EX-99.1 2 sf-ex991_8.htm EX-99.1 sf-ex991_8.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

STIFEL REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS

 

•

Record net revenues of $725.6 million, increased 11.3% compared with the year-ago quarter and 7.4% sequentially.

 

•

Record net revenues and pre-tax operating income in Global Wealth Management.

 

•

Record net revenues in Institutional Group.

 

•

Net income available to common shareholders of $50.5 million, or $0.63 per diluted common share.

 

•

Non-GAAP net income available to common shareholders of $71.6 million, or $0.90 per diluted common share.

 

•

Record client assets of $258.1 billion, increased 14.2% compared with the year-ago quarter and 2.2% sequentially.

ST. LOUIS, July 31, 2017 – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $50.5 million, or $0.63 per diluted common share on record net revenues of $725.6 million for the three months ended June 30, 2017, compared with net income available to common shareholders of $9.8 million, or $0.13 per diluted common share, on net revenues of $652.1 million for the second quarter of 2016.

For the three months ended June 30, 2017, the Company reported non-GAAP net income available to common shareholders of $71.6

million, or $0.90 per diluted common share.

For the six months ended June 30, 2017, the Company reported net income available to common shareholders of $113.6 million, or $1.41 per diluted common share on record net revenues of $1.4 billion, compared with net income available to common shareholders of $36.8 million, or $0.48 per diluted share, on net revenues of $1.3 billion for the comparable period in 2016.

For the six months ended June 30, 2017, the Company reported non-GAAP net income available to common shareholders of $131.2 million, or $1.63 per diluted common share.

Chairman’s Comments

“We had a very strong quarter as we generated our third consecutive quarter of record net revenue and our non-GAAP pre-tax margins reached 16.3%, the highest level since the fourth quarter of 2010.  Our revenues benefited from another record quarter from Global Wealth Management and record net revenue in our Institutional Group  driven by record investment banking revenues.  Given the increased contributions from more stable revenue streams such as our bank and fee-based accounts, Stifel’s top and bottom lines are much better positioned to withstand the cyclicality in certain of our more transactional businesses then we were just a few years ago.  Additionally, this quarter illustrated the positive impact that our investments in our investment banking franchise can have our top and bottom lines, despite the challenging environment for institutional brokerage,” stated Ronald J. Kruszewski, Chairman & CEO of Stifel.

Financial Highlights (Unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

(in 000s, except per share data)

 

6/30/17

 

 

6/30/16

 

 

3/31/17

 

 

 

Non-GAAP (1) 6/30/17

 

 

Non-GAAP (1) 6/30/17

 

 

Non-GAAP (1) 6/30/16

 

U.S. GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

725,647

 

 

$

652,145

 

 

$

675,531

 

 

 

$

725,647

 

 

$

1,403,162

 

 

$

1,272,119

 

Compensation ratio

 

 

62.5%

 

 

 

70.5%

 

 

 

64.6%

 

 

 

 

61.4%

 

 

 

61.9%

 

 

 

63.9%

 

Non-compensation ratio

 

 

26.0%

 

 

 

27.1%

 

 

 

23.7%

 

 

 

 

22.3%

 

 

 

22.6%

 

 

 

26.1%

 

Pre-tax operating margin

 

 

11.5%

 

 

 

2.4%

 

 

 

11.7%

 

 

 

 

16.3%

 

 

 

15.5%

 

 

 

10.0%

 

Net income

 

$

52,811

 

 

$

9,771

 

 

$

65,512

 

 

 

$

73,991

 

 

$

135,840

 

 

$

78,364

 

Preferred dividend

 

 

2,344

 

 

 

—

 

 

 

2,344

 

 

 

 

2,344

 

 

 

4,688

 

 

 

—

 

Net income available to common shareholders

 

$

50,467

 

 

$

9,771

 

 

$

63,168

 

 

 

$

71,647

 

 

$

131,152

 

 

$

78,364

 

Earnings per diluted common share

 

$

0.66

 

 

$

0.13

 

 

$

0.81

 

 

 

$

0.92

 

 

$

1.69

 

 

$

1.03

 

Earnings per diluted common share available to common shareholders

 

$

0.63

 

 

$

0.13

 

 

$

0.78

 

 

 

$

0.90

 

 

$

1.63

 

 

$

1.03

 


 

1

 

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $268.0 million, a 13.1% decrease compared with the second quarter of 2016 and an 8.3% decrease compared with the first quarter of 2017. Brokerage revenues generated by the Sterne businesses, which were sold in 2016, were $14.1 million during the second quarter of 2016.

 

Three Months Ended

 

(in 000s)

 

6/30/17

 

 

6/30/16

 

 

% Change

 

 

3/31/17

 

 

% Change

 

Global Wealth Management brokerage revenues

 

$

168,085

 

 

$

172,179

 

 

 

(2.4

)

 

$

171,494

 

 

 

(2.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

50,869

 

 

 

55,008

 

 

 

(7.5

)

 

 

53,820

 

 

 

(5.5

)

Fixed income

 

 

49,013

 

 

 

81,344

 

 

 

(39.7

)

 

 

66,817

 

 

 

(26.6

)

Total institutional brokerage

 

 

99,882

 

 

 

136,352

 

 

 

(26.7

)

 

 

120,637

 

 

 

(17.2

)

Total brokerage revenues

 

$

267,967

 

 

$

308,531

 

(2)

 

(13.1

)

 

$

292,131

 

 

 

(8.3

)

 

 

•

Global wealth management brokerage revenues were $168.1 million, a 2.4% decrease compared with the second quarter of 2016 and a 2.0% decrease compared with the first quarter of 2017. Excluding the revenues from the Sterne businesses, global wealth brokerage revenues for the second quarter of 2017 increased 5.5% compared to the second quarter of 2016.

