SOURCE: Stifel Financial Corp.

Stifel Financial Corp.

August 08, 2011 16:25 ET

Stifel Financial Corp. Reports Second Quarter 2011 Financial Results

ST. LOUIS, MO--(Marketwire - Aug 8, 2011) - Stifel Financial Corp. (NYSE: SF)

  • Net revenues of $358.9 million increased 9% from the second quarter of 2010.
  • Non-GAAP net income of $31.3 million(1), or $0.50 per diluted share, increased 30% from the 2nd quarter of 2010.
  • GAAP net income of $3.4 million, or $0.05 per diluted share.
  • Stockholders' equity was $1.3 billion and book value per share was $24.50 as of June 30, 2011.

Stifel Financial Corp. (NYSE: SF) today reported unaudited GAAP net revenues of $358.9 million for the three months ended June 30, 2011. The company reported non-GAAP net income of $31.3 million1, or $0.50 per diluted share, for the three months ended June 30, 2011, compared with non-GAAP net income of $24.1 million1, or $0.46 per diluted share2, on net revenues of $328.0 million for the second quarter of 2010. On a GAAP basis, the company reported unaudited net income of $3.4 million, or $0.05 per diluted share, for the three months ended June 30, 2011, compared with net income of $21.1 million, or $0.40 per diluted share2 for the second quarter of 2010. A reconciliation of the company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

GAAP results for the three months ended June 30, 2011 were significantly impacted by charges relating to ongoing civil litigation with five southeastern Wisconsin school districts ("District Litigation") and the related regulatory investigation. The charges relating to the District Litigation are the result of the purchase, at a substantial discount, of approximately $162.5 million face value notes from Depfa Bank and a provision for estimated costs associated with the ongoing civil litigation and related regulatory investigation. The purchase price is confidential. In addition, the Company incurred merger-related expenses as a result of our merger with Thomas Weisel Partners Group, Inc. ("TWPG"). Combined, these charges reduced net income by $27.9 million or $0.45 per diluted share.

For the six months ended June 30, 2011, the company reported non-GAAP net income of $64.2 million1, or $1.02 per diluted share, on net revenues of $725.6 million, compared with non-GAAP net income of $47.8 million1, or $0.91 per diluted share2, on net revenues of $640.0 million during the comparable period in 2010. On a GAAP basis, the company reported unaudited net income of $34.8 million, or $0.55 per diluted share, for the six months ended June 30, 2011, compared with unaudited net income of $44.8 million, or $0.85 per diluted share2, during the comparable period in 2010.

"Second quarter results improved over the year-ago period, but were impacted by a challenging market environment dominated by macroeconomic factors, and significant non-core expenses primarily related to additional legal reserves in connection with previously disclosed matters. Despite these factors, our investment banking group generated their second best revenue quarter, which was offset by pressure in our brokerage and private client businesses due to a lack of investor conviction coupled with lower industry-wide volumes," commented Ronald J. Kruszewski, Chairman, President and Chief Executive Officer of Stifel Financial. "We continue to position the firm for long-term growth and our recent announcement of the pending acquisition of Stone & Youngberg delivers on this strategy by adding public finance expertise and coverage in new markets. We are excited about combining our highly complementary businesses and delivering enhanced services to both our institutional and wealth management clients."

Summary Results of Operations (Unaudited)
Three Months Ended Six Months Ended
(in 000s) 6/30/11 6/30/10 % Change 3/31/11 % Change 6/30/11 6/30/10 % Change
Net revenues $ 358,857 $ 328,009 9.4 $ 366,613 (2.1 ) $ 725,470 $ 640,039 13.3
Net income $ 3,416 $ 21,109 (83.8 ) $ 31,398 (89.1 ) $ 34,814 $ 44,849 (22.4 )
Non-GAAP net income 1 $ 31,316 $ 24,060 30.2 $ 32,926 (4.9 ) $ 64,242 $ 47,835 34.3
Earnings per share: (2)
Basic $ 0.06 $ 0.46 (87.0 ) $ 0.60 (90.0 ) $ 0.66 $ 0.97 (32.0 )
Diluted $ 0.05 $ 0.40 (87.5 ) $ 0.50 (90.0 ) $ 0.55 $ 0.85 (35.3 )
Non-GAAP diluted 1 $ 0.50 $ 0.46 8.7 $ 0.52 (3.8 ) $ 1.02 $ 0.91 12.1

