sf-8k_20200729.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

_________________________

 

FORM 8-K

_________________________

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

 

Date of Report (Date of earliest event reported):  July 29, 2020

_________________________

STIFEL FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

_________________________

 

Delaware
(State of incorporation)

 

001-09305
(Commission File Number)

 

43-1273600
(IRS Employer
Identification No.)

 

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

(Address of principal executive offices and zip code)

 

(314) 342-2000

(Registrant’s telephone number, including area code)

 

Not Applicable

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

_________________________

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

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

 

Common Stock, $0.15 par value per share

 

SF

 

 

New York Stock Exchange

 

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

 

SF-PA

 

 

New York Stock Exchange

 

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

 

SF-PB

 

 

New York Stock Exchange

 

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

 

SF-PC

 

 

New York Stock Exchange

 

5.20% Senior Notes due 2047

 

SFB

 

 

New York Stock Exchange

 

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

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

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

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

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

 

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

 

Emerging growth company

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

 

 


 

 

Item 2.02 Results of Operations and Financial Condition.

On July 29, 2020, Stifel Financial Corp. (“Stifel” or the “Company”) reported its financial results for the three months ended June 30, 2020. A copy of the related press release is attached hereto as Exhibit 99.1.

Stifel will hold a conference call on Wednesday, July 29, 2020, at 9:30 a.m. Eastern time. All interested parties are invited to listen to Stifel Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID 2565812. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through Stifel's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call. The conference call slide show is attached hereto as Exhibit 99.2.

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

 

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits.

 

Exhibit NumberDescription of Exhibit

 

99.1

Press release dated July 29, 2020.

99.2

104

Investor presentation.

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


2


 

 

SIGNATURE

 

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

 

 

STIFEL FINANCIAL CORP.

 

Date:  July 29, 2020

By:

/s/ James M. Marischen

 

 

Name:

James M. Marischen

 

 

Title:

Chief Financial Officer

 

 

3

sf-ex991_6.htm

Exhibit 99.1

 

July 29, 2020

FOR IMMEDIATE RELEASE

Media Contact:  Neil Shapiro (212) 271-3447

Investor Contact:  Joel Jeffrey  (212) 271-3610

www.stifel.com/investor-relations

 

STIFEL REPORTS SECOND QUARTER 2020 RESULTS

 

Net revenues of $895.8 million, increased 11.9% with the year-ago quarter, were the Company’s third highest quarterly net revenues.

 

Record Institutional Group net revenues and fixed income brokerage revenues.

 

Net income available to common shareholders of $103.0 million, or $1.39 per diluted common share.

 

Non-GAAP net income available to common shareholders of $115.3 million, or $1.55 per diluted common share.

 

Annualized return on average tangible common shareholders’ equity (1) was 20.7%.

 

Non-GAAP annualized return on average tangible common shareholders’ equity (1) was 23.2%.

ST. LOUIS, MO – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $103.0 million, or $1.39 per diluted common share on net revenues of $895.8 million for the three months ended June 30, 2020, compared with net income available to common shareholders of $103.8 million, or $1.31 per diluted common share, on net revenues of $800.8 million for the second quarter of 2019.

For the three months ended June 30, 2020, the Company reported non-GAAP net income available to common shareholders of $115.3 million, or $1.55 per diluted common share. The Company’s reported GAAP net income for the three months ended June 30, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“The benefits of the investments we have made in our business were again evident in our second quarter results. Net revenue and earnings per share were the third highest in our history. Our Institutional Group had a record quarter led by record fixed income brokerage revenue as well as strong investment banking results primarily from robust capital raising activity in both fixed income and equity. This helped to counter the impact of the market sell off in the first quarter and the zero rate environment had on revenue lines such as asset management and net interest income, respectively. In terms of the future, I remain cautiously optimistic. We enter the third quarter, with a strong and liquid balance sheet, our strongest capital ratios in nearly four years, and a solid and improving recruiting pipeline. While the economic outlook for the second half of the year remains unclear, I believe that the performance of our diversified financial services model will remain strong,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

 

Financial Highlights (Unaudited)

 

Three Months Ended

 

($ in 000s, except per share data)

 

GAAP 6/30/20

 

 

GAAP 6/30/19

 

 

% Change

 

 

GAAP 3/31/20

 

 

% Change

 

 

 

Non-GAAP (2) 6/30/20

 

 

Non-GAAP (2) 6/30/19

 

 

% Change

 

Net revenues

 

$

895,817

 

 

$

800,787

 

 

 

11.9

 

 

$

913,034

 

 

 

(1.9

)

 

 

$

895,817

 

 

$

800,787

 

 

 

11.9

 

Net income applicable to Stifel Financial Corp.

 

$

107,887

 

 

$

109,085

 

 

 

(1.1

)

 

$

86,589

 

 

 

24.6

 

 

 

$

120,178

 

 

$

116,659

 

 

 

3.0

 

Preferred dividends

 

 

4,843

 

 

 

5,288

 

 

 

(8.4

)

 

 

4,844

 

 

 

(0.0

)

 

 

 

4,843

 

 

 

5,288

 

 

 

(8.4

)

Net income available to common shareholders

 

$

103,044

 

 

$

103,797

 

 

 

(0.7

)

 

$

81,745

 

 

 

26.1

 

 

 

$

115,335

 

 

$

111,371

 

 

 

3.6

 

Earnings per diluted common share

 

$

1.45

 

 

$

1.38

 

 

 

5.1

 

 

$

1.13

 

 

 

28.3

 

 

 

$

1.62

 

 

$

1.48

 

 

 

9.5

 

Earnings per diluted common share available to common shareholders

 

$

1.39

 

 

$

1.31

 

 

 

6.1

 

 

$

1.07

 

 

 

29.9

 

 

 

$

1.55

 

 

$

1.41

 

 

 

9.9

 

Compensation ratio

 

 

61.1

%

 

 

58.3

%

 

 

 

 

 

 

63.2

%

 

 

 

 

 

 

 

60.0

%

 

 

57.9

%

 

 

 

 

Non-compensation ratio

 

 

22.9

%

 

 

23.2

%

 

 

 

 

 

 

24.2

%

 

 

 

 

 

 

 

22.2

%

 

 

22.3

%

 

 

 

 

Pre-tax operating margin (3)

 

 

16.0

%

 

 

18.5

%

 

 

 

 

 

 

12.6

%

 

 

 

 

 

 

 

17.8

%

 

 

19.8

%

 

 

 

 


 

1

 


For the six months ended June 30, 2020, the Company reported net income available to common shareholders of $184.8 million, or $2.44 per diluted common share on record net revenues of $1.8 billion, compared with net income available to common shareholders of $200.7 million, or $2.53 per diluted common share, on net revenues of $1.6 billion for the six months ended June 30, 2019.

For the six months ended June 30, 2020, the Company reported non-GAAP net income available to common shareholders of $207.3 million, or $2.74 per diluted common share.

Financial Highlights (Unaudited)

 

Six Months Ended

 

($ in 000s, except per share data)

 

GAAP 6/30/20

 

 

GAAP 6/30/19

 

 

% Change

 

 

 

Non-GAAP (2) 6/30/20

 

 

Non-GAAP (2) 6/30/19

 

 

% Change

 

Net revenues

 

$

1,808,851

 

 

$

1,571,207

 

 

 

15.1

 

 

 

$

1,809,030

 

 

$

1,571,207

 

 

 

15.1

 

Net income applicable to Stifel Financial Corp.

 

$

194,476

 

 

$

208,292

 

 

 

(6.6

)

 

 

$

216,955

 

 

$

223,523

 

 

 

(2.9

)

Preferred dividends

 

 

9,687

 

 

 

7,632

 

 

 

26.9

 

 

 

 

9,687

 

 

 

7,632

 

 

 

26.9

 

Net income available to common shareholders

 

$

184,789

 

 

$

200,660

 

 

 

(7.9

)

 

 

$

207,268

 

 

$

215,891

 

 

 

(4.0

)

Earnings per diluted common share

 

$

2.57

 

 

$

2.63

 

 

 

(2.3

)

 

 

$

2.87

 

 

$

2.82

 

 

 

1.8

 

Earnings per diluted common share available to common shareholders

 

$

2.44

 

 

$

2.53

 

 

 

(3.6

)

 

 

$

2.74

 

 

$

2.73

 

 

 

0.4

 

Compensation ratio

 

 

62.2

%

 

 

58.9

%

 

 

 

 

 

 

 

61.3

%

 

 

58.4

%

 

 

 

 

Non-compensation ratio

 

 

23.5

%

 

 

22.9

%

 

 

 

 

 

 

 

22.8

%

 

 

22.2

%

 

 

 

 

Pre-tax operating margin (4)

 

 

14.3

%

 

 

18.2

%

 

 

 

 

 

 

 

15.9

%

 

 

19.4

%

 

 

 

 

 

Net Revenues

Net revenues were $895.8 million for the second quarter of 2020, an 11.9% increase from the second quarter of 2019 and a 1.9% decrease from the first quarter of 2020. Net revenues, compared with the second quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and advisory fee revenues, partially offset by lower net interest income and asset management and service fees. Net revenues, compared with the first quarter of 2020, reflected increased advisory fee revenues, principal transaction fee revenues, and capital raising revenues, partially offset by lower net interest income, asset management and service fees, and commission revenues.

