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

Exhibit 99.1

 

April 30, 2019

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 2019 FINANCIAL RESULTS

 

•

Net revenues of $770.4 million, increased 2.7% compared with the year-ago quarter.

 

•

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

 

•

Net income available to common shareholders of $96.9 million, or $1.22 per diluted common share.

 

•

Non-GAAP net income available to common shareholders of $104.5 million, or $1.32 per diluted common share.

 

•

Record client assets of $300.0 billion, increased 9.2% compared with the year-ago quarter and 11.2% sequentially.

 

•

Bank net interest margin of 3.17% increased 28 basis points sequentially.

 

•

Non-GAAP return on tangible common equity of 22.3%.

 

•

Increase in quarterly dividend by 25% to $0.15 per common share.

 

•

Repurchased approximately 1.0 million shares of the Company’s common stock at an average price of $53.25.

ST. LOUIS, MO – Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $96.9 million, or $1.22 per diluted common share on net revenues of $770.4 million for the three months ended March 31, 2019, compared with net income available to common shareholders of $86.4 million, or $1.06 per diluted common share, on net revenues of $750.4 million for the first quarter of 2018.

For the three months ended March 31, 2019, the Company reported non-GAAP net income available to common shareholders of $104.5 million, or $1.32 per diluted common share. The Company’s reported GAAP net income for the three months ended March 31, 2019 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“Stifel generated record first quarter results highlighting the diversity of our business model.  Net revenue of $770 million increased 3% from last year’s first quarter record and we achieved non-GAAP pre-tax margins of 19% and return on tangible equity of 22%.  Our Global Wealth Management segment posted record net revenues and record pre-tax income, overcoming the expected decline in asset management revenue resulting from the market sell off in the fourth quarter of 2018.  Our Institutional Group generated strong advisory, public finance, and fixed income brokerage revenue that helped to minimize the impact of the government shutdown on our equities business.  As we look forward, we are optimistic about our business prospects for the remainder of 2019 and beyond,”  stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

 

 

 

1

 

Financial Highlights (Unaudited)

 

Three Months Ended

 

($ in 000s, except per share data)

 

GAAP 3/31/19

 

 

GAAP 3/31/18

 

 

% Change

 

 

GAAP 12/31/18

 

 

% Change

 

 

 

Non-GAAP (1) 3/31/19

 

 

Non-GAAP (1) 3/31/18

 

 

% Change

 

Net revenues

 

$

770,420

 

 

$

750,358

 

 

 

2.7

 

 

$

793,449

 

 

 

(2.9

)

 

 

$

770,420

 

 

$

750,549

 

 

 

2.6

 

Net income applicable to Stifel Financial Corp.

 

$

99,207

 

 

$

88,761

 

 

 

11.8

 

 

$

114,062

 

 

 

(13.0

)

 

 

$

106,864

 

 

$

96,147

 

 

 

11.1

 

Preferred dividend

 

 

2,344

 

 

 

2,344

 

 

 

—

 

 

 

2,344

 

 

 

—

 

 

 

 

2,344

 

 

 

2,344

 

 

 

—

 

Net income available to common shareholders

 

$

96,863

 

 

$

86,417

 

 

 

12.1

 

 

$

111,718

 

 

 

(13.3

)

 

 

$

104,520

 

 

$

93,803

 

 

 

11.4

 

Earnings per diluted common share

 

$

1.25

 

 

$

1.09

 

 

 

14.7

 

 

$

1.41

 

 

 

(11.3

)

 

 

$

1.35

 

 

$

1.18

 

 

 

14.4

 

Earnings per diluted common share available to common shareholders

 

$

1.22

 

 

$

1.06

 

 

 

15.1

 

 

$

1.38

 

 

 

(11.6

)

 

 

$

1.32

 

 

$

1.15

 

 

 

14.8

 

Compensation ratio

 

 

59.5

%

 

 

61.0

%

 

 

 

 

 

 

56.5

%

 

 

 

 

 

 

 

59.0

%

 

 

60.5

%

 

 

 

 

Non-compensation ratio

 

 

22.6

%

 

 

23.0

%

 

 

 

 

 

 

23.8

%

 

 

 

 

 

 

 

22.0

%

 

 

22.2

%

 

 

 

 

Pre-tax operating margin (2)

 

 

17.9

%

 

 

16.0

%

 

 

 

 

 

 

19.7

%

 

 

 

 

 

 

 

19.0

%

 

 

17.3

%

 

 

 

 

 

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $259.5 million, a 1.5% decrease compared with the first quarter of 2018 and a 4.4% increase compared with the fourth quarter of 2018.

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Global Wealth Management

 

$

153,194

 

 

$

162,734

 

 

 

(5.9

)

 

$

157,331

 

 

 

(2.6

)

Institutional brokerage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

38,881

 

 

 

48,085

 

 

 

(19.1

)

 

 

48,705

 

 

 

(20.2

)

Fixed income capital markets

 

 

67,406

 

 

 

52,738

 

 

 

27.8

 

 

 

42,463

 

 

 

58.7

 

Total institutional brokerage

 

 

106,287

 

 

 

100,823

 

 

 

5.4

 

 

 

91,168

 

 

 

16.6

 

Total brokerage revenues

 

$

259,481

 

 

$

263,557

 

 

 

(1.5

)

 

$

248,499

 

 

 

4.4

 

 

•

Global Wealth Management brokerage revenues were $153.2 million, a 5.9% decrease compared with the first quarter of 2018 and a 2.6% decrease compared with the fourth quarter of 2018.