Business Segment Results

Summary Segment Results (Unaudited)
Three Months Ended Six Months Ended
(in 000s) 6/30/11 6/30/10 %
Change
3/31/11 %
Change
6/30/11 6/30/10 %
Change
Net revenues: (3)
Global Wealth Management $ 225,645 $ 199,940 12.9 $ 238,446 (5.4 ) $ 464,091 $ 399,361 16.2
Institutional Group 132,915 124,602 6.7 126,994 4.7 259,909 237,894 9.3
Other 403 3,467 (88.4 ) 1,179 (65.8 ) 1,582 2,784 (43.2 )
$ 358,963 $ 328,009 9.4 $ 366,619 (2.1 ) $ 725,582 $ 640,039 13.4
Operating contribution: 3
Global Wealth Management $ 55,426 $ 40,441 37.1 $ 61,472 (9.8 ) $ 116,898 $ 79,599 46.9
Institutional Group 21,951 30,769 (28.7 ) 21,393 2.6 43,344 58,225 (25.6 )
Other (28,321 ) (30,240 ) (6.3 ) (29,714 ) (4.7 ) (58,035 ) (57,287 ) 1.3
$ 49,056 $ 40,970 19.7 $ 53,151 (7.7 ) $ 102,207 $ 80,537 26.9

Global Wealth Management

For the quarter ended June 30, 2011, the Global Wealth Management ("GWM") segment generated pre-tax operating income of $55.4 million, compared with $40.4 million in the second quarter of 2010 and $61.5 million in the first quarter of 2011. Net revenues for the quarter were $225.6 million, compared with $199.9 million in the second quarter of 2010, and $238.4 million in the first quarter of 2011. The increase in net revenues over the comparable period in 2010 is primarily attributable to: (1) higher commissions revenues as a result of increased client assets coupled with higher productivity; (2) growth in asset management and service fees as a result of an increase in assets under management, positive gains in market performance and contributions as a result of the merger with TWPG; and (3) increased equity underwriting sales credits. The decrease in net revenues from the record first quarter of 2011 was primarily attributable to a decrease in commissions and principal transactions revenues as a result of lower trading volumes.

  • The Private Client Group reported net revenues of $213.5 million, a 12% increase compared with the second quarter of 2010 and a 7% decrease compared with the first quarter of 2011.
  • Stifel Bank reported net revenues of $12.1 million, a 36% increase compared with the second quarter of 2010 and a 36% increase compared with the first quarter of 2011.

Institutional Group

For the quarter ended June 30, 2011, the Institutional Group segment generated pre-tax operating income of $22.0 million, compared with $30.8 million in the second quarter of 2010 and $21.4 million in the first quarter of 2011. Net revenues for the quarter were $132.9 million, compared with $124.6 million in the second quarter of 2010 and $127.0 million in the first quarter of 2011. The growth in revenue over the comparable period in 2010 was driven by an increase in investment banking revenues, which was primarily related to improved equity capital market conditions and contributions as a result of the merger with TWPG. The increase in activity was offset by a decline in fixed income and equity institutional brokerage revenues, which was negatively impacted by the challenging market conditions present during the first half of 2011 and lower industry-wide volumes. The decrease in net revenues from the first quarter of 2011 was primarily attributable to a decrease in institutional brokerage revenues, offset by an increase in advisory fees and equity and, to a lesser extent, fixed income capital raising revenues.

Institutional brokerage revenues were $73.2 million, a 17% decrease compared with the second quarter of 2010 and a 19% decrease compared with the first quarter of 2011.

  • Equity institutional brokerage revenues were $41.7 million, a 6% decrease compared with the second quarter of 2010 and a 20% decrease compared with the first quarter of 2011.
  • Fixed income institutional brokerage revenues were $31.5 million, a 29% decrease compared with the second quarter of 2010 and an 18% decrease compared with the first quarter of 2011.

Investment banking revenues were $58.0 million, a 62% increase compared with the second quarter of 2010 and a 65% increase compared with the first quarter of 2011.

  • Equity capital raising revenues were $28.0 million, a 35% increase compared with the second quarter of 2010 and a 22% increase compared with the first quarter of 2011.
  • Fixed income capital raising revenues were $5.2 million, a 17% increase compared with the second quarter of 2010 and a 70% increase compared with the first quarter of 2011.
  • Equity advisory fee revenues were $22.9 million, a 149% increase compared with the second quarter of 2010, and a 173% increase compared with the first quarter of 2011.
  • Fixed income advisory fee revenues were $1.9 million, a 44% increase compared with the second quarter of 2010 and a 184% increase compared with the first quarter of 2011.

