 September 2013
Stifel Investor Presentation
Exhibit 99.1 |
 Disclaimer
Forward-Looking
Statements
This
presentation
may
contain
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995
that
involve
significant
risks,
assumptions,
and
uncertainties,
including
statements
relating
to
the
market
opportunity
and
future
business
prospects
of
Stifel
Financial
Corp.,
as
well
as
Stifel,
Nicolaus
&
Company,
Incorporated
and
its
subsidiaries
(collectively,
“SF”
or
the
“Company”).
These
statements
can
be
identified
by
the
use
of
the
words
“may,”
“will,”
“should,”
“could,”
“would,”
“plan,”
“potential,”
“estimate,”
“project,”
“believe,”
“intend,”
“anticipate,”
“expect,”
and
similar
expressions.
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
and
legal
actions,
changes
in
legislation,
and
technology
changes.
Note
Regarding
the
Use
of
Non-GAAP
Financial
Measures
The
Company
utilized
non-GAAP
calculations
of
presented
net
revenues,
compensation
and
benefits,
non-compensation
operating
expenses,
income
before
income
taxes,
provision
for
income
taxes,
net
income,
compensation
and
non-compensation
operating
expense
ratios,
pre-tax
margin
and
diluted
earnings
per
share
as
an
additional
measure
to
aid
in
understanding
and
analyzing
the
Company’s
financial
results.
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
periods
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
the
overall
understanding
of
the
Company’s
current
financial
performance. |
 Market Overview |
   4
Domestic Equity Flows
Equity Risk Premium
2013 Q2
2013 Q1
2012 Q4
2012 Q3
2012 Q2
QoQ
YoY
S&P 500
1,606
1,569
1,426
1,441
1,362
2%
18%
U.S. Treasury 10yr Yield
2.49%
1.85%
1.76%
1.63%
1.65%
64 bps
85 bps
Equity ADV
6,594
6,372
6,084
5,981
6,917
3%
-5%
Corporate Bond ADV
20,285
20,736
16,347
16,364
17,147
-2%
18%
U.S. ECM ($)
70,090
66,130
57,479
72,721
63,108
6%
11%
U.S. ECM (#)
264
248
208
198
183
6%
44%
U.S. DCM ($)
537,406
638,092
585,195
640,538
545,330
-16%
-1%
U.S. DCM (#)
2,255
2,418
2,236
2,448
2,491
-7%
-9%
Municipal Bond DCM ($)
93,171
83,481
97,126
87,670
115,009
12%
-19%
U.S. Announced M&A ($)
193,501
310,801
354,156
217,632
228,327
-38%
-15%
U.S. Announced M&A (#)
2,275
2,654
3,303
2,896
2,968
-14%
-23%
U.S. Completed M&A ($)
204,022
234,295
321,526
211,896
302,631
-13%
-33%
U.S. Completed M&A (#)
2,145
2,645
3,307
2,855
2,886
-19%
-26%
Second Quarter
Results
Activity Summary
Volumes are in million $, except trading volumes which are in million shares. Data as of
6/30/2013. Market Overview |
 Stifel Overview |
 6
Stifel Overview
Global Wealth Management
Institutional Group
Independent Research
Institutional Equity & Fixed Income
Brokerage
Equity & Fixed Income Capital Raising
M&A Advisory / Restructuring
Private Client
Stifel Bank & Trust
Customer Financing
Asset Management
(1)
As
of
9/12/13.
(2)
Insider
ownership
percentage
includes
all
fully
diluted
shares,
units
outstanding,
options
outstanding,
as
well
as
shares
owned
by
Stifel’s
former
Chairman
as
of
8/8/13.
