Stifel Reports Third Quarter 2013 Financial Results

ST. LOUIS, MO--(Marketwired - Nov 7, 2013) - Stifel Financial Corp. (NYSE: SF)

• Net revenues of $478.6 million, increased 16% compared with the year-ago quarter.
• Net income from continuing operations of $74.9 million, or $1.00 per diluted share.
• Non-GAAP net income of $39.6 million, or $0.53 per diluted share.

Stifel Financial Corp. (NYSE: SF) today reported net income from continuing operations of $74.9 million, or $1.00 per diluted common share on net revenues of $478.6 million for the three months ended September 30, 2013, compared with net income of $37.4 million, or $0.60 per diluted share, on net revenues of $414.2 million for the third quarter of 2012. Included in net revenues for the three months ended September 30, 2012 is $25.6 million in realized and unrealized gains recognized on the Company's investment in Knight Capital Group, Inc. The after-tax impact of these gains was $0.09 per diluted share.

On August 21, 2013, the Company announced its intention to discontinue the business operations of its Canadian subsidiary, Stifel Nicolaus Canada, Inc. ("SN Canada"), which is expected to be completed by the end of the second quarter of 2014. The results of SN Canada, previously reported in the Institutional Group segment, are classified as discontinued operations for all periods presented. As a result of discontinuing the business operations of SN Canada during the current quarter, the Company recorded a U.S. tax benefit of $58.2 million.

For the three months ended September 30, 2013, the Company reported non-GAAP net income of $39.6 million, or $0.53 per diluted share. These non-GAAP results exclude merger-related expenses associated with the acquisitions of the Knight Capital Fixed Income business, KBW, and Miller Buckfire of $22.9 million (after-tax), and the tax benefit described above. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

Summary Results of Operations (Unaudited)
			Three Months Ended																	Nine Months Ended
(in 000s)			9/30/13				9/30/12			% Change			6/30/13				% Change			9/30/13				9/30/12				% Change
	Net revenues		$	478,639			$	414,157		15.6			$	493,678			(3.0	)		$	1,410,921			$	1,182,830			19.3
	Net income from continuing operations		$	74,929			$	37,434		100.2			$	30,916			142.4			$	120,782			$	102,012			18.4
	Net income		$	69,690			$	37,710		84.8			$	29,435			136.8			$	113,745			$	98,619			15.3
	Non-GAAP net income (1)		$	39,649			$	37,434		5.9			$	45,133			(12.2	)		$	124,840			$	102,012			22.4
Earnings per basic share:
	Income from continuing operations		$	1.16			$	0.70		65.7			$	0.48			141.7			$	1.91			$	1.91			--
	Loss from discontinued operations			(0.08	)			--		*				(0.02	)		300.0				(0.11	)			(0.07	)		57.1
	Earnings per basic common share		$	1.08			$	0.70		54.3			$	0.46			134.8			$	1.80			$	1.84			(2.2	)
	Non-GAAP diluted 1		$	0.53			$	0.60		(11.7	)		$	0.70			(24.3	)		$	1.71			$	1.62			5.6
Earnings per diluted share:
	Income from continuing operations		$	1.00			$	0.60		66.7			$	0.42			138.1			$	1.66			$	1.62			2.5
	Loss from discontinued operations			(0.07	)			--		*				(0.02	)		250.0				(0.10	)			(0.05	)		100.0
	Earnings per diluted common share		$	0.93			$	0.60		55.0			$	0.40			132.5			$	1.56			$	1.57			(0.6	)
	Non-GAAP diluted 1		$	0.53			$	0.60		(11.7	)		$	0.61			(13.1	)		$	1.71			$	1.62			5.6
Weighted average number of common shares outstanding:
	Basic			64,706				53,601		20.7				64,505			0.3				63,133				53,471			18.1
	Diluted			75,191				63,054		19.2				74,090			1.5				72,851				62,817			16.0

Nine Months Results

• Record net revenues of $1.41 billion, increased 19% compared with the year-ago period.
• Net income from continuing operations of $120.8 million, or $1.66 per diluted share.
• Non-GAAP net income of $124.8 million, or $1.71 per diluted share.

