EX-99.1 2 sf-ex991_7.htm EX-99.1 sf-ex991_7.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

STIFEL REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS

 

•

Net revenues of $721.2 million, increased 12.3% compared with the year-ago quarter and decreased 0.6% sequentially.

 

•

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

 

•

Record pre-tax operating margin in Institutional Group.

 

•

Net income available to common shareholders of $64.2 million, or $0.79 per diluted common share.

 

•

Non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.

 

•

Record client assets of $264.7 billion, increased 12.9% compared with the year-ago quarter and 2.6% sequentially.

 

•

Payment of regular quarterly dividend of $0.10 per common share.

 

•

Issuance of $225 million of Senior Notes (settled in October 2017).

 

•

Assets of $20.5 billion, increased 4.9% from June 30, 2017.

 

•

Bank net interest margin of 2.80% increased 3 basis points sequentially.

ST. LOUIS, October 30, 2017 – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $64.2 million, or $0.79 per diluted common share on net revenues of $721.2 million for the three months ended September 30, 2017, compared with net income available to common shareholders of $16.3 million, or $0.21 per diluted common share, on net revenues of $642.0 million for the third quarter of 2016.

For the three months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.

For the nine months ended September 30, 2017, the Company reported net income available to common shareholders of $177.8 million, or $2.21 per diluted common share on record net revenues of $2.1 billion, compared with net income available to common shareholders of $53.1 million, or $0.69 per diluted share, on net revenues of $1.9 billion for the comparable period in 2016.

For the nine months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $202.8 million, or $2.52 per diluted common share.

Chairman’s Comments

“We are pleased with our results in the third quarter, as we generated the second highest quarterly revenue in our firm’s history, down modestly from our record results in the previous quarter.  Additionally, we generated our highest pre-tax operating margin in nearly seven years during the quarter as our focus on expense management continues to improve our bottom line growth.  Less than two years ago, I commented that we would focus on optimizing our existing business to deliver stronger top and bottom line results.  Our performance in the third quarter underscores the progress we’ve made in a relatively short period of time as the investments we made in the business in the past few years continue to drive growth despite market cyclicality,”  stated Ronald J. Kruszewski, Chairman & CEO of Stifel.

 

Financial Highlights (Unaudited)

 

Three Months Ended

 

(in 000s, except per share data)

 

GAAP  9/30/17

 

 

GAAP 9/30/16

 

 

% Change

 

 

GAAP 6/30/17

 

 

% Change

 

 

 

Non-GAAP (1) 9/30/17

 

 

Non-GAAP (1) 6/30/17

 

 

% Change

 

Net revenues

 

$

721,169

 

 

$

641,986

 

 

 

12.3

 

 

$

725,647

 

 

 

(0.6

)

 

 

$

721,169

 

 

$

725,647

 

 

 

(0.6

)

Net income

 

$

66,536

 

 

$

17,814

 

 

 

273.5

 

 

$

52,811

 

 

 

26.0

 

 

 

$

73,949

 

 

$

73,991

 

 

 

(0.1

)

Preferred dividend

 

 

2,343

 

 

 

1,563

 

 

 

49.9

 

 

 

2,344

 

 

 

(0.0

)

 

 

 

2,343

 

 

 

2,344

 

 

 

(0.0

)

Net income available to common shareholders

 

$

64,193

 

 

$

16,251

 

 

 

295.0

 

 

$

50,467

 

 

 

27.2

 

 

 

$

71,606

 

 

$

71,647

 

 

 

(0.1

)

Earnings per diluted common share

 

$

0.82

 

 

$

0.23

 

 

 

256.5

 

 

$

0.66

 

 

 

24.2

 

 

 

$

0.91

 

 

$

0.92

 

 

 

(1.1

)

Earnings per diluted common share available to common shareholders

 

$

0.79

 

 

$

0.21

 

 

 

276.2

 

 

$

0.63

 

 

 

25.4

 

 

 

$

0.89

 

 

$

0.90

 

 

 

(1.1

)

Compensation ratio

 

 

62.2%

 

 

 

67.6%

 

 

 

 

 

 

 

62.5%

 

 

 

 

 

 

 

 

61.1%

 

 

 

61.4%

 

 

 

 

 

Non-compensation ratio

 

 

22.8%

 

 

 

28.0%

 

 

 

 

 

 

 

26.0%

 

 

 

 

 

 

 

 

22.1%

 

 

 

22.3%

 

 

 

 

 

Pre-tax operating margin

 

 

15.0%

 

 

 

4.4%

 

 

 

 

 

 

 

11.5%

 

 

 

 

 

 

 

 

16.8%

 

 

 

16.3%

 

 

 

 

 

 

 

1

 

Financial Highlights (Unaudited)

 

Nine Months Ended

 

(in 000s, except per share data)

 

GAAP 9/30/17

 

 

GAAP 9/30/16

 

 

% Change

 

 

 

Non-GAAP (1) 9/30/17

 

 

Non-GAAP (1) 9/30/16

 

 

% Change

 

Net revenues

 

$

2,122,347

 

 

$

1,914,105

 

 

 

10.9

 

 

 

$

2,124,331

 

 

$

1,918,207

 

 

 

10.7

 

Net income

 

$

184,859

 

 

$

54,640

 

 

 

238.3

 

 

 

$

209,789

 

 

$

133,083

 

 

 

57.6

 

Preferred dividend

 

 

7,031

 

 

 

1,563

 

 

 

349.8

 

 

 

 

7,031

 

 

 

1,563

 

 

 

349.8

 

Net income available to common shareholders

 

$

177,828

 

 

$

53,077

 

 

 

235.0

 

 

