8-K
STIFEL FINANCIAL CORP false 0000720672 0000720672 2021-07-28 2021-07-28 0000720672 us-gaap:CommonStockMember 2021-07-28 2021-07-28 0000720672 us-gaap:SeriesAPreferredStockMember 2021-07-28 2021-07-28 0000720672 us-gaap:SeriesBPreferredStockMember 2021-07-28 2021-07-28 0000720672 us-gaap:SeriesCPreferredStockMember 2021-07-28 2021-07-28 0000720672 us-gaap:SeriesDPreferredStockMember 2021-07-28 2021-07-28 0000720672 us-gaap:SeniorNotesMember 2021-07-28 2021-07-28

 

 

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): July 28, 2021

 

 

STIFEL FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-09305   43-1273600

(State

of incorporation)

  

(Commission

File Number)

  

(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
Depository Shares, each representing 1/1,000th interest in a share of 4.50% Non-Cumulative Preferred Stock, Series D    SF-PD    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 July 28, 2021, Stifel Financial Corp. (“Stifel” or the “Company”) reported its financial results for the three months ended June 30, 2021. A copy of the related press release is attached hereto as Exhibit 99.1. In addition, a copy of the Company’s Financial Data Supplement for the three months ended June 30, 2021 is attached hereto as Exhibit 99.2.

Stifel will hold a conference call on Wednesday, July 28, 2021, 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 4838637. 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 99.3.

The exhibits are 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 Number

   

Description of Exhibit

99.1    Press release dated July 28, 2021.
99.2    Quarterly Financial Supplement.
99.3    Investor presentation.
104    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: July 28, 2021     By:  

  /s/ James M. Marischen

    Name:     James M. Marischen
    Title:     Chief Financial Officer

 

3

Exhibit 99.1

 

LOGO

ST. LOUIS, MO, July 28, 2021 – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $189.8 million, or $1.60 per diluted common share on net revenues of $1.2 billion for the three months ended June 30, 2021, compared with net income available to common shareholders of $103.0 million, or $0.92 per diluted common share (1) on net revenues of $895.8 million for the second quarter of 2020. For the three months ended June 30, 2021, the Company reported non-GAAP net income available to common shareholders of $202.1 million, or $1.70 per diluted common share. The Company’s reported GAAP net income for the three months ended June 30, 2021 was primarily impacted by merger-related expenses.

 

 

Ronald J. Kruszewski, Chairman and Chief Executive Officer, said “Our results in the first half of 2021 are impressive. We generated consecutive quarters of record net revenue and our improved operating scale drove record non-GAAP earnings for both the quarter and the first half of the year. With both of the firm’s operating segments driving our performance, I am optimistic that these results can be sustained, as illustrated by our increased guidance for the remainder of the year.”

 

 

 

Highlights

 

›   Record net revenues of $1.2 billion, increased 29% compared with the year-ago quarter. Year-to-date record net revenues of $2.3 billion, increased 27% over the comparable period last year.

 

›   Record net income available to common shareholders of $1.60 per diluted common share, or $1.70 per diluted common share excluding the impact of merger-related expenses. This represents an increase of 74% over the year-ago quarter.

 

›   Year-to-date record net income available to common shareholders of $3.00 per diluted common share, or $3.20 per diluted common share excluding the impact of merger-related expenses. This represents an increase of 84% over the comparable period last year.

 

›   Record client assets of $402.4 billion, increased 31% compared with the year-ago quarter.

 

›   Annualized return on average tangible shareholders’ equity (ROTCE) (6) was 29%, or 31% excluding the impact of merger-related expenses.

 

›   Tangible book value per common share of $25.87 (8), up 29% compared with the year ago quarter.

Segment Highlights

 

›   Global Wealth Management reported record net revenues, up 26% compared with the year ago quarter reflecting growth in fee-based assets and client activity.

 

›   Institutional Group reported record net revenues, up 31% compared with the year ago quarter as a result of strong advisory fee and capital raising revenues.

 

Financial Summary (Unaudited)  
($ in 000s)    2Q 2021     2Q 2020     6m 2021     6m 2020  

GAAP Financial Highlights:

 

Net revenues

    $ 1,153,136     $ 895,817     $ 2,287,925     $ 1,808,851  

Net income (2)

    $ 189,788     $ 103,044     $ 354,514     $ 184,789  

Diluted EPS (1) (2)

    $ 1.60     $ 0.92     $ 3.00     $ 1.63  

Comp. ratio

      60.0 %      61.1 %      60.8 %      62.2 % 

Non-comp. ratio

      17.1 %      22.9 %      17.7 %      23.5 % 

Pre-tax margin

      22.9 %      16.0 %      21.5 %      14.3 % 

Non-GAAP Financial Highlights:

 

Net revenues

    $ 1,153,098     $ 895,817     $ 2,288,078     $ 1,809,030  

Net income (2) (3)

    $ 202,067     $ 115,335     $ 378,492     $ 207,268  

Diluted EPS (1) (2) (3)

    $ 1.70     $ 1.03     $ 3.20     $ 1.83  

Comp. ratio (3)

      59.5 %      60.0 %      60.2 %      61.3 % 

Non-comp. ratio (3)

      16.2 %      22.2 %      16.9 %      22.8 % 

Pre-tax margin (4)

      24.3 %      17.8 %      22.9 %      15.9 % 

ROCE (5)

     20.6 %      14.1 %      19.7 %      12.7 % 

ROTCE (6)

      30.5 %      23.2 %      29.5 %      20.9 % 

Global Wealth Management (assets and loans in millions)

 

Net revenues

    $ 637,567     $ 505,782     $ 1,269,062     $ 1,088,738  

Pre-tax net income

    $ 227,305     $ 156,325     $ 450,536     $ 350,492  

Total client assets

    $ 402,442     $ 306,235      

Fee-based client assets

    $ 148,838     $ 106,218      

Bank loans, net (7)

    $ 13,165     $ 10,923      

Institutional Group

 

Net revenues

    $ 520,811     $ 398,096     $ 1,026,892     $ 730,334  

Equity

    $ 334,689     $ 211,044     $ 681,080     $ 406,372  

Fixed Income

    $ 186,122     $ 187,052     $ 345,812     $ 323,962  

Pre-tax net income

    $ 141,494     $ 83,049     $ 258,682     $ 124,789  
 

 

Media Contact: Neil Shapiro (212) 271-3447  |  Investor Contact: Joel Jeffrey (212) 271-3610  |  www.stifel.com/investor-relations

LOGO

 

Global Wealth Management

 

Global Wealth Management reported record net revenues of $637.6 million for the three months ended June 30, 2021 compared with $505.8 million during the second quarter of 2020. Pre-tax net income was $227.3 million compared with $156.3 million in the second quarter of 2020.

 

Highlights

 

›   Added 26 financial advisors, including 14 experienced advisors, with total trailing 12 month production of $12 million.

 

›   Record client assets of $402.4 billion, up 31% over the year-ago quarter.

 

›   Private Client fee-based assets of $148.8 billion, up 40% over the year-ago quarter.

 

›   Bank loans of $13.2 billion, up 21% over the year-ago quarter.

Net revenues increased 26% from a year ago:

 

›   Asset management revenues increased 49% over the year-ago quarter reflecting higher asset values and strong fee-based asset flows.

 

›   Brokerage revenues increased 23% over the year-ago quarter reflecting strong client activity during the quarter.

 

›   Net interest income increased 3% over the year-ago quarter driven by higher bank lending partially offset by the impact of lower interest rates.

Total Expenses:

 

›   Compensation expense increased over the year-ago quarter primarily driven by higher revenues.

 

›   Provision for credit losses was impacted by the release of the allowance for credit losses driven by improvements in the outlook for macroeconomic conditions. Approximately $4.6 million of the release relates to loans that are being sold at a premium.

 

›   Non-compensation operating expenses increased over the year-ago quarter primarily as a result of higher professional fees, travel, entertainment, and conference-related expenses. The increase was partially offset by lower net provisions for litigation matters.
Summary Results of Operations  
($ in 000s)    2Q 2021     2Q 2020  

Net revenues

    $ 637,567     $ 505,782  

Asset management and service fees

      295,847       198,921  

Brokerage revenues

      194,862       159,123  

Net interest income

      124,686       121,564  

Investment banking

      11,898       8,016  

Other income

      10,274       18,158  

Total expenses

    $ 410,262     $ 349,457  

Compensation expense

      341,367       258,291  

Provision for credit losses

      (9,652 )      19,210  

Non-comp. opex

      78,547       71,956  

Pre-tax net income

    $ 227,305     $ 156,325  

Compensation ratio

      53.5 %      51.1 % 

Non-compensation ratio

      10.8 %      18.0 % 

Pre-tax margin

      35.7 %      30.9 % 
 

 

Stifel Financial Corp.  |  Page 2

LOGO

 

Institutional Group

 

Institutional Group reported record net revenues of $520.8 million for the three months ended June 30, 2021 compared with $398.1 million during the second quarter of 2020. Pre-tax net income was $141.5 million compared with $83.0 million in the second quarter of 2020.