 

•

Institutional equity brokerage revenues were $50.9 million, a 7.5% decrease compared with the second quarter of 2016 and a 5.5% decrease compared with the first quarter of 2017.

 

•

Institutional fixed income brokerage revenues were $49.0 million, a 39.7% decrease compared with the second quarter of 2016 and a 26.6% decrease compared with the first quarter of 2017.

Investment Banking Revenues

Investment banking revenues were $185.3 million, a 39.2% increase compared with the second quarter of 2016 and a 46.0% increase compared with the first quarter of 2017.

 

Three Months Ended

 

(in 000s)

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

 

3/31/17

 

 

% Change

 

Investment banking:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

56,970

 

 

 

 

$

37,638

 

 

 

 

 

51.4

 

 

$

45,649

 

 

 

24.8

 

Fixed income

 

 

45,830

 

 

 

 

 

28,774

 

 

 

 

 

59.3

 

 

 

28,267

 

 

 

62.1

 

Capital raising

 

 

102,800

 

 

 

 

 

66,412

 

 

 

 

 

54.8

 

 

 

73,916

 

 

 

39.1

 

Advisory fees:

 

 

82,461

 

 

 

 

 

66,713

 

 

 

 

 

23.6

 

 

 

52,936

 

 

 

55.8

 

Total investment banking

 

$

185,261

 

 

 

 

$

133,125

 

 

 

 

 

39.2

 

 

$

126,852

 

 

 

46.0

 

 

•

Equity capital raising revenues were $57.0 million, a 51.4% increase compared with the second quarter of 2016 and a 24.8% increase compared with the first quarter of 2017.

 

•

Fixed income capital raising revenues were $45.8 million, a 59.3% increase compared with the second quarter of 2016 and a 62.1% increase compared with the first quarter of 2017.

 

•

Advisory fee revenues were $82.5 million, a 23.6% increase compared with the second quarter of 2016 and a 55.8% increase compared with the first quarter of 2017.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $172.9 million, a 19.6% increase compared with the second quarter of 2016 and a 6.3% increase compared with the first quarter of 2017. The increase from the comparative period in 2016 is primarily attributable to the growth in the value of fee-based accounts and an increase in the Federal Funds rate, which increased fees earned on cash balances.


 

2

 

Net Interest Income

Record net interest income of $92.3 million, a 90.3% increase compared with the second quarter of 2016 and an 8.5% increase compared with the first quarter of 2017.

 

•

Interest income was $109.0 million, a 65.6% increase compared with the second quarter of 2016 and a 7.9% increase compared with the first quarter of 2017. Interest income was impacted by the continued growth of interest-earning assets.

 

•

Interest expense was $16.6 million, a 3.6% decrease compared with the second quarter of 2016 and a 4.7% increase compared with the first quarter of 2017.

Compensation and Benefits Expenses

For the quarter ended June 30, 2017, compensation and benefits expenses were $453.9 million, which included $8.0 million of merger-related and severance expenses. This compares with $460.0 million in the second quarter of 2016 and $436.4 million in the first quarter of 2017. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 61.4% in the second quarter of 2017.

 

 

Three Months Ended 6/30/17

 

 

Six Months Ended 6/30/17

 

GAAP compensation and benefits

 

$

453,876

 

 

$

890,263

 

As a percentage of net revenues

 

 

62.5

%

 

 

63.5

%

Non-GAAP adjustments: (3)

 

 

 

 

 

 

 

 

Merger-related

 

 

(5,551

)

 

 

(15,356

)

Severance

 

 

(2,420

)

 

 

(6,955

)

 

 

 

(7,971

)

 

 

(22,311

)

Non-GAAP compensation and benefits

 

$

445,905

 

 

$

867,952

 

As a percentage of non-GAAP net revenues

 

 

61.4

%

 

 

61.9

%

Non-Compensation Operating Expenses

For the quarter ended June 30, 2017, non-compensation operating expenses were $188.6 million, which included litigation and merger-related expenses of $26.8 million. This compares with $176.3 million in the second quarter of 2016 and $160.1 million in the first quarter of 2017. Excluding litigation and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2017 were 22.3%.

 

 

Three Months Ended 6/30/17

 

 

Six Months Ended 6/30/17

 

GAAP non-compensation expenses

 

$

188,573

 

 

$

348,698

 

As a percentage of net revenues

 

 

26.0

%

 

 

24.9

%

Non-GAAP adjustments: (3)

 

 

 

 

 

 

 

 

Litigation and merger-related

 

 

(26,849

)

 

 

(32,174

)

Non-GAAP non-compensation expenses

 

$

161,724

 

 

$

316,524

 

As a percentage of non-GAAP net revenues

 

 

22.3

%

 

 

22.6

%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended June 30, 2017 was 36.5%. This compares with an effective income tax rate of 38.1% for the second quarter of 2016 and 17.1% for the first quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended June 30, 2017 was 37.3%.

