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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

OR

☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-09305

STIFEL FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Delaware |  | 43-1273600
(State or other jurisdiction of |  | (I.R.S. Employer
incorporation or organization) |  | Identification No.)

501 N. Broadway, St. Louis, Missouri 63102-2188

(Address of principal executive offices and zip code)

(314) 342-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class/ Trading Symbol |  | Name of Each Exchange on Which Registered |  | Shares or principal amount outstanding - May 1, 2020 |
Common Stock, $0.15 par value per share (SF) |  | New York Stock Exchange |  |  | 68,485,191 |
Depository Shares, each representing 1/1,000th interest in a share of 6.25% Non-Cumulative Preferred Stock, Series A (SF PRA) |  | New York Stock Exchange |  |  | 6,000 |
Depository Shares, each representing 1/1,000th interest in a share of 6.25% Non-Cumulative Preferred Stock, Series B (SF PRB) |  | New York Stock Exchange |  |  | 6,400 |
5.20% Senior Notes due 2047 (SFB) |  | New York Stock Exchange |  | $ | 225,000,000 |

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“the Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐

Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

1

STIFEL FINANCIAL CORP.

Form 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION |  |
Item 1. Financial Statements |  | 3
Consolidated Statements of Financial Condition as of March 31, 2020 (unaudited) and December 31, 2019 |  | 3
Consolidated Statements of Operations for the three months ended March 31, 2020 and March 31, 2019 (unaudited) |  | 5
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and March 31, 2019 (unaudited) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2020 and March 31, 2019 (unaudited) |  | 6 7
Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and March 31, 2019 (unaudited) |  | 8
Notes to Consolidated Financial Statements (unaudited) |  | 10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 49
Item 3. Quantitative and Qualitative Disclosures About Market Risk |  | 71
Item 4. Controls and Procedures |  | 74
PART II – OTHER INFORMATION |  |
Item 1. Legal Proceedings |  | 74
Item 1A. Risk Factors |  | 75
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |  | 77
Item 6. Exhibits |  | 78
Signatures |  | 79

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STIFEL FINANCIAL CORP.

Consolidated Statements of Financial Condition

|  | March 31, 2020 |  |  | December 31, 2019 |
($ in thousands) |  | (Unaudited) |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,382,920 |  |  | $ | 1,142,596 |
Cash segregated for regulatory purposes |  |  | 196,950 |  |  |  | 131,374 |
Receivables: |  |  |  |  |  |  |  |
Brokerage clients, net |  |  | 1,469,706 |  |  |  | 1,351,786 |
Brokers, dealers, and clearing organizations |  |  | 704,394 |  |  |  | 627,790 |
Securities purchased under agreements to resell |  |  | 458,968 |  |  |  | 385,008 |
Financial instruments owned, at fair value |  |  | 932,511 |  |  |  | 972,932 |
Available-for-sale securities, at fair value |  |  | 3,366,090 |  |  |  | 3,254,737 |
Held-to-maturity securities, at amortized cost |  |  | 3,085,824 |  |  |  | 2,856,219 |
Loans: |  |  |  |  |  |  |  |
Held for investment, net |  |  | 9,994,500 |  |  |  | 9,624,042 |
Held for sale, at lower of cost or market |  |  | 570,787 |  |  |  | 389,693 |
Investments, at fair value |  |  | 55,688 |  |  |  | 79,972 |
Fixed assets, net |  |  | 829,824 |  |  |  | 1,107,928 |
Goodwill |  |  | 1,184,514 |  |  |  | 1,194,074 |
Intangible assets, net |  |  | 154,646 |  |  |  | 161,773 |
Loans and advances to financial advisors and other employees, net |  |  | 537,882 |  |  |  | 525,332 |
Deferred tax assets, net |  |  | 114,989 |  |  |  | 104,380 |
Other assets |  |  | 855,813 |  |  |  | 700,589 |
Total assets |  | $ | 25,896,006 |  |  | $ | 24,610,225 |

See accompanying Notes to Consolidated Financial Statements.

3

STIFEL FINANCIAL CORP.

Consolidated Statements of Financial Condition (continued)

|  | March 31, 2020 |  |  | December 31, 2019 |
($ in thousands, except share and per share amounts) |  | (Unaudited) |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |
Payables: |  |  |  |  |  |  |  |
Brokerage clients |  | $ | 946,380 |  |  | $ | 740,444 |
Brokers, dealers, and clearing organizations |  |  | 545,927 |  |  |  | 712,291 |
Drafts |  |  | 90,739 |  |  |  | 119,758 |
Securities sold under agreements to repurchase |  |  | 475,528 |  |  |  | 391,634 |
Bank deposits |  |  | 16,880,933 |  |  |  | 15,332,581 |
Financial instruments sold, but not yet purchased, at fair value |  |  | 668,795 |  |  |  | 662,852 |
Accrued compensation |  |  | 264,645 |  |  |  | 507,009 |
Accounts payable and accrued expenses |  |  | 1,027,314 |  |  |  | 1,146,706 |
Federal Home Loan Bank advances |  |  | 250,000 |  |  |  | 250,000 |
Borrowings |  |  | 198,150 |  |  |  | 150 |
Senior notes |  |  | 1,017,269 |  |  |  | 1,017,010 |
Debentures to Stifel Financial Capital Trusts |  |  | 60,000 |  |  |  | 60,000 |
Total liabilities |  |  | 22,425,680 |  |  |  | 20,940,435 |
Equity |  |  |  |  |  |  |  |
Stifel Financial Corp. shareholders' equity: |  |  |  |  |  |  |  |
Preferred stock - $1 par value; authorized 3,000,000 shares; issued 12,400 shares |  |  | 310,000 |  |  |  | 310,000 |
Common stock - $0.15 par value; authorized 194,000,000 shares; issued 74,441,146 and 74,441,113 shares, respectively |  |  | 11,166 |  |  |  | 11,166 |
Additional paid-in-capital |  |  | 1,837,950 |  |  |  | 1,909,286 |
Retained earnings |  |  | 1,728,911 |  |  |  | 1,715,704 |
Accumulated other comprehensive loss |  |  | (96,460 | ) |  |  | (11,705 | )
Treasury stock, at cost, 5,928,739 and 6,113,084 shares, respectively |  |  | (321,241 | ) |  |  | (319,660 | )
Total Stifel Financial Corp. shareholders’ equity |  |  | 3,470,326 |  |  |  | 3,614,791 |
Non-controlling interests |  |  | — |  |  |  | 54,999 |
Total equity |  |  | 3,470,326 |  |  |  | 3,669,790 |
Total liabilities and equity |  | $ | 25,896,006 |  |  | $ | 24,610,225 |

See accompanying Notes to Consolidated Financial Statements.

4

STIFEL FINANCIAL CORP.

Consolidated Statements of Operations

(Unaudited)

|  | Three Months Ended March 31, |
($ in thousands, except per share amounts) |  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |
Commissions |  | $ | 211,098 |  |  | $ | 155,449 |
Principal transactions |  |  | 138,666 |  |  |  | 104,032 |
Investment banking |  |  | 179,468 |  |  |  | 161,840 |
Asset management and service fees |  |  | 237,775 |  |  |  | 195,267 |
Interest |  |  | 161,177 |  |  |  | 191,071 |
Other income |  |  | 9,207 |  |  |  | 12,209 |
Total revenues |  |  | 937,391 |  |  |  | 819,868 |
Interest expense |  |  | 24,357 |  |  |  | 49,448 |
Net revenues |  |  | 913,034 |  |  |  | 770,420 |
Non-interest expenses: |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 577,179 |  |  |  | 458,114 |
Occupancy and equipment rental |  |  | 66,073 |  |  |  | 58,862 |
Communications and office supplies |  |  | 41,124 |  |  |  | 35,697 |
Commissions and floor brokerage |  |  | 14,842 |  |  |  | 10,956 |
Provision for loan losses |  |  | 18,978 |  |  |  | 2,283 |
Other operating expenses |  |  | 79,732 |  |  |  | 66,699 |
Total non-interest expenses |  |  | 797,928 |  |  |  | 632,611 |
Income from operations before income tax expense |  |  | 115,106 |  |  |  | 137,809 |
Provision for income taxes |  |  | 28,517 |  |  |  | 38,370 |
Net income |  |  | 86,589 |  |  |  | 99,439 |
Net income applicable to non-controlling interests |  |  | — |  |  |  | 232 |
Net income applicable to Stifel Financial Corp. |  |  | 86,589 |  |  |  | 99,207 |
Preferred dividends |  |  | 4,844 |  |  |  | 2,344 |
Net income available to common shareholders |  | $ | 81,745 |  |  | $ | 96,863 |
Earnings per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 1.15 |  |  | $ | 1.35 |
Diluted |  | $ | 1.07 |  |  | $ | 1.22 |
Cash dividends declared per common share |  | $ | 0.17 |  |  | $ | 0.15 |
Weighted-average number of common shares outstanding: |  |  |  |  |  |  |  |
Basic |  |  | 71,286 |  |  |  | 71,700 |
Diluted |  |  | 76,619 |  |  |  | 79,210 |

See accompanying Notes to Consolidated Financial Statements.

5

STIFEL FINANCIAL CORP.

Consolidated Statements of Comprehensive Income

(Unaudited)

|  | Three Months Ended March 31, |
($ in thousands) |  | 2020 |  |  | 2019 |
Net income |  | $ | 86,589 |  |  | $ | 99,439 |
Other comprehensive income/(loss), net of tax: (1) |  |  |  |  |  |  |  |
Changes in unrealized gains/(losses) on available-for-sale securities (2) |  |  | (73,227 | ) |  |  | 25,800 |
Changes in unrealized gains/(losses) on cash flow hedging instruments (3) |  |  | (1,706 | ) |  |  | (1,826 | )
Foreign currency translation adjustment |  |  | (9,822 | ) |  |  | 2,168 |
Total other comprehensive income/(loss), net of tax |  |  | (84,755 | ) |  |  | 26,142 |
Comprehensive income |  |  | 1,834 |  |  |  | 125,581 |
Net income attributable to non-controlling interest |  |  | — |  |  |  | 232 |
Comprehensive income applicable to Stifel Financial Corp. |  | $ | 1,834 |  |  | $ | 125,349 |

(1) | Net of a tax benefit of $27.9 million and tax expense of $10.1 million for the three months ended March 31, 2020 and 2019, respectively.

(2) | Net of reclassifications to earnings of realized losses of $0.5 million during the three months ended March 31, 2020. There were no reclassifications to earnings during the three months ended March 31, 2019.

(3) | Amounts are net of reclassifications to earnings of losses of $0.3 million and gains of $1.5 million for the three months ended March 31, 2020 and 2019, respectively.

See accompanying Notes to Consolidated Financial Statements.

6

STIFEL FINANCIAL CORP.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

|  | Three Months Ended March 31, |
($ in thousands, except per share amounts) |  | 2020 |  |  | 2019 |
Preferred stock, par value $1.00 per share: |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 310,000 |  |  | $ | 150,000 |
Issuance of preferred stock |  |  | — |  |  |  | 160,000 |
Balance, end of period |  |  | 310,000 |  |  |  | 310,000 |
Common stock, par value $0.15 per share: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | 11,166 |  |  |  | 11,166 |
Issuance of common stock |  |  | — |  |  |  | — |
Balance, end of period |  |  | 11,166 |  |  |  | 11,166 |
Additional paid-in-capital: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | 1,909,286 |  |  |  | 1,893,304 |
Unit amortization, net of forfeitures |  |  | 33,799 |  |  |  | 33,317 |
Distributions under employee plans |  |  | (105,570 | ) |  |  | (95,295 | )
Issuance of preferred stock |  |  | — |  |  |  | (4,706 | )
Dividends declared to equity-award holders |  |  | 350 |  |  |  | — |
Other |  |  | 85 |  |  |  | (16 | )
Balance, end of period |  |  | 1,837,950 |  |  |  | 1,826,604 |
Retained earnings: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | 1,715,704 |  |  |  | 1,366,503 |
Net income |  |  | 86,589 |  |  |  | 99,439 |
Dividends declared: |  |  |  |  |  |  |  |
Common |  |  | (14,916 | ) |  |  | (12,944 | )
Preferred |  |  | (4,844 | ) |  |  | (2,344 | )
Distributions under employee plans |  |  | (46,717 | ) |  |  | 27 |
Cumulative adjustments for accounting changes (1) |  |  | (7,772 | ) |  |  | (6,759 | )
Other |  |  | 867 |  |  |  | (264 | )
Balance, end of period |  |  | 1,728,911 |  |  |  | 1,443,658 |
Accumulated other comprehensive loss: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | (11,705 | ) |  |  | (72,523 | )
Unrealized gains/(losses) on securities, net of tax |  |  | (73,227 | ) |  |  | 25,800 |
Unrealized losses on cash flow hedging activities, net of tax |  |  | (1,706 | ) |  |  | (1,826 | )
Foreign currency translation adjustment, net of tax |  |  | (9,822 | ) |  |  | 2,168 |
Balance, end of period |  |  | (96,460 | ) |  |  | (46,381 | )
Treasury stock, at cost: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | (319,660 | ) |  |  | (180,857 | )
Common stock issued under employee plans |  |  | 54,579 |  |  |  | 66,302 |
Common stock repurchased |  |  | (56,160 | ) |  |  | (53,869 | )
Balance, end of period |  |  | (321,241 | ) |  |  | (168,424 | )
Total Stifel Financial Corp. Shareholders' Equity |  |  | 3,470,326 |  |  |  | 3,376,623 |
Non-controlling interests: |  |  |  |  |  |  |  |
Balance, beginning of period |  |  | 54,999 |  |  |  | 30,000 |
Net income applicable to non-controlling interests |  |  | — |  |  |  | 232 |
Capital contributions from non-controlling interest holders |  |  | — |  |  |  | 26,800 |
Distributions to non-controlling interest holders |  |  | — |  |  |  | (458 | )
Deconsolidation of non-controlling interest |  |  | (54,999 | ) |  |  | — |
Balance, end of period |  |  | — |  |  |  | 56,574 |
Total Shareholders' Equity |  | $ | 3,470,326 |  |  | $ | 3,433,197 |

(1) Cumulative adjustments for accounting changes relate to the adoption of certain accounting updates during 2020 and 2019. See Note 2 to the consolidated financial statements for further information.

See accompanying Notes to Consolidated Financial Statements.

7

STIFEL FINANCIAL CORP.

Consolidated Statements of Cash Flows

(Unaudited)

|  | Three Months Ended March 31, |
($ in thousands) |  | 2020 |  |  | 2019 |
Cash Flows From Operating Activities: |  |  |  |  |  |  |  |
Net income |  | $ | 86,589 |  |  | $ | 99,439 |
Adjustments to reconcile net income to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 9,378 |  |  |  | 10,290 |
Amortization of loans and advances to financial advisors and other employees |  |  | 27,729 |  |  |  | 21,596 |
Amortization of premium on investment portfolio |  |  | 6,210 |  |  |  | 8,727 |
Provision for loan losses and allowance for loans and advances to financial advisors and other employees |  |  | 19,253 |  |  |  | 1,611 |
Amortization of intangible assets |  |  | 5,032 |  |  |  | 3,593 |
Deferred income taxes |  |  | 17,098 |  |  |  | 2,102 |
Stock-based compensation |  |  | 30,762 |  |  |  | 32,119 |
(Gains)/losses on sale of investments |  |  | 31,043 |  |  |  | (2,174 | )
Other, net |  |  | (5,464 | ) |  |  | (6,429 | )
Decrease/(increase) in operating assets, net of assets acquired: |  |  |  |  |  |  |  |
Receivables: |  |  |  |  |  |  |  |
Brokerage clients |  |  | (117,920 | ) |  |  | (182,761 | )
Brokers, dealers, and clearing organizations |  |  | (76,604 | ) |  |  | (72,766 | )
Securities purchased under agreements to resell |  |  | (73,960 | ) |  |  | 131,866 |
Financial instruments owned, including those pledged |  |  | 40,421 |  |  |  | 2,641 |
Loans originated as held for sale |  |  | (474,824 | ) |  |  | (272,301 | )
Proceeds from mortgages held for sale |  |  | 506,936 |  |  |  | 333,478 |
Loans and advances to financial advisors and other employees |  |  | (40,554 | ) |  |  | (50,216 | )
Other assets |  |  | (51,427 | ) |  |  | (24,357 | )
Increase/(decrease) in operating liabilities, net of liabilities assumed: |  |  |  |  |  |  |  |
Payables: |  |  |  |  |  |  |  |
Brokerage clients |  |  | 205,936 |  |  |  | (200,229 | )
Brokers, dealers, and clearing organizations |  |  | 106,196 |  |  |  | 21,639 |
Drafts |  |  | (29,019 | ) |  |  | (4,263 | )
Financial instruments sold, but not yet purchased |  |  | 5,943 |  |  |  | 31,754 |
Other liabilities and accrued expenses |  |  | (234,445 | ) |  |  | (252,199 | )
Net cash used in operating activities |  | $ | (5,691 | ) |  | $ | (366,840 | )

See accompanying Notes to Consolidated Financial Statements.

8

STIFEL FINANCIAL CORP.

Consolidated Statements of Cash Flows (continued)

(Unaudited)

|  | Three Months Ended March 31, |
($ in thousands) |  | 2020 |  |  | 2019 |
Cash Flows From Investing Activities: |  |  |  |  |  |  |  |
Proceeds from: |  |  |  |  |  |  |  |
Principal paydowns, sales, calls, and maturities of available-for-sale securities |  |  | 385,131 |  |  | $ | 93,349 |
Calls and principal paydowns of held-to-maturity securities |  |  | 155,184 |  |  |  | 114,535 |
Sale or maturity of investments |  |  | 2,252 |  |  |  | — |
Disposition of business |  |  | 37,000 |  |  |  | — |
Increase in loans held for investment, net |  |  | (593,296 | ) |  |  | (195,186 | )
Payments for: |  |  |  |  |  |  |  |
Purchase of available-for-sale securities |  |  | (601,660 | ) |  |  | (250 | )
Purchase of held-to-maturity securities |  |  | (384,700 | ) |  |  | — |
Purchase of fixed assets |  |  | (53,002 | ) |  |  | (72,868 | )
Purchase of investments |  |  | (12,900 | ) |  |  | — |
Acquisitions, net of cash received |  |  | — |  |  |  | (28,523 | )
Net cash used in investing activities |  |  | (1,065,991 | ) |  |  | (88,943 | )
Cash Flows From Financing Activities: |  |  |  |  |  |  |  |
Proceeds from borrowings, net |  |  | 198,000 |  |  |  | 218,315 |
Repayments of Federal Home Loan Bank advances, net |  |  | — |  |  |  | (290,000 | )
Payment of contingent consideration |  |  | (2,208 | ) |  |  | (2,994 | )
Increase/(decrease) in securities sold under agreements to repurchase |  |  | 83,894 |  |  |  | (93,419 | )
Increase/(decrease) in bank deposits, net |  |  | 1,548,352 |  |  |  | (813,736 | )
Increase/(decrease) in securities loaned |  |  | (272,560 | ) |  |  | 132,952 |
Tax payments related to shares withheld for stock-based compensation plans |  |  | (68,497 | ) |  |  | (27,847 | )
Proceeds from preferred stock issuance, net |  |  | — |  |  |  | 155,294 |
Proceeds from non-controlling interests |  |  | — |  |  |  | 26,800 |
Repurchase of common stock |  |  | (56,160 | ) |  |  | (53,869 | )
Cash dividends on preferred stock |  |  | (4,844 | ) |  |  | (2,344 | )
Cash dividends paid to common stock and equity-award holders |  |  | (11,472 | ) |  |  | (12,944 | )
Cash paid to employees upon settlement of equity awards |  |  | (27,101 | ) |  |  | — |
Other |  |  | — |  |  |  | (490 | )
Net cash provided by/(used in) financing activities |  |  | 1,387,404 |  |  |  | (764,282 | )
Effect of exchange rate changes on cash |  |  | (9,822 | ) |  |  | 2,156 |
Increase/(decrease) in cash, cash equivalents, and cash segregated for regulatory purposes |  |  | 305,900 |  |  |  | (1,217,909 | )
Cash, cash equivalents, and cash segregated for regulatory purposes at beginning of period |  |  | 1,273,970 |  |  |  | 2,069,374 |
Cash, cash equivalents, and cash segregated for regulatory purposes at end of period |  | $ | 1,579,870 |  |  | $ | 851,465 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Cash paid for income taxes, net of refunds |  | $ | 15,423 |  |  | $ | 466 |
Cash paid for interest |  | $ | 28,707 |  |  | $ | 49,425 |
Noncash financing activities: |  |  |  |  |  |  |  |
Unit grants, net of forfeitures |  | $ | 106,522 |  |  | $ | 92,344 |

The following presents cash, cash equivalents, and cash restricted for regulatory purposes for the periods presented ($ in thousands): |
|  | March 31, 2020 |  |  | December 31, 2019 |
Cash and cash equivalents |  | $ | 1,382,920 |  |  | $ | 1,142,596 |
Cash segregated for regulatory purposes |  |  | 196,950 |  |  |  | 131,374 |
Total cash, cash equivalents, and cash segregated for regulatory purposes |  | $ | 1,579,870 |  |  | $ | 1,273,970 |

See accompanying Notes to Consolidated Financial Statements.

9

STIFEL FINANCIAL CORP.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies

Nature of Operations

Stifel Financial Corp. (the “Company”), through its wholly owned subsidiaries, is principally engaged in retail brokerage; securities trading; investment banking; investment advisory; retail, consumer, and commercial banking; and related financial services. Our major geographic area of concentration is throughout the United States, with a growing presence in the United Kingdom, Europe, and Canada. Our company’s principal customers are individual investors, corporations, municipalities, and institutions.

Basis of Presentation

The consolidated financial statements include Stifel Financial Corp. and its wholly owned subsidiaries, principally Stifel, Nicolaus & Company, Incorporated (“Stifel”), Keefe, Bruyette & Woods, Inc., Stifel Bancorp, Inc. (“Stifel Bancorp”), Stifel Nicolaus Canada Inc. (“SNC”), and Stifel Nicolaus Europe Limited (“SNEL”). Unless otherwise indicated, the terms “we,” “us,” “our,” or “our company” in this report refer to Stifel Financial Corp. and its wholly owned subsidiaries.

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles. In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise noted) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2019 on file with the SEC.

On March 27, 2020, the Company completed the sale of Ziegler Capital Management, LLC (“ZCM”), a wholly owned asset management subsidiary. The assets and liabilities of ZCM were classified as held for sale and are included in other assets and accounts payable and accrued expenses, respectively, at December 31, 2019. See Note 8 for further information.

Certain amounts from prior periods have been reclassified to conform to the current period’s presentation. The effect of these reclassifications on our company’s previously reported consolidated financial statements was not material.

Consolidation Policies

The consolidated financial statements include the accounts of Stifel Financial Corp. and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. For consolidated subsidiaries that are less than wholly owned, the third-party holdings of equity interests are referred to as non-controlling interests. The portion of shareholders’ equity that is attributable to non-controlling interests for such subsidiaries is presented as non-controlling interests, a component of total equity, in the consolidated statements of financial condition.

Our non-controlling interest at December 31, 2019 represented a 27.5% third-party ownership of North Shore Aviation Holdings LLC (“North Shore”), which was a consolidated subsidiary of the Company that, through its subsidiary, owns airplane engines.

On February 7, 2020, North Shore entered into a Credit Agreement with North Shore Aviation Trust Series 2020-1 (the “Trust”) whereby the Trust provided North Shore with a $120.0 million credit facility. North Shore was recapitalized with funding from the issuance of the senior notes and E-Certificates by the Trust. Upon the recapitalization, Stifel Bancorp’s equity in North Shore was redeemed. We deconsolidated the related assets, liabilities, and non-controlling interests of North Shore.

We have investments or interests in other entities for which we must evaluate whether to consolidate by determining whether we have a controlling financial interest or are considered to be the primary beneficiary. Under our current consolidation policy, which complies with the provisions of ASC 810 as amended by ASU 2015-02, we consolidate those entities where we have the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity or the rights to receive benefits from the entity that could potentially be significant to the entity.

We determine whether we are the primary beneficiary of a variable interest entity (“VIE”) by performing an analysis of the VIE’s control structure, expected benefits and losses, and expected residual returns. This analysis includes a review of, among other factors, the VIE’s capital structure, contractual terms, which interests create or absorb benefits or losses, variability, related party relationships, and the design of the VIE. We reassess our evaluation of whether an entity is a VIE when certain reconsideration events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. See Note 25 for additional information on VIEs.

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Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.

During the three months ended March 31, 2020, other than the following, there were no significant changes made to the Company’s significant accounting policies. The accounting policy changes are attributable to the adoption of the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments − Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”)” on January 1, 2020. This accounting update impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss (CECL) methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. CECL will replace the loss model currently applicable to bank loans, held-to-maturity securities, and other receivables carried at amortized cost. These credit loss policy updates are applied prospectively in our consolidated financial statements from January 1, 2020.

Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical periods.

Allowance for Credit Losses

The allowance for credit losses includes both the allowance for loan losses and the reserve for unfunded lending commitments and represents management’s estimate of the expected credit losses in our company’s loan portfolio. The expected credit losses on our loan portfolio are referred to as the allowance for loan losses and are reported separately as a contra-asset to loans on the consolidated statement of financial condition. The expected credit losses for unfunded lending commitments, including standby letters of credit and binding unfunded loan commitments are reported on the consolidated statement of financial condition in accounts payable and accrued expenses. The provision for loan losses related to the loan portfolio in the consolidated statement of operations and the provision for unfunded lending commitments are reported in the consolidated statement of operations in other operating expenses.

For loans, the expected credit loss is typically estimated using quantitative methods that consider a variety of factors such as historical loss experience derived from proxy data, the current credit quality of the portfolio as well as an economic outlook over the life of the loan. The life of the loan for closed-ended products is based on the contractual maturity of the loan adjusted for any expected prepayments. The contractual maturity includes any extension options that are at the sole discretion of the borrower. For open-ended products, the expected credit loss is determined based on the maximum repayment term associated with future draws from credit lines.

In our loss forecasting framework, we incorporate forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. These macroeconomic scenarios include variables that have historically been key drivers of increases and decreases in credit losses. These variables include, but are not limited to, unemployment rates, real estate prices, gross domestic product levels, corporate bond spreads and long-term interest rate forecasts. As any one economic outlook is inherently uncertain, we leverage multiple scenarios. The scenarios that are chosen each quarter and the amount of weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, views of internal as well as third-party economists and industry trends.

Also included in the allowance for loan losses are qualitative reserves to cover losses that are expected but, in our company’s assessment, may not be adequately represented in the quantitative methods or the economic assumptions described above. For example, factors that we consider include changes in lending policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and nonaccrual loans, the effect of external factors such as competition, and legal and regulatory requirements, among others. Further, we consider the inherent uncertainty in quantitative models that are built on historical data.

Once a loan is determined to be impaired, when principal or interest becomes 90 days past due or when collection becomes uncertain, the accrual of interest and amortization of deferred loan origination fees is discontinued (“non-accrual status”), and any accrued and unpaid interest income is reversed. Loans placed on non-accrual status are returned to accrual status when all delinquent principal and interest payments are collected and the collectability of future principal and interest payments is reasonably assured. Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is certain. Subsequent recoveries, if any, are credited to the allowance for loan loss.

We do not include reserves for interest receivable in the measurement of the allowance for credit losses as we generally classify loans as nonperforming at 90 days past due and reverse interest income for these loans at that time.

Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment measurements. Impairment is measured on a loan-by-loan basis for non-homogeneous loans, and a specific allowance is established for individual loans determined to be impaired. Impairment is measured by comparing the carrying value of the impaired loan to the present value of its expected cash flow discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. See Note 7 for more information.

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Available-for-Sale and Held-to-Maturity Securities

We evaluate each available-for-sale security where the value has declined below amortized cost. If our company intends to sell or believes it is more likely than not that it will be required to sell the debt security, it is written down to fair value through earnings. For available-for-sale debt securities our company intends to hold, we evaluate the debt securities for expected credit losses except for debt securities that are guaranteed by the U.S. Treasury or U.S. government agencies where we apply a zero credit loss assumption. For the remaining available-for-sale debt securities, we consider qualitative parameters such as internal and external credit ratings and the value of underlying collateral. If an available-for-sale debt security fails any of the qualitative parameters, a discounted cash flow analysis is used by our company to determine if a portion of the unrealized loss is a result of a credit loss. Any credit losses determined are recognized as an increase to the allowance for credit losses through provision expense recorded in the consolidated statement of operations in other operating expenses. Cash flows expected to be collected are estimated using all relevant information available such as, remaining payment terms, prepayment speeds, the financial condition of the issuer, expected defaults and the value of the underlying collateral. If any of the decline in fair value is related to market factors, that amount is recognized in accumulated other comprehensive income. In certain instances, the credit loss may exceed the total decline in fair value, in which case, the allowance recorded is limited to the difference between the amortized cost and the fair value of the asset. We separately evaluate our held-to-maturity debt securities for any credit losses. We perform a discounted cash flow analysis to estimate any credit losses which are then recognized as part of the allowance for credit losses. For available-for-sale and held-to-maturity debt securities, we have established a nonaccrual policy that results in timely write-off of accrued interest. See Note 6 for more information.

NOTE 2 – New Accounting Pronouncements

Recently Adopted Accounting Guidance

Goodwill Impairment Testing

On January 1, 2020, we adopted ASU 2017-04, which simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under the accounting update, the annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The adoption of the accounting update did not have a material impact on our consolidated financial statements. The future impact of the accounting update will depend upon the performance of our reporting units and the market conditions impacting the fair value of each reporting unit going forward.

Financial Instruments – Credit Losses

On January 1, 2020, we adopted ASU 2016-13 that requires the measurement of the allowance for credit losses to be based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets. Upon adoption of the standard on January 1, 2020, we recorded a $10.4 million increase to the allowance for credit losses. The increase in the allowance is driven by the fact that the allowance under the CECL model covers expected credit losses over the full expected life of the loan portfolios and also takes into account forecasts of expected future economic conditions. The cumulative effect of adopting this standard was a decrease to retained earnings of $7.8 million (net of tax).

Recently Issued Accounting Guidance

Reference Rate Reform

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The accounting standard related to contracts or hedging relationships that reference LIBOR or other reference rates that are expected to be discontinued due to reference rate reform. The accounting standard provides for optional expedients and other guidance regarding the accounting related to modifications of contracts, hedging relationships and other transactions affected by reference rate reform. We have elected to retrospectively adopt the new standard as of January 1, 2020 which resulted in no immediate impact. While reference rate reform is not expected to have a material accounting impact on our consolidated financial statements, the new standard will ease the administrative burden in accounting for the future effects of reference rate reform.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. This accounting update removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The accounting update is effective for interim and annual periods beginning after December 15, 2020 (January 1, 2021, for our company), and early adoption is permitted. We are currently evaluating the impact that the accounting update will have on our consolidated financial statements.

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NOTE 3 – Receivables From and Payables to Brokers, Dealers, and Clearing Organizations

Amounts receivable from brokers, dealers, and clearing organizations at March 31, 2020 and December 31, 2019, included (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Receivables from clearing organizations |  | $ | 485,103 |  |  | $ | 471,122 |
Deposits paid for securities borrowed |  |  | 103,530 |  |  |  | 135,373 |
Securities failed to deliver |  |  | 115,761 |  |  |  | 21,295 |
|  | $ | 704,394 |  |  | $ | 627,790 |

Amounts payable to brokers, dealers, and clearing organizations at March 31, 2020 and December 31, 2019, included (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Deposits received from securities loaned |  | $ | 335,773 |  |  | $ | 608,333 |
Payable to clearing organizations |  |  | 71,325 |  |  |  | 78,702 |
Securities failed to receive |  |  | 138,829 |  |  |  | 25,256 |
|  | $ | 545,927 |  |  | $ | 712,291 |

Deposits paid for securities borrowed approximate the market value of the securities. Securities failed to deliver and receive represent the contract value of securities that have not been delivered or received on settlement date.

