Stifel Reports Second Quarter 2017 Financial Results

ST. LOUIS, MO--(Marketwired - July 31, 2017) -

Record net revenues of $725.6 million, increased 11.3% compared with the year-ago quarter and 7.4% sequentially.
Record net revenues and pre-tax operating income in Global Wealth Management.
Record net revenues in Institutional Group.
Net income available to common shareholders of $50.5 million, or $0.63 per diluted common share.
Non-GAAP net income available to common shareholders of $71.6 million, or $0.90 per diluted common share.
Record client assets of $258.1 billion, increased 14.2% compared with the year-ago quarter and 2.2% sequentially.

Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $50.5 million, or $0.63 per diluted common share on record net revenues of $725.6 million for the three months ended June 30, 2017, compared with net income available to common shareholders of $9.8 million, or $0.13 per diluted common share, on net revenues of $652.1 million for the second quarter of 2016.

For the three months ended June 30, 2017, the Company reported non-GAAP net income available to common shareholders of $71.6 million, or $0.90 per diluted common share.

For the six months ended June 30, 2017, the Company reported net income available to common shareholders of $113.6 million, or $1.41 per diluted common share on record net revenues of $1.4 billion, compared with net income available to common shareholders of $36.8 million, or $0.48 per diluted share, on net revenues of $1.3 billion for the comparable period in 2016.

For the six months ended June 30, 2017, the Company reported non-GAAP net income available to common shareholders of $131.2 million, or $1.63 per diluted common share.

Chairman's Comments

"We had a very strong quarter as we generated our third consecutive quarter of record net revenue and our non-GAAP pre-tax margins reached 16.3%, the highest level since the fourth quarter of 2010. Our revenues benefited from another record quarter from Global Wealth Management and record net revenue in our Institutional Group driven by record investment banking revenues. Given the increased contributions from more stable revenue streams such as our bank and fee-based accounts, Stifel's top and bottom lines are much better positioned to withstand the cyclicality in certain of our more transactional businesses then we were just a few years ago. Additionally, this quarter illustrated the positive impact that our investments in our investment banking franchise can have our top and bottom lines, despite the challenging environment for institutional brokerage," stated Ronald J. Kruszewski, Chairman & CEO of Stifel.


Financial Highlights (Unaudited)			Three Months Ended												Six Months Ended
(in 000s, except per share data)			6/30/17			6/30/16			3/31/17			Non- GAAP⁽¹⁾6/30/17			Non- GAAP⁽¹⁾6/30/17			Non- GAAP⁽¹⁾6/30/16
U.S. GAAP
	Net revenues		$	725,647		$	652,145		$	675,531		$	725,647		$	1,403,162		$	1,272,119
		Compensation ratio		62.5	%		70.5	%		64.6	%		61.4	%		61.9	%		63.9	%
		Non-compensation ratio		26.0	%		27.1	%		23.7	%		22.3	%		22.6	%		26.1	%
		Pre-tax operating margin		11.5	%		2.4	%		11.7	%		16.3	%		15.5	%		10.0	%
		Net income	$	52,811		$	9,771		$	65,512		$	73,991		$	135,840		$	78,364
		Preferred dividend		2,344			-			2,344			2,344			4,688			-
		Net income available to common shareholders	$	50,467		$	9,771		$	63,168		$	71,647		$	131,152		$	78,364
	Earnings per diluted common share		$	0.66		$	0.13		$	0.81		$	0.92		$	1.69		$	1.03
	Earnings per diluted common share available to common shareholders		$	0.63		$	0.13		$	0.78		$	0.90		$	1.63		$	1.03

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $268.0 million, a 13.1% decrease compared with the second quarter of 2016 and an 8.3% decrease compared with the first quarter of 2017. Brokerage revenues generated by the Sterne businesses, which were sold in 2016, were $14.1 million during the second quarter of 2016.