 

 

Three Months Ended 6/30/17

 

 

Six Months Ended 6/30/17

 

GAAP provision for income taxes

 

$

30,387

 

 

$

43,894

 

GAAP effective tax rate

 

 

36.5

%

 

 

27.1

%

Non-GAAP adjustments: (3)

 

 

 

 

 

 

 

 

Litigation and merger-related and severance

 

 

13,428

 

 

 

21,840

 

Excess tax benefits from stock-based compensation (4)

 

 

212

 

 

 

17,155

 

 

 

 

13,640

 

 

 

38,995

 

Non-GAAP provision for income taxes

 

$

44,027

 

 

$

82,889

 

Non-GAAP effective tax rate

 

 

37.3

%

 

 

37.9

%


 

3

 

Conference Call Information

Stifel Financial Corp. will host its second quarter 2017 financial results conference call on Monday, July 31, 2017, at 8:00 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 (877) 876-9938 and referencing conference ID #51914622. 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 Eaton Partners LLC, 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 Stifel Trust Company Delaware, N.A. 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.

 

 

4

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in 000s, except per share amounts)

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

 

 

 

3/31/17

 

 

 

 

% Change

 

 

 

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

172,264

 

 

 

 

$

182,104

 

 

 

 

 

(5.4

)

 

 

 

$

175,274

 

 

 

 

 

(1.7

)

 

 

 

$

347,538

 

 

 

 

$

380,034

 

 

 

 

 

(8.6

)

Principal transactions

 

 

95,703

 

 

 

 

 

126,426

 

 

 

 

 

(24.3

)

 

 

 

 

116,857

 

 

 

 

 

(18.1

)

 

 

 

 

212,560

 

 

 

 

 

247,374

 

 

 

 

 

(14.1

)

Brokerage Revenues

 

 

267,967

 

 

 

 

 

308,530

 

 

 

 

 

(13.1

)

 

 

 

 

292,131

 

 

 

 

 

(8.3

)

 

 

 

 

560,098

 

 

 

 

 

627,408

 

 

 

 

 

(10.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising

 

 

102,800

 

 

 

 

 

66,412

 

 

 

 

 

54.8

 

 

 

 

 

73,916

 

 

 

 

 

39.1

 

 

 

 

 

176,716

 

 

 

 

 

119,716

 

 

 

 

 

47.6

 

Advisory fees

 

 

82,461

 

 

 

 

 

66,713

 

 

 

 

 

23.6

 

 

 

 

 

52,936

 

 

 

 

 

55.8

 

 

 

 

 

135,397

 

 

 

 

 

114,067

 

 

 

 

 

18.7

 

Investment banking

 

 

185,261

 

 

 

 

 

133,125

 

 

 

 

 

39.2

 

 

 

 

 

126,852

 

 

 

 

 

46.0

 

 

 

 

 

312,113

 

 

 

 

 

233,783

 

 

 

 

 

33.5

 

Asset management and service fees

 

 

172,914

 

 

 

 

 

144,567

 

 

 

 

 

19.6

 

 

 

 

 

162,739

 

 

 

 

 

6.3

 

 

 

 

 

335,653

 

 

 

 

 

289,099

 

 

 

 

 

16.1

 

Other income

 

 

7,198

 

 

 

 

 

17,405

 

 

 

 

 

(58.6

)

 

 

 

 

8,752

 

 

 

 

 

(17.8

)

 

 

 

 

15,950

 

 

 

 

 

24,595

 

 

 

 

 

(35.1

)

Operating Revenue

 

 

633,340

 

 

 

 

 

603,627

 

 

 

 

 

4.9

 

 

 

 

 

590,474

 

 

 

 

 

7.3

 

 

 

 

 

1,223,814

 

 

 

 

 

1,174,885

 

 

 

 

 

4.2

 

Interest Revenue

 

 

108,951

 

 

 

 

 

65,780

 

 

 

 

 

65.6

 

 

 

 

 

100,953

 

 

 

 

 

7.9

 

 

 

 

 

209,904

 

 

 

 

 

128,607

 

 

 

 

 

63.2

 

Total Revenue

 

 

742,291

 

 

 

 

 

669,407

 

 

 

 

 

10.9

 

 

 

 

 

691,427

 

 

 

 

 

7.4

 

 

 

 

 

1,433,718

 

 

 

 

 

1,303,492

 

 

 

 

 

10.0

 

Interest Expense

 

 

16,644

 

 

 

 

 

17,262

 

 

 

 

 

(3.6

)

 

 

 

 

15,896

 

 

 

 

 

4.7

 

 

 

 

 

32,540

 

 

 

 

 

31,373

 

 

 

 

 

3.7

 

Net Revenue

 

 

725,647

 

 

 

 

 

652,145

 

 

 

 

 

11.3

 

 

 

 

 

675,531

 

 

 

 

 

7.4

 

 

 

 

 

1,401,178

 

 

 

 

 

1,272,119

 

 

 

 

 

10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

453,876

 

 

 

 

 

460,023

 

 

 

 

 

(1.3

)

 

 

 

 

436,387

 

 

 

 

 

4.0

 

 

 

 

 

890,263

 

 

 

 

 

871,136

 

 

 

 

 

2.2

 

Occupancy and equipment rental

 

 

57,892

 

 

 

 

 

58,746

 

 

 

 

 

(1.5

)

 

 

 

 

52,545

 

 

 

 

 

10.2

 

 

 

 

 

110,437

 

 

 

 

 

116,002

 

 

 

 

 

(4.8

)

Communication and office supplies

 

 

34,192

 

 

 

 

 

37,426

 

 

 

 

 

(8.6

)

 

 

 

 

33,844

 

