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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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): November 3, 2008
STIFEL FINANCIAL CORP.
Delaware |
1-9305 |
43-1273600 |
One Financial Plaza
501 North Broadway
St. Louis, Missouri 63102-2102
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code
(314) 342-2000
___________________________N/A___________________________
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))
Page 1
Item 2.02 Results of Operations and Financial Condition.
On November 3, 2008 Stifel Financial Corp. announced its results for the three and nine months ended September 30, 2008. A copy of the related press release is attached hereto as Exhibit 99.1.
Stifel Financial Corp. will hold a conference call on Monday, November 3, 2008, at 4:30 p.m. EST. This call will be Web cast and slides can be accessed on the Investor Relations portion of the Stifel Financial Corp. website at www.stifel.com, as well as on all sites within Thomson/CCBN's Investor Distribution Network. To participate on the call, please dial 888-676-3684 and request the Stifel Financial Corp. earnings call. The conference call slide show is attached hereto as Exhibit 99.2.
The exhibits are "furnished" pursuant to Item 2.02 "Results of Operations and Financial Condition," is not to be considered "filed" under the Securities Exchange Act of 1934, as amended, ("Exchange Act") and shall not be incorporated by reference into any filing by Stifel Financial Corp. under the Securities Act of 1933, as amended, ("Securities Act") or the Exchange Act.
Items 9.01 Financial Statements and Exhibits.
(c) Exhibits:
The following exhibits are "furnished" pursuant to Item 12 "Disclosure of Results of Operations and Financial Condition," is not to be considered "filed" under the Securities Exchange Act of 1934, as amended, ("Exchange Act") and shall not be incorporated by reference into any filing by Stifel Financial Corp. under the Securities Act of 1933, as amended, ("Securities Act") or the Exchange Act.
Exhibit 99.1: Stifel Financial Corp.'s press release dated November 3, 2008.
Exhibit 99.2: Stifel Financial Corp.'s Investor Presentation.
Page 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: November 3, 2008 |
By: /s/ James M. Zemlyak |
Name: James M. Zemlyak |
Page 3
Exhibit Index
Exhibit No. |
Description |
|
99.1 |
|
Stifel Financial Corp.'s press release dated November 3, 2008. |
99.2 |
Stifel Financial Corp.'s Investor Presentation. |
Page 4
STIFEL FINANCIAL CORP.
[Stifel Financial Corp. logo]
Stifel Financial News
One Financial Plaza |
Chief Financial OfficerFor further information contact:
James M. Zemlyak,
For Immediate Release
Stifel Financial Corp. Reports Third Quarter Results
Record Quarterly Net Revenues of $218.9 million
Record Nine Month Net Revenues of $639.4 million
Non-GAAP EPS $0.60
GAAP EPS $0.46
St. Louis, Missouri - November 3, 2008 - Stifel Financial Corp. (NYSE: "SF") today reported unaudited quarterly net income of $12.8 million, or $0.46 per diluted share, on record net revenues of $218.9 million for the quarter ended September 30, 2008. For the comparable quarter of 2007, net income was $8.1 million, or $0.30 per diluted share, on net revenues of $183.0 million. For the nine months ended September 30, 2008, we posted net income of $39.5 million, or $1.44 per diluted share, on net revenues of $639.4 million, compared with $18.3 million, or $0.73 per diluted share, on net revenues of $550.9 million, for the same period one year earlier. All prior period share and earnings per share amounts have been retroactively restated to reflect the three-for-two stock split distributed in June 2008.
At September 30, 2008, our equity was $565.4 million, resulting in book value per share of $22.21. During the first nine months of 2008, the Company repurchased 567,953 shares of its common stock, at an average price of $27.87 per share. On September 29, 2008, the Company completed the public offering of 1,495,000 new shares of Company common stock.
After adjusting for acquisition related charges, non-GAAP net income, our "Core earnings", and non-GAAP earnings per diluted share were $16.7 million and $0.60, respectively for the third quarter of 2008 compared to 2007 third quarter non-GAAP earnings of $14.3 million and non-GAAP earnings per diluted share of $0.53. For the nine months ended September 30, 2008, our non-GAAP earnings and non-GAAP earnings per diluted share were $51.4 million and $1.88, respectively compared to 2007 year to date non-GAAP earnings of $46.3 million and non-GAAP earnings per diluted share of $1.83. A reconciliation between our GAAP results and non-GAAP measures is included in this release.