Stifel Financial (NYSE: SF)
Financial
services
firm
demonstrating
growth,
scale
and
stability
$2.7
billion
market
capitalization
(1)
2012
Represented
Stifel’s
17
th
year
of
consecutive
record
net
revenues
Balanced business model
Top performing financial stock over the past ten years
35% Insider ownership
(2)
National presence with over 2,000
Financial Advisors
$151 billion in total client assets
Largest U.S. equity research platform
Broad product portfolio & industry
expertise |
 7
Stifel’s Market Opportunity
Stifel’s Differentiated Value Proposition: Growth, Scale, and
Stability Bulge Bracket
Middle Market
Firm focus
Good research
Growth investor access
Issues
Deleverage
Raise common equity
Changing business
models
Headcount
Large-cap focused
Issues
Financial / firm stability
Trading support
Few with retail
Size / scale
Firm focus
Stability (financial &
personnel)
Large distribution
Growth investor access
Investment Banking
Retail
Outstanding research
Trading
Size / scale
Large distribution
Investment Banking
Retail
Trading |
 Strategy: Building the Premier Investment Bank
8
Unburdened by capital constraints
Low leverage business model and conservative risk management
Built the Company through 11 acquisitions since 2005; prudently evaluate
all opportunities Capitalize on headwinds across the industry
Select growth of high-quality talent
Drive revenue synergies by leveraging the global wealth and institutional
businesses 17
th
Consecutive Year of Record Net Revenues
Position Stifel to Take Advantage of Opportunities
|
 A Growth Story…
9
Net Revenues ($MM)
(1)
Core Net Income ($MM)
(1)
Total Equity ($MM)
Total
Client
Assets
($BN)
(2)
Book
Value
Per
Share
(4)
Financial
Advisors
(3)
(1)
CAGR reflects years 2006 to 2012.
(2)
Client assets -
Includes FDIC-insured products as of 6/30 for years
2008-2013 (3)
Includes Independent Contractors.
(4)
Book Value Per Share adjusted for April 2011 three-for-two stock
split (2006-2010). |
 10
Building Scale…
Growth Focused
Investment Banking
Research, Sales and Trading
Achieved cost efficiencies
July 2010
Private Client
Revenue production has exceeded
expectations
October 2009
Significant enhancement to our
Capital Markets business
Achieved cost savings objectives
December 2005
Bank holding company
Financial holding company
Grown assets from ~ $100M to $3.2B
April 2007
Private Client
Public Finance
Seamless & efficient integration
December 2008
Fixed Income IB
Fixed Income Sales and Trading
Private Client
Seamless & efficient integration
October 2011
FIG Investment Banking
FIG Sales and Trading
FIG Research
February 2013
56 UBS Branches
Private Client
Capital Markets
Achieved cost savings objectives
February 2007
Each merger has been accretive to Stifel
Retention remains high
Restructuring advisory
December 2012
Knight
Fixed Income
Fixed Income Sales and
Trading –
U.S. & Europe
Fixed Income Research
July 2013 |
 Stability Achieved Through A Balanced Business Model
11
Net Revenues
Balanced business model facilitates growth during volatile markets
Stable GWM business is augmented by profitable and growing Institutional
Group Proven ability to grow all businesses
Operating Contribution
6 mo 2012
6 mo 2013
6 mo 2012
6 mo 2013
Note:
Net
revenues
and
operating
contribution
excludes
the
Other
segment.
11 |
 12
Leverage Ratio
Total Assets ($ in Billions)
Book Value Per Share
(1)
Total Capitalization ($ in Billions)
(1)
Per share information adjusted for April 2011 three-for-two stock
split Strong Balance Sheet Facilitates Growth
As June 30, 2013 |
 Top Performing Stock
Cumulative Price Appreciation As of September 12, 2013
13
Since 12/31/12
Since 12/31/07
Since 12/31/00
FBR & Co.
70.93%
Evercore Partners
132.67%
Stifel Financial Corp.
1011.12%
Evercore Partners
66.08%
Stifel Financial Corp.
80.32%
Raymond James Financial
180.32%
Morgan Stanley
46.55%
Raymond James Financial
33.04%
Goldman Sachs Group
52.75%
Cowen Group
37.14%
S&P 500 Index
14.65%
S&P 500 Index
27.50%
Legg Mason
32.19%
Lazard
-8.41%
Legg Mason
-6.42%
Stifel Financial Corp.
