ST. LOUIS, MO --(Marketwired - October 30, 2017) - Stifel Financial Corp. (
- Net revenues of $721.2 million, increased 12.3% compared with the year-ago quarter and decreased 0.6% sequentially.
- Record net revenues and pre-tax operating income in Global Wealth Management.
- Record pre-tax operating margin in Institutional Group.
- Net income available to common shareholders of $64.2 million, or $0.79 per diluted common share.
- Non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.
- Record client assets of $264.7 billion, increased 12.9% compared with the year-ago quarter and 2.6% sequentially.
- Payment of regular quarterly dividend of $0.10 per common share.
- Issuance of $225 million of Senior Notes (settled in October 2017).
- Assets of $20.5 billion, increased 4.9% from June 30, 2017.
- Bank net interest margin of 2.80% increased 3 basis points sequentially.
Stifel Financial Corp. (
For the three months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.
For the nine months ended September 30, 2017, the Company reported net income available to common shareholders of $177.8 million, or $2.21 per diluted common share on record net revenues of $2.1 billion, compared with net income available to common shareholders of $53.1 million, or $0.69 per diluted share, on net revenues of $1.9 billion for the comparable period in 2016.
For the nine months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $202.8 million, or $2.52 per diluted common share.
Chairman's Comments
"We are pleased with our results in the third quarter, as we generated the second highest quarterly revenue in our firm's history, down modestly from our record results in the previous quarter. Additionally, we generated our highest pre-tax operating margin in nearly seven years during the quarter as our focus on expense management continues to improve our bottom line growth. Less than two years ago, I commented that we would focus on optimizing our existing business to deliver stronger top and bottom line results. Our performance in the third quarter underscores the progress we've made in a relatively short period of time as the investments we made in the business in the past few years continue to drive growth despite market cyclicality," stated Ronald J. Kruszewski, Chairman & CEO of Stifel.
| Financial Highlights (Unaudited) | Three Months Ended | |||||||||||||||||||||||
| (in 000s, except per share data) | GAAP 9/30/17 | GAAP 9/30/16 | % Change | GAAP 6/30/17 | % Change | Non- GAAP (1) 9/30/17 | Non- GAAP (1) 6/30/17 | % Change | ||||||||||||||||
| Net revenues | $ | 721,169 | $ | 641,986 | 12.3 | $ | 725,647 | (0.6 | ) | $ | 721,169 | $ | 725,647 | (0.6 | ) | |||||||||
| Net income | $ | 66,536 | $ | 17,814 | 273.5 | $ | 52,811 | 26.0 | $ | 73,949 | $ | 73,991 | (0.1 | ) | ||||||||||
| Preferred dividend | 2,343 | 1,563 | 49.9 | 2,344 | (0.0 | ) | 2,343 | 2,344 | (0.0 | ) | ||||||||||||||
| Net income available to common shareholders | $ | 64,193 | $ | 16,251 | 295.0 | $ | 50,467 | 27.2 | $ | 71,606 | $ | 71,647 | (0.1 | ) | ||||||||||
| Earnings per diluted common share | $ | 0.82 | $ | 0.23 | 256.5 | $ | 0.66 | 24.2 | $ | 0.91 | $ | 0.92 | (1.1 | ) | ||||||||||
| Earnings per diluted common share available to common shareholders | $ | 0.79 | $ | 0.21 | 276.2 | $ | 0.63 | 25.4 | $ | 0.89 | $ | 0.90 | (1.1 | ) | ||||||||||
| Compensation ratio | 62.2% | 67.6% | 62.5% | 61.1% | 61.4% | |||||||||||||||||||
| Non-compensation ratio | 22.8% | 28.0% | 26.0% | 22.1% | 22.3% | |||||||||||||||||||
| Pre-tax operating margin | 15.0% | 4.4% | 11.5% | 16.8% | 16.3% | |||||||||||||||||||
| Financial Highlights (Unaudited) | Nine Months Ended | ||||||||||||||||
| (in 000s, except per share data) | GAAP 9/30/17 | GAAP 9/30/16 | % Change | Non- GAAP (1) 9/30/17 | Non- GAAP (1) 9/30/16 | % Change | |||||||||||
| Net revenues | $ | 2,122,347 | $ | 1,914,105 | 10.9 | $ | 2,124,331 | $ | 1,918,207 | 10.7 | |||||||
| Net income | $ | 184,859 | $ | 54,640 | 238.3 | $ | 209,789 | $ | 133,083 | 57.6 | |||||||
| Preferred dividend | 7,031 | 1,563 | 349.8 | 7,031 | 1,563 | 349.8 | |||||||||||
| Net income available to common shareholders | $ | 177,828 | $ | 53,077 | 235.0 | $ | 202,758 | $ | 131,520 | 54.2 | |||||||
| Earnings per diluted common share | $ | 2.29 | $ | 0.71 | 222.5 | $ | 2.60 | $ | 1.74 | 49.4 | |||||||
| Earnings per diluted common share available to common shareholders | $ | 2.21 | $ | 0.69 | 220.3 | $ | 2.52 | $ | 1.72 | 46.5 | |||||||
| Compensation ratio | 63.1% | 68.2% | 61.6% | 63.0% | |||||||||||||
| Non-compensation ratio | 24.2% | 27.2% | 22.4% | 24.2% | |||||||||||||
| Pre-tax operating margin | 12.7% | 4.6% | 16.0% | 12.8% | |||||||||||||
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions, were $249.6 million, a 13.4% decrease compared with the third quarter of 2016 and a 6.8% decrease compared with the second quarter of 2017.
