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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

_________________________

 

FORM 8-K

_________________________

CURRENT REPORT
Pursuant To Section 13 OR 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  October 27, 2020

_________________________

STIFEL FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

_________________________

 

Delaware
(State of incorporation)

 

001-09305
(Commission File Number)

 

43-1273600
(IRS Employer
Identification No.)

 

501 N. Broadway, St. Louis, Missouri  63102-2188

(Address of principal executive offices and zip code)

 

(314) 342-2000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

 

Common Stock, $0.15 par value per share

 

SF

 

 

New York Stock Exchange

 

Depository Shares, each representing 1/1,000th interest in a share of 6.25% Non-Cumulative Preferred Stock, Series A

 

SF-PA

 

 

New York Stock Exchange

 

Depository Shares, each representing 1/1,000th interest in a share of 6.25% Non-Cumulative Preferred Stock, Series B

 

SF-PB

 

 

New York Stock Exchange

 

Depository Shares, each representing 1/1,000th interest in a share of 6.125% Non-Cumulative Preferred Stock, Series C

 

SF-PC

 

 

New York Stock Exchange

 

5.20% Senior Notes due 2047

 

SFB

 

 

New York Stock Exchange

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

On October 27, 2020, Stifel Financial Corp. (“Stifel” or the “Company”) reported its financial results for the three months ended September 30, 2020. A copy of the related press release is attached hereto as Exhibit 99.1.

Stifel will hold a conference call on Wednesday, October 28, 2020, at 9:30 a.m. Eastern time. All interested parties are invited to listen to Stifel Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID 6093315. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through Stifel's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call. The conference call slide show is attached hereto as Exhibit 99.2.

The exhibit is being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits.

 

Exhibit NumberDescription of Exhibit

 

99.1

Press release dated October 27, 2020.

99.2

104

Investor presentation.

Cover Page Interactive Data File (embedded within the Inline XBRL document).


2

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

STIFEL FINANCIAL CORP.

 

Date:  October 27, 2020

By:

/s/ James M. Marischen

 

 

Name:

James M. Marischen

 

 

Title:

Chief Financial Officer

 

 

3

Exhibit 99.1

 

October 27, 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 THIRD QUARTER 2020 RESULTS

 

•

Net revenues of $883.3 million, increased 7.5% with the year-ago quarter.

 

•

Net income available to common shareholders of $110.6 million, or $1.46 per diluted common share.

 

•

Non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share.

 

•

Annualized return on average tangible common shareholders’ equity (1) was 20.4%.

 

•

Non-GAAP annualized return on average tangible common shareholders’ equity (1) was 22.2%.

ST. LOUIS, MO – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $110.6 million, or $1.46 per diluted common share on net revenues of $883.3 million for the three months ended September 30, 2020, compared with net income available to common shareholders of $104.6 million, or $1.34 per diluted common share, on net revenues of $821.6 million for the third quarter of 2019.

For the three months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share. The Company’s reported GAAP net income for the three months ended September 30, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“The financial performance during the quarter, and over the past few years, has been driven by a diverse business mix that’s enabled both our Institutional Group and Wealth Management segments to generate strong growth. This diversification is illustrated by record nine month Wealth Management revenues despite significant declines in net interest income and deposit sweep fees, both a result of the Federal Reserve’s implementation of a zero rate environment. Likewise, we achieved record nine-month Institutional Group revenues as record capital raising and brokerage revenues more than compensated for the 13% decline in advisory revenue,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, “Simply, Stifel is a growth company with diversified, balanced, and synergistic businesses. Over the last 12 months, Wealth Management, under both brokerage and fee-based models, has contributed 46% of net revenues. Institutional revenues, comprised of equity and fixed income, investment banking and trading, made up 41% of net revenues, while net interest income accounted for the remaining 13%. The complementary nature of these businesses is reflected in our return on tangible common equity, which is 23% over the past 12 months.”

 

 

 

1

 

Financial Highlights (Unaudited)

 

Three Months Ended

 

($ in 000s, except per share data)

 

GAAP 9/30/20

 

 

GAAP 9/30/19

 

 

% Change

 

 

GAAP 6/30/20

 

 

% Change

 

 

 

Non-GAAP (2) 9/30/20

 

 

Non-GAAP (2) 9/30/19

 

 

% Change

 

Net revenues

 

$

883,300

 

 

$

821,572

 

 

 

7.5

 

 

$

895,817

 

 

 

(1.4

)

 

 

$

883,300

 

 

$

821,572

 

 

 

7.5

 

Net income applicable to Stifel Financial Corp.

 

$

120,527

 

 

$

109,414

 

 

 

10.2

 

 

$

107,887

 

 

 

11.7

 

 

 

$

130,422

 

 

$

121,990

 

 

 

6.9

 

Preferred dividends

 

 

9,897

 

 

 

4,844

 

 

 

104.3

 

 

 

4,843

 

 

 

104.4

 

 

 

 

9,897

 

 

 

4,844

 

 

 

104.3

 

Net income available to common shareholders

 

$

110,630

 

 

$

104,570

 

 

 

5.8

 

 

$

103,044

 

 

 

7.4

 

 

 

$

120,525

 

 

$

117,146

 

 

 

2.9

 

Earnings per diluted common share

 

$

1.59

 

 

$

1.40

 

 

 

13.6

 

 

$

1.45

 

 

 

9.7

 

 

 

$

1.72

 

 

$

1.56

 

 

 

10.3

 

Earnings per diluted common share available to common shareholders

 

$

1.46

 

 

$

1.34

 

 

 

9.0

 

 

$

1.39

 

 

 

5.0

 

 

 

$

1.59

 

 

$

1.50

 

 

 

6.0

 

Compensation ratio

 

 

60.4

%

 

 

59.2

%

 

 

 

 

 

 

61.1

%

 

 

 

 

 

 

 

59.6

%

 

 

58.1

%

 

 

 

 

Non-compensation ratio

 

 

21.7

%

 

 

22.5

%

 

 

 

 

 

 

22.9

%

 

 

 

 

 

 

 

21.0

%

 

 

21.7

%

 

 

 

 

Pre-tax operating margin (3)

 

 

17.9

%

 

 

18.3

%

 

 

 

 

 

 

16.0

%

 

 

 

 

 

 

 

19.4

%

 

 

20.2

%

 

 

 

 


 

2

 

For the nine months ended September 30, 2020, the Company reported net income available to common shareholders of $295.4 million, or $3.90 per diluted common share on record net revenues of $2.7 billion, compared with net income available to common shareholders of $305.2 million, or $3.87 per diluted common share, on net revenues of $2.4 billion for the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $327.8 million, or $4.33 per diluted common share.

Financial Highlights (Unaudited)

 

Nine Months Ended

 

($ in 000s, except per share data)

 

GAAP 9/30/20

 

 

GAAP 9/30/19

 

 

% Change

 

 

 

Non-GAAP (2) 9/30/20

 

 

Non-GAAP (2) 9/30/19

 

 

% Change

 

Net revenues

 

$

2,692,151

 

 

$

2,392,779

 

 

 

12.5

 

 

 

$

2,692,330

 

 

$

2,392,779

 

 

 

12.5

 

Net income applicable to Stifel Financial Corp.

 

$

315,003

 

 

$

317,706

 

 

 

(0.9

)

 

 

$

347,377

 

 

$

345,513

 

 

 

0.5

 

Preferred dividends

 

 

19,584

 

 

 

12,476

 

 

 

57.0

 

 

 

 

19,584

 

 

 

12,476

 

 

 

57.0

 

Net income available to common shareholders

 

$

295,419

 

 

$

305,230

 

 

 

(3.2

)

 

 

$

327,793

 

 

$

333,037

 

 

 

(1.6

)

Earnings per diluted common share

 

$

4.16

 

 

$

4.03

 

 

 

3.2

 

 

 

$

4.59

 

 

$

4.38

 

 

 

4.8

 

Earnings per diluted common share available to common shareholders

 

$

3.90

 

 

$

3.87

 

 

 

0.8

 

 

 

$

4.33

 

 

$

4.22

 

 

 

2.6

 

Compensation ratio

 

 

61.6

%

 

 

59.0

%

 

 

 

 

 

 

 

60.7

%

 

 

58.3

%

 

 

 

 

Non-compensation ratio

 

 

22.9

%

 

 

22.8

%

 

 

 

 

 

 

 

22.2

%

 

 

22.1

%

 

 

 

 

Pre-tax operating margin (4)

 

 

15.5

%

 

 

18.2

%

 

 

 

 

 

 

 

17.1

%

 

 

19.6

%

 

 

 

 

 

Net Revenues

Net revenues were $883.3 million for the third quarter of 2020, a 7.5% increase from the third quarter of 2019 and a 1.4% decrease from the second quarter of 2020. Net revenues, compared with the third quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower net interest income and advisory fee revenues. Net revenues, compared with the second quarter of 2020, reflected increased asset management and services fees and capital raising revenues, partially offset by lower advisory fee revenues, principal transaction fee revenues, net interest income, and commission revenues.