Our results include the operations of Ryan Beck and Company and Stifel Bank and Trust for the nine months ended September 30, 2008, compared to the prior year nine month results which include Ryan Beck operations for seven months and Stifel Bank and Trust for six months, as the acquisitions were made on February 28, 2007 and April 2, 2007, respectively. Prior year nine month results also include a significant investment banking transaction that contributed $24.7 million in revenues in the second quarter of 2007.
Stifel Financial Corp. |
||||||||
Summary of Results of Operations (Unaudited) |
||||||||
($ In Thousands, Except Per Share Amounts) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
|
Total Revenues |
$ 223,829 |
$ 214,020 |
$ 190,839 |
5% |
17% |
$ 655,091 |
$ 573,968 |
14% |
Net Revenues |
$ 218,923 |
$ 208,951 |
$ 182,983 |
5% |
20% |
$ 639,351 |
$ 550,879 |
16% |
Non-GAAP Net Income (1) |
$ 16,714 |
$ 16,319 |
$ 14,266 |
2% |
17% |
$ 51,352 |
$ 46,297 |
11% |
Net Income |
$ 12,777 |
$ 12,332 |
$ 8,058 |
4% |
59% |
$ 39,456 |
$ 18,335 |
115% |
Per Share Information |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
|
Non-GAAP Earnings Per Share: Diluted (1) |
$ 0.60 |
$ 0.60 |
$ 0.53 |
0% |
13% |
$ 1.88 |
$ 1.83 |
3% |
Earnings Per Share: Diluted |
$ 0.46 |
$ 0.45 |
$ 0.30 |
2% |
53% |
$ 1.44 |
$ 0.73 |
97% |
Weighed average common equivalent share Computations: Diluted shares |
28,045 |
27,229 |
26,815 |
3% |
5% |
27,335 |
25,264 |
8% |
(1 See"Reconciliationof Core Earnings" table |
Page 1
Business Highlights
YTD Highlights
Quarterly Highlights
Chairman's Comments
Chairman and Chief Executive Officer, Ronald J. Kruszewski, commented, "Our quarterly and year-to-date results underscore the balance of our revenues and low balance sheet leverage. While the environment remains challenging, the current turmoil provides us tremendous opportunity to continue to build our franchise."
Page 2
Stifel Financial Corp. |
||||||||||
Summary of Results of Operations (Unaudited) |
||||||||||
($ In Thousands, Except Per Share Amounts) |
||||||||||
Three Months Ended |
Percent Change From |
|||||||||
9/30/2008 |
% of Net Revenues |
6/30/2008 |
% of Net Revenues |
9/30/2007 |
% of Net Revenues |
6/30/2008 |
9/30/2007 |
|||
Commissions |
$ 88,727 |
40.5% |
$ 83,063 |
39.8% |
$ 82,917 |
45.3% |
7% |
7% |
||
Principal transactions |
68,182 |
31.2% |
65,674 |
31.4% |
31,711 |
17.4% |
4% |
115% |
||
Investment banking |
25,156 |
11.5% |
20,935 |
10.0% |
30,966 |
16.9% |
20% |
-19% |
||
Asset management and service fees |
30,336 |
13.8% |
29,966 |
14.3% |
27,108 |
14.8% |
1% |
12% |
||
Other |
(1,391) |
-0.6% |
1,715 |
0.8% |
2,165 |
1.2% |
n/a |
n/a |
||
Total operating revenues |
211,010 |
96.4% |
201,353 |
96.3% |
174,867 |
95.6% |
5% |
21% |
||
Interest revenue |
12,819 |
5.8% |
12,667 |
6.1% |
15,972 |
8.7% |
1% |
-20% |
||
Total revenues |
223,829 |
102.2% |
214,020 |
102.4% |
190,839 |
104.3% |
5% |
17% |
||
Less: Interest expense |
4,906 |
2.2% |
5,069 |
2.4% |
7,856 |
4.3% |
-3% |
-38% |
||
Net revenues |
218,923 |
100.0% |
208,951 |
100.0% |
182,983 |
100.0% |
5% |