| Three Months Ended | ||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | |||||||||||
| Global Wealth Management brokerage revenues | $ | 158,334 | $ | 165,476 | (4.3 | ) | $ | 168,085 | (5.8 | ) | ||||||
| Institutional brokerage: | ||||||||||||||||
| Equity | 45,209 | 51,004 | (11.4 | ) | 50,869 | (11.1 | ) | |||||||||
| Fixed income | 46,079 | 71,794 | (35.8 | ) | 49,013 | (6.0 | ) | |||||||||
| Total institutional brokerage | 91,288 | 122,798 | (25.7 | ) | 99,882 | (8.6 | ) | |||||||||
| Total brokerage revenues | $ | 249,622 | $ | 288,274 | (13.4 | ) | $ | 267,967 | (6.8 | ) | ||||||
- Global wealth management brokerage revenues were $158.3 million, a 4.3% decrease compared with the third quarter of 2016 and a 5.8% decrease compared with the second quarter of 2017.
- Institutional equity brokerage revenues were $45.2 million, an 11.4% decrease compared with the third quarter of 2016 and an 11.1% decrease compared with the second quarter of 2017.
- Institutional fixed income brokerage revenues were $46.1 million, a 35.8% decrease compared with the third quarter of 2016 and a 6.0% decrease compared with the second quarter of 2017.
Investment Banking Revenues
Investment banking revenues were $181.9 million, a 25.6% increase compared with the third quarter of 2016 and a 1.8% decrease compared with the second quarter of 2017.
| Three Months Ended | ||||||||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | |||||||||||||||||
| Capital raising: | ||||||||||||||||||||||
| Global Wealth Management | $ | 9,072 | $ | 12,212 | (25.7 | ) | $ | 10,641 | (14.7 | ) | ||||||||||||
| Equity | 43,277 | 20,782 | 108.2 | 45,664 | (5.2 | ) | ||||||||||||||||
| Fixed income | 27,573 | 25,483 | 8.2 | 46,495 | (40.7 | ) | ||||||||||||||||
| Institutional Group | 70,850 | 46,265 | 53.1 | 92,159 | (23.1 | ) | ||||||||||||||||
| Capital raising | 79,922 | 58,477 | 36.7 | 102,800 | (22.3 | ) | ||||||||||||||||
| Advisory fees | 101,982 | 86,322 | 18.1 | 82,461 | 23.7 | |||||||||||||||||
| Total investment banking | $ | 181,904 | $ | 144,799 | 25.6 | $ | 185,261 | (1.8 | ) | |||||||||||||
- Global wealth management capital raising revenues were $9.1 million, a 25.7% decrease compared with the third quarter of 2016 and a 14.7% decrease compared with the second quarter of 2017.
- Institutional equity capital raising revenues were $43.3 million, a 108.2% increase compared with the third quarter of 2016 and a 5.2% decrease compared with the second quarter of 2017.
- Institutional fixed income capital raising revenues were $27.6 million, an 8.2% increase compared with the third quarter of 2016 and a 40.7% decrease compared with the second quarter of 2017.
- Advisory fee revenues were $102.0 million, an 18.1% increase compared with the third quarter of 2016 and a 23.7% increase compared with the second quarter of 2017.
Asset Management and Service Fee Revenues
Asset management and service fee revenues were a record $179.8 million, a 24.7% increase compared with the third quarter of 2016 and a 4.0% increase compared with the second quarter of 2017. The increase from the comparative period in 2016 is primarily attributable to the growth in the value of fee-based accounts and an increase in the Federal Funds rate, which increased fees earned on cash balances.
Net Interest Income
Record net interest income of $100.2 million, an 80.6% increase compared with the third quarter of 2016 and an 8.6% increase compared with the second quarter of 2017.