		Three Months Ended
(in 000s)		6/30/17		6/30/16				% Change		3/31/17		% Change
Global Wealth Management brokerage revenues		$	168,085	$	172,179			(2.4	)	$	171,494	(2.0	)

Institutional brokerage:
	Equity		50,869		55,008			(7.5	)		53,820	(5.5	)
	Fixed income		49,013		81,344			(39.7	)		66,817	(26.6	)
Total institutional brokerage			99,882		136,352			(26.7	)		120,637	(17.2	)
Total brokerage revenues		$	267,967	$	308,531	⁽²	⁾	(13.1	)	$	292,131	(8.3	)

Global wealth management brokerage revenues were $168.1 million, a 2.4% decrease compared with the second quarter of 2016 and a 2.0% decrease compared with the first quarter of 2017. Excluding the revenues from the Sterne businesses, global wealth brokerage revenues for the second quarter of 2017 increased 5.5% compared to the second quarter of 2016.
Institutional equity brokerage revenues were $50.9 million, a 7.5% decrease compared with the second quarter of 2016 and a 5.5% decrease compared with the first quarter of 2017.
Institutional fixed income brokerage revenues were $49.0 million, a 39.7% decrease compared with the second quarter of 2016 and a 26.6% decrease compared with the first quarter of 2017.

Investment Banking Revenues

Investment banking revenues were $185.3 million, a 39.2% increase compared with the second quarter of 2016 and a 46.0% increase compared with the first quarter of 2017.


			Three Months Ended
(in 000s)			6/30/17		6/30/16		% Change	3/31/17		% Change
Investment banking:
Capital raising:
	Equity		$	56,970	$	37,638	51.4	$	45,649	24.8
	Fixed income			45,830		28,774	59.3		28,267	62.1
		Capital raising		102,800		66,412	54.8		73,916	39.1
	Advisory fees:			82,461		66,713	23.6		52,936	55.8
Total investment banking			$	185,261	$	133,125	39.2	$	126,852	46.0

Equity capital raising revenues were $57.0 million, a 51.4% increase compared with the second quarter of 2016 and a 24.8% increase compared with the first quarter of 2017.
Fixed income capital raising revenues were $45.8 million, a 59.3% increase compared with the second quarter of 2016 and a 62.1% increase compared with the first quarter of 2017.
Advisory fee revenues were $82.5 million, a 23.6% increase compared with the second quarter of 2016 and a 55.8% increase compared with the first quarter of 2017.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $172.9 million, a 19.6% increase compared with the second quarter of 2016 and a 6.3% increase compared with the first quarter of 2017. 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 $92.3 million, a 90.3% increase compared with the second quarter of 2016 and an 8.5% increase compared with the first quarter of 2017.

Interest income was $109.0 million, a 65.6% increase compared with the second quarter of 2016 and a 7.9% increase compared with the first quarter of 2017. Interest income was impacted by the continued growth of interest-earning assets.
Interest expense was $16.6 million, a 3.6% decrease compared with the second quarter of 2016 and a 4.7% increase compared with the first quarter of 2017.

Compensation and Benefits Expenses

For the quarter ended June 30, 2017, compensation and benefits expenses were $453.9 million, which included $8.0 million of merger-related and severance expenses. This compares with $460.0 million in the second quarter of 2016 and $436.4 million in the first quarter of 2017. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 61.4% in the second quarter of 2017.


		Three Months Ended 6/30/17			Six Months Ended 6/30/17
GAAP compensation and benefits		$	453,876		$	890,263
	As a percentage of net revenues		62.5	%		63.5	%
Non-GAAP adjustments:⁽³⁾
	Merger-related		(5,551	)		(15,356	)
	Severance		(2,420	)		(6,955	)
			(7,971	)		(22,311	)
Non-GAAP compensation and benefits		$	445,905		$	867,952
	As a percentage of non-GAAP net revenues		61.4	%		61.9	%

Non-Compensation Operating Expenses

For the quarter ended June 30, 2017, non-compensation operating expenses were $188.6 million, which included litigation and merger-related expenses of $26.8 million. This compares with $176.3 million in the second quarter of 2016 and $160.1 million in the first quarter of 2017. Excluding litigation and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2017 were 22.3%.