 

Highlights

 

›   Investment banking pipeline at record levels.

 

›   Pre-tax margin of 27%, up from 21% in the year-ago quarter.

Investment banking revenues increased 74% from a year ago:

 

›   Advisory fee revenues increased 111% over the year-ago quarter on higher completed advisory transactions.

 

›   Equity capital raising revenues increased 62% over the year-ago quarter driven by higher volumes.

 

›   Fixed income capital raising revenues increased 16% over the year-ago quarter driven by an increase in public finance, as well as an increase in our corporate debt issuance business.

Equity brokerage revenues decreased 3% from a year ago:

 

›   Equity brokerage revenues declined from the year-ago quarter due to declines in cash equities driven by lower volatility and volumes.

Fixed income brokerage revenues decreased 24% from a year ago:

 

›   Fixed income brokerage revenues declined from the year-ago quarter due to lower volatility as well as tighter credit spreads.

Total Expenses:

 

›   Compensation expense increased over the year-ago quarter primarily driven by higher compensable revenues.

 

›   Non-compensation expenses increased over the year-ago quarter primarily as a result of higher professional fees, travel, entertainment, and conference-related expenses partially offset by lower net provisions for litigation matters.
Summary Results of Operations  
($ in 000s)    2Q 2021     2Q 2020  

Net revenues

    $ 520,811     $ 398,096  

Investment banking

      364,545       209,019  

Advisory fee revenue

      206,665       97,838  

Equity capital raising

      102,460       63,277  

Fixed income capital raising

      55,420       47,904  

Equity brokerage

      61,459       63,193  

Fixed income brokerage

      91,855       120,731  

Other

      2,952       5,153  

Total expenses

    $ 379,317     $ 315,047  

Compensation expense

      299,469       241,420  

Non-comp. opex.

      79,848       73,627  

Pre-tax net income

    $ 141,494     $ 83,049  

Compensation ratio

      57.5 %      60.6 % 

Non-compensation ratio

      15.3 %      18.5 % 

Pre-tax margin

      27.2 %      20.9 % 
 

 

Stifel Financial Corp.  |  Page 3

LOGO

 

Other Segment

 

 

Highlights

 

›   The Company issued $300.0 million 4.50% Non-Cumulative Preferred Stock (Series D) in July 2021 and announced the redemption of its 6.25% Non-Cumulative Preferred Stock (Series A).

 

›   Total assets increased $4.1 billion, or 16%, over the year-ago quarter.

 

›   Fitch Ratings affirmed the Company’s rating at ‘BBB’ with its outlook revised to positive during the second quarter.

 

›   The Company repurchased $29.0 million of its outstanding common stock during the second quarter.

 

›   Tier 1 leverage ratio increased 0.7% over the year-ago quarter.

 

›   The Board of Directors declared a $0.15 quarterly dividend per share payable on June 15, 2021 to common shareholders of record on June 1, 2021.

 

›   The Board of Directors declared a quarterly dividend on the outstanding shares of the Company’s preferred stock payable on June 15, 2021 to shareholders of record on June 1, 2021.
($ in millions)    2Q 2021      2Q 2020  

Net revenues

    $ (5,242 )     $ (8,061 ) 

Pre-tax net loss

    $ (104,774 )     $ (96,414 ) 

Stifel Financial Corp.

 

Tier 1 common capital ratio (9)

      15.8 %       15.3 % 

Tier 1 risk based capital ratio (9)

      18.9 %       19.3 % 

Tier 1 leverage capital ratio (9)

      11.7 %       11.0 % 

Tier 1 capital (9)

    $ 3,208      $ 2,606  

Quarter end assets

   $ 29,745      $ 25,624  

Average assets (9)

    $ 27,378      $ 23,684  

Risk weighted assets (9)

    $ 16,952      $ 13,522  

Common stock repurchases

 

Repurchases ($ in 000s)

    $ 28,972        NM  

Number of shares (000s)

      440        NM  

Average price

    $ 65.85        NM  

Period end shares (000s) (1)

      104,865        102,855  

Effective tax rate

      25.0 %       24.5 % 

 

Agency

    Rating      Outlook  

Fitch Ratings

      BBB        Positive  

S&P Global Ratings

      BBB-        Positive  
 

 

Stifel Financial Corp.  |  Page 4

Conference Call Information

Stifel Financial Corp. will host its second quarter 2021 financial results conference call on Wednesday, July 28, 2021, 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 4838637. 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 Stifel Independent Advisors, LLC. 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.

A financial summary follows. Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the financial supplement. Both the earnings release and the financial supplement are available online in the Investor Relations section at www.stifel.com/investor-relations.

The information provided herein and in the financial supplement, including information provided on the Company’s earnings conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial supplement, both of which are available online in the Investor Relations section at www.stifel.com/investor-relations.

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. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies’ operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. 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 I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 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.

 

Stifel Financial Corp.  |  Page 5

Summary Results of Operations (Unaudited)

 

 

     Three Months Ended     Six Months Ended  
  

 

 

    

 

 

  
($ in 000s, except
per share amounts)		    6/30/21      6/30/20      % Change     3/31/21      % Change     6/30/21      6/30/20      % Change  
  

 

 

  

Revenues:

 

Commissions

    $ 195,579      $ 177,028        10.5     $ 213,614        (8.4 )    $ 409,193      $ 388,126        5.4  

Principal transactions

      152,597        166,017        (8.1 )      165,006        (7.5 )      317,603        304,683        4.2  

Investment banking

      376,443        217,035        73.4       339,288        11.0       715,731        396,503        80.5  

Asset management and service fees

      295,869        198,939        48.7       278,147        6.4       574,016        436,714        31.4  

Other income

      13,235        21,514        (38.5 )      25,634        (48.4 )      38,869        30,721        26.5  
  

 

 

  

Operating revenues

      1,033,723        780,533        32.4       1,021,689        1.2       2,055,412        1,556,747        32.0  

Interest revenue

      133,591        128,368        4.1       127,540        4.7       261,131        289,545        (9.8 ) 
  

 

 

  

Total revenues

      1,167,314        908,901        28.4       1,149,229        1.6       2,316,543        1,846,292        25.5  

Interest expense

      14,178        13,084        8.4       14,440        (1.8 )      28,618        37,441        (23.6 ) 
  

 

 

  

Net revenues

      1,153,136        895,817        28.7       1,134,789        1.6       2,287,925        1,808,851        26.5  

Non-interest expenses:

 

Compensation and benefits

      692,054        547,174        26.5       697,914        (0.8 )      1,389,968        1,124,353        23.6  

Non-compensation operating expenses

      197,057        205,683        (4.2 )      208,983        (5.7 )      406,040        426,432        (4.8 ) 
  

 

 

  

Total non-interest expenses

      889,111        752,857        18.1       906,897        (2.0 )      1,796,008        1,550,785        15.8  
  

 

 

  

Income before income taxes

      264,025        142,960        84.7       227,892        15.9       491,917        258,066        90.6  

Provision for income taxes

      65,948        35,073        88.0       54,877        20.2       120,825        63,590        90.0  
  

 

 

  

Net income

      198,077        107,887        83.6       173,015        14.5       371,092        194,476        90.8  

Preferred dividends

      8,289        4,843        71.2       8,289        —         16,578        9,687        71.1  

Net income available to common shareholders

    $ 189,788      $ 103,044        84.2     $ 164,726        15.2     $ 354,514      $ 184,789        91.8  

Earnings per common share: (1)

 

Basic

    $ 1.76      $ 0.97        81.4     $ 1.53        15.0     $ 3.29      $ 1.74        89.1  

Diluted

    $ 1.60      $ 0.92        73.9     $ 1.40        14.3     $ 3.00      $ 1.63        84.0  

Cash dividends declared per common share (1)

    $ 0.15      $ 0.11        36.4     $ 0.15        —       $ 0.30      $ 0.22        36.4  

Weighted average number of common shares outstanding: (1)

 

Basic

      107,837        105,791        1.9       107,746        0.1       107,795        106,358        1.4  

