STIFEL FINANCIAL CORP.
Form 8-K Dated August 11, 2008
Exhibit 99: Press Release
[Stifel Financial Corp. logo] Stifel Financial News
One Financial Plaza
501 North Broadway
St. Louis, MO 63102
(314) 342-2000 |
For further information contact:
James M. Zemlyak, Chief Financial Officer
(314) 342-2228 zemlyakj@stifel.com
For Immediate Release
Stifel Financial Corp. Reports Second Quarter Results
Net Revenues of $209.0 million
Non-GAAP EPS $0.60
GAAP EPS $0.45
Record 1st half Net Revenue $420 million, up 14%
St. Louis, Missouri - August 11, 2008- Stifel Financial Corp. (NYSE: "SF") today reported unaudited quarterly net income of $12.3 million, or $0.45 per diluted share, on net revenues of $209.0 million for the quarter ended June 30, 2008. For the comparable quarter of 2007, net income was $1.4 million, or $0.06 per diluted share, on revenues of $210.9 million. For the six months ended June 30, 2008, we posted net income of $26.7 million, or $0.99 per diluted share, on revenues of $420.4 million, compared with $10.3 million, or $0.42 per diluted share, on revenues of $367.9 million, for the same period one year earlier. All prior period share and earnings per share amounts have been retroactively restated to reflect the three-for-two stock split distributed in June 2008.
At June 30, 2008, our equity was $465.1 million, resulting in book value per share of $19.75. During the first six months of 2008, the Company repurchased 567,953 shares of its common stock, at an average price of $27.87 per share.
After adjusting for acquisition related charges, non-GAAP net income, our "Core earnings", and non-GAAP earnings per diluted share were $16.3 million and $0.60, respectively for the second quarter of 2008 compared to 2007 second quarter non-GAAP earnings of $18.9 million and non-GAAP earnings per diluted share of $0.72. For the six months ended June 30, 2008, our non-GAAP earnings and non-GAAP earnings per diluted share were $34.6 million and $1.29, respectively for the first six months of 2008 compared to 2007 year to date non-GAAP earnings of $32.0 million and non-GAAP earnings per diluted share of $1.31. A reconciliation between our GAAP results and non-GAAP measures is included in this release.
Current six month results include the operations of Ryan Beck and Company and Stifel Bank and Trust for the six months compared to the prior year six month results which include Ryan Beck operations for four months and Stifel Bank and Trust for three months, as the acquisitions were made on February 28, 2007 and April 2, 2007, respectively. Prior year second quarter and six month results also include a significant investment banking transaction that contributed $24.7 million in revenue.
Stifel Financial Corp. |
Summary of Results of Operations(Unaudited) |
($ In Thousands, Except Per Share Amounts) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
| 6/30/2008 | 3/31/2008 | 6/30/2007 | 3/31/2008 | 6/30/2007 | 6/30/2008 | 6/30/2007 | Percent |
Total Revenues | $ 214,020 | $ 217,242 | $ 220,631 | -1% | -3% | $ 431,262 | $ 383,129 | 13% |
Net Revenues | $ 208,951 | $ 211,477 | $ 210,935 | -1% | -1% | $ 420,428 | $ 367,896 | 14% |
Non-GAAP Net Income (1) | $ 16,319 | $ 18,318 | $ 18,851 | -11% | -13% | $ 34,637 | $ 32,031 | 8% |
Net Income | $ 12,332 | $ 14,347 | $ 1,448 | -14% | 752% | $ 26,679 | $ 10,277 | 160% |
Per Share Information |
| | Three Months Ended | Percent Change From | Year Ended | Change |
| | 6/30/2008 | 3/31/2008 | 6/30/2007 | 3/31/2008 | 6/30/2007 | 6/30/2008 | 6/30/2007 | Percent |
Non-GAAP Earnings Per Share: Diluted(1) | $ 0.60 | $ 0.69 | $ 0.72 | -13% | -17% | $ 1.29 | $ 1.31 | -2% |
Earnings Per Share: Diluted | $ 0.45 | $ 0.54 | $ 0.06 | -17% | 650% | $ 0.99 | $ 0.42 | 136% |
Weighed average common equivalent share Computations: Diluted shares | 27,229 | 26,643 | 26,012 | 2% | 5% | 26,931 | 24,521 | 10% |
(1See"Reconciliationof Core Earnings" table |
Page 1
Business Highlights
YTD Highlights
- Net revenues of $420.4 million, a 14% increase for the six months as compared to 2007.
