- Record net revenues of $340.4 million.
- Non-GAAP net income of $29.6 million, or $0.72 per diluted share.
- GAAP net loss of $84.3 million.
- As of September 30, 2010, stockholders' equity was $1.2 billion, resulting in book value per share of $33.97.
- A non-cash charge of $107.2 million after tax ($181.1 million pre-tax), or $3.14 per basic share ($2.60 per diluted share outstanding, which is a non-GAAP measure), related to the acceleration of deferred compensation as a result of the previously announced modification of the company's deferred compensation plan.
- Merger-related expenses of $6.8 million after tax ($11.5 million pre-tax), or $0.20 per basic share ($0.17 per diluted share outstanding, which is a non-GAAP measure), related to the previously announced merger with Thomas Weisel Partners Group, Inc. ("TWPG").
---------------------------------------------------------------------------
Summary Results of Operations (Unaudited)
---------------------------------------------------------------------------
Three Months Ended
--------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
-------- -------- ------ -------- ------
Results of operations data
(000s):
Net revenues $340,388 $289,683 17.5% $328,009 3.8%
Net income/(loss) $(84,336) $ 22,138 *% $ 21,109 *%
Non-GAAP net income(2) $ 29,639 $ 22,138 33.9% $ 24,061 23.2%
Earnings per share:(1)
Basic $ (2.47) $ 0.77 *% $ 0.68 *%
Diluted $ (2.47) $ 0.67 *% $ 0.60 *%
Non-GAAP diluted(2) $ 0.72 $ 0.67 7.5% $ 0.69 4.4%
--------------------------------------------
Nine Months Ended
--------------------------------------------
9/30/10 9/30/09 Change
-------- -------- ------
Results of operations data
(000s):
Net revenues $980,427 $771,169 27.1%
Net income/(loss) $(39,487) $ 51,130 *%
Non-GAAP net income(2) $ 77,442 $ 51,130 51.5%
Earnings per share:(1)
Basic $ (1.24) $ 1.85 *%
Diluted $ (1.24) $ 1.62 *%
Non-GAAP diluted(2) $ 2.09 $ 1.62 29.1%
* Percentage is not meaningful.
------------------------
(1) GAAP earnings per share for the three and nine months ended
September 30, 2010 is calculated using the basic weighted average
number of common shares outstanding, not fully dilutive shares, as they
are anti-dilutive in periods a loss is incurred. Net loss for the three
and nine months ended September 30, 2010, using fully dilutive shares
of 41.2 million and 37.1 million, was $2.05 and $1.07, respectively.
(2) A reconciliation of the company's GAAP results to these non-GAAP
measures is discussed below under "Non-GAAP Financial Measures."
Consolidated Non-Interest Expenses
For the quarter ended September 30, 2010, compensation and benefits
expenses were $395.9 million, which included $183.2 million related to the
modification of the company's deferred compensation plan and merger-related
expenses, an increase of 105% compared to the third quarter of 2009, and an
increase of 83% compared to the second quarter of 2010. Excluding these
expenses, compensation and benefits expenses were $212.7 million for the
third quarter of 2010, an increase of 10% compared to the third quarter of
2009, and a 2% decrease compared to the second quarter of 2010.
Excluding these expenses, compensation and benefits, as a percentage of net
revenues, was 62% compared to 67% in the third quarter of 2009 and 66% in
the second quarter of 2010.
For the quarter ended September 30, 2010, non-compensation operating
expenses of $87.0 million, which included $8.5 million of merger-related
expenses, a 32% increase compared to the third quarter of 2009 and a 16%
increase compared to the second quarter of 2010. Excluding merger-related
expenses, non-compensation operating expenses were $78.5 million for the
third quarter of 2010, a 20% increase compared to the third quarter of
2009, and a 5% increase compared to the second quarter of 2010. The
increase in non-compensation operating expenses is primarily due to the
recently completed merger with Thomas Weisel Partners Group, Inc. ("TWPG")
and the acquisition of certain UBS branches completed in October 2009.
Business Segment Results
Global Wealth Management
For the quarter ended September 30, 2010, the Global Wealth Management
("GWM") segment generated pre-tax operating income of $51.7 million,
compared to $29.1 million in the third quarter of 2009, and $40.4 million
in the second quarter of 2010. Net revenues for the quarter were $207.5
million, compared to $158.7 million in the third quarter of 2009 and $199.9
million in the second 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 56 UBS branches completed in October 2009.