 

 

 

 

1.0

 

 

 

 

 

68,036

 

 

 

 

 

74,086

 

 

 

 

 

(8.2

)

Commissions and floor brokerage

 

 

11,232

 

 

 

 

 

12,145

 

 

 

 

 

(7.5

)

 

 

 

 

10,723

 

 

 

 

 

4.7

 

 

 

 

 

21,955

 

 

 

 

 

23,876

 

 

 

 

 

(8.0

)

Provision for loan losses

 

 

5,856

 

 

 

 

 

1,824

 

 

 

 

 

221.1

 

 

 

 

 

6,134

 

 

 

 

 

(4.5

)

 

 

 

 

11,990

 

 

 

 

 

6,082

 

 

 

 

 

97.1

 

Other operating expenses

 

 

79,401

 

 

 

 

 

66,188

 

 

 

 

 

20.0

 

 

 

 

 

56,879

 

 

 

 

 

39.6

 

 

 

 

 

136,280

 

 

 

 

 

121,231

 

 

 

 

 

12.4

 

Total non-interest expenses

 

 

642,449

 

 

 

 

 

636,352

 

 

 

 

 

1.0

 

 

 

 

 

596,512

 

 

 

 

 

7.7

 

 

 

 

 

1,238,961

 

 

 

 

 

1,212,413

 

 

 

 

 

2.2

 

Income before income taxes

 

 

83,198

 

 

 

 

 

15,793

 

 

 

 

 

426.8

 

 

 

 

 

79,019

 

 

 

 

 

5.3

 

 

 

 

 

162,217

 

 

 

 

 

59,706

 

 

 

 

 

171.7

 

Provision for income taxes

 

 

30,387

 

 

 

 

 

6,022

 

 

 

 

 

404.6

 

 

 

 

 

13,507

 

 

 

 

 

125.0

 

 

 

 

 

43,894

 

 

 

 

 

22,880

 

 

 

 

 

91.8

 

Net income

 

 

52,811

 

 

 

 

 

9,771

 

 

 

 

 

440.5

 

 

 

 

 

65,512

 

 

 

 

 

(19.4

)

 

 

 

 

118,323

 

 

 

 

 

36,826

 

 

 

 

 

221.3

 

Preferred dividends

 

 

2,344

 

 

 

 

 

—

 

 

 

 

nm

 

 

 

 

 

2,344

 

 

 

 

nm

 

 

 

 

 

4,688

 

 

 

 

 

—

 

 

 

 

nm

 

Net income available to common shareholders

 

$

50,467

 

 

 

 

$

9,771

 

 

 

 

 

416.5

 

 

 

 

$

63,168

 

 

 

 

 

(20.1

)

 

 

 

$

113,635

 

 

 

 

$

36,826

 

 

 

 

 

208.6

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.74

 

 

 

 

$

0.15

 

 

 

 

 

393.3

 

 

 

 

$

0.92

 

 

 

 

 

(19.6

)

 

 

 

$

1.66

 

 

 

 

$

0.55

 

 

 

 

 

201.8

 

Diluted

 

$

0.63

 

 

 

 

$

0.13

 

 

 

 

 

384.6

 

 

 

 

$

0.78

 

 

 

 

 

(19.2

)

 

 

 

$

1.41

 

 

 

 

$

0.48

 

 

 

 

 

193.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

68,556

 

 

 

 

 

66,792

 

 

 

 

 

2.6

 

 

 

 

 

68,386

 

 

 

 

 

0.2

 

 

 

 

 

68,471

 

 

 

 

 

67,186

 

 

 

 

 

1.9

 

Diluted

 

 

80,021

 

 

 

 

 

75,982

 

 

 

 

 

5.3

 

 

 

 

 

80,695

 

 

 

 

 

(0.8

)

 

 

 

 

80,391

 

 

 

 

 

76,084

 

 

 

 

 

5.7

 

 


 

5

 

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

(in 000s)

 

6/30/17

 

 

6/30/16

 

 

 

 

% Change

 

 

3/31/17

 

 

% Change

 

 

6/30/17

 

 

6/30/16

 

 

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

451,990

 

 

$

386,039

 

 

 

 

 

17.1

 

 

$

442,732

 

 

 

2.1

 

 

$

894,722

 

 

$

765,843

 

 

 

 

 

16.8

 

Institutional Group

 

 

276,153

 

 

 

260,920

 

 

 

 

 

5.8

 

 

 

237,467

 

 

 

16.3

 

 

 

513,620

 

 

 

502,196

 

 

 

 

 

2.3

 

Other

 

 

(2,496

)

 

 

5,186

 

 

 

 

 

(148.1

)

 

 

(4,668

)

 

 

(46.5

)

 

 

(7,164

)

 

 

4,080

 

 

 

 

 

(275.6

)

Total net revenues

 

$

725,647

 

 

$

652,145

 

 

 

 

 

11.3

 

 

$

675,531

 

 

 

7.4

 

 

$

1,401,178

 

 

$

1,272,119

 

 

 

 

 

10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

298,753

 

 

$

280,986

 

 

 

 

 

6.3

 

 

$

300,680

 

 

 

(0.6

)

 

$

599,433

 

 

$

567,456

 

 

 

 

 

5.6

 

Institutional Group

 

 

223,261

 

 

 

218,506

 

 

 

 

 

2.2

 

 

 

197,595

 

 

 

13.0

 

 

 

420,856

 

 

 

430,491

 

 

 

 

 