- GAAP net income of $26.7 million, or $0.99 per diluted share, a 160% increase for the six months as compared to 2007.
- Book value per common share increased to $19.75 as of June 30, 2008, a 14% increase from December 31, 2007.
- Core net income of $34.6 million, or $1.29 per diluted share, an 8% increase for the year as compared to 2007.
- Our Private Client Group ("PCG") and Fixed Income Capital Markets ("FICM") net revenues increased 16% and 213%, respectively, in the first six months as compared to 2007.
- Commissions and principal transactions revenue increased 49% to $301.4 million from the prior year six months.
- Investment banking revenue declined 60% to $42.8 million from the prior year six months.
- Prior year six months and second quarter results include the firm's largest investment banking transaction which contributed $24.7 million in revenues.
- Asset management and service fees revenue increased 34% to $60.2 million from the prior year six months.
- For the six months ended June 30, 2008, utilizing Core earnings, pretax margin was 14%.
- For the six months ended June 30, 2008, utilizing Core earnings, return on average equity was 16%.
Quarterly Highlights
- Net revenues of $209.0 million, down slightly from the prior year second quarter and the first quarter of 2008.
- GAAP net income of $12.3 million, or $0.45 per diluted share, a 752% increase over the prior year second quarter and a 14% decrease from the first quarter 2008.
- Corenet income of $16.3 million, or $0.60 per diluted share, a 13% decrease from the prior year second quarter and a 11% decrease from the first quarter 2008.
- Commission and principal transactions revenue increased $34.8 million, 31% over the previous year second quarter.
- Investment banking revenue declined 67% to $20.9 million from prior year second quarter.
- Asset management and service fees revenue increased 17% to $30.0 million as compared to the prior year second quarter.
- For the three months ended June 30, 2008, utilizing Core earnings, pretax margin was 13%.
- For the three months ended June 30, 2008, utilizing Core earnings, annualized return on average equity was 14%.
- The FICM segment recorded net revenues of $34.7 million a 231% increase over the second quarter 2007.
- We had a 3 for 2 stock split distributed on June 12, 2008 to shareholders of record May 29, 2008.
Chairman's Comments
Chairman and Chief Executive Officer, Ronald J. Kruszewski, commented, "Given the difficult market conditions, we are pleased to report a strong quarter. We benefited from our balanced businesses as weakness in investment banking was offset by outstanding results in Fixed Income and Private Client. The turmoil in our industry has provided us the opportunity to add quality individuals to our team.From January 2008 to date, we have opened 16 Private client offices, added 18 investment bankers including a 9 person energy team, increased our public finance team 57% through the addition of 20 associates including new offices in Lansing, Michigan and San Antonio, Texas, added 25 professionals to our fixed income team, including 12 individuals in our Aircraft Leasing group, and added 63 associates to help support the growth of Stifel Bank & Trust. While these additions will significantly add to our long-term shareholder value, our near-term results may be impacted as a result of the associated start-up costs."
