sf-ex991_7.htm

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

Exhibit 99.1

April 27, 2021

FOR IMMEDIATE RELEASE

Media Contact: Neil Shapiro (212) 271-3447

Investor Contact: Joel Jeffrey (212) 271-3610

www.stifel.com/investor-relations

STIFEL REPORTS FIRST QUARTER 2021 RESULTS

•

Record net revenues of $1.1 billion, increased 24.3% with the year-ago quarter.

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Record net revenues in Global Wealth Management and Institutional Group segments.

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Net income available to common shareholders of $164.7 million, or $1.40 per diluted common share.

•

Non-GAAP net income available to common shareholders of $176.4 million, or $1.50 per diluted common share.

•

Record client assets of $378.6 billion, increased 36.9% compared with the year-ago quarter and 5.9% sequentially.

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Annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 26.5%.

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Non-GAAP annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 28.4%.

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The Board of Directors declared a $0.15 quarterly dividend per share, an increase of 36% from the prior quarter.

ST. LOUIS, MO – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $164.7 million, or $1.40 per diluted common share on record net revenues of $1.1 billion for the three months ended March 31, 2021, compared with net income available to common shareholders of $81.7 million, or $0.71 per diluted common share,⁽²⁾ on net revenues of $913.0 million for the first quarter of 2020.

For the three months ended March 31, 2021, the Company reported non-GAAP net income available to common shareholders of $176.4 million, or $1.50 per diluted common share. The Company’s reported GAAP net income for the three months ended March 31, 2021 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“I am pleased with our first quarter results as we generated record net revenue and the second highest earnings per share in Stifel’s history,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel. “The strength of our performance was driven by record revenue in both our operating segments, Global Wealth Management and Institutional Group. The operating environment in 2021 has been a tailwind to our business as the equity markets are up, client engagement is strong, credit remains solid, and investment banking activity surged. Our results in the quarter again illustrate the benefits of our diverse business as the investments we have made have enabled us to participate in these robust market conditions to a far greater magnitude than we could have in years past. Looking forward, Stifel is well positioned for another strong year.”

Financial Highlights (Unaudited)	Three Months Ended
($ in 000s, except per share data)	GAAP 3/31/21			GAAP 3/31/20			% Change		GAAP 12/31/20			% Change			Non-GAAP ⁽³⁾ 3/31/21			Non-GAAP ⁽³⁾ 3/31/20			% Change
Net revenues	$	1,134,789		$	913,034			24.3	$	1,059,910			7.1		$	1,134,980		$	913,213			24.3
Net income	$	173,015		$	86,589			99.8	$	188,469			(8.2	)	$	184,714		$	96,777			90.9
Preferred dividends		8,289			4,844			71.1		7,677			8.0			8,289			4,844			71.1
Net income available to common shareholders	$	164,726		$	81,745			101.5	$	180,792			(8.9	)	$	176,425		$	91,933			91.9
Earnings per diluted common share ⁽²⁾	$	1.47		$	0.75			96.0	$	1.61			(8.7	)	$	1.57		$	0.84			86.9
Earnings per diluted common share available to common shareholders ⁽²⁾	$	1.40		$	0.71			97.2	$	1.55			(9.7	)	$	1.50		$	0.80			87.5
Compensation ratio		61.5	%		63.2	%				58.6	%					60.9	%		62.5	%
Non-compensation ratio		18.4	%		24.2	%				19.3	%					17.7	%		23.4	%
Pre-tax operating margin ⁽⁴⁾		20.1	%		12.6	%				22.1	%					21.4	%		14.1	%

Net Revenues

Net revenues were a record $1.1 billion for the first quarter of 2021, a 24.3% increase from the first quarter of 2020 and a 7.1% increase from the fourth quarter of 2020. Net revenues, compared with the first quarter of 2020, reflected significantly higher investment banking revenues, asset management and service fees, and increased brokerage revenues, partially offset by lower net interest income. Net revenues, compared with the fourth quarter of 2020, reflected increased capital raising revenues, growth in brokerage revenues and asset management and services fees, as well as higher net interest income, partially offset by lower advisory fee revenues.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $378.6 million, an 8.3% increase compared with the first quarter of 2020 and a 10.5% increase compared with the fourth quarter of 2020.

