SOURCE: Stifel Financial Corp.

Stifel Financial Corp.

February 15, 2011 01:01 ET

Stifel Financial Corp. Reports Fourth Quarter and Full-Year 2010 Results

ST. LOUIS, MO--(Marketwire - February 15, 2011) - Stifel Financial Corp. (NYSE: SF)

Quarterly results:

--  Record GAAP net revenues of $401.6 million.
--  Record non-GAAP net income of $47.3 million(1), or $1.11 per diluted
    share, on net revenues of $402.8 million.
--  Record GAAP net income of $41.4 million, or $0.97 per diluted share.

Full-Year 2010 results:

--  Record GAAP net revenues of $1.4 billion; 15th consecutive year of
    record net revenues.
--  Record non-GAAP net income of $124.8 million(1), or $3.24 per diluted
    share.
--  GAAP net income of $1.9 million, or $0.05 per diluted share.
--  As of December 31, 2010, stockholders' equity was $1.3 billion;
    book value per share was $36.76.

Stifel Financial Corp. (NYSE: SF) today announced record GAAP net revenues of $401.6 million for the three months ended December 31, 2010. The company reported record non-GAAP net income of $47.3 million, or $1.11 per diluted share(1), on net revenues of $402.8 million. On a GAAP basis, the company reported unaudited record net income of $41.4 million, or $0.97 per diluted share, for the three months ended December 31, 2010, compared to net income of $24.7 million, or $0.71 per diluted share, on net revenues of $319.5 million for the fourth quarter of 2009. Results for the three months ended December 31, 2010 were reduced by merger-related expenses of $5.9 million after-tax ($9.6 million pre-tax), or $0.14 per diluted share, all of which related to the previously announced merger with Thomas Weisel Partners Group, Inc. ("TWPG"). A reconciliation of the company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

For the year ended December 31, 2010, the company reported record GAAP net revenues of $1.4 billion, which represents the fifteenth consecutive year of record net revenues. The company reported non-GAAP net income of $124.8 million, or $3.24 per diluted share(1), compared to net income of $75.8 million, or $2.35 per diluted share, on net revenues of $1.1 billion for the comparable period in 2009. The company reported GAAP net income of $1.9 million, or $0.05 per diluted share, for the year ended December 31, 2010, which includes expenses associated with the previously announced modification of the company's deferred compensation plan and merger-related expenses of $122.9 million after-tax ($207.2 million pre-tax). A reconciliation of the company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

Two items significantly impacted GAAP results for 2010:

--  A non-cash charge of $106.4 million after-tax ($179.5 million
    pre-tax), or $2.77 per diluted share, related to the acceleration
    of deferred compensation in the third quarter of 2010 as a result
    of a modification of the company's deferred compensation plan.
--  Merger-related expenses of $16.5 million after-tax ($27.7 million
    pre-tax), or $0.43 per diluted share, related to the previously
    announced merger with TWPG.

"We are very pleased to report our 15th consecutive year of record net revenues and equally pleased with the success of our merger with Thomas Weisel Partners (TWPG). Our record quarterly revenues and record quarterly investment banking revenues demonstrate the power of the franchise and underscore the success of the merger with TWPG. There are clear signs of the retail investor re-engaging, as well as increased activity in the capital markets, both of which contributed to our results. Looking forward, we are well positioned to continue to gain market share, which is accomplished through the addition of talented, entrepreneurial people who share our vision to build the premier middle-market investment banking firm," commented Ronald J. Kruszewski, Chairman, President and Chief Executive Officer of Stifel Financial.

                       Summary Results of Operations (Unaudited)
                                    Three Months Ended
                ----------------------------------------------------------
(in 000s)        12/31/10    12/31/09     Change      9/30/10     Change
                ----------- ----------- ----------  ----------  ----------
  Net revenues  $   401,599 $   319,467       25.7% $  340,388        18.0%
  Non-GAAP net
   revenues (1) $   402,787 $   319,467       26.1% $  341,327        18.0%
  Net income/
   (loss)       $    41,394 $    24,668       67.8% $  (84,336)      149.1%
  Non-GAAP net
   income (1)
   (2)          $    47,318 $    24,668       91.8% $   29,639        59.6%
Earnings per
 share:
  Basic         $      1.21 $      0.82       47.6% $    (2.47)      149.0%
  Diluted       $      0.97 $      0.71       36.6% $    (2.47)      139.3%
  Non-GAAP
   diluted
   (1) (2)      $      1.11 $      0.71       56.3% $     0.72        54.2%

                            Year Ended
                ---------------------------------
(in 000s)        12/31/10    12/31/09     Change
                ----------- ----------- ---------
  Net revenues  $ 1,382,026 $ 1,090,636      26.7%
  Non-GAAP net
   revenues (1) $ 1,384,152 $ 1,090,636      26.9%
  Net income/
   (loss)       $     1,907 $    75,798     (97.5)%
  Non-GAAP net
   income (1)
   (2)          $   124,760 $    75,798      64.6%
Earnings per
 share:
  Basic         $      0.06 $      2.68     (97.8)%
  Diluted       $      0.05 $      2.35     (97.9)%
  Non-GAAP
   diluted
   (1) (2)      $      3.24 $      2.35      37.9%

(1) A reconciliation of the company's GAAP results to these non-GAAP
    measures is discussed below under "Non-GAAP Financial Measures."

