a 27.5% decrease compared with the first quarter of 2019 and a 51.0% decrease compared with the fourth quarter of 2019.


 

2

 

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $237.8 million, a 21.8% increase compared with the first quarter of 2019 and a 6.2% increase compared with the fourth quarter of 2019. The increase from the comparative period in 2019 is primarily attributable to higher asset levels at the beginning of the first quarter of 2020 and strong fee-based asset flows. See Asset Management and Service Fee Break-down table.

Net Interest Income

Net interest income of $136.8 million, a 3.4% decrease compared with the first quarter of 2019 and a 0.9% increase compared with the fourth quarter of 2019. See Net Interest Income Analysis table.

 

•

Interest income was $161.2 million, a 15.6% decrease compared with the first quarter of 2019 and a 3.5% decrease compared with the fourth quarter of 2019.

 

•

Interest expense was $24.4 million, a 50.7% decrease compared with the first quarter of 2019 and a 22.5% decrease compared with the fourth quarter of 2019.

Compensation and Benefits Expenses

For the quarter ended March 31, 2020, compensation and benefits expenses were $577.2 million, which included $6.4 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $458.1 million in the first quarter of 2019 and $567.0 million in the fourth quarter of 2019. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 62.5% in the first quarter of 2020 (non-GAAP measure).

The increase in compensation and benefits expenses, compared with the first quarter of 2019, is primarily attributable to higher volume and revenue-related expense and investments.

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

GAAP compensation and benefits

 

$

577,179

 

 

$

458,114

 

As a percentage of net revenues

 

 

63.2

%

 

 

59.5

%

Non-GAAP adjustments: (5)

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

(6,427

)

 

 

(3,932

)

Non-GAAP compensation and benefits

 

$

570,752

 

 

$

454,182

 

As a percentage of non-GAAP net revenues

 

 

62.5

%

 

 

59.0

%

Non-Compensation Operating Expenses

For the quarter ended March 31, 2020, non-compensation operating expenses were $220.7 million, which included $6.9 million of merger-related expenses (non-GAAP adjustments). This compares with $174.5 million in the first quarter of 2019 and $214.7 million in the fourth quarter of 2019. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2020 were 23.4% (non-GAAP measure).

The increase in non-compensation operating expenses, compared with the first quarter of 2019, is primarily attributable to the increase in the provision for loan losses as a result of the impact of COVID-19 on the broader economic environment, volume-related expenses, net provisions for regulatory matters, and professional fees. In addition, the first quarter of 2020 included provisions related to growth in loans and the impact of accounting for credit losses under the CECL standard (6).

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

GAAP non-compensation expenses

 

$

220,749

 

 

$

174,497

 

As a percentage of net revenues

 

 

24.2

%

 

 

22.6

%

Non-GAAP adjustments: (5)

 

 

 

 

 

 

 

 

Merger-related

 

 

(6,904

)

 

 

(4,259

)

Non-GAAP non-compensation expenses

 

$

213,845

 

 

$

170,238

 

As a percentage of non-GAAP net revenues

 

 

23.4

%

 

 

22.0

%

 


 

3

 

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended March 31, 2020 was 24.8%. This compares with an effective income tax rate of 27.9% for the first quarter of 2019 and 19.6% for the fourth quarter of 2019. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2020 was 24.8%.

The effective income tax rate was primarily impacted by tax benefits on the settlement of employee share-based awards and the establishment of a valuation allowance on certain deferred tax assets in the first quarter of 2020.

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

GAAP provision for income taxes

 

$

28,517

 

 

$

38,370

 

GAAP effective tax rate

 

 

24.8

%

 

 

27.9

%

Non-GAAP adjustments: (5)

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

3,300

 

 

 

2,203

 

Other

 

 

22

 

 

 

(1,669

)

 

 

 

3,322

 

 

 

534

 

Non-GAAP provision for income taxes

 

$

31,839

 

 

$

38,904

 

Non-GAAP effective tax rate

 

 

24.8

%

 

 

26.7

%

Conference Call Information

Stifel Financial Corp. will host its first quarter 2020 financial results conference call on Thursday, April 30, 2020, at 9:30 a.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 5496039. 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, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc. 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 and Stifel Bank & Trust offer 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 website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.

Cautionary Note Regarding 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. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see Item 8.01 of the Company’s Report on Form 8-K dated April 30, 2020 and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as to the date they are made. The Company 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.

Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.