 

•

Institutional equity brokerage revenues were $38.9 million, a 19.1% decrease compared with the first quarter of 2018 and a 20.2% decrease compared with the fourth quarter of 2018.

 

•

Institutional fixed income brokerage revenues were $67.4 million, a 27.8% increase compared with the first quarter of 2018 and a 58.7% increase compared with the fourth quarter of 2018.

Investment Banking Revenues

Investment banking revenues were $161.8 million, an 8.2% decrease compared with the first quarter of 2018 and a 19.6% decrease compared with the fourth quarter of 2018.

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

 

 

3/31/18

 

 

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Capital raising:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

8,223

 

 

 

 

$

7,688

 

 

 

 

 

7.0

 

 

$

7,915

 

 

 

3.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity capital markets

 

 

27,859

 

 

 

 

 

52,707

 

 

 

 

 

(47.1

)

 

 

51,839

 

 

 

(46.3

)

Fixed income capital markets

 

 

20,863

 

 

 

 

 

18,294

 

 

 

 

 

14.0

 

 

 

30,390

 

 

 

(31.3

)

Institutional Group

 

 

48,722

 

 

 

 

 

71,001

 

 

 

 

 

(31.4

)

 

 

82,229

 

 

 

(40.7

)

Total capital raising (3)

 

 

56,945

 

 

 

 

 

78,689

 

 

 

 

 

(27.6

)

 

 

90,144

 

 

 

(36.8

)

Advisory fees (3)

 

 

104,895

 

 

 

 

 

97,673

 

 

 

 

 

7.4

 

 

 

111,089

 

 

 

(5.6

)

Total investment banking

 

$

161,840

 

 

 

 

$

176,362

 

 

 

 

 

(8.2

)

 

$

201,233

 

 

 

(19.6

)

 

•

Global Wealth Management capital raising revenues were $8.2 million, a 7.0% increase compared with the first quarter of 2018 and a 3.9% increase compared with the fourth quarter of 2018.

 

•

Institutional equity capital raising revenues were $27.9 million, a 47.1% decrease compared with the first quarter of 2018 and a 46.3% decrease compared with the fourth quarter of 2018.

 

•

Institutional fixed income capital raising revenues were $20.9 million, a 14.0% increase compared with the first quarter of 2018 and a 31.3% decrease compared with the fourth quarter of 2018.

 

2

 

 

•

Advisory fee revenues were $104.9 million, a 7.4% increase compared with the first quarter of 2018 and a 5.6% decrease compared with the fourth quarter of 2018.

 

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $195.3 million, a 0.3% decrease compared with the first quarter of 2018 and a 7.0% decrease compared with the fourth quarter of 2018. See Asset Management and Service Fee Break-down table.

Net Interest Income

Record net interest income of $141.7 million, a 27.3% increase compared with the first quarter of 2018 and an 11.8% increase compared with the fourth quarter of 2018. The increase is primarily due to growth of interest-earning assets and interest-bearing liabilities, as well as higher interest rates.

 

•

Interest income was $191.1 million, a 38.7% increase compared with the first quarter of 2018 and a 3.5% increase compared with the fourth quarter of 2018.

 

•

Interest expense was $49.4 million, an 86.9% increase compared with the first quarter of 2018 and a 14.6% decrease compared with the fourth quarter of 2018.


 

3

 

Compensation and Benefits Expenses

For the quarter ended March 31, 2019, compensation and benefits expenses were $458.1 million, which included $3.9 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $457.9 million in the first quarter of 2018 and $448.4 million in the fourth quarter of 2018. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 59.0% in the first quarter of 2019 (non-GAAP measure).

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

GAAP compensation and benefits

 

$

458,114

 

 

$

457,893

 

As a percentage of net revenues

 

 

59.5

%

 

 

61.0

%

Non-GAAP adjustments: (4)

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

(3,932

)

 

 

(3,739

)

Non-GAAP compensation and benefits

 

$

454,182

 

 

$

454,154

 

As a percentage of non-GAAP net revenues

 

 

59.0

%

 

 

60.5

%

Non-Compensation Operating Expenses

For the quarter ended March 31, 2019, non-compensation operating expenses were $174.5 million, which included $4.3 million of merger-related expenses (non-GAAP adjustments). This compares with $172.9 million in the first quarter of 2018 and $189.1 million in the fourth quarter of 2018. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2019 were 22.0% (non-GAAP measure).

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

GAAP non-compensation expenses

 

$

174,497

 

 

$

172,911

 

As a percentage of net revenues

 

 

22.6

%

 

 

23.0

%

Non-GAAP adjustments: (4)

 

 

 

 

 

 

 

 

Merger-related

 

 

(4,259

)

 

 

(6,023

)

Non-GAAP non-compensation expenses

 

$

170,238

 

 

$

166,888

 

As a percentage of non-GAAP net revenues

 

 

22.0

%

 

 

22.2

%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended March 31, 2019 was 27.8%. This compares with an effective income tax rate of 25.8% for the first quarter of 2018 and 26.9% for the fourth quarter of 2018. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2019 was 26.6%.