Diluted

      118,602        111,581        6.3       117,875        0.6       118,279        113,477        4.2  

 

  

 

Stifel Financial Corp.  |  Page 6

Non-GAAP Financial Measures

 

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the three months ended June 30, 2021, June 30, 2020, and March 31, 2021. 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 tables provide details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three and six months ended June 30, 2021 and 2020, and the three months ended March 31, 2021 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

 

     Three Months Ended     Six Months Ended  
  

 

 

  
($ in 000s, except per share amounts)    6/30/21     6/30/20     6/30/21     6/30/20  
  

 

 

  

GAAP net income

    $ 198,077     $ 107,887     $ 371,092     $ 194,476  

Preferred dividend

      8,289       4,843       16,578       9,687  
  

 

 

  

Net income available to common shareholders

      189,788       103,044       354,514       184,789  

Non-GAAP adjustments:

         

Merger-related (10)

      16,368       16,259       31,797       29,769  

Provision for income taxes (11)

      (4,089 )      (3,968 )      (7,819 )      (7,290 ) 
  

 

 

  

Total non-GAAP adjustments

      12,279       12,291       23,978       22,479  
  

 

 

  

Non-GAAP net income available to common shareholders

    $ 202,067     $ 115,335     $ 378,492     $ 207,268  
  

 

 

  

Weighted average diluted shares outstanding (1)

      118,602       111,581       118,279       113,477  

GAAP earnings per diluted common share (1)

    $ 1.67     $ 0.97     $ 3.14     $ 1.71  

Non-GAAP adjustments (1)

      0.10       0.11       0.20       0.20  
  

 

 

  

Non-GAAP earnings per diluted common share (1)

    $ 1.77     $ 1.08     $ 3.34     $ 1.91  
  

 

 

  

GAAP earnings per diluted common share available to common shareholders (1)

    $ 1.60     $ 0.92     $ 3.00     $ 1.63  

Non-GAAP adjustments (1)

      0.10       0.11       0.20       0.20  
  

 

 

  

Non-GAAP earnings per diluted common share available to common shareholders (1)

    $ 1.70     $ 1.03     $ 3.20     $ 1.83  

 

  

 

Stifel Financial Corp.  |  Page 7

GAAP to Non-GAAP Reconciliation

 

 

     Three Months Ended     Six Months Ended  
($ in 000s)    6/30/21     6/30/20     6/30/21     6/30/20  

GAAP compensation and benefits

    $ 692,054   $ 547,174     $ 1,389,968     $ 1,124,353  

As a percentage of net revenues

      60.0 %      61.1 %      60.8 %      62.2 % 

Non-GAAP adjustments:

         

Merger-related(10)

      (6,119 )      (9,710 )      (12,293 )      (16,137 ) 

Non-GAAP compensation and benefits

    $ 685,935     $ 537,464     $ 1,377,675     $ 1,108,216  

As a percentage of non-GAAP net revenues

      59.5 %      60.0 %      60.2 %      61.3 % 

GAAP non-compensation expenses

    $ 197,057     $ 205,683     $ 406,040     $ 426,432  

As a percentage of net revenues

      17.1 %      22.9 %      17.7 %      23.5 % 

Non-GAAP adjustments:

         

Merger-related(10)

      (10,287 )      (6,549 )      (19,351 )      (13,453 ) 

Non-GAAP non-compensation expenses

    $ 186,770     $ 199,134     $ 386,689     $ 412,979  

As a percentage of non-GAAP net revenues

      16.2 %      22.2 %      16.9 %      22.8 % 

Total merger-related expenses

    $ 16,368     $ 16,259     $ 31,797     $ 29,769  

 

Stifel Financial Corp.  |  Page 8

Footnotes

 

 

(1)

All share and per share information has been retroactively adjusted to reflect the December 2020 three-for-two stock split.

(2)

Represents available to common shareholders.

(3)

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

(4)

Non-GAAP pre-tax margin for the three months ended June 30, 2021 of 24.3% is calculated by adding non-GAAP adjustments of $16.4 million to our GAAP income before income taxes of $264.0 million and dividing it by non-GAAP net revenues for the quarter of $1.2 billion. Non-GAAP pre-tax margin for the six months ended June 30, 2021 of 22.9% is calculated by adding non-GAAP adjustments of $31.8 million to our GAAP income before income taxes of $491.9 million and dividing it by non-GAAP net revenues for the period of $2.3 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

(5)

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

(6)

Annualized return on average tangible common shareholders’ equity (“ROTCE”) 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 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 $53.1 million, $48.5 million, and $51.7 million, as of June 30, 2021 and 2020, and March 31, 2021, respectively.

(7)

Includes loans held for sale.

(8)

Tangible book value per common share represents shareholders’ equity (excluding preferred stock) divided by period end common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets.

(9)

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

(10)

Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, 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.

(11)

Primarily represents the Company’s effective tax rate for the period applied to the non-GAAP adjustments.

 

Stifel Financial Corp.  |  Page 9

Exhibit 99.2

 

LOGO

 

Second Quarter 2021 Earnings Results    

 

 

Quarterly Financial Supplement    Page  

Consolidated Financial Highlights

      2  

GAAP Consolidated Results of Operations

      3  

Non-GAAP Consolidated Results of Operations

      4  

Consolidated Financial Summary

      5  

Consolidated Financial Information & Metrics

      6  

Regulatory Capital

      7  

Global Wealth Management - Summary Results of Operations

      8  

Global Wealth Management - Statistical Information

      9  

Institutional Group - Summary Results of Operations

      10  

Stifel Bancorp - Financial Information and Credit Metrics

      11  

Loans and Lending Commitments - Allowance for Credit Losses

      12  

Consolidated Net Interest Income

      13  

Stifel Bancorp Net Interest Income

      14  

GAAP to Core Reconciliation

      15  

Footnotes

      16  

Disclaimer and Legal Notice

      17  

 

 

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 1 of 17

LOGO

 

Consolidated Financial Highlights

 

 

     Three Months Ended     Six Months Ended  
(Unaudited, $ in 000s except per share information)    6/30/2021      6/30/2020      % Change     3/31/2021      % Change     6/30/2021      6/30/2020      % Change  

Net revenues

    $ 1,153,136      $ 895,817        28.7 %    $ 1,134,789        1.6 %    $ 2,287,925      $ 1,808,851        26.5 % 

Net income

    $ 198,077      $ 107,887        83.6 %    $ 173,015        14.5 %    $ 371,092      $ 194,476        90.8 % 

Preferred dividends

      8,289        4,843        71.2 %      8,289        0.0 %      16,578        9,687        71.1 % 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net income available to common shareholders

    $ 189,788      $ 103,044        84.2 %    $ 164,726        15.2 %    $ 354,514      $ 184,789        91.8 % 

Earnings per diluted common share (1)

    $ 1.67      $ 0.97        72.2 %    $ 1.47        13.6 %    $ 3.14      $ 1.71        83.6 % 

Earnings per diluted common share available to common shareholders (1)

    $ 1.60      $ 0.92        73.9 %    $ 1.40        14.3 %    $ 3.00      $ 1.63        84.0 % 

Non-GAAP financial summary (2):

                      

Net revenues

    $ 1,153,098      $ 895,817        28.7 %    $ 1,134,980        1.6 %    $ 2,288,078      $ 1,809,030        26.5 % 

Net income

    $ 210,356      $ 120,178        75.0 %    $ 184,714        13.9 %    $ 395,070      $ 216,955        82.1 % 

Preferred dividends

      8,289        4,843        71.2 %      8,289        0.0 %      16,578        9,687        71.1 % 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net income available to common shareholders

    $ 202,067        115,335        75.2 %      176,425        14.5 %      378,492        207,268        82.6 % 

Earnings per diluted common share (1)

    $ 1.77      $ 1.08        63.9 %    $ 1.57        12.7 %    $ 3.34      $ 1.91        74.9 % 

Earnings per diluted common share available to common shareholders (1)

    $ 1.70      $ 1.03        65.0 %    $ 1.50        13.3 %    $ 3.20      $ 1.83        74.9 % 

Weighted average number of common shares outstanding (1)

 

Basic

      107,837        105,791        1.9 %      107,746        0.1 %      107,795        106,358        1.4 % 

Diluted

      118,602        111,581        6.3 %      117,875        0.6 %      118,279        113,477        4.2 % 

Period end common shares outstanding (1)

      104,865        102,855        2.0 %      105,215        (0.3 %)      104,865        102,855        2.0 % 

Cash dividends declared per common share (1)

    $ 0.15      $ 0.11        36.4 %    $ 0.15        0.0 %    $ 0.30      $ 0.22        36.4 % 