31.78%
Piper Jaffray
-23.06%
Oppenheimer
-30.33%
Goldman Sachs Group
28.06%
Goldman Sachs Group
-24.04%
SWS Group
-64.42%
Lazard
24.87%
Greenhill & Co.
-25.51%
Morgan Stanley
-64.64%
S&P 500 Index
18.04%
JMP Group
-25.71%
Cowen Group
NM
Raymond James Financial
12.77%
FBR & Co.
-30.95%
Evercore Partners
NM
Piper Jaffray
10.92%
Morgan Stanley
-47.24%
FBR & Co.
NM
SWS Group
5.48%
Legg Mason
-53.52%
Greenhill & Co.
NM
JMP Group
3.79%
SWS Group
-55.96%
JMP Group
NM
Oppenheimer
-2.78%
Oppenheimer
-60.35%
Lazard
NM
Greenhill & Co.
-4.75%
Cowen Group
NM
Piper Jaffray
NM |
 Attract and retain high-quality talent
Continue to expand our private client footprint in the U.S.
Continue to expand fixed income businesses
Continue to expand investment banking capabilities
Focus on quality asset generation within Stifel Bank
Expand traditional asset management capabilities
Approach acquisition opportunities with discipline
Opportunities Drive our Growth
14
Initiatives |
 Merger With KBW |
 16
KBW Merger
Non-Core Expense Projections
Acquisition-Related Expenses
Three Months Ended
($ in thousands)
9/30/13
12/31/13
Estimate
Actual
Estimate
Estimate
Operating expenses:
Compensation
6,200
$
6,000
$
2,500
$
400
$
Non-Compensation Operating Expenses
6,800
15,000
5,000
7,100
Total estimated non-core operating expenses
13,000
21,000
7,500
7,500
Retention - KFI
-
-
22,000
-
Total estimated non-core operating expenses - Acquisition-related
13,000
$
21,000
$
29,500
$
7,500
$
6/30/13 |
 KBW
Update First Half Performance
Advisory
#1 by number of FIG mergers
#1 by number of Bank mergers
#1 by Bank deal value
Representative of the acquirer or seller on 7 out of the 10
largest bank deals
Capital Markets
Bookrunner on all four bank initial public offerings in the
first half
Notable Q2 Capital Markets Bookrun Offerings
Zions Bancorporation -
$301 million preferred offering
First PacTrust Bancorp -
$40 million preferred offering
First NBC Bank -
$115 million initial public offering
Fidelity Southern Corporation -
$69 million follow-on
offering
KBW Equities
Superior recognition in Greenwich Associates
rankings for Research, Sales and Trading
Improving equity trading market share:
Market share in adv. volume for KBW
Regional Bank Index (KRX) components was
4.6% for 1H 2013, compared to 3.1% for 1H
2012
Market share in adv. volume for small-cap
banks was 8.4% for 1H 2013, compared to
5.2% for 1H 2012
Successful July Community Bank Conference:
Record attendance with over 700 attendees
and over 1,500 investor meetings organized
Stifel / KBW fixed income:
Integration efforts underway
M&A Statistics Source: SNL Financial; Includes transactions announced since 1/1/2013; Data
as of 7/1/2013 Note:
Includes
only
whole
institution
transactions
in
the
United
States
Capital markets offerings inclusive of select Stifel transactions pre-closing
Small-cap banks includes the largest 50 banks under KBW Research coverage sub-$1bn
market cap. KBW Update
17 |
 Global Wealth Management |
 (1)
Includes Independent Contractors.
(2)
CAGR reflects years 2006 to 2012.