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

GAAP provision for income taxes

 

$

38,370

 

 

$

30,793

 

GAAP effective tax rate

 

 

27.8

%

 

 

25.8

%

Non-GAAP adjustments: (4)

 

 

 

 

 

 

 

 

Merger-related and severance

 

 

2,203

 

 

 

2,712

 

Other

 

 

(1,669

)

 

 

(145

)

 

 

 

534

 

 

 

2,567

 

Non-GAAP provision for income taxes

 

$

38,904

 

 

$

33,360

 

Non-GAAP effective tax rate

 

 

26.6

%

 

 

25.8

%

 

 


 

4

 

Conference Call Information

Stifel Financial Corp. will host its first quarter 2019 financial results conference call on Tuesday, April 30, 2019, 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 #6179475. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc., and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust and Stifel Bank 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 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

 

($ in 000s, except per share amounts)

 

3/31/19

 

 

 

 

3/31/18

 

 

 

 

% Change

 

 

 

 

12/31/18

 

 

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

155,449

 

 

 

 

$

165,775

 

 

 

 

 

(6.2

)

 

 

 

$

167,039

 

 

 

 

 

(6.9

)

Principal transactions

 

 

104,032

 

 

 

 

 

97,782

 

 

 

 

 

6.4

 

 

 

 

 

81,460

 

 

 

 

 

27.7

 

Brokerage Revenues

 

 

259,481

 

 

 

 

 

263,557

 

 

 

 

 

(1.5

)

 

 

 

 

248,499

 

 

 

 

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital raising

 

 

56,950

 

 

 

 

 

78,690

 

 

 

 

 

(27.6

)

 

 

 

 

90,144

 

 

 

 

 

(36.8

)

Advisory fees

 

 

104,890

 

 

 

 

 

97,672

 

 

 

 

 

7.4

 

 

 

 

 

111,089

 

 

 

 

 

(5.6

)

Investment banking

 

 

161,840

 

 

 

 

 

176,362

 

 

 

 

 

(8.2

)

 

 

 

 

201,233

 

 

 

 

 

(19.6

)

Asset management and service fees

 

 

195,267

 

 

 

 

 

195,801

 

 

 

 

 

(0.3

)

 

 

 

 

210,063

 

 

 

 

 

(7.0

)

Other income

 

 

12,209

 

 

 

 

 

3,357

 

 

 

 

 

263.7

 

 

 

 

 

6,996

 

 

 

 

 

74.5

 

Operating Revenues

 

 

628,797

 

 

 

 

 

639,077

 

 

 

 

 

(1.6

)

 

 

 

 

666,791

 

 

 

 

 

(5.7

)

Interest Revenue

 

 

191,071

 

 

 

 

 

137,734

 

 

 

 

 

38.7

 

 

 

 

 

184,534

 

 

 

 

 

3.5

 

Total Revenues

 

 

819,868

 

 

 

 

 

776,811

 

 

 

 

 

5.5

 

 

 

 

 

851,325

 

 

 

 

 

(3.7

)

Interest Expense

 

 

49,448

 

 

 

 

 

26,453

 

 

 

 

 

86.9

 

 

 

 

 

57,876

 

 

 

 

 

(14.6

)

Net Revenues

 

 

770,420

 

 

 

 

 

750,358

 

 

 

 

 

2.7

 

 

 

 

 

793,449

 

 

 

 

 

(2.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

458,114

 

 

 

 

 

457,893

 

 

 

 

 

0.0

 

 

 

 

 

448,375

 

 

 

 

 

2.2

 

Occupancy and equipment rental

 

 

58,862

 

 

 

 

 

57,595

 

 

 

 

 

2.2

 

 

 

 

 

57,158

 

 

 

 

 

3.0

 

Communication and office supplies

 

 

35,697

 

 

 

 

 

33,499

 

 

 

 

 

6.6

 

 

 

 

 

36,786

 

 

 

 

 

(3.0

)

Commissions and floor brokerage

 

 

10,956

 

 

 

 

 

9,365

 

 

 

 

 

17.0

 

 

 

 

 

11,169

 

 

 

 

 

(1.9

)

Provision for loan losses

 

 

2,283

 

 

 

 

 

2,043

 

 

 

 

 

11.7

 

 

 

 

 

5,122

 

 

 

 

 

(55.4

)

Other operating expenses

 

 

66,699

 

 

 

 

 

70,409

 

 

 

 

 

(5.3

)

 

 

 

 

78,908

 

 

 

 

 

(15.5

)

Total non-interest expenses

 

 

632,611

 

 

 

 

 

630,804

 

 

 

 

 

0.3

 

 

 

 

 

637,518

 

 

 

 

 

(0.8

)

Income before income tax expense

 

 

137,809

 

 

 

 

 

119,554

 

 

 

 

 

15.3

 

 

 

 

 

155,931

 

 

 

 

 

(11.6

)

Provision for income taxes

 

 

38,370

 

 

 

 

 

30,793

 

 

 

 

 

24.6

 

 

 

 

 

41,869

 

 

 

 

 

(8.4

)

Net income

 

 

99,439

 

 

 

 

 

88,761

 

 

 

 

 

12.0

 

 

 

 

 

114,062

 

 

 

 

 

(12.8

)

Net income applicable to non-controlling interests

 

 

232

 

 

 

 

 

—

 

 

 

 

n/m

 

 

 

 

 

—

 

 

 

 

n/m

 

Net income applicable to Stifel Financial Corp.