Page 2
Stifel Financial Corp. |
Summary of Results of Operations(Unaudited) |
($ In Thousands, Except Per Share Amounts) |
| | Three Months Ended | Percent Change From |
Net Revenues | 6/30/2008 | % of Net Revenues | 3/31/2008 | % of Net Revenues | 6/30/2007 | % of Net Revenues | 3/31/2008 | 6/30/2007 |
Commissions | $ 83,063 | 39.8% | $ 85,701 | 40.5% | $ 80,637 | 38.2% | -3% | 3% |
Principal transactions | 65,674 | 31.4% | 66,937 | 31.7% | 33,301 | 15.8% | -2% | 97% |
Investment banking | 20,935 | 10.0% | 21,844 | 10.3% | 63,932 | 30.3% | -4% | -67% |
Asset management and service fees | 29,966 | 14.3% | 30,278 | 14.3% | 25,537 | 12.1% | -1% | 17% |
Other | 1,715 | 0.8% | (1,207) | -0.6% | 525 | 0.3% | n/a | 227% |
| Total operating revenues | 201,353 | 96.3% | 203,553 | 96.2% | 203,932 | 96.7% | -1% | -1% |
Interest revenue | 12,667 | 6.1% | 13,689 | 6.5% | 16,699 | 7.9% | -7% | -24% |
| Total revenues | 214,020 | 102.4% | 217,242 | 102.7% | 220,631 | 104.6% | -1% | -3% |
Less: Interest expense | 5,069 | 2.4% | 5,765 | 2.7% | 9,696 | 4.6% | -12% | -48% |
| Net revenues | 208,951 | 100.0% | 211,477 | 100.0% | 210,935 | 100.0% | -1% | -1% |
Non-Interest Expenses | | | | | | | | |
Employee compensation and benefits | 144,795 | 69.3% | 146,030 | 69.1% | 163,777 | 77.6% | -1% | -12% |
Occupancy and equipment rental | 16,010 | 7.6% | 15,716 | 7.4% | 15,667 | 7.4% | 2% | 2% |
Communication and office supplies | 9,748 | 4.7% | 11,947 | 5.7% | 11,681 | 5.5% | -18% | -17% |
Commissions and floor brokerage | 3,486 | 1.7% | 481 | 0.2% | 3,104 | 1.5% | 625% | 12% |
Other operating expenses | 14,762 | 7.1% | 13,378 | 6.3% | 14,042 | 6.7% | 10% | 5% |
| Total non-interest expenses | 188,801 | 90.4% | 187,552 | 88.7% | 208,271 | 98.7% | 1% | -9% |
Income before income taxes | 20,150 | 9.6% | 23,925 | 11.3% | 2,664 | 1.3% | -16% | 656% |
Provision for income taxes | 7,818 | 3.7% | 9,578 | 4.5% | 1,216 | 0.6% | -18% | 543% |
| Net income | $ 12,332 | 5.9% | $ 14,347 | 6.8% | $ 1,448 | 0.7% | -14% | 752% |
Per Share information |
Earnings Per Share: | | | | | | | | |
Basic | $ 0.53 | | $ 0.62 | | $ 0.07 | | -15% | 657% |
Diluted | $ 0.45 | | $ 0.54 | | $ 0.06 | | -17% | 650% |
Weighted average common equivalent shares | | | | | | | |
Basic shares | 23,449 | | 23,276 | | 22,275 | | 1% | 5% |
Diluted shares | 27,229 | | 26,645 | | 26,012 | | 2% | 5% |
Statistical Information |
Book Value Per Share | $ 19.75 | | $ 18.72 | | $ 17.36 | | 6% | 14% |
Investment Executives | 986 | | 972 | | 956 | | 1% | 3% |
Full-Time Employees | 2,922 | | 2,882 | | 2,722 | | 1% | 7% |
Locations | 185 | | 179 | | 177 | | 3% | 5% |
Total Client Assets (in thousands) | $ 58,060,000 | | $ 57,283,000 | | $ 58,036,000 | | 1% | 0% |
| | Six Months Ended | |
Net Revenues | 6/30/2008 | % of Net Revenues | 6/30/2007 | % of Net Revenues | % Change |
Commissions | $ 168,764 | 40.1% | $ 142,013 | 38.6% | 19% |
Principal transactions | 132,611 | 31.6% | 59,867 | 16.3% | 122% |
Investment banking | 42,779 | 10.2% | 106,998 | 29.1% | -60% |
Asset management and service fees | 60,244 | 14.3% | 44,910 | 12.2% | 34% |
Other | 508 | 0.1% | 1,942 | 0.5% | -74% |
| Total operating revenues | 404,906 | 96.3% | 355,730 | 96.7% | 14% |
Interest revenue | 26,356 | 6.3% | 27,399 | 7.4% | -4% |