Global Wealth Management
Provides Securities Brokerage Services and Stifel Bank Products
19
Grown
from
600+
financial
advisors
in
2005
to
over
2,000
(1)
financial
advisors
currently
Proven organic growth and acquirer of private client business (56 UBS
branches, Butler Wick, Ryan Beck) Retail investors are generally
mid- to long-term buyers
Goal of providing price stability and support to the institutional order
book Strategy of recruiting experienced advisors with established
client relationships Expanding U.S. footprint
Net Revenues ($MM)
(2)
Overview
Operating
Contribution
($MM)
(2) |
 (1)
Includes Independent Contractors. (2) Client assets include
FDIC-insured products as of 6/30/13 for years 2008-2013. Global
Wealth Management 20
Opportunity Through Growth
GWM Account Growth
GWM
Broker
Growth
(1)
GWM
Assets
Under
Management
Growth
($MM)
(2)
GWM Branch Growth |
 Global Wealth Management –
Stifel Bank & Trust
Offers banking products (securities based loans and
mortgage loans) within the GWM client base,
including establishing trust services
Built-in source of business
High net worth clients
Highly efficient due to lack of “brick and mortar”
deposit focused facilities
Overview
Strength of Brokerage Position
21
Acquired FirstService Bank, a St. Louis-based,
Missouri-chartered commercial bank, in April 2007
Stifel Financial became a bank holding company and
financial services holding company
Balance sheet growth with low-risk assets
Funded by Stifel Nicolaus client deposits
Maintain high levels of liquidity
Interest Earnings Assets
(1)
Investment Portfolio
Loan Portfolio (Gross)
Total: $3.8 Billion
Total: $3.0 Billion
(2)
Total: $996 Million
(3)
Note: Data as of 6/30/13
(1)
Average interest earning assets as of 6/30/13.
(2)
MBS makes up less than 1% of Investment Portfolio
(3)
Construction and Land and Commercial Real Estate make up less than 1% of
the loan portfolio |
 Institutional Group |
 Institutional Group
23
Net
Revenues
($MM)
(2)(3)
Equity
Brokerage
+
Investment
Banking
(2)
Fixed
Income
Brokerage
+
Investment
Banking
Overview
Provides securities brokerage, trading, research,
underwriting and corporate advisory services
Largest providers of U.S. Equity Research
2
nd
largest Equity trading platform in the U.S.
outside
of
the
Bulge
Bracket
(1)
Full Service Investment Bank
Comprehensive Fixed Income platform
(1) Based on 2012 U.S. trading volume per Bloomberg. (2)
Includes TWPG historical investment banking and brokerage revenues for years 2006 through June 30, 2010.
(3) 2012 includes realized and unrealized gains on the Company’s
investment in Knight Capital Group, Inc. of $39.0 million. |
 Largest provider of U.S. equity research
2
nd
largest provider of U.S. small cap equity
coverage
Largest provider of Financial Services coverage
Deep expertise across 12 major sectors
Ranked #2 in the FT/Starmine 2013 Survey
Largest U.S. Equity Research Platform
U.S.
Equity
Research
Coverage
(1)
Coverage
Balanced
Across
All
Market
Caps
(2)
Institutional Group –
Research
Stifel Research Highlights
24
Companies Under Coverage
Rank
Firm
Overall
Small Cap
(2)
1
Stifel / Keefe, Bruyette & Woods
1,307
432
2
Bank of America Merrill Lynch
1,107
154
3
JPMorgan
1,086
163
4
Raymond James
987
323
5
Goldman Sachs
975
94
6
Wells Fargo Securities
970
160
7
Barclays
958
99
8
Citi
904
107
9
Credit Suisse
881
138
10
Deutsche Bank
867
131
11
Morgan Stanley
819
94
12
Jefferies LLC
813
173
13
UBS
811
80
14
RBC Capital Markets
798
127
15
Sidoti & Company LLC
722
493
16
Morningstar, Inc.
703
33
17
Robert W Baird & Co
651
160
18
BMO Capital Markets
584
96
19
Cowen & Co LLC
543
145
20
Piper Jaffray & Co
541
195
21
William Blair & Co LLC
533
153
22
Macquarie Group
501
65
23
KeyBanc Capital Markets
496
127
24
Oppenheimer & Co Inc
491
118
25
Sterne, Agee & Leach
452
N/A
(1)
Source: StarMine rankings as of 7/2/13. Does not include Closed End
Funds. (2) Small Cap includes market caps less than $1
billion; Mid Cap includes market caps less than $5 billion.
