SOURCE: Stifel Financial Corp.

Stifel Financial Corp.

May 01, 2017 16:02 ET

Stifel Reports First Quarter 2017 Financial Results

ST. LOUIS, MO--(Marketwired - May 01, 2017) -

  • Record net revenues of $675.5 million, increased 9.0% compared with the year-ago quarter and 2.1% sequentially.
  • Record net revenues and pre-tax operating income in Global Wealth Management.
  • Net income available to common shareholders of $63.2 million, or $0.78 per diluted common share.
  • Record client assets of $252.4 billion, increased 14.2% compared with the year-ago quarter and 6.5% sequentially.

Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $63.2 million, or $0.78 per diluted common share on record net revenues of $675.5 million for the three months ended March 31, 2017, compared with net income available to common shareholders of $27.1 million, or $0.36 per diluted common share, on net revenues of $620.0 million for the first quarter of 2016.

The GAAP results for the three months ended March 31, 2017 were impacted by the following:

  • Anticipated merger-related charges of approximately $17.1 million ($10.4 million after-tax) associated with the Company's acquisitions;
  • Severance expense of approximately $4.5 million ($2.8 million after-tax) associated with the Company's cost saving initiatives; and
  • New accounting guidance associated with stock-based compensation that favorably impacted the quarter's income tax expense by $16.9 million.

Chairman's Comments

"I'm pleased with our results, as Stifel generated a second consecutive quarter of record net revenue, and non-GAAP pre-tax margins were just under 15%, the highest level since the fourth quarter of 2014. Our continued growth on both the top and bottom line is a testament to Stifel's diversified business strategy as well as our efforts to improve our expense efficiencies. In the first quarter, our net revenue was driven by record results in our Global Wealth Management segment that was due to further increases in fee-based revenue and improved net interest income at Stifel Bank. The growth in these recurring revenue streams over the past year and a half has helped to offset the volatility in our more transaction-driven institutional businesses. In terms of expense discipline, we continue to make progress on our cost-reduction initiatives as the first quarter represented the lowest non-compensation ratio at the firm in eleven quarters," stated Ronald J. Kruszewski, Chairman & CEO of Stifel.

    
Financial Highlights (Unaudited)  Three Months Ended  
(in 000s, except per share data)  3/31/17   3/31/16   12/31/16   Non-GAAP (1) 3/31/17  
U.S. GAAP                     
 Net revenues  $675,531   $619,974   $661,391   $677,515  
  Compensation ratio   64.6 %  66.3 %  63.6 %  62.3 %
  Non-compensation ratio   23.7 %  26.6 %  28.1 %  22.8 %
  Pre-tax operating margin   11.7 %  7.1 %  8.3 %  14.9 %
  Net income  $65,512   $27,055   $26,880   $61,806  
  Preferred dividend   2,344    -    2,343    2,344  
  Net income available to common shareholders  $63,168   $27,055   $24,537   $59,462  
 Earnings per diluted common share  $0.81   $0.36   $0.34   $0.77  
 Earnings per diluted common share available to common shareholders  $0.78   $0.36   $0.31   $0.74  
                  

(1) Reconciliations of the Company's GAAP results to these non-GAAP measures are discussed below and under "Non-GAAP Financial Measures."

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $292.1 million, an 8.4% decrease compared with the first quarter of 2016 and a 0.8% increase compared with the fourth quarter of 2016. Brokerage revenues generated by the Sterne businesses, which were sold in 2016, were $15.8 million during the first quarter of 2016.

      
   Three Months Ended  
(in 000s)  3/31/17  3/31/16  % Change   12/31/16  % Change  
Global Wealth Management brokerage revenues  $171,494  $172,965  (0.9 ) $160,017  7.2  
                      
Institutional brokerage:                     
 Equity   53,820   62,273  (13.6 )  64,007  (15.9 )
 Fixed income   66,817   83,640  (20.1 )  65,712  1.7  
Total institutional brokerage   120,637   145,913  (17.3 )  129,719  (7.0 )
Total brokerage revenues (1)  $292,131  $318,878  (8.4 ) $289,736  0.8  
                

(1) Excludes brokerage revenues included in the Other segment.