- The Private Client Group reported net revenues of $197.3 million, a 28% increase compared to the third quarter of 2009 and a 3% increase compared to the second quarter of 2010.
- Stifel Bank reported net revenues of $10.2 million, a 107% increase compared to the third quarter of 2009 and a 13% increase compared to the second quarter of 2010.
- Equity institutional brokerage revenues were $43.7 million, a 10% increase compared to the third quarter of 2009, and a 1% decrease compared to the second quarter of 2010. Fixed income institutional brokerage revenues were $43.8 million, a 25% decrease compared to the third quarter of 2009, and a 1% decrease compared to the second quarter of 2010.
- Equity capital raising revenues were $18.1 million, a 37% increase compared to the third quarter of 2009, and a 13% decrease compared to the second quarter of 2010. Fixed income capital raising revenues were $4.5 million, an 8% decrease compared to the third quarter of 2009, and a 2% increase compared to the second quarter of 2010.
- Equity advisory fee revenues were $20.3 million, a 78% increase compared to the third quarter of 2009, and a 120% increase compared to the second quarter of 2010. Fixed income advisory fee revenues were $2.8 million, a 106% increase compared to the third quarter of 2009, and a 110% increase compared to the second quarter of 2010.
---------------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Earnings (Unaudited)
(in thousands, except per share amounts)
---------------------------------------------------------------------------
Three Months Ended
September 30, 2010
------------------------------------
Merger-
GAAP related Non-GAAP
---------- ---------- ----------
Net revenues $ 340,388 $ 939 $ 341,327
Non-interest expenses:
Compensation and benefits 395,936 (183,176) 212,760
Non-compensation operating expenses 87,008 (8,495) 78,513
---------- ---------- ----------
Total non-interest expenses 482,944 (191,671) 291,273
---------- ---------- ----------
Income/(loss) before income
taxes/(benefit) (142,556) 192,610 50,054
Provision for income
taxes/(benefit) (58,220) 78,635 20,415
---------- ---------- ----------
Net income/(loss) $ (84,336) $ 113,975 $ 29,639
========== ========== ==========
Earnings per share:(3)
Basic $ (2.47) $ 3.34 $ 0.87
Diluted $ (2.47) $ 2.77 $ 0.72
As a percentage of net revenues:
Compensation and benefits 116.3% 62.3%
Non-compensation operating expenses 25.6% 23.0%
Income/(loss) before income
taxes/(benefit) (41.9)% 14.7%
------------------------------------
Nine Months Ended
September 30, 2010
------------------------------------
Merger-
GAAP related Non-GAAP
---------- ---------- ----------
Net revenues $ 980,427 $ 939 $ 981,366
Non-interest expenses:
Compensation and benefits 819,085 (186,295) 632,790
Non-compensation operating expenses 228,388 (10,404) 217,984
---------- ---------- ----------
Total non-interest expenses 1,047,473 (196,699) 850,774
---------- ---------- ----------
Income/(loss) before income
taxes/(benefit) (67,046) 197,638 130,592
Provision for income
taxes/(benefit) (27,559) 80,709 53,150
---------- ---------- ----------
Net income/(loss) $ (39,487) $ 116,929 $ 77,442
========== ========== ==========
Earnings per share:(3)
Basic $ (1.24) $ 3.67 $ 2.43
Diluted $ (1.24) $ 3.16 $ 2.09
As a percentage of net revenues:
Compensation and benefits 83.5% 64.5%
Non-compensation operating expenses 23.3% 22.2%
Income/(loss) before income
taxes/(benefit) (6.8)% 13.3%
------------------------
(3) GAAP earnings per share for the three and nine months ended
September 30, 2010 is calculated using the basic weighted average
number of common shares outstanding of 34.1 million and 31.9 million,
respectively, not fully dilutive shares, as they are anti-dilutive in
periods a loss is incurred. Net loss for the three and nine months
ended September 30 2010, using fully dilutive shares of 41.2 million
and 37.1 million, was $2.05 and $1.07, respectively.
Conference Call Information
Stifel Financial Corp. will host its third quarter 2010 financial results
conference call on Tuesday, November 9, 2010, 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 #22760334. 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 one hour following the
completion of the call.
Company Information
Stifel Financial Corp. (
Stifel Financial Corp.
