- Net revenues of $895.8 million, increased 11.9% with the year-ago quarter, were the Company’s third highest quarterly net revenues.
- Record Institutional Group net revenues and fixed income brokerage revenues.
- Net income available to common shareholders of $103.0 million, or $1.39 per diluted common share.
- Non-GAAP net income available to common shareholders of $115.3 million, or $1.55 per diluted common share.
- Annualized return on average tangible common shareholders’ equity (1) was 20.7%.
- Non-GAAP annualized return on average tangible common shareholders’ equity (1) was 23.2%.
ST. LOUIS, July 29, 2020 (GLOBE NEWSWIRE) -- Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $103.0 million, or $1.39 per diluted common share on net revenues of $895.8 million for the three months ended June 30, 2020, compared with net income available to common shareholders of $103.8 million, or $1.31 per diluted common share, on net revenues of $800.8 million for the second quarter of 2019.
For the three months ended June 30, 2020, the Company reported non-GAAP net income available to common shareholders of $115.3 million, or $1.55 per diluted common share. The Company’s reported GAAP net income for the three months ended June 30, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.
Chairman’s Comments
“The benefits of the investments we have made in our business were again evident in our second quarter results. Net revenue and earnings per share were the third highest in our history. Our Institutional Group had a record quarter led by record fixed income brokerage revenue as well as strong investment banking results primarily from robust capital raising activity in both fixed income and equity. This helped to counter the impact of the market sell off in the first quarter and the zero rate environment had on revenue lines such as asset management and net interest income, respectively. In terms of the future, I remain cautiously optimistic. We enter the third quarter, with a strong and liquid balance sheet, our strongest capital ratios in nearly four years, and a solid and improving recruiting pipeline. While the economic outlook for the second half of the year remains unclear, I believe that the performance of our diversified financial services model will remain strong,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.
| Financial Highlights (Unaudited) | Three Months Ended | ||||||||||||||||||||||||||||||||
| ($ in 000s, except per share data) | GAAP 6/30/20 | GAAP 6/30/19 | % Change | GAAP 3/31/20 | % Change | Non-GAAP (2) 6/30/20 | Non-GAAP (2) 6/30/19 | % Change | |||||||||||||||||||||||||
| Net revenues | $ | 895,817 | $ | 800,787 | 11.9 | $ | 913,034 | (1.9 | ) | $ | 895,817 | $ | 800,787 | 11.9 | |||||||||||||||||||
| Net income applicable to Stifel Financial Corp. | $ | 107,887 | $ | 109,085 | (1.1 | ) | $ | 86,589 | 24.6 | $ | 120,178 | $ | 116,659 | 3.0 | |||||||||||||||||||
| Preferred dividends | 4,843 | 5,288 | (8.4 | ) | 4,844 | (0.0 | ) | 4,843 | 5,288 | (8.4 | ) | ||||||||||||||||||||||
| Net income available to common shareholders | $ | 103,044 | $ | 103,797 | (0.7 | ) | $ | 81,745 | 26.1 | $ | 115,335 | $ | 111,371 | 3.6 | |||||||||||||||||||
| Earnings per diluted common share | $ | 1.45 | $ | 1.38 | 5.1 | $ | 1.13 | 28.3 | $ | 1.62 | $ | 1.48 | 9.5 | ||||||||||||||||||||
| Earnings per diluted common share available to common shareholders | $ | 1.39 | $ | 1.31 | 6.1 | $ | 1.07 | 29.9 | $ | 1.55 | $ | 1.41 | 9.9 | ||||||||||||||||||||
| Compensation ratio | 61.1 | % | 58.3 | % | 63.2 | % | 60.0 | % | 57.9 | % | |||||||||||||||||||||||
| Non-compensation ratio | 22.9 | % | 23.2 | % | 24.2 | % | 22.2 | % | 22.3 | % | |||||||||||||||||||||||
| Pre-tax operating margin (3) | 16.0 | % | 18.5 | % | 12.6 | % | 17.8 | % | 19.8 | % | |||||||||||||||||||||||
For the six months ended June 30, 2020, the Company reported net income available to common shareholders of $184.8 million, or $2.44 per diluted common share on record net revenues of $1.8 billion, compared with net income available to common shareholders of $200.7 million, or $2.53 per diluted common share, on net revenues of $1.6 billion for the six months ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported non-GAAP net income available to common shareholders of $207.3 million, or $2.74 per diluted common share.
| Financial Highlights (Unaudited) | Six Months Ended | ||||||||||||||||||||||||
| ($ in 000s, except per share data) | GAAP 6/30/20 | GAAP 6/30/19 | % Change | Non-GAAP (2) 6/30/20 | Non-GAAP (2) 6/30/19 | % Change | |||||||||||||||||||
| Net revenues | $ | 1,808,851 | $ | 1,571,207 | 15.1 | $ | 1,809,030 | $ | 1,571,207 | 15.1 | |||||||||||||||
| Net income applicable to Stifel Financial Corp. | $ | 194,476 | $ | 208,292 | (6.6 | ) | $ | 216,955 | $ | 223,523 | (2.9 | ) | |||||||||||||
| Preferred dividends | 9,687 | 7,632 | 26.9 | 9,687 | 7,632 | 26.9 | |||||||||||||||||||
| Net income available to common shareholders | $ | 184,789 | $ | 200,660 | (7.9 | ) | $ | 207,268 | $ | 215,891 | (4.0 | ) | |||||||||||||
| Earnings per diluted common share | $ | 2.57 | $ | 2.63 | (2.3 | ) | $ | 2.87 | $ | 2.82 | 1.8 | ||||||||||||||
| Earnings per diluted common share available to common shareholders | $ | 2.44 | $ | 2.53 | (3.6 | ) | $ | 2.74 | $ | 2.73 | 0.4 | ||||||||||||||
| Compensation ratio | 62.2 | % | 58.9 | % | 61.3 | % | 58.4 | % | |||||||||||||||||
| Non-compensation ratio | 23.5 | % | 22.9 | % | 22.8 | % | 22.2 | % | |||||||||||||||||
| Pre-tax operating margin (4) | 14.3 | % | 18.2 | % | 15.9 | % | 19.4 | % | |||||||||||||||||
Net Revenues
Net revenues were $895.8 million for the second quarter of 2020, an 11.9% increase from the second quarter of 2019 and a 1.9% decrease from the first quarter of 2020. Net revenues, compared with the second quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and advisory fee revenues, partially offset by lower net interest income and asset management and service fees. Net revenues, compared with the first quarter of 2020, reflected increased advisory fee revenues, principal transaction fee revenues, and capital raising revenues, partially offset by lower net interest income, asset management and service fees, and commission revenues.
