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UNITED STATES FORM 8-K CURRENT REPORT Date of Report (Date
of earliest event reported): May 11, 2009 STIFEL FINANCIAL CORP. Delaware 1-9305 43-1273600 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) Item 2.02 Results of
Operations and Financial Condition. On
May 11, 2009 Stifel Financial Corp. announced its results for the three months ended
March 31, 2009. A copy of the related press release is
attached hereto as Exhibit 99.1. Stifel
Financial Corp. will hold a conference call on Monday, May 11, 2009, 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 May 11, 2009. Exhibit 99.2: Stifel Financial Corp.'s Investor
Presentation. 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:
May 11, 2009 By:
/s/ James M. Zemlyak
Name: James
M. Zemlyak
Title: Chief
Financial Officer Exhibit Index Exhibit No. Description 99.1 Stifel
Financial Corp.'s press release dated May 11, 2009. 99.2 Stifel
Financial Corp.'s Investor Presentation. STIFEL FINANCIAL CORP. [Stifel Financial Corp. logo] Stifel
Financial News One Financial Plaza For further information contact: James M. Zemlyak, Chief Financial Officer For Immediate Release Stifel Financial
Corp. Reports First Quarter Results St. Louis, Missouri
- - May 11, 2009 - Stifel Financial Corp. (NYSE: "SF") today reported
unaudited quarterly net income of $13.2 million, or $0.44 per diluted share, on
net revenues of $220.0 million for the quarter ended March 31, 2009. For the
comparable quarter of 2008, net income was $14.3 million, or $0.54 per diluted
share, on net revenues of $211.5 million. Our 2008 first quarter included
acquisition charges of $4.0 million, or $0.15 per diluted share. 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 March 31, 2009,
our equity was $630.8 million, resulting in book value per share of $23.19. Chairman and Chief
Executive Officer, Ronald J. Kruszewski, commented, "Our quarter over
quarter results were diminished particularly for our Private Client Group and
Equity Capital Markets segments, as a result of the continued industry-wide
difficult market conditions for corporate investment banking and reduced
valuations of customers' assets offset by excellent performances by our Fixed
Income Capital Markets and Stifel Bank segments. Additionally, overhead costs
across all segments increased as we took advantage of hiring opportunities
resulting from market displacements. Since the beginning of 2008, we have increased
our number of Financial Advisors and branch offices by hiring 363
Financial Advisors and opening 55 branches. In addition,
we have added 134 revenue producing investment bankers, traders, institutional
sales staff, and mortgage bankers along with 300 branch and home office support
staff. This is an investment in our future and I am confident that our growth
will position us to take advantage of the opportunities that lie ahead." Stifel Financial Corp. Summary of Results of Operations (Unaudited) ($ In Thousands, Except Per Share Amounts) Three Months Ended Percent Change From 3/31/2009 12/31/2008 3/31/2008 12/31/2008 3/31/2008 Total
Revenues $ 222,332 $ 233,756 $ 217,242 -5% 2% Net
Revenues $ 219,981 $ 230,986 $ 211,477 -5% 4% Net Income $ 13,177 $ 16,046 $ 14,347 -18% -8% Per Share Information Three Months Ended Percent Change From 3/31/2009 12/31/2008 3/31/2008 12/31/2008 3/31/2008 Earnings Per Share: Diluted $ 0.44 $ 0.53 $ 0.54 -18% -19% Weighed average common
equivalent share Computations: Diluted shares 30,198 30,215 26,645 0% 13% Quarterly Highlights Net revenues of $220.0 million, a 4%
increase from the prior year first quarter and a 5% decrease from the fourth
quarter of 2008.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Pursuant To Section 13 OR 15(d) of The Securities Exchange Act of 1934
(Exact name of
registrant as specified in its charter)
(State
of incorporation)
(Commission
File Number)
(IRS
Employer
Identification No.)One Financial Plaza
501 North Broadway
St. Louis, Missouri 63102-2102
(Address of principal executive offices,
including zip code)
(Former name or former address, if changed since last report)
[
] 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))
Form 8-K Dated May 11, 2009
Exhibit 99: Press Release
501 North Broadway
St. Louis, MO 63102
(314) 342-2000
(314) 342-2228 zemlyakj@stifel.com
Net Revenue of $220.0 million up 4%, Net Income of $13.2 million,
Diluted EPS $0.44Chairman's
Comments
Business Highlights
Net income of $13.2 million, or $0.44 per diluted share, an 8% decrease over the prior year first quarter and an 18% decrease from the fourth quarter of 2008.