(2) GAAP earnings per share for the three months ended September 30,
    2010 is calculated using the basic weighted average number of common
    shares outstanding, not fully diluted shares, as they are
    anti-dilutive in periods a loss is incurred. Non-GAAP net loss for
    the three months ended September 30, 2010, using fully dilutive shares
    of 41.2 million was $2.05.

Fourth Quarter

Consolidated Net Revenues

For the quarter ended December 31, 2010, net revenues were a record $401.6 million, a 26% increase compared to the fourth quarter of 2009, and an 18% increase compared to the third quarter of 2010.

Our revenue growth was primarily derived from improved equity market conditions, which has contributed to an increase in capital raising and strategic advisory fee revenues, as well as underwriting fees. The increase in financial advisors, client assets and productivity and the improving equity capital markets have contributed to the increase in our commissions and asset management fee revenues. Principal transactions revenues were down compared to the year-ago period and to the third quarter of 2010 due to challenging market conditions for fixed income during the fourth quarter.

Consolidated Compensation and Benefits Expenses

For the quarter ended December 31, 2010, compensation and benefits expenses were $237.1 million, an 18% increase compared to the fourth quarter of 2009, and a 40% decrease compared to the third quarter of 2010. The increase in compensation and benefits expenses from the comparable period in 2009 is primarily due to the merger with TWPG, the purchase of certain UBS branches completed in October 2009, and increased revenue production and profitability. The decrease in compensation and benefits expenses from the third quarter of 2010 is primarily due to the non-cash charge related to the acceleration of deferred compensation taken during the third quarter.

Excluding the non-cash charge in the third quarter of 2010, compensation and benefits as a percentage of net revenues was 59% compared to 63% in the fourth quarter of 2009 and 62% in the third quarter of 2010.

Consolidated Non-Compensation Operating Expenses

For the quarter ended December 31, 2010, non-compensation operating expenses of $97.7 million, which included $8.6 million of merger-related expenses, increased 27% compared to the fourth quarter of 2009 and increased 12.2% from the third quarter of 2010. Excluding merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses were $89.0 million for the fourth quarter of 2010, a 16% increase compared to the fourth quarter of 2009 and a 13% increase compared to the third quarter of 2010. The increase in non-compensation operating expenses is primarily due to an increase in occupancy and other operating expenses related to the merger with TWPG, the purchase of certain UBS branches completed in October 2009, and increased revenue production.

Excluding the merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses as a percentage of net revenues was 22% compared to 24% in the fourth quarter of 2009 and 23% in the third quarter of 2010.

Business Segment Results

Global Wealth Management

For the quarter ended December 31, 2010, the Global Wealth Management ("GWM") segment generated pre-tax operating income of $62.7 million, compared to $34.3 million in the fourth quarter of 2009 and $51.7 million in the third quarter of 2010. Net revenues for the quarter were $236.4 million, compared to $186.1 million in the fourth quarter of 2009, and $207.5 million in the third quarter of 2010. GWM experienced revenue growth across all revenue line items, which is primarily attributable to an increase in the number of financial advisors and client assets resulting from the purchase of certain UBS branches completed in October 2009.

--  The Private Client Group reported net revenues of $226.6 million,
    a 27% increase compared to the fourth quarter of 2009 and a 15%
    increase compared to the third quarter of 2010.
--  Stifel Bank reported net revenues of $9.8 million, a 27% increase
    compared to the fourth quarter of 2009 and a 4% decrease compared
    to the third quarter of 2010.

Compensation and benefits expenses for the quarter were $136.0 million, an increase of 16% compared to the fourth quarter of 2009 and an increase of 14% compared to the third quarter of 2010. The increases are the direct result of increased revenue production. For the fourth quarter of 2010, compensation and benefits as a percentage of net revenues was 58% compared to 63% in the fourth quarter of 2009 and 57% in the third quarter of 2010.

Non-compensation operating expenses for the quarter were $37.7 million, a 9% increase compared to the fourth quarter of 2009 and a 3% increase compared to the third quarter of 2010, primarily due to the acquisition of certain UBS branches completed in October 2009. For the fourth quarter of 2010, non-compensation operating expenses as a percentage of net revenues was 16% compared to 19% in the fourth quarter of 2009 and 18% in the third quarter of 2010.