Consolidated Compensation and Benefits Expenses

For the quarter ended June 30, 2011, compensation and benefits expenses was $229.9 million, which included $2.0 million of merger-related expenses, increased 6% compared with the second quarter of 2010, and decreased 1% compared with the first quarter of 2011. The increase in compensation and benefits expenses from the comparable period in 2010 is primarily due to increased revenue production and profitability. The decrease from the first quarter of 2011 is primarily attributable to a decrease in variable compensation as a result of lower revenues.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 64%(4) compared with 65%4 in the second quarter of 2010 and 63%4 in the first quarter of 2011. Transition pay, which primarily consists of amortization of upfront notes, signing bonuses and retention awards, as a percentage of net revenues was 5% in the second quarter of 2011 compared with 6% in the second quarter of 2010 and 5% in the first quarter of 2011.

Consolidated Non-Compensation Operating Expenses

For the quarter ended June 30, 2011, non-compensation operating expenses of $125.0 million, which included $41.8 million of litigation-related charges and $1.3 million of merger-related expenses, increased 66% compared with the second quarter of 2010 and increased 48% compared with the first quarter of 2011. Excluding legal and merger-related expenses, non-compensation operating expenses were $81.9 million for the second quarter of 2011, a 12% increase compared with the second quarter of 2010 and consistent with the first quarter of 2011. The increase in non-compensation operating expenses from the comparable period in 2010 is primarily due to increased variable expenses associated with revenue growth and an increase in expenses as a result of the merger with TWPG.

Excluding legal and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2011 was 23%4 compared with 22%4 in the second quarter of 2010 and 22%4 in the first quarter of 2011.

Provision for Income Taxes

The effective income tax rate for the quarter ended June 30, 2011 was 12% compared with 41% for the comparable period in 2010 and 38% for the first quarter of 2011.

Statement of Financial Condition (Unaudited)

Total assets increased 34% to $4.5 billion as of June 30, 2011 from $3.4 billion as of June 30, 2010. 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 June 30, 2011 from $1.4 billion as of June 30, 2010. As of June 30, 2011, Stifel Bank's investment portfolio of $1.1 billion has increased 45% from June 30, 2010, with over 75% of the investment portfolio is comprised of agency mortgage-backed securities. The increase in total assets is also attributable to the assets acquired in the merger with TWPG. In addition to the net assets acquired in the merger with TWPG, the company recorded goodwill and intangible assets of $153.1 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 June 30, 2011 increased $369.4 million, or 40%, to $1.3 billion from $927.1 million as of June 30, 2010. 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 $71.2 million, or 2.4 million shares(5), of the company's common stock pursuant to existing Board repurchase authorizations since June 30, 2010. Book value per share was $24.50 at June 30, 2011.

As of June 30, 2011, the company reported total securities owned and investments at fair value of $1.9 billion, which included securities categorized as Level 3 of $175.7 million. The company's Level 3 assets include auction rate securities with a fair value of $118.4 million as of June 30, 2011.

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 six months ended June 30, 2011 and 2010 and the three months ended March 31, 2011. 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 litigation-related expenses associated with the civil lawsuit and related regulatory investigation in connection with the ongoing matter with five Southeastern Wisconsin school districts 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 tables provide 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 benefits 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, 2011 and 2010 and the three months ended March 31, 2011 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 June 30, 2011 Six Months Ended June 30, 2011
GAAP Non-core (6) Non-GAAP GAAP Non-core 6 Non-GAAP
Net revenues $ 358,857 $ 106 $ 358,963 $ 725,470 $ 112 $ 725,582
Non-interest expenses:
Compensation and benefits 229,939 (1,966 ) 227,973 461,105 (1,722 ) 459,383
Non-compensation operating expenses 125,043 (43,109 ) 81,934 209,806 (45,814 ) 163,992
Total non-interest expenses 354,982 (45,075 ) 309,907 670,911 (47,536 ) 623,375
Income before income taxes 3,875 45,181 49,056 54,559 47,648 102,207
Provision for income taxes 459 17,281 17,740 19,745 18,220 37,965
Net income $ 3,416 $ 27,900 $ 31,316 $ 34,814 $ 29,428 $ 64,242
Earnings per share:
Diluted $ 0.05 $ 0.50 $ 0.55 $ 1.02
As a percentage of net revenues:
Compensation and benefits 64.1 % 63.5 % 63.6 % 63.3 %
Non-compensation operating expenses 34.8 % 22.8 % 28.9 % 22.6 %
Income before income taxes 1.1 % 13.7 % 7.5 % 14.1 %

