sf-ex991_6.htm

FOR IMMEDIATE RELEASE

STIFEL REPORTS FOURTH QUARTER AND FULL-YEAR 2015 FINANCIAL RESULTS

20^th Consecutive Year of Record Net Revenues

Record 2015 Revenues & Record Pre-Tax Operating Income in Global Wealth Management

Quarterly Highlights

Net revenues of $581.3 million, increased 1% compared with the year-ago quarter.

Non-GAAP net income of $40.2 million, or $0.51 per diluted common share.

Net income of $11.2 million, or $0.14 per diluted common share.

Repurchased 1.2 million shares for approximately $51.9 million.

ST. LOUIS, February 23, 2016 – Stifel Financial Corp. (NYSE: SF) today reported net income of $11.2 million, or $0.14 per diluted common share on net revenues of $581.3 million for the three months ended December 31, 2015, compared with net income of $45.2 million, or $0.58 per diluted common share, on net revenues of $578.1 million for the fourth quarter of 2014.

For the three months ended December 31, 2015, the Company reported non-GAAP net income of $40.2 million, or $0.51 per diluted common share, compared with non-GAAP net income of $58.4 million, or $0.75 per diluted common share for the fourth quarter of 2014. These non-GAAP results exclude merger-related expenses of $29.0 million (after-tax), primarily related to the acquisitions of Barclays Wealth and Investment Management, Americas and Sterne Agee. A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed below under “Non-GAAP Financial Measures.”

	Three Months Ended												Year Ended
(in 000s)	12/31/15		12/31/14		% Change			9/30/15		% Change			12/31/15		12/31/14		% Change
Net revenues	$	581,286	$	578,076		0.6		$	591,575		(1.7	)	$	2,331,594	$	2,208,424		5.6
Net income	$	11,172	$	45,182		(75.3	)	$	17,179		(35.0	)	$	92,336	$	176,067		(47.6	)
Non-GAAP net income ¹	$	40,211	$	58,440		(31.2	)	$	47,705		(15.7	)	$	193,061	$	210,432		(8.3	)
Earnings per common share:
Basic	$	0.16	$	0.67		(76.1	)	$	0.25		(36.0	)	$	1.35	$	2.65		(49.1	)
Diluted	$	0.14	$	0.58		(75.9	)	$	0.22		(36.4	)	$	1.18	$	2.31		(48.9	)
Non-GAAP net income ¹	$	0.51	$	0.75		(32.0	)	$	0.60		(0.15	)	$	2.46	$	2.76		(10.9	)
Weighted average number of common shares outstanding:
Basic		68,150		66,851		1.9			69,633		(2.1	)		68,543		66,472		3.1
Diluted		79,355		77,540		2.3			79,759		(0.5	)		78,554		76,376		2.9

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

Annual Highlights

Record net revenues of $2.3 billion, increased 6% compared with 2014.

Non-GAAP net income of $193.1 million, or $2.46 per diluted common share.

Net income decreased 48% to $92.3 million in 2015.

Completed two acquisitions: Sterne Agee and Barclays Wealth and Investment Management, Americas

Full-Year 2015 Results

For the year ended December 31, 2015, the Company reported net income of $92.3 million, or $1.18 per diluted common share on record net revenues of $2.3 billion, compared with net income of $176.1 million, or $2.31 per diluted share, on net revenues of $2.2 billion in 2014.

For the year ended December 31, 2015, the Company reported non-GAAP net income of $193.1 million, or $2.46 per diluted share, compared with non-GAAP net income of $210.4 million, or $2.76 per diluted common share for the comparable period in 2014. A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed below under “Non-GAAP Financial Measures.”

Chairman’s Comments

“We are excited to report that 2015 was our 20^th consecutive year of record net revenues. We completed two acquisitions: Sterne Agee in June, which added financial advisors and fixed income capabilities, and Barclays Wealth and Investment Management, Americas in December, which significantly expands our high net worth advisory business,” stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

“While the challenging market environment impacted fourth quarter activity, we plan to focus on optimizing our current capital base, managing our expense base, and taking the necessary steps to achieve our key financial targets. We will continue to selectively add capabilities and evaluate opportunities that further our strategic objectives. With a balanced business model, we believe we are well positioned to take advantage of opportunities ahead.”