20% |
||
Non-Interest Expenses |
||||||||||
Employee compensation and benefits |
150,203 |
68.6% |
144,795 |
69.3% |
126,652 |
69.2% |
4% |
19% |
||
Occupancy and equipment rental |
17,286 |
7.9% |
16,010 |
7.7% |
14,492 |
7.9% |
8% |
19% |
||
Communication and office supplies |
11,192 |
5.1% |
9,748 |
4.7% |
11,528 |
6.3% |
15% |
-3% |
||
Commissions and floor brokerage |
4,348 |
2.0% |
3,486 |
1.7% |
2,527 |
1.4% |
25% |
72% |
||
Other operating expenses |
14,800 |
6.8% |
14,762 |
7.0% |
14,512 |
8.0% |
0% |
2% |
||
Total non-interest expenses |
197,829 |
90.4% |
188,801 |
90.4% |
169,711 |
92.8% |
5% |
17% |
||
Income before income taxes |
21,094 |
9.6% |
20,150 |
9.6% |
13,272 |
7.2% |
5% |
59% |
||
Provision for income taxes |
8,317 |
3.8% |
7,818 |
3.7% |
5,214 |
2.8% |
6% |
60% |
||
Net income |
$ 12,777 |
5.8% |
$ 12,332 |
5.9% |
$ 8,058 |
4.4% |
4% |
59% |
||
Per Share information |
||||||||||
Earnings Per Share: |
||||||||||
Basic |
$ 0.54 |
$ 0.53 |
$ 0.36 |
2% |
50% |
|||||
Diluted |
$ 0.46 |
$ 0.45 |
$ 0.30 |
2% |
53% |
|||||
Weighted average common equivalent shares | ||||||||||
Basic shares |
23,830 |
23,449 |
22,394 |
2% |
6% |
|||||
Diluted shares |
28,045 |
27,229 |
26,815 |
3% |
5% |
|||||
Statistical Information |
||||||||||
Book Value Per Share |
$ 22.21 |
$ 19.75 |
$ 18.08 |
12% |
23% |
|||||
Investment Executives |
1,043 |
986 |
956 |
6% |
9% |
|||||
Full-Time Employees |
3,038 |
2,922 |
2,720 |
4% |
12% |
|||||
Locations |
194 |
185 |
177 |
5% |
10% |
|||||
Total Client Assets (in thousands) |
$ 58,860,000 |
$ 58,060,000 |
$61,120,000 |
1% |
-4% |
Nine Months Ended |
||||||
Net Revenues |
9/30/2008 |
% of Net Revenues |
9/30/2007 |
% of Net Revenues |
% Change |
|
Commissions |
$ 257,491 |
40.3% |
$ 224,930 |
40.9% |
14% |
|
Principal transactions |
200,793 |
31.4% |
91,578 |
16.6% |
119% |
|
Investment banking |
67,935 |
10.6% |
137,964 |
25.0% |
-51% |
|
Asset management and service fees |
90,580 |
14.2% |
72,018 |
13.1% |
26% |
|
Other |
(883) |
-0.1% |
4,107 |
0.7% |
n/a |
|
Total operating revenues |
615,916 |
96.4% |
530,597 |
96.3% |
16% |
|
Interest revenue |
39,175 |
6.1% |
43,371 |
7.9% |
-10% |
|
Total revenues |
655,091 |
102.5% |
573,968 |
104.2% |
14% |
|
Less: Interest expense |
15,740 |
2.5% |
23,089 |
4.2% |
-32% |
|
Net revenues |
639,351 |
100.0% |
550,879 |
100.0% |
16% |
|
Non-Interest Expenses |
|
|||||
Employee compensation and benefits |
441,028 |
69.0% |
401,263 |
72.8% |
10% |
|
Occupancy and equipment rental |
49,012 |
7.7% |
40,767 |
7.4% |
20% |
|
Communication and office supplies |
32,887 |
5.1% |
31,303 |
5.7% |
5% |
|
Commissions and floor brokerage |
8,315 |
1.3% |
7,246 |
1.3% |
15% |
|
Other operating expenses |
42,940 |
6.7% |
39,547 |
7.2% |
9% |
|
Total non-interest expenses |
574,182 |
89.8% |
520,126 |
94.4% |
10% |
|
Income before income taxes |
65,169 |
10.2% |
30,753 |
5.6% |
112% |
|
Provision for income taxes |
25,713 |
4.0% |
12,418 |
2.3% |
107% |
|
Net income |
$ 39,456 |
6.2% |
$ 18,335 |
3.3% |
115% |
|
Per Share information |
||||||
Revenues: |
9/30/2008 |
9/30/2007 |
% Change |
|||
Earnings Per Share: |