 

4

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s, except per share amounts)

 

3/31/20

 

 

 

 

3/31/19

 

 

 

 

%

Change

 

 

 

 

12/31/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

211,098

 

 

 

 

$

155,449

 

 

 

 

 

35.8

 

 

 

 

$

183,144

 

 

 

 

 

15.3

 

Principal transactions

 

 

138,666

 

 

 

 

 

104,032

 

 

 

 

 

33.3

 

 

 

 

 

106,408

 

 

 

 

 

30.3

 

Brokerage revenues

 

 

349,764

 

 

 

 

 

259,481

 

 

 

 

 

34.8

 

 

 

 

 

289,552

 

 

 

 

 

20.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory fees

 

 

76,072

 

 

 

 

 

104,890

 

 

 

 

 

(27.5

)

 

 

 

 

155,331

 

 

 

 

 

(51.0

)

Capital raising

 

 

103,396

 

 

 

 

 

56,950

 

 

 

 

 

81.6

 

 

 

 

 

121,843

 

 

 

 

 

(15.1

)

Investment banking

 

 

179,468

 

 

 

 

 

161,840

 

 

 

 

 

10.9

 

 

 

 

 

277,174

 

 

 

 

 

(35.3

)

Asset management and service fees

 

 

237,775

 

 

 

 

 

195,267

 

 

 

 

 

21.8

 

 

 

 

 

223,969

 

 

 

 

 

6.2

 

Other income

 

 

9,207

 

 

 

 

 

12,209

 

 

 

 

 

(24.6

)

 

 

 

 

17,917

 

 

 

 

 

(48.6

)

Operating revenues

 

 

776,214

 

 

 

 

 

628,797

 

 

 

 

 

23.4

 

 

 

 

 

808,612

 

 

 

 

 

(4.0

)

Interest revenue

 

 

161,177

 

 

 

 

 

191,071

 

 

 

 

 

(15.6

)

 

 

 

 

167,087

 

 

 

 

 

(3.5

)

Total revenues

 

 

937,391

 

 

 

 

 

819,868

 

 

 

 

 

14.3

 

 

 

 

 

975,699

 

 

 

 

 

(3.9

)

Interest expense

 

 

24,357

 

 

 

 

 

49,448

 

 

 

 

 

(50.7

)

 

 

 

 

31,448

 

 

 

 

 

(22.5

)

Net revenues

 

 

913,034

 

 

 

 

 

770,420

 

 

 

 

 

18.5

 

 

 

 

 

944,251

 

 

 

 

 

(3.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

577,179

 

 

 

 

 

458,114

 

 

 

 

 

26.0

 

 

 

 

 

566,981

 

 

 

 

 

1.8

 

Occupancy and equipment rental

 

 

66,073

 

 

 

 

 

58,862

 

 

 

 

 

12.3

 

 

 

 

 

64,327

 

 

 

 

 

2.7

 

Communication and office supplies

 

 

41,124

 

 

 

 

 

35,697

 

 

 

 

 

15.2

 

 

 

 

 

39,845

 

 

 

 

 

3.2

 

Commissions and floor brokerage

 

 

14,842

 

 

 

 

 

10,956

 

 

 

 

 

35.5

 

 

 

 

 

11,505

 

 

 

 

 

29.0

 

Provision for loan losses

 

 

18,978

 

 

 

 

 

2,283

 

 

 

 

 

731.3

 

 

 

 

 

4,412

 

 

 

 

 

330.1

 

Other operating expenses

 

 

79,732

 

 

 

 

 

66,699

 

 

 

 

 

19.5

 

 

 

 

 

94,588

 

 

 

 

 

(15.7

)

Total non-interest expenses

 

 

797,928

 

 

 

 

 

632,611

 

 

 

 

 

26.1

 

 

 

 

 

781,658

 

 

 

 

 

2.1

 

Income before income taxes

 

 

115,106

 

 

 

 

 

137,809

 

 

 

 

 

(16.5

)

 

 

 

 

162,593

 

 

 

 

 

(29.2

)

Provision for income taxes

 

 

28,517

 

 

 

 

 

38,370

 

 

 

 

 

(25.7

)

 

 

 

 

31,925

 

 

 

 

 

(10.7

)

Net income

 

 

86,589

 

 

 

 

 

99,439

 

 

 

 

 

(12.9

)

 

 

 

 

130,668

 

 

 

 

 

(33.7

)

Net income/(loss) applicable to non-controlling interests

 

 

—

 

 

 

 

 

232

 

 

 

 

n/m

 

 

 

 

 

(22

)

 

 

 

n/m

 

Net income applicable to Stifel Financial Corp.

 

 

86,589

 

 

 

 

 

99,207

 

 

 

 

 

(12.7

)

 

 

 

 

130,690

 

 

 

 

 

(33.7

)

Preferred dividends

 

 

4,844

 

 

 

 

 

2,344

 

 

 

 

 

106.7

 

 

 

 

 

4,843

 

 

 

 

n/m

 

Net income available to common shareholders

 

$

81,745

 

 

 

 

$

96,863

 

 

 

 

 

(15.6

)

 

 

 

$

125,847

 

 

 

 

 

(35.0

)

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.15

 

 

 

 

$

1.35

 

 

 

 

 

(14.8

)

 

 

 

$

1.79

 

 

 

 

 

(35.8

)

Diluted

 

$

1.07

 

 

 

 

$

1.22

 

 

 

 

 

(12.3

)

 

 

 

$

1.62

 

 

 

 

 

(34.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.17

 

 

 