The operating environment continued to be impacted by the spread of the COVID-19 virus which caused a sharp contraction in global economic activity and increased market volatility. Economic indicators generally improved as the quarter progressed, following significant declines in March and April, as economies began to reopen and central banks, along with governments, continued to implement monetary easing measures and provide fiscal stimulus to support the economy. These contributed to higher global equity prices and tighter credit spreads compared with the end of the first quarter of 2020.
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions, were $343.0 million, a 31.2% increase compared with the second quarter of 2019 and a 1.9% decrease compared with the first quarter of 2020.
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | |||||||||||||||
| Global Wealth Management | $ | 159,123 | $ | 162,388 | (2.0 | ) | $ | 179,879 | (11.5 | ) | ||||||||||
| Institutional brokerage: | ||||||||||||||||||||
| Equity capital markets | 63,193 | 40,670 | 55.4 | 70,195 | (10.0 | ) | ||||||||||||||
| Fixed income capital markets | 120,731 | 58,387 | 106.8 | 99,688 | 21.1 | |||||||||||||||
| Total institutional brokerage | 183,924 | 99,057 | 85.7 | 169,883 | 8.3 | |||||||||||||||
| Total brokerage revenues (5) | $ | 343,047 | $ | 261,445 | 31.2 | $ | 349,762 | (1.9 | ) | |||||||||||
- Global Wealth Management brokerage revenues were $159.1 million, a 2.0% decrease compared with the second quarter of 2019 and an 11.5% decrease compared with the first quarter of 2020.
- Institutional equity brokerage revenues were $63.2 million, a 55.4% increase compared with the second quarter of 2019 and a 10.0% decrease compared with the first quarter of 2020.
- Institutional fixed income brokerage revenues were $120.7 million, a 106.8% increase compared with the second quarter of 2019 and a 21.1% increase compared with the first quarter of 2020.
Investment Banking Revenues
Investment banking revenues were $217.0 million, a 20.8% increase compared with the second quarter of 2019 and a 20.9% increase compared with the first quarter of 2020.
| Three Months Ended | ||||||||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | |||||||||||||||||||
| Capital raising: | ||||||||||||||||||||||||
| Global Wealth Management | $ | 8,016 | $ | 10,559 | (24.1 | ) | $ | 10,314 | (22.3 | ) | ||||||||||||||
| Equity capital markets | 63,277 | 59,156 | 7.0 | 60,195 | 5.1 | |||||||||||||||||||
| Fixed income capital markets | 47,904 | 26,997 | 77.4 | 32,887 | 45.7 | |||||||||||||||||||
| Institutional Group | 111,181 | 86,153 | 29.1 | 93,082 | 19.4 | |||||||||||||||||||
| Total capital raising (5) | 119,197 | 96,712 | 23.2 | 103,396 | 15.3 | |||||||||||||||||||
| Advisory fees (5) | 97,838 | 82,905 | 18.0 | 76,072 | 28.6 | |||||||||||||||||||
| Total investment banking | $ | 217,035 | $ | 179,617 | 20.8 | $ | 179,468 | 20.9 | ||||||||||||||||
- Global Wealth Management capital raising revenues were $8.0 million, a 24.1% decrease compared with the second quarter of 2019 and a 22.3% decrease compared with the first quarter of 2020.
- Institutional equity capital raising revenues were $63.3 million, a 7.0% increase compared with the second quarter of 2019 and a 5.1% increase compared with the first quarter of 2020.
- Institutional fixed income capital raising revenues were $47.9 million, a 77.4% increase compared with the second quarter of 2019 and a 45.7% increase compared with the first quarter of 2020.
- Advisory fee revenues were $97.8 million, an 18.0% increase compared with the second quarter of 2019 and a 28.6% increase compared with the first quarter of 2020.
Asset Management and Service Fee Revenues
Asset management and service fee revenues were $198.9 million, a 5.8% decrease compared with the second quarter of 2019 and a 16.3% decrease compared with the first quarter of 2020. The decrease from the comparative period in 2019 is primarily attributable to lower asset values at the beginning of the second quarter of 2020, partially offset by fee-based asset flows. See Asset Management and Service Fee Break-down table.
Net Interest Income
Net interest income of $115.3 million, a 14.6% decrease compared with the second quarter of 2019 and a 15.7% decrease compared with the first quarter of 2020. See Net Interest Income Analysis table.
- Interest income was $128.4 million, a 31.7% decrease compared with the second quarter of 2019 and a 20.4% decrease compared with the first quarter of 2020.
- Interest expense was $13.1 million, a 75.3% decrease compared with the second quarter of 2019 and a 46.3% decrease compared with the first quarter of 2020.
Compensation and Benefits Expenses
For the quarter ended June 30, 2020, compensation and benefits expenses were $547.2 million, which included $9.7 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $466.9 million in the second quarter of 2019 and $577.2 million in the first quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 60.0% in the second quarter of 2020 (non-GAAP measure).
The increase in compensation and benefits expenses, compared with the second quarter of 2019, is primarily attributable to higher volume and revenue-related expense and investments.
| Three Months Ended | Six Months Ended | |||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | 6/30/20 | 6/30/19 | ||||||||||||
| GAAP compensation and benefits | $ | 547,174 | $ | 466,861 | $ | 1,124,353 | $ | 924,975 | ||||||||
| As a percentage of net revenues | 61.1 | % | 58.3 | % | 62.2 | % | 58.9 | % | ||||||||
| Non-GAAP adjustments: (6) | ||||||||||||||||
| Merger-related and severance | (9,710 | ) | (3,304 | ) | (16,137 | ) | (7,236 | ) | ||||||||
| Non-GAAP compensation and benefits | $ | 537,464 | $ | 463,557 | $ | 1,108,216 | $ | 917,739 | ||||||||
| As a percentage of non-GAAP net revenues | 60.0 | % | 57.9 | % | 61.3 | % | 58.4 | % | ||||||||
Non-Compensation Operating Expenses
For the quarter ended June 30, 2020, non-compensation operating expenses were $205.7 million, which included $6.5 million of merger-related expenses (non-GAAP adjustments). This compares with $185.9 million in the second quarter of 2019 and $220.7 million in the first quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2020 were 22.2% (non-GAAP measure).