Reconciliation of GAAP to Non-GAAP Earnings (Unaudited)
(in thousands, except per share amounts)
Three Months Ended June 30, 2010 Six Months Ended June 30, 2010
GAAP Non-core 6 Non-GAAP GAAP Non-core 6 Non-GAAP
Net revenues $ 328,009 $ -- $ 328,009 $ 640,039 $ -- $ 640,039
Non-interest expenses:
Compensation and benefits 216,907 (3,119 ) 213,788 423,149 (3,119 ) 420,030
Non-compensation operating expenses 75,157 (1,906 ) 73,251 141,380 (1,908 ) 139,472
Total non-interest expenses 292,064 (5,025 ) 287,039 564,529 (5,027 ) 559,502
Income before income taxes 35,945 5,025 40,970 75,510 5,027 80,537
Provision for income taxes 14,836 2,074 16,910 30,661 2,041 32,702
Net income $ 21,109 $ 2,951 $ 24,060 $ 44,849 $ 2,986 $ 47,835
Earnings per share: (7)
Diluted $ 0.40 $ 0.46 $ 0.85 $ 0.91
As a percentage of net revenues:
Compensation and benefits 66.1 % 65.2 % 66.1 % 65.6 %
Non-compensation operating expenses 22.9 % 22.3 % 22.1 % 21.8 %
Income before income taxes 11.0 % 12.5 % 11.8 % 12.6 %

Reconciliation of GAAP to Non-GAAP Earnings (Unaudited)
(in thousands, except per share amounts)
Three Months Ended March 31, 2011
GAAP Non-core (8) Non-GAAP
Net revenues $ 366,613 $ 6 $ 366,619
Non-interest expenses:
Compensation and benefits 231,166 244 231,410
Non-compensation operating expenses 84,763 (2,705 ) 82,058
Total non-interest expenses 315,929 (2,461 ) 313,468
Income before income taxes 50,684 2,467 53,151
Provision for income taxes 19,286 939 20,225
Net income $ 31,398 $ 1,528 $ 32,926
Earnings per share:
Diluted $ 0.50 $ 0.52
As a percentage of net revenues:
Compensation and benefits 63.1 % 63.1 %
Non-compensation operating expenses 23.1 % 22.4 %
Income before income taxes 13.8 % 14.5 %

Conference Call Information

Stifel Financial Corp. will host its second quarter 2011 financial results conference call on Monday, August 8, 2011, at 5:00 p.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 #87862307. 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 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 314 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 Stifel Nicolaus Europe Limited (formerly 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.

Summary Results of Operations (Unaudited)
Three Months Ended Six Months Ended
(in thousands, except per share amounts) 6/30/11 6/30/10 %
Change
3/31/11 %
Change
6/30/11 6/30/10 %
Change
Revenues:
Commissions $ 138,315 $ 103,634 33.5 $ 155,786 (11.2 ) $ 294,101 $ 208,669 40.9
Principal transactions 79,741 122,923 (35.1 ) 92,859 (14.1 ) 172,600 240,343 (28.2 )
Investment banking 64,418 41,252 56.2 41,418 55.5 105,836 75,473 40.2
Asset management 56,981 44,138 29.1 57,680 (1.2 ) 114,661 85,241 34.5
Other income 4,556 3,757 21.3 6,256 (27.2 ) 10,812 5,702 89.6
Operating revenues 344,011 315,704 9.0 353,999 (2.8 ) 698,010 615,428 13.4
Interest revenue 21,229 14,654 44.9 18,856 12.6 40,085 29,301 36.8
Total revenues 365,240 330,358 10.6 372,855 (2.0 ) 738,095 644,729 14.5
Interest expense 6,383 2,349 171.7 6,242 2.3 12,625 4,690 169.2
Net revenues 358,857 328,009 9.4 366,613 (2.1 ) 725,470 640,039 13.3
Non-interest expenses:
Compensation and benefits 229,939 216,907 6.0 231,166 (0.5 ) 461,105 423,149 9.0
Occupancy and equipment rental 29,723 26,595 11.8 29,325 1.4 59,048 51,453 14.8
Communications and office supplies 18,515 15,925 16.3 18,845 (1.8 ) 37,360 30,343 23.1
Commission and floor brokerage 6,894 5,272 30.8 6,649 3.7 13,543 11,016 22.9
Other operating expenses 69,911 27,365 155.5 29,944 133.5 99,855 48,568 105.6
Total non-interest expenses 354,982 292,064 21.5 315,929 12.4 670,911 564,529 18.8
Income before income taxes 3,875 35,945 (89.2 ) 50,684 (92.4 ) 54,559 75,510 (27.7 )
Provision for income taxes 459 14,836 (96.9 ) 19,286 (97.6 ) 19,745 30,661 (35.6 )
Net income $ 3,416 $ 21,109 (83.8 ) $ 31,398 (89.1 ) $ 34,814 $ 44,849 (22.4 )
Earnings per share: (9)
Basic $ 0.06 $ 0.46 (87.0 ) $ 0.60 (90.0 ) $ 0.66 $ 0.97 (32.0 )
Diluted $ 0.05 $ 0.40 (87.5 ) $ 0.50 (90.0 ) $ 0.55 $ 0.85 (35.3 )
Weighted average number of common shares outstanding: 9
Basic 52,932 46,257 14.4 52,534 0.8 52,734 46,168 14.2
Diluted 63,245 52,351 20.8 63,179 0.1 63,239 52,459 20.5