Commissions and principal transactions revenue of $171.9 million increased 13% over the prior year first quarter and decreased 2% from the fourth quarter of 2008.
Investment banking revenues decreased 29% to $15.5 million from the prior year first quarter and decreased 2% from the fourth quarter of 2008.
Asset management and service fees revenue decreased 18% to $24.9 million from the prior year first quarter and decreased 15% from the fourth quarter of 2008.
The Private Client Group segment recorded net revenues of $110.5 million, a 4% decrease from the first quarter of 2008 and a 1% decrease from the fourth quarter of 2008.
The Fixed Income Capital Markets segment recorded net revenues of $58.4 million, a 33% increase over the first quarter of 2008 and relatively unchanged from the fourth quarter of 2008.
The ECM segment net revenues decreased 4% from the first quarter 2008 and 14% from the fourth quarter of 2008.
The number of Financial Advisors increased to 1,394 from 1,169 in the prior year first quarter.
For the three months ended March 31, 2009, pre-tax margin was 10% compared to 11% for the previous year first quarter and 12% for the fourth quarter of 2008.
For the three months ended March 31, 2008, annualized return on average equity was 9% as compared to 14% for the previous year first quarter and 11% for the fourth quarter of 2008.
We announced an agreement to acquire from UBS Financial Services Inc. up to 55 branches from UBS Wealth Management Americas branch network.
Stifel Financial Corp. |
|||||||||
Summary of Results of Operations(Unaudited) |
|||||||||
($ In Thousands, Except Per Share Amounts) |
|||||||||
|
Three Months Ended |
Percent Change From |
|||||||
Net Revenues |
3/31/2009 |
% of Net revenue |
12/31/2008 |
% of Net revenue |
3/31/2008 |
% of Net revenue |
12/31/2008 |
3/31/2009 |
|
Commissions |
$ 74,610 |
33.9% |
$ 83,599 |
36.2% |
$ 85,701 |
40.5% |
-11% |
-13% |
|
Principal transactions |
97,278 |
44.2% |
92,492 |
40.0% |
66,937 |
31.7% |
5% |
45% |
|
Investment banking |
15,504 |
7.1% |
15,775 |
6.8% |
21,844 |
10.3% |
-2% |
-29% |
|
Asset management and service fees |
24,933 |
11.3% |
29,346 |
12.7% |
30,278 |
14.3% |
-15% |
-18% |
|
Other |
115 |
0.1% |
1,571 |
0.7% |
(1,207) |
-0.6% |
-93% |
n/a |
|
Total operating revenues |
212,440 |
96.6% |
222,783 |
96.4% |
203,553 |
96.2% |
-5% |
4% |
|
Interest revenue |
9,892 |
4.5% |
10,973 |
4.8% |
13,689 |
6.5% |
-10% |
-28% |
|
Total revenues |
222,332 |
101.1% |
233,756 |
101.2% |
217,242 |
102.7% |
-5% |
2% |
|
Less: Interest expense |
2,351 |
1.1% |
2,770 |
1.2% |
5,765 |
2.7% |
-15% |
-59% |
|
Net revenues |
219,981 |
100.0% |
230,986 |
100.0% |
211,477 |
100.0% |
-5% |
4% |
|
Non-Interest Expenses |
|
|
|||||||
Employee compensation and benefits |
147,840 |
67.2% |
141,750 |
61.4% |
146,030 |
69.1% |
4% |
1% |
|
Occupancy and equipment rental |
17,867 |
8.1% |
18,972 |
8.2% |
15,716 |
7.4% |
-6% |
14% |
|
Communication and office supplies |
11,845 |
5.4% |
12,734 |
5.5% |
11,947 |
5.7% |
-7% |
-1% |
|
Commissions and floor brokerage |
4,360 |
2.0% |
4,972 |
2.2% |
481 |
0.2% |
-12% |
806% |
|
Other operating expenses |
