EX-99.1 2 d767542dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

STIFEL REPORTS SECOND QUARTER 2014 FINANCIAL RESULTS

Highlights for the three months ended June 30, 2014:

 

  •   Net revenues of $560.1 million, increased 14% compared with the year-ago quarter.

 

  •   Non-GAAP net income from continuing operations of $51.3 million, or $0.68 per diluted common share.

 

  •   Net income from continuing operations of $45.6 million, or $0.60 per diluted common share.

Highlights for the six months ended June 30, 2014:

 

  •   Record net revenues of $1.1 billion, increased 19% compared with the year-ago period.

 

  •   Non-GAAP net income from continuing operations of $103.3 million, or $1.37 per diluted share.

 

  •   Net income from continuing operations of $93.6 million, or $1.24 per diluted share.

ST. LOUIS, August 6, 2014 – Stifel Financial Corp. (NYSE: SF) today reported net income from continuing operations of $45.6 million, or $0.60 per diluted common share on net revenues of $560.1 million for the three months ended June 30, 2014, compared with net income from continuing operations of $30.9 million, or $0.42 per diluted common share, on net revenues of $493.7 million for the second quarter of 2013.

For the three months ended June 30, 2014, the Company reported non-GAAP net income from continuing operations of $51.3 million, or $0.68 per diluted common share. These non-GAAP results exclude merger-related expenses associated with the Company’s recent acquisitions for a total of $5.7 million (after-tax).

For the six months ended June 30, 2014, the Company reported net income from continuing operations of $93.6 million, or $1.24 per diluted common share on record net revenues of $1.1 billion, compared with net income from continuing operations of $45.9 million, or $0.64 per diluted share, on net revenues of $932.3 million for the comparable period in 2013. For the six months ended June 30, 2014, the Company reported non-GAAP net income from continuing operations of $103.3 million, or $1.37 per diluted share. A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed below under “Non-GAAP Financial Measures.”

 

     Three Months Ended     Six Months Ended  
(in 000s)    6/30/14     6/30/13     %
Change		      3/31/14     %
Change		     6/30/14     6/30/13     %
Change		  

Net revenues

    $ 560,147      $ 493,678        13.5       $ 546,746        2.5      $ 1,106,893      $ 932,282        18.7   

Net income from continuing operations

    $ 45,577      $ 30,916        47.4       $ 47,973        (5.0 )    $ 93,550      $ 45,852        104.0   

Net income

    $ 43,601      $ 29,435        48.1       $ 47,382        (8.0 )    $ 90,983      $ 44,054        106.5   

Non-GAAP net income from continuing operations1

    $ 51,266      $ 45,133        13.6       $ 52,028        (1.5 )    $ 103,294      $ 85,191        21.3   

Earnings per basic common share:

                  

Income from continuing operations

    $ 0.69      $ 0.48        43.8       $ 0.73        (5.5 )    $ 1.42      $ 0.74        91.9   

Loss from discontinued operations

      (0.03 )      (0.02 )      50.0         (0.01 )      200.0        (0.04 )      (0.03 )      33.3   
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per basic common share

    $ 0.66      $ 0.46        43.5       $ 0.72        (8.3 )    $ 1.38      $ 0.71        94.4   

Earnings per diluted common share:

                  

Income from continuing operations

    $ 0.60      $ 0.42        42.9       $ 0.63        (4.8 )    $ 1.24      $ 0.64        93.8   

Loss from discontinued operations

      (0.02 )      (0.02 )      —           —          nm        (0.04 )      (0.02 )      100.0   
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per diluted common share

    $ 0.58      $ 0.40        45.0       $ 0.63        (7.9 )    $ 1.20      $ 0.62        93.5   

Non-GAAP net income from continuing operations1

    $ 0.68      $ 0.61        11.5       $ 0.69        (1.4 )    $ 1.37      $ 1.19        15.1   

Weighted average number of common shares outstanding:

                  

Basic

      66,302        64,505        2.8         66,037        0.4        66,167        62,292        6.1   