The operating environment continued to recover during the third quarter of 2020 from the impact of the COVID-19 pandemic earlier in the year as global economic activity significantly rebounded following a sharp decrease in the second quarter, market volatility declined modestly, and monetary and fiscal policy remained accommodative. As a result, global equity prices increased and credit spreads tightened compared with the end of the second quarter of 2020.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $313.5 million, a 19.8% increase compared with the third quarter of 2019 and an 8.6% decrease compared with the second quarter of 2020.

 

Three Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

% Change

 

 

6/30/20

 

 

% Change

 

Global Wealth Management

 

$

162,627

 

 

$

160,117

 

 

 

1.6

 

 

$

159,123

 

 

 

2.2

 

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

54,204

 

 

 

41,037

 

 

 

32.1

 

 

 

63,193

 

 

 

(14.2

)

Fixed income capital markets

 

 

96,706

 

 

 

60,613

 

 

 

59.5

 

 

 

120,731

 

 

 

(19.9

)

Total institutional brokerage

 

 

150,910

 

 

 

101,650

 

 

 

48.5

 

 

 

183,924

 

 

 

(17.9

)

Total brokerage revenues (5)

 

$

313,537

 

 

$

261,767

 

 

 

19.8

 

 

$

343,047

 

 

 

(8.6

)

 

•

Global Wealth Management brokerage revenues were $162.6 million, a 1.6% increase compared with the third quarter of 2019 and a 2.2% increase compared with the second quarter of 2020.

 

•

Institutional equity brokerage revenues were $54.2 million, a 32.1% increase compared with the third quarter of 2019 and a 14.2% decrease compared with the second quarter of 2020.

 

•

Institutional fixed income brokerage revenues were $96.7 million, a 59.5% increase compared with the third quarter of 2019 and a 19.9% decrease compared with the second quarter of 2020.


 

3

 

Investment Banking Revenues

Investment banking revenues were $218.1 million, a 9.7% increase compared with the third quarter of 2019 and a 0.5% increase compared with the second quarter of 2020.

  

 

Three Months Ended

 

($ in 000s)

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

 

6/30/20

 

 

% Change

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

8,113

 

 

 

 

$

9,855

 

 

 

 

 

(17.7

)

 

$

8,016

 

 

 

1.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

78,462

 

 

 

 

 

53,006

 

 

 

 

 

48.0

 

 

 

63,277

 

 

 

24.0

 

Fixed income capital markets

 

 

50,717

 

 

 

 

 

31,082

 

 

 

 

 

63.2

 

 

 

47,904

 

 

 

5.9

 

Institutional Group

 

 

129,179

 

 

 

 

 

84,088

 

 

 

 

 

53.6

 

 

 

111,181

 

 

 

16.2

 

Total capital raising (5)

 

 

137,292

 

 

 

 

 

93,943

 

 

 

 

 

46.1

 

 

 

119,197

 

 

 

15.2

 

Advisory fees (5)

 

 

80,842

 

 

 

 

 

104,847

 

 

 

 

 

(22.9

)

 

 

97,838

 

 

 

(17.4

)

Total investment banking

 

$

218,134

 

 

 

 

$

198,790

 

 

 

 

 

9.7

 

 

$

217,035

 

 

 

0.5

 

 

•

Global Wealth Management capital raising revenues were $8.1 million, a 17.7% decrease compared with the third quarter of 2019 and a 1.2% increase compared with the second quarter of 2020.

 

•

Institutional equity capital raising revenues were $78.5 million, a 48.0% increase compared with the third quarter of 2019 and a 24.0% increase compared with the second quarter of 2020.

 

•

Institutional fixed income capital raising revenues were $50.7 million, a 63.2% increase compared with the third quarter of 2019 and a 5.9% increase compared with the second quarter of 2020.

 

•

Advisory fee revenues were $80.8 million, a 22.9% decrease compared with the third quarter of 2019 and a 17.4% decrease compared with the second quarter of 2020.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $230.8 million, a 6.0% increase compared with the third quarter of 2019 and a 16.0% increase compared with the second quarter of 2020. The increase from the comparative period in 2019 is primarily attributable to higher asset values and strong fee-based asset flows. See Asset Management and Service Fee Break-down table.

Net Interest Income

Net interest income was $100.6 million, a 25.3% decrease compared with the third quarter of 2019 and a 12.7% decrease compared with the second quarter of 2020. See Net Interest Income Analysis table.

 

•

Interest income was $114.4 million, a 36.0% decrease compared with the third quarter of 2019 and a 10.9% decrease compared with the second quarter of 2020.

 

•

Interest expense was $13.8 million, a 68.7% decrease compared with the third quarter of 2019 and a 5.6% increase compared with the second quarter of 2020.


 

4

 

Compensation and Benefits Expenses

For the quarter ended September 30, 2020, compensation and benefits expenses were $533.6 million, which included $6.8 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $486.2 million in the third quarter of 2019 and $547.2 million in the second quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 59.6% in the third quarter of 2020 (non-GAAP measure).

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

 

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

9/30/20

 

 

9/30/19

 

GAAP compensation and benefits

 

$

533,638

 

 

$

486,160

 

 

$

1,657,991

 

 

$

1,411,135

 

As a percentage of net revenues

 

 

60.4

%

 

 

59.2

%

 

 

61.6

%

 

 

59.0

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

(6,770

)

 

 

(8,827

)

 

 

(22,907

)

 

 

(16,063

)

Non-GAAP compensation and benefits

 

$

526,868

 

 

$

477,333

 

 

$

1,635,084

 

 

$

1,395,072

 

As a percentage of non-GAAP net revenues

 

 

59.6

%

 

 

58.1

%

 

 

60.7

%

 

 

58.3

%

Non-Compensation Operating Expenses

For the quarter ended September 30, 2020, non-compensation operating expenses were $191.3 million, which included $6.2 million of merger-related expenses (non-GAAP adjustments). This compares with $184.7 million in the third quarter of 2019 and $205.7 million in the second quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2020 were 21.0% (non-GAAP measure).

The increase in non-compensation operating expenses, compared with the third quarter of 2019, is primarily attributable to volume-related expenses, net provisions for regulatory matters, and professional fees, partially offset by decreases in travel and conference-related expenses as a result of COVID-19. In addition, the third quarter of 2020 was positively impacted by the adjustments associated with the accounting for credit losses under the CECL standard (7).

 

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

9/30/20

 

 

9/30/19

 

GAAP non-compensation expenses

 

$

191,269

 

 

$

184,658

 

 

$

617,701

 

 

$

545,099

 

As a percentage of net revenues

 

 

21.7

%

 

 

22.5

%

 

 

22.9

%

 

 

22.8

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related

 

 

(6,219

)

 

 

(6,023

)

 

 

(19,672

)

 

 

(13,699

)

Litigation-related

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,507

)

 

 

 

(6,219

)

 

 

(6,023

)

 

 

(19,672

)

 

 

(17,206

)

Non-GAAP non-compensation expenses

 

$

185,050

 

 

$

178,635

 

 

$

598,029

 

 

$

527,893

 

As a percentage of non-GAAP net revenues

 

 

21.0

%

 

 

21.7

%

 

 

22.2

%

 

 

22.1

%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended September 30, 2020 was 23.9%. This compares with an effective income tax rate of 27.1% for the third quarter of 2019 and 24.5% for the second quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended September 30, 2020 was 23.9%.