 

 

99,207

 

 

 

 

 

88,761

 

 

 

 

 

11.8

 

 

 

 

 

114,062

 

 

 

 

 

(13.0

)

Preferred dividends

 

 

2,344

 

 

 

 

 

2,344

 

 

 

 

 

—

 

 

 

 

 

2,344

 

 

 

 

 

—

 

Net income available to common shareholders

 

$

96,863

 

 

 

 

$

86,417

 

 

 

 

 

12.1

 

 

 

 

$

111,718

 

 

 

 

 

(13.3

)

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.35

 

 

 

 

$

1.20

 

 

 

 

 

12.5

 

 

 

 

$

1.56

 

 

 

 

 

(13.5

)

Diluted

 

$

1.22

 

 

 

 

$

1.06

 

 

 

 

 

15.1

 

 

 

 

$

1.38

 

 

 

 

 

(11.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.15

 

 

 

 

$

0.12

 

 

 

 

 

25.0

 

 

 

 

$

0.12

 

 

 

 

 

25.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

71,700

 

 

 

 

 

71,999

 

 

 

 

 

(0.4

)

 

 

 

 

71,666

 

 

 

 

 

0.0

 

Diluted

 

 

79,210

 

 

 

 

 

81,789

 

 

 

 

 

(3.2

)

 

 

 

 

80,706

 

 

 

 

 

(1.9

)


 

6

 

Summary Segment Results (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

 

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

510,610

 

 

$

485,575

 

 

 

 

 

5.2

 

 

$

509,256

 

 

 

0.3

 

Institutional Group

 

 

261,286

 

 

 

270,078

 

 

 

 

 

(3.3

)

 

 

286,640

 

 

 

(8.8

)

Other

 

 

(1,476

)

 

 

(5,295

)

 

 

 

 

72.1

 

 

 

(2,447

)

 

 

39.7

 

Total net revenues

 

$

770,420

 

 

$

750,358

 

 

 

 

 

2.7

 

 

$

793,449

 

 

 

(2.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

316,120

 

 

$

308,804

 

 

 

 

 

2.4

 

 

$

320,296

 

 

 

(1.3

)

Institutional Group

 

 

229,082

 

 

 

225,508

 

 

 

 

 

1.6

 

 

 

244,488

 

 

 

(6.3

)

Other

 

 

87,409

 

 

 

96,492

 

 

 

 

 

(9.4

)

 

 

72,734

 

 

 

20.2

 

Total operating expenses

 

$

632,611

 

 

$

630,804

 

 

 

 

 

0.3

 

 

$

637,518

 

 

 

(0.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating contribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

$

194,490

 

 

$

176,771

 

 

 

 

 

10.0

 

 

$

188,960

 

 

 

2.9

 

Institutional Group

 

 

32,204

 

 

 

44,570

 

 

 

 

 

(27.7

)

 

 

42,152

 

 

 

(23.6

)

Other

 

 

(88,885

)

 

 

(101,787

)

 

 

 

 

(12.7

)

 

 

(75,181

)

 

 

18.2

 

Income before income taxes

 

$

137,809

 

 

$

119,554

 

 

 

 

 

15.3

 

 

$

155,931

 

 

 

(11.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

48.5

 

 

 

49.8

 

 

 

 

 

 

 

 

 

48.5

 

 

 

 

 

Institutional Group

 

 

61.0

 

 

 

59.0

 

 

 

 

 

 

 

 

 

62.0

 

 

 

 

 

Non-comp. operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

13.4

 

 

 

13.8

 

 

 

 

 

 

 

 

 

14.4

 

 

 

 

 

Institutional Group

 

 

26.7

 

 

 

24.5

 

 

 

 

 

 

 

 

 

23.3

 

 

 

 

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Wealth Management

 

 

38.1

 

 

 

36.4

 

 

 

 

 

 

 

 

 

37.1

 

 

 

 

 

Institutional Group

 

 

12.3

 

 

 

16.5

 

 

 

 

 

 

 

 

 

14.7

 

 

 

 

 

Consolidated pre-tax margin

 

 

17.9

 

 

 

16.0

 

 

 

 

 

 

 

 

 

19.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Financial metrics (unaudited):

As of and For the Three Months Ended

 

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

3/31/19

 

3/31/18

 

12/31/18

 

Total assets

$

24,183,559

 

$

21,715,342

 

$

24,519,598

 

Total Stifel Financial shareholders' equity

$

3,376,623

 

$

2,917,540

 

$

3,167,593

 

Book value per common share (5)

$

43.18

 

$

38.49

 

$

42.62

 

Return on common equity (6)

 

12.7

%

 

12.7

%

 

14.9

%

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

 

13.7

%

 

13.7

%

 

16.9

%

Return on tangible common equity (7)

 

20.6

%

 

21.0

%

 

24.1

%

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

 

22.3

%

 

22.8

%

 

27.3

%

Tier 1 common capital ratio (8)

 

15.9

%

 

16.6

%

 

16.8

%

Tier 1 risk based capital ratio (8)

 

18.5

%

 

18.7

%

 

18.2

%

Tier 1 leverage capital ratio (8)

 

9.8

%

 

9.6

%

 

9.3

%

Pre-tax margin on net revenues

 

17.9

%

 

16.0

%

 