For the nine months ended September 30, 2013, the Company reported net income from continuing operations of $120.8 million, or $1.66 per diluted common share on record net revenues of $1.41 billion, compared with net income of $102.0 million, or $1.62 per diluted share, on net revenues of $1.18 billion for the comparable period in 2012. For the nine months ended September 30, 2013, the Company reported non-GAAP net income of $124.8 million, or $1.71 per diluted share. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

Chairman's Comments

Ronald J. Kruszewski, Chairman, President and CEO of Stifel said, "Despite the fact that the industry reflected muted client activity during the summer months, we are pleased with our third quarter results. Year over year, revenues are up 19% and core net income from continuing operations is up 18%, both reflecting the strength of our balanced business model."

Kruszewski continued, "We have had a very encouraging start to our 4th quarter. We remain focused on serving our clients and are well positioned to capitalize on the opportunities ahead."

Business Segment Results

Summary Segment Results (Unaudited)
			Three Months Ended																		Nine Months Ended
(in 000s)			9/30/13				9/30/12				% Change			6/30/13				% Change			9/30/13				9/30/12				% Change
Net revenues:
	Global Wealth Management		$	274,669			$	250,914			9.5			$	282,717			(2.8	)		$	824,344			$	737,822			11.7
	Institutional Group			205,132				164,611			24.6				215,443			(4.7	)			593,875				443,961			33.8
	Other			(1,162	)			(1,368	)		(15.1	)			(4,482	)		(74.1	)			(7,298	)			1,047			*
			$	478,639			$	414,157			15.6			$	493,678			(3.0	)		$	1,410,921			$	1,182,830			19.3
Operating contribution: (2)
	Global Wealth Management		$	72,128			$	68,020			6.0			$	78,924			(8.6	)		$	220,551			$	197,933			11.4
	Institutional Group			34,986				33,201			5.4				31,082			12.6				94,298				79,809			18.2
	Other			(41,669	)			(40,047	)		4.1				(34,784	)		19.8				(110,192	)			(108,346	)		1.7
			$	65,443			$	61,174			7.0			$	75,222			(13.0	)		$	204,657			$	169,396			20.8
* Percentage not meaningful.

Global Wealth Management

For the quarter ended September 30, 2013, the Global Wealth Management ("GWM") segment generated pre-tax operating income of $72.1 million, compared with $68.0 million in the third quarter of 2012 and $78.9 million in the second quarter of 2013. Net revenues for the quarter were $274.7 million, compared with $250.9 million in the third quarter of 2012, and $282.7 million in the second quarter of 2013. The increase in net revenues from the third quarter of 2012 is primarily attributable to (1) an increase in commission revenues; (2) growth in asset management and service fees; and (3) increased net interest revenues.

• The Private Client Group reported net revenues of $248.5 million, a 9% increase compared with the third quarter of 2012 and a 3% decrease compared with the second quarter of 2013.
• Stifel Bank reported net revenues of $26.1 million, a 17% increase compared with the third quarter of 2012 and a 3% increase compared with the second quarter of 2013.

Institutional Group

For the quarter ended September 30, 2013, the Institutional Group segment generated pre-tax operating income of $35.0 million, compared with $33.2 million in the third quarter of 2012 and $31.1 million in the second quarter of 2013. Net revenues for the quarter were $205.1 million, compared with $164.6 million in the third quarter of 2012 and $215.4 million in the second quarter of 2013. The increase in net revenues from the third quarter of 2012 was primarily attributable to (1) an increase in equity capital raising revenues; (2) an increase in advisory fees; and (3) higher institutional brokerage revenues, offset by a reduction in other revenues as a result of gains recorded on our investment in Knight Capital during the third quarter of 2012.

The decrease in net revenues from the second quarter of 2013 was primarily attributable to (1) a decline in capital raising revenues; and (2) a decrease in equity institutional brokerage revenues, offset by (1) higher fixed income institutional brokerage revenues. Net revenue growth, on a year-over-year basis, is attributable to the acquisitions of KBW and the Knight Capital Fixed Income business and, to a lesser extent, Miller Buckfire.