	Three Months Ended
($ in 000s)	3/31/21		3/31/20		% Change			12/31/20		% Change
Global Wealth Management	$	201,104	$	179,879		11.8		$	185,719		8.3
Institutional brokerage:
Equity capital markets		79,121		70,195		12.7			69,201		14.3
Fixed income capital markets		98,395		99,688		(1.3	)		87,664		12.2
Total institutional brokerage		177,516		169,883		4.5			156,865		13.2
Total brokerage revenues ⁽⁵⁾	$	378,620	$	349,762		8.3		$	342,584		10.5

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Global Wealth Management brokerage revenues were $201.1 million, an 11.8% increase compared with the first quarter of 2020 and an 8.3% increase compared with the fourth quarter of 2020.

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Institutional equity brokerage revenues were $79.1 million, a 12.7% increase compared with the first quarter of 2020 and a 14.3% increase compared with the fourth quarter of 2020.

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Institutional fixed income brokerage revenues were $98.4 million, a 1.3% decrease compared with the first quarter of 2020 and a 12.2% increase compared with the fourth quarter of 2020.

Investment Banking Revenues

Investment banking revenues were a record $339.3 million, an 89.1% increase compared with the first quarter of 2020 and a 0.5% increase compared with the fourth quarter of 2020.

	Three Months Ended
($ in 000s)	3/31/21		3/31/20		% Change		12/31/20		% Change
Capital raising:
Global Wealth Management	$	13,549	$	10,314		31.4	$	9,562		41.7

Equity capital markets		147,419		60,195		144.9		104,097		41.6
Fixed income capital markets		47,838		32,887		45.5		50,613		(5.5	)
Institutional Group		195,257		93,082		109.8		154,710		26.2
Total capital raising ⁽⁵⁾		208,806		103,396		101.9		164,272		27.1
Advisory fees		130,482		76,072		71.5		173,395		(24.7	)
Total investment banking ⁽⁵⁾	$	339,288	$	179,468		89.1	$	337,667		0.5

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Global Wealth Management capital raising revenues were $13.5 million, a 31.4% increase compared with the first quarter of 2020 and a 41.7% increase compared with the fourth quarter of 2020.

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Institutional equity capital raising revenues were $147.4 million, a 144.9% increase compared with the first quarter of 2020 and a 41.6% increase compared with the fourth quarter of 2020.

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Institutional fixed income capital raising revenues were $47.8 million, a 45.5% increase compared with the first quarter of 2020 and a 5.5% decrease compared with the fourth quarter of 2020.

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Advisory fee revenues were $130.5 million, a 71.5% increase compared with the first quarter of 2020 and a 24.7% decrease compared with the fourth quarter of 2020.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $278.1 million, a 17.0% increase compared with the first quarter of 2020 and an 11.3% increase compared with the fourth quarter of 2020. The increase from the comparative period in 2020 is primarily attributable to higher asset values and strong fee-based asset flows. Please refer to the Asset Management and Service Fee Break-down table for additional details.

Net Interest Income

Net interest income was $113.1 million, a 17.3% decrease compared with the first quarter of 2020 and a 7.3% increase compared with the fourth quarter of 2020. The decrease from the first quarter of 2020 was primarily driven by the impact of lower interest rates. Please refer to the Net Interest Income Analysis table for additional details.

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Interest income was $127.5 million, a 20.9% decrease compared with the first quarter of 2020 and a 6.4% increase compared with the fourth quarter of 2020.

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Interest expense was $14.4 million, a 40.7% decrease compared with the first quarter of 2020 and a 0.5% decrease compared with the fourth quarter of 2020.

Compensation and Benefits Expenses

For the quarter ended March 31, 2021, compensation and benefits expenses were $697.9 million, which included $6.2 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $577.2 million in the first quarter of 2020 and $621.3 million in the fourth quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 60.9% in the first quarter of 2021 (non-GAAP measure).

