SEC Info - Stifel Financial Corp - ‘8-K’ for 8/10/15

ST. LOUIS, August 10, 2015 – Stifel Financial Corp. (NYSE: SF) today reported net income of $20.9 million, or $0.27 per diluted common share on record net revenues of $597.8 million for the three months ended June 30, 2015, compared with net income of $43.6 million, or $0.58 per diluted common share, on net revenues of $560.1 million for the second quarter of 2014.

For the three months ended June 30, 2015, the Company reported non-GAAP net income of $55.1 million, or $0.71 per diluted common share. These non-GAAP results exclude merger-related and other non-recurring expenses of $34.2 million (after-tax).

For the six months ended June 30, 2015, the Company reported net income of $64.0 million, or $0.82 per diluted common share on record net revenues of $1.2 billion, compared with net income of $91.0 million, or $1.20 per diluted share, on net revenues of $1.1 billion for the comparable period in 2014.

For the six months ended June 30, 2015, the Company reported non-GAAP net income of $105.0 million, or $1.35 per diluted share. A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed below under “Non-GAAP Financial Measures.”


	Three Months Ended												Six Months Ended
(in 000s)	6/30/15		6/30/14		% Change			3/31/15		% Change			6/30/15		6/30/14		% Change
Net revenues	$	597,751	$	560,105		6.7		$	560,982		6.6		$	1,158,733	$	1,106,862		4.7
Net income	$	20,888	$	43,600		(52.1	)	$	43,097		(51.5	)	$	63,985	$	90,983		(29.7	)
Non-GAAP net income¹	$	55,091	$	49,290		11.8		$	49,940		10.3		$	105,031	$	100,728		4.3

Earnings per common share:
Basic	$	0.31	$	0.66		(53.0	)	$	0.63		(50.8	)	$	0.94	$	1.38		(31.9	)
Diluted	$	0.27	$	0.58		(53.4	)	$	0.56		(51.8	)	$	0.82	$	1.20		(31.7	)
Non-GAAP net income¹	$	0.71	$	0.65		9.2		$	0.65		9.2		$	1.35	$	1.33		1.5


Weighted average number of common shares outstanding:
Basic		68,370		66,302		3.1			68,006		0.5			68,189		66,167		3.1
Diluted		77,856		75,641		2.9			77,359		0.6			77,624		75,665		2.6

“Our record second quarter results demonstrate the strength of our platform. On June 5, 2015, we completed the acquisition of Sterne Agee, and as a result, our second quarter includes approximately one month of Sterne Agee’s financial results. We are pleased to welcome our new associates to Stifel,” stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

Kruszewski continued, “We remain excited about partnering with the professionals at Barclays to continue to grow our Global Wealth Management business. We are committed to investing in and helping grow the Barclays franchise over the long-term, and creating a best-in-class platform to serve our clients. We remain on track to close the transaction in the 4^th quarter of 2015.”

Brokerage revenues, defined as commissions and principal transactions revenues, were $269.3 million, a 2.1% decrease compared with the second quarter of 2014 and a 4.0% decrease compared with the first quarter of 2015.

Investment banking revenues were $161.0 million, an 11.2% increase compared with the second quarter of 2014 and a 28.7% increase compared with the first quarter of 2015.

Asset management and service fee revenues were $119.9 million, a 27.3% increase compared with the second quarter of 2014 and a 5.3% increase compared with the first quarter of 2015. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets.

For the quarter ended June 30, 2015, compensation and benefits expenses were $410.0 million, which included $39.6 million of merger-related expenses, compared with $355.3 million in the second quarter of 2014, and $355.7 million in the first quarter of 2015. Compensation and benefits expense included merger-related expenses of $1.5 million in the second quarter of 2014 and $3.4 million in the first quarter of 2015.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.0% in the second quarter of 2015, compared with 63.0% in the second quarter of 2014 and 62.5% in the first quarter of 2015. Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, as a percentage of net revenues was 3.7% in the second quarter of 2015, compared with 4.5% in the second quarter of 2014 and 4.1% in the first quarter of 2015.

For the quarter ended June 30, 2015, non-compensation operating expenses were $149.7 million, which included merger-related expenses of $15.1 million, compared with $130.4 million in the second quarter of 2014, and $135.2 million in the first quarter of 2015.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2015 was 22.5%, compared with 22.4% in the second quarter of 2014 and 23.2% in the first quarter of 2015.

The effective income tax rate for the quarter ended June 30, 2015 was 45.1% compared with 41.4% in the second quarter of 2014, and 38.5% in the first quarter of 2015. The effective tax rate for the second quarter of 2015 was impacted by losses recognized by our foreign subsidiaries that are taxed at a different rate than our U.S. subsidiaries.