 

$

202,758

 

 

$

131,520

 

 

 

54.2

 

Earnings per diluted common share

 

$

2.29

 

 

$

0.71

 

 

 

222.5

 

 

 

$

2.60

 

 

$

1.74

 

 

 

49.4

 

Earnings per diluted common share available to common shareholders

 

$

2.21

 

 

$

0.69

 

 

 

220.3

 

 

 

$

2.52

 

 

$

1.72

 

 

 

46.5

 

Compensation ratio

 

 

63.1%

 

 

 

68.2%

 

 

 

 

 

 

 

 

61.6%

 

 

 

63.0%

 

 

 

 

 

Non-compensation ratio

 

 

24.2%

 

 

 

27.2%

 

 

 

 

 

 

 

 

22.4%

 

 

 

24.2%

 

 

 

 

 

Pre-tax operating margin

 

 

12.7%

 

 

 

4.6%

 

 

 

 

 

 

 

 

16.0%

 

 

 

12.8%

 

 

 

 

 

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $249.6 million, a 13.4% decrease compared with the third quarter of 2016 and a 6.8% decrease compared with the second quarter of 2017.

 

 

Three Months Ended

 

(in 000s)

 

9/30/17

 

 

9/30/16

 

 

% Change

 

 

6/30/17

 

 

% Change

 

Global Wealth Management brokerage revenues

 

$

158,334

 

 

$

165,476

 

 

 

(4.3

)

 

$

168,085

 

 

 

(5.8

)

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

45,209

 

 

 

51,004

 

 

 

(11.4

)

 

 

50,869

 

 

 

(11.1

)

Fixed income

 

 

46,079

 

 

 

71,794

 

 

 

(35.8

)

 

 

49,013

 

 

 

(6.0

)

Total institutional brokerage

 

 

91,288

 

 

 

122,798

 

 

 

(25.7

)

 

 

99,882

 

 

 

(8.6

)

Total brokerage revenues

 

$

249,622

 

 

$

288,274

 

 

 

(13.4

)

 

$

267,967

 

 

 

(6.8

)

 

•

Global wealth management brokerage revenues were $158.3 million, a 4.3% decrease compared with the third quarter of 2016 and a 5.8% decrease compared with the second quarter of 2017.

 

•

Institutional equity brokerage revenues were $45.2 million, an 11.4% decrease compared with the third quarter of 2016 and an 11.1% decrease compared with the second quarter of 2017.

 

•

Institutional fixed income brokerage revenues were $46.1 million, a 35.8% decrease compared with the third quarter of 2016 and a 6.0% decrease compared with the second quarter of 2017.

Investment Banking Revenues

Investment banking revenues were $181.9 million, a 25.6% increase compared with the third quarter of 2016 and a 1.8% decrease compared with the second quarter of 2017.

 

 

Three Months Ended

 

(in 000s)

 

9/30/17

 

 

9/30/16

 

 

% Change

 

 

6/30/17

 

 

% Change

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

9,072

 

 

$

12,212

 

 

 

(25.7

)

 

$

10,641

 

 

 

(14.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

43,277

 

 

 

20,782

 

 

 

108.2

 

 

 

45,664

 

 

 

(5.2

)

Fixed income

 

 

27,573

 

 

 

25,483

 

 

 

8.2

 

 

 

46,495

 

 

 

(40.7

)

Institutional Group

 

 

70,850

 

 

 

46,265

 

 

 

53.1

 

 

 

92,159

 

 

 

(23.1

)

Capital raising

 

 

79,922

 

 

 

58,477

 

 

 

36.7

 

 

 

102,800

 

 

 

(22.3

)

Advisory fees

 

 

101,982

 

 

 

86,322

 

 

 

18.1

 

 

 

82,461

 

 

 

23.7

 

Total investment banking

 

$

181,904

 

 

$

144,799

 

 

 

25.6

 

 

$

185,261

 

 

 

(1.8

)

 

•

Global wealth management capital raising revenues were $9.1 million, a 25.7% decrease compared with the third quarter of 2016 and a 14.7% decrease compared with the second quarter of 2017.

 

•

Institutional equity capital raising revenues were $43.3 million, a 108.2% increase compared with the third quarter of 2016 and a 5.2% decrease compared with the second quarter of 2017.

 

•

Institutional fixed income capital raising revenues were $27.6 million, an 8.2% increase compared with the third quarter of 2016 and a 40.7% decrease compared with the second quarter of 2017.

 

•

Advisory fee revenues were $102.0 million, an 18.1% increase compared with the third quarter of 2016 and a 23.7% increase compared with the second quarter of 2017.


 

2

 

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $179.8 million, a 24.7% increase compared with the third quarter of 2016 and a 4.0% increase compared with the second 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.

Net Interest Income

Record net interest income of $100.2 million, an 80.6% increase compared with the third quarter of 2016 and an 8.6% increase compared with the second quarter of 2017.

 

•

Interest income was $117.9 million, a 57.4% increase compared with the third quarter of 2016 and an 8.2% increase compared with the second quarter of 2017. Interest income was impacted by the continued growth of interest-earning assets.

 

•

Interest expense was $17.6 million, a 9.1% decrease compared with the third quarter of 2016 and a 5.9% increase compared with the second quarter of 2017.


 

3

 

Compensation and Benefits Expenses

For the quarter ended September 30, 2017, compensation and benefits expenses were $448.4 million, which included $8.1 million of merger-related and severance expenses. This compares with $434.2 million in the third quarter of 2016 and $453.9 million in the second quarter of 2017. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 61.1% in the third quarter of 2017.