NOTE 4 – Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, including financial instruments owned, available-for-sale securities, investments, financial instruments sold, but not yet purchased, and derivatives.

We generally utilize third-party pricing services to value Level 1 and Level 2 available-for-sale investment securities, as well as certain derivatives designated as cash flow hedges. We review the methodologies and assumptions used by the third-party pricing services and evaluate the values provided, principally by comparison with other available market quotes for similar instruments and/or analysis based on internal models using available third-party market data. We may occasionally adjust certain values provided by the third-party pricing service when we believe, as the result of our review, that the adjusted price most appropriately reflects the fair value of the particular security.

Following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value. The descriptions include an indication of the level of the fair value hierarchy in which the assets or liabilities are classified.

Financial Instruments Owned and Available-For-Sale Securities

When available, the fair value of financial instruments is based on quoted prices in active markets and reported in Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equity securities listed in active markets, corporate fixed income securities, and U.S. government securities.

If quoted prices are not available for identical instruments, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include U.S. government agency securities, mortgage-backed securities, corporate fixed income and equity securities infrequently traded, state and municipal securities, sovereign debt, and asset-backed securities, which primarily include collateralized loan obligations.

We have identified Level 3 financial instruments to include certain asset-backed securities and loans with unobservable pricing inputs. Level 3 financial instruments have little to no pricing observability as of the report date. These financial instruments do not have active two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

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Investments

Investments carried at fair value primarily include corporate equity securities, auction-rate securities (“ARS”), and private company investments.

Corporate equity securities are primarily valued based on quoted prices in active markets and reported in Level 1.

ARS are primarily valued based upon our expectations of issuer redemptions and using internal discounted cash flow models that utilize unobservable inputs. ARS are primarily reported as Level 3 assets.

Investments at fair value include investments in funds, including certain money market funds that are measured at net asset value (“NAV”). The Company uses NAV to measure the fair value of its fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the underlying investments at fair value.

The Company’s investments in funds measured at NAV include partnership interests, mutual funds, private equity funds, and money market funds. Private equity funds primarily invest in a broad range of industries worldwide in a variety of situations, including leveraged buyouts, recapitalizations, growth investments and distressed investments. The private equity funds are primarily closed-end funds in which the Company’s investments are generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed.

The general and limited partnership interests in investment partnerships were primarily valued based upon NAVs received from third-party fund managers. The various partnerships are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the funds to utilize pricing/valuation information, including independent appraisals, from third-party sources. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that may be used as an input to value these investments.

The table below presents the fair value of our investments in, and unfunded commitments to, funds that are measured at NAV as of March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Fair value of investments |  |  | Unfunded commitments |  |  | Fair value of investments |  |  | Unfunded commitments |
Money market funds |  | $ | 26,567 |  |  | $ | — |  |  | $ | 25,734 |  |  | $ | — |
Mutual funds |  |  | 4,741 |  |  |  | — |  |  |  | 7,875 |  |  |  | — |
Private equity funds |  |  | 2,264 |  |  |  | 1,203 |  |  |  | 2,288 |  |  |  | 1,203 |
Partnership interests |  |  | 3,240 |  |  |  | 953 |  |  |  | 3,058 |  |  |  | 953 |
Total |  | $ | 36,812 |  |  | $ | 2,156 |  |  | $ | 38,955 |  |  | $ | 2,156 |

Financial Instruments Sold, But Not Yet Purchased

Financial instruments sold, but not purchased, recorded at fair value based on quoted prices in active markets and other observable market data include highly liquid instruments with quoted prices, such as U.S. government securities, equity and fixed income securities listed in active markets, which are reported as Level 1.

If quoted prices are not available, fair values are obtained from pricing services, broker quotes, or other model-based valuation techniques with observable inputs, such as the present value of estimated cash flows, and reported as Level 2. The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include U.S. government agency securities, agency mortgage-backed securities not actively traded, corporate fixed income, sovereign debt securities, and state and municipal securities.

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Derivatives

Derivatives are valued using quoted market prices for identical instruments when available or pricing models based on the net present value of estimated future cash flows. The valuation models used require market observable inputs, including contractual terms, market prices, yield curves, credit curves, and measures of volatility. We manage credit risk for our derivative positions on a counterparty-by-counterparty basis and calculate credit valuation adjustments, included in the fair value of these instruments, on the basis of our relationships at the counterparty portfolio/master netting agreement level. These credit valuation adjustments are determined by applying a credit spread for the counterparty to the total expected exposure of the derivative after considering collateral and other master netting arrangements. We have classified our interest rate swaps as Level 2.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2020, are presented below (in thousands):

|  | March 31, 2020 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial instruments owned: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 12,821 |  |  | $ | 12,821 |  |  | $ | — |  |  | $ | — |
U.S. government agency securities |  |  | 80,138 |  |  |  | — |  |  |  | 80,138 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 371,762 |  |  |  | — |  |  |  | 371,762 |  |  |  | — |
Non-agency |  |  | 2,870 |  |  |  | — |  |  |  | 2,870 |  |  |  | — |
Asset-backed securities |  |  | 12,942 |  |  |  | — |  |  |  | 12,767 |  |  |  | 175 |
Corporate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  |  | 275,663 |  |  |  | 7,850 |  |  |  | 267,813 |  |  |  | — |
Equity securities |  |  | 69,259 |  |  |  | 64,203 |  |  |  | 5,056 |  |  |  | — |
Sovereign debt |  |  | 21,057 |  |  |  | — |  |  |  | 21,057 |  |  |  | — |
State and municipal securities |  |  | 75,740 |  |  |  | — |  |  |  | 75,740 |  |  |  | — |
Loans |  |  | 10,259 |  |  |  | — |  |  |  | — |  |  |  | 10,259 |
Total financial instruments owned |  |  | 932,511 |  |  |  | 84,874 |  |  |  | 837,203 |  |  |  | 10,434 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency securities |  |  | 5,650 |  |  |  | — |  |  |  | 5,650 |  |  |  | — |
State and municipal securities |  |  | 17,142 |  |  |  | — |  |  |  | 17,142 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 829,433 |  |  |  | — |  |  |  | 829,433 |  |  |  | — |
Commercial |  |  | 108,186 |  |  |  | — |  |  |  | 108,186 |  |  |  | — |
Non-agency |  |  | 8,644 |  |  |  | — |  |  |  | 8,644 |  |  |  | — |
Corporate fixed income securities |  |  | 727,590 |  |  |  | — |  |  |  | 727,590 |  |  |  | — |
Asset-backed securities |  |  | 1,669,445 |  |  |  | — |  |  |  | 1,669,445 |  |  |  | — |
Total available-for-sale securities |  |  | 3,366,090 |  |  |  | — |  |  |  | 3,366,090 |  |  |  | — |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate equity securities |  |  | 14,898 |  |  |  | 13,838 |  |  |  | — |  |  |  | 1,060 |
Auction rate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 14,243 |  |  |  | — |  |  |  | — |  |  |  | 14,243 |
Municipal securities |  |  | 183 |  |  |  | — |  |  |  | — |  |  |  | 183 |
Other |  |  | 16,119 |  |  |  | 9,362 |  |  |  | 5,924 |  |  |  | 833 |
Investments in funds and partnerships measured at NAV |  |  | 10,245 |  |  |  |  |  |  |  |  |  |  |  |  |
Total investments |  |  | 55,688 |  |  |  | 23,200 |  |  |  | 5,924 |  |  |  | 16,319 |
Cash equivalents measured at NAV |  |  | 26,567 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | $ | 4,380,856 |  |  | $ | 108,074 |  |  | $ | 4,209,217 |  |  | $ | 26,753 |

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|  | March 31, 2020 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments sold, but not yet purchased: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 239,311 |  |  | $ | 239,311 |  |  | $ | — |  |  | $ | — |
U.S. government agency securities |  |  | 16,320 |  |  |  | — |  |  |  | 16,320 |  |  |  | — |
Agency mortgage-backed securities |  |  | 179,407 |  |  |  | — |  |  |  | 179,407 |  |  |  | — |
Corporate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  |  | 192,603 |  |  |  | 3,882 |  |  |  | 188,721 |  |  |  | — |
Equity securities |  |  | 22,776 |  |  |  | 22,776 |  |  |  | — |  |  |  | — |
Sovereign debt |  |  | 18,178 |  |  |  | — |  |  |  | 18,178 |  |  |  | — |
State and municipal securities |  |  | 200 |  |  |  | — |  |  |  | 200 |  |  |  | — |
Total financial instruments sold, but not yet purchased |  |  | 668,795 |  |  |  | 265,969 |  |  |  | 402,826 |  |  |  | — |
Derivative contracts (1) |  |  | 1,262 |  |  |  | — |  |  |  | 1,262 |  |  |  | — |
|  | $ | 670,057 |  |  | $ | 265,969 |  |  | $ | 404,088 |  |  | $ | — |

(1) | Included in accounts payable and accrued expenses in the consolidated statements of financial condition.

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A ssets and liabilities measured at fair value on a recurring basis as of December 31, 2019, are presented below (in thousands):

|  | December 31, 2019 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial instruments owned: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 9,266 |  |  | $ | 9,266 |  |  | $ | — |  |  | $ | — |
U.S. government agency securities |  |  | 66,881 |  |  |  | — |  |  |  | 66,881 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 388,856 |  |  |  | — |  |  |  | 388,856 |  |  |  | — |
Non-agency |  |  | 5,155 |  |  |  | — |  |  |  | 5,155 |  |  |  | — |
Asset-backed securities |  |  | 28,385 |  |  |  | — |  |  |  | 28,210 |  |  |  | 175 |
Corporate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  |  | 250,783 |  |  |  | 872 |  |  |  | 249,911 |  |  |  | — |
Equity securities |  |  | 64,009 |  |  |  | 61,579 |  |  |  | 2,430 |  |  |  | — |
Sovereign debt |  |  | 12,403 |  |  |  | — |  |  |  | 12,403 |  |  |  | — |
State and municipal securities |  |  | 137,211 |  |  |  | — |  |  |  | 137,211 |  |  |  | — |
Loans |  |  | 9,983 |  |  |  | — |  |  |  | 832 |  |  |  | 9,151 |
Total financial instruments owned |  |  | 972,932 |  |  |  | 71,717 |  |  |  | 891,889 |  |  |  | 9,326 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency securities |  |  | 5,067 |  |  |  | — |  |  |  | 5,067 |  |  |  | — |
State and municipal securities |  |  | 24,297 |  |  |  | — |  |  |  | 24,297 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 837,878 |  |  |  | — |  |  |  | 837,878 |  |  |  | — |
Commercial |  |  | 109,537 |  |  |  | — |  |  |  | 109,537 |  |  |  | — |
Non-agency |  |  | 9,758 |  |  |  | — |  |  |  | 9,758 |  |  |  | — |
Corporate fixed income securities |  |  | 675,311 |  |  |  | — |  |  |  | 675,311 |  |  |  | — |
Asset-backed securities |  |  | 1,592,889 |  |  |  | — |  |  |  | 1,592,889 |  |  |  | — |
Total available-for-sale securities |  |  | 3,254,737 |  |  |  | — |  |  |  | 3,254,737 |  |  |  | — |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate equity securities |  |  | 35,083 |  |  |  | 34,023 |  |  |  | — |  |  |  | 1,060 |
Auction rate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 14,243 |  |  |  | — |  |  |  | — |  |  |  | 14,243 |
Municipal securities |  |  | 654 |  |  |  | — |  |  |  | 470 |  |  |  | 184 |
Other |  |  | 16,771 |  |  |  | 9,905 |  |  |  | 6,013 |  |  |  | 853 |
Investments in funds and partnerships measured at NAV |  |  | 13,221 |  |  |  |  |  |  |  |  |  |  |  |  |
Total investments |  |  | 79,972 |  |  |  | 43,928 |  |  |  | 6,483 |  |  |  | 16,340 |
Cash equivalents measured at NAV |  |  | 25,734 |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative contracts (1) |  |  | 1,086 |  |  |  | — |  |  |  | 1,086 |  |  |  | — |
|  | $ | 4,334,461 |  |  | $ | 115,645 |  |  | $ | 4,154,195 |  |  | $ | 25,666 |

(1) | Included in other assets in the consolidated statements of financial condition.

|  | December 31, 2019 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments sold, but not yet purchased: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 243,570 |  |  | $ | 243,570 |  |  | $ | — |  |  | $ | — |
U.S. government agency securities |  |  | 1,000 |  |  |  | — |  |  |  | 1,000 |  |  |  | — |
Agency mortgage-backed securities |  |  | 231,909 |  |  |  | — |  |  |  | 231,909 |  |  |  | — |
Corporate securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  |  | 140,100 |  |  |  | 633 |  |  |  | 139,467 |  |  |  | — |
Equity securities |  |  | 32,047 |  |  |  | 32,047 |  |  |  | — |  |  |  | — |
Sovereign debt |  |  | 13,271 |  |  |  | — |  |  |  | 13,271 |  |  |  | — |
Loans |  |  | 955 |  |  |  | — |  |  |  | — |  |  |  | 955 |
Total financial instruments sold, but not yet purchased |  | $ | 662,852 |  |  | $ | 276,250 |  |  | $ | 385,647 |  |  | $ | 955 |

17

The following table summarizes the changes in fair value associated with Level 3 financial instruments during the three months ended March 31, 2020 (in thousands):

|  | Three Months Ended March 31, 2020 |
|  | Financial instruments owned |  |  | Investments |
|  | Asset-Backed Securities |  |  | Loans |  |  | Corporate Equity Securities |  |  | Auction Rate Securities – Equity |  |  | Auction Rate Securities – Municipal |  |  | Other |
Balance at December 31, 2019 |  | $ | 175 |  |  | $ | 9,151 |  |  | $ | 1,060 |  |  | $ | 14,243 |  |  | $ | 184 |  |  | $ | 853 |
Unrealized losses |  |  | — |  |  |  | (2,827 | ) |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |
Purchases |  |  | — |  |  |  | 6,942 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Sales |  |  | — |  |  |  | (3,004 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (20 | )
Redemptions |  |  | — |  |  |  | (3 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Net change |  |  | — |  |  |  | 1,108 |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (20 | )
Balance at March 31, 2020 |  | $ | 175 |  |  | $ | 10,259 |  |  | $ | 1,060 |  |  | $ | 14,243 |  |  | $ | 183 |  |  | $ | 833 |

The change in fair value associated with Level 3 financial instruments sold, but not yet purchased during the three months ended March 31, 2020 is attributable to purchases, partially offset by unrealized losses and sales.

The results included in the table above are only a component of the overall investment strategies of our company. The table above does not present Level 1 or Level 2 valued assets or liabilities. The changes in unrealized gains/(losses) recorded in earnings for the three months ended March 31, 2020, relating to Level 3 assets still held at March 31, 2020, were immaterial.

The fair value of certain Level 3 assets was determined using various methodologies, as appropriate, including third-party pricing vendors and broker quotes. These inputs are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of current market environment, and other analytical procedures.

The fair value for our auction rate securities was determined using an income approach based on an internally developed discounted cash flow model. The discounted cash flow model utilizes two significant unobservable inputs: discount rate and workout period. Significant increases in any of these inputs in isolation would result in a significantly lower fair value. On an ongoing basis, management verifies the fair value by reviewing the appropriateness of the discounted cash flow model and its significant inputs.

18

Fair Value of Financial Instruments

The following reflects the fair value of financial instruments as of March 31, 2020 and December 31, 2019, whether or not recognized in the consolidated statements of financial condition at fair value (in thousands).

|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Carrying Value |  |  | Estimated Fair Value |  |  | Carrying Value |  |  | Estimated Fair Value |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,382,920 |  |  | $ | 1,382,920 |  |  | $ | 1,142,596 |  |  | $ | 1,142,596 |
Cash segregated for regulatory purposes |  |  | 196,950 |  |  |  | 196,950 |  |  |  | 131,374 |  |  |  | 131,374 |
Securities purchased under agreements to resell |  |  | 458,968 |  |  |  | 458,968 |  |  |  | 385,008 |  |  |  | 385,008 |
Financial instruments owned |  |  | 932,511 |  |  |  | 932,511 |  |  |  | 972,932 |  |  |  | 972,932 |
Available-for-sale securities |  |  | 3,366,090 |  |  |  | 3,366,090 |  |  |  | 3,254,737 |  |  |  | 3,254,737 |
Held-to-maturity securities |  |  | 3,085,824 |  |  |  | 2,697,830 |  |  |  | 2,856,219 |  |  |  | 2,827,883 |
Bank loans |  |  | 9,994,500 |  |  |  | 10,017,518 |  |  |  | 9,624,042 |  |  |  | 9,801,986 |
Loans held for sale |  |  | 570,787 |  |  |  | 570,787 |  |  |  | 389,693 |  |  |  | 389,693 |
Investments |  |  | 55,688 |  |  |  | 55,688 |  |  |  | 79,972 |  |  |  | 79,972 |
Derivative contracts (1) |  |  | — |  |  |  | — |  |  |  | 1,086 |  |  |  | 1,086 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities sold under agreements to repurchase |  | $ | 475,528 |  |  | $ | 475,528 |  |  | $ | 391,634 |  |  | $ | 391,634 |
Bank deposits |  |  | 16,880,933 |  |  |  | 16,076,448 |  |  |  | 15,332,581 |  |  |  | 14,467,894 |
Financial instruments sold, but not yet purchased |  |  | 668,795 |  |  |  | 668,795 |  |  |  | 662,852 |  |  |  | 662,852 |
Federal Home Loan Bank advances |  |  | 250,000 |  |  |  | 250,000 |  |  |  | 250,000 |  |  |  | 250,000 |
Borrowings |  |  | 198,150 |  |  |  | 198,150 |  |  |  | 150 |  |  |  | 150 |
Senior notes |  |  | 1,017,269 |  |  |  | 1,016,578 |  |  |  | 1,017,010 |  |  |  | 1,069,425 |
Debentures to Stifel Financial Capital Trusts |  |  | 60,000 |  |  |  | 37,860 |  |  |  | 60,000 |  |  |  | 45,847 |
Derivative contracts (2) |  |  | 1,262 |  |  |  | 1,262 |  |  |  | — |  |  |  | — |

(1) | Included in other assets in the consolidated statements of financial condition.

(2) | Included in accounts payable and accrued expenses in the consolidated statements of financial condition.

The following tables present the estimated fair values of financial instruments not measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 1,356,353 |  |  | $ | 1,356,353 |  |  | $ | — |  |  | $ | — |
Cash segregated for regulatory purposes |  |  | 196,950 |  |  |  | 196,950 |  |  |  | — |  |  |  | — |
Securities purchased under agreements to resell |  |  | 458,968 |  |  |  | 431,737 |  |  |  | 27,231 |  |  |  | — |
Held-to-maturity securities |  |  | 2,697,830 |  |  |  | — |  |  |  | 2,584,305 |  |  |  | 113,525 |
Bank loans |  |  | 10,017,518 |  |  |  | — |  |  |  | 10,017,518 |  |  |  | — |
Loans held for sale |  |  | 570,787 |  |  |  | — |  |  |  | 570,787 |  |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities sold under agreements to repurchase |  | $ | 475,528 |  |  | $ | — |  |  | $ | 475,528 |  |  | $ | — |
Bank deposits |  |  | 16,076,448 |  |  |  | — |  |  |  | 16,076,448 |  |  |  | — |
Federal Home Loan Bank advances |  |  | 250,000 |  |  |  | 250,000 |  |  |  | — |  |  |  | — |
Borrowings |  |  | 198,150 |  |  |  | 198,150 |  |  |  | — |  |  |  | — |
Senior notes |  |  | 1,016,578 |  |  |  | 1,016,578 |  |  |  | — |  |  |  | — |
Debentures to Stifel Financial Capital Trusts |  |  | 37,860 |  |  |  | — |  |  |  | — |  |  |  | 37,860 |

19

|  | December 31, 2019 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 1,116,862 |  |  | $ | 1,116,862 |  |  | $ | — |  |  | $ | — |
Cash segregated for regulatory purposes |  |  | 131,374 |  |  |  | 131,374 |  |  |  | — |  |  |  | — |
Securities purchased under agreements to resell |  |  | 385,008 |  |  |  | 342,132 |  |  |  | 42,876 |  |  |  | — |
Held-to-maturity securities |  |  | 2,827,883 |  |  |  | — |  |  |  | 2,666,773 |  |  |  | 161,110 |
Bank loans |  |  | 9,801,986 |  |  |  | — |  |  |  | 9,801,986 |  |  |  | — |
Loans held for sale |  |  | 389,693 |  |  |  | — |  |  |  | 389,693 |  |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities sold under agreements to repurchase |  | $ | 391,634 |  |  | $ | 22,205 |  |  | $ | 369,429 |  |  | $ | — |
Bank deposits |  |  | 14,467,894 |  |  |  | — |  |  |  | 14,467,894 |  |  |  | — |
Federal Home Loan Bank advances |  |  | 250,000 |  |  |  | 250,000 |  |  |  | — |  |  |  | — |
Borrowings |  |  | 150 |  |  |  | 150 |  |  |  | — |  |  |  | — |
Senior notes |  |  | 1,069,425 |  |  |  | 1,069,425 |  |  |  | — |  |  |  | — |
Debentures to Stifel Financial Capital Trusts |  |  | 45,847 |  |  |  | — |  |  |  | — |  |  |  | 45,847 |

The following, as supplemented by the discussion above, describes the valuation techniques used in estimating the fair value of our financial instruments as of March 31, 2020 and December 31, 2019.

Financial Assets

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2020 and December 31, 2019 approximate fair value due to their short-term nature.

Held-to-Maturity Securities

Securities held to maturity are recorded at amortized cost based on our company’s positive intent and ability to hold these securities to maturity. Securities held to maturity include agency mortgage-backed securities, asset-backed securities, consisting of collateralized loan obligation securities and corporate fixed income securities. The estimated fair value, included in the above table, is determined using several factors; however, primary weight is given to discounted cash flow modeling techniques that incorporated an estimated discount rate based upon recent observable debt security issuances with similar characteristics.

Loans Held for Sale

Loans held for sale consist of fixed-rate and adjustable-rate residential real estate mortgage loans intended for sale. Loans held for sale are stated at lower of cost or market value. Market value is determined based on prevailing market prices for loans with similar characteristics or on sale contract prices.

Bank Loans

The fair values of mortgage loans and commercial loans were estimated using a discounted cash flow method, a form of the income approach. Discount rates were determined considering rates at which similar portfolios of loans, with similar remaining maturities, would be made and considering liquidity spreads applicable to each loan portfolio based on the secondary market.

Financial Liabilities

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The carrying values at March 31, 2020 and December 31, 2019 approximate fair value due to the short-term nature.

Bank Deposits

The fair value of interest-bearing deposits, including certificates of deposits, demand deposits, savings, and checking accounts, was calculated by discounting the future cash flows using discount rates based on the replacement cost of funding of similar structures and terms.

20

FHLB Advances

FHLB advances reflect terms that approximate current market rates for similar borrowings.

Borrowings

The carrying amount of borrowings approximates fair value due to the relative short-term nature of such borrowings.

Senior Notes

The fair value of our senior notes is estimated based upon quoted market prices.

Debentures to Stifel Financial Capital Trusts

The fair value of our trust preferred securities is based on the discounted value of contractual cash flows. We have assumed a discount rate based on similar type debt instruments.

These fair value disclosures represent our best estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected losses, current economic conditions, risk characteristics of the various instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.

NOTE 5 – Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased

The components of financial instruments owned and financial instruments sold, but not yet purchased, at March 31, 2020 and December 31, 2019 are as follows (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Financial instruments owned: |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 12,821 |  |  | $ | 9,266 |
U.S. government agency securities |  |  | 80,138 |  |  |  | 66,881 |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Agency |  |  | 371,762 |  |  |  | 388,856 |
Non-agency |  |  | 2,870 |  |  |  | 5,155 |
Asset-backed securities |  |  | 12,942 |  |  |  | 28,385 |
Corporate securities: |  |  |  |  |  |  |  |
Fixed income securities |  |  | 275,663 |  |  |  | 250,783 |
Equity securities |  |  | 69,259 |  |  |  | 64,009 |
Sovereign debt |  |  | 21,057 |  |  |  | 12,403 |
State and municipal securities |  |  | 75,740 |  |  |  | 137,211 |
Loans |  |  | 10,259 |  |  |  | 9,983 |
|  | $ | 932,511 |  |  | $ | 972,932 |
Financial instruments sold, but not yet purchased: |  |  |  |  |  |  |  |
U.S. government securities |  | $ | 239,311 |  |  | $ | 243,570 |
U.S. government agency securities |  |  | 16,320 |  |  |  | 1,000 |
Agency mortgage-backed securities |  |  | 179,407 |  |  |  | 231,909 |
Corporate securities: |  |  |  |  |  |  |  |
Fixed income securities |  |  | 192,603 |  |  |  | 140,100 |
Equity securities |  |  | 22,776 |  |  |  | 32,047 |
Sovereign debt |  |  | 18,178 |  |  |  | 13,271 |
State and municipal securities |  |  | 200 |  |  |  | — |
Loans |  |  | — |  |  |  | 955 |
|  | $ | 668,795 |  |  | $ | 662,852 |

At March 31, 2020 and December 31, 2019, financial instruments owned in the amount of $708.0 million and $511.2 million, respectively, were pledged as collateral for our repurchase agreements and short-term borrowings. Our financial instruments owned are presented on a trade-date basis in the consolidated statements of financial condition.

21

Financial instruments sold, but not yet purchased, represent obligations of our company to deliver the specified security at the contracted price, thereby creating a liability to purchase the security in the market at prevailing prices in future periods. We are obligated to acquire the securities sold short at prevailing market prices in future periods, which may exceed the amount reflected in the consolidated statements of financial condition.

NOTE 6 – Available-for-Sale and Held-to-Maturity Securities

The following tables provide a summary of the amortized cost and fair values of the available-for-sale securities and held-to-maturity securities at March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |
|  | Amortized Cost |  |  | Gross Unrealized Gains (1) |  |  | Gross Unrealized Losses (1) |  |  | Estimated Fair Value |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency securities |  | $ | 5,534 |  |  | $ | 116 |  |  | $ | — |  |  | $ | 5,650 |
State and municipal securities |  |  | 17,079 |  |  |  | 63 |  |  |  | — |  |  |  | 17,142 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 807,043 |  |  |  | 22,545 |  |  |  | (155 | ) |  |  | 829,433 |
Commercial |  |  | 108,144 |  |  |  | 524 |  |  |  | (482 | ) |  |  | 108,186 |
Non-agency |  |  | 8,620 |  |  |  | 118 |  |  |  | (94 | ) |  |  | 8,644 |
Corporate fixed income securities |  |  | 741,219 |  |  |  | 3,460 |  |  |  | (17,089 | ) |  |  | 727,590 |
Asset-backed securities |  |  | 1,776,630 |  |  |  | 836 |  |  |  | (108,021 | ) |  |  | 1,669,445 |
|  | $ | 3,464,269 |  |  | $ | 27,662 |  |  | $ | (125,841 | ) |  | $ | 3,366,090 |
Held-to-maturity securities (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  | $ | 3,085,824 |  |  | $ | 1,458 |  |  | $ | (389,452 | ) |  | $ | 2,697,830 |

|  | December 31, 2019 |
|  | Amortized Cost |  |  | Gross Unrealized Gains (1) |  |  | Gross Unrealized Losses (1) |  |  | Estimated Fair Value |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency securities |  | $ | 5,028 |  |  | $ | 39 |  |  | $ | — |  |  | $ | 5,067 |
State and municipal securities |  |  | 24,198 |  |  |  | 99 |  |  |  | — |  |  |  | 24,297 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 840,659 |  |  |  | 3,070 |  |  |  | (5,851 | ) |  |  | 837,878 |
Commercial |  |  | 109,982 |  |  |  | 269 |  |  |  | (714 | ) |  |  | 109,537 |
Non-agency |  |  | 9,731 |  |  |  | 50 |  |  |  | (23 | ) |  |  | 9,758 |
Corporate fixed income securities |  |  | 664,028 |  |  |  | 11,283 |  |  |  | — |  |  |  | 675,311 |
Asset-backed securities |  |  | 1,600,415 |  |  |  | 679 |  |  |  | (8,205 | ) |  |  | 1,592,889 |
|  | $ | 3,254,041 |  |  | $ | 15,489 |  |  | $ | (14,793 | ) |  | $ | 3,254,737 |
Held-to-maturity securities (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  | $ | 2,856,219 |  |  | $ | 5,960 |  |  | $ | (34,296 | ) |  | $ | 2,827,883 |

(1) | Unrealized gains/(losses) related to available-for-sale securities are reported in accumulated other comprehensive loss.

(2) | Held-to-maturity securities are carried in the consolidated statements of financial condition at amortized cost, and the changes in the value of these securities, other than impairment charges, are not reported on the consolidated financial statements.

Effective January 1, 2020, we adopted the new accounting standard for credit losses that requires evaluation of available-for-sale and held-to-maturity debt securities for any expected losses with recognition of an allowance for credit losses, when applicable. For more information, see Note 1 – Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies. At March 31, 2020, we did not have an allowance for credit losses recorded on our investment portfolio.

Accrued interest receivable for our investment portfolio at March 31, 2020 was $38.2 million and is reported in other assets in the consolidated statements of financial condition. We do not include reserves for interest receivable in the measurement of the allowance for credit losses.

22

During the three months ended March 31, 2020, we received proceeds of $288.3 million, from the sale of available-for-sale securities, which resulted in a realized loss of $0.7 million. There were no sales of available-for-sale securities during the three months ended March 31, 2019.

During the three months ended March 31, 2020 and March 31, 2019, unrealized losses, net of deferred taxes, of $73.2 million and unrealized gains, net of deferred taxes of $25.8 million were recorded in accumulated other comprehensive loss in the consolidated statements of financial condition.

