SOURCE: Stifel Financial Corp.

Stifel Financial Corp.

February 23, 2016 16:20 ET

Stifel Reports Fourth Quarter and Full-Year 2015 Financial Results

20th Consecutive Year of Record Net Revenues; Record 2015 Revenues & Record Pre-Tax Operating Income in Global Wealth Management

ST. LOUIS, MO--(Marketwired - February 23, 2016) -

Quarterly Highlights

  • Net revenues of $581.3 million, increased 1% compared with the year-ago quarter.
  • Non-GAAP net income of $40.2 million, or $0.51 per diluted common share.
  • Net income of $11.2 million, or $0.14 per diluted common share. 
  • Repurchased 1.2 million shares for approximately $51.9 million.

Stifel Financial Corp. (NYSE: SF) today reported net income of $11.2 million, or $0.14 per diluted common share on net revenues of $581.3 million for the three months ended December 31, 2015, compared with net income of $45.2 million, or $0.58 per diluted common share, on net revenues of $578.1 million for the fourth quarter of 2014.

For the three months ended December 31, 2015, the Company reported non-GAAP net income of $40.2 million, or $0.51 per diluted common share, compared with non-GAAP net income of $58.4 million, or $0.75 per diluted common share for the fourth quarter of 2014. These non-GAAP results exclude merger-related expenses of $29.0 million (after-tax), primarily related to the acquisitions of Barclays Wealth and Investment Management, Americas and Sterne Agee. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

             
    Three Months Ended     Year Ended  
(in 000s)   12/31/15   12/31/14   % Change     9/30/15   % Change     12/31/15   12/31/14   % Change  
  Net revenues   $ 581,286   $ 578,076   0.6     $ 591,575   (1.7 )   $ 2,331,594   $ 2,208,424   5.6  
  Net income   $ 11,172   $ 45,182   (75.3 )   $ 17,179   (35.0 )   $ 92,336   $ 176,067   (47.6 )
  Non-GAAP net income 1   $ 40,211   $ 58,440   (31.2 )   $ 47,705   (15.7 )   $ 193,061   $ 210,432   (8.3 )
Earnings per common share:                                                
  Basic   $ 0.16   $ 0.67   (76.1 )   $ 0.25   (36.0 )   $ 1.35   $ 2.65   (49.1 )
  Diluted   $ 0.14   $ 0.58   (75.9 )   $ 0.22   (36.4 )   $ 1.18   $ 2.31   (48.9 )
  Non-GAAP net income 1   $ 0.51   $ 0.75   (32.0 )   $ 0.60   (0.15 )   $ 2.46   $ 2.76   (10.9 )
Weighted average number of common shares outstanding:                                                
  Basic     68,150     66,851   1.9       69,633   (2.1 )     68,543     66,472   3.1  
  Diluted     79,355     77,540   2.3       79,759   (0.5 )     78,554     76,376   2.9  
                                                   
1   A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
     
     

Annual Highlights

  • Record net revenues of $2.3 billion, increased 6% compared with 2014.
  • Non-GAAP net income of $193.1 million, or $2.46 per diluted common share.
  • Net income decreased 48% to $92.3 million in 2015.
  • Completed two acquisitions: Sterne Agee and Barclays Wealth and Investment Management, Americas

Full-Year 2015 Results

For the year ended December 31, 2015, the Company reported net income of $92.3 million, or $1.18 per diluted common share on record net revenues of $2.3 billion, compared with net income of $176.1 million, or $2.31 per diluted share, on net revenues of $2.2 billion in 2014. 

For the year ended December 31, 2015, the Company reported non-GAAP net income of $193.1 million, or $2.46 per diluted share, compared with non-GAAP net income of $210.4 million, or $2.76 per diluted common share for the comparable period in 2014. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

Chairman's Comments

"We are proud to report that 2015 was our 20th consecutive year of record net revenues. We completed two acquisitions: Sterne Agee in June, which added financial advisors and fixed income capabilities, and Barclays Wealth and Investment Management, Americas in December, which significantly expands our high net worth advisory business," stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

While the challenging market environment impacted fourth quarter activity, we are committed to optimizing our current capital base, managing our expense base, and taking the necessary steps to achieve our key financial targets. We will continue to selectively add capabilities and evaluate opportunities that further our strategic objectives. With a balanced business model, we believe we are well positioned to take advantage of future opportunities."