 

$

0.15

 

 

 

 

 

13.3

 

 

 

 

$

0.15

 

 

 

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

71,286

 

 

 

 

 

71,700

 

 

 

 

 

(0.6

)

 

 

 

 

70,470

 

 

 

 

 

1.2

 

Diluted

 

 

76,619

 

 

 

 

 

79,210

 

 

 

 

 

(3.3

)

 

 

 

 

77,813

 

 

 

 

 

(1.5

)


 

5

 

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

 

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

582,956

 

 

$

510,610

 

 

 

 

 

14.2

 

 

$

552,945

 

 

 

5.4

 

Institutional Group

 

 

332,238

 

 

 

261,286

 

 

 

 

 

27.2

 

 

 

391,907

 

 

 

(15.2

)

Other

 

 

(2,160

)

 

 

(1,476

)

 

 

 

 

(46.3

)

 

 

(601

)

 

 

(259.4

)

Total net revenues

 

$

913,034

 

 

$

770,420

 

 

 

 

 

18.5

 

 

$

944,251

 

 

 

(3.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

388,789

 

 

$

316,120

 

 

 

 

 

23.0

 

 

$

356,650

 

 

 

9.0

 

Institutional Group

 

 

290,498

 

 

 

229,082

 

 

 

 

 

26.8

 

 

 

336,366

 

 

 

(13.6

)

Other

 

 

118,641

 

 

 

87,409

 

 

 

 

 

35.7

 

 

 

88,642

 

 

 

33.8

 

Total operating expenses

 

$

797,928

 

 

$

632,611

 

 

 

 

 

26.1

 

 

$

781,658

 

 

 

2.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

194,167

 

 

$

194,490

 

 

 

 

 

(0.2

)

 

$

196,295

 

 

 

(1.1

)

Institutional Group

 

 

41,740

 

 

 

32,204

 

 

 

 

 

29.6

 

 

 

55,541

 

 

 

(24.8

)

Other

 

 

(120,801

)

 

 

(88,885

)

 

 

 

 

35.9

 

 

 

(89,243

)

 

 

35.4

 

Income before income taxes

 

$

115,106

 

 

$

137,809

 

 

 

 

 

(16.5

)

 

$

162,593

 

 

 

(29.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

51.2

 

 

 

48.5

 

 

 

 

 

 

 

 

 

49.7

 

 

 

 

 

Institutional Group

 

 

62.0

 

 

 

61.0

 

 

 

 

 

 

 

 

 

63.7

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

15.5

 

 

 

13.4

 

 

 

 

 

 

 

 

 

14.8

 

 

 

 

 

Institutional Group

 

 

25.4

 

 

 

26.7

 

 

 

 

 

 

 

 

 

22.1

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

33.3

 

 

 

38.1

 

 

 

 

 

 

 

 

 

35.5

 

 

 

 

 

Institutional Group

 

 

12.6

 

 

 

12.3

 

 

 

 

 

 

 

 

 

14.2

 

 

 

 

 

Consolidated pre-tax margin

 

 

12.6

 

 

 

17.9

 

 

 

 

 

 

 

 

 

17.2

 

 

 

 

 

 

 


 

6

 

 

Financial metrics (unaudited):

As of and For the Three Months Ended

 

($ in 000s, except percentages and per share amounts)

3/31/20

 

3/31/19

 

12/31/19

 

Total assets

$

25,896,006

 

$

24,183,559

 

$

24,610,225

 

Total Stifel Financial shareholders’ equity

 

3,470,326

 

 

3,376,623

 

 

3,614,791

 

Book value per common share (7)

$

46.13

 

$

43.18

 

$

48.37

 

Return on common equity (8)

 

10.0

%

 

12.7

%

 

15.6

%

Non-GAAP return on common equity (2) (8)

 

11.2

%

 

13.7

%

 

18.2

%

Return on tangible common equity (1)

 

17.4

%

 

21.2

%

 

27.0

%

Non-GAAP return on tangible common equity (1) (2)

 

19.5

%

 

22.8

%

 

31.4

%

Tier 1 common capital ratio (9)

 

14.3

%

 

15.9

%

 

15.2

%

Tier 1 risk based capital ratio (9)

 

16.6

%

 

18.5

%

 

17.6

%

Tier 1 leverage capital ratio (9)

 

9.6

%

 

9.8

%

 

10.0

%

Pre-tax margin on net revenues

 

12.6

%

 

17.9

%

 

17.2

%

Non-GAAP pre-tax margin on net revenues (2) (3)

 

14.1

%

 

19.0

%

 

20.5

%

Effective tax rate

 

24.8

%

 

27.9

%

 

19.6

%

Non-GAAP effective tax rate (2)

 

24.8

%

 

26.7

%

 

22.0

%

 

Statistical Information (unaudited):

 

As of and For the Three Months Ended

 

($ in 000s, except financial advisors and locations)

 

3/31/20

 

 

3/31/19

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Financial advisors

 

 

2,130

 