Institutional brokerage revenues were $110.3 million, a 37% increase compared with the third quarter of 2012 and a 5% increase compared with the second quarter of 2013.

• Equity brokerage revenues were $58.7 million, a 68% increase compared with the third quarter of 2012 and an 8% decrease compared with the second quarter of 2013.
• Fixed income brokerage revenues were $51.7 million, a 13% increase compared with the third quarter of 2012 and a 26% increase compared with the second quarter of 2013.

Investment banking revenues were $83.5 million, a 43% increase compared with the third quarter of 2012 and a 19% decrease compared with the second quarter of 2013.

• Equity capital raising revenues were $30.7 million, an 88% increase compared with the third quarter of 2012 and a 26% decrease compared with the second quarter of 2013.
• Fixed income capital raising revenues were $13.5 million, a 9% decrease compared with the third quarter of 2012 and a 5% decrease compared with the second quarter of 2013.
• Advisory fee revenues were $39.2 million, a 44% increase compared with the third quarter of 2012 and an 18% decrease compared with the second quarter of 2013.

Consolidated Compensation and Benefits Expenses

For the quarter ended September 30, 2013, compensation and benefits expenses were $326.0 million, which included merger-related expenses of $28.6 million, compared with $264.5 million in the third quarter of 2012 and $317.2 million in the second quarter of 2013, which included merger-related expenses of $6.0 million.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.0% in the third quarter of 2013, compared with 63.8% in the third quarter of 2012 and 63.0% in the second quarter of 2013. Transition pay, which primarily consists of amortization of upfront notes, signing bonuses and retention awards, as a percentage of net revenues was 4.6% in the second quarter of 2013, compared with 4.3% in the third quarter of 2012 and 4.2% in the second quarter of 2013.

Consolidated Non-Compensation Operating Expenses

For the quarter ended September 30, 2013, non-compensation operating expenses were $121.6 million, which included $4.8 million of merger-related expenses, compared with $88.5 million in the third quarter of 2012 and $123.9 million in the second quarter of 2013, which included $15.0 million in merger-related expenses.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2013 was 24.4%, compared with 21.4% in the third quarter of 2012 and 22.2% in the second quarter of 2013.

Provision for Income Taxes

As a result of discontinuing the business operations of SN Canada during the current quarter, the Company recorded a $58.2 million U.S. tax benefit arising out of its investment in SN Canada, primarily resulting from a non-deductible impairment charge on this investment during the third quarter of 2008.

Assets and Capital

Assets

• Assets increased 42% to $8.7 billion as of September 30, 2013 from $6.1 billion as of September 30, 2012. The increase is primarily attributable to growth of Stifel Bank, the Company's bank subsidiary, which as of September 30, 2013 has grown its assets to $4.5 billion from $3.2 billion as of September 30, 2012.
• At September 30, 2013, the Company's Level 3 assets of $252.3 million, or 3% of total assets, consisted of $144.4 million of auction rate securities and $107.9 million of private equity, municipal securities, and other fixed income securities. The Company's Level 3 assets as a percentage of total assets measured at fair value was 10% at September 30, 2013.
• Non-performing assets as a percentage of total assets as of September 30, 2013 was 0.17%.
• LTM net charge-offs of $0.4 million.

Capital

• The Company's Tier 1 leverage capital ratio was 14.8% at September 30, 2013 and Tier 1 risk-based capital ratio was 23.2% at September 30, 2013.
• At September 30, 2013, book value per common share was $31.46 based on approximately 63.4 million shares outstanding.
• Stockholders' equity as of September 30, 2013 increased $467.3 million, or 40%, to $2.0 billion from $1.4 billion as of September 30, 2012.