The increase in compensation and benefits expenses, compared with the first quarter of 2020, is primarily attributable to revenue growth, as well as the change in the composition of revenues.

	Three Months Ended
($ in 000s)	3/31/21			3/31/20
GAAP compensation and benefits	$	697,914		$	577,179
As a percentage of net revenues		61.5	%		63.2	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related and severance		(6,174	)		(6,427	)
Non-GAAP compensation and benefits	$	691,740		$	570,752
As a percentage of non-GAAP net revenues		60.9	%		62.5	%

Non-Compensation Operating Expenses

For the quarter ended March 31, 2021, non-compensation operating expenses were $209.0 million, which included $9.1 million of merger-related expenses (non-GAAP adjustments). This compares with $220.7 million in the first quarter of 2020 and $203.9 million in the fourth quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2021 were 17.7% (non-GAAP measure).

The decrease in non-compensation operating expenses, compared with the first quarter of 2020, is primarily attributable to the release of the allowance for credit losses driven by improvements in the outlook for macroeconomic conditions, and lower travel, entertainment, and conference-related expenses. In addition, the net provisions for litigation matters were lower. These decreases were partially offset by higher volume-related expenses, including investment banking transaction expenses, reflecting an increase in activity levels. In addition, occupancy expense and professional fees were higher. In addition, non-compensation operating expenses for the three months ended March 31, 2020 were impacted by an increase in the provision for credit losses as a result of the impact of COVID-19 on the broader economic environment.

	Three Months Ended
($ in 000s)	3/31/21			3/31/20
GAAP non-compensation expenses	$	208,983		$	220,749
As a percentage of net revenues		18.4	%		24.2	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related		(9,064	)		(6,904	)
Non-GAAP non-compensation expenses	$	199,919		$	213,845
As a percentage of non-GAAP net revenues		17.7	%		23.4	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended March 31, 2021 was 24.1%. This compares with an effective income tax rate of 24.8% for the first quarter of 2020 and 19.7% for the fourth quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2021 was 24.1%.

	Three Months Ended
($ in 000s)	3/31/21			3/31/20
GAAP provision for income taxes	$	54,877		$	28,517
GAAP effective tax rate		24.1	%		24.8	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related and severance		3,670			3,300
Other		60			22
		3,730			3,322
Non-GAAP provision for income taxes	$	58,607		$	31,839
Non-GAAP effective tax rate		24.1	%		24.8	%

Conference Call Information

Stifel Financial Corp. will host its first quarter 2021 financial results conference call on Tuesday, April 27, 2021, at 9:30 a.m. Eastern Time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID 7880334. 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, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc. 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 and Stifel Bank & Trust offer 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 website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.

Cautionary Note Regarding 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. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Forward-looking statements speak only as to the date they are made. The Company 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.

Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.

Summary Results of Operations (Unaudited)
	Three Months Ended
($ in 000s, except per share amounts)	3/31/21			3/31/20		% Change			12/31/20		% Change
Revenues:
Commissions	$	213,614		$	211,098		1.2		$	199,847		6.9
Principal transactions		165,006			138,666		19.0			142,737		15.6
Brokerage revenues		378,620			349,764		8.3			342,584		10.5

Capital raising		208,806			103,396		101.9			164,276		27.1
Advisory fees		130,482			76,072		71.5			173,395		(24.7	)
Investment banking		339,288			179,468		89.1			337,671		0.5
Asset management and service fees		278,147			237,775		17.0			249,928		11.3
Other income		25,634			9,207		178.4			24,366		5.2
Operating revenues		1,021,689			776,214		31.6			954,549		7.0
Interest revenue		127,540			161,177		(20.9	)		119,876		6.4
Total revenues		1,149,229			937,391		22.6			1,074,425		7.0
Interest expense		14,440			24,357		(40.7	)		14,515		(0.5	)
Net revenues		1,134,789			913,034		24.3			1,059,910		7.1