 

 

Three Months Ended 9/30/17

 

 

Nine Months Ended 9/30/17

 

GAAP compensation and benefits

 

$

448,410

 

 

$

1,338,673

 

As a percentage of net revenues

 

 

62.2

%

 

 

63.1

%

Non-GAAP adjustments: (2)

 

 

 

 

 

 

 

 

Merger-related

 

 

(5,518

)

 

 

(20,874

)

Severance

 

 

(2,538

)

 

 

(9,493

)

 

 

 

(8,056

)

 

 

(30,367

)

Non-GAAP compensation and benefits

 

$

440,354

 

 

$

1,308,306

 

As a percentage of non-GAAP net revenues

 

 

61.1

%

 

 

61.6

%

Non-Compensation Operating Expenses

For the quarter ended September 30, 2017, non-compensation operating expenses were $164.6 million, which included merger-related expenses of $4.7 million. This compares with $179.8 million in the third quarter of 2016 and $188.6 million in the second quarter of 2017. Excluding litigation and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2017 were 22.1%.

 

 

Three Months Ended 9/30/17

 

 

Nine Months Ended 9/30/17

 

GAAP non-compensation expenses

 

$

164,620

 

 

$

513,318

 

As a percentage of net revenues

 

 

22.8

%

 

 

24.2

%

Non-GAAP adjustments: (2)

 

 

 

 

 

 

 

 

Merger-related

 

 

(4,725

)

 

 

(16,899

)

Litigation-related

 

 

—

 

 

 

(20,000

)

 

 

 

(4,725

)

 

 

(36,899

)

Non-GAAP non-compensation expenses

 

$

159,895

 

 

$

476,419

 

As a percentage of non-GAAP net revenues

 

 

22.1

%

 

 

22.4

%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.5%. This compares with an effective income tax rate of 36.3% for the third quarter of 2016 and 36.5% for the second quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.9%.

 

 

Three Months Ended 9/30/17

 

 

Nine Months Ended 9/30/17

 

GAAP provision for income taxes

 

$

41,603

 

 

$

85,497

 

GAAP effective tax rate

 

 

38.5

%

 

 

31.6

%

Non-GAAP adjustments: (2)

 

 

 

 

 

 

 

 

Litigation and merger-related and severance

 

 

5,072

 

 

 

26,869

 

Excess tax benefits from stock-based compensation (3)

 

 

297

 

 

 

17,452

 

 

 

 

5,369

 

 

 

44,321

 

Non-GAAP provision for income taxes

 

$

46,972

 

 

$

129,818

 

Non-GAAP effective tax rate

 

 

38.9

%

 

 

38.2

%


 

4

 

Conference Call Information

Stifel Financial Corp. will host its third quarter 2017 financial results conference call on Monday, October 30, 2017, 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 (888) 676-3684 and referencing conference ID #3699219. 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.

 

 

5

 

Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

(in 000s, except per share amounts)

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

 

 

 

6/30/17

 

 

 

 

% Change

 

 

 

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

162,612

 

 

 

 

$

171,272

 

 

 

 

 

(5.1

)

 

 

 

$

172,264

 

 

 

 

 

(5.6

)

 

 

 

$

510,150

 

 

 

 

$

551,306

 

 

 

 

 

(7.5

)

Principal transactions

 

 

87,010

 

 

 

 

 

117,002

 

 

 

 

 

(25.6

)

 

 

 

 

95,703

 

 

 

 

 

(9.1

)

 

 

 

 

299,570

 

 

 

 

 

364,376

 

 

 

 

 

(17.8

)

Brokerage Revenues

 

 

249,622

 

 

 

 

 

288,274

 

 

 

 

 

(13.4

)

 

 

 

 

267,967

 

 

 

 

 

(6.8

)

 

 

 

 

809,720

 

 

 

 

 

915,682

 

 

 

 

 

(11.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising

 

 

79,922

 

 

 

 

 

58,477

 

 

 

 

 

36.7

 

 

 

 

 

102,800

 

 

 

 

 

(22.3

)

 

 

 

 

256,638

 

 

 

 

 

178,193

 

 

 

 

 

44.0

 

Advisory fees

 

 

101,982

 

 

 

 

 

86,322

 

 

 

 

 

18.1

 

 

 

 

 

82,461

 

 

 

 

 

23.7

 

 

 

 

 

237,379

 

 

 

 

 

200,389

 

 

 

 

 

18.5

 

Investment banking

 

 

181,904

 

 

 

 

 

144,799

 

 

 

 

 

25.6

 

 

 

 

 

185,261

 

 

 

 

 

(1.8

)

 

 

 

 

494,017

 

 

 

 

 

378,582

 

 

 

 

 

30.5

 

Asset management and service fees

 

 

179,848

 

 

 

 

 

144,206

 

 

 

 

 

24.7

 

 

 

 

 

172,914

 

 

 

 

 

4.0

 

 

 

 

 

515,501

 

 

 

 

 

433,305

 

 

 

 

 

19.0

 

Other income

 

 

9,558

 

 

 

 

 

9,209

 

 

 

 

 

3.8

 

 

 

 

 

7,198

 

 

 

 

 

32.8

 

 

 

 

 

25,508

 

 

 

 

 

33,804

 

 

 

 

 

(24.5

)

Operating Revenue

 

 

620,932

 

 

 

 

 

586,488

 

 

 

 

 

5.9

 

 

 

 

 

633,340

 

 

 

 

 

(2.0

)

 

 

 

 

1,844,746

 

 

 

 

 

1,761,373

 

 

 

 

 

4.7

 

Interest Revenue

 

 

117,862

 

 

 

 

 

74,881

 

 

 

 

 

57.4

 

 

 

 