Fourth Quarter 2015

Brokerage Revenues

Brokerage revenues, defined as commissions plus principal transactions, were $294.8 million, a 9% increase compared with the fourth quarter of 2014 and a 2% increase compared with the third quarter of 2015.

·	Global wealth management brokerage revenues were $166.3 million, a 4% increase compared with the fourth quarter of 2014 and a 2% decrease compared with the third quarter of 2015.

·	Institutional equity brokerage revenues were $54.8 million, a 19% decrease compared with the fourth quarter of 2014 and an 8% decrease compared with the third quarter of 2015.

·	Institutional fixed income brokerage revenues were $73.6 million, a 66% increase compared with the fourth quarter of 2014 and a 21% increase compared with the third quarter of 2015.

Investment Banking Revenues

Investment banking revenues were $102.8 million, a 40% decrease compared with the fourth quarter of 2014 and a 13% decrease compared with the third quarter of 2015.

·	Equity capital raising revenues were $40.5 million, a 15% decrease compared with the fourth quarter of 2014 and an 11% increase compared with the third quarter of 2015.

·	Fixed income capital raising revenues were $29.6 million, a 41% increase compared with the fourth quarter of 2014 and a 9% decrease compared with the third quarter of 2015.

·	Advisory fee revenues were $32.6 million, a 68% decrease compared with the fourth quarter of 2014 and a 34% decrease compared with the third quarter of 2015.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $129.3 million, a 22% increase compared with the fourth quarter of 2014 and a 1% decrease compared with the third quarter of 2015. The increase from the prior year 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 December 31, 2015, compensation and benefits expenses were $399.0 million, which included $21.5 million of merger-related expenses. This compares with $370.5 million in the fourth quarter of 2014 and $404.2 million in the third quarter of 2015.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 64.8% in the fourth quarter of 2015, compared with 61.5% in the fourth quarter of 2014 and 62.9% in the third quarter of 2015.

Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, was 3.9% of net revenues in the fourth quarter of 2015, compared with 4.0% in the fourth quarter of 2014 and 3.7% in the third quarter of 2015.

Non-Compensation Operating Expenses

For the quarter ended December 31, 2015, non-compensation operating expenses were $171.2 million, which included merger-related expenses of $23.6 million. This compares with $138.2 million in the fourth quarter of 2014 and $165.0 million in the third quarter of 2015.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended December 31, 2015 was 25.4%, compared with 23.0% in the fourth quarter of 2014 and 24.9% in the third quarter of 2015.

Provision for Income Taxes

The effective income tax rate for the quarter ended December 31, 2015 was impacted by the recognition of a U.S. tax benefit due to a realized loss on our investment in Sterne UK Ltd. The current quarter effective rate compares with 34.4% in the fourth quarter of 2014 and 23.1% in the third quarter of 2015.

Full-Year 2015

Brokerage Revenues

Brokerage revenues were $1.14 billion, a 4% increase compared to $1.10 billion in 2014.

·	Global wealth management brokerage revenues were $652.7 million, a 2% increase compared to $638.5 million in 2014.

·	Institutional equity brokerage revenues were $235.2 million, a 6.0% decrease compared to $250.2 million in 2014.

·	Institutional fixed income brokerage revenues were $251.0 million, a 19% increase compared to $211.4 million in 2014.

Investment Banking Revenues

Investment banking revenues were $503.1 million, an 11% decrease compared to $562.8 million in 2014.

·	Equity capital raising revenues were $177.5 million, an 18% decrease compared to $217.4 million in 2014.

·	Fixed income capital raising revenues were $130.1 million, an 81% increase compared to $71.9 million in 2014.

·	Advisory fee revenues were $195.5 million, a 29% decrease compared to $273.5 million in 2014.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $493.8 million, a 28% increase compared to $386.0 million in 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 year ended December 31, 2015, compensation and benefits expenses were $1.6 billion, which included $96.8 million of merger-related expenses, compared to $1.4 billion in 2014.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues for the year ended December 31, 2015 was 63.0%, compared with 62.3% in 2014. Transition pay as a percentage of net revenues for the year ended December 31, 2015 was 3.8%, compared with 4.4% in 2014.