Non-interest expenses:
Compensation and benefits		697,914			577,179		20.9			621,344		12.3
Occupancy and equipment rental		72,032			66,073		9.0			73,729		(2.3	)
Communication and office supplies		41,825			41,124		1.7			40,443		3.4
Commissions and floor brokerage		15,703			14,842		5.8			12,687		23.8
Provision for credit losses		(5,252	)		16,068		(132.7	)		—	n/m
Other operating expenses		84,675			82,642		2.5			77,006		10.0
Total non-interest expenses		906,897			797,928		13.7			825,209		9.9
Income before income taxes		227,892			115,106		98.0			234,701		(2.9	)
Provision for income taxes		54,877			28,517		92.4			46,232		18.7
Net income		173,015			86,589		99.8			188,469		(8.2	)
Preferred dividends		8,289			4,844		71.1			7,677		8.0
Net income available to common shareholders	$	164,726		$	81,745		101.5		$	180,792		(8.9	)
Earnings per common share: ⁽²⁾
Basic	$	1.53		$	0.76		101.3		$	1.70		(10.0	)
Diluted	$	1.40		$	0.71		97.2		$	1.55		(9.7	)

Cash dividends declared per common share ⁽²⁾	$	0.15		$	0.11		36.4		$	0.11		36.4

Weighted average number of common shares outstanding: ⁽²⁾
Basic		107,746			106,929		0.8			106,041		1.6
Diluted		117,875			114,929		2.6			116,828		0.9

Summary Segment Results (Unaudited)
	Three Months Ended
($ in 000s)	3/31/21			3/31/20			% Change			12/31/20			% Change
Net revenues:
Global Wealth Management	$	631,495		$	582,956			8.3		$	575,252			9.8
Institutional Group		506,081			332,238			52.3			489,448			3.4
Other		(2,787	)		(2,160	)	n/m				(4,790	)	n/m
Total net revenues	$	1,134,789		$	913,034			24.3		$	1,059,910			7.1

Operating expenses:
Global Wealth Management	$	408,264		$	388,789			5.0		$	378,790			7.8
Institutional Group		388,893			290,498			33.9			365,793			6.3
Other		109,740			118,641			(7.5	)		80,626			36.1
Total operating expenses	$	906,897		$	797,928			13.7		$	825,209			9.9

Operating contribution:
Global Wealth Management	$	223,231		$	194,167			15.0		$	196,462			13.6
Institutional Group		117,188			41,740			180.8			123,655			(5.2	)
Other		(112,527	)		(120,801	)		(6.8	)		(85,416	)		31.7
Income before income taxes	$	227,892		$	115,106			98.0		$	234,701			(2.9	)

As a percentage of net revenues:
Compensation and benefits
Global Wealth Management		53.3			51.2						52.8
Institutional Group		59.6			62.0						58.1
Non-comp. operating expenses
Global Wealth Management		11.4			15.5						13.0
Institutional Group		17.2			25.4						16.6
Income before income taxes
Global Wealth Management		35.3			33.3						34.2
Institutional Group		23.2			12.6						25.3
Consolidated pre-tax margin		20.1			12.6						22.1

Financial metrics (unaudited):	As of and For the Three Months Ended
($ in 000s, except percentages and per share amounts)	3/31/21			3/31/20			12/31/20
Total assets	$	28,141,581		$	25,896,006		$	26,604,254
Total shareholders' equity	$	4,318,872		$	3,470,326		$	4,238,766
Book value per common share ⁽²⁾ ⁽⁷⁾	$	35.96		$	30.75		$	35.91
Return on common equity ⁽⁸⁾		17.6	%		10.0	%		20.0	%
Non-GAAP return on common equity ^{(3) (8)}		18.8	%		11.2	%		21.6	%
Return on tangible common equity ⁽¹⁾		26.5	%		16.6	%		30.8	%
Non-GAAP return on tangible common equity ^{(1) (3)}		28.4	%		18.6	%		33.3	%
Tier 1 common capital ratio ⁽⁹⁾		16.0	%		14.3	%		16.5	%
Tier 1 risk based capital ratio ⁽⁹⁾		19.4	%		16.6	%		20.2	%
Tier 1 leverage capital ratio ⁽⁹⁾		11.5	%		9.6	%		11.9	%
Pre-tax margin on net revenues		20.1	%		12.6	%		22.1	%
Non-GAAP pre-tax margin on net revenues ^{(3) (4)}		21.4	%		14.1	%		23.8	%
Effective tax rate		24.1	%		24.8	%		19.7	%
Non-GAAP effective tax rate ⁽³⁾		24.1	%		24.8	%		19.7	%