 

 

2,061

 

 

 

3.3

 

 

 

2,127

 

 

 

0.1

 

Independent contractors

 

 

94

 

 

 

99

 

 

 

(5.1

)

 

 

95

 

 

 

(1.1

)

Total financial advisors

 

 

2,224

 

 

 

2,160

 

 

 

3.0

 

 

 

2,222

 

 

 

0.1

 

Locations

 

 

447

 

 

 

407

 

 

 

9.8

 

 

 

446

 

 

 

0.2

 

Total client assets

 

$

276,627,000

 

 

$

299,993,000

 

 

 

(7.8

)

 

$

329,495,000

 

 

 

(16.0

)

Fee-based client assets

 

$

93,633,000

 

 

$

99,579,000

 

 

 

(6.0

)

 

$

117,189,000

 

 

 

(20.1

)

Client money market and insured product

 

$

17,234,000

 

 

$

14,928,000

 

 

 

15.4

 

 

$

14,841,000

 

 

 

16.1

 

Secured client lending (10)

 

$

3,148,790

 

 

$

3,175,240

 

 

 

(0.8

)

 

$

3,363,450

 

 

 

(6.4

)

  

  

 

Asset Management and Service Fee Break-down (unaudited)

 

Asset Management and Service Fee Revenues:

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Private Client Group (11)

 

$

193,260

 

 

$

148,092

 

 

 

30.5

 

 

$

177,987

 

 

 

8.6

 

Asset Management

 

 

29,762

 

 

 

28,469

 

 

 

4.5

 

 

 

31,653

 

 

 

(6.0

)

Third-party Bank Sweep Program

 

 

3,308

 

 

 

8,562

 

 

 

(61.4

)

 

 

3,821

 

 

 

(13.4

)

Other (12)

 

 

11,445

 

 

 

10,144

 

 

 

12.8

 

 

 

10,508

 

 

 

8.9

 

Total asset management and service fee revenues

 

$

237,775

 

 

$

195,267

 

 

 

21.8

 

 

$

223,969

 

 

 

6.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based Assets:

 

Three Months Ended

 

($ in millions)

 

3/31/20

 

 

3/31/19

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Private Client Group (11)

 

$

80,617

 

 

$

73,553

 

 

 

9.6

 

 

$

92,110

 

 

 

(12.5

)

Asset Management

 

 

22,752

 

 

 

32,952

 

 

 

(31.0

)

 

 

36,525

 

 

 

(37.7

)

Elimination (13)

 

 

(9,736

)

 

 

(6,926

)

 

 

40.6

 

 

 

(11,446

)

 

 

(14.9

)

Total fee-based assets

 

$

93,633

 

 

$

99,579

 

 

 

(6.0

)

 

$

117,189

 

 

 

(20.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual Program Banks

 

$

1,491

 

 

$

1,875

 

 

 

(20.5

)

 

$

1,185

 

 

 

25.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROA (bps) (14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Client Group (13)

 

 

83.9

 

 

 

89.6

 

 

 

 

 

 

 

83.6

 

 

 

 

 

Asset Management

 

 

38.0

 

 

 

34.6

 

 

 

 

 

 

 

34.7

 

 

 

 

 

Individual Program Banks

 

 

95.0

 

 

 

153.3

 

 

 

 

 

 

 

123.7

 

 

 

 

 


 

7

 

Consolidated Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

December 31, 2019

 

($ in millions, except percentages)

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and federal funds sold

 

$

931.8

 

 

$

3.7

 

 

 

1.58

%

 

$

1,124.9

 

 

$

7.8

 

 

 

2.78

%

 

$

805.7

 

 

$

3.6

 

 

 

1.80

%

Financial instruments owned

 

 

1,076.6

 

 

 

4.6

 

 

 

1.70

 

 

 

1,277.4

 

 

 

6.3

 

 

 

1.98

 

 

 

1,074.2

 

 

 

5.1

 

 

 

1.91

 

Margin balances

 

 

1,231.7

 

 

 

10.1

 

 

 

3.29

 

 

 

1,258.5

 

 

 

13.4

 

 

 

4.27

 

 

 

1,291.7

 

 

 

11.6

 

 

 

3.58

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

4,538.5

 

 

 

37.0

 

 

 

3.26

 

 

 

4,698.9

 

 

 

49.0

 

 

 

4.17

 

 

 

4,511.8

 

 

 

38.8

 

 

 

3.44

 

Mortgage-backed securities

 

 

1,094.2

 

 

 

6.0

 

 

 

2.18

 

 

 

1,531.4

 

 

 

9.0

 

 

 

2.35

 

 

 

987.9

 

 

 

5.1

 

 

 

2.06

 

Corporate fixed income securities

 

 

732.8

 

 

 

5.0

 

 

 

2.76

 

 

 

954.5

 

 

 

7.2

 

 

 

3.01

 

 

 

663.7

 

 

 

4.8

 

 

 

2.89

 

State and municipal securities

 

 

18.4

 