Non-Compensation Operating Expenses

For the year ended December 31, 2015, non-compensation operating expenses were $621.2 million, which included merger-related expenses of $60.8 million, compared to $513.7 million in 2014.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the year ended December 31, 2015 was 24.0%, compared with 22.5% in 2014.

Provision for Income Taxes

The effective income tax rate for the year ended December 31, 2015 was 34.8% compared with 38.4% in 2014. The effective rate in 2015 was impacted by the recognition of a U.S. tax benefit due to a realized loss on our investment in Sterne UK Ltd.

Assets and Capital

Assets

Assets increased 40% to $13.3 billion as of December 31, 2015 from $9.5 billion as of December 31, 2014. The increase is attributable to growth of Stifel Bank, which as of December 31, 2015 has grown its assets to $7.3 billion from $5.2 billion as of December 31, 2014 and the acquisitions of Barclays Wealth and Investment Management, Americas and Sterne Agee in 2015.

At December 31, 2015, the Company’s Level 3 assets of $133.3 million, or 1% of total assets, consisted of $57.0 million of auction rate securities and $76.3 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 5% at December 31, 2015.

·	Non-performing assets as a percentage of total assets as of December 31, 2015 was 0.03%.

Capital

·	Stockholders’ equity as of December 31, 2015 increased $170.4 million, or 7%, to $2.49 billion from $2.32 billion as of December 31, 2014.

·	During the three months ended December 31, 2015, the Company repurchased 1.2 million shares for approximately $51.9 million bringing the total repurchases to 2.7 million shares for approximately $117.8 million in 2015.

·	At December 31, 2015, book value per common share was $37.19 based on 67.0 million common shares outstanding. This represents a 6% increase from December 31, 2014.

·	At December 31, 2015, the Company’s Tier 1 leverage capital and Tier 1 risk-based capital ratios were 16.6% and 25.4%, respectively, compared to 16.5% and 25.0%, respectively, at December 31, 2014.

Conference Call Information

Stifel Financial Corp. will host its fourth quarter and full-year 2015 financial results conference call on Tuesday, February 23, 2016, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #88941816. 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’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc., and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. 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. and 1919 Investment Counsel & Trust Company offer trust and related services. To learn more about Stifel, please visit the Company’s web site at www.stifel.com.