The operating environment continued to be impacted by the spread of the COVID-19 virus which caused a sharp contraction in global economic activity and increased market volatility. Economic indicators generally improved as the quarter progressed, following significant declines in March and April, as economies began to reopen and central banks, along with governments, continued to implement monetary easing measures and provide fiscal stimulus to support the economy. These contributed to higher global equity prices and tighter credit spreads compared with the end of the first quarter of 2020.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $343.0 million, a 31.2% increase compared with the second quarter of 2019 and a 1.9% decrease compared with the first quarter of 2020.

 

Three Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

% Change

 

 

3/31/20

 

 

% Change

 

Global Wealth Management

 

$

159,123

 

 

$

162,388

 

 

 

(2.0

)

 

$

179,879

 

 

 

(11.5

)

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

63,193

 

 

 

40,670

 

 

 

55.4

 

 

 

70,195

 

 

 

(10.0

)

Fixed income capital markets

 

 

120,731

 

 

 

58,387

 

 

 

106.8

 

 

 

99,688

 

 

 

21.1

 

Total institutional brokerage

 

 

183,924

 

 

 

99,057

 

 

 

85.7

 

 

 

169,883

 

 

 

8.3

 

Total brokerage revenues (5)

 

$

343,047

 

 

$

261,445

 

 

 

31.2

 

 

$

349,762

 

 

 

(1.9

)

 

Global Wealth Management brokerage revenues were $159.1 million, a 2.0% decrease compared with the second quarter of 2019 and an 11.5% decrease compared with the first quarter of 2020.

 

Institutional equity brokerage revenues were $63.2 million, a 55.4% increase compared with the second quarter of 2019 and a 10.0% decrease compared with the first quarter of 2020.

 

Institutional fixed income brokerage revenues were $120.7 million, a 106.8% increase compared with the second quarter of 2019 and a 21.1% increase compared with the first quarter of 2020.


 

2

 


Investment Banking Revenues

Investment banking revenues were $217.0 million, a 20.8% increase compared with the second quarter of 2019 and a 20.9% increase compared with the first quarter of 2020.

  

 

Three Months Ended

 

($ in 000s)

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

 

3/31/20

 

 

% Change

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

8,016

 

 

 

 

$

10,559

 

 

 

 

 

(24.1

)

 

$

10,314

 

 

 

(22.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

63,277

 

 

 

 

 

59,156

 

 

 

 

 

7.0

 

 

 

60,195

 

 

 

5.1

 

Fixed income capital markets

 

 

47,904

 

 

 

 

 

26,997

 

 

 

 

 

77.4

 

 

 

32,887

 

 

 

45.7

 

Institutional Group

 

 

111,181

 

 

 

 

 

86,153

 

 

 

 

 

29.1

 

 

 

93,082

 

 

 

19.4

 

Total capital raising (5)

 

 

119,197

 

 

 

 

 

96,712

 

 

 

 

 

23.2

 

 

 

103,396

 

 

 

15.3

 

Advisory fees (5)

 

 

97,838

 

 

 

 

 

82,905

 

 

 

 

 

18.0

 

 

 

76,072

 

 

 

28.6

 

Total investment banking

 

$

217,035

 

 

 

 

$

179,617

 

 

 

 

 

20.8

 

 

$

179,468

 

 

 

20.9

 

 

Global Wealth Management capital raising revenues were $8.0 million, a 24.1% decrease compared with the second quarter of 2019 and a 22.3% decrease compared with the first quarter of 2020.

 

Institutional equity capital raising revenues were $63.3 million, a 7.0% increase compared with the second quarter of 2019 and a 5.1% increase compared with the first quarter of 2020.

 

Institutional fixed income capital raising revenues were $47.9 million, a 77.4% increase compared with the second quarter of 2019 and a 45.7% increase compared with the first quarter of 2020.

 

Advisory fee revenues were $97.8 million, an 18.0% increase compared with the second quarter of 2019 and a 28.6% increase compared with the first quarter of 2020.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $198.9 million, a 5.8% decrease compared with the second quarter of 2019 and a 16.3% decrease compared with the first quarter of 2020. The decrease from the comparative period in 2019 is primarily attributable to lower asset values at the beginning of the second quarter of 2020, partially offset by fee-based asset flows. See Asset Management and Service Fee Break-down table.

Net Interest Income

Net interest income of $115.3 million, a 14.6% decrease compared with the second quarter of 2019 and a 15.7% decrease compared with the first quarter of 2020. See Net Interest Income Analysis table.

 

Interest income was $128.4 million, a 31.7% decrease compared with the second quarter of 2019 and a 20.4% decrease compared with the first quarter of 2020.

 

Interest expense was $13.1 million, a 75.3% decrease compared with the second quarter of 2019 and a 46.3% decrease compared with the first quarter of 2020.


 

3

 


Compensation and Benefits Expenses

For the quarter ended June 30, 2020, compensation and benefits expenses were $547.2 million, which included $9.7 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $466.9 million in the second quarter of 2019 and $577.2 million in the first quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 60.0% in the second quarter of 2020 (non-GAAP measure).

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

 

Three Months Ended

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

6/30/20

 

 

6/30/19

 

GAAP compensation and benefits

 

$

547,174

 

 

$

466,861

 

 

$

1,124,353

 

 

$

924,975

 

As a percentage of net revenues

 

 

61.1

%

 

 

58.3

%

 

 

62.2

%

 

 

58.9

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

(9,710

)

 

 

(3,304

)

 

 

(16,137

)

 

 

(7,236

)

Non-GAAP compensation and benefits

 

$

537,464

 

 

$

463,557

 

 

$

1,108,216

 

 

$

917,739

 

As a percentage of non-GAAP net revenues

 

 

60.0

%

 

 

57.9

%

 

 

61.3

%

 

 

58.4

%

Non-Compensation Operating Expenses

For the quarter ended June 30, 2020, non-compensation operating expenses were $205.7 million, which included $6.5 million of merger-related expenses (non-GAAP adjustments). This compares with $185.9 million in the second quarter of 2019 and $220.7 million in the first quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2020 were 22.2% (non-GAAP measure).

The increase in non-compensation operating expenses, compared with the second quarter of 2019, is primarily attributable to the increase in the provision for credit losses as a result of the impact of COVID-19 on the broader economic environment, volume-related expenses, net provisions for regulatory matters, and professional fees, partially offset by decreases in travel and conference-related expenses as a result of COVID-19. In addition, the second quarter of 2020 included provisions related to growth in loans and the impact of accounting for credit losses under the CECL standard (7).

 

Three Months Ended

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

6/30/20

 

 

6/30/19

 

GAAP non-compensation expenses

 

$

205,683

 

 

$

185,944

 

 

$

426,432

 

 

$

360,441

 

As a percentage of net revenues

 

 

22.9

%

 

 

23.2

%

 

 

23.5

%

 

 

22.9

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related

 

 

(6,549

)

 

 

(3,417

)

 

 

(13,453

)

 

 

(7,676

)

Litigation-related

 

 

 

 

 

(3,507

)

 

 

 

 

 

(3,507

)

 

 

 

(6,549

)

 

 

(6,924

)

 

 

(13,453

)

 

 

(11,183

)

Non-GAAP non-compensation expenses

 

$

199,134

 

 

$

179,020

 

 

$

412,979

 

 

$

349,258

 

As a percentage of non-GAAP net revenues

 

 

22.2

%

 

 

22.3

%

 

 

22.8

%

 

 

22.2

%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended June 30, 2020 was 24.5%. This compares with an effective income tax rate of 25.9% for the second quarter of 2019 and 24.8% for the first quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended June 30, 2020 was 24.5%.