		Three Months Ended 6/30/17			Six Months Ended 6/30/17
GAAP non-compensation expenses		$	188,573		$	348,698
	As a percentage of net revenues		26.0	%		24.9	%
Non-GAAP adjustments:⁽³⁾
	Litigation and merger-related		(26,849	)		(32,174	)
Non-GAAP non-compensation expenses		$	161,724		$	316,524
	As a percentage of non-GAAP net revenues		22.3	%		22.6	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended June 30, 2017 was 36.5%. This compares with an effective income tax rate of 38.1% for the second quarter of 2016 and 17.1% for the first quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended June 30, 2017 was 37.3%.


		Three Months Ended 6/30/17			Six Months Ended 6/30/17
GAAP provision for income taxes		$	30,387		$	43,894
	GAAP effective tax rate		36.5	%		27.1	%
Non-GAAP adjustments:⁽³⁾
	Litigation and merger-related and severance		13,428			21,840
	Excess tax benefits from stock-based compensation⁽⁴⁾		212			17,155
			13,640			38,995
Non-GAAP provision for income taxes		$	44,027		$	82,889
	Non-GAAP effective tax rate		37.3	%		37.9	%

Conference Call Information

Stifel Financial Corp. will host its second quarter 2017 financial results conference call on Monday, July 31, 2017, at 8:00 a.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 #51914622. 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										Six Months Ended
(in 000s, except per share amounts)			6/30/17		6/30/16		% Change		3/31/17		% Change		6/30/17		6/30/16		% Change
Revenues:
	Commissions		$	172,264	$	182,104	(5.4	)	$	175,274	(1.7	)	$	347,538	$	380,034	(8.6	)
	Principal transactions			95,703		126,426	(24.3	)		116,857	(18.1	)		212,560		247,374	(14.1	)
		Brokerage Revenues		267,967		308,530	(13.1	)		292,131	(8.3	)		560,098		627,408	(10.7	)

	Capital raising			102,800		66,412	54.8			73,916	39.1			176,716		119,716	47.6
	Advisory fees			82,461		66,713	23.6			52,936	55.8			135,397		114,067	18.7
		Investment banking		185,261		133,125	39.2			126,852	46.0			312,113		233,783	33.5
	Asset management and service fees			172,914		144,567	19.6			162,739	6.3			335,653		289,099	16.1
	Other income			7,198		17,405	(58.6	)		8,752	(17.8	)		15,950		24,595	(35.1	)
Operating Revenue				633,340		603,627	4.9			590,474	7.3			1,223,814		1,174,885	4.2
	Interest Revenue			108,951		65,780	65.6			100,953	7.9			209,904		128,607	63.2
Total Revenue				742,291		669,407	10.9			691,427	7.4			1,433,718		1,303,492	10.0
	Interest Expense			16,644		17,262	(3.6	)		15,896	4.7			32,540		31,373	3.7
Net Revenue				725,647		652,145	11.3			675,531	7.4			1,401,178		1,272,119	10.1

Non-interest Expenses:
	Compensation and benefits			453,876		460,023	(1.3	)		436,387	4.0			890,263		871,136	2.2
	Occupancy and equipment rental			57,892		58,746	(1.5	)		52,545	10.2			110,437		116,002	(4.8	)
	Communication and office supplies			34,192		37,426	(8.6	)		33,844	1.0			68,036		74,086	(8.2	)
	Commissions and floor brokerage			11,232		12,145	(7.5	)		10,723	4.7			21,955		23,876	(8.0	)
	Provision for loan losses			5,856		1,824	221.1			6,134	(4.5	)		11,990		6,082	97.1
	Other operating expenses			79,401		66,188	20.0			56,879	39.6			136,280		121,231	12.4
		Total non-interest expenses		642,449		636,352	1.0			596,512	7.7			1,238,961		1,212,413	2.2
Income before income taxes				83,198		15,793	426.8			79,019	5.3			162,217		59,706	171.7
	Provision for income taxes			30,387		6,022	404.6			13,507	125.0			43,894		22,880	91.8
Net income				52,811		9,771	440.5			65,512	(19.4	)		118,323		36,826	221.3
	Preferred dividends			2,344		-	nm			2,344	nm			4,688		-	nm
Net income available to common shareholders			$	50,467	$	9,771	416.5		$	63,168	(20.1	)	$	113,635	$	36,826	208.6
Earnings per common share:
	Basic		$	0.74	$	0.15	393.3		$	0.92	(19.6	)	$	1.66	$	0.55	201.8
	Diluted		$	0.63	$	0.13	384.6		$	0.78	(19.2	)	$	1.41	$	0.48	193.8