  • Global wealth management brokerage revenues were $171.5 million, a 0.9% decrease compared with the first quarter of 2016 and a 7.2% increase compared with the fourth quarter of 2016. Excluding the revenues from the Sterne businesses, global wealth brokerage revenues for the first quarter of 2017 increased 7.9% compared to the first quarter of 2016.
  • Institutional equity brokerage revenues were $53.8 million, a 13.6% decrease compared with the first quarter of 2016 and a 15.9% decrease compared with the fourth quarter of 2016.
  • Institutional fixed income brokerage revenues were $66.8 million, a 20.1% decrease compared with the first quarter of 2016 and a 1.7% increase compared with the fourth quarter of 2016.

Investment Banking Revenues

Investment banking revenues were $126.9 million, a 26.0% increase compared with the first quarter of 2016 and a 5.7% decrease compared with the fourth quarter of 2016.

      
   Three Months Ended  
(in 000s)  3/31/17  3/31/16  % Change   12/31/16  % Change  
Investment banking:                     
Capital raising:                     
 Equity  $48,812  $25,548  91.1   $48,393  0.9  
 Fixed income   25,104   27,756  (9.6 )  29,811  (15.8 )
  Capital raising   73,916   53,304  38.7    78,204  (5.5 )
Advisory fees   52,936   47,354  11.8    56,248  (5.9 )
Total investment banking  $126,852  $100,658  26.0   $134,452  (5.7 )
                
  • Equity capital raising revenues were $48.8 million, a 91.1% increase compared with the first quarter of 2016 and a 0.9% increase compared with the fourth quarter of 2016.
  • Fixed income capital raising revenues were $25.1 million, a 9.6% decrease compared with the first quarter of 2016 and a 15.8% decrease compared with the fourth quarter of 2016.
  • Advisory fee revenues were $52.9 million, an 11.8% increase compared with the first quarter of 2016 and a 5.9% decrease compared with the fourth quarter of 2016.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $162.7 million, a 12.6% increase compared with the first quarter of 2016 and an 8.9% increase compared with the fourth quarter of 2016. The increase from the comparative period in 2016 is primarily attributable to the growth in the value of fee-based accounts and an increase in the Federal Funds rate, which increased fees earned on cash balances.

Net Interest Income

Record net interest income of $85.1 million, a 74.7% increase compared with the first quarter of 2016 and a 13.8% increase compared with the fourth quarter of 2016.

  • Interest income was $101.0 million, a 60.8% increase compared with the first quarter of 2016 and an 11.1% increase compared with the fourth quarter of 2016. Interest income was impacted by the continued growth of interest-earning assets.
  • Interest expense was $15.9 million, a 12.6% increase compared with the first quarter of 2016 and a 1.4% decrease compared with the fourth quarter of 2016. Interest expense was impacted by the Company's July 2016 issuance of $200.0 million senior notes.

Compensation and Benefits Expenses

For the quarter ended March 31, 2017, compensation and benefits expenses were $436.4 million, which included $14.3 million of merger-related and severance expenses. This compares with $411.1 million in the first quarter of 2016 and $420.6 million in the fourth quarter of 2016. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 62.3% in the first quarter of 2017.

     
GAAP compensation and benefits  $436,387  
 As a percentage of net revenues   64.6 %
Non-GAAP adjustments:(1)      
 Merger-related   (9,805 )
 Severance   (4,535 )
    (14,340 )
Non-GAAP compensation and benefits  $422,047  
 As a percentage of non-GAAP net revenues   62.3 %
      

(1) See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."

Non-Compensation Operating Expenses

For the quarter ended March 31, 2017, non-compensation operating expenses were $160.1 million, which included merger-related expenses of $5.3 million. This compares with $164.9 million in the first quarter of 2016 and $185.9 million in the fourth quarter of 2016. Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2017 were 22.8%.

     
GAAP non-compensation expenses  $160,125  
 As a percentage of net revenues   23.7 %
Non-GAAP adjustments:(1)      
 Merger-related   (5,325 )
Non-GAAP non-compensation expenses  $154,800  
 As a percentage of non-GAAP net revenues   22.8 %
      

(1) See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended March 31, 2017 was 17.1%, as new accounting guidance associated with stock-based compensation favorably impacted the quarter's income tax expense by $16.9 million. This new accounting guidance, which was adopted by the Company on January 1, 2017, will continue to impact the Company's effective income tax rate. This compares with an effective income tax rate of 38.4% for the first quarter of 2016 and 51.0% for the fourth quarter of 2016. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2017 was 38.6%.