 

Three Months Ended

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

6/30/20

 

 

6/30/19

 

GAAP provision for income taxes

 

$

35,073

 

 

$

38,225

 

 

$

63,590

 

 

$

76,595

 

GAAP effective tax rate

 

 

24.5

%

 

 

25.9

%

 

 

24.6

%

 

 

26.9

%

Non-GAAP adjustments: (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related, litigation-related, and severance

 

 

3,986

 

 

 

2,752

 

 

 

7,286

 

 

 

4,955

 

Other

 

 

(18

)

 

 

(98

)

 

 

4

 

 

 

(1,767

)

 

 

 

3,968

 

 

 

2,654

 

 

 

7,290

 

 

 

3,188

 

Non-GAAP provision for income taxes

 

$

39,041

 

 

$

40,879

 

 

$

70,880

 

 

$

79,783

 

Non-GAAP effective tax rate

 

 

24.5

%

 

 

25.9

%

 

 

24.6

%

 

 

26.3

%

 


 

4

 


Conference Call Information

Stifel Financial Corp. will host its first quarter 2020 financial results conference call on Wednesday, July 29, 2020, at 9:30 a.m. Eastern Time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID 2565812. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through the Company’s web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank and Stifel Bank & Trust offer a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer trust and related services. To learn more about Stifel, please visit the Company’s website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.

Cautionary Note Regarding Forward-Looking Statements

This earnings release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020 and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as to the date they are made. The Company disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

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

 

5

 


Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

($ in 000s, except per share amounts)

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

 

 

 

3/31/20

 

 

 

 

% Change

 

 

 

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

177,028

 

 

 

 

$

164,981

 

 

 

 

 

7.3

 

 

 

 

$

211,098

 

 

 

 

 

(16.1

)

 

 

 

$

388,126

 

 

 

 

$

320,430

 

 

 

 

 

21.1

 

Principal transactions

 

 

166,017

 

 

 

 

 

96,464

 

 

 

 

 

72.1

 

 

 

 

 

138,666

 

 

 

 

 

19.7

 

 

 

 

 

304,683

 

 

 

 

 

200,496

 

 

 

 

 

52.0

 

Brokerage revenues

 

 

343,045

 

 

 

 

 

261,445

 

 

 

 

 

31.2

 

 

 

 

 

349,764

 

 

 

 

 

(1.9

)

 

 

 

 

692,809

 

 

 

 

 

520,926

 

 

 

 

 

33.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory fees

 

 

97,838

 

 

 

 

 

82,911

 

 

 

 

 

18.0

 

 

 

 

 

76,072

 

 

 

 

 

28.6

 

 

 

 

 

173,910

 

 

 

 

 

187,801

 

 

 

 

 

(7.4

)

Capital raising

 

 

119,197

 

 

 

 

 

96,706

 

 

 

 

 

23.3

 

 

 

 

 

103,396

 

 

 

 

 

15.3

 

 

 

 

 

222,593

 

 

 

 

 

153,656

 

 

 

 

 

44.9

 

Investment banking

 

 

217,035

 

 

 

 

 

179,617

 

 

 

 

 

20.8

 

 

 

 

 

179,468

 

 

 

 

 

20.9

 

 

 

 

 

396,503

 

 

 

 

 

341,457

 

 

 

 

 

16.1

 

Asset management and service fees

 

 

198,939

 

 

 

 

 

211,171

 

 

 

 

 

(5.8

)

 

 

 

 

237,775

 

 

 

 

 

(16.3

)

 

 

 

 

436,714

 

 

 

 

 

406,438

 

 

 

 

 

7.4

 

Other income

 

 

21,514

 

 

 

 

 

13,505

 

 

 

 

 

59.3

 

 

 

 

 

9,207

 

 

 

 

 

133.7

 

 

 

 

 

30,721

 

 

 

 

 

25,714

 

 

 

 

 

19.5

 

Operating revenues

 

 

780,533

 

 

 

 

 

665,738

 

 

 

 

 

17.2

 

 

 

 

 

776,214

 

 

 

 

 

0.6

 

 

 

 

 

1,556,747

 

 

 

 

 

1,294,535

 

 

 

 

 

20.3

 

Interest revenue

 

 

128,368

 

 

 

 

 

187,940

 

 

 

 

 

(31.7

)

 

 

 

 

161,177

 

 

 

 

 

(20.4

)

 

 

 

 

289,545

 

 

 

 

 

379,011

 

 

 

 

 

(23.6

)

Total revenues

 

 

908,901

 

 

 

 

 

853,678

 

 

 

 

 

6.5

 

 

 

 

 

937,391

 

 

 

 

 

(3.0

)

 

 

 

 

1,846,292

 

 

 

 

 

1,673,546

 

 

 

 

 

10.3

 

Interest expense

 

 

13,084

 

 

 

 

 

52,891

 

 

 

 

 

(75.3

)

 

 

 

 

24,357

 

 

 

 

 

(46.3

)

 

 

 

 

37,441

 

 

 

 

 

102,339

 

 

 

 

 

(63.4

)

Net revenues

 

 

895,817

 

 

 

 

 

800,787

 

 

 

 

 

11.9

 

 

 

 

 

913,034

 

 

 

 

 

(1.9

)

 

 

 

 

1,808,851

 

 

 

 

 

1,571,207

 

 

 

 

 

15.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

547,174

 

 

 

 

 

466,861

 

 

 

 

 

17.2

 

 

 

 

 

577,179

 

 

 

 

 

(5.2

)

 

 

 

 

1,124,353

 

 

 

 

 

924,975

 

 

 

 

 

21.6

 

Occupancy and equipment rental

 

 

66,264

 

 

 

 

 

61,055

 

 

 

 

 

8.5

 

 

 

 

 

66,073

 

 

 

 

 

0.3

 

 

 

 

 

132,337

 

 

 

 

 

119,917

 

 

 

 

 

10.4

 

Communication and office supplies

 

 

43,046

 

 

 

 

 

35,069

 

 

 

 

 

22.7

 

 

 

 

 

41,124

 

 

 

 

 

4.7

 

 

 

 

 

84,170

 

 

 

 

 

70,766

 

 

 

 

 

18.9

 

Commissions and floor brokerage

 

 

15,177

 

 

 

 

 

11,008

 

 

 

 

 

37.9

 

 

 

 

 

14,842

 

 

 

 

 

2.3

 

 

 

 

 

30,019

 

 

 

 

 

21,964

 

 

 

 

 

36.7

 

Provision for credit losses

 

 

19,210

 

 

 

 

 

2,353

 

 

 

 

 

716.4

 

 

 

 

 

16,068

 

 

 

 

 

19.6

 

 

 

 

 

35,278

 

 

 

 

 

4,636

 

 

 

 

 

661.0

 

Other operating expenses

 

 

61,986

 

 

 

 

 

76,459

 

 

 

 

 

(18.9

)

 

 

 

 

82,642

 

 

 

 

 

(25.0

)

 

 

 

 

144,628

 

 

 

 

 

143,158

 

 

 

 

 

1.0

 

Total non-interest expenses

 

 

752,857

 

 

 

 

 

652,805

 

 

 

 

 

15.3

 

 

 

 

 

797,928

 

 

 

 

 

(5.6

)

 

 

 

 

1,550,785

 

 

 

 

 

1,285,416

 

 

 

 

 

20.6

 

Income before income taxes

 

 

142,960

 

 

 

 

 

147,982

 

 

 

 

 

(3.4

)

 

 

 

 

115,106

 

 

 

 

 

24.2

 

 

 

 

 

258,066

 

 

 

 

 

285,791

 

 

 

 

 

(9.7

)

Provision for income taxes

 

 

35,073

 

 

 

 

 

38,225

 

 

 

 

 

(8.2

)

 

 

 

 

28,517

 

 

 

 

 

23.0

 

 

 

 

 

63,590

 

 

 

 

 

76,595

 

 

 

 

 

(17.0

)

Net income

 

 

107,887

 

 

 

 

 

109,757

 

 

 

 

 

(1.7

)

 

 

 

 

86,589

 

 

 

 

 

24.6

 

 

 

 

 

194,476

 

 

 

 

 

209,196

 

 

 

 

 

(7.0

)

Net income applicable to non-controlling interests

 

 

 

 

 

 

 

672

 

 

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

904

 

 

 

 

n/m

 

Net income applicable to Stifel Financial Corp.