 

 

0.1

 

 

 

2.13

 

 

 

50.1

 

 

 

0.3

 

 

 

2.38

 

 

 

27.7

 

 

 

0.2

 

 

 

2.22

 

Other

 

 

3.9

 

 

 

—

 

 

 

2.17

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4.5

 

 

 

—

 

 

 

2.02

 

Total Investments

 

 

6,387.8

 

 

 

48.1

 

 

 

3.01

 

 

 

7,234.9

 

 

 

65.5

 

 

 

3.62

 

 

 

6,195.6

 

 

 

48.9

 

 

 

3.16

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

3,560.3

 

 

 

38.0

 

 

 

4.27

 

 

 

3,419.8

 

 

 

40.8

 

 

 

4.78

 

 

 

3,380.0

 

 

 

36.9

 

 

 

4.37

 

Residential real estate

 

 

3,416.1

 

 

 

25.3

 

 

 

2.96

 

 

 

2,927.9

 

 

 

22.5

 

 

 

3.07

 

 

 

3,144.9

 

 

 

24.0

 

 

 

3.06

 

Securities-based loans

 

 

2,063.8

 

 

 

16.5

 

 

 

3.19

 

 

 

1,799.5

 

 

 

19.1

 

 

 

4.25

 

 

 

2,064.7

 

 

 

18.5

 

 

 

3.59

 

Commercial real estate

 

 

445.0

 

 

 

5.8

 

 

 

5.22

 

 

 

336.5

 

 

 

4.7

 

 

 

5.60

 

 

 

386.2

 

 

 

5.8

 

 

 

6.03

 

Loans held for sale

 

 

374.5

 

 

 

4.0

 

 

 

4.26

 

 

 

179.0

 

 

 

1.8

 

 

 

4.09

 

 

 

335.3

 

 

 

4.0

 

 

 

4.80

 

Other

 

 

500.1

 

 

 

5.6

 

 

 

4.46

 

 

 

319.0

 

 

 

4.4

 

 

 

5.36

 

 

 

503.4

 

 

 

6.1

 

 

 

4.75

 

Total Loans

 

 

10,359.8

 

 

 

95.2

 

 

 

3.67

 

 

 

8,981.7

 

 

 

93.3

 

 

 

4.15

 

 

 

9,814.5

 

 

 

95.3

 

 

 

3.88

 

Other interest-bearing assets

 

 

607.9

 

 

 

(0.5

)

 

 

(0.30

)

 

 

736.3

 

 

 

4.8

 

 

 

2.61

 

 

 

642.4

 

 

 

2.6

 

 

 

1.59

 

Total interest-earning assets/interest income

 

 

20,595.6

 

 

 

161.2

 

 

 

3.13

 

 

 

20,613.7

 

 

 

191.1

 

 

 

3.71

 

 

 

19,824.1

 

 

 

167.1

 

 

 

3.37

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

91.3

 

 

 

0.2

 

 

 

0.87

 

 

 

68.2

 

 

 

0.5

 

 

 

3.10

 

 

 

31.5

 

 

 

0.1

 

 

 

1.66

 

Senior notes

 

 

1,017.1

 

 

 

11.2

 

 

 

4.40

 

 

 

1,016.1

 

 

 

11.1

 

 

 

4.38

 

 

 

1,016.8

 

 

 

11.1

 

 

 

4.38

 

Deposits

 

 

15,377.9

 

 

 

9.6

 

 

 

0.25

 

 

 

15,282.3

 

 

 

28.1

 

 

 

0.73

 

 

 

14,672.8

 

 

 

13.6

 

 

 

0.37

 

FHLB

 

 

590.5

 

 

 

2.4

 

 

 

1.59

 

 

 

461.4

 

 

 

1.7

 

 

 

1.45

 

 

 

513.0

 

 

 

2.1

 

 

 

1.67

 

Other interest-bearing liabilities

 

 

1,628.1

 

 

 

1.0

 

 

 

0.26

 

 

 

1,588.3

 

 

 

8.0

 

 

 

2.03

 

 

 

1,595.6

 

 

 

4.5

 

 

 

1.12

 

Total interest-bearing liabilities/interest expense

 

$

18,704.9

 

 

$

24.4

 

 

 

0.52

%

 

$

18,416.3

 

 

$

49.4

 

 

 

1.07

%

 

$

17,829.7

 

 

$

31.4

 

 

 

0.71

%

Net interest income/margin

 

 

 

 

 

$

136.8

 

 

 

2.66

%

 

 

 

 

 

$

141.7

 

 

 

2.75

%

 

 

 

 

 

$

135.7

 

 

 

2.74

%

 

Stifel Bancorp, Inc. (15) Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

December 31, 2019

 

($ in millions, except percentages)

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and federal funds sold

 

$

446.0

 

 

$

1.2

 

 

 

1.10

%

 

$

732.6

 

 

$

4.6

 

 

 

2.49

%

 

$

255.7

 

 

$

1.2

 

 

 