||||||
Basic |
$ 1.68 |
$ 0.85 |
98% |
|||
Diluted |
$ 1.44 |
$ 0.73 |
97% |
|||
Weighted average common equivalent shares |
|
|||||
Basic shares |
23,520 |
21,456 |
10% |
|||
Diluted shares |
27,335 |
25,264 |
8% |
Business Segment Results
Stifel Financial Corp. |
||||||||
Summary of Segment Data & Statistical Information (Unaudited) |
||||||||
Segment Data ($ In Thousands) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
Net Revenues |
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
Private Client |
$ 113,976 |
$ 120,999 |
$ 112,650 |
-6% |
1% |
$ 349,828 |
$ 316,451 |
11% |
Equity capital markets |
63,405 |
48,011 |
47,703 |
32% |
33% |
160,644 |
178,643 |
-10% |
Fixed income capital markets |
38,193 |
34,709 |
15,962 |
10% |
139% |
116,904 |
41,073 |
185% |
Stifel Bank |
3,175 |
3,237 |
1,839 |
-2% |
73% |
8,494 |
2,929 |
190% |
Other |
174 |
1,995 |
4,829 |
-91% |
-96% |
3,481 |
11,783 |
-70% |
Total net revenues |
$ 218,923 |
$ 208,951 |
$ 182,983 |
5% |
20% |
$ 639,351 |
$ 550,879 |
16% |
Operating Contribution |
||||||||
Private Client |
$ 22,801 |
$ 29,856 |
$ 23,401 |
-24% |
-3% |
$ 78,262 |
$ 67,869 |
15% |
Equity capital markets |
11,775 |
3,584 |
8,499 |
229% |
39% |
22,286 |
42,445 |
-47% |
Fixed income capital markets |
12,014 |
11,786 |
2,133 |
2% |
463% |
38,713 |
3,406 |
1037% |
Stifel Bank |
732 |
422 |
369 |
73% |
98% |
1,463 |
643 |
128% |
Other/unallocated overhead |
(26,228) |
(25,498) |
(21,130) |
n/a |
n/a |
(75,555) |
(83,610) |
n/a |
Income before income taxes |
$ 21,094 |
$ 20,150 |
$ 13,272 |
5% |
59% |
$ 65,169 |
$ 30,753 |
112% |
Page 3
Private Client Group Segment- Nine Month Highlights
Private Client Group Segment- Third Quarter Highlights
Stifel Financial Corp. |
||||||||
Private Client Group Segment Data & Statistical Information (Unaudited) |
||||||||
($ in thousands) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
Revenues: |
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
Commissions and principal transactions |
$ 78,031 |
$ 81,540 |
$ 71,766 |
-4% |
9% |
$ 237,523 |
$ 199,421 |
19% |
Investment banking |
3,371 |
6,216 |
10,068 |
-46% |
-67% |
13,690 |
35,366 |
-61% |
Asset management and service fees |
30,111 |
29,941 |
26,833 |
1% |
12% |
90,199 |
71,550 |
26% |
Net interest & other |
2,463 |
3,302 |
3,983 |
-25% |
-38% |
8,416 |
10,114 |
-17% |
Total Net Revenues |
113,976 |
120,999 |
112,650 |
-6% |
1% |
349,828 |
316,451 |
11% |
Non-interest expenses: |
||||||||
Employee compensation & benefits |
70,343 |
72,691 |
72,177 |
-3% |
-3% |
215,879 |
201,964 |
7% |
Other non-interest expenses |
20,832 |
18,452 |
17,072 |
13% |
22% |
55,687 |
46,618 |
19% |
Total non-interest expenses |
91,175 |
91,143 |
89,249 |
0% |
2% |
271,566 |
248,582 |
9% |
Income before income taxes |
$ 22,801 |
$ 29,856 |
$ 23,401 |
-24% |
-3% |
$ 78,262 |
$ 67,869 |
15% |
Ratios to Net Revenues |
||||||||
Employee compensation & benefits |
62% |
60% |
64% |
62% |
64% |
|||
Other non-interest expenses |
18% |
15% |
15% |
16% |
15% |
|||
Net Margins |
20% |
25% |
21% |
22% |
21% |
Page 4