Diluted

      75,641        74,090        2.1         75,691        (0.1 )      75,665        71,627        5.6   

 

1  A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.”

Chairman’s Comments

“We are pleased with the performance of our private client and investment banking groups, which contributed nicely to our results in a challenging market environment. Our global wealth management segment posted record net revenues and record pre-tax operating contributions in the quarter. Investment banking benefitted from strong equity capital raising and advisory activity. Our institutional brokerage results are reflective of lower industry volumes,” stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

“During the second quarter, we announced two acquisitions. Oriel Securities, a London-based stockbroking and investment banking firm, will build out our institutional businesses already underway in London. And, in June, we announced the acquisition of Legg Mason Investment Counsel, which will be complementary to our high net worth private client group.”

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions revenues, were $278.4 million, a 5% increase compared with the second quarter of 2013 and a 3% decrease compared with the first quarter of 2014.

 

  •   Global wealth management brokerage revenues were $161.8 million, a 1% increase compared with the second quarter of 2013 and flat compared with the first quarter of 2014.

 

  •   Institutional equity brokerage revenues were $62.1 million, a 3% decrease compared with the second quarter of 2013 and a 6% decrease compared with the first quarter of 2014.

 

  •   Institutional fixed income brokerage revenues were $54.5 million, a 33% increase compared with the second quarter of 2013 and a 7% decrease compared with the first quarter of 2014.

 

2

Investment Banking Revenues

Investment banking revenues were $141.5 million, a 19% increase compared with the second quarter of 2013 and a 7% increase compared with the first quarter of 2014.

 

  •   Equity capital raising revenues were $65.8 million, a 23% increase compared with the second quarter of 2013 and an 8% increase compared with the first quarter of 2014.

 

  •   Fixed income capital raising revenues were $15.4 million, a 13% decrease compared with the second quarter of 2013 and an 18% increase compared with the first quarter of 2014.

 

  •   Advisory fee revenues were $60.4 million, a 25% increase compared with the second quarter of 2013 and a 3% increase compared with the first quarter of 2014.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $94.2 million, a 24% increase compared with the second quarter of 2013 and a 6% increase compared with the first quarter of 2014. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets.

Compensation and Benefits Expenses

For the quarter ended June 30, 2014, compensation and benefits expenses were $355.3 million, which included $1.5 million of merger-related expenses, compared with $317.2 million in the second quarter of 2013, and $346.8 million in the first quarter of 2014. Compensation and benefits expense included merger-related expenses of $6.0 million in the second quarter of 2013 and $2.3 million in the first quarter of 2014.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 63.0% in the second quarter of 2014, compared with 62.8% in the second quarter of 2013 and 62.8% in the first quarter of 2014. Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, as a percentage of net revenues was 4.5% in the second quarter of 2014, compared with 4.2% in the second quarter of 2013 and 4.3% in the first quarter of 2014.

 

3

Non-Compensation Operating Expenses

For the quarter ended June 30, 2014, non-compensation operating expenses were $127.4 million, which included merger-related expenses of $4.5 million, compared with $123.9 million in the second quarter of 2013, and $121.8 million in the first quarter of 2014. Non-compensation operating expenses included merger-related expenses of $14.9 million in the second quarter of 2013 and $2.5 million in the first quarter of 2014.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2014 was 21.9%, compared with 22.0% in the second quarter of 2013 and 21.8% in the first quarter of 2014.

Provision for Income Taxes

The effective income tax rate for the quarter ended June 30, 2014 was 41.2% compared with 41.2% in the second quarter of 2013, and 38.6% in the first quarter of 2014.

Assets and Capital

Assets

 

  •   Assets increased 13% to $9.6 billion as of June 30, 2014 from $8.5 billion as of June 30, 2013. The increase is primarily attributable to growth of Stifel Bank, the Company’s bank subsidiary, which as of June 30, 2014 has grown its assets to $5.1 billion from $4.3 billion as of June 30, 2013.