 

108,951

 

 

 

 

 

8.2

 

 

 

 

 

327,766

 

 

 

 

 

203,488

 

 

 

 

 

61.1

 

Total Revenue

 

 

738,794

 

 

 

 

 

661,369

 

 

 

 

 

11.7

 

 

 

 

 

742,291

 

 

 

 

 

(0.5

)

 

 

 

 

2,172,512

 

 

 

 

 

1,964,861

 

 

 

 

 

10.6

 

Interest Expense

 

 

17,625

 

 

 

 

 

19,383

 

 

 

 

 

(9.1

)

 

 

 

 

16,644

 

 

 

 

 

5.9

 

 

 

 

 

50,165

 

 

 

 

 

50,756

 

 

 

 

 

(1.2

)

Net Revenue

 

 

721,169

 

 

 

 

 

641,986

 

 

 

 

 

12.3

 

 

 

 

 

725,647

 

 

 

 

 

(0.6

)

 

 

 

 

2,122,347

 

 

 

 

 

1,914,105

 

 

 

 

 

10.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

448,410

 

 

 

 

 

434,236

 

 

 

 

 

3.3

 

 

 

 

 

453,876

 

 

 

 

 

(1.2

)

 

 

 

 

1,338,673

 

 

 

 

 

1,305,372

 

 

 

 

 

2.6

 

Occupancy and equipment rental

 

 

57,427

 

 

 

 

 

62,453

 

 

 

 

 

(8.0

)

 

 

 

 

57,892

 

 

 

 

 

(0.8

)

 

 

 

 

167,864

 

 

 

 

 

178,455

 

 

 

 

 

(5.9

)

Communication and office supplies

 

 

34,650

 

 

 

 

 

31,182

 

 

 

 

 

11.1

 

 

 

 

 

34,192

 

 

 

 

 

1.3

 

 

 

 

 

102,686

 

 

 

 

 

105,268

 

 

 

 

 

(2.5

)

Commissions and floor brokerage

 

 

11,232

 

 

 

 

 

10,777

 

 

 

 

 

4.2

 

 

 

 

 

11,232

 

 

 

 

 

—

 

 

 

 

 

33,187

 

 

 

 

 

34,653

 

 

 

 

 

(4.2

)

Provision for loan losses

 

 

7,990

 

 

 

 

 

3,561

 

 

 

 

 

124.4

 

 

 

 

 

5,856

 

 

 

 

 

36.4

 

 

 

 

 

19,980

 

 

 

 

 

9,643

 

 

 

 

 

107.2

 

Other operating expenses

 

 

53,321

 

 

 

 

 

71,795

 

 

 

 

 

(25.7

)

 

 

 

 

79,401

 

 

 

 

 

(32.8

)

 

 

 

 

189,601

 

 

 

 

 

193,026

 

 

 

 

 

(1.8

)

Total non-interest expenses

 

 

613,030

 

 

 

 

 

614,004

 

 

 

 

 

(0.2

)

 

 

 

 

642,449

 

 

 

 

 

(4.6

)

 

 

 

 

1,851,991

 

 

 

 

 

1,826,417

 

 

 

 

 

1.4

 

Income before income taxes

 

 

108,139

 

 

 

 

 

27,982

 

 

 

 

 

286.5

 

 

 

 

 

83,198

 

 

 

 

 

30.0

 

 

 

 

 

270,356

 

 

 

 

 

87,688

 

 

 

 

 

208.3

 

Provision for income taxes

 

 

41,603

 

 

 

 

 

10,168

 

 

 

 

 

309.2

 

 

 

 

 

30,387

 

 

 

 

 

36.9

 

 

 

 

 

85,497

 

 

 

 

 

33,048

 

 

 

 

 

158.7

 

Net income

 

 

66,536

 

 

 

 

 

17,814

 

 

 

 

 

273.5

 

 

 

 

 

52,811

 

 

 

 

 

26.0

 

 

 

 

 

184,859

 

 

 

 

 

54,640

 

 

 

 

 

238.3

 

Preferred dividends

 

 

2,343

 

 

 

 

 

1,563

 

 

 

 

 

49.9

 

 

 

 

 

2,344

 

 

 

 

 

(0.0

)

 

 

 

 

7,031

 

 

 

 

 

1,563

 

 

 

 

 

349.8

 

Net income available to common shareholders

 

$

64,193

 

 

 

 

$

16,251

 

 

 

 

 

295.0

 

 

 

 

$

50,467

 

 

 

 

 

27.2

 

 

 

 

$

177,828

 

 

 

 

$

53,077

 

 

 

 

 

235.0

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.94

 

 

 

 

$

0.24

 

 

 

 

 

291.7

 

 

 

 

$

0.74

 

 

 

 

 

27.0

 

 

 

 

$

2.60

 

 

 

 

$

0.79

 

 

 

 

 

229.1

 

Diluted

 

$

0.79

 

 

 

 

$

0.21

 

 

 

 

 

276.2

 

 

 

 

$

0.63

 

 

 

 

 

25.4

 

 

 

 

$

2.21

 

 

 

 

$

0.69

 

 

 

 

 

220.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

68,522

 

 

 

 

 

66,482

 

 

 

 

 

3.1

 

 

 

 

 

68,556

 

 

 

 

 

(0.0

)

 

 

 

 

68,488

 

 

 

 

 

66,950

 

 

 

 

 

2.3

 

Diluted

 

 

80,881

 

 

 

 

 

77,544

 

 

 

 

 

4.3

 

 

 

 

 

80,021

 

 

 

 

 

1.1

 

 

 

 

 

80,562

 

 

 

 

 

76,612

 

 

 