1.83

%

Investments

 

 

6,387.8

 

 

 

48.1

 

 

 

3.01

 

 

 

7,234.9

 

 

 

65.5

 

 

 

3.62

 

 

 

6,195.6

 

 

 

48.9

 

 

 

3.16

 

Loans

 

 

10,359.8

 

 

 

95.2

 

 

 

3.67

 

 

 

8,981.7

 

 

 

93.3

 

 

 

4.15

 

 

 

9,814.5

 

 

 

95.3

 

 

 

3.88

 

Other interest-bearing assets

 

 

59.6

 

 

 

0.6

 

 

 

4.02

 

 

 

52.3

 

 

 

1.0

 

 

 

8.45

 

 

 

57.4

 

 

 

0.5

 

 

 

3.77

 

Total interest-earning assets/interest income

 

 

17,253.2

 

 

 

145.1

 

 

 

3.36

 

 

 

17,001.5

 

 

 

164.4

 

 

 

3.87

 

 

 

16,323.2

 

 

 

145.9

 

 

 

3.58

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

15,377.9

 

 

 

9.6

 

 

 

0.25

 

 

 

15,282.3

 

 

 

28.1

 

 

 

0.73

 

 

 

14,672.8

 

 

 

13.6

 

 

 

0.37

 

FHLB

 

 

590.5

 

 

 

2.4

 

 

 

1.59

 

 

 

461.4

 

 

 

1.7

 

 

 

1.45

 

 

 

513.0

 

 

 

2.1

 

 

 

1.67

 

Other interest-bearing liabilities

 

 

1.6

 

 

 

—

 

 

 

7.09

 

 

 

1.7

 

 

 

—

 

 

 

9.16

 

 

 

1.6

 

 

 

—

 

 

 

7.85

 

Total interest-bearing liabilities/interest expense

 

$

15,970.0

 

 

 

12.0

 

 

 

0.30

%

 

$

15,745.4

 

 

 

29.8

 

 

 

0.76

%

 

$

15,187.4

 

 

 

15.7

 

 

 

0.41

%

Net interest income/margin

 

 

 

 

 

$

133.1

 

 

 

3.09

%

 

 

 

 

 

$

134.6

 

 

 

3.17

%

 

 

 

 

 

$

130.2

 

 

 

3.19

%

 

 

8

 

Stifel Bancorp, Inc. (15) –  a component of Global Wealth Management

 

 

 

Selected operating data (unaudited):

Three Months Ended

 

($ in 000s, except percentages)

3/31/20

 

 

3/31/19

 

 

% Change

 

 

12/31/19

 

 

% Change

 

Net interest income

$

133,131

 

 

$

134,564

 

 

 

(1.1

)

 

$

130,157

 

 

 

2.3

 

Bank loan loss provision

 

18,978

 

 

 

2,283

 

 

 

731.3

 

 

 

4,412

 

 

 

330.1

 

Charge-offs

 

20

 

 

 

56

 

 

 

(64.3

)

 

 

220

 

 

 

(90.9

)

Net interest margin

 

3.09

%

 

 

3.17

%

 

(8) bps

 

 

 

3.19

%

 

(10) bps

 

 

Financial Metrics (unaudited):

 

As of

 

($ in 000s, except percentages)

 

3/31/20

 

 

3/31/19

 

 

12/31/19

 

Total assets

 

$

18,442,914

 

 

$

16,822,599

 

 

$

16,941,877

 

Total shareholders’ equity

 

 

1,224,307

 

 

 

1,242,760

 

 

 

1,207,469

 

Total loans, net (includes loans held for sale)

 

 

10,565,287

 

 

 

8,850,905

 

 

 

10,013,735

 

Total deposits

 

 

16,880,933

 

 

 

15,049,877

 

 

 

15,332,581

 

Available-for-sale securities, at fair value

 

 

3,363,961

 

 

 

3,002,751

 

 

 

3,253,588

 

Held-to-maturity securities, at amortized cost

 

 

3,083,065

 

 

 

4,100,357

 

 

 

2,853,360

 

Commercial and industrial

 

 

3,813,862

 

 

 

3,314,564

 

 

 

3,438,953

 

Residential real estate

 

 

3,495,136

 

 

 

2,928,228

 

 

 

3,309,548

 

Securities-based loans

 

 

1,945,371

 

 

 

1,860,989

 

 

 

2,098,211

 

Commercial real estate

 

 

399,732

 

 

 

361,950

 

 

 

428,549

 

Loans held for sale

 

 

570,787

 

 

 

144,216

 

 

 

389,693

 

Stifel Bank & Trust:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (9)

 

 

11.7

%

 

 

13.7

%

 

 

12.1

%

Tier 1 capital ratio (9)

 

 

11.7

%

 

 

13.8

%

 

 

12.1

%

Total capital ratio (9)

 

 

13.0

%

 

 

14.9

%

 

 

13.3

%

Tier 1 leverage ratio (9)

 

 

7.1

%

 

 