Weighted average number of common shares outstanding:
	Basic			68,556		66,792	2.6			68,386	0.2			68,471		67,186	1.9
	Diluted			80,021		75,982	5.3			80,695	(0.8	)		80,391		76,084	5.7


Summary Segment Results (Unaudited)
			Three Months Ended													Six Months Ended
(in 000s)			6/30/17			6/30/16			% Change		3/31/17			% Change		6/30/17			6/30/16			% Change
Net revenues:
	Global Wealth Management		$	451,990		$	386,039		17.1		$	442,732		2.1		$	894,722		$	765,843		16.8
	Institutional Group			276,153			260,920		5.8			237,467		16.3			513,620			502,196		2.3
	Other			(2,496	)		5,186		(148.1	)		(4,668	)	(46.5	)		(7,164	)		4,080		(275.6	)
		Total net revenues	$	725,647		$	652,145		11.3		$	675,531		7.4		$	1,401,178		$	1,272,119		10.1

Operating expenses:
	Global Wealth Management		$	298,753		$	280,986		6.3		$	300,680		(0.6	)	$	599,433		$	567,456		5.6
	Institutional Group			223,261			218,506		2.2			197,595		13.0			420,856			430,491		(2.2	)
	Other			120,435			136,860		(12.0	)		98,237		22.6			218,672			214,466		2.0
		Total operating expenses	$	642,449		$	636,352		1.0		$	596,512		7.7		$	1,238,961		$	1,212,413		2.2

Operating contribution:
	Global Wealth Management		$	153,237		$	105,053		45.9		$	142,052		7.9		$	295,289		$	198,387		48.8
	Institutional Group			52,892			42,414		24.7			39,872		32.7			92,764			71,705		29.4
	Other			(122,931	)		(131,674	)	(6.6	)		(102,905	)	19.5			(225,836	)		(210,386	)	7.3
		Income before income taxes	$	83,198		$	15,793		426.8		$	79,019		5.3		$	162,217		$	59,706		171.7

As a percentage of net revenues:
	Compensation and benefits
		Global Wealth Management		50.7			56.6					51.6					51.1			57.4
		Institutional Group		59.6			58.8					60.5					60.0			60.5
	Non-comp. operating expenses
		Global Wealth Management		15.4			16.2					16.3					15.9			16.7
		Institutional Group		21.2			25.0					22.7					21.9			25.2
	Income before income taxes
		Global Wealth Management		33.9			27.2					32.1					33.0			25.9
		Institutional Group		19.2			16.2					16.8					18.1			14.3
	Consolidated pre-tax margin ^{(5) (6)}			11.5			2.4					11.7					11.6			4.7


Stifel Financial Corp.
Selected Key Metrics
(Unaudited)