The increase in non-compensation operating expenses, compared with the second quarter of 2019, is primarily attributable to the increase in the provision for credit losses as a result of the impact of COVID-19 on the broader economic environment, volume-related expenses, net provisions for regulatory matters, and professional fees, partially offset by decreases in travel and conference-related expenses as a result of COVID-19. In addition, the second quarter of 2020 included provisions related to growth in loans and the impact of accounting for credit losses under the CECL standard (7).
| Three Months Ended | Six Months Ended | |||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | 6/30/20 | 6/30/19 | ||||||||||||
| GAAP non-compensation expenses | $ | 205,683 | $ | 185,944 | $ | 426,432 | $ | 360,441 | ||||||||
| As a percentage of net revenues | 22.9 | % | 23.2 | % | 23.5 | % | 22.9 | % | ||||||||
| Non-GAAP adjustments: (6) | ||||||||||||||||
| Merger-related | (6,549 | ) | (3,417 | ) | (13,453 | ) | (7,676 | ) | ||||||||
| Litigation-related | — | (3,507 | ) | — | (3,507 | ) | ||||||||||
| (6,549 | ) | (6,924 | ) | (13,453 | ) | (11,183 | ) | |||||||||
| Non-GAAP non-compensation expenses | $ | 199,134 | $ | 179,020 | $ | 412,979 | $ | 349,258 | ||||||||
| As a percentage of non-GAAP net revenues | 22.2 | % | 22.3 | % | 22.8 | % | 22.2 | % | ||||||||
Provision for Income Taxes
The GAAP effective income tax rate for the quarter ended June 30, 2020 was 24.5%. This compares with an effective income tax rate of 25.9% for the second quarter of 2019 and 24.8% for the first quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended June 30, 2020 was 24.5%.
| Three Months Ended | Six Months Ended | |||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | 6/30/20 | 6/30/19 | ||||||||||||
| GAAP provision for income taxes | $ | 35,073 | $ | 38,225 | $ | 63,590 | $ | 76,595 | ||||||||
| GAAP effective tax rate | 24.5 | % | 25.9 | % | 24.6 | % | 26.9 | % | ||||||||
| Non-GAAP adjustments: (6) | ||||||||||||||||
| Merger-related, litigation-related, and severance | 3,986 | 2,752 | 7,286 | 4,955 | ||||||||||||
| Other | (18 | ) | (98 | ) | 4 | (1,767 | ) | |||||||||
| 3,968 | 2,654 | 7,290 | 3,188 | |||||||||||||
| Non-GAAP provision for income taxes | $ | 39,041 | $ | 40,879 | $ | 70,880 | $ | 79,783 | ||||||||
| Non-GAAP effective tax rate | 24.5 | % | 25.9 | % | 24.6 | % | 26.3 | % | ||||||||
Conference Call Information
Stifel Financial Corp. will host its first quarter 2020 financial results conference call on Wednesday, July 29, 2020, at 9:30 a.m. Eastern Time. The conference call may include forward-looking statements.
All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID 2565812. A live audio webcast of the call, as well as a presentation highlighting the Company’s results, will be available through the Company’s web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.
Company Information
Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank and Stifel Bank & Trust offer a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer trust and related services. To learn more about Stifel, please visit the Company’s website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.
Cautionary Note Regarding Forward-Looking Statements
This earnings release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020 and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as to the date they are made. The Company disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.
| Summary Results of Operations (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| ($ in 000s, except per share amounts) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | 6/30/20 | 6/30/19 | % Change | |||||||||||||||||
| Revenues: | |||||||||||||||||||||||||
| Commissions | $ | 177,028 | $ | 164,981 | 7.3 | $ | 211,098 | (16.1 | ) | $ | 388,126 | $ | 320,430 | 21.1 | |||||||||||
| Principal transactions | 166,017 | 96,464 | 72.1 | 138,666 | 19.7 | 304,683 | 200,496 | 52.0 | |||||||||||||||||
| Brokerage revenues | 343,045 | 261,445 | 31.2 | 349,764 | (1.9 | ) | 692,809 | 520,926 | 33.0 | ||||||||||||||||
| Advisory fees | 97,838 | 82,911 | 18.0 | 76,072 | 28.6 | 173,910 | 187,801 | (7.4 | ) | ||||||||||||||||
| Capital raising | 119,197 | 96,706 | 23.3 | 103,396 | 15.3 | 222,593 | 153,656 | 44.9 | |||||||||||||||||
| Investment banking | 217,035 | 179,617 | 20.8 | 179,468 | 20.9 | 396,503 | 341,457 | 16.1 | |||||||||||||||||
| Asset management and service fees | 198,939 | 211,171 | (5.8 | ) | 237,775 | (16.3 | ) | 436,714 | 406,438 | 7.4 | |||||||||||||||
| Other income | 21,514 | 13,505 | 59.3 | 9,207 | 133.7 | 30,721 | 25,714 | 19.5 | |||||||||||||||||
| Operating revenues | 780,533 | 665,738 | 17.2 | 776,214 | 0.6 | 1,556,747 | 1,294,535 | 20.3 | |||||||||||||||||
| Interest revenue | 128,368 | 187,940 | (31.7 | ) | 161,177 | (20.4 | ) | 289,545 | 379,011 | (23.6 | ) | ||||||||||||||
| Total revenues | 908,901 | 853,678 | 6.5 | 937,391 | (3.0 | ) | 1,846,292 | 1,673,546 | 10.3 | ||||||||||||||||
| Interest expense | 13,084 | 52,891 | (75.3 | ) | 24,357 | (46.3 | ) | 37,441 | 102,339 | (63.4 | ) | ||||||||||||||
| Net revenues | 895,817 | 800,787 | 11.9 | 913,034 | (1.9 | ) | 1,808,851 | 1,571,207 | 15.1 | ||||||||||||||||