15,914 |
7.2% |
25,958 |
11.2% |
13,378 |
6.3% |
-39% |
19% |
|
Total non-interest expenses |
197,826 |
89.9% |
204,386 |
88.5% |
187,552 |
88.7% |
-3% |
5% |
|
Income before income taxes |
22,155 |
10.1% |
26,600 |
11.5% |
23,925 |
11.3% |
-17% |
-7% |
|
Provision for income taxes |
8,978 |
4.1% |
10,554 |
4.6% |
9,578 |
4.5% |
-15% |
-6% |
|
Net income |
$ 13,177 |
6.0% |
$ 16,046 |
6.9% |
$ 14,347 |
6.8% |
-18% |
-8% |
|
Per Share information |
|||||||||
Earnings Per Share: |
|
|
|||||||
Basic |
$ 0.49 |
|
$ 0.61 |
$ 0.61 |
-20% |
-20% |
|||
Diluted |
$ 0.44 |
|
$ 0.53 |
$ 0.54 |
-17% |
-19% |
|||
Weighted average common equivalent shares |
|||||||||
Basic shares |
26,772 |
|
25,706 |
23,276 |
4% |
15% |
|||
Diluted shares |
30,198 |
|
30,215 |
26,645 |
0% |
13% |
|||
Statistical Information |
|||||||||
Book Value Per Share |
$ 23.19 |
$ 22.75 |
$ 18.71 |
2% |
24% |
||||
Financial Advisors |
1,394 |
1,315 |
1,169 |
6% |
19% |
||||
Employees |
3,560 |
3,371 |
2,994 |
6% |
19% |
||||
Locations |
230 |
225 |
179 |
2% |
28% |
||||
Total Client Assets (in thousands) |
$ 54,854,000 |
$ 51,828,000 |
$57,283,000 |
6% |
-4% |
||||
Stifel Financial Corp. |
||||||
Summary of Segment Data & Statistical Information (Unaudited) |
||||||
Segment Data ($ In Thousands) |
||||||
|
Three Months Ended |
Percent Change From |
|
|||
Net Revenues |
03/31/2009 |
12/31/2008 |
03/31/2008 |
12/31/2008 |
03/31/2008 |
|
Private client |
$ 110,524 |
$ 111,603 |
$ 114,853 |
-1% |
-4% |
|
Equity capital markets |
47,083 |
54,902 |
49,228 |
-14% |
-4% |
|
Fixed income capital markets |
58,389 |
58,276 |
44,002 |
0% |
33% |
|
Stifel Bank |
3,640 |
1,080 |
2,082 |
237% |
75% |
|
Other |
345 |
5,125 |
1,312 |
-93% |
-74% |
|
Total net revenues |
$ 219,981 |
$ 230,986 |
$ 211,477 |
-5% |
4% |
|
Operating Contribution |
|
|
|
|
||
Private client |
$ 15,460 |
$ 19,216 |
$ 25,605 |
-20% |
-40% |
|
Equity capital markets |
5,725 |
7,171 |
6,927 |
-20% |
-17% |
|
Fixed income capital markets |
20,309 |
23,722 |
14,913 |
-14% |
36% |
|
Stifel Bank |
1,774 |
(844) |
309 |
n/a |
474% |
|
Other/unallocated overhead |
(21,113) |
(22,665) |
(23,829) |
n/a |
n/a |
|
Income before income taxes |
$ 22,155 |
$ 26,600 |
$ 23,925 |
-17% |
-7% |
|
Net revenues of $110.5 million, a 4% decrease over the prior year first quarter and a 1% decrease from the fourth quarter of 2008.
Operating contribution of $15.5 million, a 40% decrease over the prior year first quarter and a 20% decrease from the fourth quarter of 2008.
Commissions and principal transactions revenue increased 5% over the prior year first quarter and increased 4% from the fourth quarter of 2008.
Investment banking revenues decreased 50% from the prior year first quarter and increased 13% from the fourth quarter of 2008.
Asset management and service fees revenue decreased 18% to $24.8 million as compared to the prior year first quarter and decreased 14% from the fourth quarter of 2008.
For the three months ended March 31, 2009, employee compensation and benefits was 65% of net revenues compared to 63% for the same period last year and 63% for the fourth quarter of 2008.