 

 

107,887

 

 

 

 

 

109,085

 

 

 

 

 

(1.1

)

 

 

 

 

86,589

 

 

 

 

 

24.6

 

 

 

 

 

194,476

 

 

 

 

 

208,292

 

 

 

 

 

(6.6

)

Preferred dividends

 

 

4,843

 

 

 

 

 

5,288

 

 

 

 

 

(8.4

)

 

 

 

 

4,844

 

 

 

 

 

(0.0

)

 

 

 

 

9,687

 

 

 

 

 

7,632

 

 

 

 

 

26.9

 

Net income available to common shareholders

 

$

103,044

 

 

 

 

$

103,797

 

 

 

 

 

(0.7

)

 

 

 

$

81,745

 

 

 

 

 

26.1

 

 

 

 

$

184,789

 

 

 

 

$

200,660

 

 

 

 

 

(7.9

)

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.46

 

 

 

 

$

1.43

 

 

 

 

 

2.1

 

 

 

 

$

1.15

 

 

 

 

 

27.0

 

 

 

 

$

2.61

 

 

 

 

$

2.74

 

 

 

 

 

(4.7

)

Diluted

 

$

1.39

 

 

 

 

$

1.31

 

 

 

 

 

6.1

 

 

 

 

$

1.07

 

 

 

 

 

29.9

 

 

 

 

$

2.44

 

 

 

 

$

2.53

 

 

 

 

 

(3.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.17

 

 

 

 

$

0.15

 

 

 

 

 

13.3

 

 

 

 

$

0.17

 

 

 

 

 

 

 

 

 

$

0.34

 

 

 

 

$

0.30

 

 

 

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

70,527

 

 

 

 

 

72,519

 

 

 

 

 

(2.7

)

 

 

 

 

71,286

 

 

 

 

 

(1.1

)

 

 

 

 

70,905

 

 

 

 

 

73,180

 

 

 

 

 

(3.1

)

Diluted

 

 

74,387

 

 

 

 

 

79,079

 

 

 

 

 

(5.9

)

 

 

 

 

76,619

 

 

 

 

 

(2.9

)

 

 

 

 

75,651

 

 

 

 

 

79,160

 

 

 

 

 

(4.4

)


 

6

 


Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

 

 

% Change

 

 

3/31/20

 

 

% Change

 

 

6/30/20

 

 

6/30/19

 

 

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

505,782

 

 

$

532,433

 

 

 

 

 

(5.0

)

 

$

582,956

 

 

 

(13.2

)

 

$

1,088,738

 

 

$

1,043,043

 

 

 

 

 

4.4

 

Institutional Group

 

 

398,096

 

 

 

270,602

 

 

 

 

 

47.1

 

 

 

332,238

 

 

 

19.8

 

 

 

730,334

 

 

 

531,888

 

 

 

 

 

37.3

 

Other

 

 

(8,061

)

 

 

(2,248

)

 

 

 

n/m

 

 

 

(2,160

)

 

n/m

 

 

 

(10,221

)

 

 

(3,724

)

 

 

 

n/m

 

Total net revenues

 

$

895,817

 

 

$

800,787

 

 

 

 

 

11.9

 

 

$

913,034

 

 

 

(1.9

)

 

$

1,808,851

 

 

$

1,571,207

 

 

 

 

 

15.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

349,457

 

 

$

340,081

 

 

 

 

 

2.8

 

 

$

388,789

 

 

 

(10.1

)

 

$

738,246

 

 

$

656,201

 

 

 

 

 

12.5

 

Institutional Group

 

 

315,047

 

 

 

231,300

 

 

 

 

 

36.2

 

 

 

290,498

 

 

 

8.5

 

 

 

605,545

 

 

 

460,382

 

 

 

 

 

31.5

 

Other

 

 

88,353

 

 

 

81,424

 

 

 

 

 

8.5

 

 

 

118,641

 

 

 

(25.5

)

 

 

206,994

 

 

 

168,833

 

 

 

 

 

22.6

 

Total operating expenses

 

$

752,857

 

 

$

652,805

 

 

 

 

 

15.3

 

 

$

797,928

 

 

 

(5.6

)

 

$

1,550,785

 

 

$

1,285,416

 

 

 

 

 

20.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

156,325

 

 

$

192,352

 

 

 

 

 

(18.7

)

 

$

194,167

 

 

 

(19.5

)

 

$

350,492

 

 

$

386,842

 

 

 

 

 

(9.4

)

Institutional Group

 

 

83,049

 

 

 

39,302

 

 

 

 

 

111.3

 

 

 

41,740

 

 

 

99.0

 

 

 

124,789

 

 

 

71,506

 

 

 

 

 

74.5

 

Other

 

 

(96,414

)

 

 

(83,672

)

 

 

 

 

15.2

 

 

 

(120,801

)

 

 

(20.2

)

 

 

(217,215

)

 

 

(172,557

)

 

 

 

 

25.9

 

Income before income taxes

 

$

142,960

 

 

$

147,982

 

 

 

 

 

(3.4

)

 

$

115,106

 

 

 

24.2

 

 

$

258,066

 

 

$

285,791

 

 

 

 

 

(9.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

51.1

 

 

 

49.3

 

 

 

 

 

 

 

 

 

51.2

 

 

 

 

 

 

 

51.1

 

 

 

48.9

 

 

 

 

 

 

 

Institutional Group

 

 

60.6

 

 

 

57.6

 

 

 

 

 

 

 

 

 

62.0

 

 

 

 

 

 

 

61.3

 

 

 

59.3

 

 

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

18.0

 

 

 

14.6

 

 

 

 

 

 

 

 

 

15.5

 

 

 

 

 

 

 

16.7

 

 

 

14.0

 

 

 

 

 

 

 

Institutional Group

 

 

18.5

 

 

 

27.9

 

 

 

 

 

 

 

 

 

25.4

 

 

 

 

 

 

 

21.6

 

 

 

27.3

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

30.9

 

 

 

36.1

 

 

 

 

 

 

 

 

 

33.3

 

 

 

 

 

 

 

32.2

 

 

 

37.1

 

 

 

 

 

 

 

Institutional Group

 

 

20.9

 

 

 

14.5

 

 

 

 

 

 

 

 

 

12.6

 

 

 

 

 

 

 

17.1

 

 

 

13.4

 

 

 

 

 

 

 

Consolidated pre-tax margin

 

 

16.0

 

 

 

18.5

 

 

 

 

 

 

 

 

 

12.6

 

 

 

 

 

 

 

14.3

 

 

 

18.2

 

 

 

 

 

 

 

 

 


 

7

 


 

Financial metrics (unaudited):

As of and For the Three Months Ended

 

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

6/30/20

 

6/30/19

 

3/31/20

 

Total assets

$

25,624,225

 

$

24,343,597

 

$

25,896,006

 

Total Stifel Financial shareholders' equity

$

3,884,060

 

$

3,429,126

 

$

3,470,326

 

Book value per common share (8)

$

48.84

 

$

44.68

 

$

46.13

 

Return on common equity (9)

 

12.6

%

 

13.4

%

 

10.0

%

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

 

14.1

%

 

14.3

%

 

11.2

%

Return on tangible common equity (1)

 

20.7

%

 

21.1

%

 

16.6

%

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

 

23.2

%

 

22.6

%

 

18.6

%

Tier 1 common capital ratio (10)

 

15.3

%

 

15.6

%

 

14.3

%

Tier 1 risk based capital ratio (10)

 

19.3

%

 

18.0

%

 

16.6

%

Tier 1 leverage capital ratio (10)

 

11.0

%

 

10.0

%

 

9.6

%

Pre-tax margin on net revenues

 

16.0

%

 

18.5

%

 

12.6

%

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

 

17.8

%

 

19.8

%

 

14.1

%

Effective tax rate

 

24.5

%

 

25.9

%

 

24.8

%

Non-GAAP effective tax rate (2)

 

24.5

%

 

25.9

%

 

24.8

%

 

Statistical Information (unaudited):

 

As of and For the Three Months Ended

 

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

 

6/30/20

 

 

6/30/19

 

 

% Change

 

 

3/31/20

 

 

% Change

 

Financial advisors

 

 

2,138

 

 

 

2,097

 

 

 

2.0

 

 

 

2,130

 

 

 

0.4

 

Independent contractors

 

 

94

 

 

 

96

 

 

 

(2.1

)

 

 

94

 

 

 

 

Total financial advisors

 

 

2,232

 

 

 

2,193

 

 

 

1.8

 

 

 

2,224

 

 

 

0.4

 

Locations

 

 

447

 

 

 

413

 

 

 

8.2

 

 

 

447

 

 

 

 

Total client assets

 

$

306,235,000

 

 

$

305,233,000

 

 

 

0.3

 

 

$

276,627,000

 

 

 

10.7

 

Fee-based client assets

 

$

106,218,000

 

 

$

103,824,000

 

 

 

2.3

 

 

$

93,633,000

 

 

 

13.4

 

Client money market and insured product

 

$

18,664,000

 

 

$

13,674,000

 

 

 

36.5

 

 

$

17,234,000

 

 

 

8.3

 

Secured client lending (11)

 

$

2,563,773

 

 

$

3,251,723

 

 

 

(21.2

)

 

$

3,148,790

 

 

 

(18.6

)

  

  

 

Asset Management and Service Fee Break-down (unaudited)

 

Asset Management and Service Fee Revenues:

 

Three Months Ended

 

($ in 000s)

 

6/30/20

 

 

6/30/19

 

 

% Change

 

 

3/31/20

 