Note: Bold font indicates middle-market firms. Research coverage
distribution as of 7/23/13. |
 Institutional Equity Sales
110 person sales force, commission based
Experts in small and mid cap growth and value
Team based sales model with 2-4 sales people per
account
Team leaders have an average of 15 years experience
Offices in all major institutional markets in North
America & Europe
Accounts range from large mutual funds to small
industry focused investors
Managed over 741 non-deal roadshow days in 2012
Extensive experience with traditional and overnight
corporate finance transactions
Equity Trading
53 sales traders located in
Baltimore, New York, Boston, Dallas, San
Francisco, Cleveland, London, and Canada
24 position traders covering each major industry
8 specialized traders focused on: Option Trading,
Convertible and ETF Trading
Agency model –
no proprietary trading or prime
brokerage
Profitable model with advantages of scale
Institutional Group –
Equity Sales and Trading
Powerful Platform Spanning North America and Europe
25
Extensive Distribution Network
Agency model –
no proprietary trading or prime brokerage
Major liquidity provider to largest equity money management
complexes Multi-execution venues: high-touch, algorithms,
program trading and direct market access Dedicated convertible
sales, trading and research desk |
 Overview
Strong Fixed Income Capital Markets Capabilities
Institutional Group –
Fixed Income
Client Distribution
(1)(2)
Platform & Products
Focus on long-only money
managers and income
funds versus hedge funds
Consistency of execution
Identification of relative
value through security
selection
Agency/Gov't Securities
Money Markets
Mortgages & MBS
Reverse MBS
Asset-Backed Securities
Investment Grade Credit
High Yield & Distressed
Aircraft Finance & Credit
Solutions
Whole Loans
Municipals
Emerging Markets
Structured Products
Stifel Capital Advisors
Hybrid Securities
Dedicated Loan Trading Group
Capable UK Sales & Trading
platform (former Knight team)
(1)
Client Distribution is for 1/1/12 –
7/31/13.
(2)
Other category includes: Corporation, Hedge Fund, Pension Fund,
Trust Company, Foundation, Endowment, University &
Non-Profit. 26
Comprehensive platform
69 traders with annual client trade volume
approaching $400 billion
33-person Fixed Income Research and Strategy
Group
Widespread distribution
More than 180 Institutional sales professionals
covering over 4,400 accounts
33 institutional fixed income offices nationwide
European offices in London and Zurich |
 Accomplished U.S. Equity Underwriting Franchise –
All Equity Transactions
Investment Banking
Bookrun Equity Deals Since 2010
All Managed Equity Deals Since 2010
27
($ in billions)
# of
$
Rank
Firm
Deals
Volume
1
Bank of America Merrill Lynch
755
$461.5
2
JPMorgan
743
$446.9
3
Citi
707
$444.9
4
Morgan Stanley
665
$428.9
5
Barclays
610
$364.7
6
Wells Fargo Securities
602
$330.1
7
Deutsche Bank
598
$375.3
8
Credit Suisse
597
$369.8
9
Stifel / Keefe, Bruyette & Woods
575
$219.1
10
RBC Capital Markets
550
$259.8
11
Goldman Sachs
522
$370.7
12
UBS
506
$289.8
13
Raymond James
411
$205.9
14
Robert W Baird & Co
300
$75.8
15
Piper Jaffray & Co
285
$139.1
16
Jefferies LLC
270
$56.0
17
Oppenheimer & Co Inc
255
$65.5
18
JMP Securities LLC
247
$49.0
19
William Blair & Co LLC
199
$57.9
20
Cowen & Co LLC
195
$49.4
21
BMO Capital Markets
181
$70.4
22
Canaccord Genuity Corp
172
$18.4
23
Janney Montgomery Scott
171
$29.5
24
KeyBanc Capital Markets
166
$63.6
25
Ladenburg Thalmann & Co Inc
159
$17.7
($ in billions)
# of
$
Rank
Firm
Deals
Volume
1
Bank of America Merrill Lynch
686
$84.4
2
JPMorgan
644
$86.5
3
Citi
611
$80.0
4
Morgan Stanley
604
$97.5
5
Barclays
494
$72.9
6
Credit Suisse
473
$61.2
7
Goldman Sachs
460
$80.2
8
Deutsche Bank
450
$52.4
9
Wells Fargo Securities
418
$33.2
10
UBS
339
$35.9
11
Jefferies LLC
215
$12.5
12
RBC Capital Markets
182
$13.9
13
Stifel / Keefe, Bruyette & Woods
178
$9.1
14
Raymond James
114
$6.4
15
Piper Jaffray & Co
96
$4.3
16
Roth Capital Partners
78
$1.5
17
Cowen & Co LLC
72
$2.2
18
Robert W Baird & Co
68
$3.1
19
Lazard Capital Markets
59
$1.7
20
Leerink Swann LLC
54
$1.9
21
Sandler O'Neill & Partners
46
$3.7
22
KeyBanc Capital Markets
45
$2.6
23
William Blair & Co LLC
38
$1.5
23
Aegis Capital Corp
38
$0.5
25
Canaccord Genuity Corp
36
$1.6
Source:
Dealogic.