Institutional Group

For the quarter ended December 31, 2010, the Institutional Group segment generated pre-tax operating income of $43.7 million, compared to $37.8 million in the fourth quarter of 2009, and $27.7 million in the third quarter of 2010. Net revenues for the quarter were $165.9 million, compared to $133.3 million in the fourth quarter of 2009 and $138.0 million in the third quarter of 2010. The growth in revenue over the comparable periods was driven by an increase in advisory services activity, which was primarily related to the merger with TWPG, in addition to strong equity and debt originations. The increase in activity was offset by a decline in fixed income institutional brokerage revenues, which was negatively impacted by the challenging market conditions present during the fourth quarter of 2010.

Institutional brokerage revenues were $82.6 million, a 4% decrease compared to the fourth quarter of 2009 and a 6% decrease compared to the third quarter of 2010.

--  Equity institutional brokerage revenues were $46.5 million, a 20%
    increase compared to the fourth quarter of 2009 and a 6% increase
    compared to the third quarter of 2010.
--  Fixed income institutional brokerage revenues were $36.1 million,
    a 24% decrease compared to the fourth quarter of 2009 and an 18%
    decrease compared to the third quarter of 2010.

Investment banking revenues were $81.6 million, an 82% increase compared to the fourth quarter of 2009 and a 79% increase compared to the third quarter of 2010.

--  Equity capital raising revenues were $34.5 million, a 48% increase
    compared to the fourth quarter of 2009 and a 91% increase compared
    to the third quarter of 2010.
--  Fixed income capital raising revenues were $6.2 million, a 12%
    increase compared to the fourth quarter of 2009 and a 38% increase
    compared to the third quarter of 2010.
--  Equity advisory fee revenues were $38.1 million, a 148% increase
    compared to the fourth quarter of 2009, and an 88% increase compared
    to the third quarter of 2010.
--  Fixed income advisory fee revenues were $2.8 million, a 300% increase
    compared to the fourth quarter of 2009 and unchanged from the third
    quarter of 2010.

Compensation and benefits expenses for the quarter were $94.3 million, a 28% increase compared to the fourth quarter of 2009 and a 15% increase compared to the third quarter of 2010. For the fourth quarter of 2010, compensation and benefits as a percentage of net revenues was 57% compared to 55% in the fourth quarter of 2009 and 60% in the third quarter of 2010. The increase in compensation and benefits expenses over the comparable periods is primarily related to associates who joined in connection with the TWPG merger.

Non-compensation operating expenses for the quarter were $28.0 million, a 28% increase compared to the fourth quarter in 2009 and a 1% decrease compared to the third quarter of 2010. The increase in other non-compensation expenses over the comparable period in 2009 is primarily attributable to increased activity in all expense categories related to the merger with TWPG. For the fourth quarter of 2010, non-compensation operating expenses as a percentage of net revenues was 17% compared to 16% in the fourth quarter of 2009 and 21% in the third quarter of 2010.

Full Year 2010

Consolidated Net Revenues

For the year ended December 31, 2010, net revenues were a record $1.4 billion, a 27% increase compared to $1.1 billion during the comparable period in 2009, which represents our fifteenth consecutive annual increase in net revenues.

Our revenue growth was primarily derived from improved equity market conditions and the recently completed merger with TWPG and the acquisition of certain UBS branches at the end of 2009. The increase in financial advisors, client assets and productivity and the improving equity capital markets have contributed to the increase in our commissions and asset management fee revenues. The improved market conditions and our merger with TWPG has contributed to the improvement in our investment banking revenues over the comparable period in 2009, as there has been an increase in capital raising and strategic advisory fee revenues, as well as underwriting fees. Principal transactions revenues were flat compared to the year-ago period mainly driven by improved equity markets, offset by the changing fixed income environment.

Consolidated Compensation and Benefits Expenses

For the year ended December 31, 2010, compensation and benefits expenses were $1.1 billion, which included $186.1 million related to the modification of the company's deferred compensation plan and merger-related expenses, a 47% increase compared to $718.1 million in 2009. Excluding the charges for the modification of the company's deferred compensation plan in the third quarter and merger-related expenses in the third and fourth quarters of 2010, compensation and benefits expenses for 2010 increased 21% compared to 2009. Excluding these expenses, compensation and benefits as a percentage of net revenues was 63% compared to 66% in 2009.