We completed the integration of Butler Wick PCG offices we acquired on December 31, 2008.
We added 26 PCG offices and 164 Financial Advisors, including 17 offices and 67 Financial Advisors from Butler Wick, in the first quarter as part of our ongoing footprint expansion efforts.
We announced an agreement to acquire from UBS Financial Services Inc. up to 55 branches from UBS Wealth Management Americas branch network.
Stifel Financial Corp. |
|||||
Private Client Group Segment Data & Statistical Information (Unaudited) |
|||||
($ in thousands) |
|||||
Three Months Ended |
Percent Change From |
||||
Revenues: |
03/31/2009 |
12/31/2008 |
03/31/2008 |
12/31/2008 |
03/31/2008 |
Commissions and principal transactions |
$ 81,653 |
$ 78,597 |
$ 77,952 |
4% |
5% |
Investment banking |
2,070 |
1,825 |
4,103 |
13% |
-50% |
Asset management and service fees |
24,831 |
28,848 |
30,147 |
-14% |
-18% |
Net interest & other |
1,970 |
2,333 |
2,651 |
-16% |
-26% |
Total net revenues |
110,524 |
111,603 |
114,853 |
-1% |
-4% |
Non-interest expenses: |
|
||||
Employee compensation and benefits |
72,218 |
69,762 |
72,845 |
4% |
-1% |
Other non-interest expenses |
22,846 |
22,625 |
16,403 |
1% |
39% |
Total non-interest expenses |
95,064 |
92,387 |
89,248 |
3% |
7% |
Income before income taxes |
$ 15,460 |
$ 19,216 |
$ 25,605 |
-20% |
-40% |
Ratios to Net Revenues |
|
||||
Employee compensation and benefits |
65% |
63% |
63% |
||
Other non-interest expenses |
21% |
20% |
14% |
||
Net margins |
14% |
17% |
22% |
||
Net revenues of $47.1 million, a 4% decrease over the prior year first quarter and a 14% decrease from the fourth quarter of 2008.
Operating contribution of $5.7 million, a 17% decrease over the prior year first quarter and a 20% decrease from the fourth quarter of 2008.
Commissions and principal transactions revenue increased 6% over the prior year first quarter and decreased 17% from the fourth quarter of 2008.
Investment banking revenues decreased 29% over the prior year first quarter and decreased 1% from the fourth quarter of this year.
For the three months ended March 31, 2009, employee compensation and benefits was 62% of net revenues compared to 64% for the prior year first quarter and 59% for the fourth quarter 2008.
We added 12 revenue producers in the first quarter 2009.
Stifel Financial Corp. |
|||||
Equity Capital Markets Group Segment Data & Statistical Information (Unaudited) |
|||||
($ in thousands) |
|||||
Three Months Ended |
Percent Change From |
||||
Revenues: |
03/31/2009 |
12/31/2008 |
03/31/2008 |
12/31/2008 |
03/31/2008 |
Commissions and principal transactions |
$ 36,787 |
$ 44,268 |
$ 34,654 |
-17% |
6% |
Capital raising |
693 |
5,142 |
6,758 |
-87% |
-90% |
Advisory fees |
9,405 |
5,026 |
7,509 |
87% |
25% |
Investment banking |
10,098 |
10,168 |
14,267 |
-1% |
-29% |
Other |
198 |
466 |
307 |
-58% |
-36% |
Total net revenues |
47,083 |
54,902 |
49,228 |
-14% |
-4% |
Non-interest expenses: |
|
||||
Employee compensation and benefits |
29,311 |
32,137 |
31,294 |
-9% |
-6% |
Other non-interest expenses |
12,047 |
15,594 |
11,007 |
-23% |
9% |
Total non-interest expenses |
41,358 |
47,731 |
42,301 |
-13% |
-2% |
Income before income taxes |
$ 5,725 |
$ 7,171 |
$ 6,927 |
-20% |
-17% |
Ratios to Net Revenues |
|
||||
Employee compensation and benefits |
62% |
59% |
64% |
||
Other non-interest expenses |
26% |
28% |
22% |
||
Net margins |
12% |
13% |
14% |
||
Net revenues of $58.4 million, a 33% increase over the prior year first quarter and unchanged from the fourth quarter of 2008.