 

% Change

 

Private Client Group (12)

 

$

164,403

 

 

$

164,554

 

 

 

(0.1

)

 

$

193,260

 

 

 

(14.9

)

Asset Management

 

 

23,769

 

 

 

29,485

 

 

 

(19.4

)

 

 

29,762

 

 

 

(20.1

)

Third-party Bank Sweep Program

 

 

522

 

 

 

6,869

 

 

 

(92.4

)

 

 

3,308

 

 

 

(84.2

)

Other (13)

 

 

10,245

 

 

 

10,263

 

 

 

(0.2

)

 

 

11,445

 

 

 

(10.5

)

Total asset management and service fee revenues

 

$

198,939

 

 

$

211,171

 

 

 

(5.8

)

 

$

237,775

 

 

 

(16.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based Assets:

 

Three Months Ended

 

($ in millions)

 

6/30/20

 

 

6/30/19

 

 

% Change

 

 

3/31/20

 

 

% Change

 

Private Client Group (12)

 

$

91,360

 

 

$

80,983

 

 

 

12.8

 

 

$

80,617

 

 

 

13.3

 

Asset Management

 

 

25,706

 

 

 

33,156

 

 

 

(22.5

)

 

 

22,752

 

 

 

13.0

 

Elimination (14)

 

 

(10,848

)

 

 

(10,315

)

 

 

5.2

 

 

 

(9,736

)

 

 

11.4

 

Total fee-based assets

 

$

106,218

 

 

$

103,824

 

 

 

2.3

 

 

$

93,633

 

 

 

13.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual Program Banks

 

$

3,007

 

 

$

1,459

 

 

 

106.1

 

 

$

1,491

 

 

 

101.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROA (bps) (15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Client Group (12)

 

 

81.6

 

 

 

89.5

 

 

 

 

 

 

 

83.9

 

 

 

 

 

Asset Management

 

 

37.0

 

 

 

35.6

 

 

 

 

 

 

 

38.0

 

 

 

 

 

Individual Program Banks

 

 

7.1

 

 

 

163.6

 

 

 

 

 

 

 

95.0

 

 

 

 

 


 

8

 


Consolidated Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

March 31, 2020

 

($ in millions, except percentages)

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and federal funds sold

 

$

1,674.0

 

 

$

1.0

 

 

 

0.24

%

 

$

750.4

 

 

$

4.3

 

 

 

2.31

%

 

$

931.8

 

 

$

3.7

 

 

 

1.58

%

Financial instruments owned

 

 

761.7

 

 

 

2.9

 

 

 

1.50

 

 

 

1,320.5

 

 

 

6.4

 

 

 

1.94

 

 

 

1,076.6

 

 

 

4.6

 

 

 

1.70

 

Margin balances

 

 

981.5

 

 

 

6.4

 

 

 

2.59

 

 

 

1,291.5

 

 

 

13.7

 

 

 

4.23

 

 

 

1,231.7

 

 

 

10.1

 

 

 

3.29

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

4,842.0

 

 

 

32.6

 

 

 

2.70

 

 

 

4,508.4

 

 

 

46.0

 

 

 

4.08

 

 

 

4,538.5

 

 

 

37.0

 

 

 

3.26

 

Mortgage-backed securities

 

 

877.2

 

 

 

4.6

 

 

 

2.09

 

 

 

1,470.9

 

 

 

8.6

 

 

 

2.33

 

 

 

1,094.2

 

 

 

6.0

 

 

 

2.18

 

Corporate fixed income securities

 

 

648.9

 

 

 

4.2

 

 

 

2.59

 

 

 

915.0

 

 

 

6.9

 

 

 

3.02

 

 

 

732.8

 

 

 

5.0

 

 

 

2.76

 

State and municipal securities

 

 

12.2

 

 

 

0.1

 

 

 

2.19

 

 

 

48.0

 

 

 

0.2

 

 

 

1.85

 

 

 

18.4

 

 

 

0.1

 

 

 

2.13

 

Other

 

 

5.3

 

 

 

 

 

 

2.02

 

 

 

 

 

 

 

 

 

 

 

 

3.9

 

 

 

 

 

 

2.17

 

Total Investments

 

 

6,385.6

 

 

 

41.5

 

 

 

2.60

 

 

 

6,942.3

 

 

 

61.7

 

 

 

3.56

 

 

 

6,387.8

 

 

 

48.1

 

 

 

3.01

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

4,095.4

 

 

 

31.8

 

 

 

3.10

 

 

 

3,337.4

 

 

 

41.3

 

 

 

4.95

 

 

 

3,560.3

 

 

 

38.0

 

 

 

4.27

 

Residential real estate

 

 

3,589.2

 

 

 

25.6

 

 

 

2.85

 

 

 

2,953.7

 

 

 

22.5

 

 

 

3.05

 

 

 

3,416.1

 

 

 

25.3

 

 

 

2.96

 

Securities-based loans

 

 

1,789.2

 

 

 

9.9

 

 

 

2.22

 

 

 

1,916.3

 

 

 

20.2

 

 

 

4.21

 

 

 

2,063.8

 

 

 

16.5

 

 

 

3.19

 

Commercial real estate

 

 

402.6

 

 

 

4.0

 

 

 

3.98

 

 

 

354.3

 

 

 

5.0

 

 

 

5.63

 

 

 

445.0

 

 

 

5.8

 

 

 

5.22

 

Loans held for sale

 

 

486.7

 

 

 

3.3

 

 

 

2.68

 

 

 

178.6

 

 

 

1.8

 

 

 

4.02

 

 

 

374.5

 

 

 

4.0

 

 

 

4.26

 

Other

 

 

546.3

 

 

 

4.6

 

 

 

3.36

 

 

 

377.9

 

 

 

5.1

 

 

 

5.38

 

 

 

500.1

 

 

 

5.6

 

 

 

4.46

 

Total Loans

 

 

10,909.4

 

 

 

79.2

 

 

 

2.90

 

 

 

9,118.2

 

 

 

95.9

 

 

 

4.21

 

 

 

10,359.8

 

 

 

95.2

 

 

 

3.67

 

Other interest-bearing assets

 

 

476.3

 

 

 

(2.6

)

 

 

(2.15

)

 

 

831.6

 

 

 

5.9

 

 

 

2.86

 

 

 

607.9

 

 

 

(0.5

)

 

 

(0.30

)

Total interest-earning assets/interest income

 

 

21,188.5

 

 

 

128.4

 

 

 

2.42

 

 

 

20,254.5

 

 

 

187.9

 

 

 

3.71

 

 

 

20,595.6

 

 

 

161.2

 

 

 

3.13

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

11.4

 

 

 

0.1

 

 

 

2.83

 

 

 

29.8

 

 

 

0.2

 

 

 

3.16

 

 

 

91.3

 

 

 

0.2

 

 

 

0.88

 

Senior notes

 

 

1,195.0

 

 

 

13.1

 

 

 

4.38

 

 

 

1,016.2

 

 

 

11.1

 

 

 

4.38

 

 

 

1,017.1

 

 

 

11.2

 

 

 

4.40

 

Deposits

 

 

16,676.5

 

 

 

2.3

 

 

 

0.05

 

 

 

14,660.7

 

 

 

29.3

 

 

 

0.80

 

 

 

15,377.9

 

 

 

9.6

 

 

 

0.25

 

FHLB

 

 

250.8

 

 

 

0.7

 

 

 

1.09

 

 

 

550.2

 

 

 

2.9

 

 

 

2.12

 

 

 

590.5

 

 

 

2.4

 

 

 

1.59

 

Other interest-bearing liabilities

 

 

1,179.2

 

 

 

(3.1

)

 

 

(1.03

)

 

 

1,764.4

 

 

 

9.4

 

 

 

2.10

 

 

 

1,628.1

 

 

 

1.0

 

 

 

0.26

 

Total interest-bearing liabilities/interest expense

 

$

19,312.9

 

 

$

13.1

 

 

 

0.27

%

 

$

18,021.3

 

 

$

52.9

 

 

 

1.17

%

 

$

18,704.9

 

 

$

24.4

 

 

 

0.52

%

Net interest income/margin

 

 

 

 

 

$

115.3

 

 

 

2.18

%

 

 

 

 

 

$

135.0

 

 

 

2.67

%

 

 

 

 

 

$

136.8

 

 

 

2.66

%

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

March 31, 2020

 

($ in millions, except percentages)

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

 

Average Balance

 

 

Interest Income/ Expense

 

 

Average Interest Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and federal funds sold

 

$

961.1

 

 

$

0.3

 

 

 

0.13

%

 

$

330.6

 

 

$

1.8

 

 

 

2.15

%

 

$

446.0

 

 

$

1.2

 

 

 