19.7

%

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

 

19.0

%

 

17.3

%

 

21.9

%

Effective tax rate

 

27.8

%

 

25.8

%

 

26.9

%

Non-GAAP effective tax rate (1)

 

26.6

%

 

25.8

%

 

25.6

%

 

Statistical Information (unaudited):

 

As of and For the Three Months Ended

 

($ in 000s, except financial advisors and locations)

 

3/31/19

 

 

3/31/18

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Financial advisors (9)

 

 

2,061

 

 

 

2,008

 

 

 

2.6

 

 

 

2,051

 

 

 

0.5

 

Independent contractors

 

 

99

 

 

 

109

 

 

 

(9.2

)

 

 

101

 

 

 

(2.0

)

Total financial advisors

 

 

2,160

 

 

 

2,117

 

 

 

2.0

 

 

 

2,152

 

 

 

0.4

 

Locations

 

 

407

 

 

 

397

 

 

 

2.5

 

 

 

404

 

 

 

0.7

 

Total client assets

 

$

299,993,000

 

 

$

274,651,000

 

 

 

9.2

 

 

$

269,862,000

 

 

 

11.2

 

Fee-based client assets

 

$

99,579,000

 

 

$

89,031,000

 

 

 

11.8

 

 

$

90,174,000

 

 

 

10.4

 

Client money market and insured product

 

$

14,928,000

 

 

$

16,659,000

 

 

 

(10.4

)

 

$

16,109,000

 

 

 

(7.3

)

Secured client lending (10)

 

$

3,175,240

 

 

$

3,119,473

 

 

 

1.8

 

 

$

2,893,074

 

 

 

9.8

 

  

 

 

Asset Management and Service Fee Break-down (unaudited)

 

Asset Management and Service Fee Revenues:

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Private Client Group (11)

 

$

148,092

 

 

$

146,769

 

 

 

0.9

 

 

$

159,775

 

 

 

(7.3

)

Asset Management

 

 

28,469

 

 

 

27,104

 

 

 

5.0

 

 

 

28,670

 

 

 

(0.7

)

Third-party Bank Sweep Program

 

 

8,562

 

 

 

11,603

 

 

 

(26.2

)

 

 

11,062

 

 

 

(22.6

)

Other (12)

 

 

10,144

 

 

 

10,325

 

 

 

(1.8

)

 

 

10,556

 

 

 

(3.9

)

Total asset management and service fee revenues

 

$

195,267

 

 

$

195,801

 

 

 

(0.3

)

 

$

210,063

 

 

 

(7.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based Assets:

 

Three Months Ended

 

($ in millions)

 

3/31/19

 

 

3/31/18

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Private Client Group (11)

 

$

73,553

 

 

$

66,255

 

 

 

11.0

 

 

$

66,097

 

 

 

11.3

 

Asset Management

 

 

32,952

 

 

 

29,086

 

 

 

13.3

 

 

 

30,269

 

 

 

8.9

 

Elimination (13)

 

 

(6,926

)

 

 

(6,310

)

 

 

9.8

 

 

 

(6,192

)

 

 

11.9

 

Total fee-based assets

 

$

99,579

 

 

$

89,031

 

 

 

11.8

 

 

$

90,174

 

 

 

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual Program Banks

 

$

1,875

 

 

$

3,676

 

 

 

(49.0

)

 

$

2,569

 

 

 

(27.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROA (bps) (14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Client Group (11)

 

 

89.6

 

 

 

90.9

 

 

 

 

 

 

 

89.4

 

 

 

 

 

Asset Management

 

 

34.6

 

 

 

37.3

 

 

 

 

 

 

 

37.9

 

 

 

 

 

Individual Program Banks

 

 

153.3

 

 

 

121.7

 

 

 

 

 

 

 

159.3

 

 

 

 

 


 

8

 

Net Interest Income Analysis (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2019

 

 

March 31, 2018

 

 

December 31, 2018

 

($ 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

 

$

1,124.9

 

 

$

7.8

 

 

 

2.78

%

 

$

351.4

 

 

$

1.4

 

 

 

1.64

%

 

$

689.1

 

 

$

4.3

 

 

 

2.52

%

Financial instruments owned

 

 

1,277.4

 

 

 

6.3

 

 

 

1.98

 

 

 

1,142.4

 

 

 

4.9

 

 

 

1.73

 

 

 

1,275.9

 

 

 

5.8

 

 

 

1.81

 

Margin balances

 

 

1,258.5

 

 

 

13.4

 

 

 

4.27

 

 

 

1,276.6

 

 

 

11.0

 

 

 

3.43

 

 

 

1,245.0

 

 

 

13.2

 

 

 

4.24

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

4,698.9

 

 

 

49.0

 

 

 

4.17

 

 

 

4,431.2

 

 

 

36.9

 

 

 

3.33

 

 

 

4,909.1

 

 

 

49.2

 

 

 

4.01

 

Mortgage-backed securities

 

 

1,531.4

 

 

 

9.0

 

 

 

2.35

 

 

 

1,746.1

 

 

 

9.6

 

 

 

2.20

 

 

 

1,599.4

 

 

 

9.0

 

 

 

2.18

 

Corporate fixed income securities

 

 

954.5

 

 

 

7.2

 

 

 

3.01

 

 

 

1,293.6

 

 

 

8.1

 

 

 

2.51

 