Financial metrics:		As of and For the Three Months Ended
*(in 000s, except percentages)*		6/30/17			6/30/16			3/31/17
	Total assets	$	19,533,575		$	15,385,602		$	19,135,892
	Total equity		2,845,309			2,490,865			2,777,903
	Book value per common share	$	39.47		$	37.41		$	38.40
	Return on common equity ⁽⁷⁾		7.9	%		1.6	%		10.0	%
	Non-GAAP return on common equity ^{(1) (7)}		11.1	%		8.5	%		9.5	%
	Return on tangible common equity ⁽⁸⁾		13.4	%		2.8	%		17.2	%
	Non-GAAP return on tangible common equity ^{(1) (8)}		18.8	%		15.1	%		16.2	%
	Tier 1 common capital ratio ⁽⁹⁾		18.2	%		20.2	%		18.4	%
	Tier 1 risk based capital ratio ⁽⁹⁾		20.5	%		20.6	%		20.8	%
	Tier 1 leverage capital ratio ⁽⁹⁾		10.3	%		11.5	%		10.1	%
	Pre-tax margin on net revenues		11.5	%		2.4	%		11.7	%
	Non-GAAP pre-tax margin on net revenues ⁽¹⁾		16.3	%		12.9	%		14.9	%
	Effective tax rate		36.5	%		38.1	%		17.1	%
	Non-GAAP effective tax rate ⁽¹⁾		37.3	%		38.1	%		38.6	%


(in 000s, except per share amounts)		6/30/17		6/30/16				% Change		3/31/17		% Change
Statistical Information:
	Financial advisors ⁽¹⁰⁾		2,277		2,291	⁽¹¹	⁾	(0.6	)		2,299	(1.0	)
	Locations		399		400			(0.3	)		399	-
	Total client assets	$	258,097,000	$	225,983,000	⁽¹¹	⁾	14.2		$	252,448,000	2.2
	Fee-based client assets	$	79,177,000	$	65,491,000			20.9		$	75,414,000	5.0
	Client money market and insured product	$	17,831,000	$	17,674,000			0.9		$	19,058,000	(6.4	)
	Secured client lending ⁽¹²⁾	$	2,999,461	$	2,657,313			12.9		$	2,962,936	1.2


Stifel Bank & Trust - a component of Global Wealth Management
Selected Key Metrics
(Unaudited)
Selected operating data:		Three Months Ended												Six Months Ended
(in 000s, except percentages)		6/30/17			6/30/16			% Change	3/31/17			% Change		6/30/17			6/30/16			% Change
	Net Interest Income	$	90,795		$	48,536		87.1	$	85,710		5.9		$	174,814		$	94,287		85.4
	Bank loan loss provision		5,856			1,824		221.1		6,134		(4.5	)		11,991			6,082		97.2
	Net charge-offs		2,953			-		n/m		-		n/m			2,953			-		n/m
	Net Interest Margin		2.77	%		2.34	%	18.4		2.66	%	4.1			2.71	%		2.40	%	12.9


Financial Metrics:		As of
(in 000s, except percentages)		6/30/17			6/30/16			3/31/17
	Total Assets	$	13,598,260		$	9,262,027		$	13,232,940
	Total Equity		978,626			613,325			931,913
	Total Loans, net		6,299,669			4,421,583			6,071,272
	Total Deposits		12,050,474			7,881,219			11,700,961
	Available-for-sale securities, at fair value		3,448,548			2,464,018			3,371,187
	Held-to-maturity securities, at amortized cost		3,304,090			2,115,734			3,185,813
	Residential real estate		2,248,528			1,228,234			2,214,356
	Commercial and industrial		2,064,052			1,424,671			1,830,865
	Securities-based loans		1,755,592			1,418,986			1,728,516
	Commercial real estate		71,517			83,628			78,522
	Loans held for sale		139,676			250,725			206,724
	Common equity tier 1 capital ratio ⁽⁹⁾		14.9	%		13.7	%		15.4	%
	Tier 1 capital ratio ⁽⁹⁾		14.9	%		13.7	%		15.4	%
	Total capital ratio ⁽⁹⁾		15.7	%		14.5	%		16.2	%
	Tier 1 leverage ratio ⁽⁹⁾		7.2	%		7.4	%		7.2	%