Operating contribution of $20.3 million, a 36% increase over the prior year first quarter and a 14% decrease from the fourth quarter of 2008.
Commissions and principal transactions revenue increased 34% over the prior year first quarter and were unchanged from the fourth quarter of 2008.
For the three months ended March 31, 2009, employee compensation and benefits was 57% of net revenues compared to 59% for the prior year first quarter and 51% in the fourth quarter 2008.
We added 8 revenue producers in the first quarter of 2009.
Stifel Financial Corp. |
|||||
Fixed Income Capital Markets Segment Data & Statistical Information (Unaudited) |
|||||
($ in thousands) |
|||||
Three Months Ended |
Percent Change From |
||||
Revenues: |
03/31/2009 |
12/31/2008 |
03/31/2008 |
12/31/2008 |
03/31/2008 |
Commissions and principal transactions |
$ 53,448 |
$ 53,226 |
$ 40,032 |
0% |
34% |
Investment banking |
3,337 |
3,783 |
3,474 |
-12% |
-4% |
Other |
1,604 |
1,267 |
496 |
27% |
224% |
Total net revenues |
58,389 |
58,276 |
44,002 |
0% |
33% |
Non-interest expenses: |
|
||||
Employee compensation and benefits |
33,207 |
29,667 |
25,936 |
12% |
28% |
Operating expenses |
4,873 |
4,887 |
3,153 |
0% |
55% |
Total non-interest expenses |
38,080 |
34,554 |
29,089 |
10% |
31% |
Income before income taxes |
$ 20,309 |
$ 23,722 |
$ 14,913 |
-14% |
36% |
Ratios to Net Revenues |
|
||||
Employee compensation and benefits |
57% |
51% |
59% |
||
Other non-interest expenses |
8% |
8% |
7% |
||
Net margins |
35% |
41% |
34% |
||
Net revenues of $3.6 million increased 75% over the prior year first quarter and increased 237% over the fourth quarter of 2008.
Operating contributions of $1.8 million increased 474% over the prior year first quarter and increased $2.6 million over the fourth quarter of 2008.
Total retained loans, net, increased 42% from the prior year first quarter and decreased 5% over the fourth quarter of 2008.
Total assets increased 113% over the prior year first quarter, and increased 54% over the fourth quarter of 2008.
Stifel Financial Corp. |
|||||
Stifel Bank & Trust Segment Data & Statistical Information (Unaudited) |
|||||
($ in thousands) |
|||||
Three Months Ended |
Percent Change From |
||||
Revenues: |
03/31/2009 |
12/31/2008 |
03/31/2008 |
12/31/2008 |
03/31/2008 |
Interest |
3,656 |
3,763 |
3,551 |
-3% |
3% |
Other |
670 |
(1,961) |
247 |
n/a |
171% |
Total Revenues |
4,326 |
1,802 |
3,798 |
140% |
14% |
Less: Interest expense |
686 |
722 |
1,716 |
-5% |
-60% |
Total net revenues |
3,640 |
1,080 |
2,082 |
237% |
75% |
Non-interest expenses: |
|
||||
Employee compensation and benefits |
411 |
784 |
759 |
-48% |
-46% |
Other non-interest expenses |
1,455 |
1,140 |
1,014 |
28% |
43% |
Total non-interest expenses |
1,866 |
1,924 |
1,773 |
-3% |
5% |
Income before income taxes |
1,774 |
(844) |
309 |
n/a |
474% |
As of |
3/31/2009 |
12/31/2008 |
3/31/2008 |
||
Total assets |
$ 529,953 |
$ 343,417 |
$ 248,982 |
54% |
113% |
Total retained loans, net |
$ 182,841 |
$ 192,819 |
$ 129,206 |
-5% |
42% |
Total loans held for sale, net |
$ 31,108 |
$ 37,348 |
$ 3,433 |
-17% |
806% |
Total deposits |
$ 459,305 |
$ 284,798 |
$ 192,487 |
61% |
139% |
Allowance for loan losses as a % of loans |
1.47% |
1.23% |
1.32% |
||
Total non-performing loans as a % of loans |
1.37% |
0.30% |
1.51% |
|
|
Total assets increased 25% to $2.0 billion at March 31, 2009 from $1.6 billion at March 31, 2008. Total stockholders' equity increased $193.8 million, or 44%, to $630.8 million at March 31, 2009, principally due to funds from our public offering, net income, and amortization of stock-based awards.