- Interest income was $117.9 million, a 57.4% increase compared with the third quarter of 2016 and an 8.2% increase compared with the second quarter of 2017. Interest income was impacted by the continued growth of interest-earning assets.
- Interest expense was $17.6 million, a 9.1% decrease compared with the third quarter of 2016 and a 5.9% increase compared with the second quarter of 2017.
Compensation and Benefits Expenses
For the quarter ended September 30, 2017, compensation and benefits expenses were $448.4 million, which included $8.1 million of merger-related and severance expenses. This compares with $434.2 million in the third quarter of 2016 and $453.9 million in the second quarter of 2017. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 61.1% in the third quarter of 2017.
| Three Months Ended 9/30/17 | Nine Months Ended 9/30/17 | ||||||||
| GAAP compensation and benefits | $ | 448,410 | $ | 1,338,673 | |||||
| As a percentage of net revenues | 62.2 | % | 63.1 | % | |||||
| Non-GAAP adjustments: (2) | |||||||||
| Merger-related | (5,518 | ) | (20,874 | ) | |||||
| Severance | (2,538 | ) | (9,493 | ) | |||||
| (8,056 | ) | (30,367 | ) | ||||||
| Non-GAAP compensation and benefits | $ | 440,354 | $ | 1,308,306 | |||||
| As a percentage of non-GAAP net revenues | 61.1 | % | 61.6 | % | |||||
Non-Compensation Operating Expenses
For the quarter ended September 30, 2017, non-compensation operating expenses were $164.6 million, which included merger-related expenses of $4.7 million. This compares with $179.8 million in the third quarter of 2016 and $188.6 million in the second quarter of 2017. Excluding litigation and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2017 were 22.1%.
| Three Months Ended 9/30/17 | Nine Months Ended 9/30/17 | |||||||
| GAAP non-compensation expenses | $ | 164,620 | $ | 513,318 | ||||
| As a percentage of net revenues | 22.8 | % | 24.2 | % | ||||
| Non-GAAP adjustments: (2) | ||||||||
| Merger-related | (4,725 | ) | (16,899 | ) | ||||
| Litigation-related | - | (20,000 | ) | |||||
| (4,725 | ) | (36,899 | ) | |||||
| Non-GAAP non-compensation expenses | $ | 159,895 | $ | 476,419 | ||||
| As a percentage of non-GAAP net revenues | 22.1 | % | 22.4 | % | ||||
Provision for Income Taxes
The GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.5%. This compares with an effective income tax rate of 36.3% for the third quarter of 2016 and 36.5% for the second quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.9%.
| Three Months Ended 9/30/17 | Nine Months Ended 9/30/17 | |||||||
| GAAP provision for income taxes | $ | 41,603 | $ | 85,497 | ||||
| GAAP effective tax rate | 38.5 | % | 31.6 | % | ||||
| Non-GAAP adjustments: (2) | ||||||||
| Litigation and merger-related and severance | 5,072 | 26,869 | ||||||
| Excess tax benefits from stock-based compensation (3) | 297 | 17,452 | ||||||
| 5,369 | 44,321 | |||||||
| Non-GAAP provision for income taxes | $ | 46,972 | $ | 129,818 | ||||
| Non-GAAP effective tax rate | 38.9 | % | 38.2 | % | ||||
Conference Call Information
Stifel Financial Corp. will host its third quarter 2017 financial results conference call on Monday, October 30, 2017, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.