Non-GAAP Financial Measures

The Company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share as additional measures to aid in understanding and analyzing the Company's financial results for the three and nine months ended September 30, 2013. 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 exclude compensation expense related to the granting of stock awards with no continuing service requirement issued as retention as part of the acquisitions of the Knight Capital Fixed Income business and KBW and certain compensation and non-compensation operating expenses associated with the acquisitions of KBW, Miller Buckfire, the Knight Capital Fixed Income business, and the U.S. tax benefit arising out of the Company's investment in SN Canada.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share and the same respective non-GAAP measures of the Company's financial performance should be considered together.

The following 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 diluted earnings per share on a GAAP basis for the three and nine months ended September 30, 2013 to the aforementioned expenses on a non-GAAP basis for the same period.

				Three Months Ended September 30, 2013											Nine Months Ended September 30, 2013
(in 000s, except per share amounts)				Non-GAAP			Non-Core				GAAP				Non-GAAP			Non-Core				GAAP
Net revenues				$	479,634		$	(995	)		$	478,639			$	1,413,660		$	(2,739	)		$	1,410,921
Non-interest expenses:
	Compensation and benefits				297,374			28,646				326,020				889,728			68,451				958,179
	Non-compensation operating expenses				116,817			4,795				121,611				319,275			26,226				345,501
		Total non-interest expenses			414,191			33,441				447,631				1,209,003			94,677				1,303,680
	Income from continuing operations before income taxes				65,443			(34,436	)			31,008				204,657			(97,416	)			107,241
	Provision for income taxes				25,795			(69,716	)			(43,921	)			79,817			(93,358	)			(13,541	)
	Net income from continuing operations			$	39,649		$	35,280			$	74,929			$	124,840		$	(4,058	)		$	120,782
Earnings per share:
	Basic			$	0.61		$	0.55			$	1.16			$	1.98		$	(0.06	)		$	1.91
	Diluted			$	0.53		$	0.47			$	1.00			$	1.71		$	(0.05	)		$	1.66
As a percentage of net revenues:
	Compensation and benefits				62.0							68.1				62.9							67.9
	Non-compensation operating expenses				24.4							25.4				22.6							24.5
	Income before income taxes				13.6							6.5				14.5							7.6

Conference Call Information

Stifel Financial Corp. will host its third quarter 2013 financial results conference call on Thursday, November 7, 2013, 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, President, and CEO, Ronald J. Kruszewski, by dialing (888) 676-3684 and referencing conference ID #95677827. 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 clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. 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. offers 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																	Nine Months Ended
(in thousands, except per share amounts)				9/30/13				9/30/12			% Change			6/30/13				% Change			9/30/13				9/30/12				% Change
Revenues:
	Commissions			$	145,837			$	125,509		16.2			$	154,795			(5.8	)		$	446,498			$	370,107			20.6
	Principal transactions				122,583				102,474		19.6				111,306			10.1				341,153				311,420			9.5
	Investment banking				92,851				71,743		29.4				119,443			(22.3	)			289,199				208,342			38.8
	Asset management and service fees				76,710				62,881		22.0				76,088			0.8				221,711				189,010			17.3
	Other income				13,063				31,094		(58.0	)			11,787			10.8				45,269				49,991			(9.4	)
		Operating revenues			451,044				393,701		14.6				473,419			(4.7	)			1,343,830				1,128,870			19.0
	Interest revenue				39,130				26,360		48.4				32,893			19.0				101,829				78,728			29.3
		Total revenues			490,174				420,061		16.7				506,312			(3.2	)			1,445,659				1,207,598			19.7
	Interest expense				11,535				5,904		95.4				12,634			(8.7	)			34,738				24,768			40.3
		Net revenues			478,639				414,157		15.6				493,678			(3.0	)			1,410,921				1,182,830			19.3
Non-interest expenses:
	Compensation and benefits				326,020				264,458		23.3				317,247			2.8				958,179				751,992			27.4
	Occupancy and equipment rental				41,288				32,596		26.7				41,282			--				116,090				94,776			22.5
	Communications and office supplies				26,122				19,561		33.5				25,456			2.6				74,034				60,115			23.2
	Commission and floor brokerage				10,150				7,842		29.4				9,790			3.7				28,777				22,339			28.8
	Other operating expenses				44,051				28,526		54.4				47,328			(1.8	)			126,600				84,212			50.3
		Total non-interest expenses			447,631				352,983		26.8				441,103			1.5				1,303,680				1,013,434			28.6
Income from continuing operations before income taxes					31,008				61,174		(49.3	)			52,575			(41.0	)			107,241				169,396			(36.7	)
	Provision for income taxes				(43,921	)			23,740		*				21,659			*				(13,541	)			67,384			*
Net income from continuing operations					74,929				37,434		100.2				30,916			142.4				120,782				102,012			18.4
Discontinued operations:
	Income/(loss) from discontinued operations, net of tax				(5,239	)			276		*				(1,481	)		253.7				(7,037	)			(3,393	)		107.4
Net income				$	69,690			$	37,710		84.8			$	29,435			136.8			$	113,745			$	98,619			15.3
Earnings per basic common share:
	Income from continuing operations			$	1.16			$	0.70		65.7			$	0.48			141.7			$	1.91			$	1.91			--
	Income/(loss) from discontinued operations				(0.08	)			--		*				(0.02	)		300.0				(0.11	)			(0.07	)		57.1
	Earnings per basic common share			$	1.08			$	0.70		54.3			$	0.46			134.8			$	1.80			$	1.84			(2.2	)
Earnings per diluted common share:
	Income from continuing operations			$	1.00			$	0.60		66.7			$	0.42			138.1			$	1.66			$	1.62			2.5
	Income/(loss) from discontinued operations				(0.07	)			--		*				(0.02	)		250.0				(0.10	)			(0.05	)		100.0
	Earnings per diluted common share			$	0.93			$	0.60		55.0			$	0.40			132.5			$	1.56			$	1.57			(0.6	)
Weighted average number of common shares outstanding:
	Basic				64,706				53,601		20.7				64,505			0.3				63,133				53,471			18.1
	Diluted				75,191				63,054		19.2				74,090			1.5				72,851				62,817			16.0
* Percentage not meaningful.