Forward-Looking Statements

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

Summary Results of Operations (Unaudited)
	Three Months Ended														Year Ended
(in thousands, except per share amounts)	12/31/15			12/31/14			% Change			9/30/15		% Change			12/31/15		12/31/14			% Change
Revenues:
Commissions	$	187,287		$	180,127			4.0		$	194,083		(3.5	)	$	749,536	$	690,197			8.6
Principal transactions		107,464			91,617			17.3			95,593		12.4			389,319		409,929			(5.0	)
Brokerage revenues		294,751			271,744			8.5			289,676		1.8			1,138,855		1,100,126			3.5
Investment banking		102,811			171,956			(40.2	)		118,753		(13.4	)		503,052		562,804			(10.6	)
Asset management and service fees		129,319			105,962			22.0			130,636		(1.0	)		493,761		386,001			27.9
Other income		18,251			(3,960	)		(560.9	)		18,930		(3.6	)		62,224		14,785			320.9
Operating revenues		545,132			545,702			(0.1	)		557,995		(2.3	)		2,197,892		2,063,716			6.5
Interest revenue		48,639			44,934			8.2			43,376		12.1			179,101		185,969			(3.7	)
Total revenues		593,771			590,636			0.5			601,371		(1.3	)		2,376,993		2,249,685			5.7
Interest expense		12,485			12,560			(0.6	)		9,796		27.4			45,399		41,261			10.0
Net revenues		581,286			578,076			0.6			591,575		(1.7	)		2,331,594		2,208,424			5.6
Non-interest expenses:
Compensation and benefits		398,966			370,454			7.7			404,205		(1.3	)		1,568,862		1,403,932			11.7
Occupancy and equipment rental		61,667			43,929			40.4			53,282		15.7			207,465		169,040			22.7
Communications and office supplies		34,652			28,775			20.4			35,678		(2.9	)		130,678		106,926			22.2
Commission and floor brokerage		10,895			8,308			31.1			12,430		(12.3	)		42,518		36,555			16.3
Other operating expenses		64,024			57,232			11.9			63,632		0.6			240,504		201,177			19.5
Total non-interest expenses		570,204			508,698			12.1			569,227		0.2			2,190,027		1,917,630			14.2
Income from continuing operations before income taxes		11,082			69,378			(84.0	)		22,348		(50.4	)		141,567		290,794			(51.3	)
Provision for income taxes		(90	)		23,890			(100.4	)		5,169		(101.7	)		49,231		111,664			(55.9	)
Net income from continuing operations		11,172			45,488			(75.4	)		17,179		(35.0	)		92,336		179,130			(48.5	)
Discontinued operations:
Loss from discontinued operations, net of tax		—			(306	)		(100.0	)		—		—			—		(3,063	)		(100.0	)
Net income	$	11,172		$	45,182			(75.3	)	$	17,179		(35.0	)	$	92,336	$	176,067			(47.6	)
Earnings per basic common share:
Income from continuing operations	$	0.16		$	0.67			(76.1	)	$	0.25		(36.0	)	$	1.35	$	2.69			(49.8	)
Loss from discontinued operations		—			—			—			—		—			—		(0.04	)		(100.0	)
Earnings per basic common share	$	0.16		$	0.67			(76.1	)	$	0.25		(36.0	)	$	1.35	$	2.65			(49.1	)
Earnings per diluted common share:
Income from continuing operations	$	0.14		$	0.59			(76.3	)	$	0.22		(36.4	)	$	1.18	$	2.35			(49.8	)
Loss from discontinued operations		—			(0.01	)		(100.0	)		—		—			—		(0.04	)		(100.0	)
Earnings per diluted common share	$	0.14		$	0.58			(75.9	)	$	0.22		(36.4	)	$	1.18	$	2.31			(48.9	)
Weighted average number of common shares outstanding:
Basic		68,150			66,851			1.9			69,633		(2.1	)		68,543		66,472			3.1
Diluted		79,355			77,540			2.3			79,759		(0.5	)		78,554		76,376			2.9

Statistical Information

(in thousands, except per share, employee and location amounts)
	12/31/15		12/31/14		% Change		9/30/15		% Change
Statistical Information:
Book value per share	$	37.19	$	35.00		6.3	$	36.63		1.5
Financial advisors ²		2,891		2,103		37.5		2,846		1.6
Full-time associates		7,133		6,223		14.6		6,865		3.9
Locations		402		367		9.5		391		2.8
Total client assets	$	234,070,000	$	186,558,000		25.5	$	205,085,000		14.1

Business Segment Results

Summary Segment Results (Unaudited)
	Three Months Ended															Year Ended
(in 000s)	12/31/15			12/31/14			% Change			9/30/15			% Change			12/31/15			12/31/14			% Change
Net revenues:
Global Wealth Management	$	347,216		$	310,980			11.7		$	357,306			(2.8	)	$	1,377,313		$	1,232,651			11.7
Institutional Group		246,325			276,222			(10.8	)		232,125			6.1			975,594			997,071			(2.2	)
Other		(12,255	)		(9,126	)		34.3			2,144		*				(21,313	)		(21,298	)		0.1
	$	581,286		$	578,076			0.6		$	591,575			(1.7	)	$	2,331,594		$	2,208,424			5.6
Operating contribution: ³
Global Wealth Management	$	92,077		$	84,178			9.4		$	97,227			(5.3	)	$	382,126		$	346,978			10.1
Institutional Group		40,917			47,734			(14.3	)		25,853			58.3			141,042			165,546			(14.8	)
Other		(75,701	)		(42,173	)		79.5			(51,128	)		48.1			(220,205	)		(175,252	)		25.7
	$	57,293		$	89,739			(36.2	)	$	71,952			(20.4	)	$	302,963		$	337,272			(10.2	)
As a percentage of net revenues:
Compensation and benefits
Global Wealth Management		57.1			58.0						57.1						56.7			57.1
Institutional Group		58.1			61.3						62.0						61.1			61.4
Non-comp. operating expenses
Global Wealth Management		16.4			14.9						15.7						15.7			14.8
Institutional Group		25.3			21.4						26.9						24.4			22.0
Income before income taxes³
Global Wealth Management		26.5			27.1						27.2						27.7			28.1
Institutional Group		16.6			17.3						11.1						14.5			16.6
		9.8			15.5						12.2						13.0			15.2

*	Percentage not meaningful.