All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (888) 676-3684 and referencing conference ID #3699219. 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. (
Forward-Looking Statements
This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
| Summary Results of Operations (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in 000s, except per share amounts) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | 9/30/17 | 9/30/16 | % Change | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 162,612 | $ | 171,272 | (5.1 | ) | $ | 172,264 | (5.6 | ) | $ | 510,150 | $ | 551,306 | (7.5 | ) | ||||||||||
| Principal transactions | 87,010 | 117,002 | (25.6 | ) | 95,703 | (9.1 | ) | 299,570 | 364,376 | (17.8 | ) | |||||||||||||||
| Brokerage Revenues | 249,622 | 288,274 | (13.4 | ) | 267,967 | (6.8 | ) | 809,720 | 915,682 | (11.6 | ) | |||||||||||||||
| Capital raising | 79,922 | 58,477 | 36.7 | 102,800 | (22.3 | ) | 256,638 | 178,193 | 44.0 | |||||||||||||||||
| Advisory fees | 101,982 | 86,322 | 18.1 | 82,461 | 23.7 | 237,379 | 200,389 | 18.5 | ||||||||||||||||||
| Investment banking | 181,904 | 144,799 | 25.6 | 185,261 | (1.8 | ) | 494,017 | 378,582 | 30.5 | |||||||||||||||||
| Asset management and service fees | 179,848 | 144,206 | 24.7 | 172,914 | 4.0 | 515,501 | 433,305 | 19.0 | ||||||||||||||||||
| Other income | 9,558 | 9,209 | 3.8 | 7,198 | 32.8 | 25,508 | 33,804 | (24.5 | ) | |||||||||||||||||
| Operating Revenue | 620,932 | 586,488 | 5.9 | 633,340 | (2.0 | ) | 1,844,746 | 1,761,373 | 4.7 | |||||||||||||||||
| Interest Revenue | 117,862 | 74,881 | 57.4 | 108,951 | 8.2 | 327,766 | 203,488 | 61.1 | ||||||||||||||||||
| Total Revenue | 738,794 | 661,369 | 11.7 | 742,291 | (0.5 | ) | 2,172,512 | 1,964,861 | 10.6 | |||||||||||||||||
| Interest Expense | 17,625 | 19,383 | (9.1 | ) | 16,644 | 5.9 | 50,165 | 50,756 | (1.2 | ) | ||||||||||||||||
| Net Revenue | 721,169 | 641,986 | 12.3 | 725,647 | (0.6 | ) | 2,122,347 | 1,914,105 | 10.9 | |||||||||||||||||
| Non-interest Expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | 448,410 | 434,236 | 3.3 | 453,876 | (1.2 | ) | 1,338,673 | 1,305,372 | 2.6 | |||||||||||||||||
| Occupancy and equipment rental | 57,427 | 62,453 | (8.0 | ) | 57,892 | (0.8 | ) | 167,864 | 178,455 | (5.9 | ) | |||||||||||||||
| Communication and office supplies | 34,650 | 31,182 | 11.1 | 34,192 | 1.3 | 102,686 | 105,268 | (2.5 | ) | |||||||||||||||||
| Commissions and floor brokerage | 11,232 | 10,777 | 4.2 | 11,232 | - | 33,187 | 34,653 | (4.2 | ) | |||||||||||||||||
| Provision for loan losses | 7,990 | 3,561 | 124.4 | 5,856 | 36.4 | 19,980 | 9,643 | 107.2 | ||||||||||||||||||
| Other operating expenses | 53,321 | 71,795 | (25.7 | ) | 79,401 | (32.8 | ) | 189,601 | 193,026 | (1.8 | ) | |||||||||||||||
| Total non-interest expenses | 613,030 | 614,004 | (0.2 | ) | 642,449 | (4.6 | ) | 1,851,991 | 1,826,417 | 1.4 | ||||||||||||||||
| Income before income taxes | 108,139 | 27,982 | 286.5 | 83,198 | 30.0 | 270,356 | 87,688 | 208.3 | ||||||||||||||||||
| Provision for income taxes | 41,603 | 10,168 | 309.2 | 30,387 | 36.9 | 85,497 | 33,048 | 158.7 | ||||||||||||||||||
| Net income | 66,536 | 17,814 | 273.5 | 52,811 | 26.0 | 184,859 | 54,640 | 238.3 | ||||||||||||||||||
| Preferred dividends | 2,343 | 1,563 | 49.9 | 2,344 | (0.0 | ) | 7,031 | 1,563 | 349.8 | |||||||||||||||||
| Net income available to common shareholders | $ | 64,193 | $ | 16,251 | 295.0 | $ | 50,467 | 27.2 | $ | 177,828 | $ | 53,077 | 235.0 | |||||||||||||
| Earnings per common share: | ||||||||||||||||||||||||||
| Basic | $ | 0.94 | $ | 0.24 | 291.7 | $ | 0.74 | 27.0 | $ | 2.60 | $ | 0.79 | 229.1 | |||||||||||||
| Diluted | $ | 0.79 | $ | 0.21 | 276.2 | $ | 0.63 | 25.4 | $ | 2.21 | $ | 0.69 | 220.3 | |||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 68,522 | 66,482 | 3.1 | 68,556 | (0.0 | ) | 68,488 | 66,950 | 2.3 | |||||||||||||||||