 

  •   At June 30, 2014, the Company’s Level 3 assets of $196.2 million, or 2.0% of total assets, consisted of $112.5 million of auction rate securities and $83.7 million of partnership interests, private company investments, private equity, and fixed income securities. The Company’s Level 3 assets as a percentage of total assets measured at fair value was 6.6% at June 30, 2014.

 

  •   Non-performing assets as a percentage of total assets as of June 30, 2014 was 0.10%.

Capital

 

  •   The Company’s Tier 1 leverage capital ratio was 15.4% at June 30, 2014 and Tier 1 risk-based capital ratio was 25.5% at June 30, 2014.

 

  •   At June 30, 2014, book value per common share was $33.18 based on 65.5 million common shares outstanding.

 

  •   Stockholders’ equity as of June 30, 2014 increased $275.2 million, or 13%, to $2.2 billion from $1.9 billion as of June 30, 2013.

 

4

Conference Call Information

Stifel Financial Corp. will host its second quarter 2014 financial results conference call on Wednesday, August 6, 2014, at 8:30 a.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (888) 676-3684 and referencing conference ID #80900810. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through the Company’s web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. offers trust and related services. To learn more about Stifel, please visit the Company’s web site at www.stifel.com.

 

5

Forward-Looking Statements

This earnings release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies’ operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

 

6

    Summary Results of Operations (Unaudited)                    
    Three Months Ended     Six Months Ended  
(in thousands, except per share amounts)   6/30/14     6/30/13     % Change     3/31/14     % Change     6/30/14     6/30/13     % Change  

Revenues:

                

Commissions

   $ 152,712      $ 154,795        (1.3 )    $ 159,416        (4.2 )    $ 312,128      $ 300,662        3.8   

Principal transactions

     125,676        111,306        12.9        126,461        (0.6 )      252,137        218,570        15.4   

Investment banking

     141,515        119,443        18.5        132,304        7.0        273,819        196,348        39.5   

Asset management and service fees

     94,231        76,088        23.8        89,170        5.7        183,401        145,000        26.5   

Other income

     8,742        11,787        (25.8 )      5,200        68.1        13,942        32,206        (56.7 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating revenues

     522,876        473,419        10.4        512,551        2.0        1,035,427        892,786        16.0   

Interest revenue

     46,113        32,893        40.2        42,826        7.7        88,939        62,699        41.9   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

     568,989        506,312        12.4        555,377        2.5        1,124,366        955,485        17.7   

Interest expense

     8,842        12,634        (30.0 )      8,631        2.4        17,473        23,203        (24.7 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net revenues

     560,147        493,678        13.5        546,746        2.5        1,106,893        932,282        18.7   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-interest expenses:

                

Compensation and benefits

     355,267        317,247        12.0        346,771        2.4        702,038        632,159        11.1   

Occupancy and equipment rental

     42,967        41,282        4.1        40,532        6.0        83,499        74,801        11.6   

Communications and office supplies

     25,869        25,456        1.6        24,818        4.2        50,687        47,913        5.8   

Commission and floor brokerage

     9,248        9,790        (5.5 )      9,028        2.4        18,276        18,627        (1.9 ) 

Other operating expenses

     49,273        47,328        4.1        47,469        3.8        96,742        82,549        17.2   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expenses

     482,624        441,103        9.4        468,618        3.0        951,242        856,049        11.1   

Income from continuing operations before income taxes

     77,523        52,575        47.5        78,128        (0.8 )      155,651        76,233        104.2   

Provision for income taxes

     31,946        21,659        47.5        30,155        5.9        62,101        30,381        104.4   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income from continuing operations

     45,577        30,916        47.4        47,973        (5.0 )      93,550        45,852        104.0   

Discontinued operations:

                

Loss from discontinued operations, net of tax

     (1,976 )      (1,481 )      33.4        (591 )      234.2        (2,567 )      (1,798 )      42.7   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

   $ 43,601      $ 29,435        48.1      $ 47,382        (8.0 )    $ 90,983      $ 44,054        106.5   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per basic common share:

                