(in thousands, except per share, employee and location amounts)
6/30/11 6/30/10 % Change 3/31/11 % Change
Statistical Information:
Book value per share 9 $ 24.50 $ 20.01 22.4 $ 24.32 0.7
Financial advisors (10) 1,958 1,916 2.2 1,947 0.6
Full-time associates 4,938 4,587 7.7 4,916 0.4
Locations 314 301 4.3 311 1.0
Total client assets $ 116,174,000 $ 92,423,000 25.7 $ 115,284,000 0.8

Global Wealth Management Summary Results of Operations (Unaudited)
Three Months Ended Six Months Ended
(in 000s) 6/30/11 6/30/10 %
Change
3/31/11 %
Change
6/30/11 6/30/10 %
Change
Revenues:
Commissions $ 93,593 $ 79,521 17.7 $ 101,762 (8.0 ) $ 195,355 $ 159,108 22.8
Principal transactions 51,263 58,675 (12.6 ) 56,163 (8.7 ) 107,426 118,546 (9.4 )
Asset management and service fees 56,817 43,777 29.8 57,530 (1.2 ) 114,347 84,671 35.0
Net interest 13,401 11,506 16.5 11,169 20.0 24,570 22,540 9.0
Investment banking 6,411 5,494 16.7 6,312 1.6 12,723 10,796 17.8
Other income 4,160 967 330.2 5,510 (24.5 ) 9,670 3,700 161.4
Net revenues 225,645 199,940 12.9 238,446 (5.4 ) 464,091 399,361 16.2
Non-interest expenses:
Compensation and benefits 132,952 123,609 7.6 142,586 (6.8 ) 275,538 248,347 10.9
Non-compensation operating expenses 37,267 35,890 3.8 34,388 8.4 71,655 71,415 0.3
Total non-interest expenses 170,219 159,499 6.7 176,974 (3.8 ) 347,193 319,762 8.6
Income before income taxes $ 55,426 $ 40,441 37.1 $ 61,472 (9.8 ) $ 116,898 $ 79,599 46.9
As a percentage of net revenues:
Compensation and benefits 58.9 61.8 59.8 59.4 62.2
Non-compensation operating expenses 16.5 18.0 14.4 15.4 17.9
Income before income taxes 24.6 20.2 25.8 25.2 19.9

Stifel Bank & Trust (Unaudited)
(in thousands)
6/30/11 6/30/10 % Change 3/31/11 % Change
Other information:
Assets $ 1,807,859 $ 1,392,828 29.8 $ 1,787,531 1.1
Investment securities 1,074,114 740,121 45.1 1,190,776 (9.8 )
Retained loans, net 476,764 366,391 30.1 396,244 20.3
Loans held for sale, net 55,110 60,154 (8.4 ) 30,866 78.5
Deposits 1,641,079 1,255,292 30.7 1,625,890 0.9
Allowance as a percentage of loans (11) 0.68 % 0.53 % 0.63 %
Non-performing assets as a percentage of total assets 0.10 % 0.16 % 0.12 %