Equity Capital Markets Segment - Nine Month Highlights Equity Capital Markets Segment - Third Quarter Highlights
Stifel Financial Corp. |
||||||||
Equity Capital Markets Group Segment Data & Statistical Information (Unaudited) |
||||||||
($ in thousands) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
Revenues: |
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
Commissions and principal transactions |
$ 44,827 |
$ 35,880 |
$ 31,020 |
25% |
45% |
$ 115,361 |
$ 85,104 |
36% |
Capital raising |
5,408 |
4,559 |
6,525 |
19% |
-17% |
16,725 |
37,521 |
-55% |
Advisory fees |
12,827 |
7,309 |
10,133 |
75% |
27% |
27,645 |
55,233 |
-50% |
Investment banking |
18,235 |
11,868 |
16,658 |
54% |
9% |
44,370 |
92,754 |
-52% |
Other |
343 |
263 |
25 |
30% |
1272% |
913 |
785 |
16% |
Total Net Revenues |
63,405 |
48,011 |
47,703 |
32% |
33% |
160,644 |
178,643 |
-10% |
Non-interest expenses: |
||||||||
Employee compensation & benefits |
39,139 |
32,950 |
28,235 |
19% |
39% |
103,383 |
105,619 |
-2% |
Other non-interest expenses |
12,491 |
11,477 |
10,969 |
9% |
14% |
34,975 |
30,579 |
14% |
Total non-interest expenses |
51,630 |
44,427 |
39,204 |
16% |
32% |
138,358 |
136,198 |
2% |
Income before income taxes |
$ 11,775 |
$ 3,584 |
$ 8,499 |
229% |
39% |
$ 22,286 |
$ 42,445 |
-47% |
Ratios to Net Revenues |
||||||||
Employee compensation & benefits |
62% |
69% |
59% |
64% |
59% |
|||
Other non-interest expenses |
20% |
24% |
23% |
22% |
17% |
|||
Net Margins |
19% |
7% |
18% |
14% |
24% |
Page 5
Fixed Income Capital Markets Segment-Nine Month Highlights Fixed Income Capital Markets Segment Third Quarter Highlights
Stifel Financial Corp. |
||||||||
Fixed Income Capital Markets Segment Data & Statistical Information (Unaudited) |
||||||||
($ in thousands) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
Revenues: |
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
Commissions & principal transactions |
$ 34,050 |
$ 31,317 |
$ 11,840 |
9% |
188% |
$ 105,399 |
$ 31,939 |
230% |
Investment banking |
3,550 |
2,851 |
4,241 |
25% |
-16% |
9,875 |
10,076 |
-2% |
Other |
593 |
541 |
(119) |
9% |
n/a |
1,630 |
(942) |
n/a |
Total Net Revenues |
38,193 |
34,709 |
15,962 |
10% |
139% |
116,904 |
41,073 |
185% |
Non-Interest Expenses |
||||||||
Employee compensation and benefits |
22,891 |
19,665 |
10,576 |
16% |
116% |
68,492 |
28,623 |
139% |
Operating expenses |
3,288 |
3,258 |
3,253 |
1% |
1% |
9,699 |
9,044 |
7% |
Total non-interest expenses |
26,179 |
22,923 |
13,829 |
14% |
89% |
78,191 |
37,667 |
108% |
Income before income taxes |
$ 12,014 |
$ 11,786 |
$ 2,133 |
2% |
463% |
$ 38,713 |
$ 3,406 |
1037% |
Ratios to Net Revenues |
||||||||
Employee compensation & benefits |
60% |
57% |
66% |
59% |
70% |
|||
Other non-interest expenses |
9% |
9% |
20% |
8% |
22% |
|||
Net Margins |
31% |
34% |
13% |
33% |
8% |
Page 6
Stifel Bank Segment-Nine Month Highlights Current nine month results include the operations of Stifel Bank and Trust for the full nine months compared to the prior year nine month results, which include Stifel Bank and Trust for only six months, as the acquisition was made on April 2, 2007, respectively.