Income from continuing operations

   $ 0.69      $ 0.48        43.8      $ 0.73        (5.5 )    $ 1.42      $ 0.74        91.9   

Loss from discontinued operations

     (0.03 )      (0.02 )      50.0        (0.01 )      200.0        (0.04 )      (0.03 )      33.3   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per basic common share

   $ 0.66      $ 0.46        43.5      $ 0.72        (8.3 )    $ 1.38      $ 0.71        94.4   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per diluted common share:

                

Income from continuing operations

   $ 0.60      $ 0.42        42.9      $ 0.63        (4.8 )    $ 1.24      $ 0.64        93.8   

Loss from discontinued operations

     (0.02 )      (0.02 )      —          —          *        (0.04 )      (0.02 )      100.0   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per diluted common share

   $ 0.58      $ 0.40        45.0      $ 0.63        (7.9 )    $ 1.20      $ 0.62        93.5   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average number of common shares outstanding:

                

Basic

     66,302        64,505        2.8        66,037        0.4        66,167        62,292        6.1   

Diluted

     75,641        74,090        2.1        75,691        (0.1 )      75,665        71,627        5.6   

 

* Percentage not meaningful.

 

7

Statistical Information

 

(in thousands, except per share, employee and location amounts)  
     6/30/14      6/30/13      % Change      3/31/14      % Change  

Statistical Information:

               

Book value per share

    $ 33.18       $ 30.05         10.4       $ 32.09         3.4   

Financial advisors 2

      2,085         2,069         0.8         2,081         0.2   

Full-time associates

      5,881         5,759         2.1         5,831         0.9   

Locations

      361         357         1.1         359         0.6   

Total client assets

    $ 173,383,000       $ 150,628,000         15.1       $ 168,899,000         2.7   

Business Segment Results

 

Summary Segment Results (Unaudited)

  
     Three Months Ended     Six Months Ended  
(in 000s)    6/30/14     6/30/13     %
Change		     3/31/14     %
Change		     6/30/14     6/30/13     %
Change		  

Net revenues:

                 

Global Wealth Management

    $ 307,247      $ 282,717        8.7      $ 297,183        3.4      $ 604,430      $ 549,674        10.0   

Institutional Group

      255,712        215,444        18.7        249,977        2.3        505,689        388,744        30.1   

Other

      (2,812 )      (4,483 )      37.3        (414 )      (578.9 )      (3,226 )      (6,136 )      47.4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   $ 560,147      $ 493,678        13.5      $ 546,746        2.5      $ 1,106,893      $ 932,282        18.7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating contribution: 3

                 

Global Wealth Management

    $ 89,098      $ 78,924        12.9      $ 79,676        11.8      $ 168,774      $ 148,423        13.7   

Institutional Group

      42,690        31,083        37.3        45,622        (6.4 )      88,312        59,313        48.9   

Other

      (46,858 )      (34,785 )      (34.7 )      (40,726 )      (15.1 )      (87,584 )      (68,523 )      (27.8 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   $ 84,930      $ 75,222        12.9      $ 84,572        0.4      $ 169,502      $ 139,213        21.8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

As a percentage of net revenues:

                 

Compensation and benefits

                 

Global Wealth Management

      55.9        57.7          58.6          57.2        58.4     

Institutional Group

      61.6        61.5          61.6          61.6        61.5     

Non-comp. operating expenses

                 

Global Wealth Management

      15.1        14.4          14.6          14.9        14.6     

Institutional Group

      21.7        24.1          20.1          20.9        23.2     

Income before income taxes

                 

Global Wealth Management

      29.0        27.9          26.8          27.9        27.0     

Institutional Group

      16.7        14.4          18.3          17.5        15.3     
  

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    
     15.1        15.2          15.4          15.3        14.9     
  

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

 

2  Includes 140, 145 and 141 independent contractors at June 30, 2014, June 30, 2013, and March 31, 2014, respectively.
3  A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.”