 

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

9/30/20

 

 

9/30/19

 

GAAP provision for income taxes

 

$

37,866

 

 

$

40,632

 

 

$

101,456

 

 

$

117,227

 

GAAP effective tax rate

 

 

23.9

%

 

 

27.1

%

 

 

24.4

%

 

 

27.0

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related, litigation-related, and severance

 

 

3,084

 

 

 

3,994

 

 

 

10,370

 

 

 

8,949

 

Other

 

 

10

 

 

 

(1,720

)

 

 

14

 

 

 

(3,487

)

 

 

 

3,094

 

 

 

2,274

 

 

 

10,384

 

 

 

5,462

 

Non-GAAP provision for income taxes

 

$

40,960

 

 

$

42,906

 

 

$

111,840

 

 

$

122,689

 

Non-GAAP effective tax rate

 

 

23.9

%

 

 

26.0

%

 

 

24.4

%

 

 

26.2

%

 


 

5

 

Conference Call Information

Stifel Financial Corp. will host its third quarter 2020 financial results conference call on Wednesday, October 28, 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 6093315. 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 “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 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.

 

6

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

($ in 000s, except per share amounts)

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

 

 

 

6/30/20

 

 

 

 

% Change

 

 

 

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

172,654

 

 

 

 

$

163,920

 

 

 

 

 

5.3

 

 

 

 

$

177,028

 

 

 

 

 

(2.5

)

 

 

 

$

560,780

 

 

 

 

$

484,350

 

 

 

 

 

15.8

 

Principal transactions

 

 

140,883

 

 

 

 

 

97,847

 

 

 

 

 

44.0

 

 

 

 

 

166,017

 

 

 

 

 

(15.1

)

 

 

 

 

445,566

 

 

 

 

 

298,343

 

 

 

 

 

49.3

 

Brokerage revenues

 

 

313,537

 

 

 

 

 

261,767

 

 

 

 

 

19.8

 

 

 

 

 

343,045

 

 

 

 

 

(8.6

)

 

 

 

 

1,006,346

 

 

 

 

 

782,693

 

 

 

 

 

28.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory fees

 

 

80,842

 

 

 

 

 

104,847

 

 

 

 

 

(22.9

)

 

 

 

 

97,838

 

 

 

 

 

(17.4

)

 

 

 

 

254,752

 

 

 

 

 

292,648

 

 

 

 

 

(12.9

)

Capital raising

 

 

137,292

 

 

 

 

 

93,943

 

 

 

 

 

46.1

 

 

 

 

 

119,197

 

 

 

 

 

15.2

 

 

 

 

 

359,885

 

 

 

 

 

247,599

 

 

 

 

 

45.3

 

Investment banking

 

 

218,134

 

 

 

 

 

198,790

 

 

 

 

 

9.7

 

 

 

 

 

217,035

 

 

 

 

 

0.5

 

 

 

 

 

614,637

 

 

 

 

 

540,247

 

 

 

 

 

13.8

 

Asset management and service fees

 

 

230,782

 

 

 

 

 

217,628

 

 

 

 

 

6.0

 

 

 

 

 

198,939

 

 

 

 

 

16.0

 

 

 

 

 

667,496

 

 

 

 

 

624,066

 

 

 

 

 

7.0

 

Other income

 

 

20,258

 

 

 

 

 

8,747

 

 

 

 

 

131.6

 

 

 

 

 

21,514

 

 

 

 

 

(5.8

)

 

 

 

 

50,979

 

 

 

 

 

34,461

 

 

 

 

 

47.9

 

Operating revenues

 

 

782,711

 

 

 

 

 

686,932

 

 

 

 

 

13.9

 

 

 

 

 

780,533

 

 

 

 

 

0.3

 

 

 

 

 

2,339,458

 

 

 

 

 

1,981,467

 

 

 

 

 

18.1

 

Interest revenue

 

 

114,411

 

 

 

 

 

178,784

 

 

 

 

 

(36.0

)

 

 

 

 

128,368

 

 

 

 

 

(10.9

)

 

 

 

 

403,956

 

 

 

 

 

557,795

 

 

 

 

 

(27.6

)

Total revenues

 

 

897,122

 

 

 

 

 

865,716

 

 

 

 

 

3.6

 

 

 

 

 

908,901

 

 

 

 

 

(1.3

)

 

 

 

 

2,743,414

 

 

 

 

 

2,539,262

 

 

 

 

 

8.0

 

Interest expense

 

 

13,822

 

 

 

 

 

44,144

 

 

 

 

 

(68.7

)

 

 

 

 

13,084

 

 

 

 

 

5.6

 

 

 

 

 

51,263

 

 

 

 

 

146,483

 

 

 

 

 

(65.0

)

Net revenues

 

 

883,300

 

 

 

 

 

821,572

 

 

 

 

 

7.5

 

 

 

 

 

895,817

 

 

 

 

 

(1.4

)

 

 

 

 

2,692,151

 

 

 

 

 

2,392,779

 

 

 

 

 

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

533,638

 

 

 

 

 

486,160

 

 

 

 

 

9.8

 

 

 

 

 

547,174

 

 

 

 

 

(2.5

)

 

 

 

 

1,657,991

 

 

 

 

 

1,411,135

 

 

 

 

 

17.5

 

Occupancy and equipment rental

 

 

68,598

 

 

 

 

 

58,649

 

 

 

 

 

17.0

 

 

 

 

 

66,264

 

 

 

 

 

3.5

 

 

 

 

 

200,935

 

 

 

 

 

178,566

 

 

 

 

 

12.5

 

Communication and office supplies

 

 

40,123

 

 

 

 

 

36,817

 

 

 

 

 

9.0

 

 

 

 

 

43,046

 

 

 

 

 

(6.8

)

 

 

 

 

124,293

 

 

 

 

 

107,583

 

 

 

 

 

15.5

 

Commissions and floor brokerage

 

 

13,254

 

 

 

 

 

10,542

 

 

 

 

 

25.7

 

 

 

 

 

15,177

 

 

 

 

 

(12.7

)

 

 

 

 

43,273

 

 

 

 

 

32,506

 

 

 

 

 

33.1

 

Provision for credit losses

 

 

(1,353

)

 

 

 

 

929

 

 

 

 

n/m

 

 

 

 

 

19,210

 

 

 

 

n/m

 

 

 

 

 

33,925

 

 

 

 

 

5,565

 

 

 

 

 

509.6

 

Other operating expenses

 

 

70,647

 

 

 

 

 

77,721

 

 

 

 

 

(9.1

)

 

 

 

 

61,986

 

 

 

 

 

14.0

 

 

 

 

 

215,275

 

 

 

 

 

220,879

 

 

 

 

 

(2.5

)

Total non-interest expenses

 

 

724,907

 

 

 

 

 

670,818

 

 

 

 

 

8.1

 

 

 

 

 

752,857

 

 

 

 

 

(3.7

)

 

 

 

 

2,275,692

 

 

 

 

 

1,956,234

 

 

 

 

 

16.3

 

Income before income taxes

 

 

158,393

 

 

 

 

 

150,754

 

 

 

 

 

5.1

 

 

 

 

 

142,960

 

 

 

 

 

10.8

 

 

 

 

 

416,459

 

 

 

 

 

436,545

 

 

 

 

 

(4.6

)

Provision for income taxes

 

 

37,866

 

 

 

 

 

40,632

 

 

 

 

 

(6.8

)

 

 

 

 

35,073

 

 

 

 

 

8.0

 

 

 

 

 

101,456

 

 

 

 

 

117,227

 

 

 

 

 

(13.5

)

Net income

 

 

120,527

 

 

 

 

 

110,122

 

 

 

 

 

9.4

 

 

 

 

 

107,887

 

 

 

 

 

11.7

 

 

 

 

 

315,003

 

 

 

 

 

319,318

 

 

 

 

 

(1.4

)

Net income applicable to non-controlling interests

 

 

—

 

 

 

 

 

708

 

 

 

 

n/m

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

1,612

 

 

 

 

n/m

 

Net income applicable to Stifel Financial Corp.