(2.2

)

Other

 

 

120,435

 

 

 

136,860

 

 

 

 

 

(12.0

)

 

 

98,237

 

 

 

22.6

 

 

 

218,672

 

 

 

214,466

 

 

 

 

 

2.0

 

Total operating expenses

 

$

642,449

 

 

$

636,352

 

 

 

 

 

1.0

 

 

$

596,512

 

 

 

7.7

 

 

$

1,238,961

 

 

$

1,212,413

 

 

 

 

 

2.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

153,237

 

 

$

105,053

 

 

 

 

 

45.9

 

 

$

142,052

 

 

 

7.9

 

 

$

295,289

 

 

$

198,387

 

 

 

 

 

48.8

 

Institutional Group

 

 

52,892

 

 

 

42,414

 

 

 

 

 

24.7

 

 

 

39,872

 

 

 

32.7

 

 

 

92,764

 

 

 

71,705

 

 

 

 

 

29.4

 

Other

 

 

(122,931

)

 

 

(131,674

)

 

 

 

 

(6.6

)

 

 

(102,905

)

 

 

19.5

 

 

 

(225,836

)

 

 

(210,386

)

 

 

 

 

7.3

 

Income before income taxes

 

$

83,198

 

 

$

15,793

 

 

 

 

 

426.8

 

 

$

79,019

 

 

 

5.3

 

 

$

162,217

 

 

$

59,706

 

 

 

 

 

171.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

50.7

 

 

 

56.6

 

 

 

 

 

 

 

 

 

51.6

 

 

 

 

 

 

 

51.1

 

 

 

57.4

 

 

 

 

 

 

 

Institutional Group

 

 

59.6

 

 

 

58.8

 

 

 

 

 

 

 

 

 

60.5

 

 

 

 

 

 

 

60.0

 

 

 

60.5

 

 

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

15.4

 

 

 

16.2

 

 

 

 

 

 

 

 

 

16.3

 

 

 

 

 

 

 

15.9

 

 

 

16.7

 

 

 

 

 

 

 

Institutional Group

 

 

21.2

 

 

 

25.0

 

 

 

 

 

 

 

 

 

22.7

 

 

 

 

 

 

 

21.9

 

 

 

25.2

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

33.9

 

 

 

27.2

 

 

 

 

 

 

 

 

 

32.1

 

 

 

 

 

 

 

33.0

 

 

 

25.9

 

 

 

 

 

 

 

Institutional Group

 

 

19.2

 

 

 

16.2

 

 

 

 

 

 

 

 

 

16.8

 

 

 

 

 

 

 

18.1

 

 

 

14.3

 

 

 

 

 

 

 

Consolidated pre-tax margin (5) (6)

 

 

11.5

 

 

 

2.4

 

 

 

 

 

 

 

 

 

11.7

 

 

 

 

 

 

 

11.6

 

 

 

4.7

 

 

 

 

 

 

 

 


 

6

 

 

Stifel Financial Corp.

 

Selected Key Metrics

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Financial metrics:

As of and For the Three Months Ended

 

(in 000s, except percentages)

6/30/17

 

6/30/16

 

3/31/17

 

Total assets

$

19,533,575

 

$

15,385,602

 

$

19,135,892

 

Total equity

 

2,845,309

 

 

2,490,865

 

 

2,777,903

 

Book value per common share

$

39.47

 

$

37.41

 

$

38.40

 

Return on common equity (7)

 

7.9

%

 

1.6

%

 

10.0

%

Non-GAAP return on common equity (1) (7)

 

11.1

%

 

8.5

%

 

9.5

%

Return on tangible common equity (8)

 

13.4

%

 

2.8

%

 

17.2

%

Non-GAAP return on tangible common equity (1) (8)

 

18.8

%

 

15.1

%

 

16.2

%

Tier 1 common capital ratio (9)

 

18.2

%

 

20.2

%

 

18.4

%

Tier 1 risk based capital ratio (9)

 

20.5

%

 

20.6

%

 

20.8

%

Tier 1 leverage capital ratio (9)

 

10.3

%

 

11.5

%

 

10.1

%

Pre-tax margin on net revenues

 

11.5

%

 

2.4

%

 

11.7

%

Non-GAAP pre-tax margin on net revenues (1)

 

16.3

%

 

12.9

%

 

14.9

%

Effective tax rate

 

36.5

%

 

38.1

%

 

17.1

%

Non-GAAP effective tax rate (1)

 

37.3

%

 

38.1

%

 

38.6

%

 

 

(in 000s, except per share amounts)

 

6/30/17

 

 

6/30/16

 

 

% Change

 

 

3/31/17

 

 

% Change

 

Statistical Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial advisors (10)

 

 

2,277

 

 

 

2,291

 

(11)

 

(0.6

)

 

 

2,299

 

 

 

(1.0

)

Locations

 

 

399

 

 

 

400

 

 

 

(0.3

)

 

 

399

 

 

 

—

 

Total client assets

 

$

258,097,000

 

 

$

225,983,000

 

(11)

 

14.2

 

 

$

252,448,000

 

 

 

2.2

 

Fee-based client assets

 

$

79,177,000

 

 

$

65,491,000

 

 

 

20.9

 

 

$

75,414,000

 

 

 

5.0

 

Client money market and insured product

 

$

17,831,000

 

 

$

17,674,000

 

 

 

0.9

 

 

$

19,058,000

 

 

 

(6.4

)

Secured client lending (12)

 