Consolidated Non-Compensation Operating Expenses

For the year ended December 31, 2010, non-compensation operating expenses of $326.1 million, which included $19.0 million of merger-related expenses, increased 29% compared to $252.1 million in 2009. Excluding merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses increased 22% compared to 2009. The increase in non-compensation operating expenses is primarily due to the recently completed merger with TWPG and the acquisition of certain UBS branches completed in October 2009. Excluding the merger-related expenses, non-compensation operating expenses as a percentage of net revenues was 22% compared to 23% in 2009.

Business Segment Results

Global Wealth Management

For the year ended December 31, 2010, the GWM segment generated pre-tax operating income of $194.0 million, an 85% increase compared to $104.7 million in 2009. Net revenues for the year ended December 31, 2010 were $843.3 million, a 42% increase compared to $596.0 million in the comparable period of 2009. GWM experienced revenue growth across all revenue line items, which is primarily attributable to an increase in the number of financial advisors and client assets resulting from the purchase of certain UBS branches completed in October 2009.

--  The Private Client Group reported net revenues of $804.7 million, a
    40% increase compared to $575.6 million in 2009.
--  Stifel Bank reported net revenues of $38.6 million, a 90% increase
    compared to $20.4 million in 2009.

Compensation and benefits expenses for the year ended December 31, 2010 were $503.5 million; an increase of 36% compared to 2009, and the direct result of increased revenue production. For the year, compensation and benefits as a percentage of net revenues was 60% compared to 62% in 2009.

Non-compensation operating expenses for the year ended December 31, 2010 were $145.8 million, a 20% increase compared to 2009, primarily due to the acquisition of certain UBS branches completed in October 2009. For the year, non-compensation operating expenses as a percentage of net revenues was 17% compared to 20% in 2009.

Institutional Group

For the year ended December 31, 2010, the Institutional Group segment generated pre-tax operating income of $129.5 million, compared to $129.1 million in 2009. Net revenues for the year were $541.8 million, a 10% increase compared to $494.1 million in 2009. The growth in revenue over the comparable period was driven by an increase in advisory services activity, which was primarily related to the merger of TWPG, in addition to strong equity and debt originations. The increase in activity was offset by a decline in fixed income institutional brokerage revenues, which was negatively impacted by the challenging market conditions present throughout 2010.

Institutional brokerage revenues were $341.5 million, a 9% decrease compared to $375.3 million in 2009.

--  Equity institutional brokerage revenues were $173.0 million, a 13%
    increase compared to $153.3 million in 2009.
--  Fixed income institutional brokerage revenues were $168.5 million, a
    24% decrease compared to $222.0 million in 2009.

Investment banking revenues were $191.9 million, a 73% increase compared to $110.9 million in 2009.

--  Equity capital raising revenues were $87.4 million, a 96% increase
    compared to $44.6 million in 2009.
--  Fixed income capital raising revenues were $21.1 million, a 24%
    increase compared to $17.1 million in 2009.
--  Equity advisory fee revenues were $76.1 million, a 65% increase
    compared to $46.0 million in 2009.
--  Fixed income advisory fee revenues were $7.3 million, a 128% increase
    compared to $3.2 million in 2009.

Compensation and benefits expenses for the year were $315.3 million, a 10% increase compared to $287.8 million in 2009. For the year, compensation and benefits as a percentage of net revenues was 58%, which was consistent with 2009. The increase in compensation and benefits expenses over the comparable periods is primarily related to associates who joined in connection with the TWPG merger and increased revenue production.

Non-compensation operating expenses for the year were $97.0 million, a 26% increase compared to $77.1 million in 2009. The increase in other non-compensation expenses over the comparable periods is primarily attributable to increased activity in all expense categories related to the merger with TWPG. For the year, non-compensation operating expenses as a percentage of net revenues was 18% compared to 16% in 2009.

Statement of Financial Condition (Unaudited)

Total assets increased 33% to $4.2 billion as of December 31, 2010 from $3.2 billion as of December 31, 2009. The increase is primarily attributable to growth of the company's bank subsidiary, which has grown its balance sheet to $1.8 billion as of December 31, 2010 from $1.2 billion as of December 31, 2009. As of December 31, 2010, Stifel Bank's investment portfolio of $1.0 billion has increased 75% from December 31, 2009. Over 75% of the investment portfolio is comprised of agency mortgage-backed securities. The increase in total assets is also attributable to the recently completed merger with TWPG. In addition to the net assets acquired in the merger with TWPG, the company recognized goodwill and intangible assets of $148.6 million. The company's broker-dealer subsidiary's gross assets and liabilities, including trading inventory, stock loan/borrow, receivables and payables from/to brokers, dealers and clearing organizations and clients, fluctuate with business levels and overall market conditions.