Stifel Bank Segment Third Quarter Highlights
Stifel Financial Corp. |
||||||||
Stifel Bank & Trust Segment Data & Statistical Information (Unaudited) |
||||||||
($ in thousands) |
||||||||
Three Months Ended |
Percent Change From |
Nine Months Ended |
Change |
|||||
Revenues: |
9/30/2008 |
6/30/2008 |
9/30/2007 |
6/30/2008 |
9/30/2007 |
9/30/2008 |
9/30/2007 |
Percent |
Interest |
$ 4,129 |
$ 3,811 |
$ 3,231 |
8% |
28% |
$ 11,491 |
$ 5,823 |
97% |
Other |
493 |
862 |
423 |
-43% |
17% |
1,602 |
559 |
187% |
Total Revenues |
4,622 |
4,673 |
3,654 |
-1% |
26% |
13,093 |
6,382 |
105% |
Less: Interest expense |
1,447 |
1,436 |
1,815 |
1% |
-20% |
4,599 |
3,453 |
33% |
Total Net Revenues |
3,175 |
3,237 |
1,839 |
-2% |
73% |
8,494 |
2,929 |
190% |
Employee compensation and benefits |
1,045 |
978 |
516 |
7% |
102% |
2,782 |
863 |
222% |
Other non-interest expenses |
1,398 |
1,837 |
954 |
-24% |
47% |
4,249 |
1,423 |
199% |
Total non-interest expenses |
2,443 |
2,815 |
1,470 |
-13% |
66% |
7,031 |
2,286 |
208% |
Income before income taxes |
$ 732 |
$ 422 |
$ 369 |
73% |
98% |
$ 1,463 |
$ 643 |
128% |
As Of |
9/30/2008 |
6/30/2008 |
9/30/2007 |
|||||
Total assets |
$ 327,279 |
$ 301,511 |
$ 229,231 |
9% |
43% |
|||
Total retained loans, net |
$ 203,181 |
$ 168,904 |
$ 110,614 |
20% |
84% |
|||
Total loans held for sale, net |
$ 11,370 |
$ 17,301 |
$ - - |
-34% |
n/a |
|||
Total deposits |
$ 261,018 |
$ 222,249 |
$ 171,411 |
17% |
52% |
|||
Tier 1 capital |
$ 40,445 |
$ 30,709 |
$ 38,336 |
32% |
6% |
|||
Allowance for loan losses as a % of loans |
1.22% |
1.18% |
1.43% |
|||||
Total Non-Performing Loans as a % of Loans |
0.09% |
0.73% |
0.59% |
Prior year to date results include six months as Stifel Bank& Trust was purchased on April 1, 2007.
Page 7
Non-GAAP Financial Measures Our management has utilized non-GAAP calculations of presented net revenues, compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share that are adjusted in the manner presented as an additional measure to aid in understanding and analyzing our financial results for the three and nine months ended September 30, 2008. Specifically, our management believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of our core operating results and business outlook. Our management believes that these non-GAAP measures will allow for a better evaluation of the operating performance of our business and facilitate a meaningful comparison of our results in the current period to those in prior periods and future periods. Our reference to these non-GAAP measures should not be considered as a s
ubstitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance. The non-GAAP amounts exclude compensation and operating expenses associated with the LM Capital Markets and Ryan Beck acquisitions, principally stock-based awards offered to key associates of the LM Capital Markets in January 2006. A limitation of utilizing these non-GAAP measures of compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share is that the GAAP accounting effects of these acquisitions do in fact reflect the underlying financial results of our business and these effects should not be ignored in evaluating and analyzing our financial results. Therefore, our management believes that both GAAP measures of net revenues, compensation and benefits operating expenses, income before income taxes, income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share and the same respective non-GAAP measures of our financial performance should be considered together. We expect to grant stock-based awards and other share-based compensation in the future. We do not expect to make such substantial grants to employees outside of our regular compensation and hiring process, as we did when we granted the restricted stock units in connection with our LM Capital Markets acquisition. The following provides details with respect to reconciling net revenues, compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share on a GAAP basis for the three and nine months ended September 30, 2008 to the aforementioned captions on a non-GAAP basis for the same respective period. Page 8
Stifel Financial Corp. |
||||||||||
Reconciliation of Core Earnings (Unaudited) |
||||||||||
($ In Thousands) |
||||||||||
Three Months Ended September 30, 2008 |
Three Months Ended September 30, 2007 |
|||||||||
GAAP |
Acquisition Related |
Core Business |
% of Revenues |
GAAP |
Acquisition Related |
Core Business |
% of Revenues |
|||
Revenues |
||||||||||
Net Revenues |