 

 

1,143.9

 

 

 

8.4

 

 

 

2.98

 

State and municipal securities

 

 

50.1

 

 

 

0.3

 

 

 

2.38

 

 

 

74.1

 

 

 

0.3

 

 

 

1.36

 

 

 

72.8

 

 

 

0.3

 

 

 

2.02

 

Total Investments

 

 

7,234.9

 

 

 

65.5

 

 

 

3.62

 

 

 

7,545.0

 

 

 

54.9

 

 

 

2.91

 

 

 

7,725.2

 

 

 

66.9

 

 

 

3.47

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

3,419.8

 

 

 

40.8

 

 

 

4.78

 

 

 

2,478.0

 

 

 

26.7

 

 

 

4.32

 

 

 

3,245.7

 

 

 

38.9

 

 

 

4.79

 

Residential real estate

 

 

2,927.9

 

 

 

22.5

 

 

 

3.07

 

 

 

2,636.9

 

 

 

18.3

 

 

 

2.77

 

 

 

2,844.8

 

 

 

21.1

 

 

 

2.96

 

Securities-based loans

 

 

1,799.5

 

 

 

19.1

 

 

 

4.25

 

 

 

1,796.6

 

 

 

15.3

 

 

 

3.41

 

 

 

1,844.9

 

 

 

19.3

 

 

 

4.18

 

Commercial real estate

 

 

336.5

 

 

 

4.7

 

 

 

5.60

 

 

 

104.5

 

 

 

1.0

 

 

 

3.78

 

 

 

322.1

 

 

 

4.8

 

 

 

5.94

 

Loans held for sale

 

 

179.0

 

 

 

1.8

 

 

 

4.09

 

 

 

200.6

 

 

 

1.8

 

 

 

3.65

 

 

 

236.5

 

 

 

2.3

 

 

 

3.97

 

Other

 

 

319.0

 

 

 

4.4

 

 

 

5.36

 

 

 

50.2

 

 

 

0.5

 

 

 

4.01

 

 

 

280.2

 

 

 

3.7

 

 

 

5.43

 

Total Loans

 

 

8,981.7

 

 

 

93.3

 

 

 

4.15

 

 

 

7,266.8

 

 

 

63.6

 

 

 

3.50

 

 

 

8,774.2

 

 

 

90.1

 

 

 

4.11

 

Other interest-bearing assets

 

 

736.3

 

 

 

4.8

 

 

 

2.61

 

 

 

768.0

 

 

 

1.9

 

 

 

0.97

 

 

 

836.5

 

 

 

4.2

 

 

 

2.00

 

Total interest-earning assets/interest income

 

 

20,613.7

 

 

 

191.1

 

 

 

3.71

 

 

 

18,350.2

 

 

 

137.7

 

 

 

3.00

 

 

 

20,545.9

 

 

 

184.5

 

 

 

3.59

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

68.2

 

 

 

0.5

 

 

 

3.10

 

 

 

160.4

 

 

 

0.9

 

 

 

2.31

 

 

 

58.7

 

 

 

0.5

 

 

 

3.09

 

Senior notes

 

 

1,016.1

 

 

 

11.1

 

 

 

4.38

 

 

 

1,015.1

 

 

 

11.1

 

 

 

4.38

 

 

 

1,016.0

 

 

 

11.0

 

 

 

4.38

 

Deposits

 

 

15,282.3

 

 

 

28.1

 

 

 

0.73

 

 

 

13,151.6

 

 

 

8.1

 

 

 

0.25

 

 

 

14,631.2

 

 

 

33.0

 

 

 

0.90

 

FHLB

 

 

461.4

 

 

 

1.7

 

 

 

1.45

 

 

 

902.9

 

 

 

3.3

 

 

 

1.44

 

 

 

994.2

 

 

 

4.6

 

 

 

1.85

 

Other interest-bearing liabilities

 

 

1,588.3

 

 

 

8.0

 

 

 

2.03

 

 

 

1,268.8

 

 

 

3.1

 

 

 

0.95

 

 

 

1,532.0

 

 

 

8.8

 

 

 

2.27

 

Total interest-bearing liabilities/interest expense

 

$

18,416.3

 

 

$

49.4

 

 

 

1.07

%

 

$

16,498.8

 

 

$

26.5

 

 

 

0.64

%

 

$

18,232.1

 

 

$

57.9

 

 

 

1.27

%

Net interest income/margin

 

 

 

 

 

$

141.7

 

 

 

2.75

%

 

 

 

 

 

$

111.2

 

 

 

2.43

%

 

 

 

 

 

$

126.6

 

 

 

2.47

%

 


 

9

 

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

 

 

 

Selected operating data (unaudited):

Three Months Ended

 

($ in 000s, except percentages)

3/31/19

 

 

3/31/18

 

 

% Change

 

 

12/31/18

 

 

% Change

 

Net interest income

$

134,564

 

 

$

107,627

 

 

 

25.0

 

 

$

121,790

 

 

 

10.5

 

Bank loan loss provision

$

2,283

 

 

$

2,043

 

 

 

11.7

 

 

$

5,122

 

 

 

(55.4

)

Charge-offs

$

56

 

 

$

14

 

 

 

300.0

 

 

$

—

 

 

n/m

 

Net interest margin

 

3.17

%

 

 

2.89

%

 

 

9.7

 

 

 