The table below summarizes the amortized cost and fair values of our securities by contractual maturity at March 31, 2020 and December 31, 2019 (in thousands). Expected maturities may differ significantly from contractual maturities, as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Amortized Cost |  |  | Estimated Fair Value |  |  | Amortized Cost |  |  | Estimated Fair Value |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 26,838 |  |  | $ | 26,980 |  |  | $ | 6,861 |  |  | $ | 6,871 |
After one year through three years |  |  | 261,013 |  |  |  | 259,331 |  |  |  | 229,184 |  |  |  | 229,760 |
After three years through five years |  |  | 422,686 |  |  |  | 412,819 |  |  |  | 422,236 |  |  |  | 429,909 |
After five years through ten years |  |  | 478,472 |  |  |  | 453,334 |  |  |  | 409,664 |  |  |  | 411,680 |
After ten years |  |  | 2,275,260 |  |  |  | 2,213,626 |  |  |  | 2,186,096 |  |  |  | 2,176,517 |
|  | $ | 3,464,269 |  |  | $ | 3,366,090 |  |  | $ | 3,254,041 |  |  | $ | 3,254,737 |
Held-to-maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
After five years through ten years |  | $ | 686,300 |  |  | $ | 618,937 |  |  | $ | 598,250 |  |  | $ | 597,166 |
After ten years |  |  | 2,399,524 |  |  |  | 2,078,893 |  |  |  | 2,257,969 |  |  |  | 2,230,717 |
|  | $ | 3,085,824 |  |  | $ | 2,697,830 |  |  | $ | 2,856,219 |  |  | $ | 2,827,883 |

The maturities of our available-for-sale (fair value) and held-to-maturity (amortized cost) securities at March 31, 2020, are as follows (in thousands):

|  | Within 1 Year |  |  | 1-5 Years |  |  | 5-10 Years |  |  | After 10 Years |  |  | Total |
Available-for-sale securities (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency securities |  | $ | 1,761 |  |  | $ | 3,889 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,650 |
State and municipal securities |  |  | — |  |  |  | — |  |  |  | 2,463 |  |  |  | 14,679 |  |  |  | 17,142 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 33 |  |  |  | 676 |  |  |  | 786 |  |  |  | 827,938 |  |  |  | 829,433 |
Commercial |  |  | — |  |  |  | 31,607 |  |  |  | — |  |  |  | 76,579 |  |  |  | 108,186 |
Non-agency |  |  | — |  |  |  | 7,827 |  |  |  | — |  |  |  | 817 |  |  |  | 8,644 |
Corporate fixed income securities |  |  | 25,186 |  |  |  | 628,151 |  |  |  | 74,253 |  |  |  | — |  |  |  | 727,590 |
Asset-backed securities |  |  | — |  |  |  | — |  |  |  | 375,832 |  |  |  | 1,293,613 |  |  |  | 1,669,445 |
|  | $ | 26,980 |  |  | $ | 672,150 |  |  | $ | 453,334 |  |  | $ | 2,213,626 |  |  | $ | 3,366,090 |
Held-to-maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  | $ | — |  |  | $ | — |  |  | $ | 686,300 |  |  | $ | 2,399,524 |  |  | $ | 3,085,824 |

(1) | Due to the immaterial amount of income recognized on tax-exempt securities, yields were not calculated on a tax-equivalent basis.

At March 31, 2020 and December 31, 2019, securities of $526.7 million and $801.5 million, respectively, were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. At March 31, 2020 and December 31, 2019, securities of $1.3 billion and $816.1 million, respectively, were pledged with the Federal Reserve discount window.

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The following table shows the gross unrealized losses and fair value of the Company’s investment securities with unrealized losses, aggregated by investment category and length of time the individual investment securities have been in continuous unrealized loss positions, at March 31, 2020 (in thousands):

|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
|  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  | $ | (122 | ) |  | $ | 23,806 |  |  | $ | (33 | ) |  | $ | 10,315 |  |  | $ | (155 | ) |  | $ | 34,121 |
Commercial |  |  | (482 | ) |  |  | 61,706 |  |  |  | — |  |  |  | — |  |  |  | (482 | ) |  |  | 61,706 |
Non-agency |  |  | — |  |  |  | — |  |  |  | (94 | ) |  |  | 817 |  |  |  | (94 | ) |  |  | 817 |
Corporate fixed income securities |  |  | (17,089 | ) |  |  | 492,713 |  |  |  | — |  |  |  | — |  |  |  | (17,089 | ) |  |  | 492,713 |
Asset-backed securities |  |  | (67,624 | ) |  |  | 1,096,278 |  |  |  | (40,397 | ) |  |  | 466,319 |  |  |  | (108,021 | ) |  |  | 1,562,597 |
|  | $ | (85,317 | ) |  | $ | 1,674,503 |  |  | $ | (40,524 | ) |  | $ | 477,451 |  |  | $ | (125,841 | ) |  | $ | 2,151,954 |

At March 31, 2020, the amortized cost of 165 securities classified as available for sale exceeded their fair value by $125.8 million, of which $40.5 million related to investment securities that had been in a loss position for 12 months or longer. The total fair value of these investments at March 31, 2020, was $2.2 billion, which was 63.9% of our available-for-sale portfolio.

Credit Quality Indicators

The Company uses Moody credit ratings as the credit quality indicator for its held-to-maturity debt securities. Each security is evaluated at least quarterly. The indicators represent the rating for debt securities, as of the date presented, based on the most recent assessment performed. The following table shows the amortized cost of our held-to-maturity securities by credit quality indicator at March 31, 2020 (in thousands):

|  | AAA |  |  | AA |  |  | A |  |  | C |  |  | Total |
Held-to-maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities |  | $ | 109,335 |  |  | $ | 2,958,230 |  |  | $ | 15,500 |  |  | $ | 2,759 |  |  | $ | 3,085,824 |

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NOTE 7 – Bank Loans

Our loan portfolio consists primarily of the following segments:

Commercial and industrial (C&I). C&I loans primarily include commercial and industrial lending used for general corporate purposes, working capital and liquidity, and “event-driven." “Event-driven” loans support client merger, acquisition or recapitalization activities. C&I lending is structured as revolving lines of credit, letter of credit facilities, term loans and bridge loans. Risk factors considered in determining the allowance for corporate loans include the borrower’s financial strength, seniority of the loan, collateral type, leverage, volatility of collateral value, debt cushion, and covenants.

Real Estate. Real estate loans include residential real estate non-conforming loans, residential real estate conforming loans, commercial real estate, and home equity lines of credit. The allowance methodology related to real estate loans considers several factors, including, but not limited to, loan-to-value ratio, FICO score, home price index, delinquency status, credit limits, and utilization rates.

Securities-based loans. Securities-based loans allow clients to borrow money against the value of qualifying securities for any suitable purpose other than purchasing, trading, or carrying securities or refinancing margin debt. The majority of consumer loans are structured as revolving lines of credit and letter of credit facilities and are primarily offered through Stifel’s Pledged Asset ("SPA") program. The allowance methodology for securities-based lending considers the collateral type underlying the loan, including the liquidity and trading volume of the collateral, position concentration and other borrower specific factors such as personal guarantees.

Construction and land. Short-term loans used to finance the development of a real estate project.

Other. Other loans include consumer loans and credit card lending.

The following table presents the balance and associated percentage of each major loan category in our bank loan portfolio at March 31, 2020 and December 31, 2019 (in thousands, except percentages):

|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Balance |  |  | Percent |  |  | Balance |  |  | Percent |
Commercial and industrial |  | $ | 3,813,862 |  |  |  | 37.6 | % |  | $ | 3,438,953 |  |  |  | 35.3 | %
Residential real estate |  |  | 3,495,136 |  |  |  | 34.4 |  |  |  | 3,309,548 |  |  |  | 33.9 |
Securities-based loans |  |  | 1,945,371 |  |  |  | 19.2 |  |  |  | 2,098,211 |  |  |  | 21.5 |
Commercial real estate |  |  | 399,732 |  |  |  | 3.9 |  |  |  | 428,549 |  |  |  | 4.4 |
Construction and land |  |  | 412,410 |  |  |  | 4.1 |  |  |  | 398,839 |  |  |  | 4.1 |
Home equity lines of credit |  |  | 57,402 |  |  |  | 0.6 |  |  |  | 51,205 |  |  |  | 0.5 |
Other |  |  | 32,762 |  |  |  | 0.2 |  |  |  | 27,311 |  |  |  | 0.3 |
Gross bank loans |  |  | 10,156,675 |  |  |  | 100.0 | % |  |  | 9,752,616 |  |  |  | 100.0 | %
Unamortized loan discount, net |  |  | (6,148 | ) |  |  |  |  |  |  | (6,588 | ) |  |  |  |
Loans in process |  |  | (53,953 | ) |  |  |  |  |  |  | (27,717 | ) |  |  |  |
Unamortized loan fees, net |  |  | 728 |  |  |  |  |  |  |  | 1,310 |  |  |  |  |
Allowance for loan losses |  |  | (102,802 | ) |  |  |  |  |  |  | (95,579 | ) |  |  |  |
Loans held for investment, net |  | $ | 9,994,500 |  |  |  |  |  |  | $ | 9,624,042 |  |  |  |  |

At March 31, 2020 and December 31, 2019, Stifel Bancorp had loans outstanding to its executive officers and directors and executive officers and directors of certain affiliated entities in the amount of $19.0 million and $24.5 million, respectively.

At March 31, 2020 and December 31, 2019, we had loans held for sale of $570.8 million and $389.7 million, respectively. For the three months ended March 31, 2020 and 2019, we recognized gains of $2.5 million and $0.9 million, respectively, from the sale of originated loans, net of fees and costs.

Effective January 1, 2020, we adopted the new accounting standard for credit losses that requires evaluation of our loan portfolio for any expected losses with recognition of an allowance for credit losses, when applicable. For more information, see Note 1 – Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies.

Accrued interest receivable for loans and loans held for sale at March 31, 2020 was $21.6 million and is reported in other assets on the consolidated statement of financial condition.

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The following table detail s activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2020 (in thousands).

|  | Three Months Ended March 31, 2020 |
|  | Beginning Balance |  |  | CECL Adoption |  |  | Provision |  |  | Charge-offs |  |  | Recoveries |  |  | Ending Balance |
Commercial and industrial |  | $ | 69,949 |  |  | $ | (19,940 | ) |  | $ | 9,955 |  |  | $ | (2 | ) |  | $ | — |  |  | $ | 59,962 |
Residential real estate |  |  | 14,253 |  |  |  | 3,499 |  |  |  | 2,233 |  |  |  | — |  |  |  | — |  |  |  | 19,985 |
Construction and land |  |  | 4,613 |  |  |  | 2,674 |  |  |  | 3,666 |  |  |  | — |  |  |  | — |  |  |  | 10,953 |
Commercial real estate |  |  | 3,564 |  |  |  | 791 |  |  |  | 3,810 |  |  |  | — |  |  |  | — |  |  |  | 8,165 |
Securities-based loans |  |  | 2,361 |  |  |  | 1,346 |  |  |  | (792 | ) |  |  | — |  |  |  | — |  |  |  | 2,915 |
Home equity lines of credit |  |  | 442 |  |  |  | 39 |  |  |  | 57 |  |  |  | — |  |  |  | 1 |  |  |  | 539 |
Other |  |  | 194 |  |  |  | 58 |  |  |  | 49 |  |  |  | (18 | ) |  |  | — |  |  |  | 283 |
Unallocated |  |  | 203 |  |  |  | (203 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 95,579 |  |  | $ | (11,736 | ) |  | $ | 18,978 |  |  | $ | (20 | ) |  | $ | 1 |  |  | $ | 102,802 |

The following table presents the recorded balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at March 31, 2020 (in thousands):

|  | Allowance for Loan Losses |  |  | Recorded Investment in Loans |
|  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total |  |  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total |
Commercial and industrial |  | $ | 8,158 |  |  | $ | 51,804 |  |  | $ | 59,962 |  |  | $ | 12,940 |  |  | $ | 3,800,922 |  |  | $ | 3,813,862 |
Residential real estate |  |  | 24 |  |  |  | 19,961 |  |  |  | 19,985 |  |  |  | 1,411 |  |  |  | 3,493,725 |  |  |  | 3,495,136 |
Securities-based loans |  |  | — |  |  |  | 2,915 |  |  |  | 2,915 |  |  |  | — |  |  |  | 1,945,371 |  |  |  | 1,945,371 |
Commercial real estate |  |  | — |  |  |  | 8,165 |  |  |  | 8,165 |  |  |  | — |  |  |  | 399,732 |  |  |  | 399,732 |
Construction and land |  |  | — |  |  |  | 10,953 |  |  |  | 10,953 |  |  |  | — |  |  |  | 412,410 |  |  |  | 412,410 |
Home equity lines of credit |  |  | — |  |  |  | 539 |  |  |  | 539 |  |  |  | — |  |  |  | 57,402 |  |  |  | 57,402 |
Other |  |  | — |  |  |  | 283 |  |  |  | 283 |  |  |  | — |  |  |  | 32,762 |  |  |  | 32,762 |
|  | $ | 8,182 |  |  | $ | 94,620 |  |  | $ | 102,802 |  |  | $ | 14,351 |  |  | $ | 10,142,324 |  |  | $ | 10,156,675 |

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019 (in thousands).

|  | Three Months Ended March 31, 2019 |
|  | Beginning Balance |  |  | Provision |  |  | Charge-offs |  |  | Recoveries |  |  | Ending Balance |
Commercial and industrial |  | $ | 68,367 |  |  | $ | 211 |  |  | $ | (12 | ) |  | $ | — |  |  | $ | 68,566 |
Residential real estate |  |  | 11,228 |  |  |  | 270 |  |  |  | — |  |  |  | 87 |  |  |  | 11,585 |
Securities-based loans |  |  | 1,978 |  |  |  | 249 |  |  |  | — |  |  |  | — |  |  |  | 2,227 |
Commercial real estate |  |  | 1,778 |  |  |  | 643 |  |  |  | — |  |  |  | — |  |  |  | 2,421 |
Construction and land |  |  | 1,241 |  |  |  | 483 |  |  |  | — |  |  |  | — |  |  |  | 1,724 |
Home equity lines of credit |  |  | 310 |  |  |  | 61 |  |  |  | — |  |  |  | 1 |  |  |  | 372 |
Other |  |  | 88 |  |  |  | 78 |  |  |  | (44 | ) |  |  | 24 |  |  |  | 146 |
Unallocated |  |  | 843 |  |  |  | 288 |  |  |  | — |  |  |  | — |  |  |  | 1,131 |
|  | $ | 85,833 |  |  | $ | 2,283 |  |  | $ | (56 | ) |  | $ | 112 |  |  | $ | 88,172 |

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The following table presents the recorded balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at December 31, 2019 (in thousands):

|  | Allowance for Loan Losses |  |  | Recorded Investment in Loans |
|  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total |  |  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total |
Commercial and industrial |  | $ | 8,158 |  |  | $ | 61,791 |  |  | $ | 69,949 |  |  | $ | 12,991 |  |  | $ | 3,425,962 |  |  | $ | 3,438,953 |
Residential real estate |  |  | 24 |  |  |  | 14,229 |  |  |  | 14,253 |  |  |  | 1,412 |  |  |  | 3,308,136 |  |  |  | 3,309,548 |
Securities-based loans |  |  | — |  |  |  | 2,361 |  |  |  | 2,361 |  |  |  | — |  |  |  | 2,098,211 |  |  |  | 2,098,211 |
Commercial real estate |  |  | — |  |  |  | 3,564 |  |  |  | 3,564 |  |  |  | — |  |  |  | 428,549 |  |  |  | 428,549 |
Construction and land |  |  | — |  |  |  | 4,613 |  |  |  | 4,613 |  |  |  | — |  |  |  | 398,839 |  |  |  | 398,839 |
Home equity lines of credit |  |  | — |  |  |  | 442 |  |  |  | 442 |  |  |  | 184 |  |  |  | 51,021 |  |  |  | 51,205 |
Other |  |  | — |  |  |  | 194 |  |  |  | 194 |  |  |  | — |  |  |  | 27,311 |  |  |  | 27,311 |
Unallocated |  |  | — |  |  |  | 203 |  |  |  | 203 |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 8,182 |  |  | $ | 87,397 |  |  | $ | 95,579 |  |  | $ | 14,587 |  |  | $ | 9,738,029 |  |  | $ | 9,752,616 |

At March 31, 2020, we had $14.4 million of impaired loans, net of discounts, which included $0.2 million in troubled debt restructurings. The specific allowance on impaired loans at March 31, 2020 was $8.2 million. At December 31, 2019, we had $14.6 million of impaired loans, net of discounts, which included $0.2 million in troubled debt restructurings. The specific allowance on impaired loans at December 31, 2019 was $8.2 million. The gross interest income related to impaired loans, which would have been recorded, had these loans been current in accordance with their original terms, and the interest income recognized on these loans during the three months ended March 31, 2020 and 2019, were insignificant to the consolidated financial statements.

The tables below present loans that were individually evaluated for impairment by portfolio segment at March 31, 2020 and December 31, 2019, including the average recorded investment balance for the year to date period presented (in thousands):

|  | March 31, 2020 |
|  | Unpaid Contractual Principal Balance |  |  | Recorded Investment with No Allowance |  |  | Recorded Investment with Allowance |  |  | Total Recorded Investment |  |  | Related Allowance |  |  | Average Recorded Investment |
Commercial and industrial |  | $ | 12,940 |  |  | $ | — |  |  | $ | 12,940 |  |  | $ | 12,940 |  |  | $ | 8,158 |  |  | $ | 12,940 |
Residential real estate |  |  | 1,411 |  |  |  | 1,249 |  |  |  | 162 |  |  |  | 1,411 |  |  |  | 24 |  |  |  | 1,411 |
Home equity lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 123 |
Other |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 14,501 |  |  | $ | 1,249 |  |  | $ | 13,102 |  |  | $ | 14,351 |  |  | $ | 8,182 |  |  | $ | 14,474 |

|  | December 31, 2019 |
|  | Unpaid Contractual Principal Balance |  |  | Recorded Investment with No Allowance |  |  | Recorded Investment with Allowance |  |  | Total Recorded Investment |  |  | Related Allowance |  |  | Average Recorded Investment |
Commercial and industrial |  | $ | 12,991 |  |  | $ | 51 |  |  | $ | 12,940 |  |  | $ | 12,991 |  |  | $ | 8,158 |  |  | $ | 14,172 |
Residential real estate |  |  | 1,412 |  |  |  | 1,412 |  |  |  | — |  |  |  | 1,412 |  |  |  | 24 |  |  |  | 1,231 |
Home equity lines of credit |  |  | 184 |  |  |  | 184 |  |  |  | — |  |  |  | 184 |  |  |  | — |  |  |  | 184 |
Other |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 14,737 |  |  | $ | 1,647 |  |  | $ | 12,940 |  |  | $ | 14,587 |  |  | $ | 8,182 |  |  | $ | 15,587 |

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The following tables present the aging of the recorded investment in past due loans at March 31, 2020 and December 31, 2019 by portfolio segment (in thousands):

|  | As of March 31, 2020 |
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | Total Past Due |  |  | Current Balance |  |  | Total |
Commercial and industrial |  | $ | — |  |  | $ | 12,940 |  |  | $ | 12,940 |  |  | $ | 3,800,922 |  |  | $ | 3,813,862 |
Residential real estate |  |  | 18,801 |  |  |  | 1,249 |  |  |  | 20,050 |  |  |  | 3,475,086 |  |  |  | 3,495,136 |
Securities-based loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,945,371 |  |  |  | 1,945,371 |
Commercial real estate |  |  | 146 |  |  |  | — |  |  |  | 146 |  |  |  | 399,586 |  |  |  | 399,732 |
Construction and land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 412,410 |  |  |  | 412,410 |
Home equity lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 57,402 |  |  |  | 57,402 |
Other |  |  | 24 |  |  |  | 20 |  |  |  | 44 |  |  |  | 32,718 |  |  |  | 32,762 |
Total |  | $ | 18,971 |  |  | $ | 14,209 |  |  | $ | 33,180 |  |  | $ | 10,123,495 |  |  | $ | 10,156,675 |

|  | As of March 31, 2020* |
|  | Non-Accrual |  |  | Restructured |  |  | Nonperforming loans with no allowance |  |  | Total |
Commercial and industrial |  | $ | 12,940 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,940 |
Residential real estate |  |  | — |  |  |  | 162 |  |  |  | 1,249 |  |  |  | 1,411 |
Total |  | $ | 12,940 |  |  | $ | 162 |  |  | $ | 1,249 |  |  | $ | 14,351 |

* | There were no loans past due 90 days and still accruing interest at March 31, 2020.

|  | As of December 31, 2019 |
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | Total Past Due |  |  | Current Balance |  |  | Total |
Commercial and industrial |  | $ | — |  |  | $ | 12,940 |  |  | $ | 12,940 |  |  | $ | 3,426,013 |  |  | $ | 3,438,953 |
Residential real estate |  |  | 10,476 |  |  |  | 1,249 |  |  |  | 11,725 |  |  |  | 3,297,823 |  |  |  | 3,309,548 |
Securities-based loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,098,211 |  |  |  | 2,098,211 |
Commercial real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 428,549 |  |  |  | 428,549 |
Construction and land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 398,839 |  |  |  | 398,839 |
Home equity lines of credit |  |  | 83 |  |  |  | 184 |  |  |  | 267 |  |  |  | 50,938 |  |  |  | 51,205 |
Other |  |  | 5 |  |  |  | — |  |  |  | 5 |  |  |  | 27,306 |  |  |  | 27,311 |
Total |  | $ | 10,564 |  |  | $ | 14,373 |  |  | $ | 24,937 |  |  | $ | 9,727,679 |  |  | $ | 9,752,616 |

|  | As of December 31, 2019* |
|  | Non-Accrual |  |  | Restructured |  |  | Total |
Commercial and industrial |  | $ | 12,940 |  |  | $ | — |  |  | $ | 12,940 |
Residential real estate |  |  | 1,249 |  |  |  | 163 |  |  |  | 1,412 |
Home equity lines of credit |  |  | 184 |  |  |  | — |  |  |  | 184 |
Total |  | $ | 14,373 |  |  | $ | 163 |  |  | $ | 14,536 |

* | There were no loans past due 90 days and still accruing interest at December 31, 2019.

Credit quality indicators

As of March 31, 2020, bank loans were primarily extended to non-investment grade borrowers. Substantially all of these loans align with the U.S. Federal bank regulatory agencies’ definition of Pass. Loans meet the definition of Pass when they are performing and do not demonstrate adverse characteristics that are likely to result in a credit loss. A loan is determined to be impaired when principal or interest becomes 90 days past due or when collection becomes uncertain. At the time a loan is determined to be impaired, the accrual of interest and amortization of deferred loan origination fees is discontinued (“non-accrual status”), and any accrued and unpaid interest income is reversed.

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We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk. Trends in delinquency ratios are an indicator, among other considerations, of credit risk within our loan portfolio. The level of nonperforming assets represents another indicator of the potential for future credit losses. Accordingly, key metrics we track and use in evaluating the credit quality of our loan portfolio include delinquency and nonperforming asset rates, as well as charge-off rates and our internal risk ratings of the loan portfolio. In general, we are a secured lender. At March 31, 2020 and December 31, 2019, 97.7% and 98.3% of our loan portfolio was collateralized, respectively. Collateral is required in accordance with the normal credit evaluation process based upon the creditworthiness of the customer and the credit risk associated with the particular transaction. The Company uses the following definitions for risk ratings:

Pass. A credit exposure rated pass has a continued expectation of timely repayment, all obligations of the borrower are current, and the obligor complies with material terms and conditions of the lending agreement.

Special Mention. Extensions of credit that have potential weakness that deserve management’s close attention, and if left uncorrected may, at some future date, result in the deterioration of the repayment prospects or collateral position.

Substandard. Obligor has a well-defined weakness that jeopardizes the repayment of the debt and has a high probability of payment default with the distinct possibility that the Company will sustain some loss if noted deficiencies are not corrected.

Doubtful. Inherent weakness in the exposure makes the collection or repayment in full, based on existing facts, conditions and circumstances, highly improbable, and the amount of loss is uncertain.

Substandard loans are regularly reviewed for impairment. Doubtful loans are considered impaired. When a loan is impaired the impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent.

Based on the most recent analysis performed, the risk category of our loan portfolio was as follows (in thousands):

|  | As of March 31, 2020 |
|  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
Commercial and industrial |  | $ | 3,684,127 |  |  | $ | 70,798 |  |  | $ | 45,997 |  |  | $ | 12,940 |  |  | $ | 3,813,862 |
Residential real estate |  |  | 3,493,375 |  |  |  | 512 |  |  |  | — |  |  |  | 1,249 |  |  |  | 3,495,136 |
Securities-based loans |  |  | 1,945,371 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,945,371 |
Commercial real estate |  |  | 398,395 |  |  |  | 1,191 |  |  |  | 146 |  |  |  | — |  |  |  | 399,732 |
Construction and land |  |  | 412,410 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 412,410 |
Home equity lines of credit |  |  | 56,558 |  |  |  | 844 |  |  |  | — |  |  |  | — |  |  |  | 57,402 |
Other |  |  | 32,762 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 32,762 |
Total |  | $ | 10,022,998 |  |  | $ | 73,345 |  |  | $ | 46,143 |  |  | $ | 14,189 |  |  | $ | 10,156,675 |

|  | As of December 31, 2019 |
|  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
Commercial and industrial |  | $ | 3,365,800 |  |  | $ | 48,241 |  |  | $ | 11,972 |  |  | $ | 12,940 |  |  | $ | 3,438,953 |
Residential real estate |  |  | 3,307,719 |  |  |  | 417 |  |  |  | 1,412 |  |  |  | — |  |  |  | 3,309,548 |
Securities-based loans |  |  | 2,098,211 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,098,211 |
Commercial real estate |  |  | 427,963 |  |  |  | 586 |  |  |  | — |  |  |  | — |  |  |  | 428,549 |
Construction and land |  |  | 398,839 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 398,839 |
Home equity lines of credit |  |  | 51,021 |  |  |  | — |  |  |  | 184 |  |  |  | — |  |  |  | 51,205 |
Other |  |  | 27,311 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27,311 |
Total |  | $ | 9,676,864 |  |  | $ | 49,244 |  |  | $ | 13,568 |  |  | $ | 12,940 |  |  | $ | 9,752,616 |

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|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Total |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 13,415 |  |  | $ | 78,130 |  |  | $ | 2,558,504 |  |  | $ | 11,957 |  |  | $ | 21,687 |  |  | $ | 38,622 |  |  | $ | 961,812 |  |  | $ | 3,684,127 |
Special Mention |  |  | — |  |  |  | — |  |  |  | 61,136 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,662 |  |  |  | 70,798 |
Substandard |  |  | — |  |  |  | — |  |  |  | 42,236 |  |  |  | — |  |  |  | — |  |  |  | 30 |  |  |  | 3,731 |  |  |  | 45,997 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12,940 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12,940 |
|  | $ | 13,415 |  |  | $ | 78,130 |  |  | $ | 2,661,876 |  |  | $ | 24,897 |  |  | $ | 21,687 |  |  | $ | 38,652 |  |  | $ | 975,205 |  |  | $ | 3,813,862 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 383,891 |  |  | $ | 1,088,915 |  |  | $ | 494,050 |  |  | $ | 381,708 |  |  | $ | 354,811 |  |  | $ | 790,000 |  |  | $ | — |  |  | $ | 3,493,375 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 512 |  |  |  | — |  |  |  | 512 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 148 |  |  |  | — |  |  |  | 1,101 |  |  |  | — |  |  |  | 1,249 |
|  | $ | 383,891 |  |  | $ | 1,088,915 |  |  | $ | 494,050 |  |  | $ | 381,856 |  |  | $ | 354,811 |  |  | $ | 791,613 |  |  | $ | — |  |  | $ | 3,495,136 |
Securities-based loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 14,447 |  |  | $ | 103,364 |  |  | $ | 3,364 |  |  | $ | 140 |  |  | $ | 143,576 |  |  | $ | 23,567 |  |  | $ | 1,656,913 |  |  | $ | 1,945,371 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 14,447 |  |  | $ | 103,364 |  |  | $ | 3,364 |  |  | $ | 140 |  |  | $ | 143,576 |  |  | $ | 23,567 |  |  | $ | 1,656,913 |  |  | $ | 1,945,371 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 65,127 |  |  | $ | 150,919 |  |  | $ | 39,637 |  |  | $ | 57,328 |  |  | $ | 21,106 |  |  | $ | 58,032 |  |  | $ | 6,246 |  |  | $ | 398,395 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,191 |  |  |  | — |  |  |  | — |  |  |  | 1,191 |
Substandard |  |  | — |  |  |  | — |  |  |  | 146 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 146 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 65,127 |  |  | $ | 150,919 |  |  | $ | 39,783 |  |  | $ | 57,328 |  |  | $ | 22,297 |  |  | $ | 58,032 |  |  | $ | 6,246 |  |  | $ | 399,732 |
Construction and land: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 15,601 |  |  | $ | 164,191 |  |  | $ | 155,330 |  |  | $ | 59,888 |  |  | $ | 7,801 |  |  | $ | 1,722 |  |  | $ | 7,877 |  |  | $ | 412,410 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 15,601 |  |  | $ | 164,191 |  |  | $ | 155,330 |  |  | $ | 59,888 |  |  | $ | 7,801 |  |  | $ | 1,722 |  |  | $ | 7,877 |  |  | $ | 412,410 |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 56,558 |  |  | $ | 56,558 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 844 |  |  |  | 844 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 57,402 |  |  | $ | 57,402 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | — |  |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 1,258 |  |  | $ | 53 |  |  | $ | 31,444 |  |  | $ | 32,762 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | — |  |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 1,258 |  |  | $ | 53 |  |  | $ | 31,444 |  |  | $ | 32,762 |

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NOTE 8 – Goodwill and Intangible Assets

The carrying amount of goodwill and intangible assets attributable to each of our reporting segments is presented in the following table (in thousands):

|  | December 31, 2019 |  |  | Adjustments |  |  | Sale of ZCM |  |  | March 31, 2020 |
Goodwill |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Global Wealth Management |  | $ | 344,981 |  |  | $ | — |  |  | $ | (9,972 | ) |  | $ | 335,009 |
Institutional Group |  |  | 849,093 |  |  |  | 412 |  |  |  | — |  |  |  | 849,505 |
|  | $ | 1,194,074 |  |  | $ | 412 |  |  | $ | (9,972 | ) |  | $ | 1,184,514 |

|  | December 31, 2019 |  |  | Adjustments / Sale of ZCM |  |  | Amortization |  |  | March 31, 2020 |
Intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Global Wealth Management |  | $ | 53,279 |  |  | $ | (1,532 | ) |  | $ | (1,735 | ) |  | $ | 50,012 |
Institutional Group |  |  | 108,494 |  |  |  | (563 | ) |  |  | (3,297 | ) |  |  | 104,634 |
|  | $ | 161,773 |  |  | $ | (2,095 | ) |  | $ | (5,032 | ) |  | $ | 154,646 |

The adjustments to goodwill and intangible assets during the three months ended March 31, 2020, are primarily attributable to the sale of ZCM, and the acquisitions of MainFirst Bank AG on November 1, 2019 and GMP Capital, Inc. on December 6, 2019.

On March 27, 2020, the Company completed the sale of ZCM, a wholly owned asset management subsidiary. The Company recorded a gain on the sale during the three months ended March 31, 2020, which included a write-off of allocated goodwill and the remaining net book value of intangible assets.

The allocation of the purchase price of these acquisitions are preliminary and will be finalized upon completion of the analysis of the fair values of the net assets as of the respective acquisition dates and the identified intangible assets. The final goodwill recorded on the consolidated statement of financial condition may differ from that reflected herein as a result of future measurement period adjustments and the recording of identified intangible assets.

The goodwill represents the value expected from the synergies created through the operational enhancement benefits that will result from the integration of each respective business, its employees, and customer base.

Amortizable intangible assets consist of acquired customer relationships, trade name, investment banking backlog, and non-compete agreements that are amortized over their contractual or determined useful lives. Intangible assets as of March 31, 2020 and December 31, 2019 were as follows (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Gross Carrying Value |  |  | Accumulated Amortization |  |  | Gross Carrying Value |  |  | Accumulated Amortization |
Customer relationships |  | $ | 202,563 |  |  | $ | 76,762 |  |  | $ | 207,253 |  |  | $ | 75,987 |
Trade name |  |  | 28,659 |  |  |  | 14,112 |  |  |  | 28,659 |  |  |  | 13,649 |
Core deposits |  |  | 8,615 |  |  |  | 3,475 |  |  |  | 8,615 |  |  |  | 2,985 |
Non-compete agreements |  |  | 9,280 |  |  |  | 3,020 |  |  |  | 9,490 |  |  |  | 2,828 |
Investment banking backlog |  |  | 4,245 |  |  |  | 2,024 |  |  |  | 4,245 |  |  |  | 1,787 |
Acquired technology |  |  | 840 |  |  |  | 163 |  |  |  | 840 |  |  |  | 93 |
|  | $ | 254,202 |  |  | $ | 99,556 |  |  | $ | 259,102 |  |  | $ | 97,329 |

Amortization expense related to intangible assets was $5.0 million and $3.6 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense is included in other operating expenses in the consolidated statements of operations.