Statistical Information (unaudited):	As of and For the Three Months Ended
($ in 000s, except financial advisors and locations)	3/31/21		3/31/20		% Change			12/31/20		% Change
Financial advisors		2,182		2,130		2.4			2,187		(0.2	)
Independent contractors		92		94		(2.1	)		93		(1.1	)
Total financial advisors		2,274		2,224		2.2			2,280		(0.3	)
Locations		446		447		(0.2	)		450		(0.9	)
Total client assets	$	378,615,000	$	276,627,000		36.9		$	357,429,000		5.9
Fee-based client assets	$	137,804,000	$	93,633,000		47.2		$	129,372,000		6.5
Client money market and insured product	$	23,616,000	$	17,234,000		37.0		$	22,837,000		3.4
Secured client lending ⁽¹⁰⁾	$	3,124,545	$	3,148,790		(0.8	)	$	2,816,973		10.9

	Asset Management and Service Fee Break-down (unaudited)
Asset Management and Service Fee Revenues:	Three Months Ended
($ in 000s)	3/31/21			3/31/20			% Change			12/31/20			% Change
Private Client Group ⁽¹¹⁾	$	233,805		$	193,260			21.0		$	208,238			12.3
Asset Management		30,114			29,762			1.2			28,298			6.4
Third-party Bank Sweep Program		2,102			3,308			(36.5	)		2,782			(24.4	)
Other ⁽¹²⁾		12,126			11,445			6.0			10,610			14.3
Total asset management and service fee revenues	$	278,147		$	237,775			17.0		$	249,928			11.3

Fee-based Assets:	Three Months Ended
($ in millions)	3/31/21			3/31/20			% Change			12/31/20			% Change
Private Client Group ⁽¹¹⁾	$	119,836		$	80,617			48.6		$	111,995			7.0
Asset Management		31,115			22,752			36.8			29,864			4.2
Elimination ⁽¹³⁾		(13,147	)		(9,736	)		35.0			(12,487	)		5.3
Total fee-based assets	$	137,804		$	93,633			47.2		$	129,372			6.5

Third-party Bank Sweep Program	$	6,455		$	1,491			332.9		$	6,555			(1.5	)

ROA (bps) ⁽¹⁴⁾
Private Client Group ⁽¹¹⁾		83.5			83.9						83.8
Asset Management		38.7			38.0						37.9
Third-party Bank Sweep Program		12.3			95.0						18.9

Consolidated Net Interest Income Analysis (Unaudited):