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 2 of 17

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GAAP Results of Operations (Unaudited)

 

 

     Three Months Ended     Six Months Ended  
($ in 000s except per share information)    6/30/2021     6/30/2020      % Change     3/31/2021     % Change     6/30/2021     6/30/2020      % Change  

Revenues:

                   

Commissions

    $ 195,579     $ 177,028        10.5 %    $ 213,614       (8.4 %)    $ 409,193     $ 388,126        5.4 % 

Principal transactions

      152,597       166,017        (8.1 %)      165,006       (7.5 %)      317,603       304,683        4.2 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Brokerage revenues

      348,176       343,045        1.5 %      378,620       (8.0 %)      726,796       692,809        4.9 % 

Capital raising

      169,778       119,197        42.4 %      208,806       (18.7 %)      378,584       222,593        70.1 % 

Advisory fees

      206,665       97,838        111.2 %      130,482       58.4 %      337,147       173,910        93.9 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Investment banking

      376,443       217,035        73.4 %      339,288       11.0 %      715,731       396,503        80.5 % 

Asset management and service fees

      295,869       198,939        48.7 %      278,147       6.4 %      574,016       436,714        31.4 % 

Other income

      13,235       21,514        (38.5 %)      25,634       (48.4 %)      38,869       30,721        26.5 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Operating revenues

      1,033,723       780,533        32.4 %      1,021,689       1.2 %      2,055,412       1,556,747        32.0 % 

Interest revenue

      133,591       128,368        4.1 %      127,540       4.7 %      261,131       289,545        (9.8 %) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Total revenues

      1,167,314       908,901        28.4 %      1,149,229       1.6 %      2,316,543       1,846,292        25.5 % 

Interest expense

      14,178       13,084        8.4 %      14,440       (1.8 %)      28,618       37,441        (23.6 %) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net revenues

      1,153,136       895,817        28.7 %      1,134,789       1.6 %      2,287,925       1,808,851        26.5 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Non-interest expenses:

                   

Compensation and benefits

      692,054       547,174        26.5 %      697,914       (0.8 %)      1,389,968       1,124,353        23.6 % 

Occupancy and equipment rental

      70,971       66,264        7.1 %      72,032       (1.5 %)      143,003       132,337        8.1 % 

Communication and office supplies

      41,308       43,046        (4.0 %)      41,825       (1.2 %)      83,133       84,170        (1.2 %) 

Commissions and floor brokerage

      13,977       15,177        (7.9 %)      15,703       (11.0 %)      29,680       30,019        (1.1 %) 

Provision for credit losses

      (9,652 )      19,210        (150.2 %)      (5,252 )      83.8 %      (14,904 )      35,278        (142.2 %) 

Other operating expenses

      80,453       61,986        29.8 %      84,675       (5.0 %)      165,128       144,628        14.2 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Total non-interest expenses

      889,111       752,857        18.1 %      906,897       (2.0 %)      1,796,008       1,550,785        15.8 % 

Income before income taxes

      264,025       142,960        84.7 %      227,892       15.9 %      491,917       258,066        90.6 % 

Provision for income taxes

      65,948       35,073        88.0 %      54,877       20.2 %      120,825       63,590        90.0 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net income

      198,077       107,887        83.6 %      173,015       14.5 %      371,092       194,476        90.8 % 

Preferred dividends

      8,289       4,843        71.2 %      8,289       0.0 %      16,578       9,687        71.1 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net income available to common shareholders

    $ 189,788     $ 103,044        84.2 %    $ 164,726       15.2 %    $ 354,514     $ 184,789        91.8 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Earnings per common share: (1)

                   

Basic

    $ 1.76     $ 0.97        81.4 %    $ 1.53       15.0 %    $ 3.29     $ 1.74        89.1 % 

Diluted

    $ 1.60     $ 0.92        73.9 %    $ 1.40       14.3 %    $ 3.00     $ 1.63        84.0 % 

Weighted average number of common shares outstanding: (1)

 

                

Basic

      107,837       105,791        1.9 %      107,746       0.1 %      107,795       106,358        1.4 % 

Diluted

      118,602       111,581        6.3 %      117,875       0.6 %      118,279       113,477        4.2 % 

Cash dividends declared per common share (1)

    $ 0.15     $ 0.11        36.4 %    $ 0.15       0.0 %    $ 0.30     $ 0.22        36.4 % 

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 3 of 17

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Non-GAAP Results of Operations (Unaudited)

 

 

     Three Months Ended     Six Months Ended  
($ in 000s except per share information)    6/30/2021     6/30/2020      % Change     3/31/2021     % Change     6/30/2021     6/30/2020      % Change  

Revenues:

                   

Commissions

    $ 195,579     $ 177,028        10.5 %    $ 213,614       (8.4 %)    $ 409,193     $ 388,126        5.4 % 

Principal transactions

      152,597       166,017        (8.1 %)      165,006       (7.5 %)      317,603       304,683        4.2 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Brokerage revenues

      348,176       343,045        1.5 %      378,620       (8.0 %)      726,796       692,809        4.9 % 

Capital raising

      169,778       119,197        42.4 %      208,806       (18.7 %)      378,584       222,593        70.1 % 

Advisory fees

      206,665       97,838        111.2 %      130,482       58.4 %      337,147       173,910        93.9 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Investment banking

      376,443       217,035        73.4 %      339,288       11.0 %      715,731       396,503        80.5 % 

Asset management and service fees

      295,869       198,939        48.7 %      278,147       6.4 %      574,016       436,714        31.4 % 

Other income

      13,197       21,514        (38.7 %)      25,700       (48.6 %)      38,897       30,900        25.9 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Operating revenues

      1,033,685       780,533        32.4 %      1,021,755       1.2 %      2,055,440       1,556,926        32.0 % 

Interest revenue

      133,591       128,368        4.1 %      127,540       4.7 %      261,131       289,545        (9.8 %) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Total revenues

      1,167,276       908,901        28.4 %      1,149,295       1.6 %      2,316,571       1,846,471        25.5 % 

Interest expense

      14,178       13,084        8.4 %      14,315       (1.0 %)      28,493       37,441        (23.9 %) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net revenues

      1,153,098       895,817        28.7 %      1,134,980       1.6 %      2,288,078       1,809,030        26.5 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Non-interest expenses:

                   

Compensation and benefits

      685,935       537,464        27.6 %      691,740       (0.8 %)      1,377,675       1,108,216        24.3 % 

Occupancy and equipment rental

      70,938       65,854        7.7 %      72,002       (1.5 %)      142,939       131,759        8.5 % 

Communication and office supplies

      41,232       43,008        (4.1 %)      41,825       (1.4 %)      83,057       83,773        (0.9 %) 

Commissions and floor brokerage

      13,977       15,177        (7.9 %)      15,703       (11.0 %)      29,680       30,019        (1.1 %) 

Provision for credit losses

      (9,652 )      19,210        (150.2 %)      (5,252 )      83.8 %      (14,904 )      35,278        (142.2 %) 

Other operating expenses

      70,275       55,885        25.7 %      75,641       (7.1 %)      145,917       132,150        10.4 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Total non-interest expenses

      872,705       736,598        18.5 %      891,659       (2.1 %)      1,764,364       1,521,195        16.0 % 

Income before income taxes

      280,393       159,219        76.1 %      243,321       15.2 %      523,714       287,835        81.9 % 

Provision for income taxes

      70,037       39,041        79.4 %      58,607       19.5 %      128,644       70,880        81.5 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net income

      210,356       120,178        75.0 %      184,714       13.9 %      395,070       216,955        82.1 % 

Preferred dividends

      8,289       4,843        71.2 %      8,289       0.0 %      16,578       9,687        71.1 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Net income available to common shareholders

    $ 202,067     $ 115,335        75.2 %    $ 176,425       14.5 %    $ 378,492     $ 207,268        82.6 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Earnings per common share: (1)

                   

Basic

    $ 1.87     $ 1.09        71.6 %    $ 1.64       14.0 %    $ 3.51     $ 1.95        80.0 % 

Diluted

    $ 1.70     $ 1.03        65.0 %    $ 1.50       13.3 %    $ 3.20     $ 1.83        74.9 % 

Weighted average number of common shares outstanding: (1)

 

                

Basic

      107,837       105,791        1.9 %      107,746       0.1 %      107,795       106,358        1.4 % 

Diluted

      118,602       111,581        6.3 %      117,875       0.6 %      118,279       113,477        4.2 % 

Cash dividends declared per common share (1)