Total stockholders' equity as of December 31, 2010 increased $385.4 million, or 44%, to $1.3 billion from $873.4 million as of December 31, 2009. The increase is primarily attributable to the issuance of stock upon the completion of the merger with TWPG and the cumulative impact of the previously announced modification of the deferred compensation plan of $73.9 million after-tax, offset by the repurchase of $91.8 million, or 2.0 million shares, of the company's common stock pursuant to existing Board repurchase authorizations during the year ended December 31, 2010. Book value per share was $36.76 at December 31, 2010.

As of December 31, 2010, the company reported total securities owned and investments at fair value of $1.7 billion, which included securities categorized as Level 3 of $173.5 million. The company's Level 3 assets include auction rate securities, for which the auctions have failed, with a fair value of $94.8 million as of December 31, 2010.

Non-GAAP Financial Measures

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 an additional measure to aid in understanding and analyzing the company's financial results for the three and twelve months ended December 31, 2010. 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 periods 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 exclude compensation expense for the acceleration of deferred compensation as a result of the modification of the company's deferred compensation plan and certain compensation and non-compensation operating expenses associated with the merger of TWPG.

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 twelve months ended December 31, 2010 to the aforementioned expenses on a non-GAAP basis for the same periods.

             Reconciliation of GAAP to Non-GAAP Earnings (Unaudited)
                    (in thousands, except per share amounts)

             Three Months Ended December
                       31, 2010             Year Ended December 31, 2010
             ---------------------------  --------------------------------

                       Merger-                        Merger-
               GAAP    related  Non-GAAP     GAAP     related    Non-GAAP
             --------  -------  --------  ----------  --------  ----------
Net revenues $401,599  $ 1,188  $402,787  $1,382,026  $  2,126  $1,384,152

Non-interest
 expenses:
  Compensation
   and
   benefits   237,117      242   237,359   1,056,202  (186,053)    870,149
  Non-
   compensation
   operating
   expenses    97,665   (8,616)   89,049     326,053   (19,021)    307,032
             --------  -------  --------  ----------  --------  ----------
    Total non-
     interest
     expenses 334,782   (8,374)  326,408   1,382,255  (205,074)  1,177,181
             --------  -------  --------  ----------  --------  ----------

Income/(loss)
 before income
 taxes/
 (benefit)     66,817    9,562    76,379        (229)  207,200     206,971
  Provision
   for
   income
   taxes/
   (benefit)   25,423    3,638    29,061      (2,136)   84,347      82,211
             --------  -------  --------  ----------  --------  ----------
Net income/
 (loss)      $ 41,394  $ 5,924  $ 47,318  $    1,907   122,853  $  124,760
             ========  =======  ========  ==========  ========  ==========

Earnings per
 share
  Basic      $   1.21  $        $   1.38  $     0.06  $         $     3.84
  Diluted    $   0.97  $        $   1.11  $     0.05  $         $     3.24

As a
 percentage
 of net
 revenues:
  Compensation
   and benefits  59.0%              58.9%       76.4%                 62.9%
  Non-
   compensation
   operating
   expenses      24.4%              22.1%       23.6%                 22.1%
  Income/
   (loss) before
   income taxes/
   (benefit)     16.6%              19.0%        0.0%                 15.0%

Conference Call Information

Stifel Financial Corp. will host its fourth quarter and fiscal year 2010 financial results conference call on Tuesday, February 15, 2011, at 8:30 a.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to the company's Chairman, President, and CEO, Ronald J. Kruszewski, by dialing (888) 676-3684 and referencing conference ID #42304629. 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 clients are primarily served in the U.S. through 312 offices in 44 states, and the District of Columbia through Stifel, Nicolaus & Company, Incorporated and Thomas Weisel Partners LLC, and in Canada through Stifel Nicolaus Canada Inc. Clients in the United Kingdom and Europe are served through offices of Stifel Nicolaus Limited and Thomas Weisel Partners International Limited. Each of the 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. To learn more about Stifel, please visit the company's web site at www.stifel.com.

Forward-Looking Statements

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

                          Stifel Financial Corp.
                Summary Results of Operations (Unaudited)
                 (in thousands, except per share amounts)