 

 

5.2

 

 


 

6

 

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in 000s)

 

9/30/17

 

 

9/30/16

 

 

 

 

% Change

 

 

6/30/17

 

 

% Change

 

 

9/30/17

 

 

9/30/16

 

 

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

453,558

 

 

$

390,032

 

 

 

 

 

16.3

 

 

$

451,990

 

 

 

0.3

 

 

$

1,348,280

 

 

$

1,155,875

 

 

 

 

 

16.6

 

Institutional Group

 

 

264,747

 

 

 

258,800

 

 

 

 

 

2.3

 

 

 

276,153

 

 

 

(4.1

)

 

 

778,367

 

 

 

760,996

 

 

 

 

 

2.3

 

Other

 

 

2,864

 

 

 

(6,846

)

 

 

 

 

141.8

 

 

 

(2,496

)

 

 

214.7

 

 

 

(4,300

)

 

 

(2,766

)

 

 

 

 

(55.5

)

Total net revenues

 

$

721,169

 

 

$

641,986

 

 

 

 

 

12.3

 

 

$

725,647

 

 

 

(0.6

)

 

$

2,122,347

 

 

$

1,914,105

 

 

 

 

 

10.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

291,802

 

 

$

280,953

 

 

 

 

 

3.9

 

 

$

298,753

 

 

 

(2.3

)

 

$

891,235

 

 

$

848,409

 

 

 

 

 

5.0

 

Institutional Group

 

 

213,030

 

 

 

213,877

 

 

 

 

 

(0.4

)

 

 

223,261

 

 

 

(4.6

)

 

 

633,886

 

 

 

644,368

 

 

 

 

 

(1.6

)

Other

 

 

108,198

 

 

 

119,174

 

 

 

 

 

(9.2

)

 

 

120,435

 

 

 

(10.2

)

 

 

326,870

 

 

 

333,640

 

 

 

 

 

(2.0

)

Total operating expenses

 

$

613,030

 

 

$

614,004

 

 

 

 

 

(0.2

)

 

$

642,449

 

 

 

(4.6

)

 

$

1,851,991

 

 

$

1,826,417

 

 

 

 

 

1.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

161,756

 

 

$

109,079

 

 

 

 

 

48.3

 

 

$

153,237

 

 

 

5.6

 

 

$

457,045

 

 

$

307,466

 

 

 

 

 

48.6

 

Institutional Group

 

 

51,717

 

 

 

44,923

 

 

 

 

 

15.1

 

 

 

52,892

 

 

 

(2.2

)

 

 

144,481

 

 

 

116,628

 

 

 

 

 

23.9

 

Other

 

 

(105,334

)

 

 

(126,020

)

 

 

 

 

(16.4

)

 

 

(122,931

)

 

 

(14.3

)

 

 

(331,170

)

 

 

(336,406

)

 

 

 

 

(1.6

)

Income before income taxes

 

$

108,139

 

 

$

27,982

 

 

 

 

 

286.5

 

 

$

83,198

 

 

 

30.0

 

 

$

270,356

 

 

$

87,688

 

 

 

 

 

208.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

49.1

 

 

 

55.2

 

 

 

 

 

 

 

 

 

50.7

 

 

 

 

 

 

 

50.5

 

 

 

56.7

 

 

 

 

 

 

 

Institutional Group

 

 

60.0

 

 

 

61.1

 

 

 

 

 

 

 

 

 

59.6

 

 

 

 

 

 

 

60.0

 

 

 

60.7

 

 

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

15.2

 

 

 

16.9

 

 

 

 

 

 

 

 

 

15.4

 

 

 

 

 

 

 

15.6

 

 

 

16.7

 

 

 

 

 

 

 

Institutional Group

 

 

20.5

 

 

 

21.5

 

 

 

 

 

 

 

 

 

21.2

 

 

 

 

 

 

 

21.4

 

 

 

24.0

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

35.7

 

 

 

27.9

 

 

 

 

 

 

 

 

 

33.9

 

 

 

 

 

 

 

33.9

 

 

 

26.6

 

 

 

 

 

 

 

Institutional Group

 

 

19.5

 

 

 

17.4

 

 

 

 

 

 

 

 

 

19.2

 

 

 

 

 

 

 

18.6

 

 

 

15.3

 

 

 

 

 

 

 

Consolidated pre-tax margin (4) (5)

 

 

15.0

 

 

 

4.4

 

 

 

 

 

 

 

 

 

11.5

 

 

 

 

 

 

 

12.7

 

 

 

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

Stifel Financial Corp.

 

Selected Key Metrics

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Financial metrics:

As of and For the Three Months Ended

 

(in 000s, except percentages and per share amounts)

9/30/17

 

9/30/16

 

6/30/17

 

Total assets

$

20,484,080

 

$

17,204,908

 

$

19,533,575

 

Total equity

 

2,932,405

 

 

2,691,690

 

 

2,845,309

 

Book value per common share

$

40.67

 

$

38.38

 

$

39.47

 

Return on common equity (6)

 

9.7

%

 

2.8

%

 

7.9

%

Non-GAAP return on common equity (1) (6)

 

10.8

%

 

8.7

%

 

11.1

%

Return on tangible common equity (7)

 

16.1

%

 

5.0

%

 

13.4

%

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

 

17.8

%

 

15.3

%

 

18.8

%

Tier 1 common capital ratio (8)

 

18.3

%

 

19.5

%

 

18.2

%

Tier 1 risk based capital ratio (8)

 

20.5

%

 

22.0

%

 

20.5

%

Tier 1 leverage capital ratio (8)

 

10.4

%

 

11.8

%

 