Rank
eligible
SEC
registered
IPOs
and
Follow-On
offerings
since
2010.
Includes
demutualizations.
As
of
8/31/13.
Overlapping
deals
between
Stifel
and
its
acquired
firms
have
been
removed.
Note:
$
Volume
represents
full
credit
to
underwriter
for
All
Managed
Equity
Deals
and
apportioned
credit
to
bookrunner
for
Bookrun
Equity
Deals.
Bold
font
indicates
middle-market
firms. |
 Financial Results |
 29
Stifel Financial Results
Three months ended June 30, 2013
(1)
(1)
Non-core adjustments consist of merger-related revenues and expenses associated with
our acquisitions of KBW, the Knight Capital Fixed Income business and Miller Buckfire.
($ in thousands, except per share amounts)
GAAP
Non-Core
Non-GAAP
6/30/12
% Change
3/31/13
% Change
Net revenues
498,736
1,736
500,472
374,407
33.7%
441,780
$
13.3%
Compensation and benefits
321,331
(6,018)
315,313
239,374
31.7%
281,941
11.8%
Non-comp operating expenses
126,207
(14,974)
111,233
91,159
22.0%
96,155
15.7%
Total non-interest expenses
447,538
(20,992)
426,546
330,533
29.0%
378,096
12.8%
Income before income taxes
51,198
22,728
73,926
43,874
68.5%
63,684
16.1%
Provision for income taxes
21,763
7,807
29,570
17,738
66.7%
23,808
24.2%
Net income
29,435
$
14,921
$
44,356
$
26,136
$
69.7%
39,876
$
11.2%
Earnings per share:
Diluted
0.40
$
0.60
$
0.42
$
42.9%
0.58
$
3.4%
Weighted average number of shares outstanding:
Diluted
74,090
74,090
62,678
18.2%
69,189
7.1%
Ratios to net revenues:
Compensation and benefits
64.4%
63.0%
63.9%
63.8%
Non-comp operating expenses
25.3%
22.2%
24.4%
21.8%
Income before income taxes
10.3%
14.8%
11.7%
14.4%
Three Months Ended June 30, 2013
Three Months Ended |
 30
Stifel Financial Results
Six months ended June 30, 2013
(1)
(1)
Non-core
adjustments
consist
of
a
charges
related
to
expensing
stock
awards
issued
as
retention
in
connection
with
the
acquisition
of
KBW
and
other
merger-related
revenues
and
expenses
associated
with
our
acquisitions
of
KBW,
the
Knight Capital Fixed Income business and Miller Buckfire.