Institutional Group Summary Results of Operations (Unaudited)
Three Months Ended Six Months Ended
(in 000s) 6/30/11 6/30/10 %
Change
3/31/11 %
Change
6/30/11 6/30/10 %
Change
Revenues:
Commissions $ 44,721 $ 24,113 85.5 $ 54,025 (17.2 ) $ 98,746 $ 49,561 99.2
Principal transactions 28,477 64,249 (55.7 ) 36,696 (22.4 ) 65,173 121,798 (46.5 )
Capital raising 33,172 25,220 31.5 26,046 27.4 59,218 45,224 30.9
Advisory fees 24,835 10,539 135.6 9,060 174.1 33,895 19,453 74.2
Investment banking 58,007 35,759 62.2 35,106 65.2 93,113 64,677 44.0
Other income (12) 1,710 481 255.5 1,167 46.5 2,877 1,858 54.8
Net revenues 132,915 124,602 6.7 126,994 4.7 259,909 237,894 9.3
Non-interest expenses:
Compensation and benefits 82,006 72,578 13.0 77,187 6.2 159,193 138,882 14.6
Non-compensation operating expenses 28,958 21,255 36.2 28,414 1.9 57,372 40,787 40.7
Total non-interest expenses 110,964 93,833 18.3 105,601 5.1 216,565 179,669 20.5
Income before income taxes $ 21,951 $ 30,769 (28.7 ) $ 21,393 2.6 $ 43,344 $ 58,225 (25.6 )
As a percentage of net revenues:
Compensation and benefits 61.7 58.2 60.8 61.2 58.4
Non-compensation operating expenses 21.8 17.1 22.4 22.1 17.1
Income before income taxes 16.5 24.7 16.8 16.7 24.5

Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
Three Months Ended Six Months Ended
(in 000s) 6/30/11 6/30/10 % Change 3/31/11 % Change 6/30/11 6/30/10 % Change
Institutional brokerage:
Equity $ 41,695 $ 44,100 (5.5 ) $ 52,398 (20.4 ) $ 94,093 $ 82,751 13.7
Fixed income 31,503 44,262 (28.8 ) 38,323 (17.8 ) 69,826 88,608 (21.2 )
Institutional brokerage 73,198 88,362 (17.2 ) 90,721 (19.3 ) 163,919 171,359 (4.3 )
Investment banking:
Capital raising:
Equity 27,999 20,809 34.5 23,005 21.7 51,004 34,897 46.2
Fixed income 5,173 4,411 17.3 3,041 70.1 8,214 10,327 (20.5 )
Capital raising 33,172 25,220 31.5 26,046 27.4 59,218 45,224 30.9
Advisory fees:
Equity 22,924 9,215 148.8 8,387 173.3 31,311 17,700 76.9
Fixed income 1,911 1,324 44.3 673 184.0 2,584 1,753 47.4
Advisory fees 24,835 10,539 135.6 9,060 174.1 33,895 19,453 74.2
Investment banking $ 58,007 $ 35,759 62.2 $ 35,106 65.2 $ 93,113 $ 64,677 44.0

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

(2) Per share information for the three and six months ended June 30, 2010 has been adjusted to reflect the April 2011 three-for-two stock split.

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

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

(5) Share information has been adjusted to reflect the April 2011 three-for-two stock split.

(6) Non-core items for the three and six months ended June 30, 2011 include litigation-related expenses associated with the civil lawsuit and related regulatory investigation in connection with the ongoing matter with five Southeastern Wisconsin school districts and certain merger-related expenses related to the merger with TWPG. Non-core items for the three and six months ended June 30, 2010 include certain merger-related expenses related to the merger with TWPG.

(7) Per share information has been adjusted to reflect the April 2011 three-for-two stock split.

(8) Non-core items for the three months ended March 31, 2011 include certain merger-related expenses related to the merger with TWPG.

(9) Per share and share information for the three and six months ended June 30, 2010 has been adjusted to reflect the April 2011 three-for-two stock split.

(10) Includes 160, 167 and 160 independent contractors at June 30, 2011 and 2010 and March 31, 2011, respectively.

(11) Excluding acquired loans of $140.6 million, $174.8 million and $146.4 million, the allowance as a percentage of gross loans totaled 0.96%, 1.0% and 1.0% as of June 30, 2011 and 2010 and March 31, 2011, respectively.

(12) Includes net interest and other income.

Contact Information

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