| Non-interest expenses: | |||||||||||||||||||||||||
| Compensation and benefits | 547,174 | 466,861 | 17.2 | 577,179 | (5.2 | ) | 1,124,353 | 924,975 | 21.6 | ||||||||||||||||
| Occupancy and equipment rental | 66,264 | 61,055 | 8.5 | 66,073 | 0.3 | 132,337 | 119,917 | 10.4 | |||||||||||||||||
| Communication and office supplies | 43,046 | 35,069 | 22.7 | 41,124 | 4.7 | 84,170 | 70,766 | 18.9 | |||||||||||||||||
| Commissions and floor brokerage | 15,177 | 11,008 | 37.9 | 14,842 | 2.3 | 30,019 | 21,964 | 36.7 | |||||||||||||||||
| Provision for credit losses | 19,210 | 2,353 | 716.4 | 16,068 | 19.6 | 35,278 | 4,636 | 661.0 | |||||||||||||||||
| Other operating expenses | 61,986 | 76,459 | (18.9 | ) | 82,642 | (25.0 | ) | 144,628 | 143,158 | 1.0 | |||||||||||||||
| Total non-interest expenses | 752,857 | 652,805 | 15.3 | 797,928 | (5.6 | ) | 1,550,785 | 1,285,416 | 20.6 | ||||||||||||||||
| Income before income taxes | 142,960 | 147,982 | (3.4 | ) | 115,106 | 24.2 | 258,066 | 285,791 | (9.7 | ) | |||||||||||||||
| Provision for income taxes | 35,073 | 38,225 | (8.2 | ) | 28,517 | 23.0 | 63,590 | 76,595 | (17.0 | ) | |||||||||||||||
| Net income | 107,887 | 109,757 | (1.7 | ) | 86,589 | 24.6 | 194,476 | 209,196 | (7.0 | ) | |||||||||||||||
| Net income applicable to non-controlling interests | — | 672 | n/m | — | — | — | 904 | n/m | |||||||||||||||||
| Net income applicable to Stifel Financial Corp. | 107,887 | 109,085 | (1.1 | ) | 86,589 | 24.6 | 194,476 | 208,292 | (6.6 | ) | |||||||||||||||
| Preferred dividends | 4,843 | 5,288 | (8.4 | ) | 4,844 | (0.0 | ) | 9,687 | 7,632 | 26.9 | |||||||||||||||
| Net income available to common shareholders | $ | 103,044 | $ | 103,797 | (0.7 | ) | $ | 81,745 | 26.1 | $ | 184,789 | $ | 200,660 | (7.9 | ) | ||||||||||
| Earnings per common share: | |||||||||||||||||||||||||
| Basic | $ | 1.46 | $ | 1.43 | 2.1 | $ | 1.15 | 27.0 | $ | 2.61 | $ | 2.74 | (4.7 | ) | |||||||||||
| Diluted | $ | 1.39 | $ | 1.31 | 6.1 | $ | 1.07 | 29.9 | $ | 2.44 | $ | 2.53 | (3.6 | ) | |||||||||||
| Cash dividends declared per common share | $ | 0.17 | $ | 0.15 | 13.3 | $ | 0.17 | — | $ | 0.34 | $ | 0.30 | 13.3 | ||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||||
| Basic | 70,527 | 72,519 | (2.7 | ) | 71,286 | (1.1 | ) | 70,905 | 73,180 | (3.1 | ) | ||||||||||||||
| Diluted | 74,387 | 79,079 | (5.9 | ) | 76,619 | (2.9 | ) | 75,651 | 79,160 | (4.4 | ) | ||||||||||||||
| Summary Segment Results (Unaudited) | ||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | 6/30/20 | 6/30/19 | % Change | ||||||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 505,782 | $ | 532,433 | (5.0 | ) | $ | 582,956 | (13.2 | ) | $ | 1,088,738 | $ | 1,043,043 | 4.4 | |||||||||||||||
| Institutional Group | 398,096 | 270,602 | 47.1 | 332,238 | 19.8 | 730,334 | 531,888 | 37.3 | ||||||||||||||||||||||
| Other | (8,061 | ) | (2,248 | ) | n/m | (2,160 | ) | n/m | (10,221 | ) | (3,724 | ) | n/m | |||||||||||||||||
| Total net revenues | $ | 895,817 | $ | 800,787 | 11.9 | $ | 913,034 | (1.9 | ) | $ | 1,808,851 | $ | 1,571,207 | 15.1 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 349,457 | $ | 340,081 | 2.8 | $ | 388,789 | (10.1 | ) | $ | 738,246 | $ | 656,201 | 12.5 | ||||||||||||||||
| Institutional Group | 315,047 | 231,300 | 36.2 | 290,498 | 8.5 | 605,545 | 460,382 | 31.5 | ||||||||||||||||||||||
| Other | 88,353 | 81,424 | 8.5 | 118,641 | (25.5 | ) | 206,994 | 168,833 | 22.6 | |||||||||||||||||||||
| Total operating expenses | $ | 752,857 | $ | 652,805 | 15.3 | $ | 797,928 | (5.6 | ) | $ | 1,550,785 | $ | 1,285,416 | 20.6 | ||||||||||||||||
| Operating contribution: | ||||||||||||||||||||||||||||||
| Global Wealth Management | $ | 156,325 | $ | 192,352 | (18.7 | ) | $ | 194,167 | (19.5 | ) | $ | 350,492 | $ | 386,842 | (9.4 | ) | ||||||||||||||
| Institutional Group | 83,049 | 39,302 | 111.3 | 41,740 | 99.0 | 124,789 | 71,506 | 74.5 | ||||||||||||||||||||||
| Other | (96,414 | ) | (83,672 | ) | 15.2 | (120,801 | ) | (20.2 | ) | (217,215 | ) | (172,557 | ) | 25.9 | ||||||||||||||||
| Income before income taxes | $ | 142,960 | $ | 147,982 | (3.4 | ) | $ | 115,106 | 24.2 | $ | 258,066 | $ | 285,791 | (9.7 | ) | |||||||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||||||||||||
| Compensation and benefits | ||||||||||||||||||||||||||||||
| Global Wealth Management | 51.1 | 49.3 | 51.2 | 51.1 | 48.9 | |||||||||||||||||||||||||
| Institutional Group | 60.6 | 57.6 | 62.0 | 61.3 | 59.3 | |||||||||||||||||||||||||
| Non-comp. operating expenses | ||||||||||||||||||||||||||||||
| Global Wealth Management | 18.0 | 14.6 | 15.5 | 16.7 | 14.0 | |||||||||||||||||||||||||
| Institutional Group | 18.5 | 27.9 | 25.4 | 21.6 | 27.3 | |||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||||||
| Global Wealth Management | 30.9 | 36.1 | 33.3 | 32.2 | 37.1 | |||||||||||||||||||||||||
| Institutional Group | 20.9 | 14.5 | 12.6 | 17.1 | 13.4 | |||||||||||||||||||||||||
| Consolidated pre-tax margin | 16.0 | 18.5 | 12.6 | 14.3 | 18.2 | |||||||||||||||||||||||||
| Financial metrics (unaudited): | As of and For the Three Months Ended | ||||||||
| ($ in 000s, except percentages and per share amounts) | 6/30/20 | 6/30/19 | 3/31/20 | ||||||