Fourth Quarter 2015
Brokerage Revenues

Brokerage revenues, defined as commissions plus principal transactions, were $294.8 million, a 9% increase compared with the fourth quarter of 2014 and a 2% increase compared with the third quarter of 2015.

  • Global wealth management brokerage revenues were $166.3 million, a 4% increase compared with the fourth quarter of 2014 and a 2% decrease compared with the third quarter of 2015.
  • Institutional equity brokerage revenues were $54.8 million, a 19% decrease compared with the fourth quarter of 2014 and an 8% decrease compared with the third quarter of 2015.
  • Institutional fixed income brokerage revenues were $73.6 million, a 66% increase compared with the fourth quarter of 2014 and a 21% increase compared with the third quarter of 2015.

Investment Banking Revenues

Investment banking revenues were $102.8 million, a 40% decrease compared with the fourth quarter of 2014 and a 13% decrease compared with the third quarter of 2015.

  • Equity capital raising revenues were $40.5 million, a 15% decrease compared with the fourth quarter of 2014 and an 11% increase compared with the third quarter of 2015.
  • Fixed income capital raising revenues were $29.6 million, a 41% increase compared with the fourth quarter of 2014 and a 9% decrease compared with the third quarter of 2015.
  • Advisory fee revenues were $32.6 million, a 68% decrease compared with the fourth quarter of 2014 and a 34% decrease compared with the third quarter of 2015.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $129.3 million, a 22% increase compared with the fourth quarter of 2014 and a 1% decrease compared with the third quarter of 2015. The increase from the prior year is due to the higher value of fee-based accounts as a result of market appreciation and new client assets.

Compensation and Benefits Expenses

For the quarter ended December 31, 2015, compensation and benefits expenses were $399.0 million, which included $21.5 million of merger-related expenses. This compares with $370.5 million in the fourth quarter of 2014 and $404.2 million in the third quarter of 2015.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 64.8% in the fourth quarter of 2015, compared with 61.5% in the fourth quarter of 2014 and 62.9% in the third quarter of 2015.

Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, was 3.9% of net revenues in the fourth quarter of 2015, compared with 4.0% in the fourth quarter of 2014 and 3.7% in the third quarter of 2015. 

Non-Compensation Operating Expenses

For the quarter ended December 31, 2015, non-compensation operating expenses were $171.2 million, which included merger-related expenses of $23.6 million. This compares with $138.2 million in the fourth quarter of 2014 and $165.0 million in the third quarter of 2015.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended December 31, 2015 was 25.4%, compared with 23.0% in the fourth quarter of 2014 and 24.9% in the third quarter of 2015.

Provision for Income Taxes

The effective income tax rate for the quarter ended December 31, 2015 was impacted by the recognition of a U.S. tax benefit due to a realized loss on our investment in Sterne UK Ltd. The current quarter effective rate compares with 34.4% in the fourth quarter of 2014 and 23.1% in the third quarter of 2015.

Full-Year 2015
Brokerage Revenues

Brokerage revenues were $1.14 billion, a 4% increase compared to $1.10 billion in 2014.

  • Global wealth management brokerage revenues were $652.7 million, a 2% increase compared to $638.5 million in 2014.
  • Institutional equity brokerage revenues were $235.2 million, a 6.0% decrease compared to $250.2 million in 2014.
  • Institutional fixed income brokerage revenues were $251.0 million, a 19% increase compared to $211.4 million in 2014.

Investment Banking Revenues

Investment banking revenues were $503.1 million, an 11% decrease compared to $562.8 million in 2014.

  • Equity capital raising revenues were $177.5 million, an 18% decrease compared to $217.4 million in 2014.
  • Fixed income capital raising revenues were $130.1 million, an 81% increase compared to $71.9 million in 2014.
  • Advisory fee revenues were $195.5 million, a 29% decrease compared to $273.5 million in 2014.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $493.8 million, a 28% increase compared to $386.0 million in 2014. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets.

Compensation and Benefits Expenses

For the year ended December 31, 2015, compensation and benefits expenses were $1.6 billion, which included $96.8 million of merger-related expenses, compared to $1.4 billion in 2014.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues for the year ended December 31, 2015 was 63.0%, compared with 62.3% in 2014. Transition pay as a percentage of net revenues for the year ended December 31, 2015 was 3.8%, compared with 4.4% in 2014. 

Non-Compensation Operating Expenses

For the year ended December 31, 2015, non-compensation operating expenses were $621.2 million, which included merger-related expenses of $60.8 million, compared to $513.7 million in 2014.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the year ended December 31, 2015 was 24.0%, compared with 22.5% in 2014.