10.3

%

Pre-tax margin on net revenues

 

15.0

%

 

4.4

%

 

11.5

%

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

 

16.8

%

 

14.0

%

 

16.3

%

Effective tax rate

 

38.5

%

 

36.3

%

 

36.5

%

Non-GAAP effective tax rate (1)

 

38.9

%

 

39.4

%

 

37.3

%

 

Statistical Information

 

(in 000s)

 

9/30/17

 

 

9/30/16

 

 

% Change

 

 

6/30/17

 

 

% Change

 

Statistical Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial advisors (9)

 

 

2,252

 

 

 

2,280

 

 

 

(1.2

)

 

 

2,277

 

 

 

(1.1

)

Locations

 

 

395

 

 

 

396

 

 

 

(0.3

)

 

 

399

 

 

 

(1.0

)

Total client assets

 

$

264,717,000

 

 

$

234,490,000

 

 

 

12.9

 

 

$

258,097,000

 

 

 

2.6

 

Fee-based client assets

 

$

82,999,000

 

 

$

67,927,000

 

 

 

22.2

 

 

$

79,177,000

 

 

 

4.8

 

Client money market and insured product

 

$

17,420,000

 

 

$

18,478,000

 

 

 

(5.7

)

 

$

17,831,000

 

 

 

(2.3

)

Secured client lending (10)

 

$

3,037,158

 

 

$

2,770,783

 

 

 

9.6

 

 

$

2,999,461

 

 

 

1.3

 

 

  


 

8

 

 

Stifel Bank & Trust - a component of Global Wealth Management

 

Selected Key Metrics

 

(Unaudited)

 

Selected operating data:

Three Months Ended

 

 

Nine Months Ended

 

(in 000s, except percentages)

9/30/17

 

 

9/30/16

 

 

% Change

 

 

6/30/17

 

 

% Change

 

 

9/30/17

 

 

9/30/16

 

 

% Change

 

Net Interest Income

$

97,300

 

 

$

57,994

 

 

 

67.8

 

 

$

90,795

 

 

 

7.2

 

 

$

272,114

 

 

$

152,183

 

 

 

78.8

 

Bank loan loss provision

 

7,990

 

 

 

3,561

 

 

 

124.4

 

 

 

5,856

 

 

 

36.4

 

 

 

19,980

 

 

 

9,643

 

 

 

107.2

 

Charge-offs

 

—

 

 

 

283

 

 

n/m

 

 

 

2,953

 

 

n/m

 

 

 

2,953

 

 

 

296

 

 

n/m

 

Net Interest Margin

 

2.80

%

 

 

2.41

%

 

 

16.2

 

 

 

2.77

%

 

 

1.1

 

 

 

2.74

%

 

 

2.40

%

 

 

14.2

 

 

Financial Metrics:

 

As of

 

(in 000s, except percentages)

 

9/30/17

 

 

9/30/16

 

 

6/30/17

 

Total Assets

 

$

14,538,750

 

 

$

11,018,615

 

 

$

13,598,260

 

Total Equity

 

 

1,019,257

 

 

 

740,348

 

 

 

978,626

 

Total Loans, net

 

 

6,949,369

 

 

 

5,173,992

 

 

 

6,299,669

 

Total Deposits

 

 

12,883,961

 

 

 

9,885,441

 

 

 

12,050,474

 

Available-for-sale securities, at fair value

 

 

3,687,248

 

 

 

3,139,438

 

 

 

3,448,548

 

Held-to-maturity securities, at amortized cost

 

 

3,550,962

 

 

 

2,237,112

 

 

 

3,304,090

 

Residential real estate

 

 

2,517,543

 

 

 

1,804,112

 

 

 

2,248,528

 

Commercial and industrial

 

 

2,380,417

 

 

 

1,558,284

 

 

 

2,064,052

 

Securities-based loans

 

 

1,839,981

 

 

 

1,452,913

 

 

 

1,755,592

 

Commercial real estate

 

 

78,614

 

 

 

63,680

 

 

 

71,517

 

Loans held for sale

 

 

166,335

 

 

 

217,316

 

 

 

139,676

 

Common equity tier 1 capital ratio (8)

 

 

14.4

%

 

 

13.7

%

 

 

14.9

%

Tier 1 capital ratio (8)

 

 

14.4

%

 

 

13.7

%

 

 

14.9

%

Total capital ratio (8)

 

 

15.3

%

 

 

14.5

%

 

 

15.7

%

Tier 1 leverage ratio (8)

 

 

7.1

%

 

 

7.5

%

 

 

7.2

%

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

62,229

 

 

$

39,145

 

 

$

54,202

 

Allowance as a percentage of retained loans

 

 

0.92

%

 

 

0.79

%

 

 

0.88

%

Net charge-offs as a percentage of average loans

 

 

0.00

%

 

 

0.01

%

 

 

0.05

%

Total nonperforming assets

 

 

21,776

 

 

 

28,301

 

 

 

21,219

 

Nonperforming assets as % of total assets

 

 

0.15

%

 

 

0.25

%

 

 

0.15

%

 


 

9

 

Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

(in 000s)

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

 

 

 

6/30/17

 

 

% Change

 

 

 

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

115,410

 

 

 

 

$

117,596

 

 

 

 

 

(1.9

)

 

 

 

$

120,344

 

 

 

(4.1

)

 

 

 

$

356,331

 

 

 

 

$

376,390

 

 

 

 

 

(5.3

)

Principal transactions

 

 

42,924

 

 

 

 

 

47,880

 

 

 

 

 

(10.4

)

 

 

 

 

47,741

 

 

 

(10.1

)

 

 

 

 

141,582

 

 

 