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The weighted-average remaining lives of the following intangible assets at March 31, 2020, are: customer relationships, 10.5 years; trade name, 9.7 years; core deposits, 3.9 years; non-compete agreements, 6.7 years; investment banking backlog, 8.5 years; and acquired technology, 2.4 years. We have an intangible asset that is not subject to amortization and is, therefore, not included in the table below. As of March 31, 2020, we expect amortization expense in future periods to be as follows (in thousands):

Fiscal year |  |  |  |
Remainder of 2020 |  | $ | 13,640 |
2021 |  |  | 17,326 |
2022 |  |  | 15,968 |
2023 |  |  | 14,678 |
2024 |  |  | 13,797 |
Thereafter |  |  | 77,119 |
|  | $ | 152,528 |

NOTE 9 – Borrowings and Federal Home Loan Bank Advances

Our short-term financing is generally obtained through short-term bank line financing on an uncommitted, secured basis, securities lending arrangements, repurchase agreements, advances from the Federal Home Loan Bank, term loans, and committed bank line financing on an unsecured basis. We borrow from various banks on a demand basis with company-owned and customer securities pledged as collateral. The value of customer-owned securities used as collateral is not reflected in the consolidated statements of financial condition. We also have an unsecured, committed bank line available.

Our uncommitted secured lines of credit at March 31, 2020, totaled $835.0 million with four banks and are dependent on having appropriate collateral, as determined by the bank agreements, to secure an advance under the line. The availability of our uncommitted lines is subject to approval by the individual banks each time an advance is requested and may be denied. Our peak daily borrowing on our uncommitted secured lines was $490.0 million during the three months ended March 31, 2020. There are no compensating balance requirements under these arrangements. Any borrowings on secured lines of credit are generally utilized to finance certain fixed income securities. At March 31, 2020, borrowings on our uncommitted secured lines of credit of $198.0 million, included in borrowings in the consolidated statements of financial condition, were collateralized by company-owned securities valued at $220.7 million.

The Federal Home Loan advances of $250.0 million as of March 31, 2020 are floating-rate advances. The weighted average interest rates on these advances during the three months ended March 31, 2020 was 1.59%. The advances are secured by Stifel Bancorp’s residential mortgage loan portfolio and investment portfolio. The interest rates reset on a daily basis. Stifel Bancorp has the option to prepay these advances without penalty on the interest reset date.

Our committed bank line financing at March 31, 2020, consisted of a $200.0 million revolving credit facility. The credit facility expires in March 2024. The applicable interest rate under the revolving credit facility is calculated as a per annum rate equal to the London Interbank Offered Rate (“LIBOR”) plus 1.75%, as defined in the revolving credit facility. At March 31, 2020, we had no advances on our revolving credit facility and were in compliance with all covenants.

Stifel, our broker-dealer subsidiary, has a 364-day Credit Agreement (“Stifel Credit Facility”) with a maturity date of June 2020 in which the lenders are a number of financial institutions. This committed unsecured borrowing facility provides for maximum borrowings of up to $250.0 million at variable rates of interest. At March 31, 2020, we had no advances on the Stifel Credit Facility and were in compliance with all covenants.

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NOTE 10 – Senior Notes

The following table summarizes our senior notes as of March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
4.25% senior notes, due 2024 (1) |  | $ | 500,000 |  |  | $ | 500,000 |
3.50% senior notes, due 2020 (2) |  |  | 300,000 |  |  |  | 300,000 |
5.20% senior notes, due 2047 (3) |  |  | 225,000 |  |  |  | 225,000 |
|  |  | 1,025,000 |  |  |  | 1,025,000 |
Debt issuance costs, net |  |  | (7,731 | ) |  |  | (7,990 | )
Senior notes, net |  | $ | 1,017,269 |  |  | $ | 1,017,010 |

(1) | In July 2014, we sold in a registered underwritten public offering, $300.0 million in aggregate principal amount of 4.25% senior notes due July 2024. Interest on these senior notes is payable semi-annually in arrears. We may redeem the notes in whole or in part, at our option, at a redemption price equal to 100% of their principal amount, plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption. In July 2016, we issued an additional $200.0 million in aggregate principal amount of 4.25% senior notes due 2024.

(2) | In December 2015, we sold in a registered underwritten public offering, $300.0 million in aggregate principal amount of 3.50% senior notes due December 2020. Interest on these senior notes is payable semi-annually in arrears. We may redeem the notes in whole or in part, at our option, at a redemption price equal to 100% of their principal amount, plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption.

(3) | In October 2017, we completed the pricing of a registered underwritten public offering of $200.0 million in aggregate principal amount of 5.20% senior notes due October 2047. Interest on the senior notes is payable quarterly in arrears on January 15, April 15, July 15, and October 15. On or after October 15, 2022, we may redeem some or all of the senior notes at any time at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued interest thereon to the redemption date. On October 27, 2017, we completed the sale of an additional $25.0 million aggregate principal amount of Notes pursuant to the over-allotment option.

Our senior notes mature as follows, based upon contractual terms (in thousands):

2020 |  | $ | 300,000 |
2021 |  |  | — |
2022 |  |  | — |
2023 |  |  | — |
2024 |  |  | 500,000 |
Thereafter |  |  | 225,000 |
|  | $ | 1,025,000 |

NOTE 11 – Bank Deposits

Deposits consist of money market and savings accounts, certificates of deposit, and demand deposits. Deposits at March 31, 2020 and December 31, 2019 were as follows (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Money market and savings accounts |  | $ | 15,465,695 |  |  | $ | 13,530,670 |
Demand deposits (interest-bearing) |  |  | 926,377 |  |  |  | 1,113,296 |
Demand deposits (non-interest-bearing) |  |  | 261,776 |  |  |  | 165,657 |
Certificates of deposit |  |  | 227,085 |  |  |  | 522,958 |
|  | $ | 16,880,933 |  |  | $ | 15,332,581 |

The weighted-average interest rate on deposits was 0.25% and 0.64% at March 31, 2020 and December 31, 2019, respectively.

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Scheduled maturities of certificates of deposit at March 31, 2020 and December 31, 2019 were as follows (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Certificates of deposit, less than $100,000: |  |  |  |  |  |  |  |
Within one year |  | $ | 4,971 |  |  | $ | 5,305 |
One to three years |  |  | 6,212 |  |  |  | 360 |
Three to five years |  |  | 213 |  |  |  | 13 |
|  | $ | 11,396 |  |  | $ | 5,678 |
Certificates of deposit, $100,000 and greater: |  |  |  |  |  |  |  |
Within one year |  | $ | 175,825 |  |  | $ | 441,341 |
One to three years |  |  | 39,864 |  |  |  | 68,855 |
Three to five years |  |  | — |  |  |  | 7,084 |
|  |  | 215,689 |  |  |  | 517,280 |
|  | $ | 227,085 |  |  | $ | 522,958 |

At March 31, 2020 and December 31, 2019, the amount of deposits includes related party deposits, primarily interest-bearing and time deposits of executive officers, directors, and their affiliates of $5.2 million and $6.7 million, respectively. Brokerage customers’ deposits were $15.6 billion and $13.9 billion, respectively.

NOTE 12 – Derivative Instruments and Hedging Activities

We use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date with no exchange of underlying principal amounts. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our company making fixed payments. Our policy is not to offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value executed with the same counterparty under master netting arrangements.

The following table provides the notional values and fair values of our derivative instruments designated as hedging instruments as of March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |
|  | Notional Value |  |  | Balance Sheet Location |  | Fair Value |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |
Cash flow interest rate contracts |  | $ | 250,000 |  |  | Accounts payable and accrued expenses |  | $ | 1,262 |

|  | December 31, 2019 |
|  | Notional Value |  |  | Balance Sheet Location |  | Fair Value |
Derivative Assets |  |  |  |  |  |  |  |  |  |
Cash flow interest rate contracts |  | $ | 250,000 |  |  | Other assets |  | $ | 1,086 |

Cash Flow Hedges

We have entered into interest rate swap agreements that effectively modify our exposure to interest rate risk by converting floating rate debt to a fixed rate debt. The swaps have an average remaining life of 0.8 years.

Any unrealized gains or losses related to cash flow hedging instruments are reclassified from accumulated other comprehensive loss into earnings in the same period the hedged forecasted transaction affects earnings and are recorded in interest expense on the accompanying consolidated statements of operations. The ineffective portion of the cash flow hedging instruments is recorded in other income or other operating expense.

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Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate deposits. During the next twelve months, we estimate that $1.4 million will be reclassified as an increase to interest expense.

The following table shows the effect of our company’s derivative instruments in the consolidated statements of operations for the three months ended March 31, 2020 and 2019 (in thousands):

|  | Gain/(Loss) Recognized in OCI |  |  | Gain/(Loss) Reclassified From OCI Into Income |
|  | Three Months Ended March 31, |  |  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Cash flow interest rate contracts |  | $ | (2,014 | ) |  | $ | 925 |  |  | $ | (251 | ) |  | $ | 1,542 |

We maintain a risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings caused by interest rate volatility. Our goal is to manage sensitivity to changes in rates by hedging the maturity characteristics of variable rate affiliated deposits, thereby limiting the impact on earnings. By using derivative instruments, we are exposed to credit and market risk on those derivative positions. We manage the market risk associated with interest rate contracts by establishing and monitoring limits as to the types and degree of risk that may be undertaken. Credit risk is equal to the extent of the fair value gain in a derivative if the counterparty fails to perform. When the fair value of a derivative contract is positive, this generally indicates that the counterparty owes our company and, therefore, creates a repayment risk for our company. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, have no repayment risk. See Note 4 in the notes to our consolidated financial statements for further discussion on how we determine the fair value of our financial instruments. We minimize the credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by senior management.

Credit Risk-Related Contingency Features

We have agreements with our derivative counterparties containing provisions where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

We have agreements with certain of our derivative counterparties that contain provisions where if our shareholders’ equity declines below a specified threshold or if we fail to maintain a specified minimum shareholders’ equity, then we could be declared in default on our derivative obligations.

Certain of our agreements with our derivative counterparties contain provisions where if a specified event or condition occurs that materially changes our creditworthiness in an adverse manner, we may be required to fully collateralize our obligations under the derivative instrument.

Regulatory Capital-Related Contingency Features

Certain of our derivative instruments contain provisions that require us to meet specific capital requirements under the capital adequacy guidelines and the regulatory framework for prompt corrective action administered by the Federal and state banking agencies.

If we were to lose our status as “adequately capitalized,” we would be in violation of those provisions, and the counterparties of the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions.

Counterparty Risk

In the event of counterparty default, our economic loss may be higher than the uncollateralized exposure of our derivatives if we were not able to replace the defaulted derivatives in a timely fashion. We monitor the risk that our uncollateralized exposure to each of our counterparties for interest rate swaps will increase under certain adverse market conditions by performing periodic market stress tests. These tests evaluate the potential additional uncollateralized exposure we would have to each of these derivative counterparties assuming changes in the level of market rates over a brief time period.

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NOTE 13 – Disclosures About Offsetting Assets and Liabilities

The following table provides information about financial assets and derivative assets that are subject to offset as of March 31, 2020 and December 31, 2019 (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |  | Gross amounts not offset in the Statement of Financial Condition |  |  |  |  |
|  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Statement of Financial Condition |  |  | Net Amounts Presented in the Statement of Financial Condition |  |  | Amounts available for offset |  |  | Available collateral |  |  | Net Amount |
As of March 31, 2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities borrowing (1) |  | $ | 103,530 |  |  | $ | — |  |  | $ | 103,530 |  |  | $ | (27,484 | ) |  | $ | (72,229 | ) |  | $ | 3,817 |
Reverse repurchase agreements (2) |  |  | 458,968 |  |  |  | — |  |  |  | 458,968 |  |  |  | (54,339 | ) |  |  | (404,589 | ) |  |  | 40 |
|  | $ | 562,498 |  |  | $ | — |  |  | $ | 562,498 |  |  | $ | (81,823 | ) |  | $ | (476,818 | ) |  | $ | 3,857 |
As of December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities borrowing (1) |  | $ | 135,373 |  |  | $ | — |  |  | $ | 135,373 |  |  | $ | (52,319 | ) |  | $ | (74,760 | ) |  | $ | 8,294 |
Reverse repurchase agreements (2) |  |  | 385,008 |  |  |  | — |  |  |  | 385,008 |  |  |  | (59,892 | ) |  |  | (325,096 | ) |  |  | 20 |
Cash flow interest rate contracts |  |  | 1,086 |  |  |  | — |  |  |  | 1,086 |  |  |  | — |  |  |  | — |  |  |  | 1,086 |
|  | $ | 521,467 |  |  | $ | — |  |  | $ | 521,467 |  |  | $ | (112,211 | ) |  | $ | (399,856 | ) |  | $ | 9,400 |

(1) | Securities borrowing transactions are included in receivables from brokers, dealers, and clearing organizations on the consolidated statements of financial condition. See Note 3 in the notes to consolidated financial statements for additional information on receivables from brokers, dealers, and clearing organizations.

(2) | Collateral received includes securities received by our company from the counterparty. These securities are not included on the consolidated statements of financial condition unless there is an event of default. The fair value of securities pledged as collateral was $462.3 million and $385.3 million at March 31, 2020 and December 31, 2019, respectively.

The following table provides information about financial liabilities and derivative liabilities that are subject to offset as of March 31, 2020 and December 31, 2019 (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |  | Gross amounts not offset in the Statement of Financial Condition |  |  |  |  |
|  | Gross Amounts of Recognized Liabilities |  |  | Gross Amounts Offset in the Statement of Financial Condition |  |  | Net Amounts Presented in the Statement of Financial Condition |  |  | Amounts available for offset |  |  | Collateral Pledged |  |  | Net Amount |
As of March 31, 2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities lending (3) |  | $ | (335,773 | ) |  | $ | — |  |  | $ | (335,773 | ) |  | $ | 27,484 |  |  | $ | 308,277 |  |  | $ | (12 | )
Repurchase agreements (4) |  |  | (475,528 | ) |  |  | — |  |  |  | (475,528 | ) |  |  | 54,339 |  |  |  | 421,189 |  |  |  | — |
Cash flow interest rate contracts |  |  | (1,262 | ) |  |  | — |  |  |  | (1,262 | ) |  |  | — |  |  |  | — |  |  |  | (1,262 | )
|  | $ | (812,563 | ) |  | $ | — |  |  | $ | (812,563 | ) |  | $ | 81,823 |  |  | $ | 729,466 |  |  | $ | (1,274 | )
As of December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities lending (3) |  | $ | (608,333 | ) |  | $ | — |  |  | $ | (608,333 | ) |  | $ | 52,319 |  |  | $ | 555,782 |  |  | $ | (232 | )
Repurchase agreements (4) |  |  | (391,634 | ) |  |  | — |  |  |  | (391,634 | ) |  |  | 59,892 |  |  |  | 331,742 |  |  |  | — |
|  | $ | (999,967 | ) |  | $ | — |  |  | $ | (999,967 | ) |  | $ | 112,211 |  |  | $ | 887,524 |  |  | $ | (232 | )

(3) | Securities lending transactions are included in payables to brokers, dealers, and clearing organizations on the consolidated statements of financial condition. See Note 3 in the notes to consolidated financial statements for additional information on payables to brokers, dealers, and clearing organizations.

(4) | Collateral pledged includes the fair value of securities pledged by our company to the counterparty. These securities are included in the consolidated statements of financial condition unless we default. Collateral pledged by our company to the counterparty includes U.S. government agency securities, U.S. government securities, and corporate fixed income securities with market values of $494.8 million and $407.3 million at March 31, 2020 and December 31, 2019, respectively.

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NOTE 14 – Commitments, Guarantees, and Contingencies

Broker-Dealer Commitments and Guarantees

In the normal course of business, we enter into underwriting commitments. Settlement of transactions relating to such underwriting commitments, which were open at March 31, 2020, had no material effect on the consolidated financial statements.

As a part of our fixed income public finance operations, we enter into forward commitments to purchase agency mortgage-backed securities. In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the commitment and date of sale of the mortgage-backed securities, we enter into to be announced (“TBA”) security contracts with investors for generic mortgage-backed security at specific rates and prices to be delivered on settlement dates in the future. We may be subject to loss if the timing of, or the actual amount of, the mortgage-backed security differs significantly from the term and notional amount of the TBA security contract to which we entered. These TBA securities and related purchase commitment are accounted for at fair value. As of March 31, 2020, the fair value of the TBA securities and the estimated fair value of the purchase commitments were $179.4 million.

We also provide guarantees to securities clearinghouses and exchanges under their standard membership agreement, which requires members to guarantee the performance of other members. Under the agreement, if another member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet shortfalls. Our liability under these agreements is not quantifiable and may exceed the cash and securities we have posted as collateral. However, the potential requirement for us to make payments under these arrangements is considered remote. Accordingly, no liability has been recognized for these arrangements.

Other Commitments

In the ordinary course of business, Stifel Bancorp has commitments to extend credit in the form of commitments to originate loans, standby letters of credit, and lines of credit. See Note 21 in the notes to consolidated financial statements for further details.

Concentration of Credit Risk

We provide investment, capital-raising, and related services to a diverse group of domestic customers, including governments, corporations, and institutional and individual investors. Our exposure to credit risk associated with the non-performance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile securities markets, credit markets, and regulatory changes. This exposure is measured on an individual customer basis and on a group basis for customers that share similar attributes. To reduce the potential for risk concentrations, counterparty credit limits have been implemented for certain products and are continually monitored in light of changing customer and market conditions. As of March 31, 2020, we did not have significant concentrations of credit risk with any one customer or counterparty, or any group of customers or counterparties.

NOTE 15 – Legal Proceedings

Our company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from our securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. Our company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding our business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. We are contesting allegations in these claims, and we believe that there are meritorious defenses in each of these lawsuits, arbitrations, and regulatory investigations. In view of the number and diversity of claims against our company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, we cannot state with certainty what the eventual outcome of pending litigation or other claims will be.

We have established reserves for potential losses that are probable and reasonably estimable that may result from pending and potential legal actions, investigations, and regulatory proceedings. In many cases, however, it is inherently difficult to determine whether any loss is probable or reasonably possible or to estimate the amount or range of any potential loss, particularly where proceedings may be in relatively early stages or where plaintiffs are seeking substantial or indeterminate damages. Matters frequently need to be more developed before a loss or range of loss can reasonably be estimated.

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In our opinion, based on currently available information, review with outside legal counsel, and consideration of amounts provided for in our consolidated financial statements with respect to these matters, the ultimate resolution of these matters will not have a material adverse impact on our financial position and results of operations. However, resolution of one or more of these matters may have a material effect on the results of operations in any future period, depending upon the ultimate resolution of those matters and depending upon the level of income for such period. For matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, based on currently available information, we believe that such losses will not have a material effect on our consolidated financial statements.

NOTE 16 – Regulatory Capital Requirements

We operate in a highly regulated environment and are subject to capital requirements, which may limit distributions to our company from its subsidiaries. Distributions from our broker-dealer subsidiaries are subject to net capital rules. A broker-dealer that fails to comply with the SEC’s Uniform Net Capital Rule (Rule 15c3-1) may be subject to disciplinary actions by the SEC and self-regulatory organizations, such as FINRA, including censures, fines, suspension, or expulsion. Stifel has chosen to calculate its net capital under the alternative method, which prescribes that their net capital shall not be less than the greater of $1.0 million or two percent of aggregate debit balances (primarily receivables from customers) computed in accordance with the SEC’s Customer Protection Rule (Rule 15c3-3). Our other broker-dealer subsidiaries calculate their net capital under the aggregate indebtedness method, whereby their aggregate indebtedness may not be greater than fifteen times their net capital (as defined).

At March 31, 2020, Stifel had net capital of $418.9 million, which was 25.7% of aggregate debit items and $386.3 million in excess of its minimum required net capital. At March 31, 2020, all of our other broker-dealer subsidiaries’ net capital exceeded the minimum net capital required under the SEC rule.

Our international subsidiary, SNEL, is subject to the regulatory supervision and requirements of the Financial Conduct Authority (“FCA”) in the United Kingdom. At March 31, 2020, our international subsidiary’s capital and reserves were in excess of the financial resources requirement under the rules of the FCA.

Our Canadian subsidiary, SNC, is subject to the regulatory supervision and requirements of the Investment Industry Regulatory Organization of Canada (“IIROC”). At March 31, 2020, SNC’s net capital and reserves were in excess of the financial resources requirement under the rules of the IIROC.

Our company, as a bank holding company, Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A., and Stifel Trust Company, Delaware, N.A. (collectively, “banking subsidiaries”) are subject to various regulatory capital requirements administered by the Federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our company’s and its banking subsidiaries’ financial results. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, our company and its banking subsidiaries must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our company’s and its banking subsidiaries’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Under the Basel III rules, the quantity and quality of regulatory capital increased, a capital conservation buffer was established, selected changes were made to the calculation of risk-weighted assets, and a new ratio, common equity Tier 1 was introduced, all of which are applicable to both our company and its banking subsidiaries.

Our company and its banking subsidiaries are required to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined) to risk-weighted assets (as defined), Tier 1 capital to average assets (as defined), and under rules defined in Basel III, Common equity Tier 1 capital to risk-weighted assets. Our company and its banking subsidiaries each calculate these ratios in order to assess compliance with both regulatory requirements and their internal capital policies. At current capital levels, our company and its banking subsidiaries are each categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” our company and its banking subsidiaries must maintain total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios.

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The amounts and ratios for Stifel Financial Corp., Stifel Bank & Trust, and Stifel Bank as of March 31, 2020 are represented in the tables below (in thousands, except ratios).

|  | Actual |  |  | For Capital Adequacy Purposes |  |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |
Stifel Financial Corp. |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
Common equity tier 1 capital |  | $ | 1,947,549 |  |  |  | 14.3 | % |  | $ | 611,382 |  |  |  | 4.5 | % |  | $ | 883,107 |  |  |  | 6.5 | %
Tier 1 capital |  |  | 2,257,549 |  |  |  | 16.6 | % |  |  | 815,176 |  |  |  | 6.0 | % |  |  | 1,086,901 |  |  |  | 8.0 | %
Total capital |  |  | 2,406,674 |  |  |  | 17.7 | % |  |  | 1,086,901 |  |  |  | 8.0 | % |  |  | 1,358,626 |  |  |  | 10.0 | %
Tier 1 leverage |  |  | 2,257,549 |  |  |  | 9.6 | % |  |  | 941,644 |  |  |  | 4.0 | % |  |  | 1,177,055 |  |  |  | 5.0 | %

|  | Actual |  |  | For Capital Adequacy Purposes |  |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |
Stifel Bank & Trust |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
Common equity tier 1 capital |  | $ | 1,039,680 |  |  |  | 11.7 | % |  | $ | 398,418 |  |  |  | 4.5 | % |  | $ | 575,493 |  |  |  | 6.5 | %
Tier 1 capital |  |  | 1,039,680 |  |  |  | 11.7 | % |  |  | 531,225 |  |  |  | 6.0 | % |  |  | 708,299 |  |  |  | 8.0 | %
Total capital |  |  | 1,150,272 |  |  |  | 13.0 | % |  |  | 708,299 |  |  |  | 8.0 | % |  |  | 885,374 |  |  |  | 10.0 | %
Tier 1 leverage |  |  | 1,039,680 |  |  |  | 7.1 | % |  |  | 583,181 |  |  |  | 4.0 | % |  |  | 728,977 |  |  |  | 5.0 | %

|  | Actual |  |  | For Capital Adequacy Purposes |  |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |
Stifel Bank |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
Common equity tier 1 capital |  | $ | 168,855 |  |  |  | 15.6 | % |  | $ | 48,679 |  |  |  | 4.5 | % |  | $ | 70,315 |  |  |  | 6.5 | %
Tier 1 capital |  |  | 168,855 |  |  |  | 15.6 | % |  |  | 64,906 |  |  |  | 6.0 | % |  |  | 86,541 |  |  |  | 8.0 | %
Total capital |  |  | 178,053 |  |  |  | 16.5 | % |  |  | 86,541 |  |  |  | 8.0 | % |  |  | 108,176 |  |  |  | 10.0 | %
Tier 1 leverage |  |  | 168,855 |  |  |  | 7.3 | % |  |  | 92,478 |  |  |  | 4.0 | % |  |  | 115,598 |  |  |  | 5.0 | %

NOTE 17 – Operating Leases

Our operating leases primarily relate to office space and office equipment with remaining lease terms of 1 to 15 years. At March 31, 2020, operating lease right-of-use assets were $668.7 million and included in fixed assets, net in the consolidated statements of financial condition, and lease liabilities were $708.5 million and included in accounts payable and accrued expenses in the consolidated statements of financial condition.

The table below summarizes our net lease cost for the three months ended March 31, 2020 and 2019 (in thousands):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Operating lease cost |  | $ | 24,395 |  |  | $ | 22,346 |
Short-term lease cost |  |  | 476 |  |  |  | 360 |
Variable lease cost |  |  | 15 |  |  |  | 6 |
Sublease income |  |  | (908 | ) |  |  | (1,272 | )
Net lease cost |  | $ | 23,978 |  |  | $ | 21,440 |

Operating lease costs are included in occupancy and equipment rental in the consolidated statements of operations.

The table below summarizes other information related to our operating leases as of and for the three months ended March 31, 2020 (in thousands):

Operating lease cash flows |  | $ | 23,956 |
Weighted-average remaining lease term |  | 11.5 years |
Weighted-average discount rate |  |  | 4.56 | %

In the table above, the weighted average discount rate represents our company’s incremental borrowing rate as of January 2019 for leases existing on the date of adoption of the new lease standard and at the lease inception date for leases entered into subsequent to the adoption of ASU 2016-02.

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The table below presents information about operating lease liabilities as of March 31, 2020, (in thousands, except percentages).

Remainder of 2020 |  | $ | 69,890 |
2021 |  |  | 85,042 |
2022 |  |  | 83,314 |
2023 |  |  | 82,885 |
2024 |  |  | 81,792 |
Thereafter |  |  | 529,185 |
Total undiscounted lease payments |  |  | 932,108 |
Imputed interest |  |  | (223,606 | )
Total operating lease liabilities |  | $ | 708,502 |

NOTE 18 – Revenues from Contracts with Customers

The following table presents the Company’s total revenues broken out by revenues from contracts with customers and other sources of revenues for the three months ended March 31, 2020 and 2019 (in thousands):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Revenues from contracts with customers: |  |  |  |  |  |  |  |
Commissions |  | $ | 211,098 |  |  | $ | 155,449 |
Investment banking |  |  | 179,468 |  |  |  | 161,840 |
Asset management and service fees |  |  | 237,775 |  |  |  | 195,267 |
Other |  |  | 4,767 |  |  |  | 3,782 |
Total revenue from contracts with customers |  |  | 633,108 |  |  |  | 516,338 |
Other sources of revenue: |  |  |  |  |  |  |  |
Interest |  |  | 161,177 |  |  |  | 191,071 |
Principal transactions |  |  | 138,666 |  |  |  | 104,032 |
Other |  |  | 4,440 |  |  |  | 8,427 |
Total revenues |  | $ | 937,391 |  |  | $ | 819,868 |

Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties.

The following provides detailed information on the recognition of our revenues from contracts with customers:

Commissions. We earn commission revenue by executing, settling, and clearing transactions for clients primarily in OTC and listed equity securities, insurance products, and options. Trade execution and clearing and custody services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing and custody services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commission revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date.

Investment Banking. We provide our clients with a full range of capital markets and financial advisory services. Capital markets services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings, underwriting and distributing public and private debt.

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Capital raising revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the capital markets offering at that point. Costs associated with capital raising transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within other operating expenses in the consolidated statements of operations as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as investment banking revenues.

Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within accounts payable and accrued expenses on the consolidated statements of financial condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at the same time as the associated expense. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within other operating expenses on the consolidated statements of operations and any expenses reimbursed by our clients are recognized as investment banking revenues.

Asset Management Fees. We earn management and performance fees in connection with investment advisory services provided to institutional and individual clients. Investment advisory fees are charged based on the value of assets in fee-based accounts and are affected by changes in the balances of client assets due to market fluctuations and levels of net new client assets. Fees are charged either in advance based on fixed rates applied to the value of the customers’ account at the beginning of the period or periodically based on contracted rates and account performance. Contracts can be terminated at any time with no incremental payments due to our company upon termination. If the contract is terminated by the customer fees are prorated for the period and fees charged for the post termination period are refundable to the customer.

Disaggregation of Revenue

The following tables present the Company’s revenues from contracts with customers by reportable segment disaggregated by major business activity and primary geographic regions for the three months ended March 31, 2020 and 2019 (in thousands):

|  | Three Months Ended March 31, 2020 (1) |
|  | Global Wealth Management |  |  | Institutional Group |  |  | Other |  |  | Total |
Major business activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions (1) |  | $ | 136,897 |  |  | $ | 74,198 |  |  | $ | 3 |  |  | $ | 211,098 |
Capital raising |  |  | 10,314 |  |  |  | 93,082 |  |  |  | — |  |  |  | 103,396 |
Advisory fees |  |  | 19 |  |  |  | 76,053 |  |  |  | — |  |  |  | 76,072 |
Investment banking |  |  | 10,333 |  |  |  | 169,135 |  |  |  | — |  |  |  | 179,468 |
Asset management |  |  | 237,760 |  |  |  | 15 |  |  |  | — |  |  |  | 237,775 |
Other |  |  | 4,001 |  |  |  | — |  |  |  | 766 |  |  |  | 4,767 |
Total |  |  | 388,991 |  |  |  | 243,348 |  |  |  | 769 |  |  |  | 633,108 |
Primary Geographic Region: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | 388,991 |  |  |  | 198,043 |  |  |  | 769 |  |  |  | 587,803 |
United Kingdom |  |  | — |  |  |  | 30,763 |  |  |  | — |  |  |  | 30,763 |
Other |  |  | — |  |  |  | 14,542 |  |  |  | — |  |  |  | 14,542 |
|  | $ | 388,991 |  |  | $ | 243,348 |  |  | $ | 769 |  |  | $ | 633,108 |

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|  | Three Months Ended March 31, 2019 (1) |
|  | Global Wealth Management |  |  | Institutional Group |  |  | Other |  |  | Total |
Major business activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 109,927 |  |  | $ | 45,522 |  |  | $ | — |  |  | $ | 155,449 |
Capital raising (1) |  |  | 8,223 |  |  |  | 48,722 |  |  |  | — |  |  |  | 56,945 |
Advisory fees (1) |  |  | — |  |  |  | 104,895 |  |  |  | — |  |  |  | 104,895 |
Investment banking |  |  | 8,223 |  |  |  | 153,617 |  |  |  | — |  |  |  | 161,840 |
Asset management |  |  | 195,253 |  |  |  | 14 |  |  |  | — |  |  |  | 195,267 |
Other |  |  | 2,455 |  |  |  | — |  |  |  | 1,327 |  |  |  | 3,782 |
Total |  |  | 315,858 |  |  |  | 199,153 |  |  |  | 1,327 |  |  |  | 516,338 |
Primary Geographic Region: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | 315,858 |  |  |  | 176,740 |  |  |  | 1,327 |  |  |  | 493,925 |
United Kingdom |  |  | — |  |  |  | 21,103 |  |  |  | — |  |  |  | 21,103 |
Other |  |  | — |  |  |  | 1,310 |  |  |  | — |  |  |  | 1,310 |
|  | $ | 315,858 |  |  | $ | 199,153 |  |  | $ | 1,327 |  |  | $ | 516,338 |

(1) Excludes revenues not derived from contracts with customers included in the Other segment.