7.1

%

 

 

7.1

%

Stifel Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (9)

 

 

15.6

%

 

 

17.5

%

 

 

16.9

%

Tier 1 capital ratio (9)

 

 

15.6

%

 

 

17.5

%

 

 

16.9

%

Total capital ratio (9)

 

 

16.5

%

 

 

18.6

%

 

 

18.0

%

Tier 1 leverage ratio (9)

 

 

7.3

%

 

 

7.5

%

 

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

102,802

 

 

$

88,172

 

 

$

95,579

 

Allowance as a percentage of retained loans

 

 

1.02

%

 

 

1.00

%

 

 

0.98

%

Net charge-offs as a percentage of average loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Total nonperforming assets

 

$

14,616

 

 

$

21,276

 

 

$

14,748

 

Nonperforming assets as % of total assets

 

 

0.08

%

 

 

0.13

%

 

 

0.09

%


 

9

 

Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

 

 

3/31/19

 

 

 

 

%

Change

 

 

 

 

12/31/19

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

136,897

 

 

 

 

$

109,927

 

 

 

 

 

24.5

 

 

 

 

$

129,129

 

 

 

6.0

 

Principal transactions

 

 

42,982

 

 

 

 

 

43,267

 

 

 

 

 

(0.7

)

 

 

 

 

44,871

 

 

 

(4.2

)

    Brokerage revenues

 

 

179,879

 

 

 

 

 

153,194

 

 

 

 

 

17.4

 

 

 

 

 

174,000

 

 

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

237,760

 

 

 

 

 

195,253

 

 

 

 

 

21.8

 

 

 

 

 

223,952

 

 

 

6.2

 

Net interest

 

 

138,682

 

 

 

 

 

145,295

 

 

 

 

 

(4.6

)

 

 

 

 

138,060

 

 

 

0.5

 

Investment banking (16)

 

 

10,333

 

 

 

 

 

8,223

 

 

 

 

 

25.7

 

 

 

 

 

9,278

 

 

 

11.4

 

Other income

 

 

16,302

 

 

 

 

 

8,645

 

 

 

 

 

88.6

 

 

 

 

 

7,655

 

 

 

113.0

 

Net revenues

 

 

582,956

 

 

 

 

 

510,610

 

 

 

 

 

14.2

 

 

 

 

 

552,945

 

 

 

5.4

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

298,370

 

 

 

 

 

247,473

 

 

 

 

 

20.6

 

 

 

 

 

274,954

 

 

 

8.5

 

Non-compensation operating expenses

 

 

90,419

 

 

 

 

 

68,647

 

 

 

 

 

31.7

 

 

 

 

 

81,696

 

 

 

10.7

 

Total non-interest expenses

 

 

388,789

 

 

 

 

 

316,120

 

 

 

 

 

23.0

 

 

 

 

 

356,650

 

 

 

9.0

 

Income before income taxes

 

$

194,167

 

 

 

 

$

194,490

 

 

 

 

 

(0.2

)

 

 

 

$

196,295

 

 

 

(1.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

51.2

 

 

 

 

 

48.5

 

 

 

 

 

 

 

 

 

 

 

49.7

 

 

 

 

 

Non-compensation operating expenses

 

 

15.5

 

 

 

 

 

13.4

 

 

 

 

 

 

 

 

 

 

 

14.8

 

 

 

 

 

Income before income taxes

 

 

33.3

 

 

 

 

 

38.1

 

 

 

 

 

 

 

 

 

 

 

35.5

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

 

 

3/31/19

 

 

 

 

% Change

 

 

 

 

12/31/19

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

74,198

 

 

 

 

$

45,522

 

 

 

 

 

63.0

 

 

 

 

$

54,015

 

 

 

37.4

 

Principal transactions

 

 

95,685

 

 

 

 

 

60,765

 

 

 

 

 

57.5

 

 

 

 

 

61,537

 

 

 

55.5

 

Brokerage revenues

 

 

169,883

 

 

 

 

 

106,287

 

 

 

 

 

59.8

 

 

 

 

 

115,552

 

 

 

47.0

 

Advisory fees

 

 

76,053

 

 

 

 

 

104,895

 

 

 

 

 

(27.5

)

 

 

 

 

155,331

 

 

 

(51.0

)

Capital raising

 

 

93,082

 

 

 

 

 

48,722

 

 

 

 

 

91.0

 

 

 

 

 

112,565

 

 

 

(17.3

)

Investment banking

 

 

169,135

 

 

 

 

 

153,617

 

 

 

 

 

10.1

 

 

 

 

 

267,896

 

 

 

(36.9

)

Other (17)

 

 

(6,780

)

 

 

 

 

1,382

 

 

 

 

 

(590.6

)

 

 

 

 

8,459

 

 

 

(180.2

)

Net revenues

 

 

332,238

 

 

 

 

 

261,286

 

 

 

 

 

27.2

 

 

 

 

 

391,907

 

 

 

(15.2

)

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

205,988

 

 