(in thousands, except per share, employee and location amounts)
			9/30/13			9/30/12			% Change		6/30/13			% Change
Statistical Information:
	Book value per share		$	31.46		$	26.62		18.2		$	30.05		4.7
	Financial advisors (3)			2,075			2,042		1.6			2,069		0.3
	Full-time associates			5,780			5,266		9.8			5,759		0.4
	Locations			355			338		5.0			357		(0.6	)
	Total client assets		$	153,901,000		$	136,015,000		13.2		$	150,628,000		2.2

Global Wealth Management Summary Results of Operations (Unaudited)
				Three Months Ended															Nine Months Ended
(in 000s)				9/30/13			9/30/12			% Change			6/30/13			% Change			9/30/13			9/30/12			% Change
Revenues:
	Commissions			$	99,427		$	89,390		11.2			$	104,576		(4.9	)		$	306,089		$	268,827		13.9
	Principal transactions				58,658			58,027		1.1				56,313		4.2				171,278			171,466		(0.1	)
	Asset management and service fees				76,667			62,871		21.9				75,976		0.9				221,577			188,626		17.5
	Net interest				27,665			22,277		24.5				24,505		12.9				73,657			58,146		26.7
	Investment banking				9,394			13,315		(29.4	)			15,334		(38.7	)			35,832			34,101		5.1
	Other income				2,858			5,034		(43.2	)			6,013		(52.5	)			15,911			16,656		(4.5	)
		Net revenues			274,669			250,914		9.5				282,717		(2.8	)			824,344			737,822		11.7
Non-interest expenses:
	Compensation and benefits				159,949			146,452		9.2				163,156		(2.0	)			480,701			430,432		11.7
	Non-compensation operating expenses				42,592			36,442		16.9				40,637		4.8				123,092			109,457		12.5
		Total non-interest expenses			202,541			182,894		10.7				203,793		(0.6	)			603,793			539,889		11.8
Income before income taxes				$	72,128		$	68,020		6.0			$	78,924		(8.6	)		$	220,551		$	197,933		11.4
As a percentage of net revenues:
	Compensation and benefits				58.2			58.4						57.7						58.3			58.3
	Non-compensation operating expenses				15.5			14.5						14.4						14.9			14.9
	Income before income taxes				26.3			27.1						27.9						26.8			26.8