     
GAAP provision for income taxes  $13,507  
 GAAP effective tax rate   17.1 %
Non-GAAP adjustments:(1)      
 Merger-related   8,412  
 Excess tax benefits from stock-based compensation   16,943  
    25,355  
Non-GAAP provision for income taxes  $38,862  
 Non-GAAP effective tax rate   38.6 %
      

(1) See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."

Assets and Capital

Assets

  • Assets increased 34.6% to $19.1 billion as of March 31, 2017 from $14.2 billion as of March 31, 2016. The increase is attributable to growth of Stifel Bank, which as of March 31, 2017 has grown its assets to $13.2 billion from $8.2 billion as of March 31, 2016. Stifel Bank has increased its investment portfolio by 58.1% and its loan portfolio by 69.1% since March 31, 2016.
  • Interest-earning assets at Stifel Bank for the three months ended March 31, 2017 were $12.9 billion at an average interest rate of 2.78%, compared with $7.6 billion at an average interest rate of 2.61% during the comparable period in 2016.
  • Non-performing assets as a percentage of total assets as of March 31, 2017 was 0.21%.

Capital

  • Shareholders' equity as of March 31, 2017 increased 14.9% to $2.8 billion from $2.4 billion as of March 31, 2016.
  • At March 31, 2017, book value per common share was $38.40 based on 68.4 million common shares outstanding. This represents a 5.6% increase from March 31, 2016.
  • At March 31, 2017, the Company's Tier 1 leverage capital and Tier 1 risk-based capital ratios were 10.1% and 20.9%, respectively, compared to 11.6% and 21.3%, respectively, at March 31, 2016.

Conference Call Information

Stifel Financial Corp. will host its first quarter 2017 financial results conference call on Monday, May 1, 2017, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #13766283. A live audio webcast of the call, as well as a presentation highlighting the Company's results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel's broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc.; and Eaton Partners LLC, and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. The Company's broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer trust and related services. 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  
(in 000s, except per share amounts)  3/31/17  3/31/16  % Change   12/31/16  % Change  
Revenues:                     
 Commissions  $175,274  $197,930  (11.4 ) $178,683  (1.9 )
 Principal transactions   116,857   120,948  (3.4 )  111,052  5.2  
  Brokerage Revenues   292,131   318,878  (8.4 )  289,735  0.8  
                      
 Capital raising   73,916   53,304  38.7    78,204  (5.5 )
 Advisory fees   52,936   47,354  11.8    56,248  (5.9 )
  Investment banking   126,852   100,658  26.0    134,452  (5.7 )
 Asset management and service fees   162,739   144,532  12.6    149,484  8.9  
 Other income   8,752   7,231  21.0    12,994  (32.6 )
Operating Revenue   590,474   571,299  3.4    586,665  0.6  
 Interest Revenue   100,953   62,786  60.8    90,844  11.1  
Total Revenue   691,427   634,085  9.0    677,509  2.1  
 Interest Expense   15,896   14,111  12.6    16,118  (1.4 )
Net Revenue   675,531   619,974  9.0    661,391  2.1  
                      
Non-interest Expenses:                     
 Compensation and benefits   436,387   411,113  6.1    420,644  3.7  
 Occupancy and equipment rental   52,545   57,255  (8.2 )  52,869  (0.6 )
 Communication and office supplies   33,844   36,660  (7.7 )  34,376  (1.5 )
 Commissions and floor brokerage   10,723   11,732  (8.6 )  9,662  11.0  
 Provision for loan losses   6,134   4,259  44.0    6,015  2.0  
 Other operating expenses   56,879   55,042  3.3    82,931  (31.4 )
  Total non-interest expenses   596,512   576,061  3.6    606,497  (1.6 )
Income before income taxes   79,019   43,913  79.9    54,894  43.9  
 Provision for income taxes   13,507   16,858  (19.9 )  28,014  (51.8 )
Net income   65,512   27,055  142.1    26,880  143.7  
 Preferred dividends   2,344   -  n/m    2,343  0.0  
Net income available to common shareholders  $63,168  $27,055  133.5   $24,537  157.4  
Earnings per common share:                     
 Basic  $0.92  $0.40  130.0   $0.37  148.6  
 Diluted  $0.78  $0.36  116.7   $0.31  151.6  
                      
Weighted average number of common shares outstanding:                     
 Basic   68,386   67,579  1.2    66,636  2.6  
 Diluted   80,695   76,086  6.1    79,539  1.5  
                 