1.10

%

Investments

 

 

6,385.6

 

 

 

41.5

 

 

 

2.60

 

 

 

6,942.3

 

 

 

61.7

 

 

 

3.56

 

 

 

6,387.8

 

 

 

48.1

 

 

 

3.01

 

Loans

 

 

10,909.4

 

 

 

79.2

 

 

 

2.90

 

 

 

9,118.2

 

 

 

95.9

 

 

 

4.21

 

 

 

10,359.8

 

 

 

95.2

 

 

 

3.67

 

Other interest-bearing assets

 

 

46.7

 

 

 

0.3

 

 

 

2.46

 

 

 

57.2

 

 

 

0.6

 

 

 

4.38

 

 

 

59.6

 

 

 

0.6

 

 

 

4.02

 

Total interest-earning assets/interest income

 

 

18,302.8

 

 

 

121.3

 

 

 

2.65

 

 

 

16,448.3

 

 

 

160.0

 

 

 

3.89

 

 

 

17,253.2

 

 

 

145.1

 

 

 

3.36

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,676.5

 

 

 

2.3

 

 

 

0.05

 

 

 

14,660.7

 

 

 

29.3

 

 

 

0.80

 

 

 

15,377.9

 

 

 

9.6

 

 

 

0.25

 

FHLB

 

 

250.8

 

 

 

0.7

 

 

 

1.09

 

 

 

550.2

 

 

 

2.9

 

 

 

2.12

 

 

 

590.5

 

 

 

2.4

 

 

 

1.59

 

Other interest-bearing liabilities

 

 

1.5

 

 

 

 

 

 

6.71

 

 

 

1.7

 

 

 

0.1

 

 

 

6.73

 

 

 

1.6

 

 

 

 

 

 

7.09

 

Total interest-bearing liabilities/interest expense

 

$

16,928.8

 

 

 

3.0

 

 

 

0.07

%

 

$

15,212.6

 

 

 

32.3

 

 

 

0.85

%

 

$

15,970.0

 

 

 

12.0

 

 

 

0.30

%

Net interest income/margin

 

 

 

 

 

$

118.3

 

 

 

2.59

%

 

 

 

 

 

$

127.7

 

 

 

3.11

%

 

 

 

 

 

$

133.1

 

 

 

3.09

%

 

 

9

 


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected operating data (unaudited):

Three Months Ended

 

 

Six Months Ended

 

($ in 000s, except percentages)

6/30/20

 

 

6/30/19

 

 

% Change

 

 

3/31/20

 

 

% Change

 

 

6/30/20

 

 

6/30/19

 

 

% Change

 

Net interest income

$

118,298

 

 

$

127,714

 

 

 

(7.4

)

 

$

133,131

 

 

 

(11.1

)

 

$

251,429

 

 

$

262,278

 

 

 

(4.1

)

Credit loss provision

 

19,210

 

 

 

2,353

 

 

 

716.4

 

 

 

16,068

 

 

 

19.6

 

 

 

35,278

 

 

 

4,636

 

 

 

661.0

 

Charge-offs

 

150

 

 

 

54

 

 

 

177.8

 

 

 

20

 

 

 

650.0

 

 

 

170

 

 

 

110

 

 

 

54.5

 

Net interest margin

 

2.59

%

 

 

3.11

%

 

(52) bps

 

 

 

3.09

%

 

(50) bps

 

 

 

2.83

%

 

 

3.14

%

 

(31) bps

 

 

Financial Metrics (unaudited):

 

As of

 

($ in 000s, except percentages)

 

6/30/20

 

 

6/30/19

 

 

3/31/20

 

Total assets

 

$

18,123,326

 

 

$

16,645,984

 

 

$

18,442,914

 

Total shareholders' equity

 

 

1,378,096

 

 

 

1,236,318

 

 

 

1,224,307

 

Total loans, net (includes loans held for sale)

 

 

10,923,212

 

 

 

9,127,836

 

 

 

10,565,287

 

Total deposits

 

 

16,302,281

 

 

 

14,901,061

 

 

 

16,880,933

 

Available-for-sale securities, at fair value

 

 

3,172,160

 

 

 

2,702,211

 

 

 

3,363,961

 

Held-to-maturity securities, at amortized cost

 

 

3,083,126

 

 

 

3,957,629

 

 

 

3,083,065

 

Commercial and industrial

 

 

4,149,307

 

 

 

3,338,127

 

 

 

3,813,862

 

Residential real estate

 

 

3,710,657

 

 

 

2,984,725

 

 

 

3,495,136

 

Securities-based loans

 

 

1,716,786

 

 

 

1,962,528

 

 

 

1,945,371

 

Commercial real estate

 

 

406,788

 

 

 

367,283

 

 

 

399,732

 

Loans held for sale

 

 

474,899

 

 

 

163,511

 

 

 

570,787

 

Stifel Bank & Trust:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (10)

 

 

12.4

%

 

 

13.4

%

 

 

11.7

%

Tier 1 capital ratio (10)

 

 

12.4

%

 

 

13.4

%

 

 

11.7

%

Total capital ratio (10)

 

 

13.9

%

 

 

14.5

%

 

 

13.0

%

Tier 1 leverage ratio (10)

 

 

7.2

%

 

 

7.2

%

 

 

7.1

%

Stifel Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (10)

 

 

18.8

%

 

 

17.7

%

 

 

15.6

%

Tier 1 capital ratio (10)

 

 

18.8

%

 

 

17.7

%

 

 

15.6

%

Total capital ratio (10)

 

 

20.1

%

 

 

18.9

%

 

 

16.5

%

Tier 1 leverage ratio (10)

 

 

7.1

%

 

 

7.3

%

 

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

$

139,949

 

 

$

90,472

 

 

$

121,017

 

Allowance as a percentage of retained loans

 

 

1.32

%

 

 

1.00

%

 

 

1.20

%

Net charge-offs as a percentage of average loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Total nonperforming assets

 

$

14,602

 

 

$

21,111

 

 

$

14,616

 

Nonperforming assets as % of total assets

 

 

0.08

%

 

 

0.13

%

 

 

0.08

%


 

10

 


Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

 

 

 

3/31/20

 

 

% Change

 

 

 

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

116,156

 

 

 

 

$

120,284

 

 

 

 

 

(3.4

)

 

 

 

$

136,897

 

 

 

(15.2

)

 

 

 

$

253,053

 

 

 

 

$

230,211

 

 

 

 

 

9.9

 

Principal transactions

 

 

42,967

 

 

 

 

 

42,104

 

 

 

 

 

2.0

 

 

 

 

 

42,982

 

 

 

(0.0

)

 

 

 

 

85,949

 

 

 

 

 

85,371

 

 

 

 

 

0.7

 

    Brokerage revenues

 

 

159,123

 

 

 

 

 

162,388

 

 

 

 

 

(2.0

)

 

 

 

 

179,879

 

 

 

(11.5

)

 

 

 

 

339,002

 

 

 

 

 

315,582

 

 

 

 

 

7.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

198,921

 

 

 

 

 

211,156

 

 

 

 

 

(5.8

)

 

 

 

 

237,760

 

 

 

(16.3

)

 

 

 

 

436,681

 

 

 

 

 

406,409

 

 

 

 

 

7.4

 

Net interest

 

 

121,564

 

 

 

 

 

137,599

 

 

 

 

 

(11.7

)

 

 

 

 

138,682

 

 

 

(12.3

)

 

 

 

 

260,246

 

 

 

 

 

282,894

 

 

 

 

 

(8.0

)

Investment banking (17)

 

 

8,016

 

 

 

 

 

10,559

 

 

 

 

 

(24.1

)

 

 

 

 

10,333

 

 

 

(22.4

)

 

 

 

 

18,349

 

 

 

 

 

18,782

 

 

 

 

 

(2.3

)

Other income

 

 

18,158

 

 

 

 

 

10,731

 

 

 

 

 

69.2

 

 

 

 

 

16,302

 

 

 

11.4

 

 

 

 

 

34,460

 

 

 

 

 

19,376

 

 

 

 

 

77.8

 

Net revenues

 

 

505,782

 

 

 

 

 

532,433

 

 

 

 

 

(5.0

)

 

 

 

 

582,956

 

 

 

(13.2

)

 

 

 

 

1,088,738

 

 

 

 

 

1,043,043

 

 

 

 

 

4.4

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

258,291

 

 

 

 

 

262,321

 

 

 

 

 

(1.5

)

 

 

 

 

298,370

 

 

 

(13.4

)

 

 

 

 

556,661

 

 

 

 

 

509,794

 

 

 

 

 

9.2

 

Non-compensation operating expenses

 

 

91,166

 

 

 

 

 

77,760

 

 

 

 

 

17.2

 

 

 

 

 