 

8

Global Wealth Management Summary Results of Operations (Unaudited)

 

     Three Months Ended     Six Months Ended  
(in 000s)    6/30/14      6/30/13      %
Change		     3/31/14      %
Change		     6/30/14      6/30/13      %
Change		  

Revenues:

                      

Commissions

    $ 107,438       $ 104,576         2.7      $ 107,739         (0.3 )    $ 215,177       $ 206,662         4.1   

Principal transactions

      54,342         56,313         (3.5 )      53,766         1.1        108,108         112,620         (4.0 ) 

Asset management and service fees

      94,187         75,976         24.0        89,130         5.7        183,317         144,910         26.5   

Net interest

      35,839         24,505         46.2        35,262         1.6        71,101         45,991         54.6   

Investment banking

      9,892         15,334         (35.5 )      9,926         (0.3 )      19,818         26,437         (25.0 ) 

Other income

      5,549         6,013         (7.7 )      1,360         307.9        6,909         13,054         (47.1 ) 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net revenues

      307,247         282,717         8.7        297,183         3.4        604,430         549,674         10.0   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Non-interest expenses:

                      

Compensation and benefits

      171,724         163,156         5.3        174,168         (1.4 )      345,892         320,752         7.8   

Non-compensation operating expenses

      46,425         40,637         14.2        43,339         7.1        89,764         80,499         11.5   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Total non-interest expenses

      218,149         203,793         7.0        217,507         0.3        435,656         401,251         8.6   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Income before income taxes

    $ 89,098       $ 78,924         12.9      $ 79,676         11.8      $ 168,774       $ 148,423         13.7   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

As a percentage of net revenues:

                      

Compensation and benefits

      55.9         57.7           58.6           57.2         58.4      

Non-compensation operating expenses

      15.1         14.4           14.6           14.9         14.6      

Income before income taxes

      29.0         27.9           26.8           27.9         27.0      

Stifel Bank & Trust (Unaudited)

 

Key Statistical Information  
(in 000s, except percentages)    6/30/14     6/30/13     %
Change		     3/31/14     %
Change		  

Other information:

           

Assets

    $ 5,050,036      $ 4,306,447        17.3      $ 4,994,215        1.1   

Investment securities

      2,915,235        2,956,073        (1.4 )      3,083,902        (5.5 ) 

Retained loans, net

      1,773,853        984,765        80.1        1,514,465        17.1   

Loans held for sale

      119,477        152,246        (21.5 )      102,367        16.7   

Deposits

      4,653,656        4,007,050        16.1        4,605,260        1.1   

Allowance as a percentage of loans

      0.97 %      1.10 %        0.94 %   

Non-performing assets as a percentage of total assets

      0.10 %      0.03 %        0.03 %   

 

9

Institutional Group Summary Results of Operations (Unaudited)

 

     Three Months Ended     Six Months Ended  
(in 000s)    6/30/14      6/30/13      %
Change		     3/31/14      %
Change		     6/30/14      6/30/13      %
Change		  

Revenues:

                      

Commissions

    $ 45,274       $ 50,219         (9.8 )    $ 51,677         (12.4 )    $ 96,951       $ 94,000         3.1   

Principal transactions

      71,333         54,993         29.7        72,695         (1.9 )      144,028         105,950         35.9   

Capital raising

      71,268         55,969         27.3        63,878         11.6        134,873         94,715         42.4   

Advisory fees

      60,356         48,140         25.4        58,500         3.2        119,129         75,196         58.4   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Investment banking

      131,624         104,109         26.4        122,378         7.6        254,002         169,911         49.5   

Other 4

      7,481         6,123         22.2        3,227         131.8        10,708         18,883         (43.3 ) 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net revenues

      255,712         215,444         18.7        249,977         2.3        505,689         388,744         30.1   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Non-interest expenses:

                      

Compensation and benefits

      157,499         132,397         19.0        154,016         2.3        311,515         239,218         30.2   

Non-compensation operating expenses

      55,523         51,964         6.8        50,339         10.3        105,862         90,213         17.3   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Total non-interest expenses