($ in thousands, except per share amounts)
GAAP
Non-Core
Non-GAAP
6/30/12
% Change
Total revenues
964,661
$
1,744
$
966,405
$
793,607
$
21.8%
Interest expense
24,145
-
24,145
18,867
28.0%
Net revenues
940,516
1,744
942,260
774,740
21.6%
Compensation and benefits
637,058
(39,804)
597,254
494,078
20.9%
Non-comp operating expenses
228,914
(21,526)
207,388
177,534
16.8%
Total non-interest expenses
865,972
(61,330)
804,642
671,612
19.8%
Income before income taxes
74,544
63,074
137,618
103,128
33.4%
Provision for income taxes
30,490
22,888
53,378
42,219
26.4%
Net income
44,054
$
40,186
$
84,240
$
60,909
$
38.3%
Earnings per share:
Diluted
0.62
$
1.18
$
0.97
$
21.6%
Weighted average number of shares outstanding:
Diluted
71,627
71,627
62,700
14.2%
Ratios to net revenues:
Compensation and benefits
67.7%
63.4%
63.8%
Non-comp operating expenses
24.4%
22.0%
22.9%
Income before income taxes
7.9%
14.6%
13.3%
Six Months Ended June 30, 2013
Six Months Ended |
 31
Sources of Revenues
(1)
Results for the three months ended March 31, 2013 and December 31, 2012
included realized and unrealized gains on the Company’s investment in Knight Capital Group, Inc. of $2.2 million and
$13.4 million, respectively.
($ in thousands)
6/30/13
6/30/12
%
Change
3/31/13
%
Change
6/30/13
6/30/12
%
Change
Commissions
157,168
$
127,427
$
23.3%
148,648
$
5.7%
305,816
$
250,730
$
22.0%
Principal transactions
111,448
91,564
21.7%
107,244
3.9%
218,692
207,797
5.2%
Brokerage revenues
268,616
218,991
22.7%
255,892
5.0%
524,508
458,527
14.4%
Capital raising
74,146
40,733
82.0%
51,199
44.8%
125,345
95,566
31.2%
Advisory
47,968
26,630
80.1%
27,180
76.5%
75,148
42,235
77.9%
Investment banking
122,114
67,363
81.3%
78,379
55.8%
200,493
137,801
45.5%
Asset mgt and service fees
76,088
65,311
16.5%
68,912
10.4%
145,000
126,129
15.0%
Other
11,670
5,418
115.4%
20,212
(42.3%)
31,882
18,712
70.4%
Total operating revenues
478,488
357,083
34.0%
423,395
13.0%
901,883
741,169
21.7%
Interest revenue
32,933
27,181
21.2%
29,845
10.3%
62,778
52,438
19.7%
Total revenues
511,421
384,264
33.1%
453,240
12.8%
964,661
793,607
21.6%
Interest expense
12,685
9,857
28.7%
11,460
10.7%
24,145
18,867
28.0%
Net revenues
498,736
$
374,407
$
33.2%
441,780
$
12.9%
940,516
$
774,740
$
21.4%
Three Months Ended
Six Months Ended |
 32
Core Non-Interest Expenses
Three months ended June 30, 2013
($ in thousands)
6/30/13
(1)
6/30/12
% Change
3/31/13
% Change
6/30/13
(1)
6/30/12
3/31/13
Net revenues
500,472
$
374,407
$
33.7%
441,788
$
13.3%
100.0%
100.0%
100.0%
Compensation and benefits
294,446
219,004
34.4%
259,135
13.6%
58.8%
58.5%
58.7%
Transitional pay
(2)
20,867
20,370
2.4%
22,806
(8.5%)
4.2%
5.4%
5.2%
Total compensation and benefits
315,313
239,374
31.7%
281,941
11.8%
63.0%
63.9%
63.8%
Occupancy and equipment rental
38,306
32,320
18.5%
31,501
21.6%
7.7%
8.6%
7.1%
Communication and office supplies
24,604
20,797
18.3%
21,858
12.6%
4.9%
5.6%
4.9%
Commissions and floor brokerage
9,616
7,747
24.1%
8,669
10.9%
1.9%
2.1%
2.0%
Other operating expenses
38,707
30,295
27.8%
34,127
13.4%
7.7%
8.1%
7.6%
Total non-comp operating expenses
111,233
91,159
22.0%
96,155
15.7%
22.2%
24.3%
21.8%
Total non-interest expense
426,546
330,533
29.0%
378,096
12.8%
85.2%
88.3%
85.6%
Income before income taxes
73,926
43,874
68.5%
63,692
16.1%
14.8%
11.7%
14.4%
Provision for income taxes
29,570
17,738
66.7%
23,808
24.2%
5.9%
4.6%
5.4%
Non-GAAP net income
44,356
$
26,136
$
69.7%
39,884
$
11.2%
8.9%
7.0%
9.0%
Non-core expenses (after-tax)
(14,921)
-
(25,265)
GAAP net income
29,435
$
26,136
$
14,619
$
Three Months Ended
% of Net revenues
(1)
Excludes non-core adjustments consisting of merger-related revenues and expenses
associated with our acquisitions of KBW, the Knight Capital Fixed Income business and Miller Buckfire.