$

2,999,461

 

 

$

2,657,313

 

 

 

12.9

 

 

$

2,962,936

 

 

 

1.2

 


 

7

 

 

Stifel Bank & Trust - a component of Global Wealth Management

 

Selected Key Metrics

 

(Unaudited)

 

Selected operating data:

Three Months Ended

 

 

Six Months Ended

 

(in 000s, except percentages)

6/30/17

 

 

6/30/16

 

 

% Change

 

 

3/31/17

 

 

% Change

 

 

6/30/17

 

 

6/30/16

 

 

% Change

 

Net Interest Income

$

90,795

 

 

$

48,536

 

 

 

87.1

 

 

$

85,710

 

 

 

5.9

 

 

$

174,814

 

 

$

94,287

 

 

 

85.4

 

Bank loan loss provision

 

5,856

 

 

 

1,824

 

 

 

221.1

 

 

 

6,134

 

 

 

(4.5

)

 

 

11,991

 

 

 

6,082

 

 

 

97.2

 

Net charge-offs

 

2,953

 

 

 

—

 

 

n/m

 

 

 

—

 

 

n/m

 

 

 

2,953

 

 

 

—

 

 

n/m

 

Net Interest Margin

 

2.77

%

 

 

2.34

%

 

 

18.4

 

 

 

2.66

%

 

 

4.1

 

 

 

2.71

%

 

 

2.40

%

 

 

12.9

 

 

Financial Metrics:

 

As of

 

(in 000s, except percentages)

 

6/30/17

 

 

6/30/16

 

 

3/31/17

 

Total Assets

 

$

13,598,260

 

 

$

9,262,027

 

 

$

13,232,940

 

Total Equity

 

 

978,626

 

 

 

613,325

 

 

 

931,913

 

Total Loans, net

 

 

6,299,669

 

 

 

4,421,583

 

 

 

6,071,272

 

Total Deposits

 

 

12,050,474

 

 

 

7,881,219

 

 

 

11,700,961

 

Available-for-sale securities, at fair value

 

 

3,448,548

 

 

 

2,464,018

 

 

 

3,371,187

 

Held-to-maturity securities, at amortized cost

 

 

3,304,090

 

 

 

2,115,734

 

 

 

3,185,813

 

Residential real estate

 

 

2,248,528

 

 

 

1,228,234

 

 

 

2,214,356

 

Commercial and industrial

 

 

2,064,052

 

 

 

1,424,671

 

 

 

1,830,865

 

Securities-based loans

 

 

1,755,592

 

 

 

1,418,986

 

 

 

1,728,516

 

Commercial real estate

 

 

71,517

 

 

 

83,628

 

 

 

78,522

 

Loans held for sale

 

 

139,676

 

 

 

250,725

 

 

 

206,724

 

Common equity tier 1 capital ratio (9)

 

 

14.9

%

 

 

13.7

%

 

 

15.4

%

Tier 1 capital ratio (9)

 

 

14.9

%

 

 

13.7

%

 

 

15.4

%

Total capital ratio (9)

 

 

15.7

%

 

 

14.5

%

 

 

16.2

%

Tier 1 leverage ratio (9)

 

 

7.2

%

 

 

7.4

%

 

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

54,202

 

 

$

35,866

 

 

$

51,298

 

Allowance as a percentage of retained loans

 

 

0.88

%

 

 

0.86

%

 

 

0.87

%

Net charge-offs as a percentage of average loans

 

 

0.05

%

 

 

0.00

%

 

 

0.00

%

Total nonperforming assets

 

 

21,219

 

 

 

34,919

 

 

 

28,036

 

Nonperforming assets as % of total assets

 

 

0.15

%

 

 

0.37

%

 

 

0.21

%


 

8

 

 


Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in 000s)

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

 

 

 

3/31/17

 

 

% Change

 

 

 

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

120,344

 

 

 

 

$

127,241

 

 

 

 

 

(5.4

)

 

 

 

$

120,577

 

 

 

(0.2

)

 

 

 

$

240,921

 

 

 

 

$

258,794

 

 

 

 

 

(6.9

)

Principal transactions

 

 

47,741

 

 

 

 

 

44,938

 

 

 

 

 

6.2

 

 

 

 

 

50,917

 

 

 

(6.2

)

 

 

 

 

98,658

 

 

 

 

 

86,349

 

 

 

 

 

14.3

 

Brokerage revenues

 

 

168,085

 

 

 

 

 

172,179

 

 

 

 

 

(2.4

)

 

 

 

 

171,494

 

 

 

(2.0

)

 

 

 

 

339,579

 

 

 

 

 

345,143

 

 

 

 

 

(1.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

172,889

 

 

 

 

 

144,360

 

 

 

 

 

19.8

 

 

 

 

 

162,664

 

 

 

6.3

 

 

 

 

 

335,553

 

 

 

 

 

288,712

 

 

 

 

 

16.2

 

Net interest

 

 

95,698

 

 

 

 

 

54,246

 

 

 

 

 

76.4

 

 

 

 

 

89,695

 

 

 

6.7

 

 

 

 

 

185,393

 

 

 

 

 

106,055

 

 

 

 

 

74.8

 

Investment banking

 

 

10,641

 

 

 

 

 

9,502

 

 

 

 

 

12.0

 

 

 

 

 

11,854

 

 

 

(10.2

)

 

 

 

 

22,495

 

 

 

 

 

17,911

 

 

 

 

 

25.6

 

Other income

 

 

4,677

 