      213,022         184,361         15.5        204,355         4.2        417,377         329,431         26.7   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Income before income taxes

    $ 42,690       $ 31,083         37.3      $ 45,622         (6.4 )    $ 88,312       $ 59,313         48.9   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

As a percentage of net revenues:

                      

Compensation and benefits

      61.6         61.5           61.6           61.6         61.5      

Non-compensation operating expenses

      21.7         24.1           20.1           20.9         23.2      

Income before income taxes

      16.7         14.4           18.3           17.5         15.3      

Institutional Group Brokerage & Investment Banking Revenues (Unaudited)

 

     Three Months Ended     Six Months Ended  
(in 000s)    6/30/14      6/30/13      %
Change		     3/31/14      %
Change		     6/30/14      6/30/13      %
Change		  

Institutional brokerage:

                      

Equity

    $ 62,087       $ 64,273         (3.4 )    $ 65,768         (5.6 )    $ 127,855       $ 113,511         12.6   

Fixed income

      54,520         40,939         33.2        58,604         (7.0 )      113,124         86,439         30.9   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Institutional brokerage

      116,607         105,212         10.8        124,372         (6.2 )      240,979         199,950         20.5   

Investment banking:

                      

Capital raising:

                      

Equity

      51,903         41,891         23.9        44,476         16.7        96,291         64,822         48.5   

Fixed income

      19,365         14,078         37.6        19,402         (0.2 )      38,582         29,893         29.1   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Capital raising

      71,268         55,969         27.3        63,878         11.6        134,873         94,715         42.4   

Advisory fees:

      60,356         48,140         25.4        58,500         3.2        119,129         75,196         58.4   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Investment banking

    $ 131,624       $ 104,109         26.4      $ 122,378         7.6      $ 254,002       $ 169,911         49.5   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

 

 

4  Includes net interest and other income.

 

10

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 additional measures to aid in understanding and analyzing the Company’s financial results for the three and six months ended June 30, 2014. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company’s core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance. These non-GAAP amounts exclude certain compensation and non-compensation operating expenses associated with the recent acquisitions.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the Company’s business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures of 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 and the same respective non-GAAP measures of the Company’s financial performance should be considered together.

The following table provides details with respect to reconciling net 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 on a GAAP basis for the three and six months ended June 30, 2014 to the aforementioned expenses on a non-GAAP basis for the same period.

 

     Three Months Ended June 30, 2014      Six Months Ended June 30, 2014  
(in 000s, except per share amounts)    Non-GAAP      Non-Core     GAAP      Non-GAAP      Non-Core     GAAP  

Net revenues

    $ 561,495       $ (1,348 )    $ 560,147       $ 1,109,930       $ (3,037 )    $ 1,106,893   

Non-interest expenses:

                

Compensation and benefits

      353,754         1,513        355,267         698,241         3,797        702,038   

Non-compensation operating expenses

      122,811         4,546        127,357         242,187         7,017        249,204   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Total non-interest expenses

      476,565         6,059        482,624         940,428         10,814        951,242   

Income from continuing operations before income taxes

      84,930         (7,407 )      77,523         169,502         (13,851 )      155,651   

Provision for income taxes

      33,664         (1,718 )      31,946         66,208         (4,107 )      62,101   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Net income from continuing operations

    $ 51,266       $ (5,689 )    $ 45,577       $ 103,294       $ (9,744 )    $ 93,550   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Earnings per share::

                

Basic

    $ 0.77       $ (0.08 )    $ 0.69       $ 1.56       $ (0.14 )    $ 1.42   

Diluted

    $ 0.68       $ (0.08 )    $ 0.60       $ 1.37       $ (0.13 )    $ 1.24   

As a percentage of net revenues:

                

Compensation and benefits

      63.0           63.4         62.9           63.4   

Non-compensation operating expenses

      21.9           22.8         21.8           22.5   

Income before income taxes

      15.1           13.8         15.3           14.1   

Investor Relations

Sarah Anderson

(415) 364-2500, investorrelations@stifel.com

 

11