| Total assets | $ | 25,624,225 | $ | 24,343,597 | $ | 25,896,006 | |||
| Total Stifel Financial shareholders' equity | $ | 3,884,060 | $ | 3,429,126 | $ | 3,470,326 | |||
| Book value per common share (8) | $ | 48.84 | $ | 44.68 | $ | 46.13 | |||
| Return on common equity (9) | 12.6 | % | 13.4 | % | 10.0 | % | |||
| Non-GAAP return on common equity (2) (9) | 14.1 | % | 14.3 | % | 11.2 | % | |||
| Return on tangible common equity (1) | 20.7 | % | 21.1 | % | 16.6 | % | |||
| Non-GAAP return on tangible common equity (1) (2) | 23.2 | % | 22.6 | % | 18.6 | % | |||
| Tier 1 common capital ratio (10) | 15.3 | % | 15.6 | % | 14.3 | % | |||
| Tier 1 risk based capital ratio (10) | 19.3 | % | 18.0 | % | 16.6 | % | |||
| Tier 1 leverage capital ratio (10) | 11.0 | % | 10.0 | % | 9.6 | % | |||
| Pre-tax margin on net revenues | 16.0 | % | 18.5 | % | 12.6 | % | |||
| Non-GAAP pre-tax margin on net revenues (2) (3) | 17.8 | % | 19.8 | % | 14.1 | % | |||
| Effective tax rate | 24.5 | % | 25.9 | % | 24.8 | % | |||
| Non-GAAP effective tax rate (2) | 24.5 | % | 25.9 | % | 24.8 | % | |||
| Statistical Information (unaudited): | As of and For the Three Months Ended | |||||||||||||||||||
| ($ in 000s, except financial advisors and locations) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | |||||||||||||||
| Financial advisors | 2,138 | 2,097 | 2.0 | 2,130 | 0.4 | |||||||||||||||
| Independent contractors | 94 | 96 | (2.1 | ) | 94 | — | ||||||||||||||
| Total financial advisors | 2,232 | 2,193 | 1.8 | 2,224 | 0.4 | |||||||||||||||
| Locations | 447 | 413 | 8.2 | 447 | — | |||||||||||||||
| Total client assets | $ | 306,235,000 | $ | 305,233,000 | 0.3 | $ | 276,627,000 | 10.7 | ||||||||||||
| Fee-based client assets | $ | 106,218,000 | $ | 103,824,000 | 2.3 | $ | 93,633,000 | 13.4 | ||||||||||||
| Client money market and insured product | $ | 18,664,000 | $ | 13,674,000 | 36.5 | $ | 17,234,000 | 8.3 | ||||||||||||
| Secured client lending (11) | $ | 2,563,773 | $ | 3,251,723 | (21.2 | ) | $ | 3,148,790 | (18.6 | ) | ||||||||||
| Asset Management and Service Fee Break-down (unaudited) | ||||||||||||||||||||
| Asset Management and Service Fee Revenues: | Three Months Ended | |||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | |||||||||||||||
| Private Client Group (12) | $ | 164,403 | $ | 164,554 | (0.1 | ) | $ | 193,260 | (14.9 | ) | ||||||||||
| Asset Management | 23,769 | 29,485 | (19.4 | ) | 29,762 | (20.1 | ) | |||||||||||||
| Third-party Bank Sweep Program | 522 | 6,869 | (92.4 | ) | 3,308 | (84.2 | ) | |||||||||||||
| Other (13) | 10,245 | 10,263 | (0.2 | ) | 11,445 | (10.5 | ) | |||||||||||||
| Total asset management and service fee revenues | $ | 198,939 | $ | 211,171 | (5.8 | ) | $ | 237,775 | (16.3 | ) | ||||||||||
| Fee-based Assets: | Three Months Ended | |||||||||||||||||||
| ($ in millions) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | |||||||||||||||
| Private Client Group (12) | $ | 91,360 | $ | 80,983 | 12.8 | $ | 80,617 | 13.3 | ||||||||||||
| Asset Management | 25,706 | 33,156 | (22.5 | ) | 22,752 | 13.0 | ||||||||||||||
| Elimination (14) | (10,848 | ) | (10,315 | ) | 5.2 | (9,736 | ) | 11.4 | ||||||||||||
| Total fee-based assets | $ | 106,218 | $ | 103,824 | 2.3 | $ | 93,633 | 13.4 | ||||||||||||
| Individual Program Banks | $ | 3,007 | $ | 1,459 | 106.1 | $ | 1,491 | 101.7 | ||||||||||||
| ROA (bps) (15) | ||||||||||||||||||||
| Private Client Group (12) | 81.6 | 89.5 | 83.9 | |||||||||||||||||
| Asset Management | 37.0 | 35.6 | 38.0 | |||||||||||||||||
| Individual Program Banks | 7.1 | 163.6 | 95.0 | |||||||||||||||||
| Consolidated Net Interest Income Analysis (Unaudited): | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | ||||||||||||||||||||||||||||||||||
| ($ in millions, except percentages) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | |||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
| Cash and federal funds sold | $ | 1,674.0 | $ | 1.0 | 0.24 | % | $ | 750.4 | $ | 4.3 | 2.31 | % | $ | 931.8 | $ | 3.7 | 1.58 | % | ||||||||||||||||||
| Financial instruments owned | 761.7 | 2.9 | 1.50 | 1,320.5 | 6.4 | 1.94 | 1,076.6 | 4.6 | 1.70 | |||||||||||||||||||||||||||
| Margin balances | 981.5 | 6.4 | 2.59 | 1,291.5 | 13.7 | 4.23 | 1,231.7 | 10.1 | 3.29 | |||||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 4,842.0 | 32.6 | 2.70 | 4,508.4 | 46.0 | 4.08 | 4,538.5 | 37.0 | 3.26 | |||||||||||||||||||||||||||
| Mortgage-backed securities | 877.2 | 4.6 | 2.09 | 1,470.9 | 8.6 | 2.33 | 1,094.2 | 6.0 | 2.18 | |||||||||||||||||||||||||||
| Corporate fixed income securities | 648.9 | 4.2 | 2.59 | 915.0 | 6.9 | 3.02 | 732.8 | 5.0 | 2.76 | |||||||||||||||||||||||||||
| State and municipal securities | 12.2 | 0.1 | 2.19 | 48.0 | 0.2 | 1.85 | 18.4 | 0.1 | 2.13 | |||||||||||||||||||||||||||
| Other | 5.3 | — | 2.02 | — | — | — | 3.9 | — | 2.17 | |||||||||||||||||||||||||||
| Total Investments | 6,385.6 | 41.5 | 2.60 | 6,942.3 | 61.7 | 3.56 | 6,387.8 | 48.1 | 3.01 | |||||||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 4,095.4 | 31.8 | 3.10 | 3,337.4 | 41.3 | 4.95 | 3,560.3 | 38.0 | 4.27 | |||||||||||||||||||||||||||
| Residential real estate | 3,589.2 | 25.6 | 2.85 | 2,953.7 | 22.5 | 3.05 | 3,416.1 | 25.3 | 2.96 | |||||||||||||||||||||||||||