Summary Results of Operations (Unaudited)
(in thousands, except per share amounts)
-------------------------------------------------------------------------
Three Months Ended
------------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
--------- --------- ------ --------- ------
Revenues:
Principal transactions $ 123,194 $ 123,238 0.0% $ 122,923 0.2%
Commissions 96,986 90,905 6.7 103,634 (6.4)
Asset management and
service fees 50,876 27,012 88.4 44,138 15.3
Investment banking 51,656 35,056 47.4 41,252 25.2
Other income 3,656 5,072 (27.9) 3,757 (2.7)
--------- --------- ------ --------- ------
Operating revenues 326,368 281,283 16.0 315,704 3.4
Interest revenue 17,718 11,306 56.7 14,654 20.9
--------- --------- ------ --------- ------
Total revenues 344,086 292,589 17.6 330,358 4.2
Interest expense 3,698 2,906 27.2 2,349 57.4
--------- --------- ------ --------- ------
Net revenues 340,388 289,683 17.5 328,009 3.8
--------- --------- ------ --------- ------
Non-interest expenses:
Compensation and
benefits 395,936 193,131 105.0 216,907 82.5
Occupancy and
equipment rental 29,559 24,730 19.5 26,595 11.1
Communications and
office supplies 19,877 14,429 37.8 15,925 24.8
Commission and floor
brokerage 7,972 6,486 22.9 5,272 51.2
Other operating
expenses 29,600 20,071 47.4 27,365 8.2
--------- --------- ------ --------- ------
Total non-interest
expenses 482,944 258,847 86.6 292,064 65.4
--------- --------- ------ --------- ------
Income/(loss) before
income taxes (142,556) 30,836 * 35,945 *
Provision for income
taxes/(benefit) (58,220) 8,698 * 14,836 *
--------- --------- ------ --------- ------
Net income/(loss) $ (84,336) $ 22,138 *% $ 21,109 *%
========= ========= ====== ========= ======
Earnings per share:
Basic $ (2.47) $ 0.77 *% $ 0.68 *%
Diluted(4) $ (2.47) $ 0.67 *% $ 0.60 *%
Weighted average number
of common shares
outstanding:
Basic 34,134 28,708 18.9% 30,838 10.7%
Diluted 41,223 32,817 25.7% 34,901 18.2%
------------------------------------------------
Nine Months Ended
------------------------------------------------
9/30/10 9/30/09 Change
--------- --------- ------
Revenues:
Principal transactions $ 363,537 $ 341,777 6.4%
Commissions 305,655 246,236 24.1
Asset management and
service fees 136,117 78,266 73.9
Investment banking 127,129 75,262 68.9
Other income 9,358 6,148 52.2
--------- --------- ------
Operating revenues 941,796 747,689 26.0
Interest revenue 47,019 31,782 47.9
--------- --------- ------
Total revenues 988,815 779,471 26.9
Interest expense 8,388 8,302 1.0
--------- --------- ------
Net revenues 980,427 771,169 27.1
--------- --------- ------
Non-interest expenses:
Compensation and
benefits 819,085 516,852 58.5
Occupancy and
equipment rental 81,012 63,311 28.0
Communications and
office supplies 50,220 39,403 27.5
Commission and floor
brokerage 18,988 17,167 10.6
Other operating
expenses 78,168 55,336 41.3
--------- --------- ------
Total non-interest
expenses 1,047,473 692,069 51.4
--------- --------- ------
Income/(loss) before
income taxes (67,046) 79,100 *
Provision for income
taxes/(benefit) (27,559) 27,970 *
--------- --------- ------
Net income/(loss) $ (39,487) $ 51,130 *%
========= ========= ======
Earnings per share:
Basic $ (1.24) $ 1.85 *%
Diluted(4) $ (1.24) $ 1.62 *%
Weighted average number
of common shares
outstanding:
Basic 31,910 27,652 15.4%
Diluted 37,062 31,468 17.8%
------------------------
* Percentage is not meaningful.
(4) 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)
--------------------------------------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
------------ ----------- ------ ----------- ------
Statistical
Information:
Book value per
share $ 33.97 $ 27.63 22.9% $ 30.02 13.2%
Financial
advisors(5) 1,920 1,823 5.3% 1,916 0.2%
Full-time
associates 4,868 4,289 13.5% 4,587 6.1%
Locations 311 281 10.7% 301 3.3%
Total client
assets $100,289,000 $83,501,000 20.1% $92,423,000 8.5%
(5) Includes 165, 183 and 167 independent contractors at September 30, 2010
and 2009 and June 30, 2010, respectively.