| Diluted | 80,881 | 77,544 | 4.3 | 80,021 | 1.1 | 80,562 | 76,612 | 5.2 | ||||||||||||||||||
| Summary Segment Results (Unaudited) | |||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | 9/30/17 | 9/30/16 | % Change | |||||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 453,558 | $ | 390,032 | 16.3 | $ | 451,990 | 0.3 | $ | 1,348,280 | $ | 1,155,875 | 16.6 | ||||||||||||||||||
| Institutional Group | 264,747 | 258,800 | 2.3 | 276,153 | (4.1 | ) | 778,367 | 760,996 | 2.3 | ||||||||||||||||||||||
| Other | 2,864 | (6,846 | ) | 141.8 | (2,496 | ) | 214.7 | (4,300 | ) | (2,766 | ) | (55.5 | ) | ||||||||||||||||||
| Total net revenues | $ | 721,169 | $ | 641,986 | 12.3 | $ | 725,647 | (0.6 | ) | $ | 2,122,347 | $ | 1,914,105 | 10.9 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 291,802 | $ | 280,953 | 3.9 | $ | 298,753 | (2.3 | ) | $ | 891,235 | $ | 848,409 | 5.0 | |||||||||||||||||
| Institutional Group | 213,030 | 213,877 | (0.4 | ) | 223,261 | (4.6 | ) | 633,886 | 644,368 | (1.6 | ) | ||||||||||||||||||||
| Other | 108,198 | 119,174 | (9.2 | ) | 120,435 | (10.2 | ) | 326,870 | 333,640 | (2.0 | ) | ||||||||||||||||||||
| Total operating expenses | $ | 613,030 | $ | 614,004 | (0.2 | ) | $ | 642,449 | (4.6 | ) | $ | 1,851,991 | $ | 1,826,417 | 1.4 | ||||||||||||||||
| Operating contribution: | |||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 161,756 | $ | 109,079 | 48.3 | $ | 153,237 | 5.6 | $ | 457,045 | $ | 307,466 | 48.6 | ||||||||||||||||||
| Institutional Group | 51,717 | 44,923 | 15.1 | 52,892 | (2.2 | ) | 144,481 | 116,628 | 23.9 | ||||||||||||||||||||||
| Other | (105,334 | ) | (126,020 | ) | (16.4 | ) | (122,931 | ) | (14.3 | ) | (331,170 | ) | (336,406 | ) | (1.6 | ) | |||||||||||||||
| Income before income taxes | $ | 108,139 | $ | 27,982 | 286.5 | $ | 83,198 | 30.0 | $ | 270,356 | $ | 87,688 | 208.3 | ||||||||||||||||||
| As a percentage of net revenues: | |||||||||||||||||||||||||||||||
| Compensation and benefits | |||||||||||||||||||||||||||||||
| Global Wealth Management | 49.1 | 55.2 | 50.7 | 50.5 | 56.7 | ||||||||||||||||||||||||||
| Institutional Group | 60.0 | 61.1 | 59.6 | 60.0 | 60.7 | ||||||||||||||||||||||||||
| Non-comp. operating expenses | |||||||||||||||||||||||||||||||
| Global Wealth Management | 15.2 | 16.9 | 15.4 | 15.6 | 16.7 | ||||||||||||||||||||||||||
| Institutional Group | 20.5 | 21.5 | 21.2 | 21.4 | 24.0 | ||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||
| Global Wealth Management | 35.7 | 27.9 | 33.9 | 33.9 | 26.6 | ||||||||||||||||||||||||||
| Institutional Group | 19.5 | 17.4 | 19.2 | 18.6 | 15.3 | ||||||||||||||||||||||||||
| Consolidated pre-tax margin (4) (5) | 15.0 | 4.4 | 11.5 | 12.7 | 4.6 | ||||||||||||||||||||||||||
| Stifel Financial Corp. | |||||||||||||
| Selected Key Metrics | |||||||||||||
| (Unaudited) | |||||||||||||
| Financial metrics: | As of and For the Three Months Ended | ||||||||||||
| (in 000s, except percentages and per share amounts) | 9/30/17 | 9/30/16 | 6/30/17 | ||||||||||
| Total assets | $ | 20,484,080 | $ | 17,204,908 | $ | 19,533,575 | |||||||
| Total equity | 2,932,405 | 2,691,690 | 2,845,309 | ||||||||||
| Book value per common share | $ | 40.67 | $ | 38.38 | $ | 39.47 | |||||||
| Return on common equity (6) | 9.7 | % | 2.8 | % | 7.9 | % | |||||||
| Non-GAAP return on common equity (1) (6) | 10.8 | % | 8.7 | % | 11.1 | % | |||||||
| Return on tangible common equity (7) | 16.1 | % | 5.0 | % | 13.4 | % | |||||||
| Non-GAAP return on tangible common equity (1) (7) | 17.8 | % | 15.3 | % | 18.8 | % | |||||||
| Tier 1 common capital ratio (8) | 18.3 | % | 19.5 | % | 18.2 | % | |||||||
| Tier 1 risk based capital ratio (8) | 20.5 | % | 22.0 | % | 20.5 | % | |||||||
| Tier 1 leverage capital ratio (8) | 10.4 | % | 11.8 | % | 10.3 | % | |||||||