See Note 22 for further break-out of revenues by geography.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at March 31, 2020. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at March 31, 2020.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied.

We had receivables related to revenues from contracts with customers of $138.5 million and $151.3 million at March 31, 2020 and December 31, 2019, respectively. We had no significant impairments related to these receivables during the three months ended March 31, 2020.

Our deferred revenue primarily relates to retainer fees received in investment banking advisory engagements and investment advisory fees where the performance obligation has not yet been satisfied. Deferred revenue at March 31, 2020 and December 31, 2019 was $19.1 million and $11.3 million, respectively.

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NOTE 19 – Interest Income and Interest Expense

The components of interest income and interest expense are as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Interest income: |  |  |  |  |  |  |  |
Loans held for investment, net |  | $ | 95,120 |  |  | $ | 93,224 |
Investment securities |  |  | 48,137 |  |  |  | 65,466 |
Margin balances |  |  | 10,131 |  |  |  | 13,440 |
Financial instruments owned, net |  |  | 4,574 |  |  |  | 6,313 |
Other |  |  | 3,215 |  |  |  | 12,628 |
|  | $ | 161,177 |  |  | $ | 191,071 |
Interest expense: |  |  |  |  |  |  |  |
Bank deposits |  | $ | 9,569 |  |  | $ | 28,066 |
Senior notes |  |  | 11,193 |  |  |  | 11,122 |
Federal Home Loan Bank advances |  |  | 2,353 |  |  |  | 1,678 |
Other |  |  | 1,242 |  |  |  | 8,582 |
|  | $ | 24,357 |  |  | $ | 49,448 |

NOTE 20 – Employee Incentive, Deferred Compensation, and Retirement Plans

We maintain an incentive stock plan and a wealth accumulation plan (“the Plan”) that provides for the granting of stock options, stock appreciation rights, restricted stock, performance awards, stock units, and debentures (collectively, “deferred awards”) to our associates. We are permitted to issue new shares under all stock award plans approved by shareholders or to reissue our treasury shares. Stock awards issued under our company’s incentive stock plan are granted at market value at the date of grant. Our deferred awards generally vest ratably over a one- to ten-year vesting period.

Our stock-based compensation plans are administered by the Compensation Committee of the Board of Directors (“Compensation Committee”), which has the authority to interpret the plans, determine to whom awards may be granted under the plans, and determine the terms of each award. According to the incentive stock plan, we are authorized to grant an additional 2.6 million shares at March 31, 2020.

Expense associated with our stock-based compensation, included in compensation and benefits expense in the consolidated statements of operations for our company’s incentive stock award plans was $37.0 million and $29.7 million for the three months ended March 31, 2020 and 2019, respectively.

Deferred Awards

A restricted stock unit represents the right to receive a share of the Company’s common stock at a designated time in the future without cash payment by the employee and is issued in lieu of cash incentive, principally for deferred compensation and employee retention plans. The restricted stock units vest on an annual basis over the next one to ten years and are distributable, if vested, at future specified dates. Restricted stock awards are restricted as to sale or disposition. These restrictions lapse over the next one to five years.

Our company grants Performance-based Restricted Stock Units (“PRSUs”) to certain of its executive officers. Under the terms of the grants, the number of PRSUs that will vest and convert to shares will be based on the Company's achievement of the pre-determined performance objectives during the performance period. The PRSUs will be measured over a four-year performance period and vested over a five-year period. Any resulting delivery of shares for PRSUs granted as part of compensation will occur after four years for 80% of the earned award, and in the fifth year for the remaining 20% of the earned award. The number of shares converted has the potential to range from 0% to 200% based on how the Company performs during the performance period. Compensation expense is amortized over the service period based on the fair value of the deferred award on the grant date. The Company’s pre-determined performance objectives must be met for the awards to vest. Associates forfeit unvested deferred awards upon termination of employment with a corresponding reversal of compensation expense. At March 31, 2020, the total number of restricted stock units, PRSUs, and restricted stock awards outstanding was 14.5 million, of which 12.4 million were unvested.

At March 31, 2020, there was unrecognized compensation cost for deferred awards of approximately $580.4 million, which is expected to be recognized over a weighted-average period of 2.3 years.

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Deferred Compensation Plans

The Plan is provided to certain revenue producers, officers, and key administrative associates, whereby a certain percentage of their incentive compensation is deferred as defined by the Plan into company stock units, restricted stock, and debentures. Participants may elect to defer a portion of their incentive compensation. Deferred awards generally vest over a one- to ten-year period and are distributable upon vesting or at future specified dates. Deferred compensation costs are amortized on a straight-line basis over the vesting period. Elective deferrals are 100% vested.

Additionally, the Plan allows Stifel’s financial advisors who achieve certain levels of production the option to defer a certain percentage of their gross commissions. As stipulated by the Plan, the financial advisors will defer 5% of their gross commissions. The mandatory deferral is split between company restricted stock units and debentures. They have the option to defer an additional 1% of gross commissions into company stock units with a 25% matching contribution.

In addition, certain financial advisors, upon joining our company, may receive company stock units in lieu of transition cash payments. Deferred compensation related to these awards generally vests over a one- to eight-year period. Deferred compensation costs are amortized on a straight-line basis over the deferral period.

Profit Sharing Plan

Eligible U.S. associates of our company who have met certain service requirements may participate in the Stifel Financial Corp. Profit Sharing 401(k) Plan (the “Plan”). Associates are permitted within limitations imposed by tax law to make pre-tax contributions to the Plan. We may match certain associate contributions or make additional contributions to the Plan at our discretion. Our contributions to profit sharing, included in compensation and benefits in the consolidated statements of operations, were $3.5 million and $3.4 million for the three months ended March 31, 2020 and 2019, respectively.

NOTE 21 – Off-Balance Sheet Credit Risk

In the normal course of business, we execute, settle, and finance customer and proprietary securities transactions. These activities expose our company to off-balance sheet risk in the event that customers or other parties fail to satisfy their obligations.

In accordance with industry practice, securities transactions generally settle within two business days after trade date. Should a customer or broker fail to deliver cash or securities as agreed, we may be required to purchase or sell securities at unfavorable market prices.

We borrow and lend securities to facilitate the settlement process and finance transactions, utilizing customer margin securities held as collateral. We monitor the adequacy of collateral levels on a daily basis. We periodically borrow from banks on a collateralized basis, utilizing firm and customer margin securities in compliance with SEC rules. Should the counterparty fail to return customer securities pledged, we are subject to the risk of acquiring the securities at prevailing market prices in order to satisfy our customer obligations. We control our exposure to credit risk by continually monitoring our counterparties’ positions, and where deemed necessary, we may require a deposit of additional collateral and/or a reduction or diversification of positions. Our company sells securities it does not currently own (short sales) and is obligated to subsequently purchase such securities at prevailing market prices. We are exposed to risk of loss if securities prices increase prior to closing the transactions. We control our exposure to price risk from short sales through daily review and setting position and trading limits.

We manage our risks associated with the aforementioned transactions through position and credit limits and the continuous monitoring of collateral. Additional collateral is required from customers and other counterparties when appropriate.

We have accepted collateral in connection with resale agreements, securities borrowed transactions, and customer margin loans. Under many agreements, we are permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions. At March 31, 2020 and December 31, 2019, the fair value of securities accepted as collateral where we are permitted to sell or repledge the securities was $2.2 billion and $2.3 billion, respectively, and the fair value of the collateral that had been sold or repledged was $475.5 million and $391.6 million, respectively.

We enter into interest rate derivative contracts to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are principally used to manage differences in the amount, timing, and duration of our known or expected cash payments related to certain variable-rate affiliated deposits. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments. Our interest rate hedging strategies may not work in all market environments and, as a result, may not be effective in mitigating interest rate risk.

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Derivatives’ notional contract amounts are not reflected as assets or liabilities in the consolidated statements of financial condition. Rather, the market or fair value of the derivative transactions are reported in the consolidated statements of financial condition as other assets or accounts payable and accrued expenses, as applicable.

For a complete discussion of our activities related to derivative instruments, see Note 12 in the notes to consolidated financial statements.

In the ordinary course of business, Stifel Bancorp has commitments to originate loans, standby letters of credit, and lines of credit. Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established by the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash commitments. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if necessary, is based on the credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate.

At March 31, 2020 and December 31, 2019, Stifel Bancorp had outstanding commitments to originate loans aggregating $883.5 million and $384.5 million, respectively. The commitments extended over varying periods of time, with all commitments at March 31, 2020, scheduled to be disbursed in the following three months.

Through Stifel Bancorp, in the normal course of business, we originate residential mortgage loans and sell them to investors. We may be required to repurchase mortgage loans that have been sold to investors in the event there are breaches of certain representations and warranties contained within the sales agreements. We may be required to repurchase mortgage loans that were sold to investors in the event that there was inadequate underwriting or fraud, or in the event that the loans become delinquent shortly after they are originated. We also may be required to indemnify certain purchasers and others against losses they incur in the event of breaches of representations and warranties and in various other circumstances, and the amount of such losses could exceed the repurchase amount of the related loans. Consequently, we may be exposed to credit risk associated with sold loans.

Standby letters of credit are irrevocable conditional commitments issued by Stifel Bancorp to guarantee the performance of a customer to a third party. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. Should Stifel Bancorp be obligated to perform under the standby letters of credit, it may seek recourse from the customer for reimbursement of amounts paid. At March 31, 2020 and December 31, 2019, Stifel Bancorp had outstanding letters of credit totaling $33.4 million and $38.3 million, respectively. A majority of the standby letters of credit commitments at March 31, 2020, have expiration terms that are less than one year.

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Stifel Bancorp uses the same credit policies in granting lines of credit as it does for on-balance sheet instruments. At March 31, 2020 and December 31, 2019, Stifel Bancorp had granted unused lines of credit to commercial and consumer borrowers aggregating $1.4 billion and $1.5 billion, respectively.

Effective January 1, 2020, we adopted the new accounting standard for credit losses that requires evaluation of our loan portfolio for any expected losses with recognition of an allowance for credit losses, when applicable. For more information, see Note 1 – Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies. Upon the adoption of the new accounting standard, we recorded a reserve for unfunded commitments of $20.4 million, which is included in accounts payable and accrued expenses in the consolidated statements of financial condition. At March 31, 2020, the expected credit losses for unfunded lending commitments was $18.2 million.

NOTE 22 – Segment Reporting

We currently operate through the following three business segments: Global Wealth Management, Institutional Group, and various corporate activities combined in the Other segment.

Our Global Wealth Management segment consists of two businesses, the Private Client Group and Stifel Bancorp. The Private Client Group includes branch offices and independent contractor offices of our broker-dealer subsidiaries located throughout the United States. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, as well as offering banking products to their clients through our bank subsidiaries, which provide residential, consumer, and commercial lending, as well as FDIC-insured deposit accounts to customers of our private client group and to the general public.

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The Institutional Group segment includes institutional sales and trading. It provides securities brokerage, trading, and research services to institutions, with an emphasis on the sale of equity and fixed income products. This segment also includes the management of and participation in underwritings for both corporate and public finance (exclusive of sales credits generated through the private client group, which are included in the Global Wealth Management segment), merger and acquisition, and financial advisory services.

The Other segment includes interest income from stock borrow activities, unallocated interest expense, interest income and gains and losses from investments held, amortization of stock-based awards, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; and general administration and acquisition charges.

Information concerning operations in these segments of business for the three months ended March 31, 2020 and 2019 is as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Net revenues: (1) |  |  |  |  |  |  |  |
Global Wealth Management |  | $ | 582,956 |  |  | $ | 510,610 |
Institutional Group |  |  | 332,238 |  |  |  | 261,286 |
Other |  |  | (2,160 | ) |  |  | (1,476 | )
|  | $ | 913,034 |  |  | $ | 770,420 |
Income/(loss) before income taxes: |  |  |  |  |  |  |  |
Global Wealth Management |  | $ | 194,167 |  |  | $ | 194,490 |
Institutional Group |  |  | 41,740 |  |  |  | 32,204 |
Other |  |  | (120,801 | ) |  |  | (88,885 | )
|  | $ | 115,106 |  |  | $ | 137,809 |

(1) | No individual client accounted for more than 10 percent of total net revenues for the three months ended March 31, 2020 or 2019.

The following table presents our company’s total assets on a segment basis at March 31, 2020 and December 31, 2019 (in thousands):

|  | March 31, 2020 |  |  | December 31, 2019 |
Global Wealth Management |  | $ | 22,071,309 |  |  | $ | 20,675,580 |
Institutional Group |  |  | 3,566,205 |  |  |  | 3,668,723 |
Other |  |  | 258,492 |  |  |  | 265,922 |
|  | $ | 25,896,006 |  |  | $ | 24,610,225 |

We have operations in the United States, United Kingdom, Europe, and Canada. The Company’s foreign operations are conducted through its wholly owned subsidiaries, SNEL and SNC. Substantially all long-lived assets are located in the United States.

Revenues, classified by the major geographic areas in which they are earned for the three months ended March 31, 2020 and 2019, were as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
United States |  | $ | 860,132 |  |  | $ | 741,230 |
United Kingdom |  |  | 37,738 |  |  |  | 26,390 |
Other |  |  | 15,164 |  |  |  | 2,800 |
|  | $ | 913,034 |  |  | $ | 770,420 |

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NOTE 23 – Earnings Per Share (“EPS”)

Basic EPS is computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted earnings per share include dilutive stock options and stock units under the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019 (in thousands, except per share data):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Net income applicable to Stifel Financial Corp. |  | $ | 86,589 |  |  | $ | 99,207 |
Preferred dividends |  |  | 4,844 |  |  |  | 2,344 |
Net income available to common shareholders |  | $ | 81,745 |  |  | $ | 96,863 |
Shares for basic and diluted calculation: |  |  |  |  |  |  |  |
Average shares used in basic computation |  |  | 71,286 |  |  |  | 71,700 |
Dilutive effect of stock options and units (1) |  |  | 5,333 |  |  |  | 7,510 |
Average shares used in diluted computation |  |  | 76,619 |  |  |  | 79,210 |
Earnings per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 1.15 |  |  | $ | 1.35 |
Diluted |  | $ | 1.07 |  |  | $ | 1.22 |

(1) | Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

For the three months ended March 31, 2020 and 2019, the anti-dilutive effect from restricted stock units was immaterial.

Cash Dividends

During the three months ended March 31, 2020, we declared and paid cash dividends of $0.17 per common share. During the three months ended March 31, 2019, we declared and paid cash dividends of $0.15 per common share.

NOTE 24 – Shareholders’ Equity

Share Repurchase Program

We have an ongoing authorization from the Board of Directors to repurchase our common stock in the open market or in negotiated transactions. At March 31, 2020, the maximum number of shares that may yet be purchased under this plan was 8.9 million. The repurchase program has no expiration date. These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under our employee benefit plans and for general corporate purposes. During the three months ended March 31, 2020, we repurchased $56.2 million, or 1.1 million shares, using existing Board authorizations at an average price of $49.74 per share to meet obligations under our company’s employee benefit plans and for general corporate purposes. During the three months ended March 31, 2019, we repurchased $53.9 million, or 1.0 million shares, using existing Board authorizations at an average price of $53.25 per share to meet obligations under our company’s employee benefit plans and for general corporate purposes.

Issuance of Common Stock

During the three months ended March 31, 2020, we issued 1.3 million shares, which were primarily reissued from treasury. Share issuances were primarily a result of the vesting and conversion transactions under our incentive stock award plans.

Issuance of Preferred Stock

On February 21, 2019, the Company issued $150.0 million of 6.25% Non-Cumulative Perpetual Preferred Stock, Series B, $1.00 par value, with a liquidation preference of $25,000 per share (equivalent to $25 liquidation preference per depositary share). In March 2019, we completed a public offering of an additional $10.0 million of Series B Preferred, pursuant to the over-allotment option.

When, as, and if declared by the board of directors of the Company, dividends will be payable at an annual rate of 6.25%, payable quarterly, in arrears. The Company may redeem the Series B preferred stock at its option, subject to regulatory approval, on or after March 15, 2024 or following a regulatory capital treatment event, as defined.

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NOTE 25 – Variable Interest Entities

Our company’s involvement with VIEs is limited to entities used as investment vehicles and private equity funds, the establishment of Stifel Financial Capital Trusts, and our issuance of a convertible promissory note.

We have formed several non-consolidated investment funds with third-party investors that are typically organized as limited liability companies (“LLCs”) or limited partnerships. These partnerships and LLCs have assets of $250.8 million at March 31, 2020. For those funds where we act as the general partner, our company’s economic interest is generally limited to management fee arrangements as stipulated by the fund operating agreements. We have generally provided the third-party investors with rights to terminate the funds or to remove us as the general partner. Management fee revenue earned by our company was insignificant during the three months ended March 31, 2020 and 2019. In addition, our direct investment interest in these entities is insignificant at March 31, 2020.

For the entities noted above that were determined to be VIEs, we have concluded that we are not the primary beneficiary, and therefore, we are not required to consolidate these entities.

Debenture to Stifel Financial Capital Trusts

We have completed private placements of cumulative trust preferred securities through Stifel Financial Capital Trust II, Stifel Financial Capital Trust III, and Stifel Financial Capital Trust IV (collectively, the “Trusts”). The Trusts are non-consolidated wholly owned business trust subsidiaries of our company and were established for the limited purpose of issuing trust securities to third parties and lending the proceeds to our company.

The trust preferred securities represent an indirect interest in junior subordinated debentures purchased from our company by the Trusts, and we effectively provide for the full and unconditional guarantee of the securities issued by the Trusts. We make timely payments of interest to the Trusts as required by contractual obligations, which are sufficient to cover payments due on the securities issued by the Trusts, and believe that it is unlikely that any circumstances would occur that would make it necessary for our company to make payments related to these Trusts other than those required under the terms of the debenture agreements and the trust preferred securities agreements. The Trusts were determined to be VIEs because the holders of the equity investment at risk do not have adequate decision-making ability over the Trust’s activities. Our investment in the Trusts is not a variable interest, because equity interests are variable interests only to the extent that the investment is considered to be at risk. Because our investment was funded by the Trusts, it is not considered to be at risk.

NOTE 26 – Subsequent Events

We evaluate subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Based on the evaluation, we did not identify any subsequent events that would have required adjustment to the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the accompanying consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q.

Certain statements in this report may be considered forward-looking. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements cover, among other things, statements made about general economic and market conditions, the investment banking industry, objectives and results, and also may include the Company’s belief regarding the effect of various legal proceedings, management expectations, liquidity and funding sources, counterparty credit risk, or other similar matters. In addition, statements about the potential effects of the COVID-19 pandemic on the Company’s businesses and results of operations and financial condition may constitute forward-looking statements. These statements are subject to the risk that the actual effects may differ, possibly materially from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases, beyond the Company’s control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on its customers, third-parties, and the Company.

Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including those factors discussed under “External Factors Impacting Our Business” and “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q, as well as the factors identified under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as updated in subsequent reports filed with the SEC. These reports are available at the Company’s web site at www.stifel.com and at the SEC web site at www.sec.gov.

Because of these and other uncertainties, the Company’s actual future results may be materially different from the results indicated by these forward-looking statements. In addition, the Company’s past results of operations do not necessarily indicate its future results. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events, unless it is obligated to do so under federal securities laws.

Unless otherwise indicated, the terms “we,” “us,” “our” or “our company” in this report refer to Stifel Financial Corp. and its wholly owned subsidiaries.

Executive Summary

We operate as a financial services and bank holding company. We have built a diversified business serving private clients, institutional investors, and investment banking clients located across the United States and in Europe. Our principal activities are: (i) private client services, including securities transaction and financial planning services; (ii) institutional equity and fixed income sales, trading and research, and municipal finance; (iii) investment banking services, including mergers and acquisitions, public offerings, and private placements; and (iv) retail and commercial banking, including personal and commercial lending programs. Our major geographic area of concentration is throughout the United States, with a growing presence in the United Kingdom and Europe. Our company’s principal customers are individual investors, corporations, municipalities, and institutions.

Our core philosophy is based upon a tradition of trust, understanding, and studied advice. We attract and retain experienced professionals by fostering a culture of entrepreneurial, long-term thinking. We provide our private, institutional and corporate clients quality, personalized service, with the theory that if we place clients’ needs first, both our clients and our company will prosper. Our unwavering client and employee focus have earned us a reputation as one of the leading brokerage and investment banking firms off Wall Street. We have grown our business both organically and through opportunistic acquisitions.

We plan to maintain our focus on revenue growth with a continued appreciation for the development of quality client relationships. Within our private client business, our efforts will be focused on recruiting experienced financial advisors with established client relationships. Within our capital markets business, our focus continues to be on providing quality client management and product diversification. In executing our growth strategy, we will continue to seek out opportunities that allow us to take advantage of the consolidation among middle-market firms, whereby allowing us to increase market share in our Global Wealth Management and Institutional Group businesses.

Our ability to attract and retain highly skilled and productive associates is critical to the success of our business. Accordingly, compensation and benefits comprise the largest component of our expenses, and our performance is dependent upon our ability to attract, develop and retain highly skilled associates who are motivated and committed to providing the highest quality of service and guidance to our clients.

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COVID-19 Pandemic

In the first quarter of 2020, the World Health Organization declared the outbreak of a novel strand of the coronavirus (“COVID-19”) a pandemic. The COVID-19 pandemic has resulted in authorities implementing numerous measures attempting to contain the spread and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. These measures are, among other things, severely restricting global economic activity, which is disrupting global supply chains, lowering asset valuations, significantly increasing unemployment and underemployment levels, decreasing liquidity in markets for certain securities and causing significant volatility and disruptions in the financial, energy and commodity markets. These measures have also negatively impacted, and could continue to negatively impact businesses, market participants, our counterparties and clients, and the U.S. and/or global economy for a prolonged period of time.

To address the economic impact in the U.S., in March and April 2020, the President signed into law four economic stimulus packages to provide relief to businesses and individuals, including the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Among other measures, the CARES Act created funding for the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), which provides loans to small businesses to keep their employees on payroll and make other eligible payments. The original funding for the PPP was fully allocated by mid-April 2020, with additional funding made available on April 24, 2020 under the Paycheck Protection Program and Health Care Enhancement Act.

On April 9, 2020, the Board of Governors of the Federal Reserve System (“Federal Reserve”) took additional steps to bolster the economy by providing additional funding sources for small and midsized businesses as well as for state and local governments as they work through cash flow stresses caused by the COVID-19 pandemic. Additionally, the Federal Reserve has taken other steps to provide fiscal and monetary stimuli, including reducing the federal funds rate and the interest rate on the Federal Reserve’s discount window, and implementing programs to promote liquidity in certain securities markets.

In response to the pandemic, we have implemented protocols and processes to help protect our associates and clients. These measures include:

| • | Operating our businesses from remote locations, leveraging our business continuity plans and capabilities that include having the majority of associates work from home, and other associates operating using pre-planned contingency strategies for critical site based operations. These capabilities have allowed us to continue to service our clients.

| • | Providing support to our associates during the pandemic through expanded access to wellness and healthcare remotely.

| • | Participating in the CARES Act and Federal Reserve lending programs for businesses, including the SBA PPP, and continuing to provide access to the important financial services to our clients.

In connection with reviewing our financial condition in light of the pandemic, we evaluated our assets, including goodwill and other intangibles, for potential impairment, and reviewed fair values of financial instruments that are carried at fair value. Based upon our review as of March 31, 2020, no impairments have been recorded and there have been no significant changes in fair value hierarchy classifications.

Results for the three months ended March 31, 2020

For the three months ended March 31, 2020, net revenues increased 18.5% to $913.0 million from $770.4 million during the comparable period in 2019. Net income available to common shareholders decreased 15.6% to $81.7 million, or $1.07 per diluted common share for the three months ended March 31, 2020, compared to $96.9 million, or $1.22 per diluted common share during the comparable period in 2019.

Net revenues, compared with the first quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower advisory fee revenues and net interest income. Net revenues, compared with the fourth quarter of 2019, reflected significantly lower advisory fee revenues and a decline in capital raising revenues, partially offset by an increase in brokerage revenues, asset management and service fees, and net interest income.

Net income available to common shareholders, compared with the first quarter of 2019, was negatively impacted by the increase in the provision for loan losses primarily attributable to the adoption of the expected credit loss standard on January 1, 2020, higher compensation costs as we continued to invest in our franchise during the pandemic, and higher volume-related costs, partially offset by the growth in net revenues as previously discussed.

External Factors Impacting our Business

Performance in the financial services industry in which we operate is highly correlated to the overall strength of economic conditions and financial market activity. Overall market conditions are a product of many factors, which are beyond our control and mostly unpredictable. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors, including the demand for investment banking services as reflected by the number and size of equity and debt

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financings and merger and acquisition transactions, the volatility of the equity and fixed income markets, the level and shape of various yield curves, the volume and value of trading in securities, and the value of our customers’ assets under management.

The COVID-19 pandemic has, and will likely continue to, severely impact global economic conditions, resulting in substantial volatility in the global financial markets, increased unemployment, and operational challenges such as the temporary closures of businesses, sheltering-in-place directives and increased remote work protocols. Governments and central banks around the world have reacted to the economic crisis caused by the pandemic by implementing stimulus and liquidity programs and cutting interest rates, though it is unclear whether these or future actions will be successful in countering the economic disruption. If the pandemic is prolonged or the actions of governments and central banks are unsuccessful, the adverse impact on the global economy will deepen, and our results of operations and financial condition in future quarters will be adversely affected.

Towards the end of the first quarter of 2020 and into the second quarter of 2020, the pandemic impacted each of our business segments and such impact will likely be greater in future quarters if current conditions persist or worsen (e.g., decline and volatility of asset prices, reduction in interest rates, widening of credit spreads, credit deterioration, market volatility and reduced investment banking advisory activity). The impact of the pandemic has resulted in significant decreases in the valuation of loans and commitments, investments and certain classes of trading assets, an increase in the allowance for credit losses, reduced net interest income, and reduced investment banking advisory fees. At the same time, increased revenues that we have realized for certain products related to high levels of client trading activity may not be replicated in future quarters. For more information on the factors impacting our business as a result of the pandemic, see “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q.

Effective January 1, 2020, we adopted the new accounting standard on current expected credit losses (“CECL”), under which the allowance is measured based on management’s best estimate of lifetime expected credit losses. Upon adoption of the new accounting standard, we recorded a $10.4 million, or a 10.7% increase to the allowance for credit losses. In addition, during the first quarter of 2020 we built $16.2 million of net loan loss reserves, reflecting the impact of changes in our company’s economic outlook on estimated lifetime losses under the CECL standard due to the COVID-19 pandemic.

Our overall financial results continue to be highly and directly correlated to the direction and activity levels of the United States equity and fixed income markets. At March 31, 2020, the NASDAQ, S&P 500, and Dow Jones Industrial Average closed 14.2%, 20.0%, and 24.9% lower than their December 31, 2019 closing prices, respectively.

As a participant in the financial services industry, we are subject to complicated and extensive regulation of our business. The recent economic and political environment has led to legislative and regulatory initiatives, both enacted and proposed, that could substantially intensify the regulation of the financial services industry and may significantly impact us.

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019

The following table presents consolidated financial information for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, |  |  | As a Percentage of Net Revenues For the Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |  |  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 211,098 |  |  | $ | 155,449 |  |  |  | 35.8 |  |  |  | 23.1 | % |  |  | 20.2 | %
Principal transactions |  |  | 138,666 |  |  |  | 104,032 |  |  |  | 33.3 |  |  |  | 15.2 |  |  |  | 13.5 |
Brokerage revenues |  |  | 349,764 |  |  |  | 259,481 |  |  |  | 34.8 |  |  |  | 38.3 |  |  |  | 33.7 |
Investment banking |  |  | 179,468 |  |  |  | 161,840 |  |  |  | 10.9 |  |  |  | 19.7 |  |  |  | 21.0 |
Asset management and service fees |  |  | 237,775 |  |  |  | 195,267 |  |  |  | 21.8 |  |  |  | 26.0 |  |  |  | 25.3 |
Interest |  |  | 161,177 |  |  |  | 191,071 |  |  |  | (15.6 | ) |  |  | 17.7 |  |  |  | 24.8 |
Other income |  |  | 9,207 |  |  |  | 12,209 |  |  |  | (24.6 | ) |  |  | 1.0 |  |  |  | 1.6 |
Total revenues |  |  | 937,391 |  |  |  | 819,868 |  |  |  | 14.3 |  |  |  | 102.7 |  |  |  | 106.4 |
Interest expense |  |  | 24,357 |  |  |  | 49,448 |  |  |  | (50.7 | ) |  |  | 2.7 |  |  |  | 6.4 |
Net revenues |  |  | 913,034 |  |  |  | 770,420 |  |  |  | 18.5 |  |  |  | 100.0 |  |  |  | 100.0 |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 577,179 |  |  |  | 458,114 |  |  |  | 26.0 |  |  |  | 63.2 |  |  |  | 59.5 |
Occupancy and equipment rental |  |  | 66,073 |  |  |  | 58,862 |  |  |  | 12.3 |  |  |  | 7.2 |  |  |  | 7.6 |
Communication and office supplies |  |  | 41,124 |  |  |  | 35,697 |  |  |  | 15.2 |  |  |  | 4.5 |  |  |  | 4.6 |
Commissions and floor brokerage |  |  | 14,842 |  |  |  | 10,956 |  |  |  | 35.5 |  |  |  | 1.6 |  |  |  | 1.4 |
Provision for loan losses |  |  | 18,978 |  |  |  | 2,283 |  |  |  | 731.3 |  |  |  | 2.1 |  |  |  | 0.3 |
Other operating expenses |  |  | 79,732 |  |  |  | 66,699 |  |  |  | 19.5 |  |  |  | 8.8 |  |  |  | 8.7 |
Total non-interest expenses |  |  | 797,928 |  |  |  | 632,611 |  |  |  | 26.1 |  |  |  | 87.4 |  |  |  | 82.1 |
Income before income taxes |  |  | 115,106 |  |  |  | 137,809 |  |  |  | (16.5 | ) |  |  | 12.6 |  |  |  | 17.9 |
Provision for income taxes |  |  | 28,517 |  |  |  | 38,370 |  |  |  | (25.7 | ) |  |  | 3.1 |  |  |  | 5.0 |
Net Income |  |  | 86,589 |  |  |  | 99,439 |  |  |  | (12.9 | ) |  |  | 9.5 |  |  |  | 12.9 |
Net income applicable to non-controlling interests |  |  | — |  |  |  | 232 |  |  | n/m |  |  |  | — |  |  |  | 0.0 |
Net income applicable to Stifel Financial Corp. |  |  | 86,589 |  |  |  | 99,207 |  |  |  | (12.7 | ) |  |  | 9.5 |  |  |  | 12.9 |
Preferred dividends |  |  | 4,844 |  |  |  | 2,344 |  |  |  | 106.7 |  |  |  | 0.5 |  |  |  | 0.3 |
Net income available to common shareholders |  | $ | 81,745 |  |  | $ | 96,863 |  |  |  | (15.6 | ) |  |  | 9.0 | % |  |  | 12.6 | %

NET REVENUES

The following table presents consolidated net revenues for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |
Net revenues: |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 211,098 |  |  | $ | 155,449 |  |  |  | 35.8 |
Principal transactions |  |  | 138,666 |  |  |  | 104,032 |  |  |  | 33.3 |
Brokerage revenues |  |  | 349,764 |  |  |  | 259,481 |  |  |  | 34.8 |
Advisory fees |  |  | 76,072 |  |  |  | 104,890 |  |  |  | (27.5 | )
Capital raising |  |  | 103,396 |  |  |  | 56,950 |  |  |  | 81.6 |
Investment banking |  |  | 179,468 |  |  |  | 161,840 |  |  |  | 10.9 |
Asset management and service fees |  |  | 237,775 |  |  |  | 195,267 |  |  |  | 21.8 |
Net interest |  |  | 136,820 |  |  |  | 141,623 |  |  |  | (3.4 | )
Other income |  |  | 9,207 |  |  |  | 12,209 |  |  |  | (24.6 | )
Total net revenues |  | $ | 913,034 |  |  | $ | 770,420 |  |  |  | 18.5 |

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Commissions – Commission revenues are primarily generated from agency transactions in OTC and listed equity securities, insurance products and options. In addition, commission revenues also include distribution fees for promoting and distributing mutual funds.