Provision for Income Taxes

The effective income tax rate for the year ended December 31, 2015 was 34.8% compared with 38.4% in 2014. The effective rate in 2015 was impacted by the recognition of a U.S. tax benefit due to a realized loss on our investment in Sterne UK Ltd.

Assets and Capital

Assets

  • Assets increased 40% to $13.3 billion as of December 31, 2015 from $9.5 billion as of December 31, 2014. The increase is attributable to growth of Stifel Bank, which as of December 31, 2015 has grown its assets to $7.3 billion from $5.2 billion as of December 31, 2014 and the acquisitions of Barclays Wealth and Investment Management, Americas and Sterne Agee in 2015.
  • At December 31, 2015, the Company's Level 3 assets of $128.0 million, or approximately 1% of total assets, consisted of $51.7 million of auction rate securities and $76.3 million of partnership interests, private company investments, private equity, and fixed income securities. The Company's Level 3 assets as a percentage of total assets measured at fair value was 2% at December 31, 2015.
  • Non-performing assets as a percentage of total assets as of December 31, 2015 was 0.03%.

Capital

  • Stockholders' equity as of December 31, 2015 increased $170.4 million, or 7%, to $2.49 billion from $2.32 billion as of December 31, 2014.
  • During the three months ended December 31, 2015, the Company repurchased 1.2 million shares for approximately $51.9 million bringing the total repurchases to 2.7 million shares for approximately $117.8 million in 2015.
  • At December 31, 2015, book value per common share was $37.19 based on 67.0 million common shares outstanding. This represents a 6% increase from December 31, 2014.
  • At December 31, 2015, the Company's Tier 1 leverage capital and Tier 1 risk-based capital ratios were 16.6% and 26.3%, respectively, compared to 16.5% and 25.0%, respectively, at December 31, 2014.

Conference Call Information

Stifel Financial Corp. will host its fourth quarter and full-year 2015 financial results conference call on Tuesday, February 23, 2016, 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 #88941816. 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 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 1919 Investment Counsel & Trust Company 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     Year Ended  
(in thousands, except per share amounts)   12/31/15     12/31/14     % Change     9/30/15   % Change     12/31/15   12/31/14     % Change  
Revenues:                                                      
  Commissions   $ 187,287     $ 180,127     4.0     $ 194,083   (3.5 )   $ 749,536   $ 690,197     8.6  
  Principal transactions     107,464       91,617     17.3       95,593   12.4       389,319     409,929     (5.0 )
    Brokerage revenues     294,751       271,744     8.5       289,676   1.8       1,138,855     1,100,126     3.5  
  Investment banking     102,811       171,956     (40.2 )     118,753   (13.4 )     503,052     562,804     (10.6 )
  Asset management and service fees     129,319       105,962     22.0       130,636   (1.0 )     493,761     386,001     27.9  
  Other income     18,251       (3,960 )   (560.9 )     18,930   (3.6 )     62,224     14,785     320.9  
    Operating revenues     545,132       545,702     (0.1 )     557,995   (2.3 )     2,197,892     2,063,716     6.5  
  Interest revenue     48,639       44,934     8.2       43,376   12.1       179,101     185,969     (3.7 )
    Total revenues     593,771       590,636     0.5       601,371   (1.3 )     2,376,993     2,249,685     5.7  
  Interest expense     12,485       12,560     (0.6 )     9,796   27.4       45,399     41,261     10.0  
    Net revenues     581,286       578,076     0.6       591,575   (1.7 )     2,331,594     2,208,424     5.6  
Non-interest expenses:                                                      
  Compensation and benefits     398,966       370,454     7.7       404,205   (1.3 )     1,568,862     1,403,932     11.7  
  Occupancy and equipment rental     61,667       43,929     40.4       53,282   15.7       207,465     169,040     22.7  
  Communications and office supplies     34,652       28,775     20.4       35,678   (2.9 )     130,678     106,926     22.2  
  Commission and floor brokerage     10,895       8,308     31.1       12,430   (12.3 )     42,518     36,555     16.3  
  Other operating expenses     64,024       57,232     11.9       63,632   0.6       240,504     201,177     19.5  
    Total non-interest expenses     570,204       508,698     12.1       569,227   0.2       2,190,027     1,917,630     14.2  
Income from continuing operations before income taxes     11,082       69,378     (84.0 )     22,348   (50.4 )     141,567     290,794     (51.3 )
  Provision for income taxes     (90 )     23,890     (100.4 )     5,169   (101.7 )     49,231     111,664     (55.9 )
Net income from continuing operations     11,172       45,488     (75.4 )     17,179   (35.0 )     92,336     179,130     (48.5 )
Discontinued operations:                                                      
  Loss from discontinued operations, net of tax     -       (306 )   (100.0 )     -   -       -     (3,063 )   (100.0 )
Net income   $ 11,172     $ 45,182     (75.3 )   $ 17,179   (35.0 )   $ 92,336   $ 176,067     (47.6 )
Earnings per basic common share:                                                      
  Income from continuing operations   $ 0.16     $ 0.67     (76.1 )   $ 0.25   (36.0 )   $ 1.35   $ 2.69     (49.8 )
  Loss from discontinued operations     -       -     -       -   -       -     (0.04 )   (100.0 )
  Earnings per basic common share   $ 0.16     $ 0.67     (76.1 )   $ 0.25   (36.0 )   $ 1.35   $ 2.65     (49.1 )
Earnings per diluted common share:                                                      
  Income from continuing operations   $ 0.14     $ 0.59     (76.3 )   $ 0.22   (36.4 )   $ 1.18   $ 2.35     (49.8 )
  Loss from discontinued operations     -       (0.01 )   (100.0 )     -   -       -     (0.04 )   (100.0 )
  Earnings per diluted common share   $ 0.14     $ 0.58     (75.9 )   $ 0.22   (36.4 )   $ 1.18   $ 2.31     (48.9 )
Weighted average number of common shares outstanding:                                                      
  Basic     68,150       66,851     1.9       69,633   (2.1 )     68,543     66,472     3.1  
  Diluted     79,355       77,540     2.3       79,759   (0.5 )     78,554     76,376     2.9  
                                                         