| Securities-based loans | 1,789.2 | 9.9 | 2.22 | 1,916.3 | 20.2 | 4.21 | 2,063.8 | 16.5 | 3.19 | |||||||||||||||||||||||||||
| Commercial real estate | 402.6 | 4.0 | 3.98 | 354.3 | 5.0 | 5.63 | 445.0 | 5.8 | 5.22 | |||||||||||||||||||||||||||
| Loans held for sale | 486.7 | 3.3 | 2.68 | 178.6 | 1.8 | 4.02 | 374.5 | 4.0 | 4.26 | |||||||||||||||||||||||||||
| Other | 546.3 | 4.6 | 3.36 | 377.9 | 5.1 | 5.38 | 500.1 | 5.6 | 4.46 | |||||||||||||||||||||||||||
| Total Loans | 10,909.4 | 79.2 | 2.90 | 9,118.2 | 95.9 | 4.21 | 10,359.8 | 95.2 | 3.67 | |||||||||||||||||||||||||||
| Other interest-bearing assets | 476.3 | (2.6 | ) | (2.15 | ) | 831.6 | 5.9 | 2.86 | 607.9 | (0.5 | ) | (0.30 | ) | |||||||||||||||||||||||
| Total interest-earning assets/interest income | 21,188.5 | 128.4 | 2.42 | 20,254.5 | 187.9 | 3.71 | 20,595.6 | 161.2 | 3.13 | |||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 11.4 | 0.1 | 2.83 | 29.8 | 0.2 | 3.16 | 91.3 | 0.2 | 0.88 | |||||||||||||||||||||||||||
| Senior notes | 1,195.0 | 13.1 | 4.38 | 1,016.2 | 11.1 | 4.38 | 1,017.1 | 11.2 | 4.40 | |||||||||||||||||||||||||||
| Deposits | 16,676.5 | 2.3 | 0.05 | 14,660.7 | 29.3 | 0.80 | 15,377.9 | 9.6 | 0.25 | |||||||||||||||||||||||||||
| FHLB | 250.8 | 0.7 | 1.09 | 550.2 | 2.9 | 2.12 | 590.5 | 2.4 | 1.59 | |||||||||||||||||||||||||||
| Other interest-bearing liabilities | 1,179.2 | (3.1 | ) | (1.03 | ) | 1,764.4 | 9.4 | 2.10 | 1,628.1 | 1.0 | 0.26 | |||||||||||||||||||||||||
| Total interest-bearing liabilities/interest expense | $ | 19,312.9 | $ | 13.1 | 0.27 | % | $ | 18,021.3 | $ | 52.9 | 1.17 | % | $ | 18,704.9 | $ | 24.4 | 0.52 | % | ||||||||||||||||||
| Net interest income/margin | $ | 115.3 | 2.18 | % | $ | 135.0 | 2.67 | % | $ | 136.8 | 2.66 | % | ||||||||||||||||||||||||
| Stifel Bancorp, Inc. (16) Net Interest Income Analysis (Unaudited): | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | ||||||||||||||||||||||||||||||||||
| ($ in millions, except percentages) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | |||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
| Cash and federal funds sold | $ | 961.1 | $ | 0.3 | 0.13 | % | $ | 330.6 | $ | 1.8 | 2.15 | % | $ | 446.0 | $ | 1.2 | 1.10 | % | ||||||||||||||||||
| Investments | 6,385.6 | 41.5 | 2.60 | 6,942.3 | 61.7 | 3.56 | 6,387.8 | 48.1 | 3.01 | |||||||||||||||||||||||||||
| Loans | 10,909.4 | 79.2 | 2.90 | 9,118.2 | 95.9 | 4.21 | 10,359.8 | 95.2 | 3.67 | |||||||||||||||||||||||||||
| Other interest-bearing assets | 46.7 | 0.3 | 2.46 | 57.2 | 0.6 | 4.38 | 59.6 | 0.6 | 4.02 | |||||||||||||||||||||||||||
| Total interest-earning assets/interest income | 18,302.8 | 121.3 | 2.65 | 16,448.3 | 160.0 | 3.89 | 17,253.2 | 145.1 | 3.36 | |||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Deposits | 16,676.5 | 2.3 | 0.05 | 14,660.7 | 29.3 | 0.80 | 15,377.9 | 9.6 | 0.25 | |||||||||||||||||||||||||||
| FHLB | 250.8 | 0.7 | 1.09 | 550.2 | 2.9 | 2.12 | 590.5 | 2.4 | 1.59 | |||||||||||||||||||||||||||
| Other interest-bearing liabilities | 1.5 | — | 6.71 | 1.7 | 0.1 | 6.73 | 1.6 | — | 7.09 | |||||||||||||||||||||||||||
| Total interest-bearing liabilities/interest expense | $ | 16,928.8 | 3.0 | 0.07 | % | $ | 15,212.6 | 32.3 | 0.85 | % | $ | 15,970.0 | 12.0 | 0.30 | % | |||||||||||||||||||||
| Net interest income/margin | $ | 118.3 | 2.59 | % | $ | 127.7 | 3.11 | % | $ | 133.1 | 3.09 | % | ||||||||||||||||||||||||
| Stifel Bancorp, Inc. (16) - a component of Global Wealth Management | |||||||||||||||||||||||||||||||
| Selected operating data (unaudited): | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| ($ in 000s, except percentages) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | 6/30/20 | 6/30/19 | % Change | |||||||||||||||||||||||
| Net interest income | $ | 118,298 | $ | 127,714 | (7.4 | ) | $ | 133,131 | (11.1 | ) | $ | 251,429 | $ | 262,278 | (4.1 | ) | |||||||||||||||
| Credit loss provision | 19,210 | 2,353 | 716.4 | 16,068 | 19.6 | 35,278 | 4,636 | 661.0 | |||||||||||||||||||||||
| Charge-offs | 150 | 54 | 177.8 | 20 | 650.0 | 170 | 110 | 54.5 | |||||||||||||||||||||||
| Net interest margin | 2.59 | % | 3.11 | % | (52) bps | 3.09 | % | (50) bps | 2.83 | % | 3.14 | % | (31) bps | ||||||||||||||||||
| Financial Metrics (unaudited): | As of | |||||||||||
| ($ in 000s, except percentages) | 6/30/20 | 6/30/19 | 3/31/20 | |||||||||
| Total assets | $ | 18,123,326 | $ | 16,645,984 | $ | 18,442,914 | ||||||
| Total shareholders' equity | 1,378,096 | 1,236,318 | 1,224,307 | |||||||||
| Total loans, net (includes loans held for sale) | 10,923,212 | 9,127,836 | 10,565,287 | |||||||||
| Total deposits | 16,302,281 | 14,901,061 | 16,880,933 | |||||||||
| Available-for-sale securities, at fair value | 3,172,160 | 2,702,211 | 3,363,961 | |||||||||
| Held-to-maturity securities, at amortized cost | 3,083,126 | 3,957,629 | 3,083,065 | |||||||||
| Commercial and industrial | 4,149,307 | 3,338,127 | 3,813,862 | |||||||||
| Residential real estate | 3,710,657 | 2,984,725 | 3,495,136 | |||||||||
| Securities-based loans | 1,716,786 | 1,962,528 | 1,945,371 | |||||||||
| Commercial real estate | 406,788 | 367,283 | 399,732 | |||||||||
| Loans held for sale | 474,899 | 163,511 | 570,787 | |||||||||
| Stifel Bank & Trust: | ||||||||||||