    $ 0.15     $ 0.11        36.4 %    $ 0.15       0.0 %    $ 0.30     $ 0.22        36.4 % 

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 4 of 17

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Consolidated Financial Summary

 

 

     Three Months Ended     Six Months Ended  
(Unaudited, $ in 000s except percentages)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change     6/30/2021     6/30/2020     % Change  

Net revenues:

                 

Global Wealth Management

    $ 637,567     $ 505,782       26.1 %    $ 631,495       1.0 %    $ 1,269,062     $ 1,088,738       16.6 % 

Institutional Group

      520,811       398,096       30.8 %      506,081       2.9 %      1,026,892       730,334       40.6 % 

Other

      (5,242 )      (8,061 )      (35.0 %)      (2,787 )      88.1 %      (8,029 )      (10,221 )      (21.4 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total net revenues

    $ 1,153,136     $ 895,817       28.7 %    $ 1,134,789       1.6 %    $ 2,287,925     $ 1,808,851       26.5 % 

Operating expenses:

                 

Global Wealth Management

    $ 410,262     $ 349,457       17.4 %    $ 408,264       0.5 %    $ 818,526     $ 738,246       10.9 % 

Institutional Group

      379,317       315,047       20.4 %      388,893       (2.5 %)      768,210       605,545       26.9 % 

Other

      99,532       88,353       12.7 %      109,740       (9.3 %)      209,272       206,994       1.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

    $ 889,111     $ 752,857       18.1 %    $ 906,897       (2.0 %)    $ 1,796,008     $ 1,550,785       15.8 % 

Operating contribution:

                 

Global Wealth Management

    $ 227,305     $ 156,325       45.4 %    $ 223,231       1.8 %    $ 450,536     $ 350,492       28.5 % 

Institutional Group

      141,494       83,049       70.4 %      117,188       20.7 %      258,682       124,789       107.3 % 

Other

      (104,774 )      (96,414 )      8.7 %      (112,527 )      (6.9 %)      (217,301 )      (217,215 )      0.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

    $ 264,025     $ 142,960       84.7 %    $ 227,892       15.9 %    $ 491,917     $ 258,066       90.6 % 

Financial ratios:

                 

Compensation and benefits

      60.0 %      61.1 %      (170 )      61.5 %      290       60.8 %      62.2 %      (140 ) 

Non-compensation operating expenses

      17.1 %      22.9 %      (580 )      18.4 %      (90 )      17.7 %      23.5 %      (580 ) 

Income before income taxes

      22.9 %      16.0 %      750       20.1 %      (200 )      21.5 %      14.3 %      720  

Effective tax rate

      25.0 %      24.5 %      (70 )      24.1 %      440       24.6 %      24.6 %      —    

 

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Consolidated Financial Information and Metrics

 

 

     Three Months Ended  
(Unaudited, $ in 000s except percentages and per share data)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change  

Financial Information:

           

Total assets

    $ 29,744,764     $ 25,624,225       16.1 %    $ 28,141,581       5.7 % 

Total shareholders’ equity

    $ 4,508,790     $ 3,884,060       16.1 %    $ 4,318,872       4.4 % 

Total common equity

    $ 3,973,790     $ 3,349,060       18.7 %    $ 3,783,872       5.0 % 

Less: Goodwill and intangible assets

    $ (1,314,818 )    $ (1,330,543 )      (1.2 %)    $ (1,319,089 )      (0.3 %) 

Less: DTL on goodwill and intangible assets

    $ 54,049     $ 49,175       9.9 %    $ 52,651       2.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible common equity

    $ 2,713,021     $ 2,067,692       31.2 %    $ 2,517,434       7.8 % 

Preferred equity

    $ 535,000     $ 535,000       0.0 %    $ 535,000       0.0 % 

Financial Metrics:

           

Book value per common share (1)(3)

    $ 37.89     $ 32.56       16.4 %    $ 35.96       5.4 % 

Tangible book value per common share (1) (3)

    $ 25.87     $ 20.11       28.6 %    $ 23.93       8.1 % 

Return on common equity (4)

      19.4 %      12.6 %        17.6 %   

Non-GAAP return on common equity (2)(4)

      20.6 %      14.1 %        18.8 %   

Return on tangible common equity (5)

      28.6 %      20.7 %        26.5 %   

Non-GAAP return on common equity (2)(5)

      30.5 %      23.2 %        28.4 %   

Pre-tax margin on net revenues

      22.9 %      16.0 %        20.1 %   

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

      24.3 %      17.8 %        21.4 %   

Effective tax rate

      25.0 %      24.5 %        24.1 %   

Non-GAAP effective tax rate (2)

      25.0 %      24.5 %        24.1 %   

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 6 of 17

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Regulatory Capital

 

 

     Three Months Ended  
(Unaudited, $ in 000s except percentages)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change  

SF Regulatory Capital (6):

           

Common equity tier 1 capital

    $ 2,672,682     $ 2,071,121       29.0 %    $ 2,498,655       7.0 % 

Tier 1 capital

    $ 3,207,682     $ 2,606,121       23.1 %    $ 3,033,655       5.7 % 

Risk-weighted assets

    $ 16,952,415     $ 13,521,861       25.4 %    $ 15,655,984       8.3 % 

Common equity tier 1 capital ratio

      15.8 %      15.3 %        16.0 %   

Tier 1 risk based capital ratio

      18.9 %      19.3 %        19.4 %   

Tier 1 leverage capital ratio

      11.7 %      11.0 %        11.5 %   

Stifel Bank & Trust Regulatory Capital (6):

           

Common equity tier 1 capital

    $ 1,069,763     $ 1,058,401       1.1 %    $ 1,044,894       2.4 % 

Tier 1 capital

    $ 1,069,763     $ 1,058,401       1.1 %    $ 1,044,894       2.4 % 

Risk-weighted assets

    $ 9,958,105     $ 8,538,099       16.6 %    $ 9,428,239       5.6 % 

Common equity tier 1 capital ratio

      10.7 %      12.4 %        11.1 %   

Tier 1 risk based capital ratio

      11.8 %      13.9 %        12.4 %   

Tier 1 leverage capital ratio

      7.0 %      7.2 %        7.1 %   

Stifel Bank Regulatory Capital (6):

           

Common equity tier 1 capital

    $ 326,622     $ 196,916       65.9 %    $ 280,718       16.4 % 

Tier 1 capital

    $ 326,622     $ 196,916       65.9 %    $ 280,718       16.4 % 

Risk-weighted assets

    $ 1,593,962     $ 1,047,142       52.2 %    $ 1,517,312       5.1 % 

Common equity tier 1 capital ratio

      20.5 %      18.8 %        18.5 %   

Tier 1 risk based capital ratio

      20.9 %      20.1 %        19.2 %   

Tier 1 leverage capital ratio

      7.1 %      7.1 %        7.3 %   

Stifel Net Capital:

           

Net capital

    $ 614,500     $ 449,400       36.7 %    $ 570,300       7.8 % 

Excess net capital

    $ 584,000     $ 425,200       37.3 %    $ 541,600       7.8 % 

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 7 of 17

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Global Wealth Management - Summary Results of Operations

 

 

     Three Months Ended     Six Months Ended  
(Unaudited, $ in 000s except percentages)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change     6/30/2021     6/30/2020     % Change  

Revenues:

                 

Commissions

    $ 139,653     $ 116,156       20.2 %    $ 147,505       (5.3 %)    $ 287,158     $ 253,053       13.5 % 

Principal transactions

      55,209       42,967       28.5 %      53,599       3.0 %      108,808       85,949       26.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Brokerage revenues

      194,862       159,123       22.5 %      201,104       (3.1 %)      395,966       339,002       16.8 % 

Asset management and service fees

      295,847       198,921       48.7 %      278,109       6.4 %      573,956       436,681       31.4 % 

Net interest

      124,686       121,564       2.6 %      117,775       5.9 %      242,461       260,246       (6.8 %) 

Investment banking (7)

      11,898       8,016       48.4 %      13,549       (12.2 %)      25,447       18,349       38.7 % 

Other income

      10,274       18,158       (43.4 %)      20,958       (51.0 %)      31,232       34,460       (9.4 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net revenues

      637,567       505,782       26.1 %      631,495       1.0 %      1,269,062       1,088,738       16.6 % 

Non-interest expenses:

                 

Compensation and benefits

      341,367       258,291       32.2 %      336,721       1.4 %      678,088       556,661       21.8 % 

Non-compensation operating expenses

      68,895       91,166       (24.4 %)      71,543       (3.7 %)      140,438       181,585       (22.7 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expenses