 

 

 

 

5,752

 

 

 

 

 

(18.7

)

 

 

 

 

7,025

 

 

 

(33.4

)

 

 

 

 

11,702

 

 

 

 

 

8,022

 

 

 

 

 

45.9

 

Net revenues

 

 

451,990

 

 

 

 

 

386,039

 

 

 

 

 

17.1

 

 

 

 

 

442,732

 

 

 

2.1

 

 

 

 

 

894,722

 

 

 

 

 

765,843

 

 

 

 

 

16.8

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

229,158

 

 

 

 

 

218,553

 

 

 

 

 

4.9

 

 

 

 

 

228,471

 

 

 

0.3

 

 

 

 

 

457,629

 

 

 

 

 

439,968

 

 

 

 

 

4.0

 

Non-compensation operating expenses

 

 

69,595

 

 

 

 

 

62,433

 

 

 

 

 

11.5

 

 

 

 

 

72,209

 

 

 

(3.6

)

 

 

 

 

141,804

 

 

 

 

 

127,488

 

 

 

 

 

11.2

 

Total non-interest expenses

 

 

298,753

 

 

 

 

 

280,986

 

 

 

 

 

6.3

 

 

 

 

 

300,680

 

 

 

(0.6

)

 

 

 

 

599,433

 

 

 

 

 

567,456

 

 

 

 

 

5.6

 

Income before income taxes

 

$

153,237

 

 

 

 

$

105,053

 

 

 

 

 

45.9

 

 

 

 

$

142,052

 

 

 

7.9

 

 

 

 

$

295,289

 

 

 

 

$

198,387

 

 

 

 

 

48.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

50.7

 

 

 

 

 

56.6

 

 

 

 

 

 

 

 

 

 

 

51.6

 

 

 

 

 

 

 

 

 

51.1

 

 

 

 

 

57.4

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

15.4

 

 

 

 

 

16.2

 

 

 

 

 

 

 

 

 

 

 

16.3

 

 

 

 

 

 

 

 

 

15.9

 

 

 

 

 

16.7

 

 

 

 

 

 

 

Income before income taxes

 

 

33.9

 

 

 

 

 

27.2

 

 

 

 

 

 

 

 

 

 

 

32.1

 

 

 

 

 

 

 

 

 

33.0

 

 

 

 

 

25.9

 

 

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

(in 000s)

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

 

 

 

3/31/17

 

 

% Change

 

 

 

 

6/30/17

 

 

 

 

6/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

51,920

 

 

 

 

$

54,864

 

 

 

 

 

(5.4

)

 

 

 

$

54,697

 

 

 

(5.1

)

 

 

 

$

106,617

 

 

 

 

$

121,240

 

 

 

 

 

(12.1

)

Principal transactions

 

 

47,962

 

 

 

 

 

81,488

 

 

 

 

 

(41.1

)

 

 

 

 

65,940

 

 

 

(27.3

)

 

 

 

 

113,902

 

 

 

 

 

161,026

 

 

 

 

 

(29.3

)

Brokerage revenues

 

 

99,882

 

 

 

 

 

136,352

 

 

 

 

 

(26.7

)

 

 

 

 

120,637

 

 

 

(17.2

)

 

 

 

 

220,519

 

 

 

 

 

282,266

 

 

 

 

 

(21.9

)

Capital raising

 

 

92,159

 

 

 

 

 

56,100

 

 

 

 

 

64.3

 

 

 

 

 

62,062

 

 

 

48.5

 

 

 

 

 

154,221

 

 

 

 

 

100,995

 

 

 

 

 

52.7

 

Advisory fees

 

 

82,461

 

 

 

 

 

67,523

 

 

 

 

 

22.1

 

 

 

 

 

52,936

 

 

 

55.8

 

 

 

 

 

135,397

 

 

 

 

 

114,876

 

 

 

 

 

17.9

 

Investment banking

 

 

174,620

 

 

 

 

 

123,623

 

 

 

 

 

41.3

 

 

 

 

 

114,998

 

 

 

51.8

 

 

 

 

 

289,618

 

 

 

 

 

215,871

 

 

 

 

 

34.2

 

Other (13)

 

 

1,651

 

 

 

 

 

945

 

 

 

 

 

74.7

 

 

 

 

 

1,832

 

 

 

(9.9

)

 

 

 

 

3,483

 

 

 

 

 

4,059

 

 

 

 

 

(14.2

)

Net revenues

 

 

276,153

 

 

 

 

 

260,920

 

 

 

 

 

5.8

 

 

 

 

 

237,467

 

 

 

16.3

 

 

 

 

 

513,620

 

 

 

 

 

502,196

 

 

 

 

 

2.3

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

164,532

 

 

 

 

 

153,371

 

 

 

 

 

7.3

 

 

 

 

 

143,640

 

 

 

14.5

 

 

 

 

 

308,172

 

 

 

 

 

303,989

 

 

 

 

 

1.4

 

Non-compensation operating expenses

 

 

58,729

 

 

 

 

 

65,135

 

 

 

 

 

(9.8

)

 

 

 

 

53,955

 

 

 

8.8

 

 

 

 

 

112,684

 

 

 

 

 

126,502

 

 

 

 

 

(10.9

)

Total non-interest expenses

 

 

223,261

 

 

 

 

 

218,506

 

 

 

 

 

2.2

 

 

 

 

 

197,595

 

 

 

13.0

 

 

 

 

 

420,856

 

 

 

 

 