Stifel Financial Corp. will host its second quarter 2015 financial results conference call on Monday, August 10, 2015, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel’s Chairman and CEO, Ronald J. Kruszewski, by dialing (888) 876-9938 and referencing conference ID #43107467. 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.

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 clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. offers trust and related services. To learn more about Stifel, please visit the Company’s web site at www.stifel.com.

This earnings release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies’ operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Summary Results of Operations (Unaudited)
	Three Months Ended												Six Months Ended
(in thousands, except per share amounts)	6/30/15		6/30/14		% Change			3/31/15		% Change			6/30/15		6/30/14		% Change
Revenues:
Commissions	$	183,770	$	164,371		11.8		$	180,302		1.9		$	364,073	$	336,614		8.2
Principal transactions		85,543		110,717		(22.7	)		100,205		(14.6	)		186,275		221,399		(15.9	)
Brokerage revenues		269,313		275,088		(2.1	)		280,507		(4.0	)		550,348		558,013		(1.4	)

Investment banking		161,007		144,815		11.2			125,089		28.7			285,568		280,077		2.0
Asset management and service fees		119,936		94,230		27.3			113,869		5.3			233,805		183,401		27.5
Other income		13,742		8,745		57.1			11,800		16.5			25,541		13,983		82.7
Operating revenues		563,998		522,878		7.9			531,265		6.2			1,095,262		1,035,474		5.8
Interest revenue		43,851		46,115		(4.9	)		42,736		2.6			86,588		88,950		(2.7	)
Total revenues		607,849		568,993		6.8			574,001		5.9			1,181,850		1,124,424		5.1
Interest expense		10,098		8,888		13.6			13,019		(22.4	)		23,117		17,562		31.6
Net revenues		597,751		560,105		6.7			560,982		6.6			1,158,733		1,106,862		4.7

Non-interest expenses:
Compensation and benefits		409,998		355,267		15.4			355,693		15.3			765,691		702,257		9.0
Occupancy and equipment rental		48,346		43,237		11.8			44,170		9.5			92,516		84,019		10.1
Communications and office supplies		31,114		25,858		20.3			29,234		6.4			60,348		50,696		19.0
Commission and floor brokerage		9,124		9,248		(1.3	)		10,069		(9.4	)		19,193		18,277		5.0
Other operating expenses		61,098		52,076		17.3			51,750		18.1			112,848		99,764		13.1
Total non-interest expenses		559,680		485,686		15.2			490,916		14.0			1,050,596		955,013		10.0

Income before income taxes		38,071		74,419		(48.8	)		70,066		(45.7	)		108,137		151,849		(28.8	)
Provision for income taxes		17,183		30,819		(44.2	)		26,969		(36.3	)		44,152		60,866		(27.5	)
Net income	$	20,888	$	43,600		(52.1	)	$	43,097		(51.5	)	$	63,985	$	90,983		(29.7	)

Earnings per common share:
Basic	$	0.31	$	0.66		(53.0	)	$	0.63		(50.8	)	$	0.94	$	1.38		(31.9	)
Diluted	$	0.27	$	0.58		(53.4	)	$	0.56		(51.8	)	$	0.82	$	1.20		(31.7	)

Weighted average number of common shares outstanding:
Basic		68,370		66,302		3.1			68,006		0.5			68,189		66,167		3.1
Diluted		77,856		75,641		2.9			77,359		0.6			77,624		75,665		2.6


Summary Segment Results (Unaudited)
	Three Months Ended															Six Months Ended
(in 000s)	6/30/15			6/30/14			% Change			3/31/15			% Change			6/30/15			6/30/14			% Change
Net revenues:
Global Wealth Management	$	343,382		$	307,247			11.8		$	329,410			4.2		$	672,792		$	604,430			11.3
Institutional Group		258,538			255,670			1.1			238,607			8.4			497,145			505,647			(1.7	)
Other		(4,169	)		(2,812	)		(48.3	)		(7,035	)		40.7			(11,204	)		(3,215	)		(248.5	)
	$	597,751		$	560,105			6.7		$	560,982			6.6		$	1,158,733		$	1,106,862			4.7
Operating contribution: ³
Global Wealth Management	$	93,975		$	89,098			5.5		$	98,847			(4.9	)	$	192,823		$	168,774			14.2
Institutional Group		41,942			42,312			(0.9	)		32,331			29.7			74,273			87,222			(14.8	)
Other		(43,122	)		(49,583	)		13.0			(50,369	)		14.4			(93,492	)		(90,295	)		(3.5	)
	$	92,795		$	81,827			13.4		$	80,809			14.8		$	173,604		$	165,701			4.8
As a percentage of net revenues:
Compensation and benefits
Global Wealth Management		57.1			55.9						55.6						56.4			57.2
Institutional Group		61.9			61.6						62.6						62.3			61.7
Non-comp. operating expenses
Global Wealth Management		15.5			15.1						14.4						14.9			14.9
Institutional Group		21.9			21.9						23.8						22.8			21.1
Income before income taxes
Global Wealth Management		27.4			29.0						30.0						28.7			27.9
Institutional Group		16.2			16.5						13.6						14.9			17.2
		15.5			14.6						14.3						14.9			14.9