| Pre-tax margin on net revenues | 15.0 | % | 4.4 | % | 11.5 | % | |||||||
| Non-GAAP pre-tax margin on net revenues (1) | 16.8 | % | 14.0 | % | 16.3 | % | |||||||
| Effective tax rate | 38.5 | % | 36.3 | % | 36.5 | % | |||||||
| Non-GAAP effective tax rate (1) | 38.9 | % | 39.4 | % | 37.3 | % | |||||||
| Statistical Information | ||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | |||||||||||
| Statistical Information: | ||||||||||||||||
| Financial advisors (9) | 2,252 | 2,280 | (1.2 | ) | 2,277 | (1.1 | ) | |||||||||
| Locations | 395 | 396 | (0.3 | ) | 399 | (1.0 | ) | |||||||||
| Total client assets | $ | 264,717,000 | $ | 234,490,000 | 12.9 | $ | 258,097,000 | 2.6 | ||||||||
| Fee-based client assets | $ | 82,999,000 | $ | 67,927,000 | 22.2 | $ | 79,177,000 | 4.8 | ||||||||
| Client money market and insured product | $ | 17,420,000 | $ | 18,478,000 | (5.7 | ) | $ | 17,831,000 | (2.3 | ) | ||||||
| Secured client lending (10) | $ | 3,037,158 | $ | 2,770,783 | 9.6 | $ | 2,999,461 | 1.3 | ||||||||
| Stifel Bank & Trust - a component of Global Wealth Management | |||||||||||||||||||||||||||
| Selected Key Metrics | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| Selected operating data: | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in 000s, except percentages) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | 9/30/17 | 9/30/16 | % Change | |||||||||||||||||||
| Net Interest Income | $ | 97,300 | $ | 57,994 | 67.8 | $ | 90,795 | 7.2 | $ | 272,114 | $ | 152,183 | 78.8 | ||||||||||||||
| Bank loan loss provision | 7,990 | 3,561 | 124.4 | 5,856 | 36.4 | 19,980 | 9,643 | 107.2 | |||||||||||||||||||
| Charge-offs | - | 283 | n/m | 2,953 | n/m | 2,953 | 296 | n/m | |||||||||||||||||||
| Net Interest Margin | 2.80 | % | 2.41 | % | 16.2 | 2.77 | % | 1.1 | 2.74 | % | 2.40 | % | 14.2 | ||||||||||||||
| Financial Metrics: | As of | |||||||||||
| (in 000s, except percentages) | 9/30/17 | 9/30/16 | 6/30/17 | |||||||||
| Total Assets | $ | 14,538,750 | $ | 11,018,615 | $ | 13,598,260 | ||||||
| Total Equity | 1,019,257 | 740,348 | 978,626 | |||||||||
| Total Loans, net | 6,949,369 | 5,173,992 | 6,299,669 | |||||||||
| Total Deposits | 12,883,961 | 9,885,441 | 12,050,474 | |||||||||
| Available-for-sale securities, at fair value | 3,687,248 | 3,139,438 | 3,448,548 | |||||||||
| Held-to-maturity securities, at amortized cost | 3,550,962 | 2,237,112 | 3,304,090 | |||||||||
| Residential real estate | 2,517,543 | 1,804,112 | 2,248,528 | |||||||||
| Commercial and industrial | 2,380,417 | 1,558,284 | 2,064,052 | |||||||||
| Securities-based loans | 1,839,981 | 1,452,913 | 1,755,592 | |||||||||
| Commercial real estate | 78,614 | 63,680 | 71,517 | |||||||||
| Loans held for sale | 166,335 | 217,316 | 139,676 | |||||||||
| Common equity tier 1 capital ratio (8) | 14.4 | % | 13.7 | % | 14.9 | % | ||||||
| Tier 1 capital ratio (8) | 14.4 | % | 13.7 | % | 14.9 | % | ||||||
| Total capital ratio (8) | 15.3 | % | 14.5 | % | 15.7 | % | ||||||
| Tier 1 leverage ratio (8) | 7.1 | % | 7.5 | % | 7.2 | % | ||||||
| Credit Metrics: | ||||||||||||
| Allowance for loan losses | $ | 62,229 | $ | 39,145 | $ | 54,202 | ||||||
| Allowance as a percentage of retained loans | 0.92 | % | 0.79 | % | 0.88 | % | ||||||
| Net charge-offs as a percentage of average loans | 0.00 | % | 0.01 | % | 0.05 | % | ||||||
| Total nonperforming assets | 21,776 | 28,301 | 21,219 | |||||||||
| Nonperforming assets as % of total assets | 0.15 | % | 0.25 | % | 0.15 | % | ||||||
| Global Wealth Management Summary Results of Operations (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | 9/30/17 | 9/30/16 | % Change | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 115,410 | $ | 117,596 | (1.9 | ) | $ | 120,344 | (4.1 | ) | $ | 356,331 | $ | 376,390 | (5.3 | ) | ||||||||||
| Principal transactions | 42,924 | 47,880 | (10.4 | ) | 47,741 | (10.1 | ) | 141,582 | 134,228 | 5.5 | ||||||||||||||||