                                                         
                                                         
Statistical Information
 
(in thousands, except per share, employee and location amounts)
    12/31/15   12/31/14   % Change   9/30/15   % Change
Statistical Information:                          
  Book value per share   $ 37.19   $ 35.00   6.3   $ 36.63   1.5
  Financial advisors 2     2,891     2,103   37.5     2,846   1.6
  Full-time associates     7,133     6,223   14.6     6,865   3.9
  Locations     402     367   9.5     391   2.8
  Total client assets   $ 234,070,000   $ 186,558,000   25.5   $ 205,085,000   14.1
                             
                             
                             
Business Segment Results  
   
Summary Segment Results (Unaudited)  
    Three Months Ended     Year Ended  
(in 000s)   12/31/15     12/31/14     % Change     9/30/15     % Change     12/31/15     12/31/14     % Change  
Net revenues:                                                          
  Global Wealth Management   $ 347,216     $ 310,980     11.7     $ 357,306     (2.8 )   $ 1,377,313     $ 1,232,651     11.7  
  Institutional Group     246,325       276,222     (10.8 )     232,125     6.1       975,594       997,071     (2.2 )
  Other     (12,255 )     (9,126 )   34.3       2,144     *       (21,313 )     (21,298 )   (0.1 )
    $ 581,286     $ 578,076     0.6     $ 591,575     (1.7 )   $ 2,331,594     $ 2,208,424     5.6  
Operating contribution: 3                                                          
  Global Wealth Management   $ 92,077     $ 84,178     9.4     $ 97,227     (5.3 )   $ 382,126     $ 346,978     10.1  
  Institutional Group     40,917       47,734     (14.3 )     25,853     58.3       141,042       165,546     (14.8 )
  Other     (75,701 )     (42,173 )   79.5       (51,128 )   48.1       (220,205 )     (175,252 )   25.7  
    $ 57,293     $ 89,739     (36.2 )   $ 71,952     (20.4 )   $ 302,963     $ 337,272     (10.2 )
As a percentage of net revenues:                                                          
  Compensation and benefits                                                          
    Global Wealth Management     57.1       58.0             57.1             56.7       57.1        
    Institutional Group     58.1       61.3             62.0             61.1       61.4        
  Non-comp. operating expenses                                                          
    Global Wealth Management     16.4       14.9             15.7             15.7       14.8        
    Institutional Group     25.3       21.4             26.9             24.4       22.0        
  Income before income taxes 3                                                          
    Global Wealth Management     26.5       27.1             27.2             27.7       28.1        
    Institutional Group     16.6       17.3             11.1             14.5       16.6        
      9.8       15.5             12.2             13.0       15.2        
                                                           