 

 

120,527

 

 

 

 

 

109,414

 

 

 

 

 

10.2

 

 

 

 

 

107,887

 

 

 

 

 

11.7

 

 

 

 

 

315,003

 

 

 

 

 

317,706

 

 

 

 

 

(0.9

)

Preferred dividends

 

 

9,897

 

 

 

 

 

4,844

 

 

 

 

 

104.3

 

 

 

 

 

4,843

 

 

 

 

 

104.4

 

 

 

 

 

19,584

 

 

 

 

 

12,476

 

 

 

 

 

57.0

 

Net income available to common shareholders

 

$

110,630

 

 

 

 

$

104,570

 

 

 

 

 

5.8

 

 

 

 

$

103,044

 

 

 

 

 

7.4

 

 

 

 

$

295,419

 

 

 

 

$

305,230

 

 

 

 

 

(3.2

)

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.57

 

 

 

 

$

1.47

 

 

 

 

 

6.8

 

 

 

 

$

1.46

 

 

 

 

 

7.5

 

 

 

 

$

4.17

 

 

 

 

$

4.21

 

 

 

 

 

(1.0

)

Diluted

 

$

1.46

 

 

 

 

$

1.34

 

 

 

 

 

9.0

 

 

 

 

$

1.39

 

 

 

 

 

5.0

 

 

 

 

$

3.90

 

 

 

 

$

3.87

 

 

 

 

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.17

 

 

 

 

$

0.15

 

 

 

 

 

13.3

 

 

 

 

$

0.17

 

 

 

 

 

—

 

 

 

 

$

0.51

 

 

 

 

$

0.45

 

 

 

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

70,627

 

 

 

 

 

71,197

 

 

 

 

 

(0.8

)

 

 

 

 

70,527

 

 

 

 

 

0.1

 

 

 

 

 

70,814

 

 

 

 

 

72,512

 

 

 

 

 

(2.3

)

Diluted

 

 

75,850

 

 

 

 

 

78,144

 

 

 

 

 

(2.9

)

 

 

 

 

74,387

 

 

 

 

 

2.0

 

 

 

 

 

75,712

 

 

 

 

 

78,826

 

 

 

 

 

(4.0

)


 

7

 

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

 

 

% Change

 

 

6/30/20

 

 

% Change

 

 

9/30/20

 

 

9/30/19

 

 

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

526,836

 

 

$

534,571

 

 

 

 

 

(1.4

)

 

$

505,782

 

 

 

4.2

 

 

$

1,615,574

 

 

$

1,577,614

 

 

 

 

 

2.4

 

Institutional Group

 

 

363,365

 

 

 

290,222

 

 

 

 

 

25.2

 

 

 

398,096

 

 

 

(8.7

)

 

 

1,093,699

 

 

 

822,110

 

 

 

 

 

33.0

 

Other

 

 

(6,901

)

 

 

(3,221

)

 

 

 

n/m

 

 

 

(8,061

)

 

n/m

 

 

 

(17,122

)

 

 

(6,945

)

 

 

 

n/m

 

Total net revenues

 

$

883,300

 

 

$

821,572

 

 

 

 

 

7.5

 

 

$

895,817

 

 

 

(1.4

)

 

$

2,692,151

 

 

$

2,392,779

 

 

 

 

 

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

347,906

 

 

$

331,748

 

 

 

 

 

4.9

 

 

$

349,457

 

 

 

(0.4

)

 

$

1,086,152

 

 

$

987,949

 

 

 

 

 

9.9

 

Institutional Group

 

 

286,524

 

 

 

241,599

 

 

 

 

 

18.6

 

 

 

315,047

 

 

 

(9.1

)

 

 

892,069

 

 

 

701,981

 

 

 

 

 

27.1

 

Other

 

 

90,477

 

 

 

97,471

 

 

 

 

 

(7.2

)

 

 

88,353

 

 

 

2.4

 

 

 

297,471

 

 

 

266,304

 

 

 

 

 

11.7

 

Total operating expenses

 

$

724,907

 

 

$

670,818

 

 

 

 

 

8.1

 

 

$

752,857

 

 

 

(3.7

)

 

$

2,275,692

 

 

$

1,956,234

 

 

 

 

 

16.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

178,930

 

 

$

202,823

 

 

 

 

 

(11.8

)

 

$

156,325

 

 

 

14.5

 

 

$

529,422

 

 

$

589,665

 

 

 

 

 

(10.2

)

Institutional Group

 

 

76,841

 

 

 

48,623

 

 

 

 

 

58.0

 

 

 

83,049

 

 

 

(7.5

)

 

 

201,630

 

 

 

120,129

 

 

 

 

 

67.8

 

Other

 

 

(97,378

)

 

 

(100,692

)

 

 

 

 

(3.3

)

 

 

(96,414

)

 

 

1.0

 

 

 

(314,593

)

 

 

(273,249

)

 

 

 

 

15.1

 

Income before income taxes

 

$

158,393

 

 

$

150,754

 

 

 

 

 

5.1

 

 

$

142,960

 

 

 

10.8

 

 

$

416,459

 

 

$

436,545

 

 

 

 

 

(4.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

52.7

 

 

 

49.0

 

 

 

 

 

 

 

 

 

51.1

 

 

 

 

 

 

 

51.7

 

 

 

48.9

 

 

 

 

 

 

 

Institutional Group

 

 

58.0

 

 

 

59.1

 

 

 

 

 

 

 

 

 

60.6

 

 

 

 

 

 

 

60.2

 

 

 

59.2

 

 

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

13.3

 

 

 

13.1

 

 

 

 

 

 

 

 

 

18.0

 

 

 

 

 

 

 

15.5

 

 

 

13.7

 

 

 

 

 

 

 

Institutional Group

 

 

20.9

 

 

 

24.1

 

 

 

 

 

 

 

 

 

18.5

 

 

 

 

 

 

 

21.4

 

 

 

26.2

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

34.0

 

 

 

37.9

 

 

 

 

 

 

 

 

 

30.9

 

 

 

 

 

 

 

32.8

 

 

 

37.4

 

 

 

 

 

 

 

Institutional Group

 

 

21.1

 

 

 

16.8

 

 

 

 

 

 

 

 

 

20.9

 

 

 

 

 

 

 

18.4

 

 

 

14.6

 

 

 

 

 

 

 

Consolidated pre-tax margin

 

 

17.9

 

 

 

18.3

 

 

 

 

 

 

 

 

 

16.0

 

 

 

 

 

 

 

15.5

 

 

 

18.2

 

 

 

 

 

 

 

 

 


 

8

 

 

Financial metrics (unaudited):

As of and For the Three Months Ended

 

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

9/30/20

 

9/30/19

 

6/30/20

 

Total assets

$

25,549,182

 

$

24,160,777

 

$

25,624,225

 

Total Stifel Financial shareholders' equity

$

4,030,687

 

$

3,501,715

 

$

3,884,060

 

Book value per common share (8)

$

50.95

 

$

46.34

 

$

48.84

 

Return on common equity (9)

 

12.8

%

 

13.2

%

 

12.6

%

Non-GAAP return on common equity (2) (9)

 

14.0

%

 

14.8

%

 

14.1

%

Return on tangible common equity (1)

 

20.4

%

 

21.1

%

 

20.7

%

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

 

22.2

%

 

23.7

%

 

23.2

%

Tier 1 common capital ratio (10)

 

15.4

%

 

15.6

%

 

15.3

%

Tier 1 risk based capital ratio (10)

 

19.2

%

 

18.1

%

 

19.3

%

Tier 1 leverage capital ratio (10)

 

11.3

%

 

10.0

%

 

11.0

%

Pre-tax margin on net revenues

 

17.9

%

 

18.3

%

 

16.0

%

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

 

19.4

%

 

20.2

%

 

17.8

%

Effective tax rate

 

23.9

%

 

27.1

%

 

24.5

%

Non-GAAP effective tax rate (2)

 

23.9

%

 

26.0

%

 

24.5

%

 

Statistical Information (unaudited):

 

As of and For the Three Months Ended

 

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

 

9/30/20

 

 

9/30/19

 

 

% Change

 

 

6/30/20

 

 

% Change

 

Financial advisors

 

 

2,177

 

 

 

2,097

 

 

 

3.8

 

 

 

2,138

 

 

 

1.8

 

Independent contractors

 

 

94

 

 

 

96

 

 

 

(2.1

)

 

 

94

 

 

 

—

 

Total financial advisors

 

 

2,271

 

 

 

2,193

 

 

 

3.6

 

 

 

2,232

 

 

 

1.7

 

Locations

 

 

451

 

 

 

426

 

 

 

5.9

 

 

 

447

 

 

 

0.9

 

Total client assets

 

$

325,159,000

 