 

 

134,228

 

 

 

 

 

5.5

 

    Brokerage revenues

 

 

158,334

 

 

 

 

 

165,476

 

 

 

 

 

(4.3

)

 

 

 

 

168,085

 

 

 

(5.8

)

 

 

 

 

497,913

 

 

 

 

 

510,618

 

 

 

 

 

(2.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

179,830

 

 

 

 

 

143,152

 

 

 

 

 

25.6

 

 

 

 

 

172,889

 

 

 

4.0

 

 

 

 

 

515,383

 

 

 

 

 

431,864

 

 

 

 

 

19.3

 

Net interest

 

 

102,831

 

 

 

 

 

63,981

 

 

 

 

 

60.7

 

 

 

 

 

95,698

 

 

 

7.5

 

 

 

 

 

288,224

 

 

 

 

 

170,036

 

 

 

 

 

69.5

 

Investment banking

 

 

9,072

 

 

 

 

 

12,212

 

 

 

 

 

(25.7

)

 

 

 

 

10,641

 

 

 

(14.7

)

 

 

 

 

31,567

 

 

 

 

 

30,123

 

 

 

 

 

4.8

 

Other income

 

 

3,491

 

 

 

 

 

5,211

 

 

 

 

 

(33.0

)

 

 

 

 

4,677

 

 

 

(25.4

)

 

 

 

 

15,193

 

 

 

 

 

13,234

 

 

 

 

 

14.8

 

Net revenues

 

 

453,558

 

 

 

 

 

390,032

 

 

 

 

 

16.3

 

 

 

 

 

451,990

 

 

 

0.3

 

 

 

 

 

1,348,280

 

 

 

 

 

1,155,875

 

 

 

 

 

16.6

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

222,621

 

 

 

 

 

215,151

 

 

 

 

 

3.5

 

 

 

 

 

229,158

 

 

 

(2.9

)

 

 

 

 

680,250

 

 

 

 

 

655,119

 

 

 

 

 

3.8

 

Non-compensation operating expenses

 

 

69,181

 

 

 

 

 

65,802

 

 

 

 

 

5.1

 

 

 

 

 

69,595

 

 

 

(0.6

)

 

 

 

 

210,985

 

 

 

 

 

193,290

 

 

 

 

 

9.2

 

Total non-interest expenses

 

 

291,802

 

 

 

 

 

280,953

 

 

 

 

 

3.9

 

 

 

 

 

298,753

 

 

 

(2.3

)

 

 

 

 

891,235

 

 

 

 

 

848,409

 

 

 

 

 

5.0

 

Income before income taxes

 

$

161,756

 

 

 

 

$

109,079

 

 

 

 

 

48.3

 

 

 

 

$

153,237

 

 

 

5.6

 

 

 

 

$

457,045

 

 

 

 

$

307,466

 

 

 

 

 

48.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

49.1

 

 

 

 

 

55.2

 

 

 

 

 

 

 

 

 

 

 

50.7

 

 

 

 

 

 

 

 

 

50.5

 

 

 

 

 

56.7

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

15.2

 

 

 

 

 

16.9

 

 

 

 

 

 

 

 

 

 

 

15.4

 

 

 

 

 

 

 

 

 

15.6

 

 

 

 

 

16.7

 

 

 

 

 

 

 

Income before income taxes

 

 

35.7

 

 

 

 

 

27.9

 

 

 

 

 

 

 

 

 

 

 

33.9

 

 

 

 

 

 

 

 

 

33.9

 

 

 

 

 

26.6

 

 

 

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

(in 000s)

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

 

 

 

6/30/17

 

 

% Change

 

 

 

 

9/30/17

 

 

 

 

9/30/16

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

47,202

 

 

 

 

$

53,676

 

 

 

 

 

(12.1

)

 

 

 

$

51,920

 

 

 

(9.1

)

 

 

 

$

153,819

 

 

 

 

$

174,916

 

 

 

 

 

(12.1

)

Principal transactions

 

 

44,086

 

 

 

 

 

69,122

 

 

 

 

 

(36.2

)

 

 

 

 

47,962

 

 

 

(8.1

)

 

 

 

 

157,988

 

 

 

 

 

230,148

 

 

 

 

 

(31.4

)

Brokerage revenues

 

 

91,288

 

 

 

 

 

122,798

 

 

 

 

 

(25.7

)

 

 

 

 

99,882

 

 

 

(8.6

)

 

 

 

 

311,807

 

 

 

 

 

405,064

 

 

 

 

 

(23.0

)

Capital raising

 

 

70,850

 

 

 

 

 

46,265

 

 

 

 

 

53.1

 

 

 

 

 

92,159

 

 

 

(23.1

)

 

 

 

 

225,071

 

 

 

 

 

147,260

 

 

 

 

 

52.8

 

Advisory fees

 

 

101,982

 

 

 

 

 

86,322

 

 

 

 

 

18.1

 

 

 

 

 

82,461

 

 

 

23.7

 

 

 

 

 

237,379

 

 

 

 

 

201,199

 

 

 

 

 

18.0

 

Investment banking

 

 

172,832

 

 

 

 

 

132,587

 

 

 

 

 

30.4

 

 

 

 

 

174,620

 

 

 

(1.0

)

 

 

 

 

462,450

 

 

 

 

 

348,459

 

 

 

 

 

32.7

 

Other (11)

 

 

627

 

 

 

 

 

3,415

 

 

 

 

 

(81.6

)

 

 

 

 

1,651

 

 

 

(62.0

)

 

 

 

 

4,110

 

 

 

 

 

7,473

 

 

 

 

 

(45.0

)

Net revenues

 

 