                                       Three Months Ended
                     ------------------------------------------------------
                     12/31/10   12/31/09    Change     9/30/10    Change
                     ---------- ---------- --------   ---------  --------
Revenues:
   Principal
    transactions     $   89,996 $  116,410    (22.7)% $ 123,194     (26.9)%
   Commissions          139,605     99,285     40.6      96,986      43.9
   Investment
    banking              90,975     50,545     80.0      51,656      76.1
   Asset management
    and service fees     57,042     39,091     45.9      50,876      12.1
   Other income          10,497      2,990    251.1       3,656     187.1
                     ---------- ---------- --------   ---------  --------
     Operating
      revenues          388,115    308,321     25.9     326,368      18.9
   Interest revenue      18,307     15,078     21.4      17,718       3.3
                     ---------- ---------- --------   ---------  --------
     Total revenues     406,422    323,399     25.7     344,086      18.1
   Interest expense       4,823      3,932     22.7       3,698      30.4
                     ---------- ---------- --------   ---------  --------
     Net revenues       401,599    319,467     25.7     340,388      18.0
                     ---------- ---------- --------   ---------  --------
Non-interest
 expenses:
   Compensation and
    benefits            237,117    201,263     17.8     395,936     (40.1)
   Occupancy and
    equipment rental     34,730     26,430     31.4      29,559      17.5
   Communications
    and office
    supplies             19,709     15,342     28.5      19,877      (0.8)
   Commission and
    floor brokerage       7,313      6,249     17.0       7,972      (8.3)
   Other operating
    expenses             35,913     28,869     24.4      29,600      21.3
                     ---------- ---------- --------   ---------  --------
     Total
      non-interest
      expenses          334,782    278,153     20.4     482,944     (30.7)

Income/(loss) before
 income taxes            66,817     41,314     61.7    (142,556)    146.9
   Provision for
    income
    taxes/(benefit)      25,423     16,646     52.7     (58,220)    143.7
                     ---------- ---------- --------   ---------  --------
Net income/(loss)    $   41,394 $   24,668     67.8 % $ (84,336)    149.1%
                     ========== ========== ========   =========  ========

Earnings per share:
   Basic             $     1.21 $     0.82     47.6 % $   (2.47)    149.0%
   Diluted (3)       $     0.97 $     0.71     36.6 % $   (2.47)    139.3%

Weighted average
 number of common
 shares outstanding:
   Basic                 34,179     30,209     13.1 %    34,134       0.1%
   Diluted               42,467     34,706     22.4 %    41,223       3.0%


                               Year Ended
                     ------------------------------
                     12/31/10   12/31/09     Change
                     ---------  ---------- --------
Revenues:
   Principal
    transactions     $ 453,533  $  458,188     (1.0)%
   Commissions         445,260     345,520     28.9
   Investment
    banking            218,104     125,807     73.4
   Asset management
    and service fees   193,159     117,357     64.6
   Other income         19,855       9,138    117.3
                     ---------  ---------- --------
     Operating
      revenues       1,329,911   1,056,010     25.9
   Interest revenue     65,326      46,860     39.4
                     ---------  ---------- --------
     Total revenues  1,395,237   1,102,870     26.5
   Interest expense     13,211      12,234      8.0
                     ---------  ---------- --------
     Net revenues    1,382,026   1,090,636     26.7
                     ---------  ---------- --------
Non-interest
 expenses:
   Compensation and
    benefits         1,056,202     718,115     47.1
   Occupancy and
    equipment rental   115,742      89,741     29.0
   Communications
    and office
    supplies            69,929      54,745     27.7
   Commission and
    floor brokerage     26,301      23,416     12.3
   Other operating
    expenses           114,081      84,205     35.5
                     ---------  ---------- --------
     Total
      non-interest
      expenses       1,382,255     970,222     42.5

Income/(loss) before
 income taxes             (229)    120,414   (100.0)
   Provision for
    income
    taxes/(benefit)     (2,136)     44,616   (104.8)
                     ---------  ---------- --------
Net income/(loss)    $   1,907  $   75,798    (97.5)%
                     =========  ========== ========

Earnings per share:
   Basic             $    0.06  $     2.68    (97.8)%
   Diluted (3)       $    0.05  $     2.35    (97.9)%

Weighted average
 number of common
 shares outstanding:
   Basic                32,482      28,297     14.8%
   Diluted              38,448      32,294     19.1%

(3) Earnings per diluted common share are calculated using the basic
    weighted average number of common shares outstanding in periods a loss
    is incurred.



                              Stifel Financial Corp.
      (in thousands, except per share, employee and location amounts)
                     12/31/10      12/31/09   Change    9/30/10     Change
                   ------------- ------------ ------  ------------- ------
Statistical
 Information:
  Book value per
   share           $       36.76 $      28.86   27.4% $       35.52    3.5%
  Financial
   advisors (4)            1,935        1,885    2.7%         1,920    0.8%
  Full-time
   associates              4,906        4,434   10.6%         4,868    0.8%
  Locations                  312          294    6.1%           311    0.3%
  Total client
   assets          $ 110,593,000 $ 91,342,000   21.1% $ 100,289,000   10.3%

(4) Includes 160, 166 and 165 independent contractors at December 31, 2010
    and 2009 and September 30, 2010, respectively.