A reconciliation of the Company’s GAAP results to these non-GAAP measures is discussed under “Non-GAAP Financial Measures.”

Global Wealth Management Summary Results of Operations (Unaudited)
	Three Months Ended												Six Months Ended
(in 000s)	6/30/15		6/30/14		% Change			3/31/15		% Change			6/30/15		6/30/14		% Change
Revenues:
Commissions	$	125,121	$	112,205		11.5		$	116,214		7.7		$	241,335	$	225,202		7.2
Principal transactions		33,682		48,335		(30.3	)		41,781		(19.4	)		75,689		95,638		(20.9	)
Brokerage revenues		158,803		160,540		(1.1	)		157,995		0.5			317,024		320,840		(1.2	)

Asset management and service fees		119,734		94,187		27.1			113,666		5.3			233,400		183,317		27.3
Net interest		37,454		35,839		4.5			37,924		(1.2	)		75,378		71,101		6.0
Investment banking		15,128		11,132		35.9			10,326		46.5			25,228		22,263		13.3
Other income		12,263		5,549		121.0			9,499		29.0			21,762		6,909		215.0
Net revenues		343,382		307,247		11.8			329,410		4.2			672,792		604,430		11.3
Non-interest expenses:
Compensation and benefits		196,234		171,724		14.3			183,243		7.1			379,477		345,892		9.7
Non-compensation operating expenses		53,173		46,425		14.5			47,320		12.4			100,492		89,764		12.0
Total non-interest expenses		249,407		218,149		14.3			230,563		8.2			479,969		435,656		10.2
Income before income taxes	$	93,975	$	89,098		5.5		$	98,847		(4.9	)	$	192,823	$	168,774		14.2

As a percentage of net revenues:
Compensation and benefits		57.1		55.9					55.6					56.4		57.2
Non-compensation operating expenses		15.5		15.1					14.4					14.9		14.9
Income before income taxes		27.4		29.0					30.0					28.7		27.9



Stifel Bank & Trust (Unaudited)
Key Statistical Information
(in 000s, except percentages)	6/30/15		6/30/14		% Change	3/31/15		% Change
Other information:
Assets	$	4,786,248	$	5,039,556	(5.0)	$	5,289,349	(9.5)
Investment securities		1,907,282		2,915,235	(34.6)		2,599,854	(26.6)
Retained loans, net		2,626,508		1,773,853	48.1		2,505,007	4.9
Loans held for sale		183,991		119,477	54.0		188,783	(2.5)
Deposits		4,313,940		4,654,937	(7.3)		4,834,042	(10.8)

Allowance as a percentage of loans		0.98%		0.97%			0.96%
Non-performing assets as a percentage of total assets		0.13%		0.10%			0.13%

Institutional Group Summary Results of Operations (Unaudited)
	Three Months Ended												Six Months Ended
(in 000s)	6/30/15		6/30/14		% Change			3/31/15		% Change			6/30/15		6/30/14		% Change
Revenues:
Commissions	$	58,649	$	52,166		12.4		$	64,088		(8.5	)	$	122,738	$	111,411		10.2
Principal transactions		51,861		62,382		(16.9	)		58,423		(11.2	)		110,587		125,762		(12.1	)
Brokerage revenues		110,510		114,548		(3.5	)		122,511		(9.8	)		233,325		237,173		(1.6	)
Capital raising		82,690		73,327		12.8			65,321		26.6			147,707		138,685		6.5
Advisory fees		63,189		60,356		4.7			49,443		27.8			112,632		119,129		(5.5	)
Investment banking		145,879		133,683		9.1			114,764		27.1			260,339		257,814		1.0
Other ⁴		2,149		7,439		(71.1	)		1,332		61.3			3,481		10,660		(67.3	)
Net revenues		258,538		255,670		1.1			238,607		8.4			497,145		505,647		(1.7	)
Non-interest expenses:
Compensation and benefits		160,077		157,500		1.6			149,411		7.1			309,488		311,734		(0.7	)
Non-compensation operating expenses		56,519		55,858		1.2			56,865		(0.6	)		113,384		106,691		6.3
Total non-interest expenses		216,596		213,358		1.5			206,276		5.0			422,872		418,425		1.1
Income before income taxes	$	41,942	$	42,312		(0.9	)	$	32,331		29.7		$	74,273	$	87,222		(14.8	)