| Common equity tier 1 capital ratio (10) | 12.4 | % | 13.4 | % | 11.7 | % | ||||||
| Tier 1 capital ratio (10) | 12.4 | % | 13.4 | % | 11.7 | % | ||||||
| Total capital ratio (10) | 13.9 | % | 14.5 | % | 13.0 | % | ||||||
| Tier 1 leverage ratio (10) | 7.2 | % | 7.2 | % | 7.1 | % | ||||||
| Stifel Bank: | ||||||||||||
| Common equity tier 1 capital ratio (10) | 18.8 | % | 17.7 | % | 15.6 | % | ||||||
| Tier 1 capital ratio (10) | 18.8 | % | 17.7 | % | 15.6 | % | ||||||
| Total capital ratio (10) | 20.1 | % | 18.9 | % | 16.5 | % | ||||||
| Tier 1 leverage ratio (10) | 7.1 | % | 7.3 | % | 7.3 | % | ||||||
| Credit Metrics: | ||||||||||||
| Allowance for credit losses | $ | 139,949 | $ | 90,472 | $ | 121,017 | ||||||
| Allowance as a percentage of retained loans | 1.32 | % | 1.00 | % | 1.20 | % | ||||||
| Net charge-offs as a percentage of average loans | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
| Total nonperforming assets | $ | 14,602 | $ | 21,111 | $ | 14,616 | ||||||
| Nonperforming assets as % of total assets | 0.08 | % | 0.13 | % | 0.08 | % | ||||||
| Global Wealth Management Summary Results of Operations (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | 6/30/20 | 6/30/19 | % Change | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 116,156 | $ | 120,284 | (3.4 | ) | $ | 136,897 | (15.2 | ) | $ | 253,053 | $ | 230,211 | 9.9 | |||||||||||
| Principal transactions | 42,967 | 42,104 | 2.0 | 42,982 | (0.0 | ) | 85,949 | 85,371 | 0.7 | |||||||||||||||||
| Brokerage revenues | 159,123 | 162,388 | (2.0 | ) | 179,879 | (11.5 | ) | 339,002 | 315,582 | 7.4 | ||||||||||||||||
| Asset management and service fees | 198,921 | 211,156 | (5.8 | ) | 237,760 | (16.3 | ) | 436,681 | 406,409 | 7.4 | ||||||||||||||||
| Net interest | 121,564 | 137,599 | (11.7 | ) | 138,682 | (12.3 | ) | 260,246 | 282,894 | (8.0 | ) | |||||||||||||||
| Investment banking (17) | 8,016 | 10,559 | (24.1 | ) | 10,333 | (22.4 | ) | 18,349 | 18,782 | (2.3 | ) | |||||||||||||||
| Other income | 18,158 | 10,731 | 69.2 | 16,302 | 11.4 | 34,460 | 19,376 | 77.8 | ||||||||||||||||||
| Net revenues | 505,782 | 532,433 | (5.0 | ) | 582,956 | (13.2 | ) | 1,088,738 | 1,043,043 | 4.4 | ||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | 258,291 | 262,321 | (1.5 | ) | 298,370 | (13.4 | ) | 556,661 | 509,794 | 9.2 | ||||||||||||||||
| Non-compensation operating expenses | 91,166 | 77,760 | 17.2 | 90,419 | 0.8 | 181,585 | 146,407 | 24.0 | ||||||||||||||||||
| Total non-interest expenses | 349,457 | 340,081 | 2.8 | 388,789 | (10.1 | ) | 738,246 | 656,201 | 12.5 | |||||||||||||||||
| Income before income taxes | $ | 156,325 | $ | 192,352 | (18.7 | ) | $ | 194,167 | (19.5 | ) | $ | 350,492 | $ | 386,842 | (9.4 | ) | ||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||||||||
| Compensation and benefits | 51.1 | 49.3 | 51.2 | 51.1 | 48.9 | |||||||||||||||||||||
| Non-compensation operating expenses | 18.0 | 14.6 | 15.5 | 16.7 | 14.0 | |||||||||||||||||||||
| Income before income taxes | 30.9 | 36.1 | 33.3 | 32.2 | 37.1 | |||||||||||||||||||||
| Institutional Group Summary Results of Operations (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | % Change | 3/31/20 | % Change | 6/30/20 | 6/30/19 | % Change | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 60,875 | $ | 44,697 | 36.2 | $ | 74,198 | (18.0 | ) | $ | 135,073 | $ | 90,219 | 49.7 | ||||||||||||
| Principal transactions | 123,049 | 54,360 | 126.4 | 95,685 | 28.6 | 218,734 | 115,125 | 90.0 | ||||||||||||||||||
| Brokerage revenues | 183,924 | 99,057 | 85.7 | 169,883 | 8.3 | 353,807 | 205,344 | 72.3 | ||||||||||||||||||
| Advisory fees | 97,838 | 82,905 | 18.0 | 76,053 | 28.6 | 173,891 | 187,800 | (7.4 | ) | |||||||||||||||||
| Capital raising | 111,181 | 86,153 | 29.1 | 93,082 | 19.4 | 204,263 | 134,875 | 51.4 | ||||||||||||||||||
| Investment banking | 209,019 | 169,058 | 23.6 | 169,135 | 23.6 | 378,154 | 322,675 | 17.2 | ||||||||||||||||||
| Other (18) | 5,153 | 2,487 | 107.2 | (6,780 | ) | (176.0 | ) | (1,627 | ) | 3,869 | (142.1 | ) | ||||||||||||||
| Net revenues | 398,096 | 270,602 | 47.1 | 332,238 | 19.8 | 730,334 | 531,888 | 37.3 | ||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | 241,420 | 155,779 | 55.0 | 205,988 | 17.2 | 447,408 | 315,190 | 41.9 | ||||||||||||||||||
| Non-compensation operating expenses | 73,627 | 75,521 | (2.5 | ) | 84,510 | (12.9 | ) | 158,137 | 145,192 | 8.9 | ||||||||||||||||
| Total non-interest expenses | 315,047 | 231,300 | 36.2 | 290,498 | 8.5 | 605,545 | 460,382 | 31.5 | ||||||||||||||||||
| Income before income taxes | $ | 83,049 | $ | 39,302 | 111.3 | $ | 41,740 | 99.0 | $ | 124,789 | $ | 71,506 | 74.5 | |||||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||||||||
| Compensation and benefits | 60.6 | 57.6 | 62.0 | 61.3 | 59.3 | |||||||||||||||||||||
| Non-compensation operating expenses | 18.5 | 27.9 | 25.4 | 21.6 | 27.3 | |||||||||||||||||||||
| Income before income taxes | 20.9 | 14.5 | 12.6 | 17.1 | 13.4 | |||||||||||||||||||||
Non-GAAP Financial Measures
The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the three months ended June 30, 2020, June 30, 2019, and March 31, 2020. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company’s core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.