At March 31, 2009, the Company reported total securities owned and investments at fair value of $649.7 million, which included securities categorized as level III of $37.8 million.
Stifel Financial Corp. will hold a conference call Monday, May 11, 2009, 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.
Stifel Financial Corp. operates 237 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.
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 or to complete the acquisition of the branch offices and financial advisors as part of our transaction with UBS; a material adverse change in the 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 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.
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Stifel Financial Corp. 1st Quarter 2009 Fiscal Year Earnings Conference Call May 11, 2009 |
Forward 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 and Company, Inc. and its other 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. In particular, these statements may refer to our goals, intentions and expectations, our business plans and growth strategies, our ability to integrate and manage our acquired businesses, estimates of our risks and future costs and benefits, and forecasted demographic and economic trends relating to our industry. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-looking statements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws. 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 and include, among other things changes in general economic and business conditions, actions of competitors, regulatory actions, changes in legislation and technology changes. To supplement our financial statements presented in accordance with GAAP, 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. |
1st Quarter 2009 Highlights Net revenues of $220.0 million, a 4% increase from the 1Q08. The PCG segment recorded net revenues of $110.5 million, a 4% decrease from the 1Q08. The ECM segment recorded net revenues of $47.1 million, a 4% decrease over the 1Q08. The FICM segment recorded net revenues of $58.4 million, a 33% increase from 1Q08. Net income of $13.2 million, or $0.44 per diluted share, an 8% decrease from 1Q08. 1Q09 pre-tax margin was 10% compared to 11% from 1Q08. 1Q09 annualized return on average equity was 9% compared to 14% from 1Q08. The number of Financial Advisors increased to 1,394 from 1,169 in 1Q08. We announced an agreement to acquire from UBS Financial Services Inc. up to 55 branches from UBS Wealth Management Americas branch network. |
Chairman's Comments 1Q09 PCG and ECM results were negatively impacted by continuing difficult market conditions for investment banking and reduced valuations of customers' assets Excellent performance by our Fixed Income Capital Markets and Stifel Bank Overhead costs increased as we continued to make investments in all segments of the platform. Since 1/1/2008, we have: Hired 361 FA's and opening 55 PCG branches Added 134 revenue producing investment bankers, traders, institutional sales staff, and mortgage bankers Added 299 branch and home office support staff |
Summary Income Statement |
1st Quarter Normalized Pro Forma |
Source of Revenues |
Principal Transactions |
Segment Comparison Excluding Acquisitions Total net revenues increased 4% despite difficult market conditions in 1Q09. Weakness in PCG & ECM were more than offset by FICM and Stifel Bank results |
1st Quarter Segment Comparison (Excludes Acquisitions) Balanced business model facilitates growth during volatile markets Stable PCG business is augmented by profitable and growing Capital Markets. |
Private Client Group Income Statements Commission & fee growth impacted by market decline Margins were lower due to market conditions, decline of managed money balances, and the opening of new offices and hiring Financial Advisors. |
Equity Capital Markets Income Statements Commissions & principal transactions increased 6% during the quarter Industry wide slowdown in trading activity offset by market share gains Investment Banking weakness is driven by lack of public market activity Advisory business grew in the quarter |
Fixed Income Capital Markets Income Statements Distribution model and scale drove revenue growth and margin expansion Fixed income markets remain favorable, in addition Stifel FICM continues to gain market share Continued strength in the flow business is driven by investments in Sales, Trading and Banking |
Stifel Bank & Trust Income Statements |