Credit Metrics:
	Allowance for loan losses	$	54,202		$	35,866		$	51,298
	Allowance as a percentage of retained loans		0.88	%		0.86	%		0.87	%
	Net charge-offs as a percentage of average loans		0.05	%		0.00	%		0.00	%
	Total nonperforming assets		21,219			34,919			28,036
	Nonperforming assets as % of total assets		0.15	%		0.37	%		0.21	%


Global Wealth Management Summary Results of Operations (Unaudited)
			Three Months Ended										Six Months Ended
(in 000s)			6/30/17		6/30/16		% Change		3/31/17		% Change		6/30/17		6/30/16		% Change
Revenues:
	Commissions		$	120,344	$	127,241	(5.4	)	$	120,577	(0.2	)	$	240,921	$	258,794	(6.9	)
	Principal transactions			47,741		44,938	6.2			50,917	(6.2	)		98,658		86,349	14.3
		Brokerage revenues		168,085		172,179	(2.4	)		171,494	(2.0	)		339,579		345,143	(1.6	)

	Asset management and service fees			172,889		144,360	19.8			162,664	6.3			335,553		288,712	16.2
	Net interest			95,698		54,246	76.4			89,695	6.7			185,393		106,055	74.8
	Investment banking			10,641		9,502	12.0			11,854	(10.2	)		22,495		17,911	25.6
	Other income			4,677		5,752	(18.7	)		7,025	(33.4	)		11,702		8,022	45.9
		Net revenues		451,990		386,039	17.1			442,732	2.1			894,722		765,843	16.8
Non-interest expenses:
	Compensation and benefits			229,158		218,553	4.9			228,471	0.3			457,629		439,968	4.0
	Non-compensation operating expenses			69,595		62,433	11.5			72,209	(3.6	)		141,804		127,488	11.2
		Total non-interest expenses		298,753		280,986	6.3			300,680	(0.6	)		599,433		567,456	5.6
Income before income taxes			$	153,237	$	105,053	45.9		$	142,052	7.9		$	295,289	$	198,387	48.8

As a percentage of net revenues:
	Compensation and benefits			50.7		56.6				51.6				51.1		57.4
	Non-compensation operating expenses			15.4		16.2				16.3				15.9		16.7
	Income before income taxes			33.9		27.2				32.1				33.0		25.9


Institutional Group Summary Results of Operations (Unaudited)
			Three Months Ended										Six Months Ended
(in 000s)			6/30/17		6/30/16		% Change		3/31/17		% Change		6/30/17		6/30/16		% Change
Revenues:
	Commissions		$	51,920	$	54,864	(5.4	)	$	54,697	(5.1	)	$	106,617	$	121,240	(12.1	)
	Principal transactions			47,962		81,488	(41.1	)		65,940	(27.3	)		113,902		161,026	(29.3	)
	Brokerage revenues			99,882		136,352	(26.7	)		120,637	(17.2	)		220,519		282,266	(21.9	)
	Capital raising			92,159		56,100	64.3			62,062	48.5			154,221		100,995	52.7
	Advisory fees			82,461		67,523	22.1			52,936	55.8			135,397		114,876	17.9
	Investment banking			174,620		123,623	41.3			114,998	51.8			289,618		215,871	34.2
	Other ⁽¹³⁾			1,651		945	74.7			1,832	(9.9	)		3,483		4,059	(14.2	)
		Net revenues		276,153		260,920	5.8			237,467	16.3			513,620		502,196	2.3
Non-interest expenses:
	Compensation and benefits			164,532		153,371	7.3			143,640	14.5			308,172		303,989	1.4
	Non-compensation operating expenses			58,729		65,135	(9.8	)		53,955	8.8			112,684		126,502	(10.9	)
		Total non-interest expenses		223,261		218,506	2.2			197,595	13.0			420,856		430,491	(2.2	)
Income before income taxes			$	52,892	$	42,414	24.7		$	39,872	32.7		$	92,764	$	71,705	29.4

As a percentage of net revenues:
	Compensation and benefits			59.6		58.8				60.5				60.0		60.5
	Non-compensation operating expenses			21.2		25.0				22.7				21.9		25.2
	Income before income taxes			19.2		16.2				16.8				18.1		14.3

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 and six months ended June 30, 2017 and 2016. 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 and six months ended June 30, 2017 and 2016 to net income and earnings per diluted common share on a non-GAAP basis for the same period.