| Total revenues | 431,262 | 102.6% | 383,129 | 104.1% | 13% |
Less: Interest expense | 10,834 | 2.6% | 15,233 | 4.1% | -29% |
| Net revenues | 420,428 | 100.0% | 367,896 | 100.0% | 14% |
Non-Interest Expenses | | | | | |
Employee compensation and benefits | 290,825 | 69.2% | 274,611 | 74.6% | 6% |
Occupancy and equipment rental | 31,726 | 7.5% | 26,275 | 7.1% | 21% |
Communication and office supplies | 21,695 | 5.2% | 19,775 | 5.4% | 10% |
Commissions and floor brokerage | 3,967 | 0.9% | 4,719 | 1.3% | -16% |
Other operating expenses | 28,140 | 6.7% | 25,035 | 6.8% | 12% |
| Total non-interest expenses | 376,353 | 89.5% | 350,415 | 95.2% | 7% |
Income before income taxes | 44,075 | 10.5% | 17,481 | 4.8% | 152% |
Provision for income taxes | 17,396 | 4.1% | 7,204 | 2.0% | 141% |
| Net income | $ 26,679 | 6.4% | $ 10,277 | 2.8% | 160% |
Per Share information |
Revenues: | 6/30/2008 | | 6/30/2007 | | % Change |
Earnings Per Share: | | | | | |
Basic | $ 1.14 | | $ 0.49 | | 133% |
Diluted | $ 0.99 | | $ 0.42 | | 136% |
Weighted average common equivalent shares | | | | |
Basic shares | 23,363 | | 20,978 | | 11% |
Diluted shares | 26,931 | | 24,521 | | 10% |
Business Segment Results
Stifel Financial Corp. |
Summary of Segment Data & Statistical Information (Unaudited) |
Segment Data ($ In Thousands) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
Net Revenues | 06/30/2008 | 03/31/2008 | 06/30/2007 | 03/31/2008 | 06/30/2007 | 06/30/2008 | 06/30/2007 | Percent |
Private Client | $ 120,999 | $ 114,853 | $ 118,274 | 5% | 2% | $ 235,852 | $ 203,801 | 16% |
Equity capital markets | 48,011 | 49,228 | 78,410 | -2% | -39% | 97,239 | 130,940 | -26% |
Fixed income capital markets | 34,709 | 44,002 | 10,496 | -21% | 231% | 78,711 | 25,111 | 213% |
Stifel Bank | 3,237 | 2,082 | 1,090 | 55% | 197% | 5,319 | 1,090 | 388% |
Other | 1,995 | 1,312 | 2,665 | 52% | -25% | 3,307 | 6,954 | -52% |
Total net revenues | $ 208,951 | $ 211,477 | $ 210,935 | -1% | -1% | $ 420,428 | $ 367,896 | 14% |
Operating Contribution | | | | | | | | |
Private Client | $ 29,856 | $ 25,605 | $ 26,377 | 17% | 13% | $ 55,461 | $ 44,468 | 25% |
Equity capital markets | 3,584 | 6,927 | 20,528 | -48% | -83% | 10,511 | 33,946 | -69% |
Fixed income capital markets | 11,786 | 14,913 | (614) | -21% | n/a | 26,699 | 1,273 | 1997% |
Stifel Bank | 422 | 309 | 274 | 37% | 54% | 731 | 274 | 167% |
Other/unallocated overhead | (25,498) | (23,829) | (43,901) | n/a | n/a | (49,327) | (62,480) | n/a |
Income before income taxes | $ 20,150 | $ 23,925 | $ 2,664 | -16% | 656% | $ 44,075 | $ 17,481 | 152% |
Page 3
Private Client Group Segment- Six Month Highlights
- Net revenues of $235.9 million, a 16% increase over the prior year first six months.
- Operating contribution of $55.5 million, a 25% increase over the same period last year.
- Commission and principal transactions revenue increased 25% over the previous year first six months.
- Investment banking revenue, which represents sales commissions on capital raising activities, declined 59% from the prior year six months.
- Asset management and service fees revenue increased 34% to $60.1 million as compared to the prior year first six months.
- For the six months ended June 30, 2008, employee compensation and benefits was 62% of net revenues compared to 64% for the same period last year.