      410,262       349,457       17.4 %      408,264       0.5 %      818,526       738,246       10.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

    $ 227,305     $ 156,325       45.4 %    $ 223,231       1.8 %    $ 450,536     $ 350,492       28.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

As a percentage of net revenues:

                 

Compensation and benefits

      53.5 %      51.1 %      240       53.3 %      20       53.4 %      51.1 %      230  

Non-compensation operating expenses

      10.8 %      18.0 %      (720 )      11.4 %      (60 )      11.1 %      16.7 %      (560 ) 

Income before income taxes

      35.7 %      30.9 %      480       35.3 %      40       35.5 %      32.2 %      330  

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 8 of 17

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Global Wealth Management - Statistical Information

 

 

     Three Months Ended  
(Unaudited, $ in 000s except financial advisors and locations)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change  

Financial advisors

      2,190       2,138       2.4 %      2,182       0.4 % 

Independent contractors

      92       94       (2.1 %)      92       0.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total financial advisors

      2,282       2,232       2.2 %      2,274       0.4 % 

Locations

      446       447       (0.2 %)      446       0.0 % 

Total client assets

    $ 402,442,000     $ 306,235,000       31.4 %    $ 378,615,000       6.3 % 

Fee-based client assets

    $ 148,838,000     $ 106,218,000       40.1 %    $ 137,804,000       8.0 % 

Brokerage assets

    $ 253,604,000     $ 200,017,000       26.8 %    $ 240,811,000       5.3 % 

Client money market and insured product

    $ 23,615,000     $ 18,664,000       26.5 %    $ 23,616,000       nm  

Secured client lending (8)

    $ 3,451,625     $ 2,563,773       34.6 %    $ 3,124,545       10.5 % 

Asset Management and Service Fee Revenue ($ in 000s):

           

Private Client Group (9)

    $ 249,273     $ 164,403       51.6 %    $ 233,805       6.6 % 

Asset Management

      32,202       23,769       35.5 %      30,114       6.9 % 

Third-party Bank Sweep Program

      1,516       522       190.4 %      2,102       (27.9 %) 

Other (10)

      12,878       10,245       25.7 %      12,126       6.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total asset management and service fee revenues

    $ 295,869     $ 198,939       48.7 %    $ 278,147       6.4 % 

Fee-based Assets ($ in millions):

           

Private Client Group (9)

    $ 129,565       91,360       41.8 %    $ 119,836       8.1 % 

Asset Management

      33,289       25,706       29.5 %      31,115       7.0 % 

Elimination (11)

      (14,015 )      (10,848 )      29.2 %      (13,147 )      6.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total fee-based assets

    $ 148,839     $ 106,218       40.1 %    $ 137,804       8.0 % 

Third-party Bank Sweep Program

    $ 5,795     $ 3,007       92.7 %    $ 6,455       (10.2 %) 

ROA (bps) (12):

           

Private Client Group (9)

      83.2       81.6         83.5    

Asset Management

      38.7       37.0         38.7    

Third-party Bank Sweep Program

      9.9       7.1         12.3    

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 9 of 17

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Institutional Group - Summary Results of Operations

  
     Three Months Ended     Six Months Ended  
(Unaudited, $ in 000s except percentages)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change     6/30/2021     6/30/2020     % Change  

Revenues:

                 

Commissions

    $ 55,926     $ 60,875       (8.1 %)    $ 66,109       (15.4 %)    $ 122,035     $  135,073       (9.7 %) 

Principal transactions

      97,388       123,049       (20.9 %)      111,407       (12.6 %)      208,795       218,734       (4.5 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Brokerage revenues

      153,314       183,924       (16.6 %)      177,516       (13.6 %)      330,830       353,807       (6.5 %) 

Capital raising

      157,880       111,181       42.0 %      195,257       (19.1 %)      353,137       204,263       72.9 % 

Advisory fees

      206,665       97,838       111.2 %      130,482       58.4 %      337,147       173,891       93.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment banking

      364,545       209,019       74.4 %      325,739       11.9 %      690,284       378,154       82.5 % 

Other income (13)

      2,952       5,153       (42.7 %)      2,826       4.5 %      5,778       (1,627 )      (455.1 %) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net revenues

      520,811       398,096       30.8 %      506,081       2.9 %      1,026,892       730,334       40.6 % 

Non-interest expenses:

                 

Compensation and benefits

      299,469       241,420       24.0 %      301,624       (0.7 %)      601,093       447,408       34.4 % 

Non-compensation operating expenses

      79,848       73,627       8.4 %      87,269       (8.5 %)      167,117       158,137       5.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expenses

      379,317       315,047       20.4 %      388,893       (2.5 %)      768,210       605,545       26.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

    $  141,494     $ 83,049       70.4 %    $  117,188       20.7 %    $ 258,682     $ 124,789       107.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

As a percentage of net revenues:

                 

Compensation and benefits

      57.5 %      60.6 %      (310 )      59.6 %      (210 )      58.5 %      61.3 %      (280 ) 

Non-compensation operating expenses

      15.3 %      18.5 %      (320 )      17.2 %      (190 )      16.3 %      21.6 %      (530 ) 

Income before income taxes

      27.2 %      20.9 %      630       23.2 %      400       25.2 %      17.1 %      810  

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 10 of 17

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Stifel Bancorp - Financial Information and Credit Metrics

 

 

     Three Months Ended  
(Unaudited, $ in 000s except percentages)    6/30/2021     6/30/2020     % Change     3/31/2021     % Change  

Stifel Bancorp Financial Information:

           

Total assets

    $ 21,250,293     $ 18,123,326       17.3 %    $ 20,500,414       3.7 % 

Total shareholder’s equity

    $ 1,563,380     $ 1,378,096       13.4 %    $ 1,474,473       6.0 % 

Total loans, net (includes loans held for sale)

    $ 13,164,958     $ 10,923,212       20.5 %    $ 12,422,234       6.0 % 

Commercial and industrial

      4,950,516       4,149,307       19.3 %      4,923,494       0.5 % 

Residental real estate

      4,567,467       3,710,657       23.1 %      4,158,033       9.8 % 

Securities-based loans

      2,331,737       1,716,786       35.8 %      2,089,747       11.6 % 

Commercial real estate

      370,517       406,788       (8.9 %)      374,736       (1.1 %) 

Other

      678,570       590,759       14.9 %      669,183       1.4 % 

Loans held for sale

      394,017       474,899       (17.0 %)      330,521       19.2 % 

Investment securities

    $ 7,264,849     $ 6,255,286       16.1 %    $ 6,948,574       4.6 % 

Available-for-sale securities, at fair value

      2,279,678       3,172,160       (28.1 %)      2,189,664       4.1 % 

Held-to-maturity securities, at amortized cost

      4,985,171       3,083,126       61.7 %      4,758,910       4.8 % 

Total deposits

    $ 19,608,800     $ 16,302,821       20.3 %    $ 18,715,133       4.8 % 

Demand deposits (interest-bearing)

      18,908,576       15,855,029       19.3 %      18,125,863       4.3 % 

Demand deposits (non interest-bearing)

      643,890       287,251       124.2 %      524,338       22.8 % 

Certificates of deposit

      56,334       160,541       (64.9 %)      64,932       (13.2 %) 

Credit Metrics:

           

Allowance for credit losses

    $ 115,190     $ 139,949       (17.7 %)    $ 129,109       (10.8 %) 

Allowance as a percentage of retained loans

      0.90 %      1.32 %        1.06 %   

Net charge-offs as a percentage of average loans

      0.03 %      0.00 %        0.01 %   

Total nonperforming assets

    $ 9,808     $ 14,602       (32.8 %)    $ 13,756       (28.7 %) 

Nonperforming assets as a percentage of total assets

      0.05 %      0.08 %        0.07 %   

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 11 of 17

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Loans and Lending Commitments - Allowance for Credit Losses

 

 

     Loans and Lending                      
(Unaudited, $ in 000s except percentages)    Commitments      ACL      ACL %     Q2 Provision  

Commercial and industrial

    $ 4,950,516      $ 46,943        0.9 %    $ (5,105 ) 

Residental real estate

      4,567,467        21,267        0.5 %      4,602  

Securities-based loans

      2,331,737        2,519        0.1 %      350  

Commercial real estate

      370,517        11,903        3.2 %      (1,157 ) 

Other

      678,570        16,564        2.4 %      (2,894 ) 
  

 

 

     

 

 

       

 

 

  

Loans held for investment, gross

      12,898,807        99,196        0.8 %      (4,204 ) 

Loans held for sale

      394,017          
  

 

 

          