Stifel Bank & Trust Total assets increased $187 million, or 54%, from 12/31/2008 Cash and cash equivalents increased $199 million from 12/31/2008 to $226 million, resulting in significant on-balance sheet liquidity Retained loan portfolio declined $10 million, or 5%, from 12/31/2008 Allowance as a percentage of gross loans was 1.47%, which represented a 24 basis point increase from 12/31/2008 Net charge offs were $271,000 for the 1st quarter of 2009 Annualized losses as a percentage of average loans was 0.49% Less than $100,000 in loans past due more than 90 days Other Real Estate Owned (OREO) increased $2.1 million from $2.3 million as of 12/31/2008 to total $4.4 million $2.2 million of the increase represented one commercial real estate property which was sold in April for no additional loss; The balance of OREO as of April 30, 2009 totaled $1.9 million Over $240 million in loans sold into the secondary market in 1Q09, compared to $330 million for all of 2008 Gross mortgage revenues totaled $3.9 million in 1Q09, compared to $4.4 million for all of fiscal 2008 Only $3 million in retained mortgage loan originations in 1Q09 with a weighted average loan to value of 47% and weighted average FICO credit score of 789 |
Stifel Bank & Trust $226 million in on-balance sheet excess liquidity held in cash and cash equivalents The UBS transaction is expected to provide an additional $800 million in deposits available to the Bank Loan to Deposit Ratio of 47% Stock Secured (Reg. U) loans from the UBS transaction of approximately $190 million Conservative diversified bond portfolio strategy, primarily consisting of AAA rated bonds Deploying excess cash into Reg. U loans and a conservative bond portfolio could raise spreads in excess of 300 to 400 basis points over current yields earned on the excess cash position |
Stifel Financial Balance Sheet Graphs Total Assets, Total Capitalization, Leverage Ratio, Book Value per Share |
Capital Structure |
Level 3 Assets |
Other Financial Data |
UBS Transaction Update Stifel announced today that it anticipates its principal operating subsidiary, Stifel, Nicolaus & Company, Incorporated, will acquire 55 branches from UBS Financial Services Inc. pursuant to its previously announced agreement to acquire certain UBS Wealth Management Americas branches. In connection with this transaction, approximately 320 of the 340 UBS Financial Advisors based at these locations have signed written commitments to join Stifel Nicolaus, representing approximately 97% of the 2008 compensable Financial Advisor revenue within these 55 branches. 55 branch offices that Stifel Nicolaus expects to acquire are located in 24 states throughout the country. These branch offices have approximately $15 billion in assets under management, including $213 million in Reg. U and Reg. T loans and $1.8 billion in money market and FDIC insured balances. In 2008, these branches generated estimated total revenue of approximately $120 million, including approximately $102 million in compensable Financial Advisor revenue. |
UBS Transaction Furthers our Goals Extends our geographic presence Strengthens our brokerage position Enhances and accelerates Stifel Bank and Trust strategy Expected to be accretive in first year |
Extends our Geographic Presence Map of our loacations |
Strengthens our Brokerage Position Ranking of Company by RRs |
Private Client Metrics Combined Stifel and UBS Gross revenue, Branch contribution margin, Financial Advisors, Assets under management, and Revenues per broker |
What are we paying? The UBS transaction is structured as an asset purchase for cash at a premium over certain balance sheet items, subject to adjustments. The payments to UBS include: Upfront cash payment of approximately $29 million based on actual number of branchas and Financial Advisors acauired Annual earn out payments for two year periodbased on performance of the UBS Financial Advisors who become Stifel Nicolaus employees Aggregate payments of approximately $21.1 million for fixed assets and employee loans The above payments are variable based upon the number of Financial Advisors and branches acquired by Stifel Nicolaus. |
Key Takeaways Adds significant capability and an attractive geographic complement to Stifel's Private Client Business Solid Financial terms Extends our geographic presence Strengthens our brokerage position Enhances and accelerates Stifel Bank and Trust strategy Expected to be accretive in first year |
Stifel Outlook Unstable conditions in the Private Client market presents opportunity for Stifel to continue to grow organically and through M&A The uncertainty surrounding the largest domestic and European private client platforms impacts thousands of US-based Financial Advisors. Success with UBS signings is testament to the PCG platform Balanced business mix facilitates growth during volatile markets 50% of 2009 revenues generated by PCG and 48% by Capital Markets. Capital Markets turmoil creates a pool of very qualified candidates All segments of Capital Markets continued to build out platform and hire in 2009. Added Convertible capability to the ECM platform in 1Q09 |
Market Turmoil = Opportunity |
Growth |
Q&A - Questions and Answers |