| Brokerage revenues | 158,334 | 165,476 | (4.3 | ) | 168,085 | (5.8 | ) | 497,913 | 510,618 | (2.5 | ) | |||||||||||||||
| Asset management and service fees | 179,830 | 143,152 | 25.6 | 172,889 | 4.0 | 515,383 | 431,864 | 19.3 | ||||||||||||||||||
| Net interest | 102,831 | 63,981 | 60.7 | 95,698 | 7.5 | 288,224 | 170,036 | 69.5 | ||||||||||||||||||
| Investment banking | 9,072 | 12,212 | (25.7 | ) | 10,641 | (14.7 | ) | 31,567 | 30,123 | 4.8 | ||||||||||||||||
| Other income | 3,491 | 5,211 | (33.0 | ) | 4,677 | (25.4 | ) | 15,193 | 13,234 | 14.8 | ||||||||||||||||
| Net revenues | 453,558 | 390,032 | 16.3 | 451,990 | 0.3 | 1,348,280 | 1,155,875 | 16.6 | ||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | 222,621 | 215,151 | 3.5 | 229,158 | (2.9 | ) | 680,250 | 655,119 | 3.8 | |||||||||||||||||
| Non-compensation operating expenses | 69,181 | 65,802 | 5.1 | 69,595 | (0.6 | ) | 210,985 | 193,290 | 9.2 | |||||||||||||||||
| Total non-interest expenses | 291,802 | 280,953 | 3.9 | 298,753 | (2.3 | ) | 891,235 | 848,409 | 5.0 | |||||||||||||||||
| Income before income taxes | $ | 161,756 | $ | 109,079 | 48.3 | $ | 153,237 | 5.6 | $ | 457,045 | $ | 307,466 | 48.6 | |||||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||||||||
| Compensation and benefits | 49.1 | 55.2 | 50.7 | 50.5 | 56.7 | |||||||||||||||||||||
| Non-compensation operating expenses | 15.2 | 16.9 | 15.4 | 15.6 | 16.7 | |||||||||||||||||||||
| Income before income taxes | 35.7 | 27.9 | 33.9 | 33.9 | 26.6 | |||||||||||||||||||||
| Institutional Group Summary Results of Operations (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | % Change | 6/30/17 | % Change | 9/30/17 | 9/30/16 | % Change | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 47,202 | $ | 53,676 | (12.1 | ) | $ | 51,920 | (9.1 | ) | $ | 153,819 | $ | 174,916 | (12.1 | ) | ||||||||||
| Principal transactions | 44,086 | 69,122 | (36.2 | ) | 47,962 | (8.1 | ) | 157,988 | 230,148 | (31.4 | ) | |||||||||||||||
| Brokerage revenues | 91,288 | 122,798 | (25.7 | ) | 99,882 | (8.6 | ) | 311,807 | 405,064 | (23.0 | ) | |||||||||||||||
| Capital raising | 70,850 | 46,265 | 53.1 | 92,159 | (23.1 | ) | 225,071 | 147,260 | 52.8 | |||||||||||||||||
| Advisory fees | 101,982 | 86,322 | 18.1 | 82,461 | 23.7 | 237,379 | 201,199 | 18.0 | ||||||||||||||||||
| Investment banking | 172,832 | 132,587 | 30.4 | 174,620 | (1.0 | ) | 462,450 | 348,459 | 32.7 | |||||||||||||||||
| Other (11) | 627 | 3,415 | (81.6 | ) | 1,651 | (62.0 | ) | 4,110 | 7,473 | (45.0 | ) | |||||||||||||||
| Net revenues | 264,747 | 258,800 | 2.3 | 276,153 | (4.1 | ) | 778,367 | 760,996 | 2.3 | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | 158,926 | 158,126 | 0.5 | 164,532 | (3.4 | ) | 467,098 | 462,115 | 1.1 | |||||||||||||||||
| Non-compensation operating expenses | 54,104 | 55,751 | (3.0 | ) | 58,729 | (7.9 | ) | 166,788 | 182,253 | (8.5 | ) | |||||||||||||||
| Total non-interest expenses | 213,030 | 213,877 | (0.4 | ) | 223,261 | (4.6 | ) | 633,886 | 644,368 | (1.6 | ) | |||||||||||||||
| Income before income taxes | $ | 51,717 | $ | 44,923 | 15.1 | $ | 52,892 | (2.2 | ) | $ | 144,481 | $ | 116,628 | 23.9 | ||||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||||||||
| Compensation and benefits | 60.0 | 61.1 | 59.6 | 60.0 | 60.7 | |||||||||||||||||||||
| Non-compensation operating expenses | 20.5 | 21.5 | 21.2 | 21.4 | 24.0 | |||||||||||||||||||||
| Income before income taxes | 19.5 | 17.4 | 19.2 | 18.6 | 15.3 | |||||||||||||||||||||
Non-GAAP Financial Measures
The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company's financial results for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 30, 2017 and 2016. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company's results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.