Global Wealth Management Results and Statistical Information (Unaudited)
(in thousands)
-------------------------------------------------------------------------
Three Months Ended
------------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
--------- --------- ------ --------- ------
Revenues:
Commissions $ 69,875 $ 63,161 10.6% $ 79,521 (12.1)%
Principal transactions 62,785 53,052 18.3 58,675 7.0
Asset management and
service fees 50,449 26,920 87.4 43,777 15.2
Net interest 12,017 7,186 67.2 11,506 4.4
Investment banking 6,957 4,263 63.2 5,494 26.6
Other income 5,401 4,077 32.5 967 *
--------- --------- ------ --------- ------
Net revenues 207,484 158,659 30.8 199,940 3.8
--------- --------- ------ --------- ------
Non-interest expenses:
Compensation and
benefits 119,100 96,711 23.2 123,609 (3.6)
Non-compensation
operating expenses 36,677 32,894 11.5 35,890 2.2
--------- --------- ------ --------- ------
Total non-interest
expenses 155,777 129,605 20.2 159,499 (2.3)
--------- --------- ------ --------- ------
Income before income
taxes $ 51,707 $ 29,054 78.0% $ 40,441 27.9%
========= ========= ====== ========= ======
As a percentage of net
revenues:
Compensation and
benefits 57.4% 61.0% 61.8%
Non-compensation
operating expenses 17.7% 20.7% 18.0%
Income before income
taxes 24.9% 18.3% 20.2%
------------------------------------------------
Nine Months Ended
------------------------------------------------
9/30/10 9/30/09 Change
--------- --------- ------
Revenues:
Commissions $ 228,983 $ 158,468 44.5%
Principal transactions 181,331 140,248 29.3
Asset management and
service fees 135,120 77,981 73.3
Net interest 34,557 18,124 90.7
Investment banking 17,753 9,176 93.5
Other income 9,101 5,914 53.9
--------- --------- ------
Net revenues 606,845 409,911 48.0
--------- --------- ------
Non-interest expenses:
Compensation and
benefits 367,447 253,169 45.1
Non-compensation
operating expenses 108,092 86,369 25.2
--------- --------- ------
Total non-interest
expenses 475,539 339,538 40.1
--------- --------- ------
Income before income
taxes $ 131,306 $ 70,373 86.6%
========= ========= ======
As a percentage of net
revenues:
Compensation and
benefits 60.6% 61.8%
Non-compensation
operating expenses 17.8% 21.0%
Income before income
taxes 21.6% 17.2%
------------------------
* Percentage is not meaningful.
Stifel Bank & Trust
(in thousands)
-------------------------------------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
----------- ----------- ------ ----------- ------
Other information:
Assets $ 1,516,484 $ 965,569 57.1% $ 1,392,828 8.9%
Investment
securities $ 830,127 $ 300,623 176.2% $ 740,121 12.2%
----------- ----------- ------ ----------- ------
Retained loans,
net $ 364,732 $ 325,443 12.1% $ 366,391 (0.5)%
----------- ----------- ------ ----------- ------
Loans held for
sale, net $ 106,788 $ 30,947 245.1% $ 60,154 77.5%
Deposits $ 1,375,984 $ 875,028 57.3% $ 1,255,292 9.6%
Allowance as a
percentage of
loans(6) 0.50% 0.76% 0.53%
Non-performing
assets as a
percentage of
total assets 0.16% 0.50% 0.16%
------------------------
(6) Excluding acquired loans of $174.8 million, $140.0 million and
$174.8 million, the allowance as a percentage of gross loans totaled
0.95%, 1.33% and 1.00% as of September 30, 2010 and 2009 and
June 30, 2010, respectively.