 

$

311,819,000

 

 

 

4.3

 

 

$

306,235,000

 

 

 

6.2

 

Fee-based client assets

 

$

115,162,000

 

 

$

108,138,000

 

 

 

6.5

 

 

$

106,218,000

 

 

 

8.4

 

Client money market and insured product

 

$

20,367,000

 

 

$

14,246,000

 

 

 

43.0

 

 

$

18,664,000

 

 

 

9.1

 

Secured client lending (11)

 

$

2,783,138

 

 

$

3,299,359

 

 

 

(15.6

)

 

$

2,563,773

 

 

 

8.6

 

  

  

 

Asset Management and Service Fee Break-down (unaudited)

 

Asset Management and Service Fee Revenues:

 

Three Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

% Change

 

 

6/30/20

 

 

% Change

 

Private Client Group (12)

 

$

190,799

 

 

$

172,124

 

 

 

10.8

 

 

$

164,403

 

 

 

16.1

 

Asset Management

 

 

27,539

 

 

 

30,650

 

 

 

(10.2

)

 

 

23,769

 

 

 

15.9

 

Third-party Bank Sweep Program

 

 

1,623

 

 

 

4,907

 

 

 

(66.9

)

 

 

522

 

 

 

210.9

 

Other (13)

 

 

10,821

 

 

 

9,947

 

 

 

8.8

 

 

 

10,245

 

 

 

5.6

 

Total asset management and service fee revenues

 

$

230,782

 

 

$

217,628

 

 

 

6.0

 

 

$

198,939

 

 

 

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based Assets:

 

Three Months Ended

 

($ in millions)

 

9/30/20

 

 

9/30/19

 

 

% Change

 

 

6/30/20

 

 

% Change

 

Private Client Group (12)

 

$

99,374

 

 

$

85,163

 

 

 

16.7

 

 

$

91,360

 

 

 

8.8

 

Asset Management

 

 

27,196

 

 

 

33,698

 

 

 

(19.3

)

 

 

25,706

 

 

 

5.8

 

Elimination (14)

 

 

(11,408

)

 

 

(10,723

)

 

 

6.4

 

 

 

(10,848

)

 

 

5.2

 

Total fee-based assets

 

$

115,162

 

 

$

108,138

 

 

 

6.5

 

 

$

106,218

 

 

 

8.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual Program Banks

 

$

4,691

 

 

$

1,225

 

 

 

282.9

 

 

$

3,007

 

 

 

56.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROA (bps) (15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Client Group (12)

 

 

83.5

 

 

 

85.0

 

 

 

 

 

 

 

81.6

 

 

 

 

 

Asset Management

 

 

40.5

 

 

 

36.4

 

 

 

 

 

 

 

37.0

 

 

 

 

 

Individual Program Banks

 

 

15.2

 

 

 

145.3

 

 

 

 

 

 

 

7.1

 

 

 

 

 


 

9

 

Consolidated Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

June 30, 2020

 

($ 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

 

$

1,789.8

 

 

$

1.1

 

 

 

0.25

%

 

$

1,056.3

 

 

$

5.7

 

 

 

2.15

%

 

$

1,674.0

 

 

$

1.0

 

 

 

0.24

%

Financial instruments owned

 

 

801.3

 

 

 

2.9

 

 

 

1.46

 

 

 

1,157.8

 

 

 

5.7

 

 

 

1.96

 

 

 

761.7

 

 

 

2.9

 

 

 

1.50

 

Margin balances

 

 

872.5

 

 

 

5.8

 

 

 

2.66

 

 

 

1,308.3

 

 

 

13.3

 

 

 

4.08

 

 

 

981.5

 

 

 

6.4

 

 

 

2.59

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

4,838.7

 

 

 

25.3

 

 

 

2.09

 

 

 

4,367.8

 

 

 

42.4

 

 

 

3.88

 

 

 

4,842.0

 

 

 

32.6

 

 

 

2.70

 

Mortgage-backed securities

 

 

824.0

 

 

 

3.2

 

 

 

1.55

 

 

 

1,253.4

 

 

 

6.6

 

 

 

2.10

 

 

 

877.2

 

 

 

4.6

 

 

 

2.09

 

Corporate fixed income securities

 

 

551.8

 

 

 

3.5

 

 

 

2.50

 

 

 

743.7

 

 

 

5.7

 

 

 

3.06

 

 

 

648.9

 

 

 

4.2

 

 

 

2.59

 

State and municipal securities

 

 

2.4

 

 

 

—

 

 

 

1.97

 

 

 

34.3

 

 

 

0.2

 

 

 

2.27

 

 

 

12.2

 

 

 

0.1

 

 

 

2.19

 

Other

 

 

4.9

 

 

 

—

 

 

 

2.07

 

 

 

4.50

 

 

 

—

 

 

 

5.98

 

 

 

5.3

 

 

 

—

 

 

 

2.02

 

Total Investments

 

 

6,221.8

 

 

 

32.0

 

 

 

2.06

 

 

 

6,403.7

 

 

 

54.9

 

 

 

3.43

 

 

 

6,385.6

 

 

 

41.5

 

 

 

2.60

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

4,036.3

 

 

 

30.1

 

 

 

2.98

 

 

 

3,330.2

 

 

 

39.7

 

 

 

4.77

 

 

 

4,095.4

 

 

 

31.8

 

 

 

3.10

 

Residential real estate

 

 

3,711.2

 

 

 

26.1

 

 

 

2.81

 

 

 

3,003.8

 

 

 

23.2

 

 

 

3.08

 

 

 

3,589.2

 

 

 

25.6

 

 

 

2.85

 

Securities-based loans

 

 

1,787.1

 

 

 

9.2

 

 

 

2.05

 

 

 

1,959.3

 

 

 

19.9

 

 

 

4.06

 

 

 

1,789.2

 

 

 

9.9

 

 

 

2.22

 

Commercial real estate

 

 

400.0

 

 

 

3.8

 

 

 

3.76

 

 

 

377.2

 

 

 

5.2

 

 

 

5.52

 

 

 

402.6

 

 

 

4.0

 

 

 

3.98

 

Loans held for sale

 

 

460.1

 

 

 

2.6

 

 

 

2.25

 

 

 

209.7

 

 

 

1.7

 

 

 

3.21

 

 

 

486.7

 

 

 

3.3

 

 

 

2.68

 

Other

 

 

602.9

 

 

 

4.5

 

 

 

3.02

 

 

 

444.9

 

 

 

5.7

 

 

 

5.23

 

 

 

546.3

 

 

 

4.6

 

 

 

3.36

 

Total Loans

 

 

10,997.6

 

 

 

76.3

 

 

 

2.77

 

 

 

9,325.1

 

 

 

95.4

 

 

 

4.09

 

 

 

10,909.4

 

 

 

79.2

 

 

 

2.90

 

Other interest-bearing assets

 

 

547.7

 

 

 

(3.7

)

 

 

(2.69

)

 

 

678.7

 

 

 

3.8

 

 

 

2.19

 

 

 

476.3

 

 

 

(2.6

)

 

 

(2.15

)

Total interest-earning assets/interest income

 

 

21,230.7

 

 

 

114.4

 

 

 

2.16

 

 

 

19,929.9

 

 

 

178.8

 

 

 

3.59

 

 

 

21,188.5

 

 

 

128.4

 

 

 

2.42

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21.0

 

 

 

0.1

 

 

 

2.63

 

 

 

11.4

 

 

 

0.1

 

 

 

2.83

 

Senior notes

 

 

1,411.8

 

 

 

15.4

 

 

 

4.37

 

 

 

1,016.6

 

 

 

11.1

 

 

 

4.38

 

 

 

1,195.0

 

 

 

13.1

 

 

 

4.38

 

Deposits

 

 

16,379.2

 

 

 

1.5

 

 

 

0.04

 

 

 

14,926.2

 

 

 

24.8

 

 

 

0.67

 

 

 

16,676.5

 

 

 

2.3

 

 

 

0.05

 

FHLB

 

 

157.1

 

 

 

0.5

 

 

 

1.31

 

 

 

270.1

 

 

 

1.1

 

 

 

1.70

 

 

 

250.8

 

 

 

0.7

 

 

 

1.09

 

Other interest-bearing liabilities

 

 

1,071.6

 

 

 

(3.6

)

 