430,491

 

 

 

 

 

(2.2

)

Income before income taxes

 

$

52,892

 

 

 

 

$

42,414

 

 

 

 

 

24.7

 

 

 

 

$

39,872

 

 

 

32.7

 

 

 

 

$

92,764

 

 

 

 

$

71,705

 

 

 

 

 

29.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

59.6

 

 

 

 

 

58.8

 

 

 

 

 

 

 

 

 

 

 

60.5

 

 

 

 

 

 

 

 

 

60.0

 

 

 

 

 

60.5

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

21.2

 

 

 

 

 

25.0

 

 

 

 

 

 

 

 

 

 

 

22.7

 

 

 

 

 

 

 

 

 

21.9

 

 

 

 

 

25.2

 

 

 

 

 

 

 

Income before income taxes

 

 

19.2

 

 

 

 

 

16.2

 

 

 

 

 

 

 

 

 

 

 

16.8

 

 

 

 

 

 

 

 

 

18.1

 

 

 

 

 

14.3

 

 

 

 

 

 

 

 


 

9

 

Non-GAAP Financial Measures

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the three and six months ended June 30, 2017 and 2016. 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. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these 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 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 income and earnings per diluted common share on a GAAP basis for the three and six months ended June 30, 2017 and 2016 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

 

 

Three Months Ended

 

 

Six Months Ended

 

(in 000s)

 

6/30/17

 

 

6/30/16

 

 

3/31/17

 

 

6/30/17

 

 

6/30/16

 

GAAP net income

 

$

52,811

 

 

$

9,771

 

 

$

65,512

 

 

$

118,323

 

 

$

36,826

 

Preferred dividend

 

 

2,344

 

 

 

—

 

 

 

2,344

 

 

 

4,688

 

 

 

—

 

Net income available to common shareholders

 

 

50,467

 

 

 

9,771

 

 

 

63,168

 

 

 

113,635

 

 

 

36,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related (14)

 

 

12,400

 

 

 

53,934

 

 

 

17,114

 

 

 

29,514

 

 

 

67,344

 

Litigation-related (15)

 

 

20,000

 

 

 

—

 

 

 

—

 

 

 

20,000

 

 

 

—

 

Severance

 

 

2,420

 

 

 

—

 

 

 

4,535

 

 

 

6,955

 

 

 

—

 

Provision for income taxes

 

 

(13,640

)

 

 

(20,536

)

 

 

(25,355

)

 

 

(38,952

)

 

 

(25,806

)

Total non-GAAP adjustments

 

 

21,180

 

 

 

33,398

 

 

 

(3,706

)

 

 

17,517

 

 

 

41,538

 

Non-GAAP net income available to common shareholders

 

$

71,647

 

 

$

43,169

 

 

$

59,462

 

 

$

131,152

 

 

$

78,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

80,021

 

 

 

75,982

 

 

 

80,695

 

 

 

80,391

 

 

 

76,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

0.66

 

 

$

0.13

 

 

$

0.81

 

 

$

1.47

 

 

$

0.48

 

Non-GAAP adjustments

 

 

0.26

 

 

 

0.44

 

 

 

(0.04

)

 

 

0.22

 

 

 

0.55

 

Non-GAAP earnings per diluted common share

 

$

0.92

 

 

$

0.57

 

 

$

0.77

 

 

$

1.69

 

 

$

1.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

0.63

 

 

$

0.13

 

 

$

0.78

 

 

$

1.41

 

 

$

0.48

 

Non-GAAP adjustments

 

 

0.27

 

 

 

0.44

 

 

 

(0.04

)

 

 

0.22

 

 

 

0.55

 

Non-GAAP earnings per diluted common share available to common shareholders

 

$

0.90

 

 

$

0.57

 

 

$

0.74

 

 

$

1.63

 

 

$

1.03

 

 


 

10

 

Footnotes

 

(1)

Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.”

 

(2)

Excludes brokerage revenues included in the Other segment.

 

(3)

See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.”

 

(4)

During the first quarter of 2017, the Company adopted new accounting guidance associated with stock-based compensation.

 

(5)

Non-GAAP pre-tax margin for the three months ended June 30, 2017 of 16.3% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $34.8 million to our GAAP income before income taxes of $83.2 million and dividing it by non-GAAP net revenues for the quarter of $725.6 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(6)

Non-GAAP pre-tax margin for the six months ended June 30, 2017 of 15.5% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $56.5 million to our GAAP income before income taxes of $162.2 million and dividing it by non-GAAP net revenues for the quarter of $1,401.2 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(7)

Computed by dividing annualized net income by average common shareholders’ equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average common shareholders’ equity.

 

(8)

Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total common shareholders' equity less goodwill and identifiable intangible assets.

 

(9)

Capital ratios are estimates at time of the Company’s earning release.

 

(10)

Includes 119, 127, and 121 independent contractors at June 30, 2017, June 30, 2016, and March 31, 2017, respectively.

 

(11)

On July 1, 2016, we sold the independent contractor business acquired with the Sterne Agee transaction in June 2015. As of June 30, 2016, there were 540 independent contractors included in the disposed business unit and $11.5 billion of total client assets. These numbers have been excluded from the table.

 

(12)

Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank.

 

(13)

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

 

(14)

Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company’s on-going business.

 

(15)

Primarily related to costs associated with the Company’s previously disclosed legal matters.

 

Investor Relations

Joel Jeffrey

(212) 271-3610, investorrelations@stifel.com

 

 

11