90,419

 

 

 

0.8

 

 

 

 

 

181,585

 

 

 

 

 

146,407

 

 

 

 

 

24.0

 

Total non-interest expenses

 

 

349,457

 

 

 

 

 

340,081

 

 

 

 

 

2.8

 

 

 

 

 

388,789

 

 

 

(10.1

)

 

 

 

 

738,246

 

 

 

 

 

656,201

 

 

 

 

 

12.5

 

Income before income taxes

 

$

156,325

 

 

 

 

$

192,352

 

 

 

 

 

(18.7

)

 

 

 

$

194,167

 

 

 

(19.5

)

 

 

 

$

350,492

 

 

 

 

$

386,842

 

 

 

 

 

(9.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

51.1

 

 

 

 

 

49.3

 

 

 

 

 

 

 

 

 

 

 

51.2

 

 

 

 

 

 

 

 

 

51.1

 

 

 

 

 

48.9

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

18.0

 

 

 

 

 

14.6

 

 

 

 

 

 

 

 

 

 

 

15.5

 

 

 

 

 

 

 

 

 

16.7

 

 

 

 

 

14.0

 

 

 

 

 

 

 

Income before income taxes

 

 

30.9

 

 

 

 

 

36.1

 

 

 

 

 

 

 

 

 

 

 

33.3

 

 

 

 

 

 

 

 

 

32.2

 

 

 

 

 

37.1

 

 

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

($ in 000s)

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

 

 

 

3/31/20

 

 

% Change

 

 

 

 

6/30/20

 

 

 

 

6/30/19

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

60,875

 

 

 

 

$

44,697

 

 

 

 

 

36.2

 

 

 

 

$

74,198

 

 

 

(18.0

)

 

 

 

$

135,073

 

 

 

 

$

90,219

 

 

 

 

 

49.7

 

Principal transactions

 

 

123,049

 

 

 

 

 

54,360

 

 

 

 

 

126.4

 

 

 

 

 

95,685

 

 

 

28.6

 

 

 

 

 

218,734

 

 

 

 

 

115,125

 

 

 

 

 

90.0

 

Brokerage revenues

 

 

183,924

 

 

 

 

 

99,057

 

 

 

 

 

85.7

 

 

 

 

 

169,883

 

 

 

8.3

 

 

 

 

 

353,807

 

 

 

 

 

205,344

 

 

 

 

 

72.3

 

Advisory fees

 

 

97,838

 

 

 

 

 

82,905

 

 

 

 

 

18.0

 

 

 

 

 

76,053

 

 

 

28.6

 

 

 

 

 

173,891

 

 

 

 

 

187,800

 

 

 

 

 

(7.4

)

Capital raising

 

 

111,181

 

 

 

 

 

86,153

 

 

 

 

 

29.1

 

 

 

 

 

93,082

 

 

 

19.4

 

 

 

 

 

204,263

 

 

 

 

 

134,875

 

 

 

 

 

51.4

 

Investment banking

 

 

209,019

 

 

 

 

 

169,058

 

 

 

 

 

23.6

 

 

 

 

 

169,135

 

 

 

23.6

 

 

 

 

 

378,154

 

 

 

 

 

322,675

 

 

 

 

 

17.2

 

Other (18)

 

 

5,153

 

 

 

 

 

2,487

 

 

 

 

 

107.2

 

 

 

 

 

(6,780

)

 

 

(176.0

)

 

 

 

 

(1,627

)

 

 

 

 

3,869

 

 

 

 

 

(142.1

)

Net revenues

 

 

398,096

 

 

 

 

 

270,602

 

 

 

 

 

47.1

 

 

 

 

 

332,238

 

 

 

19.8

 

 

 

 

 

730,334

 

 

 

 

 

531,888

 

 

 

 

 

37.3

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

241,420

 

 

 

 

 

155,779

 

 

 

 

 

55.0

 

 

 

 

 

205,988

 

 

 

17.2

 

 

 

 

 

447,408

 

 

 

 

 

315,190

 

 

 

 

 

41.9

 

Non-compensation operating expenses

 

 

73,627

 

 

 

 

 

75,521

 

 

 

 

 

(2.5

)

 

 

 

 

84,510

 

 

 

(12.9

)

 

 

 

 

158,137

 

 

 

 

 

145,192

 

 

 

 

 

8.9

 

Total non-interest expenses

 

 

315,047

 

 

 

 

 

231,300

 

 

 

 

 

36.2

 

 

 

 

 

290,498

 

 

 

8.5

 

 

 

 

 

605,545

 

 

 

 

 

460,382

 

 

 

 

 

31.5

 

Income before income taxes

 

$

83,049

 

 

 

 

$

39,302

 

 

 

 

 

111.3

 

 

 

 

$

41,740

 

 

 

99.0

 

 

 

 

$

124,789

 

 

 

 

$

71,506

 

 

 

 

 

74.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

60.6

 

 

 

 

 

57.6

 

 

 

 

 

 

 

 

 

 

 

62.0

 

 

 

 

 

 

 

 

 

61.3

 

 

 

 

 

59.3

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

18.5

 

 

 

 

 

27.9

 

 

 

 

 

 

 

 

 

 

 

25.4

 

 

 

 

 

 

 

 

 

21.6

 

 

 

 

 

27.3

 

 

 

 

 

 

 

Income before income taxes

 

 

20.9

 

 

 

 

 

14.5

 

 

 

 

 

 

 

 

 

 

 

12.6

 

 

 

 

 

 

 

 

 

17.1

 

 

 

 

 

13.4

 

 

 

 

 

 

 

 


 

11

 


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, 2020, June 30, 2019, and March 31, 2020. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company’s core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these charges do, in fact, reflect the underlying financial results of the Company’s business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures and the same respective non-GAAP measures of the Company’s financial performance should be considered together.

The following table provides details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three and six months ended June 30, 2020 and 2019, and the three months ended March 31, 2020 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)

 

6/30/20

 

 

6/30/19

 

 

3/31/20

 

 

6/30/20

 

 

6/30/19

 

GAAP net income applicable to Stifel Financial Corp.

 

$

107,887

 

 

$

109,085

 

 

$

86,589

 

 

$

194,476

 

 

$

208,292

 

Preferred dividend

 

 

4,843

 

 

 

5,288

 

 

 

4,844

 

 

 

9,687

 

 

 

7,632

 

Net income available to common shareholders

 

 

103,044

 

 

 

103,797

 

 

 

81,745

 

 

 

184,789

 

 

 

200,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance (19)

 

 

16,259

 

 

 

6,721

 

 

 

13,510

 

 

 

29,769

 

 

 

14,912

 

Litigation-related (20)

 

 

 

 

 

3,507

 

 

 

 

 

 

 

 

 

3,507

 

Provision for income taxes (21)

 

 

(3,968

)

 

 

(2,654

)

 

 

(3,322

)

 

 

(7,290

)

 

 

(3,188

)

Total non-GAAP adjustments

 

 

12,291

 

 

 

7,574

 

 

 

10,188

 

 

 

22,479

 

 

 

15,231

 

Non-GAAP net income available to common shareholders

 

$

115,335

 

 

$

111,371

 

 

$

91,933

 

 

$

207,268

 

 

$

215,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

74,387

 

 

 

79,079

 

 

 

76,619

 

 

 

75,651

 

 

 

79,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

1.45

 

 

$

1.38

 

 

$

1.13

 

 

$

2.57

 

 

$

2.63

 

Non-GAAP adjustments

 

 

0.17

 

 

 

0.10

 

 

 

0.13

 

 

 

0.30

 

 

 

0.19

 

Non-GAAP earnings per diluted common share

 

$

1.62

 

 

$

1.48

 

 

$

1.26

 

 

$

2.87

 

 

$

2.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

1.39

 

 

$

1.31

 

 

$

1.07

 

 

$

2.44

 

 

$

2.53

 

Non-GAAP adjustments

 

 

0.16

 

 

 

0.10

 

 

 

0.13

 

 

 

0.30

 

 

 

0.20

 

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

 

$

1.55

 

 

$

1.41

 

 

$

1.20

 

 

$

2.74

 

 

$

2.73

 


 

12

 


Footnotes

 

 

(1)

Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total Stifel Financial common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Deferred taxes on goodwill and tangible assets was $48.5 million, $41.6 million, and $47.2 million, as of June 30, 2020 and 2019, and March 31, 2020, respectively. Historical periods have been restated to conform with the current period presentation.