 

(1.34

)

 

 

1,673.0

 

 

 

7.0

 

 

 

1.66

 

 

 

1,179.2

 

 

 

(3.1

)

 

 

(1.03

)

Total interest-bearing liabilities/interest expense

 

$

19,019.7

 

 

$

13.8

 

 

 

0.29

%

 

$

17,906.9

 

 

$

44.1

 

 

 

0.99

%

 

$

19,312.9

 

 

$

13.1

 

 

 

0.27

%

Net interest income/margin

 

 

 

 

 

$

100.6

 

 

 

1.90

%

 

 

 

 

 

$

134.7

 

 

 

2.70

%

 

 

 

 

 

$

115.3

 

 

 

2.18

%

 

Stifel Bancorp, Inc. (16) Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

June 30, 2020

 

($ 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

 

$

786.0

 

 

$

0.3

 

 

 

0.14

%

 

$

540.8

 

 

$

3.2

 

 

 

2.36

%

 

$

961.1

 

 

$

0.3

 

 

 

0.13

%

Investments

 

 

6,221.8

 

 

 

32.0

 

 

 

2.06

 

 

 

6,403.7

 

 

 

54.9

 

 

 

3.43

 

 

 

6,385.6

 

 

 

41.5

 

 

 

2.60

 

Loans

 

 

10,997.6

 

 

 

76.3

 

 

 

2.77

 

 

 

9,325.1

 

 

 

95.4

 

 

 

4.09

 

 

 

10,909.4

 

 

 

79.2

 

 

 

2.90

 

Other interest-bearing assets

 

 

42.9

 

 

 

0.2

 

 

 

2.86

 

 

 

46.7

 

 

 

0.4

 

 

 

3.04

 

 

 

46.7

 

 

 

0.3

 

 

 

2.46

 

Total interest-earning assets/interest income

 

 

18,048.3

 

 

 

108.8

 

 

 

2.41

 

 

 

16,316.3

 

 

 

153.9

 

 

 

3.77

 

 

 

18,302.8

 

 

 

121.3

 

 

 

2.65

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,379.2

 

 

 

1.5

 

 

 

0.04

 

 

 

14,926.2

 

 

 

24.8

 

 

 

0.67

 

 

 

16,676.5

 

 

 

2.3

 

 

 

0.05

 

FHLB

 

 

157.1

 

 

 

0.5

 

 

 

1.31

 

 

 

270.1

 

 

 

1.1

 

 

 

1.70

 

 

 

250.8

 

 

 

0.7

 

 

 

1.09

 

Other interest-bearing liabilities

 

 

1.5

 

 

 

—

 

 

 

6.08

 

 

 

1.7

 

 

 

0.1

 

 

 

6.49

 

 

 

1.5

 

 

 

—

 

 

 

6.71

 

Total interest-bearing liabilities/interest expense

 

$

16,537.8

 

 

 

2.0

 

 

 

0.05

%

 

$

15,198.0

 

 

 

26.0

 

 

 

0.68

%

 

$

16,928.8

 

 

 

3.0

 

 

 

0.07

%

Net interest income/margin

 

 

 

 

 

$

106.8

 

 

 

2.37

%

 

 

 

 

 

$

127.9

 

 

 

3.14

%

 

 

 

 

 

$

118.3

 

 

 

2.59

%

 

 

10

 

Stifel Bancorp, Inc. (16) - a component of Global Wealth Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected operating data (unaudited):

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s, except percentages)

9/30/20

 

 

9/30/19

 

 

% Change

 

 

6/30/20

 

 

% Change

 

 

9/30/20

 

 

9/30/19

 

 

% Change

 

Net interest income

$

106,812

 

 

$

127,942

 

 

 

(16.5

)

 

$

118,298

 

 

 

(9.7

)

 

$

358,241

 

 

$

390,220

 

 

 

(8.2

)

Credit loss provision/(release)

 

(4,731

)

 

 

929

 

 

n/m

 

 

 

19,210

 

 

n/m

 

 

 

30,547

 

 

 

5,565

 

 

 

448.9

 

Charge-offs

 

23

 

 

 

56

 

 

 

(58.9

)

 

 

150

 

 

 

(84.7

)

 

 

193

 

 

 

166

 

 

 

16.3

 

Net interest margin

 

2.37

%

 

 

3.14

%

 

(77) bps

 

 

 

2.59

%

 

(22) bps

 

 

 

2.67

%

 

 

3.14

%

 

(47) bps

 

 

Financial Metrics (unaudited):

 

As of

 

($ in 000s, except percentages)

 

9/30/20

 

 

9/30/19

 

 

6/30/20

 

Total assets

 

$

17,854,768

 

 

$

16,442,707

 

 

$

18,123,326

 

Total shareholders' equity

 

 

1,378,981

 

 

 

1,234,932

 

 

 

1,378,096

 

Total loans, net (includes loans held for sale)

 

 

10,932,235

 

 

 

9,367,233

 

 

 

10,923,212

 

Total deposits

 

 

16,400,001

 

 

 

14,836,646

 

 

 

16,302,281

 

Available-for-sale securities, at fair value

 

 

2,823,885

 

 

 

3,448,207

 

 

 

3,172,160

 

Held-to-maturity securities, at amortized cost

 

 

3,395,115

 

 

 

2,878,516

 

 

 

3,083,126

 

Commercial and industrial

 

 

4,080,939

 

 

 

3,315,706

 

 

 

4,149,307

 

Residential real estate

 

 

3,804,836

 

 

 

3,043,271

 

 

 

3,710,657

 

Securities-based loans

 

 

1,841,516

 

 

 

1,986,339

 

 

 

1,716,786

 

Commercial real estate

 

 

386,957

 

 

 

387,868

 

 

 

406,788

 

Loans held for sale

 

 

281,475

 

 

 

265,330

 

 

 

474,899

 

Stifel Bank & Trust:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (10)

 

 

11.7

%

 

 

13.1

%

 

 

12.4

%

Tier 1 capital ratio (10)

 

 

11.7

%

 

 

13.1

%

 

 

12.4

%

Total capital ratio (10)

 

 

13.0

%

 

 

14.3

%

 

 

13.9

%

Tier 1 leverage ratio (10)

 

 

7.2

%

 

 

7.3

%

 

 

7.2

%

Stifel Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (10)

 

 

18.0

%

 

 

17.9

%

 

 

18.8

%

Tier 1 capital ratio (10)

 

 

18.0

%

 

 

17.9

%

 

 

18.8

%

Total capital ratio (10)

 

 

19.3

%

 

 

19.1

%

 

 

20.1

%

Tier 1 leverage ratio (10)

 

 

7.3

%

 

 

7.0

%

 

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

$

135,275

 

 

$

91,360

 

 

$

139,949

 

Allowance as a percentage of retained loans

 

 

1.26

%

 

 

0.99

%

 

 

1.32

%

Net charge-offs as a percentage of average loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Total nonperforming assets

 

$

14,615

 

 

$

18,031

 

 

$

14,602

 

Nonperforming assets as % of total assets

 

 

0.08

%

 

 

0.11

%

 

 

0.08

%


 

11

 

Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

 

 

 

6/30/20

 

 

% Change

 

 

 

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

120,600

 

 

 

 

$

118,061

 

 

 

 

 

2.2

 

 

 

 

$

116,156

 

 

 

3.8

 

 

 

 

$

373,653

 

 

 

 

$

348,272

 

 

 

 

 

7.3

 

Principal transactions

 

 

42,027

 

 

 

 

 

42,056

 

 

 

 

 

(0.1

)

 

 

 

 

42,967

 

 

 

(2.2

)

 

 

 

 

127,976

 

 

 

 

 

127,427

 

 

 

 

 

0.4

 

    Brokerage revenues

 

 

162,627

 

 

 

 

 

160,117

 

 

 

 

 

1.6

 

 

 

 

 

159,123

 

 

 

2.2

 

 

 

 

 

501,629

 

 

 

 

 

475,699

 

 

 

 

 

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

230,765

 

 

 

 

 

217,616

 

 

 

 

 

6.0

 

 

 

 

 

198,921

 

 

 

16.0

 

 

 

 

 

667,446

 

 

 

 

 

624,025

 

 

 

 

 

7.0

 

Net interest

 

 

108,181

 

 

 

 

 

137,937

 

 

 