Total loans, gross

      13,292,824          

Lending commitments

      2,827,000        15,994        0.6 %      (5,448 ) 
  

 

 

     

 

 

       

 

 

  

Loans and lending commitments

    $ 16,119,824      $ 115,190        $ (9,652 ) 
  

 

 

     

 

 

       

 

 

  

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 12 of 17

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Consolidated Net Interest Income

 

 

    Three Months Ended  
    June 30, 2021     June 30, 2020     March 31, 2021  
($ 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

   $ 1,249.2     $ 0.8       0.26 %    $ 1,674.0     $ 1.0       0.24 %    $ 1,812.2     $ 0.9       0.20 % 

Financial instruments owned

     979.7       2.5       1.04 %      761.7       2.9       1.50 %      807.8       2.9       1.43 % 

Margin balances

     1,059.3       6.3       2.37 %      981.5       6.4       2.59 %      961.6       6.1       2.53 % 

Investments:

                  

Asset-backed securities

     5,132.9       22.8       1.77 %      4,842.0       32.6       2.70 %      4,724.6       21.3       1.80 % 

Mortgage-backed securities

     1,070.5       4.1       1.53 %      877.2       4.6       2.09 %      905.9       3.3       1.44 % 

Corporate fixed income securities

     709.7       4.6       2.61 %      648.9       4.2       2.59 %      639.8       5.4       3.37 % 

Other

     5.8       —         2.11 %      17.5       0.1       2.14 %      6.4       —         2.06 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total investments

     6,918.9       31.5       1.82 %      6,385.6       41.5       2.60 %      6,276.7       30.0       1.91 % 

Loans:

                  

Commercial and industrial

     5,055.4       43.3       3.43 %      4,095.4       31.8       3.10 %      4,573.6       39.5       3.45 % 

Residental real estate

     4,296.5       28.5       2.66 %      3,589.2       25.6       2.85 %      3,994.5       27.0       2.71 % 

Securities-based loans

     2,214.1       10.8       1.94 %      1,789.2       9.9       2.22 %      2,002.3       9.7       1.94 % 

Commercial real estate

     417.7       3.0       2.89 %      402.6       4.0       3.98 %      371.0       3.3       3.51 % 

Loans held for sale

     286.7       1.6       2.20 %      486.7       3.3       2.68 %      534.4       2.8       2.09 % 

Other

     688.6       5.2       3.03 %      546.3       4.6       3.36 %      639.9       4.9       3.07 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total loans

     12,959.0       92.4       2.85 %      10,909.4       79.2       2.90 %      12,115.7       87.2       2.88 % 

Other interest-bearing assets

     698.9       0.1       0.01 %      476.3       (2.6 )      (2.15 %)      596.2       0.4       0.32 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing assets/ interest income

     23,865.0       133.6       2.24 %      21,188.5       128.4       2.42 %      22,570.2       127.5       2.26 % 

Interest-bearing liabilities:

                  

Senior notes

     1,112.7       12.0       4.30 %      1,195.0       13.1       4.38 %      1,112.5       12.1       4.35 % 

Deposits

     18,637.1       1.2       0.03 %      16,676.5       2.3       0.05 %      17,629.6       1.3       0.03 % 

Federal Home Loan advances

     60.3       —         0.27 %      250.8       0.7       1.09 %      15.8       —         0.29 % 

Other interest-bearing liabilities

     1,441.9       1.0       0.26 %      1,190.6       (3.0 )      (0.99 %)      1,209.6       1.0       0.34 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities/ interest expense

   $ 21,252.0       14.2       0.27 %    $ 19,312.9       13.1       0.27 %    $ 19,967.5       14.4       0.29 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

Net interest income/margin

     $ 119.4       2.00 %      $ 115.3       2.18 %      $ 113.1       2.00 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 13 of 17

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Stifel Bancorp Net Interest Income

 

 

    Three Months Ended  
    June 30, 2021     June 30, 2020     March 31, 2021  
($ 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

   $ 611.9     $ 0.2       0.14 %    $ 961.1     $ 0.3       0.13 %    $ 962.3     $ 0.3       0.12 % 

Investments

     6,918.9       31.5       1.82 %      6,385.6       41.5       2.60 %      6,276.7       30.0       1.91 % 

Loans

     12,959.0       92.4       2.85 %      10,909.4       79.2       2.90 %      12,115.7       87.2       2.88 % 

Other interest-bearing assets

     44.5       0.4       3.21 %      46.7       0.3       2.46 %      40.7       0.2       2.23 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing assets/ interest income

   $ 20,534.3     $ 124.5       2.42 %    $ 18,302.8     $ 121.3       2.65 %    $ 19,395.4     $ 117.7       2.43 % 

Interest-bearing liabilities:

                  

Deposits

   $ 18,637.1     $ 1.2       0.03 %    $ 16,676.5     $ 2.3       0.05 %    $ 17,629.6     $ 1.3       0.03 % 

Federal Home Loan advances

     60.3       —         0.27 %      250.8       0.7       1.09 %      15.8       —         0.29 % 

Other interest-bearing liabilities

     1.3       0.1       7.44 %      1.5       —         6.71 %      1.4       —         7.92 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities/ interest expense

   $ 18,698.7       1.3       0.03 %    $ 16,928.8       3.0       0.07 %    $ 17,646.8       1.3       0.03 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

Net interest income/margin

     $ 123.2       2.40 %      $ 118.3       2.59 %      $ 116.4       2.40 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 14 of 17

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GAAP to Core Reconciliation

 

 

    Three Months Ended     Six Months Ended  
(Unaudited, $ in 000s except percentages)   6/30/2021     6/30/2020     Change     3/31/2021     Change     6/30/2021     6/30/2020     Change  

GAAP net revenues

   $ 1,153,136     $ 895,817       $ 1,134,789       $ 2,287,925     $ 1,808,851    

Non-GAAP adjustments

     (38 )      —           191         153       179    
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP rnet revenues

     1,153,098       895,817         1,134,980         2,288,078       1,809,030    

GAAP compensation and benefits expense

     692,054       547,174         697,914         1,389,968       1,124,353    

Merger-related (14)

     (6,119 )      (9,710 )        (6,174 )        (12,293 )      (16,137 )   
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP compensation and benefits expense

     685,935       537,464         691,740         1,377,675       1,108,216    

GAAP non-compensation operating expenses

     197,057       205,683         208,983         406,040       426,432    

Merger-related (14)

     (10,287 )      (6,549 )        (9,064 )        (19,351 )      (13,453 )   
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP non-compensation operating expenses

     186,770       199,134         199,919         386,689       412,979    

GAAP provision for income taxes

     65,948       35,073         54,877         120,825       63,590    

Merger-related and other (14)

     4,089       3,968         3,730         7,819       7,290    
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP provision for income taxes

     70,037       39,041         58,607         128,644       70,880    
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Total merger-related adjustments

     (16,368 )      (16,259 )        (15,429 )        (31,797 )      (29,769 )   
 

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Financial ratios:

                

Compensation and benefits

     59.5 %      60.0 %      (50 )      60.9 %      (140 )      60.2 %      61.3 %      (110 ) 

Non-compensation operating expenses

     16.2 %      22.2 %      (600 )      17.7 %      (150 )      16.9 %      22.8 %      (590 ) 

Income before income taxes

     24.3 %      17.8 %      650       21.4 %      290       22.9 %      15.9 %      700  

Effective tax rate

     25.0 %      24.5 %      50       24.1 %      90       24.6 %      24.6 %      —    

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 15 of 17

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Footnotes

 

 

(1)

All share and per share information has been retroactively adjusted to reflect the December 2020 three-for-two stock split.

(2)

Please refer to the GAAP to Core Reconciliation for a reconciliation of the Company’s GAAP results to these non-GAAP measures.

(3)

Book value per common share represents shareholders’ equity (excluding preferred stock) divided by period end common shares outstanding. Tangible book value per share represents tangible common shareholders’ equity (defined below) divided by period end common shares outstanding.

(4)

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

(5)

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 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 $53.1 million, $48.5 million, and $51.7 million, as of June 30, 2021 and 2020, and March 31, 2021, respectively. Historical periods have been restated to conform with the current period presentation.

(6)

Regulatory capital amounts and ratios are estimates at the time of the Company’s earnings release on July 28, 2021.

(7)

Includes capital raising and advisory fee revenues.

(8)

Includes client margin balances held by the Company’s broker-dealer subsidiaries and securities-based loans held at the Company’s bank subsidiaries.

(9)

Includes Private Client Group and Trust Business

(10)

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

(11)

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

(12)

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.