 

 

 

159,411

 

 

 

 

 

29.2

 

 

 

 

 

249,574

 

 

 

(17.5

)

Non-compensation operating expenses

 

 

84,510

 

 

 

 

 

69,671

 

 

 

 

 

21.3

 

 

 

 

 

86,792

 

 

 

(2.6

)

Total non-interest expenses

 

 

290,498

 

 

 

 

 

229,082

 

 

 

 

 

26.8

 

 

 

 

 

336,366

 

 

 

(13.6

)

Income before income taxes

 

$

41,740

 

 

 

 

$

32,204

 

 

 

 

 

29.6

 

 

 

 

$

55,541

 

 

 

(24.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

62.0

 

 

 

 

 

61.0

 

 

 

 

 

 

 

 

 

 

 

63.7

 

 

 

 

 

Non-compensation operating expenses

 

 

25.4

 

 

 

 

 

26.7

 

 

 

 

 

 

 

 

 

 

 

22.1

 

 

 

 

 

Income before income taxes

 

 

12.6

 

 

 

 

 

12.3

 

 

 

 

 

 

 

 

 

 

 

14.2

 

 

 

 

 

 


 

10

 

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 March 31, 2020, March 31, 2019, and December 31, 2019. 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 measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these 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 net income and earnings per diluted common share on a GAAP basis for the three months ended March 31, 2020, March 31, 2019, and December 31, 2019 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

 

 

Three Months Ended

 

($ in 000s)

 

3/31/20

 

 

3/31/19

 

 

12/31/19

 

GAAP net income applicable to Stifel Financial Corp.

 

$

86,589

 

 

$

99,207

 

 

$

130,690

 

Preferred dividend

 

 

4,844

 

 

 

2,344

 

 

 

4,843

 

Net income available to common shareholders

 

 

81,745

 

 

 

96,863

 

 

 

125,847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance (18)

 

 

13,510

 

 

 

8,191

 

 

 

31,442

 

Provision for income taxes (19)

 

 

(3,322

)

 

 

(534

)

 

 

(10,690

)

Total non-GAAP adjustments

 

 

10,188

 

 

 

7,657

 

 

 

20,752

 

Non-GAAP net income available to common shareholders

 

$

91,933

 

 

$

104,520

 

 

$

146,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

76,619

 

 

 

79,210

 

 

 

77,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

1.13

 

 

$

1.25

 

 

$

1.68

 

Non-GAAP adjustments

 

 

0.13

 

 

 

0.10

 

 

 

0.27

 

Non-GAAP earnings per diluted common share

 

$

1.26

 

 

$

1.35

 

 

$

1.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

1.07

 

 

$

1.22

 

 

$

1.62

 

Non-GAAP adjustments

 

 

0.13

 

 

 

0.10

 

 

 

0.26

 

Non-GAAP earnings per diluted common share available to common shareholders

 

$

1.20

 

 

$

1.32

 

 

$

1.88

 


 

11

 

Footnotes

 

 

(1)

Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total Stifel Financial common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Deferred taxes on goodwill and tangible assets was $41.4 million, $47.2 million, and $46.5 million, as of March 31, 2020 and 2019, and December 31, 2019, respectively. Historical periods have been restated to conform with the current period presentation.

 

(2)

Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.”

 

(3)

Non-GAAP pre-tax margin for the three months ended March 31, 2020 of 14.1% is calculated by adding non-GAAP adjustments of $13.5 million to our GAAP income before income taxes of $115.1 million and dividing it by non-GAAP net revenues for the quarter of $913.2 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(4)

Excludes revenue included in the Other segment.

 

(5)

See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.”

 

(6)

In the first quarter of 2020, the Company adopted ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments,” which amends several aspects of the measurement of credit losses on certain financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (CECL) model. For further information about ASU No. 2016-13, see Note 2 “Summary of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

 

(7)

Book value per common share represents shareholders’ equity (excluding preferred stock and non-controlling interests) divided by period end common shares outstanding.

 

(8)

Annualized return on average common shareholders’ equity (“ROE”) is calculated by dividing annualized net income applicable to common shareholders by average Stifel Financial common shareholders’ equity or, in the case of non-GAAP ROE, calculated by dividing non-GAAP net income applicable to commons shareholders by average Stifel Financial common shareholders’ equity.

 

(9)

Capital ratios are estimates at time of the Company’s earnings release.

 

(10)

Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at our bank subsidiaries.

 

(11)

Includes Private Client Group and Trust Business.

 

(12)

Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.

 

(13)

Asset management assets managed in Private Client Group or Trust accounts.

 

(14)

Return on assets (ROA) is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for Individual Program Banks.

 

(15)

Includes Stifel Bank & Trust, Stifel Bank, and Stifel Trust Company, N.A.

 

(16)

Includes capital raising and advisory fees.

 

(17)

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

 

(18)

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 amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company’s on-going business.

 

(19)

See details of non-GAAP adjustments under “Provision for Income Taxes.”

 

 

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