 

 

(21.6

)

 

 

 

 

121,564

 

 

 

(11.0

)

 

 

 

 

368,427

 

 

 

 

 

420,831

 

 

 

 

 

(12.5

)

Investment banking (17)

 

 

8,113

 

 

 

 

 

9,855

 

 

 

 

 

(17.7

)

 

 

 

 

8,016

 

 

 

1.2

 

 

 

 

 

26,462

 

 

 

 

 

28,637

 

 

 

 

 

(7.6

)

Other income

 

 

17,150

 

 

 

 

 

9,046

 

 

 

 

 

89.6

 

 

 

 

 

18,158

 

 

 

(5.6

)

 

 

 

 

51,610

 

 

 

 

 

28,422

 

 

 

 

 

81.6

 

Net revenues

 

 

526,836

 

 

 

 

 

534,571

 

 

 

 

 

(1.4

)

 

 

 

 

505,782

 

 

 

4.2

 

 

 

 

 

1,615,574

 

 

 

 

 

1,577,614

 

 

 

 

 

2.4

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

277,903

 

 

 

 

 

261,681

 

 

 

 

 

6.2

 

 

 

 

 

258,291

 

 

 

7.6

 

 

 

 

 

834,564

 

 

 

 

 

771,475

 

 

 

 

 

8.2

 

Non-compensation operating expenses

 

 

70,003

 

 

 

 

 

70,067

 

 

 

 

 

(0.1

)

 

 

 

 

91,166

 

 

 

(23.2

)

 

 

 

 

251,588

 

 

 

 

 

216,474

 

 

 

 

 

16.2

 

Total non-interest expenses

 

 

347,906

 

 

 

 

 

331,748

 

 

 

 

 

4.9

 

 

 

 

 

349,457

 

 

 

(0.4

)

 

 

 

 

1,086,152

 

 

 

 

 

987,949

 

 

 

 

 

9.9

 

Income before income taxes

 

$

178,930

 

 

 

 

$

202,823

 

 

 

 

 

(11.8

)

 

 

 

$

156,325

 

 

 

14.5

 

 

 

 

$

529,422

 

 

 

 

$

589,665

 

 

 

 

 

(10.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

52.7

 

 

 

 

 

49.0

 

 

 

 

 

 

 

 

 

 

 

51.1

 

 

 

 

 

 

 

 

 

51.7

 

 

 

 

 

48.9

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

13.3

 

 

 

 

 

13.1

 

 

 

 

 

 

 

 

 

 

 

18.0

 

 

 

 

 

 

 

 

 

15.5

 

 

 

 

 

13.7

 

 

 

 

 

 

 

Income before income taxes

 

 

34.0

 

 

 

 

 

37.9

 

 

 

 

 

 

 

 

 

 

 

30.9

 

 

 

 

 

 

 

 

 

32.8

 

 

 

 

 

37.4

 

 

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

 

 

 

6/30/20

 

 

% Change

 

 

 

 

9/30/20

 

 

 

 

9/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

52,054

 

 

 

 

$

45,859

 

 

 

 

 

13.5

 

 

 

 

$

60,875

 

 

 

(14.5

)

 

 

 

$

187,127

 

 

 

 

$

136,078

 

 

 

 

 

37.5

 

Principal transactions

 

 

98,856

 

 

 

 

 

55,791

 

 

 

 

 

77.2

 

 

 

 

 

123,049

 

 

 

(19.7

)

 

 

 

 

317,590

 

 

 

 

 

170,916

 

 

 

 

 

85.8

 

Brokerage revenues

 

 

150,910

 

 

 

 

 

101,650

 

 

 

 

 

48.5

 

 

 

 

 

183,924

 

 

 

(17.9

)

 

 

 

 

504,717

 

 

 

 

 

306,994

 

 

 

 

 

64.4

 

Advisory fees

 

 

80,842

 

 

 

 

 

104,847

 

 

 

 

 

(22.9

)

 

 

 

 

97,838

 

 

 

(17.4

)

 

 

 

 

254,733

 

 

 

 

 

292,647

 

 

 

 

 

(13.0

)

Capital raising

 

 

129,179

 

 

 

 

 

84,088

 

 

 

 

 

53.6

 

 

 

 

 

111,181

 

 

 

16.2

 

 

 

 

 

333,442

 

 

 

 

 

218,963

 

 

 

 

 

52.3

 

Investment banking

 

 

210,021

 

 

 

 

 

188,935

 

 

 

 

 

11.2

 

 

 

 

 

209,019

 

 

 

0.5

 

 

 

 

 

588,175

 

 

 

 

 

511,610

 

 

 

 

 

15.0

 

Other (18)

 

 

2,434

 

 

 

 

 

(363

)

 

 

 

n/m

 

 

 

 

 

5,153

 

 

 

(52.8

)

 

 

 

 

807

 

 

 

 

 

3,506

 

 

 

 

 

(77.0

)

Net revenues

 

 

363,365

 

 

 

 

 

290,222

 

 

 

 

 

25.2

 

 

 

 

 

398,096

 

 

 

(8.7

)

 

 

 

 

1,093,699

 

 

 

 

 

822,110

 

 

 

 

 

33.0

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

210,754

 

 

 

 

 

171,534

 

 

 

 

 

22.9

 

 

 

 

 

241,420

 

 

 

(12.7

)

 

 

 

 

658,162

 

 

 

 

 

486,724

 

 

 

 

 

35.2

 

Non-compensation operating expenses

 

 

75,770

 

 

 

 

 

70,065

 

 

 

 

 

8.1

 

 

 

 

 

73,627

 

 

 

2.9

 

 

 

 

 

233,907

 

 

 

 

 

215,257

 

 

 

 

 

8.7

 

Total non-interest expenses

 

 

286,524

 

 

 

 

 

241,599

 

 

 

 

 

18.6

 

 

 

 

 

315,047

 

 

 

(9.1

)

 

 

 

 

892,069

 

 

 

 

 

701,981

 

 

 

 

 

27.1

 

Income before income taxes

 

$

76,841

 

 

 

 

$

48,623

 

 

 

 

 

58.0

 

 

 

 

$

83,049

 

 

 

(7.5

)

 

 

 

$

201,630

 

 

 

 

$

120,129

 

 

 

 

 

67.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

58.0

 

 

 

 

 

59.1

 

 

 

 

 

 

 

 

 

 

 

60.6

 

 

 

 

 

 

 

 

 

60.2

 

 

 

 

 

59.2

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

20.9

 

 

 

 

 

24.1

 

 

 

 

 

 

 

 

 

 

 

18.5

 

 

 

 

 

 

 

 

 

21.4

 

 

 

 

 

26.2

 

 

 

 

 

 

 

Income before income taxes

 

 

21.1

 

 

 

 

 

16.8

 

 

 

 

 

 

 

 

 

 

 

20.9

 

 

 

 

 

 

 

 

 

18.4

 

 

 

 

 

14.6

 

 

 

 

 

 

 

 


 

12

 

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 September 30, 2020, September 30, 2019, and June 30, 2020. 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 and nine months ended September 30, 2020 and 2019, and the three months ended June 30, 2020 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in 000s)

 

9/30/20

 

 

9/30/19

 

 

6/30/20

 

 

9/30/20

 

 

9/30/19

 

GAAP net income applicable to Stifel Financial Corp.