As a percentage of net revenues:
Compensation and benefits		61.9		61.6					62.6					62.3		61.7
Non-compensation operating expenses		21.9		21.9					23.8					22.8		21.1
Income before income taxes		16.2		16.5					13.6					14.9		17.2


Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
	Three Months Ended												Six Months Ended
(in 000s)	6/30/15		6/30/14		% Change			3/31/15		% Change			6/30/15		6/30/14		% Change
Institutional brokerage:
Equity	$	58,551	$	60,865		(3.8	)	$	61,803		(5.3	)	$	120,548	$	125,439		(3.9	)
Fixed income		51,959		53,683		(3.2	)		60,708		(14.4	)		112,777		111,734		0.9
Institutional brokerage		110,510		114,548		(3.5	)		122,511		(9.8	)		233,325		237,173		(1.6	)

Investment banking:
Capital raising:
Equity		49,550		58,500		(15.3	)		44,591		11.1			93,837		113,343		(17.2	)
Fixed income		33,140		14,827		123.5			20,730		59.9			53,870		25,342		112.6
Capital raising		82,690		73,327		12.8			65,321		26.6			147,707		138,685		6.5
Advisory fees:		63,189		60,356		4.7			49,443		27.8			112,632		119,129		(5.5	)
Investment banking	$	145,879		133,683		9.1			114,764		27.1		$	260,339		257,814		1.0

The Company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share as additional measures to aid in understanding and analyzing the Company’s financial results for the three and six months ended June 30, 2015. 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 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. These non-GAAP amounts primarily exclude acquisition related expenses which management believes are duplicative and will be eliminated in future periods, stock-based compensation and other expenses which in managements view are not representative of the ongoing business.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related 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 of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share 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 revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share on a GAAP basis for the three and six months ended June 30, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.


	Three Months Ended June 30, 2015						Six Months Ended June 30, 2015
(in 000s, except per share amounts)	Non-GAAP		Adjustments		GAAP		Non-GAAP		Adjustments		GAAP
Net revenues	$	597,751	$	—	$	597,751	$	1,161,445	$	(2,712)	$	1,158,733

Non-interest expenses:
Compensation and benefits		370,357		39,641		409,998		722,640		43,051		765,691
Non-compensation operating expenses		134,599		15,083		149,682		265,201		19,704		284,905
Total non-interest expenses		504,956		54,724		559,680		987,841		62,755		1,050,596
Income before income taxes		92,795		(54,724)		38,071		173,604		(65,467)		108,137
Provision for income taxes		37,704		(20,521)		17,183		68,573		(24,421)		44,152
Net income	$	55,091	$	(34,203)	$	20,888	$	105,031	$	(41,046)	$	63,985

Earnings per share::
Basic	$	0.81	$	(0.50)	$	0.31	$	1.54	$	(0.60)	$	0.94
Diluted	$	0.71	$	(0.44)	$	0.27	$	1.35	$	(0.53)	$	0.82

As a percentage of net revenues:
Compensation and benefits		62.0				68.6		62.2				66.1
Non-compensation operating expenses		22.5				25.0		22.9				24.6
Income before income taxes		15.5				6.4		14.9				9.3


(in thousands, except per share, employee and location amounts)
	6/30/15		6/30/14		% Change	3/31/15		% Change
Statistical Information:
Book value per share	$	36.35	$	33.18	9.6	$	34.83	4.4
Financial advisors ²		2,823		2,085	35.4		2,097	34.6
Full-time associates		6,952		5,881	18.2		6,274	10.8
Locations		398		361	10.2		368	8.2
Total client assets	$	190,241,000	$	173,383,000	9.7	$	188,616,000	0.9

This ‘8-K’ Filing	Date	Other Filings

Filed on / For Period End:	8/10/15
	6/30/15
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Stifel Financial Corp – ‘8-K’ for 8/10/15 – EX-99.1

On: Monday, 8/10/15, at 5:17pm ET · For: 8/10/15 · Accession #: 1564590-15-6869 · File #: 1-09305

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Current Report — Form 8-K
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EX-99.1 — Miscellaneous Exhibit

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Dates Referenced Herein and Documents Incorporated by Reference