                                                              
* Percentage not meaningful.                                        
                                                              
2   Includes 719, 138, and 755 independent contractors at December 31, 2015, December 31, 2014, and September 30, 2015, respectively.
3   A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
   
   
   
Global Wealth Management Summary Results of Operations (Unaudited)  
    Three Months Ended     Year Ended  
(in 000s)   12/31/15     12/31/14     % Change     9/30/15   % Change     12/31/15   12/31/14   % Change  
Revenues:                                                    
  Commissions   $ 128,395     $ 115,351     11.3     $ 134,476   (4.5 )   $ 504,206   $ 453,730   11.1  
  Principal transactions     37,944       44,761     (15.2 )     34,843   8.9       148,475     184,772   (19.6 )
    Brokerage revenues     166,339       160,112     3.9       169,319   (1.8 )     652,681     638,502   2.2  
  Asset management and service fees     130,382       105,511     23.6       129,032   1.0       492,814     385,182   27.9  
  Net interest     42,187       40,236     4.8       36,326   16.1       154,389     154,694   (0.2 )
  Investment banking     8,313       9,721     (14.5 )     10,146   (18.1 )     43,687     45,472   (3.9 )
  Other income     (5 )     (4,600 )   *       12,483   *       33,742     8,801   283.4  
    Net revenues     347,216       310,980     11.7       357,306   (2.8 )     1,377,313     1,232,651   11.7  
Non-interest expenses:                                                    
  Compensation and benefits     198,137       180,491     9.8       203,959   (2.9 )     781,573     703,679   11.1  
  Non-compensation operating expenses     57,002       46,311     23.1       56,120   1.6       213,614     181,994   17.4  
    Total non-interest expenses     255,139       226,802     12.5       260,079   (1.9 )     995,187     885,673   12.4  
Income before income taxes   $ 92,077     $ 84,178     9.4     $ 97,227   (5.3 )   $ 382,126   $ 346,978   10.1  
As a percentage of net revenues:                                                    
  Compensation and benefits     57.1       58.0             57.1           56.7     57.1      
  Non-compensation operating expenses     16.4       14.9             15.7           15.6     14.8      
  Income before income taxes     26.5       27.1             27.2           27.7     28.1      
                                                       
* Percentage not meaningful.
 
   

 
 
Stifel Bank & Trust (Unaudited)
Key Statistical Information
(in 000s, except percentages)   12/31/15   12/31/14   % Change   9/30/15   % Change
Other information:                    
  Assets   $7,275,308   $5,237,970   38.9   $4,619,093   57.5
  Investment securities   3,479,336   2,684,947   29.6   1,749,590   98.9
  Bank loans, net   3,449,662   2,298,929   50.1   2,706,074   27.5
  Loans held for sale   189,921   121,939   55.8   179,588   5.8
  Deposits   6,638,359   4,790,084   38.6   4,116,814   61.2
  Allowance as a percentage of loans 4   0.90%   0.94%       1.08%    
  Non-performing assets as a percentage of total assets   0.03%   0.13%       0.03%    
                       
4   Excluding acquired loans of $606.8 million, $207.5 million, and $47.7 million, the allowance as a percentage of loans totaled 1.19%, 1.14%, and 1.11% as of December 31, 2015 and 2014, and September 30, 2015, respectively.
   
   
   
Institutional Group Summary Results of Operations (Unaudited)  
    Three Months Ended     Year Ended  
(in 000s)   12/31/15   12/31/14   % Change     9/30/14   % Change     12/31/15   12/31/14   % Change  
Revenues:                                                
  Commissions   $ 58,891   $ 59,622   (1.2 )   $ 59,607   (1.2 )   $ 241,528   $ 224,046   7.8  
  Principal transactions     69,520     52,010   33.7       60,750   14.4       244,646     237,578   3.0  
    Brokerage revenues     128,411     111,632   15.0       120,357   6.7       486,174     461,624   5.3  
  Capital raising     61,766     58,200   6.1       59,466   3.9       264,858     243,229   8.9  
  Advisory fees     30,810     103,266   (70.2 )     49,142   (37.3 )     192,584     273,333   (29.5 )
  Investment banking     92,576     161,466   (42.7 )     108,608   (14.8 )     457,442     516,562   (11.4 )
  Other 5     25,338     3,124   *       3,160   *       31,978     18,885   69.3  
    Net revenues     246,325     276,222   (10.8 )     232,125   6.1       975,594     997,071   (2.2 )
Non-interest expenses:                                                
  Compensation and benefits     143,162     169,226   (15.4 )     143,911   (0.5 )     596,561     612,330   (2.6 )
  Non-compensation operating expenses     62,246     59,262   5.0       62,361   (0.2 )     237,991     219,195   8.6  
    Total non-interest expenses     205,408     228,488   (10.1 )     206,272   (0.4 )     834,552     831,525   0.4  
Income before income taxes   $ 40,917   $ 47,734   (14.3 )   $ 25,853   58.3     $ 141,042   $ 165,546   (14.8 )
As a percentage of net revenues:                                                
  Compensation and benefits     58.1     61.3           62.0           61.1     61.4      
  Non-compensation operating expenses     25.3     21.4           26.9           24.4     22.0      
  Income before income taxes     16.6     17.3           11.1           14.5     16.6      
                                                   