Stifel Bank & Trust (Unaudited)
Key Statistical Information
(in 000s, except percentages)			9/30/13				9/30/12				% Change			6/30/13				% Change
Other information:
	Assets		$	4,547,071			$	3,228,021			40.9			$	4,306,447			5.6
	Investment securities			2,949,080				2,128,752			38.5				2,956,073			(0.2	)
	Retained loans, net			1,061,313				746,120			42.2				983,788			7.9
	Loans held for sale			75,440				209,358			(64.0	)			152,246			(50.4	)
	Deposits			4,228,405				2,923,671			44.6				4,007,050			5.5
	Allowance as a percentage of loans			1.23	%			0.85	%						1.10	%
	Non-performing assets as a percentage of total assets			0.32	%			0.07	%						0.03	%

Institutional Group Summary Results of Operations (Unaudited)
				Three Months Ended															Nine Months Ended
(in 000s)				9/30/13			9/30/12			% Change			6/30/13			% Change			9/30/13			9/30/12			% Change
Revenues:
	Commissions			$	46,410		$	36,119		28.5			$	50,218		(7.2	)		$	140,409		$	101,280		38.6
	Principal transactions				63,925			44,447		43.8				54,966		16.2				169,875			139,954		21.4
	Capital raising				44,270			31,247		41.7				56,431		(21.6	)			139,420			105,339		32.5
	Advisory fees				39,186			27,180		44.2				47,705		(17.9	)			113,947			68,902		65.4
	Investment banking				83,456			58,427		42.8				104,136		(19.9	)			253,367			174,241		45.5
	Other (4)				11,341			25,618		(55.7	)			6,123		85.2				30,224			28,486		6.1
		Net revenues			205,132			164,611		24.6				215,443		(4.8	)			593,875			443,961		33.8
Non-interest expenses:
	Compensation and benefits				119,874			102,148		17.4				132,396		(9.5	)			359,091			275,159		30.5
	Non-compensation operating expenses				50,272			29,262		71.8				51,965		(3.3	)			140,486			88,993		57.9
		Total non-interest expenses			170,146			131,410		29.5				184,361		(7.7	)			499,577			364,152		37.2
Income before income taxes				$	34,986		$	33,201		5.4			$	31,082		12.6			$	94,298		$	79,809		18.2
As a percentage of net revenues:
	Compensation and benefits				58.4			62.1						61.5						60.5			62.0
	Non-compensation operating expenses				24.5			17.8						24.1						23.6			20.0
	Income before income taxes				17.1			20.1						14.4						15.9			18.0

Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
					Three Months Ended															Nine Months Ended
(in 000s)					9/30/13			9/30/12			% Change			6/30/13			% Change			9/30/13			9/30/12			% Change
Institutional brokerage:
	Equity				$	58,677		$	34,994		67.7			$	64,245		(8.7	)		$	172,187		$	112,648		52.9
	Fixed income					51,658			45,572		13.4				40,939		26.2				138,097			128,586		7.4
Institutional brokerage						110,335			80,566		36.9				105,184		4.9				310,284			241,234		28.6
Investment banking:
	Capital raising:
		Equity				30,739			16,357		87.9				42,258		(27.3	)			96,001			64,780		48.2
		Fixed income				13,531			14,890		(9.1	)			14,173		(4.5	)			43,419			40,469		7.3
			Capital raising			44,270			31,247		41.7				56,431		(21.6	)			139,420			105,339		32.5
	Advisory fees:					39,186			27,180		44.2				47,705		(17.9	)			113,947			68,902		65.4
Investment banking					$	83,456		$	58,427		42.8			$	104,136		(19.9	)		$	253,367		$	174,241		45.5

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

* Percentage not meaningful.

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

(3) Includes 145, 154 and 145 independent contractors at September 30, 2013 and 2012 and June 30, 2013, respectively.

(4) Includes net interest and other income.