$218,923 |
$ 4 |
$218,927 |
100% |
$182,983 |
$17 |
a |
183,000 |
100% |
|
Non Interest Expenses |
||||||||||
Compensation and Benefits |
150,203 |
(6,460) |
b |
143,743 |
66% |
126,652 |
(7,086) |
b |
119,566 |
65% |
Operating Expenses |
47,626 |
(42) |
c |
47,584 |
21% |
43,059 |
(2,796) |
c |
40,263 |
20% |
Total non-interest expenses |
197,829 |
(6,502) |
191,327 |
87% |
169,711 |
(9,882) |
159,829 |
85% |
||
Income before income taxes |
21,094 |
6,506 |
27,600 |
13% |
13,272 |
9,899 |
23,171 |
15% |
||
Provision for income taxes |
8,317 |
2,569 |
e |
10,886 |
5% |
5,214 |
3,691 |
e |
8,905 |
6% |
Net income |
$12,777 |
$3,937 |
f |
$16,714 |
8% |
$8,058 |
$6,208 |
f |
$14,266 |
9% |
Compensation Ratios (g) |
69% |
66% |
69% |
65% |
||||||
Annualized return on average equity (j) |
10% |
14% |
8% |
14% |
||||||
Pre-tax Margin (h) |
10% |
13% |
7% |
13% |
||||||
Earnings per share-Diluted (i) |
$0.46 |
$0.14 |
$0.60 |
$0.30 |
$0.23 |
$0.53 |
Nine Months Ended September 30, 2008 |
Nine Months Ended September 30, 2007 |
|||||||||
GAAP |
Acquisition Related |
Core Business |
% of Revenues |
GAAP |
Acquisition Related |
Core Business |
% of Revenues |
|||
Revenues |
||||||||||
Net Revenues |
$639,351 |
$ 4 |
a |
$639,355 |
100% |
$550,879 |
$ 330 |
a |
$551,209 |
100% |
Non Interest Expenses |
||||||||||
Compensation and Benefits |
441,028 |
(19,125) |
b |
421,903 |
66% |
401,263 |
(40,372) |
d |
360,891 |
66% |
Operating Expenses |
133,154 |
(523) |
c |
132,631 |
21% |
118,863 |
(6,199) |
c |
112,664 |
20% |
Total non-interest expenses |
574,182 |
(19,648) |
554,534 |
87% |
520,126 |
(46,571) |
473,555 |
86% |
||
Income before income taxes |
65,169 |
19,652 |
84,821 |
13% |
30,753 |
46,901 |
77,654 |
14% |
||
Provision for income taxes |
25,713 |
7,756 |
e |
33,469 |
5% |
12,418 |
18,939 |
e |
31,357 |
6% |
Net income |
$39,456 |
$11,896 |
f |
$51,352 |
8% |
$18,335 |
$27,962 |
f |
$46,297 |
8% |
Compensation Ratios (g) |
69% |
66% |
73% |
66% |
||||||
Annualized return on average equity (j) |
11% |
15% |
7% |
18% |
||||||
Pre-tax Margin (h) |
10% |
13% |
6% |
14% |
||||||
Earnings per share-Diluted (i) |
$1.44 |
$0.44 |
$1.88 |
$0.73 |
$0.89 |
$1.83 |
Page 9
Statement of Financial Condition Highlights
Total assets increased 36% to $2.0 billion at September 30, 2008 from $1.5 billion at December 31, 2007. Total stockholders' equity increased $140.8 million, or 33%, to $565.4 million at September 30, 2008, principally due to amortization of stock-based awards, funds from the public offering and net income.
At September 30, 2008, the Company reported total securities owned at fair value of $331.3 million which included trading securities categorized as level 3 of $43.6 million.
Conference Call Information
Stifel Financial Corp. will hold a conference call Monday November 3, 2008, at 4:30 p.m. Eastern. This call will be Web cast and slides can be accessed on the Investor Relations portion of the Stifel Financial Corp. website at www.stifel.com, as well as on all sites within Thomson/CCBN's Investor Distribution Network. Questions may be posed to management by participants on the call, and in response the company may disclose additional material information. To participate in the question and answer portion on the call, please dial 888-676-3684 and request the Stifel Financial Corp. earnings call. The subjects to be covered may also contain forward-looking information.
Company Information
Stifel Financial Corp. operates 194 offices in 35 states and the District of Columbia through its principal subsidiary, Stifel Nicolaus and Company, Inc., and 3 European offices through Stifel Nicolaus Limited. Stifel Nicolaus provides securities brokerage, investment banking, trading, investment advisory, commercial and retail banking and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. To learn more about Stifel, please visit the Company's web site at www.stifel.com.
Forward-Looking Statements
This press 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 press release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this press 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 the acquired companies; a material adverse change in the financial condition,; the risk of borrower, depositor and other customer attrition; a change in general business and eco nomic 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 with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Stifel disclaims any intent or obligation to update these forward-looking statements.