For the three months ended March 31, 2020, commission revenues increased 35.8% to $211.1 million from $155.4 million in the comparable period in 2019. The increase is primarily attributable to higher trading volumes due to market volatility as a result of the risks from the COVID-19 pandemic as clients reacted to the significant decline in near-term global economic activity.

Principal transactions – Principal transaction revenues are gains and losses on secondary trading, principally fixed income brokerage revenues.

For the three months ended March 31, 2020, principal transactions revenues increased 33.3% to $138.7 million from $104.0 million in the comparable period in 2019. The increase is primarily attributable to strong client engagement and volatility in the markets. The increase was partially offset by declines in credit products, notably in municipal securities, which were negatively impacted by market dislocation.

Investment banking – Investment banking revenues include: (i) capital raising revenues representing fees earned from the underwriting of debt and equity securities, and (ii) advisory fees related to corporate debt and equity offerings, municipal debt offerings, merger and acquisitions, private placements and other investment banking advisory fees.

For the three months ended March 31, 2020, investment banking revenues increased 10.9% to $179.5 million from $161.8 million in the comparable period in 2019.

Advisory fee revenues decreased 27.5% to $76.1 million for the three months ended March 31, 2020 from $104.9 million in the comparable period in 2019. The decrease in Advisory fees revenues reflected a decrease in industry-wide completed mergers and acquisitions transactions. During the first quarter of 2020, investment banking activity was negatively impacted by the economic uncertainty related to the COVID-19 pandemic.

Capital raising revenues increased 81.6% to $103.4 million for the three months ended March 31, 2020 from $57.0 million in the comparable period in 2019. For the three months ended March 31, 2020, equity capital raising revenues increased 97.6% to $64.8 million from $32.8 million in the comparable period in 2019. The increase in equity capital raising revenues is primarily attributable to an increase in deals compared to the prior year. Equity capital raising revenues in the first quarter of 2019 were negatively impacted by the government shut-down. For the three months ended March 31, 2020, fixed income capital raising revenues increased 59.8% to $38.6 million from $24.2 million in the comparable period in 2019. Fixed income capital raising revenues increased from a year ago as clients accessed the market to benefit from the lower rate environment and to raise additional liquidity in March.

Asset management and service fees – Asset management and service fee revenues are primarily generated by the investment advisory fees related to asset management services provided for individual and institutional investment portfolios, along with mutual funds. Investment advisory fees are earned on assets held in managed or non-discretionary asset-based programs. Fees from private client investment portfolios and institutional fees are typically based on asset values at the end of the prior period. Asset balances are impacted by both the performance of the market and levels of net new client assets. Rising markets have historically had a positive impact on investment advisory fee revenues as existing accounts increase in value, and individuals and institutions may commit incremental funds in rising markets.

For the three months ended March 31, 2020, asset management and service fee revenues increased 21.8% to $237.8 million from $195.3 million in the comparable period in 2019. See “Asset management and service fees” in the Global Wealth Management segment discussion for information on the changes in asset management and service fees revenues.

Other income – For the three months ended March 31, 2020, other income decreased 24.6% to $9.2 million from $12.2 million during the comparable period in 2019. The decrease is primarily attributable to greater investment losses over the comparable period in 2019, partially offset by a gain recognized on the sale of Ziegler Capital Management, LLC. Other income primarily includes investment gains and losses, rental income, and loan originations fees.

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NET INTEREST INCOME

The following table presents average balance data and operating interest revenue and expense data, as well as related interest yields for the periods indicated (in thousands, except rates):

|  | Three Months Ended |
|  | March 31, 2020 |  |  | March 31, 2019 |
|  | Average Balance |  |  | Interest Income/ Expense |  |  | Average Interest Rate |  |  | Average Balance |  |  | Interest Income/ Expense |  |  | Average Interest Rate |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing cash and federal funds sold |  | $ | 931,765 |  |  | $ | 3,678 |  |  |  | 1.58 | % |  | $ | 1,124,929 |  |  | $ | 7,828 |  |  |  | 2.78 | %
Financial instruments owned |  |  | 1,076,633 |  |  |  | 4,574 |  |  |  | 1.70 | % |  |  | 1,277,361 |  |  |  | 6,313 |  |  |  | 1.98 | %
Margin balances |  |  | 1,231,725 |  |  |  | 10,131 |  |  |  | 3.29 | % |  |  | 1,258,490 |  |  |  | 13,440 |  |  |  | 4.27 | %
Investment portfolio |  |  | 6,387,804 |  |  |  | 48,137 |  |  |  | 3.01 | % |  |  | 7,234,946 |  |  |  | 65,466 |  |  |  | 3.62 | %
Loans |  |  | 10,359,833 |  |  |  | 95,120 |  |  |  | 3.67 | % |  |  | 8,981,679 |  |  |  | 93,224 |  |  |  | 4.15 | %
Other interest-bearing assets |  |  | 607,833 |  |  |  | (463 | ) |  |  | (0.30 | %) |  |  | 736,297 |  |  |  | 4,800 |  |  |  | 2.61 | %
Total interest-earning assets/interest income |  | $ | 20,595,593 |  |  | $ | 161,177 |  |  |  | 3.13 | % |  | $ | 20,613,702 |  |  | $ | 191,071 |  |  |  | 3.71 | %
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | 91,269 |  |  | $ | 200 |  |  |  | 0.87 | % |  | $ | 68,220 |  |  | $ | 529 |  |  |  | 3.10 | %
Stock loan |  |  | 424,553 |  |  |  | (2,931 | ) |  |  | (2.76 | %) |  |  | 484,133 |  |  |  | 2,629 |  |  |  | 2.17 | %
Senior notes (Stifel Financial) |  |  | 1,017,099 |  |  |  | 11,193 |  |  |  | 4.40 | % |  |  | 1,016,116 |  |  |  | 11,122 |  |  |  | 4.38 | %
Stifel Capital Trusts |  |  | 60,000 |  |  |  | 559 |  |  |  | 3.73 | % |  |  | 60,000 |  |  |  | 808 |  |  |  | 5.39 | %
Deposits |  |  | 15,377,859 |  |  |  | 9,569 |  |  |  | 0.25 | % |  |  | 15,282,257 |  |  |  | 28,066 |  |  |  | 0.73 | %
FHLB |  |  | 590,549 |  |  |  | 2,353 |  |  |  | 1.59 | % |  |  | 461,433 |  |  |  | 1,678 |  |  |  | 1.45 | %
Other interest-bearing liabilities |  |  | 1,143,541 |  |  |  | 3,414 |  |  |  | 1.19 | % |  |  | 1,044,125 |  |  |  | 4,616 |  |  |  | 1.77 | %
Total interest-bearing liabilities/interest expense |  | $ | 18,704,870 |  |  |  | 24,357 |  |  |  | 0.52 | % |  | $ | 18,416,284 |  |  |  | 49,448 |  |  |  | 1.07 | %
Net interest income/margin |  |  |  |  |  | $ | 136,820 |  |  |  | 2.66 | % |  |  |  |  |  | $ | 141,623 |  |  |  | 2.75 | %

Net interest income – Net interest income is the difference between interest earned on interest-earning assets and interest paid on funding sources. Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. For the three months ended March 31, 2020, net interest income decreased to $136.8 million from $141.6 million during the comparable period in 2019.

For the three months ended March 31, 2020, interest revenue decreased 15.6% to $161.2 million from $191.1 million in the comparable period in 2019, principally as a result of a decrease in interest revenue generated from interest-earning assets of Stifel Bancorp due to lower interest rates. The average interest-earning assets of Stifel Bancorp increased to $17.3 billion during the three months ended March 31, 2020 compared to $17.0 billion during the comparable period in 2019 at average interest rates of 3.36% and 3.87%, respectively.

For the three months ended March 31, 2020, interest expense decreased 50.7% to $24.4 million from $49.4 million during the comparable period in 2019. The decrease is primarily attributable to lower interest rates.

Decreases in short-term interest rates, such as those announced by the Federal Reserve late in our 2019 fiscal year and during the first fiscal quarter of 2020, have had a negative impact on our results, in particular on our net interest income. The Federal Reserve significantly further lowered interest rates in response to COVID-19 pandemic concerns.

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NON-INTEREST EXPENSES

The following table presents consolidated non-interest expenses for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | $ | 577,179 |  |  | $ | 458,114 |  |  |  | 26.0 |
Occupancy and equipment rental |  |  | 66,073 |  |  |  | 58,862 |  |  |  | 12.3 |
Communications and office supplies |  |  | 41,124 |  |  |  | 35,697 |  |  |  | 15.2 |
Commissions and floor brokerage |  |  | 14,842 |  |  |  | 10,956 |  |  |  | 35.5 |
Provision for loan losses |  |  | 18,978 |  |  |  | 2,283 |  |  |  | 731.3 |
Other operating expenses |  |  | 79,732 |  |  |  | 66,699 |  |  |  | 19.5 |
Total non-interest expenses |  | $ | 797,928 |  |  | $ | 632,611 |  |  |  | 26.1 |

Compensation and benefits – Compensation and benefits expenses, which are the largest component of our expenses, include salaries, bonuses, transition pay, benefits, amortization of stock-based compensation, employment taxes and other employee-related costs. A significant portion of compensation expense is comprised of production-based variable compensation, including discretionary bonuses, which fluctuates in proportion to the level of business activity, increasing with higher revenues and operating profits. Other compensation costs, including base salaries, stock-based compensation amortization, and benefits, are more fixed in nature.

For the three months ended March 31, 2020, compensation and benefits expense increased 26.0% to $577.2 million from $458.1 million during the comparable period in 2019.

Compensation and benefits expense as a percentage of net revenues was 63.2% for the three months ended March 31, 2020, compared to 59.5% for the three months ended March 31, 2019. The increase in compensation and benefits expenses is primarily attributable to higher volume and revenue-related expense and investments in our franchise.

Occupancy and equipment rental – For the three months ended March 31, 2020, occupancy and equipment rental expense increased 12.3% to $66.1 million from $58.9 million during the comparable period in 2019. The increase is primarily attributable to an increase in data processing costs and higher rent expense as a result of an increase in locations.

Communications and office supplies – Communications expense includes costs for telecommunication and data communication, primarily for obtaining third-party market data information. For the three months ended March 31, 2020, communications and office supplies expense increased 15.2% to $41.1 million from $35.7 million during the comparable period in 2019. The increase is primarily attributable to higher communication and quote equipment expenses and shipping costs.

Commissions and floor brokerage – For the three months ended March 31, 2020, commissions and floor brokerage expense increased 35.5% to $14.8 million from $11.0 million during the comparable period in 2019. The increase is primarily attributable to an increase in brokerage trading volumes.

Provision for loan losses – For the three months ended March 31, 2020, provision for loan losses increased 731.3% to $19.0 million from $2.3 million during the comparable period in 2019. The provision for loan losses was impacted by growth in the loan portfolio and the impact of accounting for credit losses under the CECL standard, which was heightened by the impact of COVID-19 on the broader economic environment.

Other operating expenses – Other operating expenses primarily include license and registration fees, litigation-related expenses, which consist of amounts we reserve and/or pay out related to legal and regulatory matters, travel and entertainment, promotional expenses and expenses for professional services.

For the three months ended March 31, 2020, other operating expenses increased 19.5% to $79.7 million from $66.7 million during the comparable period in 2019. The increase is primarily attributable to net provisions for regulatory matters, higher investment banking gross-up costs, which is attributable to an increase in investment banking revenues, professional fees, and subscription costs, partially offset by decreases in travel costs and conference expenses.

Provision for income taxes – For the three months ended March 31, 2020, our provision for income taxes was $28.5 million, representing an effective tax rate of 24.8%, compared to $38.4 million for the comparable period in 2019, representing an effective tax rate of 27.9%. The effective income tax rate was primarily impacted by tax benefits on the settlement of employee share-based awards and the establishment of a valuation allowance on certain deferred tax assets in the first quarter of 2020.

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SEGMENT ANALYSIS

Our reportable segments include Global Wealth Management, Institutional Group, and Other.

Our Global Wealth Management segment consists of two businesses, the Private Client Group and Stifel Bancorp, Inc. The Private Client Group includes branch offices and independent contractor offices of our broker-dealer subsidiaries located throughout the United States. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, as well as offering banking products to their private clients through our bank subsidiaries, which provide residential, consumer, and commercial lending, as well as Federal Depository Insurance Corporation (“FDIC”)-insured deposit accounts to customers of our broker-dealer subsidiaries and to the general public.

The Institutional Group segment includes institutional sales and trading. It provides securities brokerage, trading, and research services to institutions with an emphasis on the sale of equity and fixed income products. This segment also includes the management of and participation in underwritings for both corporate and public finance (exclusive of sales credits generated through the private client group, which are included in the Global Wealth Management segment), merger and acquisition, and financial advisory services.

The Other segment includes interest income from stock borrow activities, unallocated interest expense, interest income and gains and losses from investments held, amortization of stock-based awards, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; and general administration and acquisition charges.

We evaluate the performance of our segments and allocate resources to them based on various factors, including prospects for growth, return on investment, and return on revenues.

Results of Operations – Global Wealth Management

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019

The following table presents consolidated financial information for the Global Wealth Management segment for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, |  |  | As a Percentage of Net Revenues For the Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |  |  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 136,897 |  |  | $ | 109,927 |  |  |  | 24.5 |  |  |  | 23.5 | % |  |  | 21.5 | %
Principal transactions |  |  | 42,982 |  |  |  | 43,267 |  |  |  | (0.7 | ) |  |  | 7.4 |  |  |  | 8.5 |
Brokerage revenues |  |  | 179,879 |  |  |  | 153,194 |  |  |  | 17.4 |  |  |  | 30.9 |  |  |  | 30.0 |
Asset management and service fees |  |  | 237,760 |  |  |  | 195,253 |  |  |  | 21.8 |  |  |  | 40.8 |  |  |  | 38.2 |
Investment banking |  |  | 10,333 |  |  |  | 8,223 |  |  |  | 25.7 |  |  |  | 1.8 |  |  |  | 1.6 |
Interest |  |  | 156,150 |  |  |  | 179,582 |  |  |  | (13.0 | ) |  |  | 26.8 |  |  |  | 35.2 |
Other income |  |  | 16,302 |  |  |  | 8,645 |  |  |  | 88.6 |  |  |  | 2.7 |  |  |  | 1.7 |
Total revenues |  |  | 600,424 |  |  |  | 544,897 |  |  |  | 10.2 |  |  |  | 103.0 |  |  |  | 106.7 |
Interest expense |  |  | 17,468 |  |  |  | 34,287 |  |  |  | (49.1 | ) |  |  | 3.0 |  |  |  | 6.7 |
Net revenues |  |  | 582,956 |  |  |  | 510,610 |  |  |  | 14.2 |  |  |  | 100.0 |  |  |  | 100.0 |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 298,370 |  |  |  | 247,473 |  |  |  | 20.6 |  |  |  | 51.2 |  |  |  | 48.5 |
Occupancy and equipment rental |  |  | 30,252 |  |  |  | 28,437 |  |  |  | 6.4 |  |  |  | 5.2 |  |  |  | 5.6 |
Communication and office supplies |  |  | 15,320 |  |  |  | 14,493 |  |  |  | 5.7 |  |  |  | 2.6 |  |  |  | 2.8 |
Commissions and floor brokerage |  |  | 5,250 |  |  |  | 4,797 |  |  |  | 9.4 |  |  |  | 0.9 |  |  |  | 0.9 |
Provision for loan losses |  |  | 18,978 |  |  |  | 2,283 |  |  |  | 731.3 |  |  |  | 3.3 |  |  |  | 0.4 |
Other operating expenses |  |  | 20,619 |  |  |  | 18,637 |  |  |  | 10.6 |  |  |  | 3.5 |  |  |  | 3.7 |
Total non-interest expenses |  |  | 388,789 |  |  |  | 316,120 |  |  |  | 23.0 |  |  |  | 66.7 |  |  |  | 61.9 |
Income before income taxes |  | $ | 194,167 |  |  | $ | 194,490 |  |  |  | (0.2 | ) |  |  | 33.3 | % |  |  | 38.1 | %

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| March 31, |
| 2020 |  |  | 2019 |
Branch offices |  | 384 |  |  |  | 371 |
Financial advisors |  | 2,130 |  |  |  | 2,061 |
Independent contractors |  | 94 |  |  |  | 99 |
Total financial advisors |  | 2,224 |  |  |  | 2,160 |

NET REVENUES

For the three months ended March 31, 2020, Global Wealth Management net revenues increased 14.2% to $583.0 million from $510.6 million for the comparable period in 2019. The increase in net revenues over the comparable period in 2019 is primarily attributable to the growth in asset management and service fee revenues and higher commission revenues, partially offset by a decrease in net interest income.

Commissions – For the three months ended March 31, 2020, commission revenues increased 24.5% to $136.9 million from $109.9 million in the comparable period in 2019.

Principal transactions – For the three months ended March 31, 2020, principal transactions revenues decreased 0.7% to $43.0 million from $43.3 million in the comparable period in 2019.

Brokerage revenues - For the three months ended March 31, 2020, brokerage revenues increased 17.4% to $179.9 million from $153.2 million in the comparable period in 2019.

Brokerage revenues were impacted by higher trading volumes due to market volatility as a result of the risks from the COVID-19 pandemic as clients reacted to the significant decline in near-term global economic activity.

Asset management and service fees – For the three months ended March 31, 2020, asset management and service fees increased 21.8% to $237.8 million from $195.3 million in the comparable period in 2019. Asset management revenues increased from a year ago reflecting higher asset levels and strong fee-based asset flows as fees from private client investment portfolios and institutional fees are typically based on asset values at the end of the prior period.

Client asset metrics as of the periods indicated (in thousands, except number of accounts and percentages):

| 3/31/20 |  |  | 3/31/19 |  |  | % Change |  |  | 12/31/19 |  |  | % Change |
Client assets | $ | 276,627,000 |  |  | $ | 299,993,000 |  |  |  | (7.8 | ) |  | $ | 329,495,000 |  |  |  | (16.0 | )
Fee-based client assets | $ | 93,633,000 |  |  | $ | 99,579,000 |  |  |  | (6.0 | ) |  | $ | 117,189,000 |  |  |  | (20.1 | )
Number of client accounts |  | 1,031,000 |  |  |  | 993,000 |  |  |  | 3.8 |  |  |  | 1,020,000 |  |  |  | 1.1 |
Number of fee-based client accounts |  | 237,000 |  |  |  | 214,000 |  |  |  | 10.7 |  |  |  | 229,000 |  |  |  | 3.5 |

The value of our client assets and fee-based assets were impacted by macroeconomic concerns resulting from the challenging operating environment leading to decreased global equity prices, wider credit spreads, and uncertainty in the economic outlook. In addition, asset balances were reduced by $9.0 billion as a result of the sale of Ziegler Capital Management LLC during the first quarter of 2020.

Investment banking – Investment banking, which represents sales credits for investment banking underwritings, increased 25.7% to $10.3 million for the three months ended March 31, 2020 from $8.2 million during the comparable period in 2019. See “Investment banking” in the Institutional Group segment discussion for information on the changes in net revenues.

Interest revenue – For the three months ended March 31, 2020, interest revenue decreased 13.0% to $156.2 million from $179.6 million in the comparable period in 2019. The decrease is primarily due lower interest rates. See “Net Interest Income – Stifel Bancorp” below for a further discussion of the changes in net interest revenues.

Other income – For the three months ended March 31, 2020, other income increased 88.6% to $16.3 million from $8.6 million in the comparable period in 2019. The increase is primarily attributable to a gain recognized on the sale of Ziegler Capital Management, LLC, partially offset by greater investment losses over the comparable period in 2019.

Interest expense – For the three months ended March 31, 2020, interest expense decreased 49.1% to $17.5 million from $34.3 million during the comparable period in 2019. The decrease in interest expense is primarily attributable to lower interest rates.

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NET INTEREST INCOME – STIFEL BANCORP

The following table present average balance data and operating interest revenue and expense data for Stifel Bancorp, as well as related interest yields for the periods indicated (in thousands, except rates):

|  | Three Months Ended March 31, 2020 |  |  | Three Months Ended March 31, 2019 |
|  | Average Balance |  |  | Interest Income/ Expense |  |  | Average Interest Rate |  |  | Average Balance |  |  | Interest Income/ Expense |  |  | Average Interest Rate |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing cash and federal funds sold |  | $ | 445,987 |  |  | $ | 1,225 |  |  |  | 1.10 | % |  | $ | 732,621 |  |  | $ | 4,554 |  |  |  | 2.49 | %
U.S. government agencies |  |  | 3,863 |  |  |  | 21 |  |  |  | 2.17 |  |  |  | — |  |  |  | — |  |  |  | — |
State and municipal securities (tax-exempt) (1) |  |  | 18,424 |  |  |  | 98 |  |  |  | 2.13 |  |  |  | 50,148 |  |  |  | 299 |  |  |  | 2.38 |
Mortgage-backed securities |  |  | 1,094,197 |  |  |  | 5,964 |  |  |  | 2.18 |  |  |  | 1,531,393 |  |  |  | 9,012 |  |  |  | 2.35 |
Corporate fixed income securities |  |  | 732,826 |  |  |  | 5,050 |  |  |  | 2.76 |  |  |  | 954,501 |  |  |  | 7,174 |  |  |  | 3.01 |
Asset-backed securities |  |  | 4,538,494 |  |  |  | 37,004 |  |  |  | 3.26 |  |  |  | 4,698,904 |  |  |  | 48,981 |  |  |  | 4.17 |
Federal Home Loan Bank ("FHLB") and other capital stock |  |  | 59,649 |  |  |  | 599 |  |  |  | 4.02 |  |  |  | 52,260 |  |  |  | 1,104 |  |  |  | 8.45 |
Loans (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities-based loans |  |  | 2,063,781 |  |  |  | 16,463 |  |  |  | 3.19 |  |  |  | 1,799,483 |  |  |  | 19,106 |  |  |  | 4.25 |
Commercial and industrial |  |  | 3,560,337 |  |  |  | 37,976 |  |  |  | 4.27 |  |  |  | 3,419,829 |  |  |  | 40,831 |  |  |  | 4.78 |
Residential real estate |  |  | 3,416,067 |  |  |  | 25,307 |  |  |  | 2.96 |  |  |  | 2,927,882 |  |  |  | 22,478 |  |  |  | 3.07 |
Commercial real estate |  |  | 445,025 |  |  |  | 5,806 |  |  |  | 5.22 |  |  |  | 336,535 |  |  |  | 4,709 |  |  |  | 5.60 |
Home equity lines of credit |  |  | 54,340 |  |  |  | 588 |  |  |  | 4.33 |  |  |  | 41,681 |  |  |  | 521 |  |  |  | 5.00 |
Construction and land |  |  | 416,455 |  |  |  | 4,716 |  |  |  | 4.53 |  |  |  | 152,234 |  |  |  | 2,123 |  |  |  | 5.58 |
Other |  |  | 29,289 |  |  |  | 275 |  |  |  | 3.75 |  |  |  | 125,044 |  |  |  | 1,628 |  |  |  | 5.21 |
Loans held for sale |  |  | 374,539 |  |  |  | 3,989 |  |  |  | 4.26 |  |  |  | 178,991 |  |  |  | 1,828 |  |  |  | 4.09 |
Total interest-earning assets (3) |  | $ | 17,253,273 |  |  | $ | 145,081 |  |  |  | 3.36 | % |  | $ | 17,001,506 |  |  | $ | 164,348 |  |  |  | 3.87 | %
Cash and due from banks |  |  | 15,573 |  |  |  |  |  |  |  |  |  |  |  | 23,021 |  |  |  |  |  |  |  |  |
Other non interest-earning assets |  |  | 292,103 |  |  |  |  |  |  |  |  |  |  |  | 350,252 |  |  |  |  |  |  |  |  |
Total assets |  | $ | 17,560,949 |  |  |  |  |  |  |  |  |  |  | $ | 17,374,779 |  |  |  |  |  |  |  |  |
Liabilities and stockholder's equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market |  | $ | 13,729,080 |  |  | $ | 3,429 |  |  |  | 0.10 | % |  | $ | 13,101,539 |  |  | $ | 16,529 |  |  |  | 0.50 | %
Time deposits |  |  | 449,862 |  |  |  | 2,637 |  |  |  | 2.35 |  |  |  | 1,476,973 |  |  |  | 8,498 |  |  |  | 2.30 |
Demand deposits |  |  | 1,148,628 |  |  |  | 3,325 |  |  |  | 1.16 |  |  |  | 602,102 |  |  |  | 2,408 |  |  |  | 1.60 |
Savings |  |  | 50,289 |  |  |  | 178 |  |  |  | 1.41 |  |  |  | 101,643 |  |  |  | 631 |  |  |  | 2.48 |
FHLB advances |  |  | 590,549 |  |  |  | 2,353 |  |  |  | 1.59 |  |  |  | 461,433 |  |  |  | 1,678 |  |  |  | 1.45 |
Other borrowings |  |  | 1,578 |  |  |  | 28 |  |  |  | 7.09 |  |  |  | 1,747 |  |  |  | 40 |  |  |  | 9.16 |
Total interest-bearing liabilities (3) |  |  | 15,969,986 |  |  |  | 11,950 |  |  |  | 0.30 | % |  |  | 15,745,437 |  |  |  | 29,784 |  |  |  | 0.76 | %
Non-interest-bearing liabilities |  |  | 206,365 |  |  |  |  |  |  |  |  |  |  |  | 166,875 |  |  |  |  |  |  |  |  |
Other non-interest bearing liabilities |  |  | 103,987 |  |  |  |  |  |  |  |  |  |  |  | 191,550 |  |  |  |  |  |  |  |  |
Total liabilities |  |  | 16,280,338 |  |  |  |  |  |  |  |  |  |  |  | 16,103,862 |  |  |  |  |  |  |  |  |
Stockholder's equity |  |  | 1,280,611 |  |  |  |  |  |  |  |  |  |  |  | 1,270,917 |  |  |  |  |  |  |  |  |
Total liabilities and stockholder's equity |  | $ | 17,560,949 |  |  |  |  |  |  |  |  |  |  | $ | 17,374,779 |  |  |  |  |  |  |  |  |
Net interest income/spread |  |  |  |  |  | $ | 133,131 |  |  |  | 3.06 | % |  |  |  |  |  | $ | 134,564 |  |  |  | 3.11 | %
Net interest margin |  |  |  |  |  |  |  |  |  |  | 3.09 | % |  |  |  |  |  |  |  |  |  |  | 3.17 | %

(1) | Due to immaterial amount of income recognized on tax-exempt securities, yields were not calculated on a tax equivalent basis.

(2) | Loans on non-accrual status are included in average balances.

(3) | See Net Interest Income table included in “Results of Operations” for additional information on our company’s average balances and operating interest and expenses.

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The following table sets forth an analysis of the effect on net interest income of volume and rate changes for the three month period ended March 31, 2020 com pared to the three month period ended March 31, 2019 (in thousands):

|  | Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019 |
|  | Increase/(decrease) due to: |
|  | Volume |  |  | Rate |  |  | Total |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing cash and federal funds sold |  | $ | (1,372 | ) |  | $ | (1,957 | ) |  | $ | (3,329 | )
U.S. government agencies |  |  | 11 |  |  |  | 10 |  |  |  | 21 |
State and municipal securities (tax-exempt) (1) |  |  | (172 | ) |  |  | (29 | ) |  |  | (201 | )
Mortgage-backed securities |  |  | (2,421 | ) |  |  | (627 | ) |  |  | (3,048 | )
Corporate fixed income securities |  |  | (1,564 | ) |  |  | (560 | ) |  |  | (2,124 | )
Asset-backed securities |  |  | (1,622 | ) |  |  | (10,355 | ) |  |  | (11,977 | )
FHLB and other capital stock |  |  | 186 |  |  |  | (691 | ) |  |  | (505 | )
Loans |  |  |  |  |  |  |  |  |  |  |  |
Securities-based loans |  |  | 3,813 |  |  |  | (6,456 | ) |  |  | (2,643 | )
Commercial and industrial |  |  | 1,794 |  |  |  | (4,649 | ) |  |  | (2,855 | )
Residential real estate |  |  | 3,582 |  |  |  | (753 | ) |  |  | 2,829 |
Commercial real estate |  |  | 1,388 |  |  |  | (291 | ) |  |  | 1,097 |
Home equity lines of credit |  |  | 120 |  |  |  | (53 | ) |  |  | 67 |
Construction and land |  |  | 2,908 |  |  |  | (315 | ) |  |  | 2,593 |
Other |  |  | (991 | ) |  |  | (362 | ) |  |  | (1,353 | )
Loans held for sale |  |  | 2,077 |  |  |  | 84 |  |  |  | 2,161 |
|  | $ | 7,737 |  |  | $ | (27,004 | ) |  | $ | (19,267 | )
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |
Money market |  | $ | 1,832 |  |  | $ | (14,932 | ) |  | $ | (13,100 | )
Time deposits |  |  | (6,026 | ) |  |  | 165 |  |  |  | (5,861 | )
Demand deposits |  |  | 4,780 |  |  |  | (3,863 | ) |  |  | 917 |
Savings |  |  | (244 | ) |  |  | (209 | ) |  |  | (453 | )
FHLB advances |  |  | 503 |  |  |  | 172 |  |  |  | 675 |
Other borrowings |  |  | (4 | ) |  |  | (8 | ) |  |  | (12 | )
|  | $ | 841 |  |  | $ | (18,675 | ) |  | $ | (17,834 | )

Increases and decreases in interest revenue and interest expense result from changes in average balances (volume) of interest-earning bank assets and liabilities, as well as changes in average interest rates. The effect of changes in volume is determined by multiplying the change in volume by the previous year's average yield/cost. Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous year's volume. Changes applicable to both volume and rate have been allocated proportionately.

Net interest income – Net interest income is the difference between interest earned on interest-earning assets and interest paid on funding sources. Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies.

For the three months ended March 31, 2020, interest revenue of $145.1 million was generated from average interest-earning assets of $17.3 billion at an average interest rate of 3.36%. Interest revenue of $164.3 million for the comparable period in 2019 was generated from average interest-earning assets of $17.0 billion at an average interest rate of 3.87%.

Interest expense represents interest on customer money market accounts, interest on time deposits, Federal Home Loan Bank advances, and other interest expense. The average balance of interest-bearing liabilities during the three months ended March 31, 2020 was $16.0 billion at an average interest rate of 0.30%. The average balance of interest-bearing liabilities for the comparable period in 2019 was $15.7 billion at an average interest rate of 0.76%.