	Three Months Ended
	March 31, 2021							March 31, 2020								December 31, 2020
($ in millions, except percentages)	Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense			Average Interest Rate			Average Balance		Interest Income/ Expense			Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	1,812.2	$	0.9		0.20	%	$	931.8	$	3.7			1.58	%	$	1,545.2	$	1.1			0.28	%
Financial instruments owned		807.8		2.9		1.43			1,076.6		4.6			1.70			670.9		2.2			1.33
Margin balances		961.6		6.1		2.53			1,231.7		10.1			3.29			869.0		5.9			2.70
Investments:
Asset-backed securities		4,724.6		21.3		1.80			4,538.5		37.0			3.26			4,826.6		21.5			1.78
Mortgage-backed securities		905.9		3.3		1.44			1,094.2		6.0			2.18			758.8		2.6			1.38
Corporate fixed income securities		639.8		5.4		3.37			732.8		5.0			2.76			602.8		4.1			2.74
Other		6.4		—		2.06			22.3		0.1			2.14			6.8		0.1			2.10
Total Investments		6,276.7		30.0		1.91			6,387.8		48.1			3.01			6,195.0		28.3			1.83
Loans:
Commercial and industrial		4,573.6		39.5		3.45			3,560.3		38.0			4.27			4,206.7		32.7			3.11
Residential real estate		3,994.5		27.0		2.71			3,416.1		25.3			2.96			3,820.8		27.7			2.90
Securities-based loans		2,002.3		9.7		1.94			2,063.8		16.5			3.19			1,899.7		9.6			2.03
Commercial real estate		371.0		3.3		3.51			445.0		5.8			5.22			379.1		3.3			3.52
Loans held for sale		534.4		2.8		2.09			374.5		4.0			4.26			489.1		3.0			2.45
Other		639.9		4.9		3.07			500.1		5.6			4.46			649.3		4.9			3.02
Total Loans		12,115.7		87.2		2.88			10,359.8		95.2			3.67			11,444.7		81.2			2.84
Other interest-bearing assets		596.2		0.4		0.32			607.9		(0.5	)		(0.30	)		469.6		1.2			1.00
Total interest-earning assets/interest income		22,570.2		127.5		2.26			20,595.6		161.2			3.13			21,194.4		119.9			2.26
Interest-bearing liabilities:
Senior notes		1,112.5		12.1		4.35			1,017.1		11.2			4.40			1,311.0		14.4			4.39
Deposits		17,629.6		1.3		0.03			15,377.9		9.6			0.25			16,429.1		1.2			0.03
FHLB		15.8		—		0.29			590.5		2.4			1.59			137.0		0.1			0.34
Other interest-bearing liabilities		1,209.6		1.0		0.34			1,719.4		1.2			0.29			513.9		(1.2	)		(0.94	)
Total interest-bearing liabilities/interest expense	$	19,967.5	$	14.4		0.29	%	$	18,704.9	$	24.4			0.52	%	$	18,391.0	$	14.5			0.32	%
Net interest income/margin			$	113.1		2.00	%			$	136.8			2.66	%			$	105.4			1.99	%

Stifel Bancorp, Inc. ⁽¹⁵⁾ Net Interest Income Analysis (Unaudited):

	Three Months Ended
	March 31, 2021							March 31, 2020							December 31, 2020
($ in millions, except percentages)	Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	962.3	$	0.3		0.12	%	$	446.0	$	1.2		1.10	%	$	546.7	$	0.2		0.15	%
Investments		6,276.7		30.0		1.91			6,387.8		48.1		3.01			6,195.0		28.3		1.83
Loans		12,115.7		87.2		2.88			10,359.8		95.2		3.67			11,444.7		81.2		2.84
Other interest-bearing assets		40.7		0.2		2.23			59.6		0.6		4.02			42.8		0.4		3.20
Total interest-earning assets/interest income		19,395.4		117.7		2.43			17,253.2		145.1		3.36			18,229.2		110.1		2.42
Interest-bearing liabilities:
Deposits		17,629.6		1.3		0.03			15,377.9		9.6		0.25			16,429.1		1.2		0.03
FHLB		15.8		—		0.29			590.5		2.4		1.59			137.0		0.1		0.34
Other interest-bearing liabilities		1.4		—		7.92			1.6		—		7.09			1.4		0.1		9.87
Total interest-bearing liabilities/interest expense	$	17,646.8		1.3		0.03	%	$	15,970.0		12.0		0.30	%	$	16,567.5		1.4		0.03	%
Net interest income/margin			$	116.4		2.40	%			$	133.1		3.09	%			$	108.7		2.39	%

Stifel Bancorp, Inc. ⁽¹⁵⁾ - a component of Global Wealth Management

Selected operating data (unaudited):	Three Months Ended
($ in 000s, except percentages)	3/31/21			3/31/20			% Change			12/31/20			% Change
Net interest income	$	116,387		$	133,131			(12.6	)	$	108,699			7.1
Credit loss provision/(release)		(5,252	)		16,068			(132.7	)		—		n/m
Charge-offs		934			20		n/m				—		n/m
Net interest margin		2.40	%		3.09	%	(69) bps				2.39	%	1 bps