 

(2)

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

 

(3)

Non-GAAP pre-tax margin for the three months ended June 30, 2020 of 17.8% is calculated by adding non-GAAP adjustments of $16.3 million to our GAAP income before income taxes of $143.0  million and dividing it by non-GAAP net revenues for the quarter of $895.8 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(4)

Non-GAAP pre-tax margin for the six months ended June 30, 2020 of 15.9% is calculated by adding non-GAAP adjustments of $29.8 million to our GAAP income before income taxes of $258.1 million and dividing it by non-GAAP net revenues of $1.8 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(5)

Excludes revenue included in the Other segment.

 

(6)

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

 

(7)

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

 

(8)

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

 

(9)

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

 

(10)

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

 

(11)

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

 

(12)

Includes Private Client Group and Trust Business.

 

(13)

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

 

(14)

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

 

(15)

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

 

(16)

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

 

(17)

Includes capital raising and advisory fees.

 

(18)

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

 

(19)

Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company’s on-going business.

 

(20)

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

 

(21)

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

 

 

13

 

sf-ex992_32.pptx.htm

Slide 0

2nd Quarter 2020 Financial Results Presentation July 29, 2020 Exhibit 99.2

Slide 1

Stifel Financial Corp. 2019 Annual Report “We can do much better with regard to diversity among our associates in particular. The business case for this effort is simple, as greater diversity – in all its forms – provides more opportunities to grow while reducing the risks of blinkered, narrow-minded thinking. This applies to greater diversity in our community just as in our revenue sources, business models, and geographic locations. More importantly, though, this is the only fair and just path forward. Look again at the cover of this annual report, because it expresses an ideal that we should strive for: There should be nothing about anyone’s birth or personal background that limits their ability to contribute and compete at our firm. The benefits of moving toward this ideal will be unquantifiable, in the best sense of the word, so I cannot stress enough that diversity doesn't need to earn its place in our ranks. We need to work, and keep working, to earn its benefits.” - Ron Kruszewski, Chairman & CEO Diversity

Slide 2

Institutional Group Generated Record Quarterly Revenue Second Quarter Snapshot 2Q20 Results millions, except per share and ratios HIGHLIGHTS NET REVENUES GAAP $895.8 NON-GAAP $895.8 NET EARNINGS GAAP $103.0 NON-GAAP $115.3 EPS GAAP $1.39 NON-GAAP $1.55 ANNUALIZED ROE GAAP 12.6% NON-GAAP 14.1% ANNUALIZED ROTCE GAAP 20.7% NON-GAAP 23.2% BOOK VALUE PER SHARE TBV $30.16 BV $48.84 Continued to Attract High Quality Financial Advisors Record Quarterly Fixed Income Brokerage Revenue Capital Raising Generated Second Highest Quarterly Revenue Credit Quality at Stifel Bank Remains Strong Strong Sequential Growth in Fee-Based Client Assets

Slide 3

Second Quarter Results SECOND QUARTER HIGHLIGHTS Second quarter Non-GAAP Net Revenue of $896 million, up 12% Y/Y. Record Institutional Group Net Revenue of $398 million, up 47% Y/Y Record Institutional Fixed Income Brokerage Revenue of $121 million, up 107% Y/Y Institutional Equity Brokerage Revenue of $63 million, up 55% Y/Y Investment Banking Revenue of $217 million, up 21% Y/Y Pre-tax Pre-Provision Margin of 19.9%, up 380 bps sequentially Fee-based Client Assets of $106 billion, up 13% sequentially Tangible Book Value Per Share of $30.16, up 6% Y/Y Non-GAAP annualized return on average tangible common shareholders’ equity was 23.2% 1 Before provision credit loss and additional comp. 2 Amount in excess of 59%

Slide 4

HIGHLIGHTS Record 6-Month Net Revenue of $1.1 billion, up% 4 Y/Y Pre-tax Pre-provision Margin of 34.7% Fee-based & Private Client Fee-based Assets Increased 13% Sequentially Recruited 28 Financial Advisor with total Trailing Twelve Month production of $23 million. Global Wealth Management

Slide 5

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 Minimal management – supervisory function is centralized for efficiency and neutral approach Advisors have direct access to knowledgeable home office associates to collaboratively deliver services to clients Technology to support advice-based model Stifel Wealth Tracker – online and mobile app: / free/ secure / smart aggregation / budgeting tools / advice when you want it / understand the markets / understand your complete financial picture Performance reporting tools – enhanced platform-wide capabilities with key vendor partners collaborating Cash management and digital banking capabilities in WM platform, including client mobile app Video meetings, centralized technology support DYNAMIC BUSINESS 85% of FAs joined Stifel in past 10 years came through organic recruiting, 15% through acquisitions Recruiting remotely during pandemic Growth of average AUM Adding capabilities that attract FAs and differentiate Stifel Stifel Wealth Tracker CIO Office & behavioral finance practice OurCrowd access to early-stage venture sponsors

Slide 6

Institutional Group * Includes net interest, asset management and service fees, and other income HIGHLIGHTS Record Quarterly Revenue of $398 million, up 47% Y/Y Record Institutional Brokerage of $184 million, up 86% Y/Y Second Strongest Quarter for Capital Markets Revenue with $111 million, up 29% Y/Y Record Pre-tax Contribution of $83 million, up 111% Y/Y Pre-tax margin of 20.9%, up 640 bps Y/Y Balanced business mix between equities and fixed income * Includes net interest, asset management and service fees, and other income

Slide 7

highlights Record Quarterly Brokerage Revenue Surpassed Prior Record by 21% (1Q20) Second Strongest Quarterly Revenue in Capital Raising Lead Managed 211 Negotiated Municipal Offerings Brokerage Activity in July Down from 2Q20 but Above 2019 Levels Institutional Equities & Fixed Income highlights Record First Half Equities Revenue Surpassed Prior Record by 14% (2015) Third Highest Capital Raising Quarter Brokerage Activity in July Down from 2Q20 but Above 2019 Levels Bar chart header numbers are a graphic

Slide 8

Investment Banking Revenue Highlights Third Strongest Investment Banking Quarter Second Strongest Record Capital Raising Quarter Strongest Verticals were Financials, Healthcare, Technology, and Industrials Miller Buckfire Continued to Generate Increased Mandates M&A Advisory Business Starting to Pick Up as Clients Re-Engage by Mergers & Acquisitions Magazine Bar chart header numbers are a graphic

Slide 9

Net Interest Income Net Interest commentary 2Q20 NII within previous guidance range, but negatively impacted by rate environment & impact of senior note issuance Interest Earning Asset increased year-on-year and sequentially due to higher cash & loan balances, primarily due to PPP loans 3Q20 Guidance: Firm-wide NII Guidance: $100 – $110 million Bank NIM Guidance: 235 – 245 bps

Slide 10

HIGHLIGHTS AAA /AA CLOs with a Portfolio Credit Enhancement of 28.6% 83% of CLO Collateral is BB/B Using Severely Adverse Default Expectations Results in Remaining Credit Enhancement of 17.1% Limited Exposure to Hotel, Gaming, & Leisure and Energy Verticals Investment Portfolio & CLOs

Slide 11

HIGHLIGHTS Lending facilities for Stifel WM and Institutional clients, as well as banking relationships outside of Stifel Over 50% of the loan portfolio is to Wealth Management clients Diversity of geographic, sector, business phase, and loan type enhances stability in various markets; low NPLs historically Limited exposure to the Energy Industry as well as to the Hotel, Leisure, Entertainment & Restaurant Industry which on a combined basis is less than 3% of our SBI loans. Stifel Bancorp Inc. Loan Portfolio 1 Total excludes $475 million of loans classified as held for sale

Slide 12

CECL Impact assumptions Moody’s forecast: 40% Baseline (sudden sharp recession) 30% Downside (double dip recession) 30% Upside (near term growth) Forecast update for most recent scenarios Includes significant economic shock in 3Q and 4Q, followed by slow, sustained recovery Reserve build driven by COVID-19 recessionary assumptions   CECL 2Q20 FACTORS CECL chart is a graphic

Slide 13

Expenses * For reconciliation of GAAP to non-GAAP expenses, refer to our second quarter 2020 earnings release. Bar chart header numbers are a graphic

Slide 14

Capital & Liquidity HIGHLIGHTS Sweep Balances Continued to Increase in 2Q20 Capital Ratios Increased Meaningfully in 2Q20 Projecting No Material Change in the Size or Composition of the Balance Sheet Raised $400 Million in Senior Notes & $225 million of Preferred Equity in 2Q20 Capital Return in 2Q20 Limited to Dividends

Slide 15

Q&A

Slide 16

Disclaimer Forward-Looking Statements This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks, assumptions, and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel, Nicolaus & Company, Incorporated and its subsidiaries (collectively, “SF” or the “Company”). These statements can be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” and similar expressions. All statements not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,2020 and in Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as to the date they are made. The Company disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Use of Non-GAAP Financial Measures The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the six months ended June 30, 2020. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company’s core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company’s current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of 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.

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