# # # # # #
Page 10
Stifel Financial Corp. 3rd Quarter 2008 Fiscal Year Earnings Conference Call November 3, 2008 |
Forward Statements This presentation may contain "forward-looking statements" that involve risks and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp. and Stifel Nicolaus ("SF" or the "Company"). Actual results may differ materially and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ are included in the Company's Annual and Quarterly Reports and from time to time in other reports filed by the Company with the Securities and Exchange Commission. To supplement our financial statements presented in accordance with GAAP, the management uses certain non-GAAP measures of financial performance and liquidity. These non-GAAP measures are in addition to results prepared by the Company in accordance with GAAP, and should only be considered together with the Company's GAAP results. Certain statements in the following presentation relate to future results that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. |
3rd Quarter 2008 Business Highlights Record Net Revenues of $218.9 million, up 20% from 3Q07. Revenue growth in PCG, ECM and Stifel Bank was offset by Investment Banking weakness GAAP net income of $12.8 million, or $0.46 per diluted share, a 53% increase over the $0.30 per diluted share reported in 3Q07. Balanced business model continues to thrive in uncertain times Core net income of $16.7 million, or $0.60 per diluted share, a 17% increase over 3Q07 Core earnings pretax margin was 13%. Core earnings, annualized return on average equity was 14% with only 3x leverage. On September 29, 2008, the Company successfully completed the public offering of 1,495,000 new shares of Company common stock at an offering price of $45.00 per share. |
YTD Highlights Record nine month revenues of $639.4 million, a 16% increase compared to 2007. PCG record revenue, up 11%, FICM record revenue, up 185%. GAAP net income of $39.5 million, or $1.44 per diluted share, a 115% increase for the nine months as compared to 2007. Book value per common share increased to $22.21 as of September 30 2008, a 22% increase from December 31, 2007. Core net income of $51.4 million, or $1.88 per diluted share, an 11% increase for the year as compared to 2007. For the nine months ended September 30, 2008, utilizing Core earnings, pre-tax margin was 13%. For the nine months ended September 30, 2008, utilizing Core earnings, annualized return on average equity was 15%. |
Summary Income Statement Core Net Revenues GAAP Net Revenues |
Growth Strategy Disruption in Private Client Market presents significant opportunities Wachovia+WFC, Merrill+BOA, Lehman Bros. bankruptcy, and the collapse of Bear Stearns has caused thousands of Financial Advisors to ponder their future. The Wall Street principal business model under scrutiny Deleveraging removes the major advantage of our competitors and significantly hampers their existing business models. Global turmoil creates opportunity to enhance Capital Markets platform While firms fight for survival, cut staff, and contemplate the new world, we are growing. Stifel is already regulated by the Fed while peers "plan" for new future. Successful Equity raise in 3Q08 will fund further expansion plans |
2008 Growth Total 2008 As of Business Units Additions 9/30/2008 Private Client Group Financial Advisors* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 1,228 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 194 Equity Capital Markets Equity Sales & Trading Professionals . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 20 112 Investment Banking Professionals . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 38 134 Fixed Income Capital Markets Fixed Income Sales & Trading Professionals . . . .. . . . . . . . . . . . . . . . . . . . . . . 27 137 Public Finance Professionals . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 25 46 Banking Stifel Bank & Trust Associates . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 49 73 |
Market Turmoil=Oportunity Stifel has one of the fastest growing Private Wealth Management businesses in the industry. Stifel Equity Research is 6th largest research department in the U.S. and the 2nd largest provider of small cap coverage. (1) (1) Source: StarMine |
Source of Revenues |
Principal Transactions |
Volatility of Investment Account |
2008 YTD Segment Comparison (excluding Acquisitions) Balanced business model facilitates growth during volatile markets Stable PCG business is augmented by profitable and growing Capital Markets. |
Segment Comparison excluding acquisitions Total net revenues increased 20% despite unprecedented equity & credit market dislocations. Revenues increased in each vertical and margins improved in 3 out of 4 operating segments |
Private Client Group - Income Statement Strong commission & fee growth was offset by a weaker syndicate calendar Margins were modestly lower due to the opening of 21 new offices in 2008 |
New Branches |
Equity Capital Markets - Income Statement Record quarterly flow business (cash equities) Variable cost business model leaves room for continued margin expansion |
Fixed Income Capital Markets - Income Statement Volatility, expanded distribution and client focused model drive record results Opened more than 375 new institutional accounts YTD in 2008 |
Stifel Bank - Income Statement Continued build-out to serve Stifel Nicolaus clients and potential clients. |
Reconciliation of GAAP to Core Earnings |
GAAP to Core Earnings |
Income Statement Impact |
Balance Sheet Graphs Total Assets Total Capitalization Capitalization Ratio Book Value Per Share |
Capital Structure |
Other Financial Data |
Q&A - Questions and Answers |