²	Includes 719, 138, and 755 independent contractors at December 31, 2015, December 31, 2014, and September 30, 2015, respectively.

³	A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.”

Global Wealth Management Summary Results of Operations (Unaudited)
	Three Months Ended														Year Ended
(in 000s)	12/31/15			12/31/14			% Change			9/30/15		% Change			12/31/15		12/31/14		% Change
Revenues:
Commissions	$	128,395		$	115,351			11.3		$	134,476		(4.5	)	$	504,206	$	453,730		11.1
Principal transactions		37,944			44,761			(15.2	)		34,843		8.9			148,475		184,772		(19.6	)
Brokerage revenues		166,339			160,112			3.9			169,319		(1.8	)		652,681		638,502		2.2
Asset management and service fees		130,382			105,511			23.6			129,032		1.0			492,814		385,182		27.9
Net interest		42,187			40,236			4.8			36,326		16.1			154,389		154,694		(0.2	)
Investment banking		8,313			9,721			(14.5	)		10,146		(18.1	)		43,687		45,472		(3.9	)
Other income		(5	)		(4,600	)	*				12,483	*				33,742		8,801		283.4
Net revenues		347,216			310,980			11.7			357,306		(2.8	)		1,377,313		1,232,651		11.7
Non-interest expenses:
Compensation and benefits		198,137			180,491			9.8			203,959		(2.9	)		781,573		703,679		11.1
Non-compensation operating expenses		57,002			46,311			23.1			56,120		1.6			213,614		181,994		17.4
Total non-interest expenses		255,139			226,802			12.5			260,079		(1.9	)		995,187		885,673		12.4
Income before income taxes	$	92,077		$	84,178			9.4		$	97,227		(5.3	)	$	382,126	$	346,978		10.1
As a percentage of net revenues:
Compensation and benefits		57.1			58.0						57.1					56.7		57.1
Non-compensation operating expenses		16.4			14.9						15.7					15.6		14.8
Income before income taxes		26.5			27.1						27.2					27.7		28.1

*	Percentage not meaningful.

Stifel Bank & Trust (Unaudited)
Key Statistical Information
(in 000s, except percentages)	12/31/15			12/31/14			% Change		9/30/15			% Change
Other information:
Assets	$	7,275,308		$	5,237,970			38.9	$	4,619,093			57.5
Investment securities		3,479,336			2,684,947			29.6		1,749,590			98.9
Bank loans, net		3,449,662			2,298,929			50.1		2,706,074			27.5
Loans held for sale		189,921			121,939			55.8		179,588			5.8
Deposits		6,638,359			4,790,084			38.6		4,116,814			61.2
Allowance as a percentage of loans 4		0.90	%		0.94	%				1.08	%
Non-performing assets as a percentage of total assets		0.03	%		0.13	%				0.03	%

(4) Excluding acquired loans of $(*) million, the allowance as a percentage of loans totaled (*)% as of December 3, 2015.