  
Summary Business Segment Results (Unaudited)  
  
   Three Months Ended  
(in 000s)  3/31/17   3/31/16   % Change   12/31/16   % Change  
Net revenues:                     
 Global Wealth Management  $442,732   $379,805   16.6   $407,535   8.6  
 Institutional Group  237,467   241,276   (1.6 ) 253,168   (6.2 )
 Other  (4,668 ) (1,107 ) (321.7 ) 688   (778.5 )
  Total net revenues (1)  $675,531   $619,974   9.0   $661,391   2.1  
                      
Operating expenses:                     
 Global Wealth Management  $300,680   $286,470   5.0   $284,683   5.6  
 Institutional Group  197,595   212,082   (6.8 ) 205,653   (3.9 )
 Other  98,237   77,509   26.7   116,161   (15.4 )
  Total operating expenses  $596,512   $576,061   3.6   $606,497   (1.6 )
                      
Operating contribution:                     
 Global Wealth Management  $142,052   $93,335   52.2   $122,852   15.6  
 Institutional Group  39,872   29,194   36.6   47,515   (16.1 )
 Other  (102,905 ) (78,616 ) 30.9   (115,473 ) (10.9 )
  Income before income taxes  $79,019   $43,913   79.9   $54,894   43.9  
                      
As a percentage of net revenues:                     
 Compensation and benefits                     
  Global Wealth Management  51.6   58.3       52.9      
  Institutional Group  60.5   62.4       57.7      
 Non-compensation operating expenses                     
  Global Wealth Management  16.3   17.1       17.0      
  Institutional Group  22.7   25.5       23.5      
 Income before income taxes                     
  Global Wealth Management  32.1   24.6       30.1      
  Institutional Group  16.8   12.1       18.8      
 Consolidated pre-tax margin (2)  11.7   7.1       8.3      
                 

(1) GAAP net revenues include a $2.0 million loss associated with the disposal of certain assets during the first quarter of 2017 from the Sterne Agee acquisition. Non-GAAP net revenues of $677.5 million for the three months ended March 31, 2017 excludes the loss.

(2) Non-GAAP pre-tax margin for the three months ended March 31, 2017 of 14.9% is calculated by adding merger-related and severance non-GAAP adjustments of $21.6 million to our GAAP income before income taxes of $79.0 million and dividing it by non-GAAP net revenues for the quarter of $677.5 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed above and under "Non-GAAP Financial Measures."

  
Statistical Information  
                       
(in 000s, except per share amounts)  3/31/17  3/31/16      % Change   12/31/16  % Change  
Statistical Information:                         
 Book value per common share  $38.40  $36.37      5.6   $38.84  (1.1 )
 Financial advisors (3)   2,299   2,289  (4 ) 0.4    2,282  0.7  
 Locations   399   401      (0.5 )  396  0.8  
 Total client assets  $252,448,000  $220,986,000  (4 ) 14.2   $236,942,000  6.5  
 Fee-based client assets  $75,414,000  $63,418,000      18.9   $70,195,000  7.4  
 Client money market and insured product  $19,058,000  $18,171,000      4.9   $19,253,000  (1.0 )
 Secured client lending (5)  $2,962,936  $2,565,885      15.5   $2,959,628  0.1  
                    

(3) Includes 121, 128, and 123 independent contractors at March 31, 2017, March 31, 2016, and December 31, 2016, respectively.

(4) On July 1, 2016, we sold the independent contractor business acquired with the Sterne Agee transaction in June 2015. As of March 31, 2016, there were 560 independent contractors included in the disposed business unit and $11.0 billion of total client assets. These numbers have been excluded from the above table.

(5) Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank.

  
Global Wealth Management Summary Results of Operations (Unaudited)  
  
   Three Months Ended  
(in 000s)  3/31/17  3/31/16  % Change     12/31/16  % Change  
Revenues:                  
 Commissions  $120,577  $131,554  (8.3)  $114,824  5.0
 Principal transactions   50,917   41,411  23.0   45,193  12.7
  Brokerage revenues   171,494   172,965  (0.9)   160,017  7.2
                   