- We added 13 PCG offices and 72 F.A.'s in the first half of 2008 as part of our ongoing footprint expansion efforts.
Private Client Group Segment- Second Quarter Highlights
- Net revenues of $121.0 million, a 2% increase over the prior year second quarter and a 5% increase from the first quarter of 2008.
- Operating contribution of $29.9 million, a 13% increase over the previous year second quarter and a 17% increase from the first quarter this year.
- Commission and principal transactions revenue increased 7% over the previous year second quarter.
- Investment banking revenue declined 52% from the prior year second quarter.
- Asset management and service fees revenue increased 17% to $29.9 million as compared to the prior year second quarter.
- For the three months ended June 30, 2008, employee compensation and benefits was 60% of net revenues compared to 63% for the same period last year.
Stifel Financial Corp. |
Private Client Group Segment Data & Statistical Information (Unaudited) |
($ in thousands) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
Revenues: | 06/30/2008 | 03/31/2008 | 06/30/2007 | 03/31/2008 | 06/30/2007 | 06/30/2008 | 06/30/2007 | Percent |
Commissions and principal transactions | 81,540 | 77,952 | 75,925 | 5% | 7% | 159,492 | 127,654 | 25% |
Investment banking | 6,216 | 4,103 | 13,010 | 51% | -52% | 10,319 | 25,298 | -59% |
Asset management and service fees | 29,941 | 30,147 | 25,490 | -1% | 17% | 60,088 | 44,718 | 34% |
Net interest & other | 3,302 | 2,651 | 3,849 | 25% | -14% | 5,953 | 6,131 | -3% |
Total Net Revenues | 120,999 | 114,853 | 118,274 | 5% | 2% | 235,852 | 203,801 | 16% |
Non-interest expenses: | | | | | | | | |
Employee compensation & benefits | 72,691 | 72,845 | 74,831 | 0% | -3% | 145,536 | 129,787 | 12% |
Other non-interest expenses | 18,452 | 16,403 | 17,066 | 12% | 8% | 34,855 | 29,546 | 18% |
| Total non-interest expenses | 91,143 | 89,248 | 91,897 | 2% | -1% | 180,391 | 159,333 | 13% |
| Income before income taxes | 29,856 | 25,605 | 26,377 | 17% | 13% | 55,461 | 44,468 | 25% |
Ratios to Net Revenues | | | | | | | | |
Employee compensation & benefits | 60% | 63% | 63% | | | 62% | 64% | |
Other non-interest expenses | 15% | 14% | 14% | | | 15% | 14% | |
Net Margins | 25% | 22% | 22% | | | 24% | 22% | |
| | | | | | | | | |
Page 4
Equity Capital Markets Segment - Six Month Highlights
- Net revenues of $97.2 million, a 26% decrease over the prior year first six months.
- Commission and principal transactions revenue increased 30% over the same period last year.
- Investment banking revenue decreased 66% from the prior years six months.
- Prior year investment banking includes a significant transaction which contributed $24.7 million in revenue in the 2007 second quarter.
- We added 48 revenue producers in the first six months of 2008.
Equity Capital Markets Segment - Second Quarter Highlights
- Net revenues of $48.0 million, a 39% decrease over the prior year second quarter and a 2% decrease from the first quarter 2008.
- Commission and principal transactions revenue increased 22% over the prior year second quarter and increased 4% from the first quarter 2008.
- Investment banking revenue decreased 76% over the prior year second quarter and decreased 17% from the first quarter of this year.
- For the three months ended June 30, 2008, employee compensation and benefits was 69% of net revenues compared to 59% for the prior year second quarter.