Financial Metrics (unaudited):	As of
($ in 000s, except percentages)	3/31/21			3/31/20			12/31/20
Total assets	$	20,500,414		$	18,442,914		$	18,867,133
Total shareholders' equity		1,474,473			1,224,307			1,399,382
Total loans, net (includes loans held for sale)		12,422,234			10,565,287			11,558,008
Total deposits		18,715,133			16,880,933			17,396,497
Available-for-sale securities, at fair value		2,189,664			3,363,961			2,229,878
Held-to-maturity securities, at amortized cost		4,758,910			3,083,065			4,114,840
Commercial and industrial		4,923,494			3,813,862			4,296,089
Residential real estate		4,158,033			3,495,136			3,956,670
Securities-based loans		2,089,747			1,945,371			1,933,974
Commercial real estate		374,736			399,732			366,485
Loans held for sale		330,521			570,787			551,248
Stifel Bank & Trust:
Common equity tier 1 capital ratio ⁽⁹⁾		11.1	%		11.7	%		11.4	%
Tier 1 capital ratio ⁽⁹⁾		11.1	%		11.7	%		11.4	%
Total capital ratio ⁽⁹⁾		12.4	%		13.0	%		12.7	%
Tier 1 leverage ratio ⁽⁹⁾		7.1	%		7.1	%		7.1	%
Stifel Bank:
Common equity tier 1 capital ratio ⁽⁹⁾		18.5	%		15.6	%		16.5	%
Tier 1 capital ratio ⁽⁹⁾		18.5	%		15.6	%		16.5	%
Total capital ratio ⁽⁹⁾		19.2	%		16.5	%		17.7	%
Tier 1 leverage ratio ⁽⁹⁾		7.3	%		7.3	%		7.3	%

Credit Metrics:
Allowance for credit losses	$	129,109		$	121,017		$	135,295
Allowance as a percentage of retained loans		1.06	%		1.20	%		1.22	%
Net charge-offs as a percentage of average loans		0.01	%		0.00	%		0.00	%
Total nonperforming assets	$	13,756		$	14,616		$	13,925
Nonperforming assets as % of total assets		0.07	%		0.08	%		0.07	%

Global Wealth Management Summary Results of Operations (Unaudited)
	Three Months Ended
($ in 000s)	3/31/21		3/31/20		% Change			12/31/20		% Change
Revenues:
Commissions	$	147,505	$	136,897		7.7		$	139,594		5.7
Principal transactions		53,599		42,982		24.7			46,125		16.2
Brokerage revenues		201,104		179,879		11.8			185,719		8.3

Asset management and service fees		278,109		237,760		17.0			249,907		11.3
Net interest		117,775		138,682		(15.1	)		110,521		6.6
Investment banking ⁽¹⁶⁾		13,549		10,333		31.1			9,562		41.7
Other income		20,958		16,302		28.6			19,543		7.2
Net revenues		631,495		582,956		8.3			575,252		9.8
Non-interest expenses:
Compensation and benefits		336,721		298,370		12.9			303,961		10.8
Non-compensation operating expenses		71,543		90,419		(20.9	)		74,829		(4.4	)
Total non-interest expenses		408,264		388,789		5.0			378,790		7.8
Income before income taxes	$	223,231	$	194,167		15.0		$	196,462		13.6

As a percentage of net revenues:
Compensation and benefits		53.3		51.2					52.8
Non-compensation operating expenses		11.4		15.5					13.0
Income before income taxes		35.3		33.3					34.2

Institutional Group Summary Results of Operations (Unaudited)
	Three Months Ended
($ in 000s)	3/31/21		3/31/20			% Change			12/31/20		% Change
Revenues:
Commissions	$	66,109	$	74,198			(10.9	)	$	60,253		9.7
Principal transactions		111,407		95,685			16.4			96,612		15.3
Brokerage revenues		177,516		169,883			4.5			156,865		13.2
Capital raising		195,257		93,082			109.8			154,710		26.2
Advisory fees		130,482		76,053			71.6			173,399		(24.8	)
Investment banking		325,739		169,135			92.6			328,109		(0.7	)
Other ⁽¹⁷⁾		2,826		(6,780	)	n/m				4,474		(36.8	)
Net revenues		506,081		332,238			52.3			489,448		3.4
Non-interest expenses:
Compensation and benefits		301,624		205,988			46.4			284,607		6.0
Non-compensation operating expenses		87,269		84,510			3.3			81,186		7.5
Total non-interest expenses		388,893		290,498			33.9			365,793		6.3
Income before income taxes	$	117,188	$	41,740			180.8		$	123,655		(5.2	)