Decreases in short-term interest rates, such as those announced by the Federal Reserve late in our 2019 fiscal year and during the first fiscal quarter of 2020, have had a negative impact on our results, in particular on our net interest income. The Federal Reserve significantly further lowered interest rates in response to COVID-19 pandemic concerns.

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See “Net Interest Income – Stifel Bancorp” above for more information regarding average balances, interest income and expense, and average interest rate yields.

NON-INTEREST EXPENSES

For the three months ended March 31, 2020, Global Wealth Management non-interest expenses increased 23.0% to $388.8 million from $316.1 million for the comparable period in 2019.

Compensation and benefits – For the three months ended March 31, 2020, compensation and benefits expense increased 20.6% to $298.4 million from $247.5 million during the comparable period in 2019. The increase is principally due to increased variable compensation. Compensation and benefits expense as a percentage of net revenues was 51.2% for the three months ended March 31, 2020, compared to 48.5% for the comparable period in 2019.

Occupancy and equipment rental – For the three months ended March 31, 2020, occupancy and equipment rental expense increased 6.4% to $30.3 million from $28.4 million during the comparable period in 2019. The increase is primarily attributable to an increase in data processing costs and rent expense over the comparable period in 2019.

Communications and office supplies – For the three months ended March 31, 2020, communications and office supplies expense increased 5.7% to $15.3 million from $14.5 million during the comparable period in 2019. The increase is primarily attributable to an increase in shipping costs and higher communication and quote equipment expenses.

Commissions and floor brokerage – For the three months ended March 31, 2020, commissions and floor brokerage expense increased 9.4% to $5.3 million from $4.8 million during the comparable period in 2019. The increase is primarily attributable to higher trading and clearing expenses.

Provision for loan losses – For the three months ended March 31, 2020, provision for loan losses increased 731.3% to $19.0 million from $2.3 million during the comparable period in 2019. The provision for loan losses was impacted by growth in the loan portfolio and the impact of accounting for credit losses under the CECL standard, which was heightened by the impact of COVID-19 on the broader economic environment.

Other operating expenses – For the three months ended March 31, 2020, other operating expenses increased 10.6% to $20.6 million from $18.6 million during the comparable period in 2019. The increase in other operating expenses from the comparable period in 2019 is primarily attributable to increases in settlement costs and professional fees, partially offset by a decrease in travel expenses.

INCOME BEFORE INCOME TAXES

For the three months ended March 31, 2020, income before income taxes decreased 0.2% to $194.2 million from $194.5 million during the comparable period in 2019.

For the three months ended March 31, 2020, profit margins (income before income taxes as a percent of net revenues) have decreased to 33.3% from 38.1% during the comparable period in 2019.

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Results of Operations – Institutional Group

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019

The following table presents consolidated financial information for the Institutional Group segment for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, |  |  | As a Percentage of Net Revenues For the Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |  |  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 74,198 |  |  | $ | 45,522 |  |  |  | 63.0 |  |  |  | 22.3 | % |  |  | 17.4 | %
Principal transactions |  |  | 95,685 |  |  |  | 60,765 |  |  |  | 57.5 |  |  |  | 28.8 |  |  |  | 23.3 |
Brokerage revenues |  |  | 169,883 |  |  |  | 106,287 |  |  |  | 59.8 |  |  |  | 51.1 |  |  |  | 40.7 |
Advisory fees |  |  | 76,053 |  |  |  | 104,895 |  |  |  | (27.5 | ) |  |  | 22.9 |  |  |  | 40.2 |
Capital raising |  |  | 93,082 |  |  |  | 48,722 |  |  |  | 91.0 |  |  |  | 28.0 |  |  |  | 18.6 |
Investment banking |  |  | 169,135 |  |  |  | 153,617 |  |  |  | 10.1 |  |  |  | 50.9 |  |  |  | 58.8 |
Interest |  |  | 5,013 |  |  |  | 5,873 |  |  |  | (14.6 | ) |  |  | 1.5 |  |  |  | 2.2 |
Other income |  |  | (7,470 | ) |  |  | 1,569 |  |  |  | (576.1 | ) |  |  | (2.2 | ) |  |  | 0.6 |
Total revenues |  |  | 336,561 |  |  |  | 267,346 |  |  |  | 25.9 |  |  |  | 101.3 |  |  |  | 102.3 |
Interest expense |  |  | 4,323 |  |  |  | 6,060 |  |  |  | (28.7 | ) |  |  | 1.3 |  |  |  | 2.3 |
Net revenues |  |  | 332,238 |  |  |  | 261,286 |  |  |  | 27.2 |  |  |  | 100.0 |  |  |  | 100.0 |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 205,988 |  |  |  | 159,411 |  |  |  | 29.2 |  |  |  | 62.0 |  |  |  | 61.0 |
Occupancy and equipment rental |  |  | 16,690 |  |  |  | 12,366 |  |  |  | 35.0 |  |  |  | 5.0 |  |  |  | 4.7 |
Communication and office supplies |  |  | 21,304 |  |  |  | 17,814 |  |  |  | 19.6 |  |  |  | 6.4 |  |  |  | 6.8 |
Commissions and floor brokerage |  |  | 9,592 |  |  |  | 6,159 |  |  |  | 55.7 |  |  |  | 2.9 |  |  |  | 2.4 |
Other operating expenses |  |  | 36,924 |  |  |  | 33,332 |  |  |  | 10.8 |  |  |  | 11.1 |  |  |  | 12.8 |
Total non-interest expenses |  |  | 290,498 |  |  |  | 229,082 |  |  |  | 26.8 |  |  |  | 87.4 |  |  |  | 87.7 |
Income before income taxes |  | $ | 41,740 |  |  | $ | 32,204 |  |  |  | 29.6 |  |  |  | 12.6 | % |  |  | 12.3 | %

NET REVENUES

For the three months ended March 31, 2020, Institutional Group net revenues increased 27.2% to $332.2 million from $261.3 million for the comparable period in 2019.

The increase in net revenues from the comparable period in 2019 was primarily attributable to an increase in capital raising revenues and equity and fixed income brokerage revenues, partially offset by a decrease in advisory fees.

Commissions – For the three months ended March 31, 2020, commission revenues increased 63.0% to $74.2 million from $45.5 million in the comparable period in 2019.

Principal transactions – For the three months ended March 31, 2020, principal transactions revenues increased 57.5% to $95.7 million from $60.8 million in the comparable period in 2019.

Brokerage revenues – For the three months ended March 31, 2020, institutional brokerage revenues increased 59.8% to $169.9 million from $106.3 million in the comparable period in 2019.

Brokerage revenues were impacted by higher trading volumes due to market volatility as a result of the risks from the COVID-19 pandemic as clients reacted to the significant decline in near-term global economic activity. In addition, brokerage revenues were negatively impacted by the continued migration from active to passive management strategies.

For the three months ended March 31, 2020, fixed income institutional brokerage revenues increased 47.9% to $99.7 million from $67.4 million in the comparable period in 2019. The increase is primarily attributable to strong client engagement and volatility in the markets. The increase was partially offset by declines in credit products, notably in municipal securities, which were negatively impacted by market dislocation.

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For the three months ended March 31, 2020, equity institutional brokerage revenues increased 80.5% to $70.2 million from $38.9 million during the comparable period in 2019. The increase is primarily attributable to higher trading volumes due to market volatility, partially offset by a continued migration from active to passive management strategies.

Investment banking – For the three months ended March 31, 2020, investment banking revenues increased 10.1% to $169.1 million from $153.6 million during the comparable period in 2019. The increase is primarily attributable to an increase in fixed income and equity capital raising revenues, partially offset by a decrease in advisory fees.

For the three months ended March 31, 2020, advisory fee revenues decreased 27.5% to $76.1 million from $104.9 million in the comparable period in 2019. The decrease in advisory fees reflected a decrease in industry-wide completed mergers and acquisitions transactions. During the first quarter of 2020, investment banking activity was negatively impacted by the economic uncertainty related to the COVID-19 pandemic.

For the three months ended March 31, 2020, capital raising revenues increased 91.0% to $93.1 million from $48.7 million in the comparable period in 2019.

For the three months ended March 31, 2020, equity capital raising revenues increased 116.1% to $60.2 million from $27.9 million during the comparable period in 2019. The increase in equity capital raising revenues increase is primarily attributable to an increase in deals compared to the prior year. Equity capital raising revenues in the first quarter of 2019 were negatively impacted by the government shut-down.

For the three months ended March 31, 2020, fixed income capital raising revenues increased 57.6% to $32.9 million from $20.9 million during the comparable period in 2019. The increase is primarily attributable to an increase in the municipal bond origination business. Fixed income capital raising revenues increased from a year ago as clients accessed the market to benefit from the lower rate environment and to raise additional liquidity.

Interest – For the three months ended March 31, 2020, interest decreased 14.6% to $5.0 million from $5.9 million in the comparable period in 2019. The decrease is primarily attributable to lower interest rates and lower inventory levels during the first quarter of 2020.

Other income – For the three months ended March 31, 2020, other income decreased 576.1% to a loss of $7.5 million from $1.6 million in the comparable period in 2019. The decrease is primarily attributable to investment losses in the first quarter of 2020.

Interest expense – For the three months ended March 31, 2020, interest expense decreased 28.7% to $4.3 million from $6.1 million in the comparable period in 2019. The decrease is primarily attributable to lower interest rates and a decrease in inventory levels from the comparative period in 2019.

NON-INTEREST EXPENSES

For the three months ended March 31, 2020, Institutional Group non-interest expenses increased 26.8% to $290.5 million from $229.1 million for the comparable period in 2019.

Compensation and benefits – For the three months ended March 31, 2020, compensation and benefits expense increased 29.2% to $206.0 million from $159.4 million during the comparable period in 2019.

Compensation and benefits expense as a percentage of net revenues was 62.0% for the three months ended March 31, 2020, compared to 61.0% for comparable period in 2019.

Occupancy and equipment rental – For the three months ended March 31, 2020, occupancy and equipment rental expense increased 35.0% to $16.7 million from $12.4 million during the comparable period in 2019. The increase is primarily attributable to higher rent expense.

Communications and office supplies – For the three months ended March 31, 2020, communications and office supplies expense increased 19.6% to $21.3 million from $17.8 million during the comparable period in 2019. The increase is primarily attributable to higher communication and quote equipment expenses.

Commissions and floor brokerage – For the three months ended March 31, 2020, commissions and floor brokerage expense increased 55.7% to $9.6 million from $6.2 million during the comparable period in 2019. The increase is primarily attributable to higher volumes from the comparable period in 2019.

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Other operating expenses – For the three months ended March 31, 2020, other operating expenses increased 10.8% to $36.9 million from $33.3 million during the comparable period in 2019. The increase is primarily attributable to an increase in settlement and legal costs, higher investment banking gross-up costs, which is attributable to an increase in investment banking revenues, professional fees, and dues and assessments, partially offset by a decrease in conference and travel costs.

INCOME BEFORE INCOME TAXES

For the three months ended March 31, 2020, income before income taxes for the Institutional Group segment increased 29.6% to $41.7 million from $32.2 million during the comparable period in 2019.

Profit margins (income before income taxes as a percentage of net revenues) have increased to 12.6% for the three months ended March 31, 2020 from 12.3% during the comparable period in 2019 as a result of higher revenues, partially offset by an increase in expenses.

Results of Operations – Other Segment

Three months Ended March 31, 2020 Compared with Three months Ended March 31, 2019

The following table presents consolidated financial information for the Other segment for the periods presented (in thousands, except percentages):

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |
Net revenues |  | $ | (2,160 | ) |  | $ | (1,476 | ) |  |  | (46.3 | )
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 72,821 |  |  |  | 51,231 |  |  |  | 42.1 |
Other operating expenses |  |  | 45,820 |  |  |  | 36,178 |  |  |  | 26.7 |
Total non-interest expenses |  |  | 118,641 |  |  |  | 87,409 |  |  |  | 35.7 |
Loss before income taxes |  | $ | (120,801 | ) |  | $ | (88,885 | ) |  |  | 35.9 | %

The other segment includes expenses related to the Company’s acquisition strategy and the investments made in the Company’s infrastructure and control environment.

The expenses relating to the Company’s acquisition strategy, which are included in the other segment, consists of stock-based compensation and operating costs from our various acquisitions. The following shows the expenses that are part of the other segment related to acquisitions.

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | $ | 6,427 |  |  | $ | 3,932 |  |  |  | 63.5 |
Other operating expenses |  |  | 6,905 |  |  |  | 4,258 |  |  |  | 62.2 |
Total non-interest expenses |  | $ | 13,332 |  |  | $ | 8,190 |  |  |  | 62.8 | %

The expenses not associated with acquisition-related activities in the other segment are as follows:

|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | % Change |
Non-interest expenses: |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | $ | 66,394 |  |  | $ | 47,299 |  |  |  | 40.4 |
Other operating expenses |  |  | 38,915 |  |  |  | 31,920 |  |  |  | 21.9 |
Total non-interest expenses |  | $ | 105,309 |  |  | $ | 79,219 |  |  |  | 32.9 | %

Non-interest expenses for the three months ended March 31, 2020 increased 32.9% from the comparable period in 2019. The increase consisted of a 40.4% increase in compensation and benefits and a 21.9% increase in other operating expenses.

Analysis of Financial Condition

Our company’s consolidated statements of financial condition consist primarily of cash and cash equivalents, receivables, financial instruments owned, bank loans, investments, goodwill, loans and advances to financial advisors, bank deposits, and payables. As of March 31, 2020, our total assets increased 5.2% to $25.9 billion from $24.6 billion at December 31, 2019. Our broker-dealer

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subsidiary’s gross assets and liabilities, including financial instruments owned, stock loan/borrow, receivables and payables from/to brokers, dealers, and clearing organizations and clients, fluctuate with our business levels and overall market conditions.

As of March 31, 2020, our liabilities were comprised primarily of deposits of $16.9 billion at Stifel Bancorp, senior notes, net of debt issuance costs, of $1.0 billion, Federal Home Loan Bank advances of $250.0 million, payables to customers of $946.4 million at our broker-dealer subsidiaries, accounts payable and accrued expenses of $1.0 billion, accrued employee compensation of $264.6 million, and trust preferred securities of $60.0 million. To meet our obligations to clients and operating needs, we had $1.4 billion in cash and cash equivalents at March 31, 2020. We also had highly liquid assets consisting of available-for-sale securities of $3.4 billion, held-to-maturity securities of $3.1 billion, client brokerage receivables of $1.5 billion, and financial instruments of $0.9 billion.

Cash Flow

Cash, cash equivalents, and restricted cash increased $240.3 million to $1.4 billion at March 31, 2020, from $1.1 billion at December 31, 2019. Operating activities used cash of $5.7 million. Investing activities used cash of $1.1 billion due to investment securities purchases, the growth of the loan portfolio, and fixed asset purchases, partially offset by proceeds from the sale and maturity of securities in our investment portfolio and the proceeds received from the sale of ZCM. Financing activities provided cash of $1.4 billion principally due to an increase in bank deposits and proceeds from borrowings, partially offset by a decrease in securities loaned, share repurchases, and dividends paid on our common and preferred stock.

Liquidity and Capital Resources

The Company’s senior management establishes the liquidity and capital policies of our company. The Company’s senior management reviews business performance relative to these policies, monitors the availability of alternative sources of financing, and oversees the liquidity and interest rate sensitivity of our company’s asset and liability position.

Our assets, consisting mainly of cash or assets readily convertible into cash, are our principal source of liquidity. The liquid nature of these assets provides for flexibility in managing and financing the projected operating needs of the business. These assets are financed primarily by our equity capital, corporate debt, debentures to trusts, client credit balances, short-term bank loans, proceeds from securities lending, and other payables. We currently finance our client accounts and firm trading positions through ordinary course borrowings at floating interest rates from various banks on a demand basis, securities lending, and repurchase agreements, with company-owned and client securities pledged as collateral. Changes in securities market volumes, related client borrowing demands, underwriting activity, and levels of securities inventory affect the amount of our financing requirements.

Our bank assets consist principally of available-for-sale and held-to-maturity securities, retained loans, and cash and cash equivalents. Stifel Bancorp’s current liquidity needs are generally met through deposits from brokerage clients and equity capital. We monitor the liquidity of our bank subsidiaries daily to ensure its ability to meet customer deposit withdrawals, maintain reserve requirements, and support asset growth.

As of March 31, 2020, we had $25.9 billion in assets, $9.9 billion of which consisted of cash or assets readily convertible into cash as follows (in thousands, except average days to conversion):

| March 31, 2020 |  |  | December 31, 2019 |  |  | Average Conversion
Cash and cash equivalents | $ | 1,382,920 |  |  | $ | 1,142,596 |  |  |
Receivables from brokers, dealers, and clearing organizations |  | 704,394 |  |  |  | 627,790 |  |  | 5 days
Securities purchased under agreements to resell |  | 458,968 |  |  |  | 385,008 |  |  | 1 day
Financial instruments owned at fair value |  | 922,077 |  |  |  | 963,606 |  |  | 3 days
Available-for-sale securities at fair value |  | 3,366,090 |  |  |  | 3,254,737 |  |  | 3 days
Held-to-maturity securities at amortized cost |  | 3,085,824 |  |  |  | 2,856,219 |  |  | 4 days
Investments |  | 29,324 |  |  |  | 49,980 |  |  | 10 days
Total cash and assets readily convertible to cash | $ | 9,949,597 |  |  | $ | 9,279,936 |  |  |

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As of March 31, 2020 and December 31, 2019, the amount of collateral by asset class is as follows (in thousands):

| March 31, 2020 |  |  | December 31, 2019 |
| Contractual |  |  | Contingent |  |  | Contractual |  |  | Contingent |
Cash and cash equivalents | $ | 234,262 |  |  | $ | — |  |  | $ | 98,250 |  |  | $ | — |
Financial instruments owned at fair value |  | 475,528 |  |  |  | 696,246 |  |  |  | 391,634 |  |  |  | 391,634 |
Investment portfolio (AFS & HTM) |  | — |  |  |  | 1,859,331 |  |  |  | — |  |  |  | 1,617,688 |
| $ | 709,790 |  |  | $ | 2,555,577 |  |  | $ | 489,884 |  |  | $ | 2,009,322 |

Capital Management

We have an ongoing authorization from the Board of Directors to repurchase our common stock in the open market or in negotiated transactions. In January 2020, the Board of Directors approved the increase of an additional 4.9 million shares, bringing the authorized share repurchase amount to 10.0 million shares. At March 31, 2020, the maximum number of shares that may yet be purchased under this plan was 8.9 million. We utilize the share repurchase program to manage our equity capital relative to the growth of our business and help to meet obligations under our employee benefit plans.

Liquidity Risk Management

Our businesses are diverse, and our liquidity needs are determined by many factors, including market movements, collateral requirements, and client commitments, all of which can change dramatically in a difficult funding environment. During a liquidity crisis, credit-sensitive funding, including unsecured debt and some types of secured financing agreements, may be unavailable, and the terms (e.g., interest rates, collateral provisions, and tenor) or availability of other types of secured financing may change. We manage liquidity risk by diversifying our funding sources across products and among individual counterparties within those products. These liquidity risk management practices have allowed us to effectively manage the market stress that began in the first quarter of 2020 from the COVID-19 pandemic. For more information on the effects of the pandemic, see Executive Summary - COVID-19 Pandemic on page 50.

As a holding company, whereby all of our operations are conducted through our subsidiaries, our cash flow and our ability to service our debt, including the notes, depend upon the earnings of our subsidiaries. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on the notes or to provide us with funds to pay our obligations, whether by dividends, distributions, loans, or other payments.

Our liquidity requirements may change in the event we need to raise more funds than anticipated to increase inventory positions, support more rapid expansion, develop new or enhanced services and products, acquire technologies, respond to acquisition opportunities, expand our recruiting efforts, or respond to other unanticipated liquidity requirements. We primarily rely on financing activities and distributions from our subsidiaries for funds to implement our business and growth strategies and repurchase our shares. Net capital rules, restrictions under our borrowing arrangements of our subsidiaries, as well as the earnings, financial condition, and cash requirements of our subsidiaries, may each limit distributions to us from our subsidiaries.

The availability of outside financing, including access to the capital markets and bank lending, depends on a variety of factors, such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services sector, and our credit rating. Our cost and availability of funding may be adversely affected by illiquid credit markets and wider credit spreads. As a result of any future concerns about the stability of the markets generally and the strength of counterparties specifically, lenders may from time to time curtail, or even cease to provide, funding to borrowers.

Our liquidity management policies are designed to mitigate the potential risk that we may be unable to access adequate financing to service our financial obligations without material business impact. The principal elements of our liquidity management framework are: (a) daily monitoring of our liquidity needs at the holding company and significant subsidiary level, (b) stress testing the liquidity positions of Stifel and our bank subsidiaries, and (c) diversification of our funding sources.

Monitoring of liquidity – Senior management establishes our liquidity and capital policies. These policies include senior management’s review of short- and long-term cash flow forecasts, review of monthly capital expenditures, the monitoring of the availability of alternative sources of financing, and the daily monitoring of liquidity in our significant subsidiaries. Our decisions on the allocation of capital to our business units consider, among other factors, projected profitability and cash flow, risk, and impact on future liquidity needs. Our treasury department assists in evaluating, monitoring, and controlling the impact that our business activities have on our financial condition, liquidity, and capital structure as well as maintains our relationships with various lenders. The objectives of these policies are to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

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Liquidity stress testing (Firm-wide) –A liquidity stress test model is maintained by the Company that measures liquidity outflows across multiple scenarios at the major operating subsidiaries and details the corresponding impact to our holding company and the overall consolidated firm. Liquidity stress tests are utilized to ensure that current exposures are consistent with the Company’s established liquidity risk tolerance and, more specifically, to identify and quantify sources of potential liquidity strain. Further, the stress tests are utilized to analyze possible impacts on the Company’s cash flows, and liquidity position. The outflows are modeled over a 30-day liquidity stress timeframe and include the impact of idiosyncratic and macro-economic stress events.

The assumptions utilized in the Company’s liquidity stress tests include, but are not limited to, the following:

| • | No government support

| • | No access to equity and unsecured debt markets within the stress horizon

| • | Higher haircuts and significantly lower availability of secured funding

| • | Additional collateral that would be required by trading counter-parties, certain exchanges, and clearing organizations related to credit rating downgrades

| • | Client cash withdrawals and inability to accept new deposits

| • | Increased demand from customers on the funding of loans and lines of credit

At March 31, 2020, the Company maintained sufficient liquidity to meet current and contingent funding obligations as modeled in its liquidity stress test model.

Liquidity stress testing (Stifel Bancorp) – Our bank subsidiaries perform three primary stress tests on their liquidity position. These stress tests are based on the following company-specific stresses: (1) the amount of deposit run-off that they could withstand over a one-month period of time based on their on-balance sheet liquidity and available credit, (2) the ability to fund operations if all available credit were to be drawn immediately, with no additional available credit, and (3) the ability to fund operations under a regulatory prompt corrective action. The goal of these stress tests is to determine their ability to fund continuing operations under significant pressures on both assets and liabilities.

Under all stress tests, our bank subsidiaries consider cash and highly liquid investments as available to meet liquidity needs. In their analysis, our bank subsidiaries consider agency mortgage-backed securities, corporate bonds, and commercial mortgage-backed securities as highly liquid. In addition to being able to be readily financed at modest haircut levels, our bank subsidiaries estimate that each of the individual securities within each of the asset classes described above could be sold into the market and converted into cash within three business days under normal market conditions, assuming that the entire portfolio of a given asset class was not simultaneously liquidated. At March 31, 2020, available cash and highly liquid investments comprised approximately 22% of Stifel Bancorp’s assets, which was well in excess of its internal target.

In addition to these stress tests, management performs a daily liquidity review. The daily analysis provides management with all major fluctuations in liquidity. The analysis also tracks the proportion of deposits that Stifel Bancorp is sweeping from its affiliated broker-dealer, Stifel. On a monthly basis, liquidity key performance indicators and compliance with liquidity policy limits are reported to the Board of Directors. Our banking subsidiaries have not violated any internal liquidity policy limits.

Funding Sources

The Company pursues a strategy of diversification of secured and unsecured funding sources (by product and by investor) and attempts to ensure that the tenor of the Company’s liabilities equals or exceeds the expected holding period of the assets being financed. The Company funds its balance sheet through diverse sources. These sources may include the Company’s equity capital, long-term debt, repurchase agreements, securities lending, deposits, committed and uncommitted credit facilities, Federal Home Loan Bank advances, and federal funds agreements.

Cash and Cash Equivalents – We held $1.4 billion of cash and cash equivalents at March 31, 2020, compared to $1.1 billion at December 31, 2019. Cash and cash equivalents provide immediate sources of funds to meet our liquidity needs.

Securities Available-for-Sale – We held $3.4 billion in available-for-sale investment securities at March 31, 2020, compared to $3.3 billion at December 31, 2019. As of March 31, 2020, the weighted-average life of the investment securities portfolio was approximately 1.0 years. These investment securities provide increased liquidity and flexibility to support our company’s funding requirements.

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We monitor the available-for-sale investment portfolio for other-than-temporary impairment based on a number of criteria, including the size of the unrealized loss position, the duration for which the security has been in a loss position, credit rating, the nature of the investments, and current market conditions. For debt securities, we also consider any intent to sell the security and the likelihood we will be required to sell the security before its anticipated recovery. We continually monitor the ratings of our security holdings and conduct regular reviews of our credit-sensitive assets.

Deposits – Deposits have become one of our largest funding sources. Deposits provide a stable, low-cost source of funds that we utilize to fund loan and asset growth and to diversify funding sources. We have continued to expand our deposit-gathering efforts through our existing private client network and through expansion. These channels offer a broad set of deposit products that include demand deposits, money market deposits, and certificates of deposit (“CDs”).

As of March 31, 2020, we had $16.9 billion in deposits compared to $15.3 billion at December 31, 2019. Our core deposits are comprised of non-interest-bearing deposits, money market deposit accounts, savings accounts, and CDs.

Short-term borrowings – Our short-term financing is generally obtained through short-term bank line financing on an uncommitted, secured basis, securities lending arrangements, repurchase agreements, advances from the Federal Home Loan Bank, term loans, and committed bank line financing on an unsecured basis. We borrow from various banks on a demand basis with company-owned and customer securities pledged as collateral. The value of customer-owned securities used as collateral is not reflected in the consolidated statements of financial condition. We also have an unsecured, committed bank line available.

Our uncommitted secured lines of credit at March 31, 2020, totaled $835.0 million with four banks and are dependent on having appropriate collateral, as determined by the bank agreements, to secure an advance under the line. The availability of our uncommitted lines is subject to approval by the individual banks each time an advance is requested and may be denied. Our peak daily borrowing on our uncommitted secured lines was $490.0 million during the three months ended March 31, 2020. There are no compensating balance requirements under these arrangements. Any borrowings on secured lines of credit are generally utilized to finance certain fixed income securities. At March 31, 2020, borrowings on our uncommitted secured lines of credit of $198.0 million, included in borrowings in the consolidated statements of financial condition, were collateralized by company-owned securities valued at $220.7 million.

The Federal Home Loan advances of $250.0 million as of March 31, 2020 are floating-rate advances. The weighted average interest rates during the three months ended March 31, 2020 on these advances is 1.59%. The advances are secured by Stifel Bancorp’s residential mortgage loan portfolio and investment portfolio. The interest rates reset on a daily basis. Stifel Bancorp has the option to prepay these advances without penalty on the interest reset date.

Unsecured borrowings – On March 5, 2019, we amended our existing Credit Agreement, which now expires in March 2024. The applicable interest rate under the revolving credit facility is calculated as a per annum rate equal to LIBOR plus 1.75%, as defined.

We can draw upon this line as long as certain restrictive covenants are maintained. Under our amended and restatement Credit Agreement, we are required to maintain compliance with a minimum consolidated tangible net worth covenant, as defined, and a maximum consolidated total capitalization ratio covenant, as defined. In addition, Stifel, our broker-dealer subsidiary, is required to maintain compliance with a minimum regulatory excess net capital percentage covenant, as defined, and our bank subsidiaries are required to maintain their status as well-capitalized, as defined.

Our revolving credit facility contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, and judgment defaults. At March 31, 2020, we had no advances on the $200.0 million revolving credit facility and were in compliance with all covenants and currently do not expect any covenant violations due to the impacts of the COVID-19 pandemic.

Stifel, our broker-dealer subsidiary, has a 364-day Credit Agreement (“Stifel Credit Facility”) with a maturity date of June 2020 in which the lenders are a number of financial institutions. This committed unsecured borrowing facility provides for maximum borrowings of up to $250.0 million at variable rates of interest. At March 31, 2020, we had no advances on the Stifel Credit Facility and were in compliance with all covenants and currently do not expect any covenant violations due to the impacts of the COVID-19 pandemic.

Federal Home Loan Bank Advances and other secured financing – Stifel Bancorp has borrowing capacity with the Federal Home Loan Bank of $3.1 billion at March 31, 2020 and $59.5 million in federal funds agreements, for the purpose of purchasing short-term funds should additional liquidity be needed. At March 31, 2020, outstanding FHLB advances were $250.0 million. Stifel Bancorp is eligible to participate in the Fed’s discount window program; however, Stifel Bancorp does not view borrowings from the Fed as a primary means of funding. The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the Fed, and is secured by securities. Stifel Bancorp has borrowing capacity of $1.3 billion with the Fed’s discount

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window at March 31, 2020. Stifel Bancorp receives overnight funds from excess cash held in Stifel brokerage accounts, which are deposited into a money market a ccount. These balances totaled $1 5.6 billion at March 31, 2020.

Public Offering of Senior Notes – On July 15, 2014, we completed an underwritten registered public offering of $300.0 million in aggregate principal amount of 4.250% senior notes due July 2024 (the “2014 Notes”). Interest on the 2014 Notes is payable semi-annually in arrears. We may redeem the 2014 Notes in whole or in part, at our option, at a redemption price equal to 100% of their principal amount, plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption. In July 2014, we received a BBB- rating on the 2014 Notes.

On December 1, 2015, we completed an underwritten registered public offering of $300.0 million in aggregate principal amount of 3.50% senior notes due December 2020 (the “December 2015 Notes”). Interest on the December 2015 Notes is payable semi-annually in arrears. We may redeem the December 2015 Notes in whole or in part, at our option, at a redemption price equal to 100% of their principal amount, plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption. In December 2015, we received a BBB- rating on the 2015 Notes.

On July 11, 2016, we completed an underwritten registered public offering of an additional $200.0 million in aggregate principal amount of the Company’s 2014 Notes. The 2014 Notes mature in July 2024 and bear interest at 4.250%, payable semi-annually in arrears in January and July.

On October 4, 2017, we completed an underwritten registered public offering of $200.0 million in aggregate principal amount of 5.20% senior notes due October 2047. Interest on the senior notes is payable quarterly in arrears on January 15, April 15, July 15, and October 15. On or after October 15, 2022, we may redeem some or all of the senior notes at any time at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued interest thereon to the redemption date. On October 27, 2017, we completed the sale of an additional $25.0 million aggregate principal amount of Notes pursuant to the over-allotment option. In October 2017, we received a BBB- rating on the 2017 Notes.

Preferred Stock Offerings – In July 2016, the Company completed an underwritten registered public offering of $150 million 6.25% Non-Cumulative Perpetual Preferred Stock, Series A.

In February 2019, the Company completed an underwritten registered public offering of $150 million 6.25% Non-Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred”). In March 2019, we completed a public offering of an additional $10.0 million of Series B Preferred, pursuant to the over-allotment option. The net proceeds from the Series B Preferred offering of $155.0 million was used for general corporate purposes.