Stifel Financial Corp. |
Equity Capital Markets Group Segment Data & Statistical Information (Unaudited) |
($ in thousands) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
Revenues: | 06/30/2008 | 03/31/2008 | 06/30/2007 | 03/31/2008 | 06/30/2007 | 06/30/2008 | 06/30/2007 | Percent |
Commissions and principal transactions | 35,880 | 34,654 | 29,463 | 4% | 22% | 70,534 | 54,085 | 30% |
| Capital raising | 4,559 | 6,758 | 19,168 | -33% | -76% | 11,317 | 30,997 | -63% |
| Advisory fees | 7,309 | 7,509 | 29,446 | -3% | -75% | 14,818 | 45,098 | -67% |
Investment banking | 11,868 | 14,267 | 48,614 | -17% | -76% | 26,135 | 76,095 | -66% |
Other | 263 | 307 | 333 | -14% | -21% | 570 | 760 | -25% |
| Total Net Revenues | 48,011 | 49,228 | 78,410 | -2% | -39% | 97,239 | 130,940 | -26% |
Non-interest expenses: | | | | | | | | |
Employee compensation & benefits | 32,950 | 31,294 | 46,495 | 5% | -29% | 64,244 | 77,384 | -17% |
Other non-interest expenses | 11,477 | 11,007 | 11,387 | 4% | 1% | 22,484 | 19,610 | 15% |
| Total non-interest expenses | 44,427 | 42,301 | 57,882 | 5% | -23% | 86,728 | 96,994 | -11% |
| Income before income taxes | 3,584 | 6,927 | 20,528 | -48% | -83% | 10,511 | 33,946 | -69% |
Ratios to Net Revenues | | | | | | | | |
Employee compensation & benefits | 69% | 64% | 59% | | | 66% | 59% | |
Other non-interest expenses | 24% | 22% | 15% | | | 23% | 15% | |
Net Margins | 7% | 14% | 26% | | | 11% | 26% | |
| | | | | | | | | |
Page 5
Fixed Income Capital Markets Segment-Six Month Highlights
- Net revenues of $78.7 million, a 213% increase over the prior year first six months.
- Operating contribution of $26.7 million, a 1,997% increase over the prior year six month period.
- Commissions and principal transactions revenue increased 255% over the prior year first six months.
- For the six months ended June 30, 2008, employee compensation and benefits was 58% of net revenues compared to 72% for the prior year first six months.
- Net margins were 34% compared to 5% in the prior year six month period.
- We added 24 revenue producers in the first six months of 2008.
Fixed Income Capital Markets Segment Second Quarter Highlights
- Net revenues of $34.7 million, a 231% increase over the prior year second quarter and a 21% decrease from the first quarter 2008.
- Commissions and principal transactions revenue increased 268% over the prior year second quarter and decreased 22% from the first quarter of this year.
- For the three months ended June 30, 2008, employee compensation and benefits was 57% of net revenues compared to 75% for the prior year second quarter.
Stifel Financial Corp. |
Fixed Income Capital Markets Segment Data & Statistical Information (Unaudited) |
($ in thousands) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
Revenues: | 06/30/2008 | 03/31/2008 | 06/30/2007 | 03/31/2008 | 06/30/2007 | 06/30/2008 | 06/30/2007 | Percent |
Commissions & principal transactions | 31,317 | 40,033 | 8,507 | -22% | 268% | 71,349 | 20,098 | 255% |
Investment banking | 2,851 | 3,474 | 2,539 | -18% | 12% | 6,325 | 5,835 | 8% |
Other | 541 | 495 | (550) | 9% | n/a | 1,037 | (822) | n/a |
| Total Net Revenues | 34,709 | 44,002 | 10,496 | -21% | 231% | 78,711 | 25,111 | 213% |
Non-Interest Expenses | | | | | | | | |
Employee compensation and benefits | 19,665 | 25,936 | 7,893 | -24% | 149% | 45,601 | 18,047 | 153% |
Operating expenses | 3,258 | 3,153 | 3,217 | 3% | 1% | 6,411 | 5,791 | 11% |
| Total non-interest expenses | 22,923 | 29,089 | 11,110 | -21% | 106% | 52,012 | 23,838 | 118% |
| Income before income taxes | 11,786 | 14,913 | (614) | -21% | n/a | 26,699 | 1,273 | 1,997% |
Ratios to Net Revenues | | | | | | | | |
Employee compensation & benefits | 57% | 59% | 75% | | | 58% | 72% | |
Other non-interest expenses | 9% | 7% | 31% | | | 8% | 23% | |
Net Margins | 34% | 34% | -6% | | | 34% | 5% | |
| | | | | | | | | |
Page 6
Stifel Bank Segment Second-Six Month Highlights
Current six month results include the operations of Stifel Bank and Trust for the full six months compared to the prior year six month results, which include Stifel Bank and Trust for only three months, as the acquisition was made on April 2, 2007, respectively.