As a percentage of net revenues:
Compensation and benefits		59.6		62.0						58.1
Non-compensation operating expenses		17.2		25.4						16.6
Income before income taxes		23.2		12.6						25.3

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 March 31, 2021, March 31, 2020, and December 31, 2020. 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 March 31, 2021, March 31, 2020, and December 31, 2020 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

	Three Months Ended
($ in 000s)	3/31/21			3/31/20			12/31/20
GAAP net income	$	173,015		$	86,589		$	188,469
Preferred dividend		8,289			4,844			7,677
Net income available to common shareholders		164,726			81,745			180,792

Non-GAAP adjustments:
Merger-related and severance ⁽¹⁸⁾		15,429			13,510			17,706
Provision for income taxes ⁽¹⁹⁾		(3,730	)		(3,322	)		(3,444	)
Total non-GAAP adjustments		11,699			10,188			14,262
Non-GAAP net income available to common shareholders	$	176,425		$	91,933		$	195,054

Weighted average diluted shares outstanding ⁽²⁾		117,875			114,929			116,828

GAAP earnings per diluted common share ⁽²⁾	$	1.47		$	0.75		$	1.61
Non-GAAP adjustments ⁽²⁾		0.10			0.09			0.13
Non-GAAP earnings per diluted common share ⁽²⁾	$	1.57		$	0.84		$	1.74

GAAP earnings per diluted common share available to common shareholders ⁽²⁾	$	1.40		$	0.71		$	1.55
Non-GAAP adjustments ⁽²⁾		0.10			0.09			0.12
Non-GAAP earnings per diluted common share available to common shareholders ⁽²⁾	$	1.50		$	0.80		$	1.67

Footnotes

⁽¹⁾

Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Average deferred taxes on goodwill and intangible assets was $51.7 million, $47.2 million, and $50.7 million, as of March 31, 2021 and 2020, and December 31, 2020, respectively. Historical periods have been restated to conform with the current period presentation.

⁽²⁾

All share and per share information has been retroactively adjusted to reflect the December 2020 three-for-two stock split.

⁽³⁾

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

⁽⁴⁾

Non-GAAP pre-tax margin for the three months ended March 31, 2021 of 21.4% is calculated by adding non-GAAP adjustments of $15.4 million to our GAAP income before income taxes of $227.9 million and dividing it by non-GAAP net revenues for the quarter of $1.1 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

⁽⁵⁾

Excludes revenue included in the Other segment.

⁽⁶⁾

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

⁽⁷⁾

Book value per common share represents shareholders’ equity (excluding preferred stock) divided by period end common shares outstanding.

⁽⁸⁾

Annualized return on average common shareholders’ equity (“ROE”) is calculated by dividing annualized net income applicable to common shareholders by average common shareholders’ equity or, in the case of non-GAAP ROE, calculated by dividing non-GAAP net income applicable to commons shareholders by average common shareholders’ equity.

⁽⁹⁾

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

⁽¹⁰⁾

Includes client margin balances held by the Company’s broker-dealer subsidiaries and securities-based loans held at the Company’s bank subsidiaries.

⁽¹¹⁾

Includes Private Client Group and Trust Business.

⁽¹²⁾

Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.

⁽¹³⁾

Asset management assets managed in Private Client Group or Trust accounts.

⁽¹⁴⁾

Return on assets (ROA) is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for Individual Program Banks.

⁽¹⁵⁾

Includes Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A, and Stifel Trust Company Delaware, N.A.

⁽¹⁶⁾

Includes capital raising and advisory fees.

⁽¹⁷⁾

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

⁽¹⁸⁾

Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, 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.

⁽¹⁹⁾

See details of non-GAAP adjustments under “Provision for Income Taxes.”