(13)

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

(14)

Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, 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.

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 16 of 17

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Disclaimer and Legal Notice

 

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 I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 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 three and six months ended June 30, 2021. 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.

Legal Notice

This Financial Supplement contains financial, statistical, and business-related information, as well as business and segment trends. The information should be read in conjunction with the Company’s second quarter earnings release issued July 28, 2021.

 

Stifel Financial Corp. Quarterly Financial Supplement  |  Second Quarter 2021 Earnings Release    Page 17 of 17

Slide 0

2nd Quarter 2021 Financial Results Presentation July 28, 2021 Exhibit 99.3

Slide 1

Record Quarterly & Six Month Net Revenue Second Quarter Snapshot 2Q21 & YTD Results millions, except per share and ratios HIGHLIGHTS NET REVENUE 2Q21: GAAP & NON-GAAP $1,153 YTD: GAAP & NON-GAAP $2,288 NET EARNINGS 2Q21: GAAP $190 NON-GAAP $202 YTD: GAAP $355 NON-GAAP $378 EPS 2Q21 GAAP $1.60 NON-GAAP $1.70 YTD: GAAP $3.00 NON-GAAP $3.20 ANNUALIZED ROE 2Q21: GAAP 19.4% NON-GAAP 20.6% YTD: GAAP 18.5% NON-GAAP 19.7% ANNUALIZED ROTCE 2Q21 GAAP 28.6% NON-GAAP 30.5% YTD: GAAP 27.6% NON-GAAP 29.5% BOOK VALUE PER SHARE TBV $25.87 BV $37.89 Record Quarterly & Six Month Pre-tax Income & EPS Record Quarterly & Six Month Global Wealth Management Revenue Record Quarterly & Six Month Institutional Group Revenue Record Investment Banking Pipelines Substantial Growth in Private Client Fee-Based Assets

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Second Quarter Results SECOND QUARTER HIGHLIGHTS Record Quarterly: Non-GAAP Net Revenue of $1.15 billion, up 29% Y/Y Global Wealth Management Revenue of $638 million, up 26% Y/Y Institutional Group Revenue of $521 million, up 31% Non-GAAP Pre-tax Margin of 24.3%, up 650 bps Y/Y Fee-based Client Assets of $149 billion, up 8% sequentially Tangible Book Value Per Share of $25.87, up 29% Y/Y Non-GAAP annualized ROTCE of 30.5%, up 730 basis points Y/Y Operating Expense = Non-Compensation Expense – Provision for Credit Loss Operating Expense Ratio excludes Provision for Credit Loss) millions 2Q21 Y/Y Change Sequential Change YTD VS 2020 Global Wealth Management $638 26% 1% $1,269 17% Institutional 521 31% 3% 1,027 41% Other -5 n/m n/m -8 n/m Net revenue 1,153 29% 2% 2,288 27% Compensation expense 686 28% -1% 1,378 24% Operating expense 1 196 9% -4% 401 6% Provision for credit loss -10 n/m 84% -15 n/m Pre-tax income 280 76% 15% 524 82% Taxes 70 79% 20% 129 81% Net income 210 75% 14% 395 82% Preferred dividends 8 71% 0% 17 71% Net income available to common shareholders 202 75% 15% 378 83% Diluted EPS $1.70 65% 13% $3.20 75% Compensation ratio 59.5% -50 bps -140 bps 60.2% -110 bps Operating expense ratio 2 17.0% -310 bps -110 bps 17.5% -340 bps Pre-tax operating margin 24.3% 650 bps 290 bps 22.9% 700 bps Book value per share $37.89 16% 5% Tangible book value per share $25.87 29% 8% ROTCE 30.5% 730 bps 210 bps FINANCIAL RESULTS

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Impressive Track Record of Growth 2015 & 2016 exclude duplicative acquisition costs Earnings per share have been adjusted to reflect December 2020 three for two stock split Non-GAAP 3

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Increased 2021 Guidance After Record First Half Results Original 2021 Guidance Assumptions Total Net Revenue Increase of 1% - 7% Net Interest Income Growth of -2% - 9% Stable Bank Net Interest Margin Bank Interest-Earning Asset Growth of up to $2 billion Growth in Asset Management Fees Comp. Ratio of 58.5% - 60.5% Operating Non-Comp. Ratio of 18-20% (1) Operating Non-Compensation Ratio excludes loan loss provision & investment banking gross up Updated 2021 Guidance Assumptions Total Net Revenue Increase of 20% - 25% Net Interest Income Expected Growth of 2% - 6% Stable Bank Net Interest Margin Bank Interest Earning Assets growth of $4 billion Record Investment Banking Revenue Record Asset Management Revenue Comp. Ratio Guidance positively Impacted by Increased Net Interest Income & Investment Banking Operating Non-Comp. Ratio Positively Impacted Higher Revenue & Improved Operating Margin

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HIGHLIGHTS Record First Half Net Revenue of $1.3 billion, up 17% Y/Y Record Quarterly Net Revenue of $638 million, up 26% Y/Y Record Quarterly Wealth Management Revenue, ex. Stifel Bancorp Inc., of $501 million Private Client Fee-based Assets Increased 42% Y/Y Added 26 Financial Advisors, including 14 Experienced Advisors with total Trailing Twelve Month production of $12 million. Global Wealth Management

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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 Announced renewed focus on recruiting independent FAs & rebranded business to Stifel Independent Advisors 85% of FAs who 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 OurCrowd access to early-stage venture sponsors

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Institutional Group * Includes net interest, asset management and service fees, and other income HIGHLIGHTS Record Results: Quarterly Net Revenue of $521 million, up 31% Y/Y Quarterly Advisory Revenue of $207 million, up 111% Y/Y First Half Net Revenue of $1.03 billion, up 41% Y/Y First Half Advisory Revenue of $337 million, up 94% Y/Y First Half Capital Raising Revenue of $353 million, up 73% Y/Y Pre-tax Margin of 27.2%, up 630 bps Y/Y * 2021 revenue based on annualized results through 6/30/2021

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highlights Record Quarterly Capital Raising Revenue Surpassed Prior Record by 9% (3Q20) Second Highest First Half Institutional Fixed Income Revenue Third Highest Quarterly Institutional Fixed Income Revenue Lead Managed 244 Negotiated Municipal Offerings Institutional Equities & Fixed Income highlights Record Six Month Institutional Equities Revenue Record Six Month Institutional Equities Brokerage Revenue Second Highest Quarterly Institutional Equities Revenue Third Highest Quarterly Capital Raising Revenue Bar chart header numbers are a graphic

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Investment Banking Revenue Highlights Record Quarterly Investment Banking Revenue Record Quarterly Advisory Revenue, up 111% Y/Y Record 2nd Quarter Capital Raising Revenue, up 42% Y/Y Record Half Year Investment Banking Revenue Surpassed Prior Record by 29% (2nd half 2020) Strongest Verticals were Financials, Healthcare, Technology, & Consumer Bar chart header numbers are a graphic * 2021 revenue based on annualized results through 6/30/2021

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Net Interest Income Net Interest commentary 2Q21 Net Interest Income Increased 6% sequentially. Average Interest Earning Assets Increased by $1.3 billion in 2Q21. Deposits up 20% year-on-year More Highly Levered to Increased Short-term Interest Rates than in Past Cycles 2021: Estimated Incremental Pre-tax Income of $150-$175 million from a 100 bps increase in Fed Funds rate. 2015: Estimated Incremental Pre-tax Income of $66 million from a 100 bps increase in Fed Funds rate.

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Stifel Bancorp Inc. Loan & Investment Portfolio * Total excludes $394 million of loans classified as held for sale

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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

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Capital & Liquidity HIGHLIGHTS Balance Sheet Growth of $3 billion in First Half of 2021, Increase of 12% YTD. Client Cash Balances Continued to Increase in 3Q21 Capital Ratios Remained Strong Repurchased Nearly 650,000 Shares in the First Half of 2021 Issued $300 million of Preferred Stock in July 2021 Announced Redemption of $150 million of Series A Preferred Stock in July 2021

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Expenses * For reconciliation of GAAP to non-GAAP expenses, refer to our second quarter 2021 earnings release. Bar chart header numbers are a graphic (000s) 2Q21 GAAP Net Income $198,077 Preferred Dividend $8,289 Net Income available to common Shareholders $189,788 Non-GAAP After Tax Adjustments $12,279 Non-GAAP Net Income Available to Common Shareholders $202,067 GAAP to Non-GAAP RECONCILIATION

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Q&A

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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 I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 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 three and six months ended June 30, 2021. 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.