		Three Months Ended									Six Months Ended
*(in 000s)*		6/30/17			6/30/16			3/31/17			6/30/17			6/30/16
GAAP net income		$	52,811		$	9,771		$	65,512		$	118,323		$	36,826
	Preferred dividend		2,344			-			2,344			4,688			-
Net income available to common shareholders			50,467			9,771			63,168			113,635			36,826

Non-GAAP adjustments:
	Merger-related ⁽¹⁴⁾		12,400			53,934			17,114			29,514			67,344
	Litigation-related ⁽¹⁵⁾		20,000			-			-			20,000			-
	Severance		2,420			-			4,535			6,955			-
	Provision for income taxes		(13,640	)		(20,536	)		(25,355	)		(38,952	)		(25,806	)
Total non-GAAP adjustments			21,180			33,398			(3,706	)		17,517			41,538
Non-GAAP net income available to common shareholders		$	71,647		$	43,169		$	59,462		$	131,152		$	78,364

Weighted average diluted shares outstanding			80,021			75,982			80,695			80,391			76,084

GAAP earnings per diluted common share		$	0.66		$	0.13		$	0.81		$	1.47		$	0.48
Non-GAAP adjustments			0.26			0.44			(0.04	)		0.22			0.55
Non-GAAP earnings per diluted common share		$	0.92		$	0.57		$	0.77		$	1.69		$	1.03

GAAP earnings per diluted common share available to common shareholders		$	0.63		$	0.13		$	0.78		$	1.41		$	0.48
Non-GAAP adjustments			0.27			0.44			(0.04	)		0.22			0.55
Non-GAAP earnings per diluted common share available to common shareholders		$	0.90		$	0.57		$	0.74		$	1.63		$	1.03

Footnotes


⁽¹⁾	Reconciliations of the Company's GAAP results to these non-GAAP measures are discussed within and under "Non-GAAP Financial Measures."
⁽²⁾	Excludes brokerage revenues included in the Other segment.
⁽³⁾	See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."
⁽⁴⁾	During the first quarter of 2017, the Company adopted new accounting guidance associated with stock-based compensation.
⁽⁵⁾	Non-GAAP pre-tax margin for the three months ended June 30, 2017 of 16.3% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $34.8 million to our GAAP income before income taxes of $83.2 million and dividing it by non-GAAP net revenues for the quarter of $725.6 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures."
⁽⁶⁾	Non-GAAP pre-tax margin for the six months ended June 30, 2017 of 15.5% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $56.5 million to our GAAP income before income taxes of $162.2 million and dividing it by non-GAAP net revenues for the quarter of $1,401.2 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures."
⁽⁷⁾	Computed by dividing annualized net income by average common shareholders' equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average common shareholders' equity.
⁽⁸⁾	Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total common shareholders' equity less goodwill and identifiable intangible assets.
⁽⁹⁾	Capital ratios are estimates at time of the Company's earning release.
⁽¹⁰⁾	Includes 119, 127, and 121 independent contractors at June 30, 2017, June 30, 2016, and March 31, 2017, respectively.
⁽¹¹⁾	On July 1, 2016, we sold the independent contractor business acquired with the Sterne Agee transaction in June 2015. As of June 30, 2016, there were 540 independent contractors included in the disposed business unit and $11.5 billion of total client assets. These numbers have been excluded from the table.
⁽¹²⁾	Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank.
⁽¹³⁾	Includes net interest, asset management and service fees, and other income.
⁽¹⁴⁾	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.
⁽¹⁵⁾	Primarily related to costs associated with the Company's previously disclosed legal matters.

Contact Information:

Investor Relations
Joel Jeffrey
(212) 271-3610
investorrelations@stifel.com