2.89

%

 

 

9.7

 

 

Financial Metrics (unaudited):

 

As of

 

($ in 000s, except percentages)

 

3/31/19

 

 

3/31/18

 

 

12/31/18

 

Total assets

 

$

16,802,553

 

 

$

15,154,798

 

 

$

17,818,887

 

Total shareholders' equity

 

 

1,227,087

 

 

 

1,081,041

 

 

 

1,203,243

 

Total loans, net (includes loans held for sale)

 

 

8,850,905

 

 

 

7,337,749

 

 

 

8,723,172

 

Total deposits

 

 

15,049,877

 

 

 

13,329,623

 

 

 

15,863,613

 

Available-for-sale securities, at fair value

 

 

2,997,801

 

 

 

3,705,918

 

 

 

3,064,257

 

Held-to-maturity securities, at amortized cost

 

 

4,100,357

 

 

 

3,842,889

 

 

 

4,215,533

 

Commercial and industrial

 

 

3,314,564

 

 

 

2,553,671

 

 

 

3,304,234

 

Residential real estate

 

 

2,928,228

 

 

 

2,634,069

 

 

 

2,875,014

 

Securities-based loans

 

 

1,860,989

 

 

 

1,809,281

 

 

 

1,786,966

 

Commercial real estate

 

 

361,950

 

 

 

101,591

 

 

 

318,961

 

Loans held for sale

 

$

144,216

 

 

$

261,467

 

 

$

205,557

 

Stifel Bank & Trust:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (8)

 

 

13.7

%

 

 

14.6

%

 

 

14.4

%

Tier 1 capital ratio (8)

 

 

13.8

%

 

 

14.6

%

 

 

14.6

%

Total capital ratio (8)

 

 

14.9

%

 

 

15.6

%

 

 

15.6

%

Tier 1 leverage ratio (8)

 

 

7.1

%

 

 

7.2

%

 

 

7.1

%

Stifel Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio (8)

 

 

17.5

%

 

n/a

 

 

 

12.3

%

Tier 1 capital ratio (8)

 

 

17.5

%

 

n/a

 

 

 

12.3

%

Total capital ratio (8)

 

 

18.6

%

 

n/a

 

 

 

13.5

%

Tier 1 leverage ratio (8)

 

 

7.5

%

 

n/a

 

 

 

9.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

88,172

 

 

$

69,497

 

 

$

85,833

 

Allowance as a percentage of retained loans

 

 

1.00

%

 

 

0.97

%

 

 

1.00

%

Net charge-offs as a percentage of average loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Total nonperforming assets

 

$

21,276

 

 

$

21,826

 

 

$

24,455

 

Nonperforming assets as % of total assets

 

 

0.13

%

 

 

0.14

%

 

 

0.14

%


 

10

 

Global Wealth Management Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

 

 

3/31/18

 

 

 

 

%

Change

 

 

 

 

12/31/18

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

109,927

 

 

 

 

$

119,205

 

 

 

 

 

(7.8

)

 

 

 

$

117,006

 

 

 

(6.1

)

Principal transactions

 

 

43,267

 

 

 

 

 

43,529

 

 

 

 

 

(0.6

)

 

 

 

 

40,325

 

 

 

7.3

 

    Brokerage revenues

 

 

153,194

 

 

 

 

 

162,734

 

 

 

 

 

(5.9

)

 

 

 

 

157,331

 

 

 

(2.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management and service fees

 

 

195,253

 

 

 

 

 

195,789

 

 

 

 

 

(0.3

)

 

 

 

 

210,051

 

 

 

(7.0

)

Net interest

 

 

145,295

 

 

 

 

 

118,455

 

 

 

 

 

22.7

 

 

 

 

 

132,402

 

 

 

9.7

 

Investment banking

 

 

8,223

 

 

 

 

 

7,688

 

 

 

 

 

7.0

 

 

 

 

 

7,915

 

 

 

3.9

 

Other income

 

 

8,645

 

 

 

 

 

909

 

 

 

 

 

851.0

 

 

 

 

 

1,557

 

 

 

455.2

 

Net revenues

 

 

510,610

 

 

 

 

 

485,575

 

 

 

 

 

5.2

 

 

 

 

 

509,256

 

 

 

0.3

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

247,473

 

 

 

 

 

241,760

 

 

 

 

 

2.4

 

 

 

 

 

246,750

 

 

 

0.3

 

Non-compensation operating expenses

 

 

68,647

 

 

 

 

 

67,044

 

 

 

 

 

2.4

 

 

 

 

 

73,546

 

 

 

(6.7

)

Total non-interest expenses

 

 

316,120

 

 

 

 

 

308,804

 

 

 

 

 

2.4

 

 

 

 

 

320,296

 

 

 

(1.3

)

Income before income taxes

 

$

194,490

 

 

 

 

$

176,771

 

 

 

 

 

10.0

 

 

 

 

$

188,960

 

 

 

2.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

48.5

 

 

 

 

 

49.8

 

 

 

 

 

 

 

 

 

 

 

48.5

 

 

 

 

 

Non-compensation operating expenses

 

 

13.4

 

 

 

 

 

13.8

 

 

 

 

 

 

 

 

 

 

 

14.4

 

 

 

 

 

Income before income taxes

 

 

38.1

 

 

 

 

 

36.4

 

 

 

 

 

 

 

 