Institutional Group Summary Results of Operations (Unaudited)
	Three Months Ended												Year Ended
(in 000s)	12/31/15		12/31/14		% Change			9/30/14		% Change			12/31/15		12/31/14		% Change
Revenues:
Commissions	$	58,891	$	59,622		(1.2	)	$	59,607		(1.2	)	$	241,528	$	224,046		7.8
Principal transactions		69,520		52,010		33.7			60,750		14.4			244,646		237,578		3.0
Brokerage revenues		128,411		111,632		15.0			120,357		6.7			486,174		461,624		5.3
Capital raising		61,766		58,200		6.1			59,466		3.9			264,858		243,229		8.9
Advisory fees		30,810		103,266		(70.2	)		49,142		(37.3	)		192,584		273,333		(29.5	)
Investment banking		92,576		161,466		(42.7	)		108,608		(14.8	)		457,442		516,562		(11.4	)
Other 5		25,338		3,124	*				3,160	*				31,978		18,885		69.3
Net revenues		246,325		276,222		(10.8	)		232,125		6.1			975,594		997,071		(2.2	)
Non-interest expenses:
Compensation and benefits		143,162		169,226		(15.4	)		143,911		(0.5	)		596,561		612,330		(2.6	)
Non-compensation operating expenses		62,246		59,262		5.0			62,361		(0.2	)		237,991		219,195		8.6
Total non-interest expenses		205,408		228,488		(10.1	)		206,272		(0.4	)		834,552		831,525		0.4
Income before income taxes	$	40,917	$	47,734		(14.3	)	$	25,853		58.3		$	141,042	$	165,546		(14.8	)
As a percentage of net revenues:
Compensation and benefits		58.1		61.3					62.0					61.1		61.4
Non-compensation operating expenses		25.3		21.4					26.9					24.4		22.0
Income before income taxes		16.6		17.3					11.1					14.5		16.6

*	Percentage not meaningful.

Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
	Three Months Ended												Year Ended
(in 000s)	12/31/15		12/31/14		% Change			9/30/15		% Change			12/31/15		12/31/14		% Change
Institutional brokerage:
Equity	$	54,837	$	67,377		(18.6	)	$	59,769		(8.2	)	$	235,155	$	250,224		(6.0	)
Fixed income		73,574		44,255		66.3			60,588		21.4			251,019		211,400		18.7
Institutional brokerage		128,411		111,632		15.0			120,357		6.7			486,174		461,624		5.3
Investment banking:
Capital raising:
Equity		38,499		38,866		(0.9	)		33,332		15.5			161,650		185,779		(13.0	)
Fixed income		23,267		19,334		20.3			26,134		(11.0	)		103,208		57,450		79.6
Capital raising		61,766		58,200		6.1			59,466		3.9			264,858		243,229		8.9
Advisory fees:		30,810		103,266		(70.2	)		49,142		(37.3	)		192,584		273,333		(29.5	)
Investment banking	$	92,576	$	161,466		(42.7	)	$	108,608		(14.8	)	$	457,442	$	516,562		(11.4	)

⁵	Includes net interest, asset management and service fees, and other income.

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 basic and diluted earnings per share as additional measures to aid in understanding and analyzing the Company’s financial results for the three and twelve months ended December 31, 2015. 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 primarily exclude acquisition related expenses which management believes are duplicative and will be eliminated, stock-based compensation and other expenses which in management’s view are not representative of on-going business.

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 basic 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 basic 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 basic and diluted earnings per share on a GAAP basis for the three and twelve months ended December 31, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.

	Three Months Ended December 31, 2015								Year Ended December 31, 2015
(in 000s, except per share amounts)	Non-GAAP		Adjustments			GAAP			Non-GAAP		Adjustments			GAAP
Net revenues	$	582,336	$	(1,050	)	$	581,286		$	2,335,387	$	(3,793	)	$	2,331,594
Non-interest expenses:
Compensation and benefits		377,427		21,539			398,966			1,472,090		96,772			1,568,862
Non-compensation operating expenses		147,616		23,622			171,238			560,334		60,831			621,165
Total non-interest expenses		525,043		45,161			570,204			2,032,424		157,603			2,190,027
Income from continuing operations before income taxes		57,293		(46,211	)		11,082			302,963		(161,396	)		141,567
Provision for income taxes		17,082		(17,172	)		(90	)		109,902		(60,671	)		49,231
Net income from continuing operations	$	40,211	$	(29,039	)	$	11,172		$	193,061	$	(100,725	)	$	92,336
Earnings per share::
Basic	$	0.59	$	(0.43	)	$	0.16		$	2.82	$	(1.47	)	$	1.35
Diluted	$	0.51	$	(0.37	)	$	0.14		$	2.46	$	(1.28	)	$	1.18
As a percentage of net revenues:
Compensation and benefits		64.8					68.6			63.0					67.3
Non-compensation operating expenses		25.4					29.5			24.0					26.6
Income before income taxes		9.8					1.9			13.0					6.1

Investor Relations

Sarah Anderson

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