264,747

 

 

 

 

 

258,800

 

 

 

 

 

2.3

 

 

 

 

 

276,153

 

 

 

(4.1

)

 

 

 

 

778,367

 

 

 

 

 

760,996

 

 

 

 

 

2.3

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

158,926

 

 

 

 

 

158,126

 

 

 

 

 

0.5

 

 

 

 

 

164,532

 

 

 

(3.4

)

 

 

 

 

467,098

 

 

 

 

 

462,115

 

 

 

 

 

1.1

 

Non-compensation operating expenses

 

 

54,104

 

 

 

 

 

55,751

 

 

 

 

 

(3.0

)

 

 

 

 

58,729

 

 

 

(7.9

)

 

 

 

 

166,788

 

 

 

 

 

182,253

 

 

 

 

 

(8.5

)

Total non-interest expenses

 

 

213,030

 

 

 

 

 

213,877

 

 

 

 

 

(0.4

)

 

 

 

 

223,261

 

 

 

(4.6

)

 

 

 

 

633,886

 

 

 

 

 

644,368

 

 

 

 

 

(1.6

)

Income before income taxes

 

$

51,717

 

 

 

 

$

44,923

 

 

 

 

 

15.1

 

 

 

 

$

52,892

 

 

 

(2.2

)

 

 

 

$

144,481

 

 

 

 

$

116,628

 

 

 

 

 

23.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

60.0

 

 

 

 

 

61.1

 

 

 

 

 

 

 

 

 

 

 

59.6

 

 

 

 

 

 

 

 

 

60.0

 

 

 

 

 

60.7

 

 

 

 

 

 

 

Non-compensation operating expenses

 

 

20.5

 

 

 

 

 

21.5

 

 

 

 

 

 

 

 

 

 

 

21.2

 

 

 

 

 

 

 

 

 

21.4

 

 

 

 

 

24.0

 

 

 

 

 

 

 

Income before income taxes

 

 

19.5

 

 

 

 

 

17.4

 

 

 

 

 

 

 

 

 

 

 

19.2

 

 

 

 

 

 

 

 

 

18.6

 

 

 

 

 

15.3

 

 

 

 

 

 

 

 


 

10

 

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 months ended September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 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 months ended September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 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

 

 

Nine Months Ended

 

(in 000s)

 

9/30/17

 

 

9/30/16

 

 

6/30/17

 

 

9/30/17

 

 

9/30/16

 

GAAP net income

 

$

66,536

 

 

$

17,814

 

 

$

52,811

 

 

$

184,859

 

 

$

54,640

 

Preferred dividend

 

 

2,343

 

 

 

1,563

 

 

 

2,344

 

 

 

7,031

 

 

 

1,563

 

Net income available to common shareholders

 

 

64,193

 

 

 

16,251

 

 

 

50,467

 

 

 

177,828

 

 

 

53,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related (12)

 

 

10,244

 

 

 

50,446

 

 

 

12,400

 

 

 

39,758

 

 

 

117,790

 

Litigation-related (13)

 

 

—

 

 

 

11,796

 

 

 

20,000

 

 

 

20,000

 

 

 

11,796

 

Severance

 

 

2,538

 

 

 

—

 

 

 

2,420

 

 

 

9,493

 

 

 

—

 

Provision for income taxes

 

 

(5,369

)

 

 

(25,337

)

 

 

(13,640

)

 

 

(44,321

)

 

 

(51,143

)

Total non-GAAP adjustments

 

 

7,413

 

 

 

36,905

 

 

 

21,180

 

 

 

24,930

 

 

 

78,443

 

Non-GAAP net income available to common shareholders

 

$

71,606

 

 

$

53,156

 

 

$

71,647

 

 

$

202,758

 

 

$

131,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

80,881

 

 

 

77,544

 

 

 

80,021

 

 

 

80,562

 

 

 

76,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

0.82

 

 

$

0.23

 

 

$

0.66

 

 

$

2.29

 

 

$

0.71

 

Non-GAAP adjustments

 

 

0.09

 

 

 

0.48

 

 

 

0.26

 

 

 

0.31

 

 

 

1.03

 

Non-GAAP earnings per diluted common share

 

$

0.91

 

 

$

0.71

 

 

$

0.92

 

 

$

2.60

 

 

$

1.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

0.79

 

 

$

0.21

 

 

$

0.63

 

 

$

2.21

 

 

$

0.69

 

Non-GAAP adjustments

 

 

0.10

 

 

 

0.48

 

 

 

0.27

 

 

 

0.31

 

 

 

1.03

 

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

 

$

0.89

 

 

$

0.69

 

 

$

0.90

 

 

$

2.52

 

 

$

1.72

 

 


 

11

 

Footnotes

 

(1)

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

 

(2)

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

 

(3)

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

 

(4)

Non-GAAP pre-tax margin for the three months ended September 30, 2017 of 16.8% is calculated by adding merger-related and severance non-GAAP adjustments of $12.8 million to our GAAP income before income taxes of $108.1 million and dividing it by non-GAAP net revenues for the quarter of $721.2 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(5)

Non-GAAP pre-tax margin for the nine months ended September 30, 2017 of 16.0% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $69.3 million to our GAAP income before income taxes of $270.4 million and dividing it by non-GAAP net revenues for the quarter of $2,124.3 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(6)

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.

 

(7)

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.

 

(8)

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

 

(9)

Includes 116, 125, and 119 independent contractors at September 30, 2017, September 30, 2016, and June 30, 2017, respectively.

 

(10)

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

 

(11)

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

 

(12)

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.

 

(13)

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

 

Investor Relations

Joel Jeffrey

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

 

 

12