Credit Rating

We believe our current rating depends upon a number of factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trends and volatility, balance sheet composition, liquidity and liquidity management, our capital structure, our overall risk management, business diversification, and our market share and competitive position in the markets in which we operate. Deteriorations in any of these factors could impact our credit rating. A reduction in our credit rating could adversely affect our liquidity and competitive position, increase our incremental borrowing costs, limit our access to the capital markets, or trigger our obligations under certain financial agreements. As such, we may not be able to successfully obtain additional outside financing to fund our operations on favorable terms, or at all.

We believe our existing assets, most of which are liquid in nature, together with the funds from operations, available informal short-term credit arrangements, and our ability to raise additional capital will provide sufficient resources to meet our present and anticipated financing needs.

Use of Capital Resources

We have paid $40.6 million in the form of upfront notes to financial advisors for transition pay during the three months ended March 31, 2020. As we continue to take advantage of the opportunities created by market displacement and as competition for skilled professionals in the industry increases, we may decide to devote more significant resources to attracting and retaining qualified personnel.

We utilize transition pay, principally in the form of upfront demand notes, to aid financial advisors, who have elected to join our firm, to supplement their lost compensation while transitioning their customers’ accounts to the Stifel platform. The initial value of the notes is determined primarily by the financial advisors’ trailing production and assets under management. These notes are generally forgiven over a five- to ten-year period based on production. The future estimated amortization expense of the upfront notes, assuming current-year production levels and static growth for the remaining nine months in 2020, and the years ended December 31, 2021,

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2022, 2023, 2024, and thereafter are $89.2 million, $90.2 million, $80.0 million, $70.7 million, $58.6 million, and $149.2 million, respectively. These estimates could change if we continue to grow our business through expansion or experience increased production levels.

We maintain an incentive stock plan and a wealth accumulation plan that provides for the granting of stock options, stock appreciation rights, restricted stock, performance awards, stock units, and debentures (collectively, “deferred awards”) to our associates. Historically, we have granted stock units to our associates as part of our retention program. A restricted stock unit or restricted stock award represents the right to receive a share of common stock from our company at a designated time in the future without cash payment by the employee and is issued in lieu of cash incentive, principally for deferred compensation and employee retention plans. The restricted stock units or restricted stock awards generally vest over the next one to ten years after issuance and are distributed at predetermined future payable dates once vesting occurs. At March 31, 2020, the total number of restricted stock units, PRSUs, and restricted stock awards outstanding was 14.5 million, of which 12.4 million were unvested. At March 31, 2020, there was unrecognized compensation cost for deferred awards of approximately $580.4 million, which is expected to be recognized over a weighted-average period of 2.3 years.

The future estimated compensation expense of the deferred awards, assuming current year forfeiture levels and static growth for the remaining nine months in 2020, and the years ended December 31, 2021, 2022, 2023, 2024, and thereafter are $116.0 million, $137.3 million, $123.6 million, $91.8 million, $64.2 million, and $47.5 million, respectively. These estimates could change if our forfeitures change from historical levels.

During the three months ended March 31, 2020, we repurchased $56.2 million, or 1.1 million shares, using existing Board authorizations at an average price of $49.74.

Net Capital Requirements – We operate in a highly regulated environment and are subject to capital requirements, which may limit distributions to our company from our subsidiaries. Distributions from our broker-dealer subsidiaries are subject to net capital rules. These subsidiaries have historically operated in excess of minimum net capital requirements. However, if distributions were to be limited in the future due to the failure of our subsidiaries to comply with the net capital rules or a change in the net capital rules, it could have a material and adverse effect to our company by limiting our operations that require intensive use of capital, such as underwriting or trading activities, or limit our ability to implement our business and growth strategies, pay interest on and repay the principal of our debt, and/or repurchase our common stock. Our non-broker-dealer subsidiaries, Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A., and Stifel Trust Company Delaware, N.A., are also subject to various regulatory capital requirements administered by the federal banking agencies. Our broker-dealer subsidiaries, our bank subsidiaries, and Stifel Trust have consistently operated in excess of their capital adequacy requirements. Our Canadian subsidiary, Stifel Nicolaus Canada Inc. (“SNC”), is subject to the regulatory supervision and requirements of IIROC.

At March 31, 2020, Stifel had net capital of $418.9 million, which was 25.7% of aggregate debit items and $386.3 million in excess of its minimum required net capital. At March 31, 2020, all of our other broker-dealer subsidiaries’ net capital exceeded the minimum net capital required under the SEC rule. At March 31, 2020, SNEL’s capital and reserves were in excess of the financial resources requirement under the rules of the FCA. At March 31, 2020, our banking subsidiaries were considered well capitalized under the regulatory framework for prompt corrective action. At March 31, 2020, SNC’s net capital and reserves were in excess of the financial resources requirement under the rules of the IIROC. See Note 16 of the Notes to Consolidated Financial Statements for details of our regulatory capital requirements.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the SEC, we make assumptions, judgments, and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. We base our assumptions, judgments, and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments, and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.

We believe that the assumptions, judgments, and estimates involved in the accounting policies described below have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules that require us to make assumptions, judgments, and estimates, so we consider these to be our critical accounting policies. Historically, our assumptions, judgments, and estimates relative to our critical accounting policies and estimates have not differed materially from actual results.

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For more information, see Note 2 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019, as well as Note 2 of the Notes to Consolidated Financial Statements in this Form 10-Q. Except as noted below under Allowance for Credit Losses, there have not been any material updates to our critical accounting policies and estimates as disclosed in the MD&A of the Compa ny's Annual Report on Form 10-K.

Allowance for Credit Losses

On January 1, 2020, we adopted the new accounting standard that requires the measurement of the allowance for credit losses, which includes the allowance for loan and lease losses and the reserve for unfunded lending commitments, to be based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets.

We regularly review the loan portfolio and have established an allowance for loan losses for inherent losses estimated to have occurred in the loan portfolio through a provision for loan losses charged to income. For loans, the expected credit loss is typically estimated using quantitative methods that consider a variety of factors such as historical loss experience derived from proxy data, the current credit quality of the portfolio as well as an economic outlook over the life of the loan. The life of the loan for closed-ended products is based on the contractual maturity of the loan adjusted for any expected prepayments. The contractual maturity includes any extension options that are at the sole discretion of the borrower. For open-ended products (e.g., lines of credit), the expected credit loss is determined based on the maximum repayment term associated with future draws from credit lines.

In its loss forecasting framework, we incorporate forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. These macroeconomic scenarios include variables that have historically been key drivers of increases and decreases in credit losses. These variables include, but are not limited to, unemployment rates, real estate prices, gross domestic product levels, corporate bond spreads and long-term interest rate forecasts. As any one economic outlook is inherently uncertain, we leverage multiple scenarios. The scenarios that are chosen each quarter and the amount of weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, views of internal as well as third-party economists and industry trends.

Also included in the allowance for loan losses are qualitative reserves to cover losses that are expected but, in our company’s assessment, may not be adequately represented in the quantitative methods or the economic assumptions described above. For example, factors that we consider include changes in lending policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and nonaccrual loans, the effect of external factors such as competition, and legal and regulatory requirements, among others. Further, we consider the inherent uncertainty in quantitative models that are built on historical data. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance for credit losses can also be impacted by unanticipated changes in asset quality of the portfolio. In addition, while we have incorporated our estimated impact of COVID-19 into our allowance for credit losses, the ultimate impact of COVID-19 is still unknown, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses.

As described above, the process to determine the allowance for credit losses requires numerous estimates and assumptions, some of which require a high degree of judgment and are often interrelated. Changes in the estimates and assumptions can result in significant changes in the allowance for credit losses. Our process for determining the allowance for credit losses is further discussed in Note 1 of the Notes to Consolidated Financial Statements.

Recent Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our consolidated financial statements.

Off-Balance Sheet Arrangements

Information concerning our off-balance sheet arrangements is included in Note 21 of the Notes to Consolidated Financial Statements. Such information is hereby incorporated by reference.

Contractual Obligations

Our contractual obligations have not materially changed from those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

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ITEM 3. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

Risk Management

Risks are an inherent part of our business and activities. Management of these risks is critical to our soundness and profitability. Risk management at our company is a multi-faceted process that requires communication, judgment, and knowledge of financial products and markets. Our senior management group takes an active role in the risk management process and requires our business units to assist in the identification, assessment, monitoring, and control of various risks. The principal risks involved in our business activities are: market (interest rates and equity prices), credit, operational, and regulatory and legal.

We have been affected, and expect to continue to be affected, by market stress resulting from the COVID-19 pandemic that began in the first quarter of 2020. For more information on the effects of the pandemic, see Executive Summary - COVID-19 Pandemic on page 50.

We have adopted policies and procedures concerning Enterprise Risk Management. The Risk Management/Corporate Governance Committee of the Board of Directors, in exercising its oversight of management's activities, conducts periodic reviews and discussions with management regarding the guidelines and policies governing the processes by which risk assessment and risk management are handled.

Market Risk

The potential for changes in the value of financial instruments owned by our company resulting from changes in interest rates and equity prices is referred to as “market risk.” Market risk is inherent to financial instruments, and accordingly, the scope of our market risk management procedures includes all market risk-sensitive financial instruments.

We trade tax-exempt and taxable debt obligations, including U.S. treasury bills, notes, and bonds; U.S. government agency and municipal notes and bonds; bank certificates of deposit; mortgage-backed securities; and corporate obligations. We are also an active market maker in over-the-counter equity securities. In connection with these activities, we may maintain inventories in order to ensure availability and to facilitate customer transactions.

Changes in value of our financial instruments may result from fluctuations in interest rates, credit ratings, equity prices, and the correlation among these factors, along with the level of volatility.

We manage our trading businesses by product and have established trading departments that have responsibility for each product. The trading inventories are managed with a view toward facilitating client transactions, considering the risk and profitability of each inventory position. Position limits in trading inventory accounts are established by our Enterprise Risk Management department and monitored on a daily basis within the business units. We monitor inventory levels and results of the trading departments, as well as inventory aging, pricing, concentration, securities ratings, and risk sensitivities.

We are also exposed to market risk based on our other investing activities. These investments consist of investments in private equity partnerships, start-up companies, venture capital investments, and zero coupon U.S. government securities and are included under the caption “Investments” on the consolidated statements of financial condition.

Interest Rate Risk

We are exposed to interest rate risk as a result of maintaining inventories of interest rate-sensitive financial instruments and from changes in the interest rates on our interest-earning assets (including client loans, stock borrow activities, investments, inventories, and resale agreements) and our funding sources (including client cash balances, FHLB advances, stock lending activities, bank borrowings, and repurchase agreements), which finance these assets. The collateral underlying financial instruments at the broker-dealer is repriced daily, thus requiring collateral to be delivered as necessary. Interest rates on client balances and stock borrow and lending produce a positive spread to our company, with the rates generally fluctuating in parallel.

We manage our inventory exposure to interest rate risk by setting and monitoring limits and, where feasible, hedging with offsetting positions in securities with similar interest rate risk characteristics. While a significant portion of our securities inventories have contractual maturities in excess of five years, these inventories, on average, turn over several times per year.

Additionally, we monitor, on a daily basis, the Value-at-Risk (“VaR”) in our trading portfolios using a ten-day horizon and report VaR at a 99% confidence level. VaR is a statistical technique used to estimate the probability of portfolio losses based on the statistical analysis of historical price trends and volatility. This model assumes that historical changes in market conditions are representative of future changes, and trading losses on any given day could exceed the reported VaR by significant amounts in unusually volatile

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markets. Further, the model involves a number of assumptions and inputs. While we believe that the assumptions and inputs we use in our risk model are reasonable, different assumptions and inputs could produce materially different VaR estimates.

The following table sets forth the high, low, and daily average VaR for our trading portfolios during the three months ended March 31, 2020, and the daily VaR at March 31, 2020 and December 31, 2019 (in thousands):

|  | Three Months Ended March 31, 2020 |  |  | VAR Calculation at |
|  | High |  |  | Low |  |  | Daily Average |  |  | March 31, 2020 |  |  | December 31, 2019 |
Daily VaR |  | $ | 7,399 |  |  | $ | 1,616 |  |  | $ | 2,795 |  |  | $ | 5,301 |  |  | $ | 2,162 |

Stifel Bancorp’s interest rate risk is principally associated with changes in market interest rates related to residential, consumer, and commercial lending activities, as well as FDIC-insured deposit accounts to customers of our broker-dealer subsidiaries and to the general public.

Our primary emphasis in interest rate risk management for Stifel Bancorp is the matching of assets and liabilities of similar cash flow and repricing time frames. This matching of assets and liabilities reduces exposure to interest rate movements and aids in stabilizing positive interest spreads. Stifel Bancorp has established limits for acceptable interest rate risk and acceptable portfolio value risk. To ensure that Stifel Bancorp is within the limits established for net interest margin, an analysis of net interest margin based on various shifts in interest rates is prepared each quarter and presented to Stifel Bancorp’s Board of Directors. Stifel Bancorp utilizes a third-party model to analyze the available data.

The following table illustrates the estimated change in net interest margin at March 31, 2020, based on shifts in interest rates of up to positive 200 basis points and negative 200 basis points:

Hypothetical change in interest rates | Projected change in net interest margin |
+200 |  | 15.4 | %
+100 |  | 7.9 |
0 |  | — |
-100 |  | (21.4 | )
-200 |  | (25.8 | )

The following GAP Analysis table indicates Stifel Bancorp’s interest rate sensitivity position at March 31, 2020 (in thousands):

| Repricing Opportunities |
| 0-6 Months |  |  | 7-12 Months |  |  | 1-5 Years |  |  | 5+ Years |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans | $ | 7,293,944 |  |  | $ | 364,829 |  |  | $ | 2,139,030 |  |  | $ | 965,754 |
Securities |  | 4,964,891 |  |  |  | 325,850 |  |  |  | 857,845 |  |  |  | 444,307 |
Interest-bearing cash |  | 946,991 |  |  |  | — |  |  |  | — |  |  |  | — |
| $ | 13,205,826 |  |  | $ | 690,679 |  |  | $ | 2,996,875 |  |  | $ | 1,410,061 |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transaction accounts and savings | $ | 16,409,984 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Certificates of deposit |  | 129,815 |  |  |  | 51,074 |  |  |  | 46,289 |  |  |  | — |
Borrowings |  | — |  |  |  | 250,000 |  |  |  | — |  |  |  | — |
| $ | 16,539,799 |  |  | $ | 301,074 |  |  | $ | 46,289 |  |  | $ | — |
GAP |  | (3,333,973 | ) |  |  | 389,605 |  |  |  | 2,950,586 |  |  |  | 1,410,061 |
Cumulative GAP | $ | (3,333,973 | ) |  | $ | (2,944,368 | ) |  | $ | 6,218 |  |  | $ | 1,416,279 |

We maintain a risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings caused by interest rate volatility. Our goal is to manage sensitivity to changes in rates by hedging the maturity characteristics of Fed funds-based affiliated deposits, thereby limiting the impact on earnings. By using derivative instruments, we are exposed to credit and market risk on those derivative positions. We manage the market risk associated with interest rate contracts by establishing and monitoring limits as to the types and degree of risk that may be undertaken. Our interest rate hedging strategies may not work in all market environments and, as a result, may not be effective in mitigating interest rate risk.

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Equity Price Risk

We are exposed to equity price risk as a consequence of making markets in equity securities. We attempt to reduce the risk of loss inherent in our inventory of equity securities by monitoring those security positions constantly throughout each day.

Our equity securities inventories are repriced on a regular basis, and there are no unrecorded gains or losses. Our activities as a dealer are client-driven, with the objective of meeting clients’ needs while earning a positive spread.

Credit Risk

We are engaged in various trading and brokerage activities, with the counterparties primarily being broker-dealers. In the event counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. We manage this risk by imposing and monitoring position limits for each counterparty, monitoring trading counterparties, conducting regular credit reviews of financial counterparties, reviewing security concentrations, holding and marking to market collateral on certain transactions, and conducting business through clearing organizations, which guarantee performance.

Our client activities involve the execution, settlement, and financing of various transactions on behalf of our clients. Client activities are transacted on either a cash or margin basis. Credit exposure associated with our private client business consists primarily of customer margin accounts, which are monitored daily and are collateralized. We monitor exposure to industry sectors and individual securities and perform analyses on a regular basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions.

We have accepted collateral in connection with resale agreements, securities borrowed transactions, and customer margin loans. Under many agreements, we are permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions. At March 31, 2020, the fair value of securities accepted as collateral where we are permitted to sell or repledge the securities was $2.2 billion, and the fair value of the collateral that had been sold or repledged was $475.5 million.

By using derivative instruments, we are exposed to credit and market risk on those derivative positions. Credit risk is equal to the fair value gain in a derivative, if the counterparty fails to perform. When the fair value of a derivative contract is positive, this generally indicates that the counterparty owes our company and, therefore, creates a repayment risk for our company. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, have no repayment risk. We minimize the credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by senior management.

Stifel Bancorp extends credit to individual and commercial borrowers through a variety of loan products, including residential and commercial mortgage loans, home equity loans, construction loans, and non-real-estate commercial and consumer loans. Bank loans are generally collateralized by real estate, real property, or other assets of the borrower. Stifel Bancorp’s loan policy includes criteria to adequately underwrite, document, monitor, and manage credit risk. Underwriting requires reviewing and documenting the fundamental characteristics of credit, including character, capacity to service the debt, capital, conditions, and collateral. Benchmark capital and coverage ratios are utilized, which include liquidity, debt service coverage, credit, working capital, and capital to asset ratios. Lending limits are established to include individual, collective, committee, and board authority. Monitoring credit risk is accomplished through defined loan review procedures, including frequency and scope.

We are subject to concentration risk if we hold large positions, extend large loans to, or have large commitments with a single counterparty, borrower, or group of similar counterparties or borrowers (i.e., in the same industry). Securities purchased under agreements to resell consist of securities issued by the U.S. government or its agencies. Receivables from and payables to clients and stock borrow and lending activities, both with a large number of clients and counterparties, and any potential concentration is carefully monitored. Stock borrow and lending activities are executed under master netting agreements, which gives our company right of offset in the event of counterparty default. Inventory and investment positions taken and commitments made, including underwritings, may involve exposure to individual issuers and businesses. We seek to limit this risk through careful review of counterparties and borrowers and the use of limits established by our senior management group, taking into consideration factors including the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment, and other positions or commitments outstanding.

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Operational Risk

Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems, and inadequacies or breaches in our control processes. We operate different businesses in diverse markets and are reliant on the ability of our associates and systems to process a large number of transactions. These risks are less direct than credit and market risk, but managing them is critical, particularly in a rapidly changing environment with increasing transaction volumes. In the event of a breakdown or improper operation of systems or improper action by associates, we could suffer financial loss, regulatory sanctions, and damage to our reputation. In order to mitigate and control operational risk, we have developed policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization and within such departments as Accounting, Operations, Information Technology, Legal, Compliance, and Internal Audit. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our various businesses are operating within established corporate policies and limits. Business continuity plans exist for critical systems, and redundancies are built into the systems as deemed appropriate.

Regulatory and Legal Risk

Legal risk includes the risk of private client group customer claims for sales practice violations. While these claims may not be the result of any wrongdoing, we do, at a minimum, incur costs associated with investigating and defending against such claims. See further discussion on our legal reserves policy under “Critical Accounting Policies and Estimates” in Item 2, Part I and “Legal Proceedings” in Item 1, Part II of this report. In addition, we are subject to potentially sizable adverse legal judgments or arbitration awards, and fines, penalties, and other sanctions for non-compliance with applicable legal and regulatory requirements. We are generally subject to extensive regulation by the SEC, FINRA, and state securities regulators in the different jurisdictions in which we conduct business. As a bank holding company, we are subject to regulation by the Federal Reserve. Our bank subsidiaries are subject to regulation by the FDIC. As a result, we are subject to a risk of loss resulting from failure to comply with banking laws. Our international subsidiary, SNEL, is subject to the regulatory supervision and requirements of the FCA in the United Kingdom. Our Canadian subsidiary, SNC, is subject to the regulatory supervision and requirements of the IIROC. We have comprehensive procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, the extension of credit, including margin loans, collection activities, money laundering, and record keeping. We act as an underwriter or selling group member in both equity and fixed income product offerings. Particularly when acting as lead or co-lead manager, we have potential legal exposure to claims relating to these securities offerings. To manage this exposure, a committee of senior executives review proposed underwriting commitments to assess the quality of the offering and the adequacy of due diligence investigation.

Our company, as a bank and financial holding company, is subject to regulation, including capital requirements, by the Federal Reserve. Stifel Bancorp is subject to various regulatory capital requirements administered by the Federal Deposit Insurance Corporation ("FDIC") and state banking authorities. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our company's and Stifel Bancorp's financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to, among other things, provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is accumulated and communicated to senior management, including the Chief Executive Officer and Chief Financial Officer, on a timely basis. Under the direction of the Chief Executive Officer and Chief Financial Officer, management has evaluated our disclosure controls and procedures as of March 31, 2020 and has concluded that the disclosure controls and procedures were adequate and effective as of such date.

Changes in Internal Control Over Financial Reporting

There have been no changes in our company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the three months ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please see our discussion set forth under Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2019 and Item 1. “Financial Statements” in our Form 10-Q for the quarter ended March 31, 2020.

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ITEM 1A. RI SK FACTORS

In addition to the information set forth in this quarterly report on Form 10‑Q, one should also carefully review and consider the information contained in our other reports and periodic filings that we make with the SEC, including, without limitation, the information contained under the caption “Item 1A. Risk Factors” in our annual report on Form 10‑K for the year ended December 31, 2019. Those risk factors could materially affect our business, financial condition, and results of operations. The risks that we describe in our public filings are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we presently deem to be immaterial, also may materially adversely affect our business, financial condition, and results of operations.

There have been no material changes in our risk factors from those disclosed under the caption “Item 1A. Risk Factors” to our annual report on Form 10-K for the year ended December 31, 2019, except for the following update:

Our results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.

The coronavirus disease (COVID-19) pandemic has, and will likely continue to, severely impact global economic conditions, resulting in substantial volatility in the global financial markets, increased unemployment, and operational challenges such as the temporary closures of businesses, sheltering-in-place directives and increased remote work protocols. Governments and central banks around the world have reacted to the economic crisis caused by the pandemic by implementing stimulus and liquidity programs and cutting interest rates, though it is unclear whether these or future actions will be successful in countering the economic disruption. If the pandemic is prolonged or the actions of governments and central banks are unsuccessful, the adverse impact on the global economy will deepen, and our results of operations and financial condition in future quarters will be adversely affected.

Towards the end of the first quarter of 2020 and into the second quarter of 2020, the pandemic impacted each of our business segments and such impact will likely be greater in future quarters if current conditions persist or worsen (e.g., decline and volatility of asset prices, reduction in interest rates, widening of credit spreads, credit deterioration, market volatility and reduced investment banking advisory activity). This resulted in significant decreases in the valuation of loans and commitments, investments and certain classes of trading assets, an increase in the allowance for credit losses, reduced net interest income, and reduced investment banking advisory fees. At the same time, increased revenues that we have realized for certain products related to high levels of client trading activity may not be replicated in future quarters.

Until the impact of the pandemic subsides, we expect to experience reduced client activity and demand for our products and services and higher credit and valuation losses in our loan, commitment and investment portfolios. We could also experience impairments of other financial assets and other negative impacts on our financial position, including possible constraints on capital and liquidity and possible reductions in our regulatory capital and liquidity ratios, as well as a higher cost of capital, and possible changes or downgrades to our credit ratings. In addition, the sharp decline in interest rates will further decrease interest margins in our lending businesses. A continued slowdown of commercial activity would cause overall investment banking revenues to decline and the decline in assets under management and client balances will also further reduce asset management and service revenues.

Operationally, although we have initiated a remote working protocol and restricted business travel of our workforce, if significant portions of our associates, including key personnel, are unable to work effectively because of illness, government actions, or other restrictions in connection with the pandemic, the impact of the pandemic on our businesses could be exacerbated. In addition, cybersecurity and operational risks may be heightened as a result of work-from-home arrangements.

Our business is dependent on the willingness and ability of our customers to conduct financial transactions. The continued spread of COVID-19, or another highly infectious or contagious disease, have caused and may continue to cause severe disruptions in such activities, as well as other aspects of conducting our business. These effects include restrictions on our employees’ ability to travel, as well as temporary closures of our facilities or the facilities of our customers, suppliers, or other vendors. We often recruit skilled professionals and new clients by visiting their offices or having them visit our offices. Consequently, travel restrictions or other disruptions that prevent us from meeting with professional prospects or potential new clients have adversely impacted and may continue to adversely impact our ability to recruit such professional prospects or engage potential new clients.

While the COVID-19 pandemic negatively impacted our results of operations in the first quarter of 2020 and is likely to continue to do so, the extent to which it, and the related global economic crisis, affect our businesses, results of operations and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and any recovery period, future actions taken by governmental authorities, central banks and other third parties in response to the pandemic, and the effects on our customers, counterparties, employees and third-party service providers. Moreover, the effects of the COVID-19 pandemic will heighten the other risks described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K. Even after the pandemic subsides, it is possible that the U.S. and other major economies will continue to experience a prolonged recession, which we expect would materially and adversely affect our businesses, results of operations and financial condition.

We have grown our asset management business in recent years, which has increased the risks associated with this business relative to our overall operations. The asset management fees we are paid are dependent upon the value of client assets in fee-based accounts in our Private Client Group segment, as well as AUM in our asset management business. Therefore, in periods of declining market

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values, the values of fee-based accounts and AUM could resultantly decline, which would negatively impact our revenues. In addition, below-market investment performance by our funds, portfolio managers, or financial advisors could result in reputational damage that might cause outflows or make it more difficult to attract new investors into our asset management products and thus further impact our business and financial condition.

Continued market volatility could also cause clients to move their investments to lower margin products, or withdraw them, which could have an adverse impact on our profitability. We could also experience a material reduction in trading volume and lower securities prices in times of market volatility, which would result in lower brokerage revenues, including losses on trading inventory. The fair values of certain of our investments have been and may continue to be negatively impacted, resulting in unrealized or realized losses on such investments.

We effect certain client securities transactions on either a cash or margin basis. We are subject to the risk of a further market decline, which could reduce the value of our collateral below the amount of the customers’ indebtedness. In addition, we offer securities-based lending through Stifel Bancorp. These security-based loans are also subject to the degree of concentrated or restricted positions, or, in the case of concentrated positions, appropriate liquidity of the underlying collateral or potential hedging strategies, which risks are heightened in an environment characterized by declining economic or market conditions as a result of COVID-19.

We are generally exposed to the risk that third parties that owe us money, securities, or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others. We actively buy securities from and sell securities to clients and counterparties in the normal course of our broker-dealers’ market-making and underwriting businesses, which exposes us to credit risk. Our credit risk and credit losses may increase to the extent our loans or investments are to borrowers or issuers who as a group may be uniquely or disproportionately affected by declining economic or market conditions as a result of COVID-19 such as those operating in the hotel, leisure, entertainment and restaurant sector. The deterioration of an individually large exposure due to COVID-19 could lead to additional loan loss provisions and/or charges-offs, or credit impairment of our investments, and subsequently have a material impact on our results of operations, financial condition, regulatory capital, and liquidity.

Decreases in short-term interest rates, such as those announced by the Federal Reserve late in our 2019 fiscal year and during the first fiscal quarter of 2020, have had a negative impact on our results, in particular on our net interest income, the difference between the interest earned on interest-earning assets and interest paid on funding sources. The Federal Reserve significantly further lowered interest rates in response to COVID-19 pandemic concerns. These market interest rate declines will negatively affect our results of operations.

Abrupt changes in market and general economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability and cause volatility in our results of operations.

Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of general economic conditions and financial market activity.

Our investment banking revenue, in the form of advisory services and underwriting, is directly related to general economic conditions and corresponding financial market activity. When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which reduces our investment banking revenues. Reduced expectations of United States economic growth or a decline in the global economic outlook could cause financial market activity to decrease and negatively affect our investment banking revenues.

In addition to the business risks set forth in the previous risk factors, global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, including, among other things, challenges to global trade or travel due to the continued spread of COVID-19 and any widening of the effect of the pandemic associated therewith, political and financial uncertainty in the United States and the European Union, renewed concern about the U.S. and other major economies, the reduction in business activity leading to a decrease in global demand for oil and natural gas and the resulting historically low prices for these commodities and complications involving terrorism and armed conflicts around the world. In particular, as it relates to COVID-19 and the associated pandemic, the extent of such effects will depend on future developments which are highly uncertain and cannot be predicted, including the geographic spread of the virus, the overall severity of the disease, the duration of the outbreak, the measures that may be taken by various governmental authorities in response to the outbreak (such as quarantines and travel restrictions) and the possible further impacts on the global economy. More generally, because our business is closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our business and overall results of operations.

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ITEM 2. UNREGISTERED SALES OF EQU ITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the quarter ended March 31, 2020. The following table sets forth information with respect to purchases made by or on behalf of Stifel Financial Corp. or any “affiliated purchaser” (as defined in Rule 10b-10(a)(3) under the Securities Exchange Act of 1934, as amended), of our common stock during the quarter ended March 31, 2020.

| Total Number of Shares Purchased |  |  | Average Price Paid per share |  |  | Total Number of Shares Purchased as Part of Publically Announced Plans |  |  | Maximum Number of Shares That May Yet be Purchased Under the Plan or Program |
January 1 - 31, 2020 |  | — |  |  | $ | — |  |  |  | — |  |  |  | 10,000,000 |
February 1 - 29, 2020 |  | 130,000 |  |  |  | 61.81 |  |  |  | 130,000 |  |  |  | 9,870,000 |
March 1 - 31, 2020 |  | 999,000 |  |  |  | 48.17 |  |  |  | 999,000 |  |  |  | 8,871,000 |
|  | 1,129,000 |  |  | $ | 49.74 |  |  |  | 1,129,000 |  |  |  |  |

We have an ongoing authorization from the Board of Directors to repurchase our common stock in the open market or in negotiated transactions. In January 2020, the Board of Directors approved the increase of an additional 4.9 million shares, bringing the authorized share repurchase amount to 10.0 million shares. At March 31, 2020, the maximum number of shares that may yet be purchased under this plan was 8.9 million.

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ITEM 6. EXHIBITS

Exhibit No. |  | Description
11.1 |  | Statement Re: Computation of per Share Earnings (The calculation of per share earnings is included in Part I, Item 1 in the Notes to Consolidated Financial Statements (Earnings Per Share) and is omitted here in accordance with Section (b)(11) of Item 601 of Regulation S-K).
31.1 |  | Rule 13a-14(a) Certification of Chief Executive Officer.
31.2 |  | Rule 13a-14(a) Certification of Chief Financial Officer.
32.1 |  | Section 1350 Certification of Chief Executive Officer.*
32.2 |  | Section 1350 Certification of Chief Financial Officer.*
101 104 |  | The following financial information, formatted in iXBRL (Inline Extensible Business Report Language), Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Statements of Financial Condition as of March 31, 2020 and December 31, 2019; (ii) Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019; (v) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2020 and 2019; (vi) Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019; and (vii) Notes to Consolidated Financial Statements. Cover Page Interactive Data File (embedded within the Inline XBRL document).

* | The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Stifel Financial Corp. under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SI GNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STIFEL FINANCIAL CORP.
/s/ Ronald J. Kruszewski
Ronald J. Kruszewski Chairman of the Board and Chief Executive Officer

/s/ James M. Marischen
James M. Marischen Chief Financial Officer

Date: May 7, 2020

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