A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these charges do, in fact, reflect the underlying financial results of the Company’s business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures and the same respective non-GAAP measures of the Company’s financial performance should be considered together.
The following table provides details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three and six months ended June 30, 2020 and 2019, and the three months ended March 31, 2020 to net income and earnings per diluted common share on a non-GAAP basis for the same period.
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| ($ in 000s) | 6/30/20 | 6/30/19 | 3/31/20 | 6/30/20 | 6/30/19 | |||||||||||||||
| GAAP net income applicable to Stifel Financial Corp. | $ | 107,887 | $ | 109,085 | $ | 86,589 | $ | 194,476 | $ | 208,292 | ||||||||||
| Preferred dividend | 4,843 | 5,288 | 4,844 | 9,687 | 7,632 | |||||||||||||||
| Net income available to common shareholders | 103,044 | 103,797 | 81,745 | 184,789 | 200,660 | |||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Merger-related and severance (19) | 16,259 | 6,721 | 13,510 | 29,769 | 14,912 | |||||||||||||||
| Litigation-related (20) | — | 3,507 | — | — | 3,507 | |||||||||||||||
| Provision for income taxes (21) | (3,968 | ) | (2,654 | ) | (3,322 | ) | (7,290 | ) | (3,188 | ) | ||||||||||
| Total non-GAAP adjustments | 12,291 | 7,574 | 10,188 | 22,479 | 15,231 | |||||||||||||||
| Non-GAAP net income available to common shareholders | $ | 115,335 | $ | 111,371 | $ | 91,933 | $ | 207,268 | $ | 215,891 | ||||||||||
| Weighted average diluted shares outstanding | 74,387 | 79,079 | 76,619 | 75,651 | 79,160 | |||||||||||||||
| GAAP earnings per diluted common share | $ | 1.45 | $ | 1.38 | $ | 1.13 | $ | 2.57 | $ | 2.63 | ||||||||||
| Non-GAAP adjustments | 0.17 | 0.10 | 0.13 | 0.30 | 0.19 | |||||||||||||||
| Non-GAAP earnings per diluted common share | $ | 1.62 | $ | 1.48 | $ | 1.26 | $ | 2.87 | $ | 2.82 | ||||||||||
| GAAP earnings per diluted common share available to common shareholders | $ | 1.39 | $ | 1.31 | $ | 1.07 | $ | 2.44 | $ | 2.53 | ||||||||||
| Non-GAAP adjustments | 0.16 | 0.10 | 0.13 | 0.30 | 0.20 | |||||||||||||||
| Non-GAAP earnings per diluted common share available to common shareholders | $ | 1.55 | $ | 1.41 | $ | 1.20 | $ | 2.74 | $ | 2.73 | ||||||||||
Footnotes
| (1) | Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total Stifel Financial common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Deferred taxes on goodwill and tangible assets was $48.5 million, $41.6 million, and $47.2 million, as of June 30, 2020 and 2019, and March 31, 2020, respectively. Historical periods have been restated to conform with the current period presentation. |
| (2) | Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.” |
| (3) | Non-GAAP pre-tax margin for the three months ended June 30, 2020 of 17.8% is calculated by adding non-GAAP adjustments of $16.3 million to our GAAP income before income taxes of $143.0 million and dividing it by non-GAAP net revenues for the quarter of $895.8 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.” |
| (4) | Non-GAAP pre-tax margin for the six months ended June 30, 2020 of 15.9% is calculated by adding non-GAAP adjustments of $29.8 million to our GAAP income before income taxes of $258.1 million and dividing it by non-GAAP net revenues of $1.8 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.” |
| (5) | Excludes revenue included in the Other segment. |
| (6) | See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.” |
| (7) | In the first quarter of 2020, the Company adopted ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments,” which amends several aspects of the measurement of credit losses on certain financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (CECL) model. For further information about ASU No. 2016-13, see Note 2 “Summary of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. |
| (8) | Book value per common share represents shareholders’ equity (excluding preferred stock and non-controlling interests) divided by period end common shares outstanding. |
| (9) | Annualized return on average common shareholders’ equity (“ROE”) is calculated by dividing annualized net income applicable to common shareholders by average Stifel Financial common shareholders’ equity or, in the case of non-GAAP ROE, calculated by dividing non-GAAP net income applicable to commons shareholders by average Stifel Financial common shareholders’ equity. |
| (10) | Capital ratios are estimates at time of the Company’s earnings release. |
| (11) | Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at our bank subsidiaries. |
| (12) | Includes Private Client Group and Trust Business. |
| (13) | Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees. |
| (14) | Asset management assets managed in Private Client Group or Trust accounts. |
| (15) | Return on assets (ROA) is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for Individual Program Banks. |
| (16) | Includes Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A, and Stifel Trust Company Delaware, N.A. |
| (17) | Includes capital raising and advisory fees. |
| (18) | Includes net interest, asset management and service fees, and other income. |
| (19) | Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company’s on-going business. |
| (20) | Primarily related to costs associated with Company’s legal matters. |
| (21) | See details of non-GAAP adjustments under “Provision for Income Taxes.” |
Media Contact: Neil Shapiro (212) 271-3447
Investor Contact: Joel Jeffrey (212) 271-3610
www.stifel.com/investor-relations