A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these charges do, in fact, reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures and the same respective non-GAAP measures of the Company's financial performance should be considered together.
The following table provides details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 30, 2017 and 2016 to net income and earnings per diluted common share on a non-GAAP basis for the same period.
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| (in 000s) | 9/30/17 | 9/30/16 | 6/30/17 | 9/30/17 | 9/30/16 | ||||||||||||
| GAAP net income | $ | 66,536 | $ | 17,814 | $ | 52,811 | $ | 184,859 | $ | 54,640 | |||||||
| Preferred dividend | 2,343 | 1,563 | 2,344 | 7,031 | 1,563 | ||||||||||||
| Net income available to common shareholders | 64,193 | 16,251 | 50,467 | 177,828 | 53,077 | ||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Merger-related (12) | 10,244 | 50,446 | 12,400 | 39,758 | 117,790 | ||||||||||||
| Litigation-related (13) | - | 11,796 | 20,000 | 20,000 | 11,796 | ||||||||||||
| Severance | 2,538 | - | 2,420 | 9,493 | - | ||||||||||||
| Provision for income taxes | (5,369 | ) | (25,337 | ) | (13,640 | ) | (44,321 | ) | (51,143 | ) | |||||||
| Total non-GAAP adjustments | 7,413 | 36,905 | 21,180 | 24,930 | 78,443 | ||||||||||||
| Non-GAAP net income available to common shareholders | $ | 71,606 | $ | 53,156 | $ | 71,647 | $ | 202,758 | $ | 131,520 | |||||||
| Weighted average diluted shares outstanding | 80,881 | 77,544 | 80,021 | 80,562 | 76,612 | ||||||||||||
| GAAP earnings per diluted common share | $ | 0.82 | $ | 0.23 | $ | 0.66 | $ | 2.29 | $ | 0.71 | |||||||
| Non-GAAP adjustments | 0.09 | 0.48 | 0.26 | 0.31 | 1.03 | ||||||||||||
| Non-GAAP earnings per diluted common share | $ | 0.91 | $ | 0.71 | $ | 0.92 | $ | 2.60 | $ | 1.74 | |||||||
| GAAP earnings per diluted common share available to common shareholders | $ | 0.79 | $ | 0.21 | $ | 0.63 | $ | 2.21 | $ | 0.69 | |||||||
| Non-GAAP adjustments | 0.10 | 0.48 | 0.27 | 0.31 | 1.03 | ||||||||||||
| Non-GAAP earnings per diluted common share available to common shareholders | $ | 0.89 | $ | 0.69 | $ | 0.90 | $ | 2.52 | $ | 1.72 | |||||||
Footnotes
(1) Reconciliations of the Company's GAAP results to these non-GAAP measures are discussed within and under "Non-GAAP Financial Measures." (2) See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures." (3) During the first quarter of 2017, the Company adopted new accounting guidance associated with stock-based compensation. (4) Non-GAAP pre-tax margin for the three months ended September 30, 2017 of 16.8% is calculated by adding merger-related and severance non-GAAP adjustments of $12.8 million to our GAAP income before income taxes of $108.1 million and dividing it by non-GAAP net revenues for the quarter of $721.2 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures." (5) Non-GAAP pre-tax margin for the nine months ended September 30, 2017 of 16.0% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $69.3 million to our GAAP income before income taxes of $270.4 million and dividing it by non-GAAP net revenues for the quarter of $2,124.3 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures." (6) Computed by dividing annualized net income by average common shareholders' equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average common shareholders' equity. (7) Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total common shareholders' equity less goodwill and identifiable intangible assets. (8) Capital ratios are estimates at time of the Company's earning release. (9) Includes 116, 125, and 119 independent contractors at September 30, 2017, September 30, 2016, and June 30, 2017, respectively. (10) Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank. (11) Includes net interest, asset management and service fees, and other income. (12) 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. (13) Primarily related to costs associated with the Company's previously disclosed legal matters.
Investor Relations Joel Jeffrey (212) 271-3610 investorrelations@stifel.com