Institutional Group Results and Statistical Information (Unaudited)
(in thousands)
------------------------------------------------------------------------
Three Months Ended
----------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
-------- -------- ------ -------- ------
Revenues:
Principal transactions $ 60,408 $ 70,186 (13.9)% $ 64,249 (6.0)%
Commissions 27,111 27,743 (2.3) 24,113 12.4
Capital raising 22,575 18,070 24.9 25,220 (10.5)
Advisory fees 23,063 12,724 81.3 10,539 118.8
-------- -------- ------ -------- ------
Investment banking 45,638 30,794 48.2 35,759 27.6
Other income(7) 4,886 1,456 235.6 481 *
-------- -------- ------ -------- ------
Net revenues 138,043 130,179 6.0 124,602 10.8
-------- -------- ------ -------- ------
Non-interest expenses:
Compensation and
benefits 82,147 77,483 6.0 72,578 13.2
Non-compensation
operating expenses 28,242 19,263 46.6 21,255 32.9
-------- -------- ------ -------- ------
Total non-interest
expenses 110,389 96,746 14.1 93,833 17.6
-------- -------- ------ -------- ------
Income before income
taxes $ 27,654 $ 33,433 (17.3)% $ 30,769 (10.1)%
======== ======== ====== ======== ======
As a percentage of
net revenues:
Compensation and
benefits 59.5% 59.5% 58.2%
Non-compensation
operating expenses 20.5% 14.8% 17.1%
Income before income
taxes 20.0% 25.7% 24.7%
----------------------------------------------
Nine Months Ended
----------------------------------------------
9/30/10 9/30/09 Change
-------- -------- ------
Revenues:
Principal transactions $182,206 $201,529 (9.6)%
Commissions 76,672 87,767 (12.6)
Capital raising 67,799 32,890 106.1
Advisory fees 42,516 33,197 28.1
-------- -------- ------
Investment banking 110,315 66,087 66.9
Other income(7) 6,744 5,404 24.8
-------- -------- ------
Net revenues 375,937 360,787 4.2
-------- -------- ------
Non-interest expenses:
Compensation and
benefits 221,029 214,251 3.2
Non-compensation
operating expenses 69,029 55,219 25.0
-------- -------- ------
Total non-interest
expenses 290,058 269,470 7.6
-------- -------- ------
Income before income
taxes $ 85,879 $ 91,317 (6.0)%
======== ======== ======
As a percentage of
net revenues:
Compensation and
benefits 58.8% 59.4%
Non-compensation
operating expenses 18.4% 15.3%
Income before income
taxes 22.8% 25.3%
------------------------
(7) Includes net interest and other income.
* Percentage is not meaningful.
Institutional Group Institutional Brokerage & Investment Banking Revenues
(Unaudited)
(in thousands)
-------------------------------------------------------------------------
Three Months Ended
--------------------------------------------
9/30/10 9/30/09 Change 6/30/10 Change
-------- -------- ------ -------- ------
Institutional brokerage:
Equity $ 43,711 $ 39,733 10.0% $ 44,099 (0.9)%
Fixed Income 43,808 58,196 (24.7) 44,263 (1.0)
-------- -------- ------ -------- ------
Institutional brokerage 87,519 97,929 (10.6) 88,362 (1.0)
-------- -------- ------ -------- ------
Investment banking:
Capital raising:
Equity 18,060 13,181 37.0 20,810 (13.2)
Fixed Income 4,515 4,889 (7.6) 4,410 2.3
-------- -------- ------ -------- ------
Capital raising 22,575 18,070 24.9 25,220 (10.5)
Advisory fees:
Equity 20,281 11,371 78.4 9,215 120.1
Fixed Income 2,782 1,353 105.6 1,324 110.2
-------- -------- ------ -------- ------
Advisory fees 23,063 12,724 81.3 10,539 118.8
-------- -------- ------ -------- ------
Investment banking $ 45,638 $ 30,794 48.2% $ 35,759 27.6%
-------- -------- ------ -------- ------
--------------------------------------------
Nine Months Ended
--------------------------------------------
9/30/10 9/30/09 Change
-------- -------- ------
Institutional brokerage:
Equity $126,462 $114,598 10.4%
Fixed Income 132,416 174,698 (24.2)
-------- -------- ------
Institutional brokerage 258,878 289,296 (10.5)
-------- -------- ------
Investment banking:
Capital raising:
Equity 52,957 21,423 147.2
Fixed Income 14,842 11,467 29.4
-------- -------- ------
Capital raising 67,799 32,890 106.1
Advisory fees:
Equity 37,981 30,682 23.8
Fixed Income 4,535 2,515 80.4
-------- -------- ------
Advisory fees 42,516 33,197 28.1
-------- -------- ------
Investment banking $110,315 $ 66,087 66.9%
-------- -------- ------
Contact Information: Investor Relations Contact Sarah Anderson (415) 364-2500