 

$

120,527

 

 

$

109,414

 

 

$

107,887

 

 

$

315,003

 

 

$

317,706

 

Preferred dividend

 

 

9,897

 

 

 

4,844

 

 

 

4,843

 

 

 

19,584

 

 

 

12,476

 

Net income available to common shareholders

 

 

110,630

 

 

 

104,570

 

 

 

103,044

 

 

 

295,419

 

 

 

305,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance (19)

 

 

12,989

 

 

 

14,850

 

 

 

16,259

 

 

 

42,758

 

 

 

29,762

 

Litigation-related (20)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,507

 

Provision for income taxes (21)

 

 

(3,094

)

 

 

(2,274

)

 

 

(3,968

)

 

 

(10,384

)

 

 

(5,462

)

Total non-GAAP adjustments

 

 

9,895

 

 

 

12,576

 

 

 

12,291

 

 

 

32,374

 

 

 

27,807

 

Non-GAAP net income available to common shareholders

 

$

120,525

 

 

$

117,146

 

 

$

115,335

 

 

$

327,793

 

 

$

333,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

75,850

 

 

 

78,144

 

 

 

74,387

 

 

 

75,712

 

 

 

78,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

1.59

 

 

$

1.40

 

 

$

1.45

 

 

$

4.16

 

 

$

4.03

 

Non-GAAP adjustments

 

 

0.13

 

 

 

0.16

 

 

 

0.17

 

 

 

0.43

 

 

 

0.35

 

Non-GAAP earnings per diluted common share

 

$

1.72

 

 

$

1.56

 

 

$

1.62

 

 

$

4.59

 

 

$

4.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

1.46

 

 

$

1.34

 

 

$

1.39

 

 

$

3.90

 

 

$

3.87

 

Non-GAAP adjustments

 

 

0.13

 

 

 

0.16

 

 

 

0.16

 

 

 

0.43

 

 

 

0.35

 

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

 

$

1.59

 

 

$

1.50

 

 

$

1.55

 

 

$

4.33

 

 

$

4.22

 


 

13

 

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. Average deferred taxes on goodwill and intangible assets was $49.6 million, $45.3 million, and $48.5 million, as of September 30, 2020 and 2019, and June 30, 2020, 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 September 30, 2020 of 19.4% is calculated by adding non-GAAP adjustments of $13.0 million to our GAAP income before income taxes of $158.4 million and dividing it by non-GAAP net revenues for the quarter of $883.3 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(4)

Non-GAAP pre-tax margin for the nine months ended September 30, 2020 of 17.1% is calculated by adding non-GAAP adjustments of $42.8 million to our GAAP income before income taxes of $416.5 million and dividing it by non-GAAP net revenues of $2.7 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(5)

Excludes revenue included in the Other segment.

 

(6)

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

 

(7)

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.

 

(8)

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

 

(9)

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.

 

(10)

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

 

(11)

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

 

(12)

Includes Private Client Group and Trust Business.

 

(13)

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

 

(14)

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

 

(15)

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.

 

(16)

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

 

(17)

Includes capital raising and advisory fees.

 

(18)

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

 

(19)

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.

 

(20)

Primarily related to costs associated with Company’s legal matters.

 

(21)

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

 

 

14

 

Slide 0

3rd Quarter 2020 Financial Results Presentation October 27, 2020 Exhibit 99.2

Slide 1

Record Third Quarter & First Nine Months Net Revenue Third Quarter Snapshot 3Q20 Results millions, except per share and ratios HIGHLIGHTS NET REVENUES GAAP & NON-GAAP $883.3 NET EARNINGS GAAP $110.6 NON-GAAP $120.5 EPS GAAP $1.46 NON-GAAP $1.59 ANNUALIZED ROE GAAP 12.8% NON-GAAP 14.0% ANNUALIZED ROTCE GAAP 20.4% NON-GAAP 22.2% BOOK VALUE PER SHARE TBV $32.34 BV $50.95 Strongest Recruiting Quarter in Last Three Years Record Quarterly Capital Raising Revenue Second Highest Quarterly Pre-Tax Income & EPS Credit Quality at Stifel Bank Remains Strong Strong Growth in Private Client Fee-Based Assets

Slide 2

Third Quarter Results Third QUARTER HIGHLIGHTS Third quarter Non-GAAP Net Revenue of $883 million, up 8% Y/Y Institutional Group Revenue of $363 million, up 25% Y/Y Record Capital Raising Revenue of $137 million, up 46% Y/Y Pre-tax Margin of 19.4%, up 160 bps sequentially Fee-based Client Assets of $115 billion, up 8% sequentially Tangible Book Value Per Share of $32.34, up 13% Y/Y Non-GAAP annualized ROTCE of 22.2%

Slide 3

HIGHLIGHTS Record first 9-Month Net Revenue of $1.6 billion, up 2% Y/Y Third Quarter Pre-tax Margin of 34%, up 310 bps sequentially Private Client Fee-based Assets Increased 17% Y/Y Recruited 45 Financial Advisor with total Trailing Twelve Month production of $38 million. Global Wealth Management

Slide 4

Wealth Management Metrics EFFICIENT BUSINESS MODEL Advisors are empowered to do what is right for their clients Product-neutral compensation – not motivated by comp to use specific products or services Product desks are not layered profit centers Supervisory function is centralized for efficiency and neutral approach Advisors have direct access to knowledgeable home office associates to collaboratively deliver services to clients Technology to support advice-based model Stifel Wealth Tracker – online and mobile app: / free/ secure / smart aggregation / budgeting tools / advice when you want it / understand the markets / understand your complete financial picture Performance reporting tools – enhanced platform-wide capabilities with key vendor partners collaborating Cash management and digital banking capabilities in WM platform, including client mobile app Video meetings, centralized technology support DYNAMIC BUSINESS 85% of FAs joined Stifel in past 10 years came through organic recruiting, 15% through acquisitions Recruiting remotely during pandemic Growth of average AUM Adding capabilities that attract FAs and differentiate Stifel Stifel Wealth Tracker CIO Office & behavioral finance practice OurCrowd access to early-stage venture sponsors

Slide 5

Institutional Group * Includes net interest, asset management and service fees, and other income HIGHLIGHTS Record first 9- Month Revenue of $1.1 billion, up 33% Y/Y Record first 9-Month Capital Raising Revenue, up 52% Y/Y Brokerage Revenue of $505 million surpassed 2019 Full Year by 19% Record Quarterly Capital Raising Revenue of $129 million, up 54% Y/Y Pre-tax margin of 21.1%, up 430 bps Y/Y Balanced business mix between equities and fixed income *2020 revenue based on annualized results through 9/30/2020

Slide 6

highlights Record First Nine Months Revenue Surpassed Prior Full Year Record by 5% (2016) Record First Nine Months Brokerage Revenue Record Quarterly Revenue in Capital Raising Lead Managed 264 Negotiated Municipal Offerings Institutional Equities & Fixed Income highlights Record First Nine Months Revenue Surpassed Prior Record by 23% (2014) Record First Nine Months Brokerage Revenue Record Quarterly Capital Raising Revenue Bar chart header numbers are a graphic

Slide 7

Investment Banking Revenue Highlights Third Strongest Investment Banking Quarter Record Capital Raising Quarter Strongest Verticals were Healthcare, Technology, & Industrials Miller Buckfire’s Restructuring Practice Remained Strong Bar chart header numbers are a graphic *2020 revenue based on annualized results through 9/30/2020

Slide 8

Net Interest Income Net Interest commentary 3Q20 NII within previous guidance range, but negatively impacted by increased cash balances. Interest Earning Assets increased year-on-year and sequentially due to higher cash & loan balances.

Slide 9

Stifel Bancorp Inc. Loan & Investment Portfolio * Total excludes $282 million of loans classified as held for sale

Slide 10

CECL & Credit Metrics ASSUMPTIONS Moody’s Forecast 40% Baseline (gradual recovery) 30% Downside (double dip recession) 30% Upside (accelerated recovery) Forecast Update for Most Recent Scenarios Broad-based Improvement of Forecasted Economic Variables Since June 30 Incorporated a Management Overlay to Offset Some of the Forecasted Economic Variables

Slide 11

Capital & Liquidity HIGHLIGHTS Sweep Balances Continued to Increase in 3Q20 Capital Ratios Consistent with 2Q20 Projecting No Material Change in the Size or Composition of the Balance Sheet Capital Return in 3Q20 Limited to Dividends

Slide 12

Expenses & Fourth Quarter Guidance * For reconciliation of GAAP to non-GAAP expenses, refer to our third quarter 2020 earnings release. Bar chart header numbers are a graphic Fourth Quarter 2020 Guidance Net Revenue: $870 – $920 million Firm-wide NII: $100 – $110 million Bank NIM: 235 – 245 bps Compensation Ratio: 57.5% - 59.5% Non-compensation Operating Ratio: 19%-21% Diluted Share Count: 77.4 million

Slide 13

Q&A

Slide 14

Disclaimer Forward-Looking Statements This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks, assumptions, and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel, Nicolaus & Company, Incorporated and its subsidiaries (collectively, “SF” or the “Company”). These statements can be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” and similar expressions. All statements not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements 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 “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30,2020 and in Part I 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. Use of 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 nine months ended September 30, 2020. 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 ongoing 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.