* Percentage not meaningful.  
   
   
   
Institutional Group Brokerage & Investment Banking Revenues (Unaudited)  
    Three Months Ended     Year Ended  
(in 000s)   12/31/15   12/31/14   % Change     9/30/15   % Change     12/31/15   12/31/14   % Change  
Institutional brokerage:                                                
  Equity   $ 54,837   $ 67,377   (18.6 )   $ 59,769   (8.2 )   $ 235,155   $ 250,224   (6.0 )
  Fixed income     73,574     44,255   66.3       60,588   21.4       251,019     211,400   18.7  
Institutional brokerage     128,411     111,632   15.0       120,357   6.7       486,174     461,624   5.3  
Investment banking:                                                
  Capital raising:                                                
    Equity     38,499     38,866   (0.9 )     33,332   15.5       161,650     185,779   (13.0 )
    Fixed income     23,267     19,334   20.3       26,134   (11.0 )     103,208     57,450   79.6  
      Capital raising     61,766     58,200   6.1       59,466   3.9       264,858     243,229   8.9  
  Advisory fees:     30,810     103,266   (70.2 )     49,142   (37.3 )     192,584     273,333   (29.5 )
Investment banking   $ 92,576   $ 161,466   (42.7 )   $ 108,608   (14.8 )   $ 457,442   $ 516,562   (11.4 )
                                                 
5   Includes net interest, asset management and service fees, and other income.
     
     

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 basic and diluted earnings per share as additional measures to aid in understanding and analyzing the Company's financial results for the three and twelve months ended December 31, 2015. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's 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. These non-GAAP amounts primarily exclude acquisition related expenses which management believes are duplicative and will be eliminated, stock-based compensation and other expenses which in management's view are not representative of on-going business.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin, and basic 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 basic 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 basic and diluted earnings per share on a GAAP basis for the three and twelve months ended December 31, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.

           
           
    Three Months Ended December 31, 2015     Year Ended December 31, 2015
(in 000s, except per share amounts)   Non-GAAP   Adjustments     GAAP     Non-GAAP   Adjustments     GAAP
  Net revenues   $ 582,336   $ (1,050 )   $ 581,286     $ 2,335,387   $ (3,793 )   $ 2,331,594
  Non-interest expenses:                                          
    Compensation and benefits     377,427     21,539       398,966       1,472,090     96,772       1,568,862
    Non-compensation operating expenses     147,616     23,622       171,238       560,334     60,831       621,165
      Total non-interest expenses     525,043     45,161       570,204       2,032,424     157,603       2,190,027
Income from continuing operations before income taxes     57,293     (46,211 )     11,082       302,963     (161,396 )     141,567
    Provision for income taxes     17,082     (17,172 )     (90 )     109,902     (60,671 )     49,231
Net income from continuing operations   $ 40,211   $ (29,039 )   $ 11,172     $ 193,061   $ (100,725 )   $ 92,336
Earnings per share::                                          
    Basic   $ 0.59   $ (0.43 )   $ 0.16     $ 2.82   $ (1.47 )   $ 1.35
    Diluted   $ 0.51   $ (0.37 )   $ 0.14     $ 2.46   $ (1.28 )   $ 1.18
As a percentage of net revenues:                                          
    Compensation and benefits     64.8             68.6       63.0             67.3
    Non-compensation operating expenses     25.4             29.5       24.0             26.6
    Income before income taxes     9.8             1.9       13.0             6.1
                                           

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