 Asset management and service fees   162,664   144,352  12.7   149,998  8.4
 Net interest   89,695   51,767  73.3   78,748  13.9
 Investment banking   11,854   8,410  41.0   12,064  (1.7)
 Other income   7,025   2,311  204.0   6,708  4.7
  Net revenues   442,732   379,805  16.6   407,535  8.6
Non-interest expenses:                  
 Compensation and benefits   228,471   221,416  3.2   215,458  6.0
 Non-compensation operating expenses   72,209   65,054  11.0   69,225  4.3
  Total non-interest expenses   300,680   286,470  5.0   284,683  5.6
Income before income taxes  $142,052  $93,335  52.2  $122,852  15.6
                   
As a percentage of net revenues:                  
 Compensation and benefits   51.6   58.3      52.9   
 Non-compensation operating expenses   16.3   17.1      17.0   
 Income before income taxes   32.1   24.6      30.1     
                
  
Stifel Bank & Trust - a component of Global Wealth Management (Unaudited)  
Key Statistical Information  
  
   As of and For The Three Months Ended  
(in 000s, except percentages)  3/31/17   3/31/16   % Change  12/31/16   % Change  
 Assets  $13,232,940   $8,172,348   61.9  $12,798,240   3.4  
 Investment securities   6,557,000    4,147,647   58.1   6,209,022   5.6  
 Retained loans, net   5,864,549    3,467,187   69.1   5,591,190   4.9  
 Loans held for sale   206,724    132,900   55.5   228,588   (9.6 )
 Deposits   11,700,961    7,218,100   62.1   11,527,483   1.5  
                        
 Net interest margin   2.66 %  2.47 %     2.24 %    
 Allowance as a percentage of loans (1)   0.87 %  0.98 %     0.81 %    
 Non-performing assets as a percentage of total assets   0.21 %  0.28 %     0.21 %    
                  

(1) Gross charge-offs as a percentage of loans was 0.0% for the periods presented above.

  
Institutional Group Summary Results of Operations (Unaudited)  
  
   Three Months Ended  
(in 000s)  3/31/17  3/31/16  % Change   12/31/16  % Change  
Revenues:                     
 Commissions  $54,697  $66,376  (17.6 ) $63,859  (14.3 )
 Principal transactions   65,940   79,537  (17.1 )  65,860  0.1  
 Brokerage revenues   120,637   145,913  (17.3 )  129,719  (7.0 )
 Capital raising   62,062   44,895  38.2    66,949  (7.3 )
 Advisory fees   52,936   47,354  11.8    55,439  (4.5 )
 Investment banking   114,998   92,249  24.7    122,388  (6.0 )
 Other (1)   1,832   3,114  (41.2 )  1,061  72.7  
  Net revenues   237,467   241,276  (1.6 )  253,168  (6.2 )
Non-interest expenses:                     
 Compensation and benefits   143,640   150,618  (4.6 )  146,056  (1.7 )
 Non-compensation operating expenses   53,955   61,464  (12.2 )  59,597  (9.5 )
  Total non-interest expenses   197,595   212,082  (6.8 )  205,653  (3.9 )
Income before income taxes  $39,872  $29,194  36.6   $47,515  (16.1 )
                      
As a percentage of net revenues:                     
 Compensation and benefits   60.5   62.4       57.7     
 Non-compensation operating expenses   22.7   25.5       23.5     
 Income before income taxes   16.8   12.1       18.8     
                 

(1) Includes net interest, asset management and service fees, and other income.

Non-GAAP Financial Measures

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company's financial results for the three months ended March 31, 2017. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company's results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these charges do, in fact, reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures and the same respective non-GAAP measures of the Company's financial performance should be considered together.

The following table provides details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three months ended March 31, 2017 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

    
(in 000s)     
GAAP net income  $65,512  
Preferred dividend   2,344  
Net income available to common shareholders   63,168  
       
Non-GAAP adjustments:      
 Merger-related (1)   17,114  
 Severance   4,535  
 Provision for income taxes (2)   (25,355 )
Total non-GAAP adjustments   (3,706 )
Non-GAAP net income available to common shareholders  $59,462  
       
Weighted average diluted shares outstanding   80,695  
       
GAAP earnings per diluted common share  $0.81  
 Non-GAAP adjustments   (0.04 )
Non-GAAP earnings per diluted common share  $0.77  
       
GAAP earnings per diluted common share available to common shareholders  $0.78  
 Non-GAAP adjustments   (0.04 )
Non-GAAP earnings per diluted common share available to common shareholders  $0.74  
     

(1) Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company's on-going business.

(2) Includes a $16.9 million impact as a result of new accounting guidance associated with stock-based compensation.

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