  Global Wealth Management Results and Statistical Information (Unaudited)
                              (in thousands)

                                       Three Months Ended
                     -----------------------------------------------------
                     12/31/10   12/31/09     Change    9/30/10     Change
                     ---------  ---------  ---------  ---------  ---------
Revenues:
   Commissions       $  92,558  $  75,584       22.5% $  69,875       32.5%
   Principal
    transactions        58,520     54,136        8.1     62,785       (6.8)
   Asset management
    and service fees    56,953     38,836       46.7     50,449       12.9
   Net interest         10,277      9,065       13.4     12,017      (14.5)
   Investment
    banking              5,015      5,730      (12.5)     6,957      (27.9)
   Other income         13,101      2,712      383.1      5,401      142.6
                     ---------  ---------  ---------  ---------  ---------
     Net revenues      236,424    186,063       27.1    207,484       13.9
                     ---------  ---------  ---------  ---------  ---------
Non-interest
 expenses:
   Compensation and
    benefits           136,009    116,988       16.3    119,100       14.2
   Non-compensation
    operating
    expenses            37,698     34,749        8.5     36,677        2.8
                     ---------  ---------  ---------  ---------  ---------
     Total
      non-interest
      expenses         173,707    151,737       14.5    155,777       11.5
                     ---------  ---------  ---------  ---------  ---------
   Income before
    income taxes     $  62,717  $  34,326       82.7% $  51,707       21.3%
                     =========  =========  =========  =========  =========

As a percentage of
 net revenues:
   Compensation and
    benefits              57.5%      62.9%                 57.4%
   Non-compensation
    operating
    expenses              16.0%      18.7%                 17.7%
   Income before
    income taxes          26.5%      18.4%                 24.9%


                               Year Ended
                     -------------------------------
                     12/31/10   12/31/09     Change
                     ---------  ---------  ---------
Revenues:
   Commissions       $ 321,541  $ 234,052       37.4%
   Principal
    transactions       239,851    194,384       23.4
   Asset management
    and service fees   192,073    116,818       64.4
   Net interest         44,834     27,188       64.9
   Investment
    banking             22,768     14,906       52.7
   Other income         22,202      8,626      157.4
                     ---------  ---------  ---------
     Net revenues      843,269    595,974       41.5
                     ---------  ---------  ---------
Non-interest
 expenses:
   Compensation and
    benefits           503,456    370,157       36.0
   Non-compensation
    operating
    expenses           145,790    121,118       20.4
                     ---------  ---------  ---------
     Total
      non-interest
      expenses         649,246    491,275       32.2
                     ---------  ---------  ---------
   Income before
    income taxes     $ 194,023  $ 104,699       85.3%
                     =========  =========  =========

As a percentage of
 net revenues:
   Compensation and
    benefits              59.7%      62.1%
   Non-compensation
    operating
    expenses              17.3%      20.3%
   Income before
    income taxes          23.0%      17.6%




                            Stifel Bank & Trust
                              (in thousands)

                     12/31/10     12/31/09   Change     9/30/10    Change
                   -----------  -----------  ------   -----------  ------
Other information:
   Assets          $ 1,773,720  $ 1,159,753    52.9%  $ 1,516,484    17.0%
   Investment
    securities     $ 1,012,714  $   578,488    75.1%  $   830,127    22.0%
   Retained loans,
    net            $   388,265  $   333,547    16.4%  $   364,732     6.5%
   Loans held for
    sale, net (5)  $    86,344  $    91,117    (5.2)% $   106,788   (19.1)%
   Deposits (6)    $ 1,623,568  $ 1,047,211    55.0 % $ 1,375,984    18.0 %

   Allowance as a
    percentage of
    loans (7)             0.60%        0.51%                 0.50%
   Non-performing
    assets as a
    percentage of
    total assets          0.18%        0.44%                 0.16%

(5) Balance at December 31, 2009 includes loans of $33.1 million held for
    sale as part of the branch sale.
(6) Balance at December 31, 2009 includes deposits of $20.8 million held
    for sale as part of the branch sale.
(7) Excluding acquired loans of $155.7 million, $171.0 million and $174.8
    million, the allowance as a percentage of gross loans totaled 0.99%,
    1.04% and 0.95% as of December 31, 2010 and 2009 and September 30,
    2010, respectively.