(2)
Transition pay includes amortization of upfront notes, signing bonuses and retention
awards. |
 33
Core Non-Interest Expenses
Six months ended June 30, 2013
($ in thousands)
6/30/13
(1)
6/30/12
% Change
6/30/13
(1)
6/30/12
Net revenues
942,260
$
774,740
$
21.6%
100.0%
100.0%
Compensation and benefits
555,424
455,336
22.0%
58.9%
58.8%
Transitional pay
(2)
41,830
38,742
8.0%
4.4%
5.0%
Total compensation and benefits
597,254
494,078
20.9%
63.4%
63.8%
Occupancy and equipment rental
69,808
63,111
10.6%
7.4%
8.1%
Communication and office supplies
46,462
41,170
12.9%
4.9%
5.3%
Commissions and floor brokerage
18,285
15,359
19.1%
1.9%
2.0%
Other operating expenses
72,833
57,894
25.8%
7.7%
7.5%
Total non-comp operating expenses
207,388
177,534
16.8%
22.0%
22.9%
Total non-interest expense
804,642
671,612
19.8%
85.4%
86.7%
Income before income taxes
137,618
103,128
33.4%
14.6%
13.3%
Provision for income taxes
53,378
42,219
26.4%
5.7%
5.3%
Non-GAAP net income
84,240
$
60,909
$
38.3%
8.9%
7.9%
Non-core expenses (after-tax)
(40,186)
-
GAAP net income
44,054
$
60,909
$
Six Months Ended
% of Net revenues
(1)
Excludes non-core adjustments consisting of a charge related to expensing stock
awards issued as retention in connection with the acquisition of KBW and other merger-related revenues and expenses associated with our acquisitions
of KBW, the Knight Capital Fixed Income business and Miller Buckfire.
(2)
Transition pay includes amortization of upfront notes, signing bonuses and retention
awards. |
 34
Segment Comparison
($ in thousands)
6/30/13
(1)
6/30/12
%
Change
3/31/13
%
Change
6/30/13
(1)
6/30/12
%
Change
Net revenues:
Global Wealth Management
282,717
$
239,300
$
18.1%
266,957
$
5.9%
549,674
$
486,908
$
12.9%
Institutional Group
220,476
136,026
62.1%
176,437
25.0%
396,913
285,270
39.1%
Other
(2,721)
(919)
196.1%
(1,606)
69.4%
(4,327)
2,562
(268.9%)
500,472
$
374,407
$
33.7%
441,788
$
13.3%
942,260
$
774,740
$
21.6%
Operating contribution:
Global Wealth Management
78,924
$
61,036
$
29.3%
69,499
$
13.6%
148,423
$
129,914
$
14.2%
Institutional Group
30,059
17,863
68.3%
28,137
6.8%
58,196
41,867
39.0%
Other
(35,057)
(35,025)
0.2%
(33,944)
3.4%
(69,001)
(68,653)
0.6%
73,926
$
43,874
$
68.5%
63,692
$
16.2%
137,618
$
103,128
$
33.4%
Three Months Ended
Six Months Ended
(1)
Core (non-GAAP) results for the three and six months ended June 30, 2013 are the same as
GAAP results. |