 

 

 

37.1

 

 

 

 

 

 

Institutional Group Summary Results of Operations (Unaudited)

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

 

 

3/31/18

 

 

 

 

% Change

 

 

 

 

12/31/18

 

 

% Change

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions

 

$

45,522

 

 

 

 

$

46,570

 

 

 

 

 

(2.3

)

 

 

 

$

50,034

 

 

 

(9.0

)

Principal transactions

 

 

60,765

 

 

 

 

 

54,253

 

 

 

 

 

12.0

 

 

 

 

 

41,134

 

 

 

47.7

 

Brokerage revenues

 

 

106,287

 

 

 

 

 

100,823

 

 

 

 

 

5.4

 

 

 

 

 

91,168

 

 

 

16.6

 

Capital raising

 

 

48,722

 

 

 

 

 

71,001

 

 

 

 

 

(31.4

)

 

 

 

 

82,229

 

 

 

(40.7

)

Advisory fees

 

 

104,895

 

 

 

 

 

97,673

 

 

 

 

 

7.4

 

 

 

 

 

111,089

 

 

 

(5.6

)

Investment banking

 

 

153,617

 

 

 

 

 

168,674

 

 

 

 

 

(8.9

)

 

 

 

 

193,318

 

 

 

(20.5

)

Other (16)

 

 

1,382

 

 

 

 

 

581

 

 

 

 

 

137.8

 

 

 

 

 

2,154

 

 

 

(35.8

)

Net revenues

 

 

261,286

 

 

 

 

 

270,078

 

 

 

 

 

(3.3

)

 

 

 

 

286,640

 

 

 

(8.8

)

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

159,411

 

 

 

 

 

159,344

 

 

 

 

 

0.0

 

 

 

 

 

177,782

 

 

 

(10.3

)

Non-compensation operating expenses

 

 

69,671

 

 

 

 

 

66,164

 

 

 

 

 

5.3

 

 

 

 

 

66,706

 

 

 

4.4

 

Total non-interest expenses

 

 

229,082

 

 

 

 

 

225,508

 

 

 

 

 

1.6

 

 

 

 

 

244,488

 

 

 

(6.3

)

Income before income taxes

 

$

32,204

 

 

 

 

$

44,570

 

 

 

 

 

(27.7

)

 

 

 

$

42,152

 

 

 

(23.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

61.0

 

 

 

 

 

59.0

 

 

 

 

 

 

 

 

 

 

 

62.0

 

 

 

 

 

Non-compensation operating expenses

 

 

26.7

 

 

 

 

 

24.5

 

 

 

 

 

 

 

 

 

 

 

23.3

 

 

 

 

 

Income before income taxes

 

 

12.3

 

 

 

 

 

16.5

 

 

 

 

 

 

 

 

 

 

 

14.7

 

 

 

 

 

 


 

11

 

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, 2019 and 2018, and December 31, 2018. 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, 2019 and 2018, and December 31, 2018 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

 

 

 

Three Months Ended

 

($ in 000s)

 

3/31/19

 

 

3/31/18

 

 

12/31/18

 

GAAP net income applicable to Stifel Financial Corp.

 

$

99,207

 

 

$

88,761

 

 

$

114,062

 

Preferred dividend

 

 

2,344

 

 

 

2,344

 

 

 

2,344

 

Net income available to common shareholders

 

 

96,863

 

 

 

86,417

 

 

 

111,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related and severance (17)

 

 

8,191

 

 

 

9,953

 

 

 

17,714

 

Litigation-related

 

 

—

 

 

 

—

 

 

 

18

 

Provision for income taxes (18)

 

 

(534

)

 

 

(2,567

)

 

 

(2,660

)

Total non-GAAP adjustments

 

 

7,657

 

 

 

7,386

 

 

 

15,072

 

Non-GAAP net income available to common shareholders

 

$

104,520

 

 

$

93,803

 

 

$

126,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

79,210

 

 

 

81,789

 

 

 

80,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share

 

$

1.25

 

 

$

1.09

 

 

$

1.41

 

Non-GAAP adjustments

 

 

0.10

 

 

 

0.09

 

 

 

0.19

 

Non-GAAP earnings per diluted common share

 

$

1.35

 

 

$

1.18

 

 

$

1.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per diluted common share available to common shareholders

 

$

1.22

 

 

$

1.06

 

 

$

1.38

 

Non-GAAP adjustments

 

 

0.10

 

 

 

0.09

 

 

 

0.19

 

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

 

$

1.32

 

 

$

1.15

 

 

$

1.57

 


 

12

 

Footnotes

 

(1)

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

 

(2)

Non-GAAP pre-tax margin for the three months ended March 31, 2019 of 19.0% is calculated by adding non-GAAP adjustments of $8.2 million to our GAAP income before income taxes of $137.8 million and dividing it by non-GAAP net revenues for the quarter of $770.4 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”

 

(3)

Excludes revenue included in the Other segment.

 

(4)

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

 

(5)

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

 

(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 earnings release.

 

(9)

Reflects change in the definition of producing brokers as of January 1, 2019. Prior period amounts have been restated to conform with current period presentation.

 

(10)

Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at our 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 included 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 and Stifel Bank, formerly known as The Business Bank of St. Louis, which was acquired on August 31, 2018.

 

(16)

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

 

(17)

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.

 

(18)

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

 

 

13