    Institutional Group Results and Statistical Information (Unaudited)
                              (in thousands)

                                      Three Months Ended
                    -----------------------------------------------------
                    12/31/10   12/31/09     Change    9/30/10     Change
                    ---------  ---------  --------   ---------  --------
Revenues:
   Principal
    transactions    $  35,564  $  62,275     (42.9)% $  60,408     (41.1)%
   Commissions         47,047     23,701      98.5      27,111      73.5

   Capital raising     40,674     28,768      41.4      22,575      80.2
   Advisory fees       40,909     16,047     154.9      23,063      77.4
                    ---------  ---------  --------   ---------  --------
   Investment
    banking            81,583     44,815      82.0      45,638      78.8
   Other income (8)     1,708      2,514     (32.1)      4,886     (65.0)
                    ---------  ---------  --------   ---------  --------
   Net revenues       165,902    133,305      24.5     138,043      20.2
                    ---------  ---------  --------   ---------  --------
Non-interest
 expenses:
   Compensation and
    benefits           94,300     73,584      28.2      82,147      14.8
   Non-compensation
    operating
    expenses           27,946     21,905      27.6      28,242      (1.0)
                    ---------  ---------  --------   ---------  --------
     Total
      non-interest
      expenses        122,246     95,489      28.0     110,389      10.7
                    ---------  ---------  --------   ---------  --------
   Income before
    income taxes    $  43,656  $  37,816      15.4%  $  27,654      57.9%
                    =========  =========  ========   =========  ========

As a percentage of
 net revenues:
   Compensation and
    benefits             56.8%      55.2%                 59.5%
   Non-compensation
    operating
    expenses             16.9%      16.4%                 20.5%
   Income before
    income taxes         26.3%      28.4%                 20.0%


                              Year Ended
                    -------------------------------
                    12/31/10   12/31/09     Change
                    ---------  ---------  --------
Revenues:
   Principal
    transactions    $ 217,770  $ 263,804     (17.5)%
   Commissions        123,719    111,469      11.0

   Capital raising    108,473     61,657      75.9
   Advisory fees       83,425     49,244      69.4
                    ---------  ---------  --------
   Investment
    banking           191,898    110,901      73.0
   Other income (8)     8,452      7,918       6.7
                    ---------  ---------  --------
   Net revenues       541,839    494,092       9.8
                    ---------  ---------  --------
Non-interest
 expenses:
   Compensation and
    benefits          315,329    287,835       9.6
   Non-compensation
    operating
    expenses           96,975     77,124      25.7
                    ---------  ---------  --------
     Total
      non-interest
      expenses        412,304    364,959      13.0
                    ---------  ---------  --------
   Income before
    income taxes    $ 129,535  $ 129,133       0.3%
                    =========  =========  ========

As a percentage of
 net revenues:
   Compensation and
    benefits             58.2%      58.3%
   Non-compensation
    operating
    expenses             17.9%      15.6%
   Income before
    income taxes         23.9%      26.1%

(8) Includes net interest and other income.




Institutional Group Institutional Brokerage & Investment Banking Revenues
                                (Unaudited)
                               (in thousands)

                                         Three Months Ended
                          ------------------------------------------------
                          12/31/10  12/31/09   Change   9/30/10    Change
                          --------- --------- --------  --------- --------

Institutional brokerage:
   Equity                 $  46,521 $  38,669     20.3% $  43,711      6.4%
   Fixed Income              36,090    47,307    (23.7)    43,808    (17.6)
                          --------- --------- --------  --------- --------
Institutional brokerage      82,611    85,976     (3.9)    87,519     (5.6)
                          --------- --------- --------  --------- --------

Investment banking:
   Capital raising:
     Equity                  34,458    23,213     48.4     18,060     90.8
     Fixed Income             6,216     5,555     11.9      4,515     37.7
                          --------- --------- --------  --------- --------
       Capital raising       40,674    28,768     41.4     22,575     80.2
   Advisory fees:
     Equity                  38,119    15,349    148.3     20,281     88.0
     Fixed Income             2,790       698    299.7      2,782      0.3
                          --------- --------- --------  --------- --------
       Advisory fees         40,909    16,047    154.9     23,063     77.4
                          --------- --------- --------  --------- --------
Investment banking        $  81,583 $  44,815     82.0% $  45,638     78.8%
                          --------- --------- --------  --------- --------


                                   Year Ended
                          ----------------------------
                          12/31/10  12/31/09   Change
                          --------- --------- --------

Institutional brokerage:
   Equity                 $ 172,983 $ 153,267     12.9%
   Fixed Income             168,506   222,006    (24.1)
                          --------- --------- --------
Institutional brokerage     341,489   375,273     (9.0)
                          --------- --------- --------

Investment banking:
   Capital raising:
     Equity                  87,415    44,636     95.8
     Fixed Income            21,058    17,021     23.7
                          --------- --------- --------
       Capital raising      108,473    61,657     75.9
   Advisory fees:
     Equity                  76,100    46,031     65.3
     Fixed Income             7,325     3,213    128.0
                          --------- --------- --------
       Advisory fees         83,425    49,244     69.4
                          --------- --------- --------
Investment banking        $ 191,898 $ 110,901     73.0%
                          --------- --------- --------

Contact Information

  • Investor Relations Contact
    Sarah Anderson
    (415) 364-2500
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