- Net revenues of $5.3 million increased 388% over the prior year.
- Total retained loans, net, increased 77% over the prior year.
- Total assets increased 50% over the prior year.
- Total deposits increased 58% over the prior year.
- We added 13 revenue producers in the first six months of 2008.
Stifel Bank Segment Second Quarter Highlights
- Net revenues of $3.2 million increased 197% over the prior year second quarter and increased 55% over the preceding quarter.
- Total retained loans, net, increased 13% over the preceding quarter.
- Total assets increased 5% over the preceding quarter.
- Non performing loans as a percentage of total loans decreased from 1.42% in the preceding quarter to 0.73%.
Stifel Financial Corp. |
Stifel Bank & Trust Segment Data & Statistical Information (Unaudited) |
($ in thousands) |
| | Three Months Ended | Percent Change From | Six Months Ended | Change |
Revenues: | 06/30/2008 | 03/31/2008 | 06/30/2007 | 03/31/2008 | 06/30/2007 | 06/30/2008 | 06/30/2007 | Percent |
Interest | 3,811 | 3,551 | 2,592 | 7% | 47% | 7,362 | 2,592 | 184% |
Other | 862 | 247 | 136 | 249% | 535% | 1,109 | 136 | 715% |
Total Revenues | 4,673 | 3,798 | 2,728 | 23% | 71% | 8,471 | 2,728 | 211% |
Less: Interest expense | 1,436 | 1,716 | 1,638 | -16% | -12% | 3,152 | 1,638 | 92% |
| Total Net Revenues | 3,237 | 2,082 | 1,090 | 55% | 197% | 5,319 | 1,090 | 388% |
Employee compensation and benefits | 978 | 759 | 348 | 29% | 181% | 1,737 | 348 | 399% |
Provision for loan loss | 935 | 135 | 15 | 593% | 6,133% | 1,070 | 15 | 7,033% |
Other non-interest expenses | 902 | 879 | 453 | 3% | 98% | 1,781 | 453 | 293% |
| Total non-interest expenses | 2,815 | 1,773 | 816 | 59% | 245% | 4,588 | 816 | 462% |
| Income before income taxes | 422 | 309 | 274 | 37% | 54% | 731 | 274 | 167% |
As Of | 06/30/2008 | 03/31/2008 | 06/30/2007 | | | | | |
Total assets | $ 301,511 | $ 287,993 | $ 201,412 | | | | | |
Total retained loans, net | $ 168,904 | $ 150,106 | $ 95,309 | | | | | |
Total loans held for sale, net | $ 17,301 | $ 20,323 | $ - - | | | | | |
Total deposits | $ 222,249 | $ 229,660 | $ 140,561 | | | | | |
Total capital | $ 55,144 | $ 56,134 | $ 55,746 | | | | | |
Allowance for loan losses as a % of loans | 1.18% | 1.15% | 1.18% | | | | | |
Total Non-Performing Loans as a % of Loans | 0.73% | 1.42% | 0.00% | | | | | |
| | | | | | | | |
Prior year to date results include three months as Stifel Bank& Trust was purchased on April 1, 2007.
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Non-GAAP Financial Measures
Our management has utilized non-GAAP calculations of presented net revenues, compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share that are adjusted in the manner presented below as an additional measure to aid in understanding and analyzing our financial results for the three and six months ended June 30, 2008. Specifically, our management believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of our core operating results and business outlook. Our management believes that these non-GAAP measures will allow for a better evaluation of the operating performance of our business and facilitate a meaningful comparison of our results in the current period to those in prior periods and future periods. Our reference to these non-GAAP measures should not be considered as a s ubstitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance. The non-GAAP amounts exclude compensation and operating expenses associated with the LM Capital Markets and Ryan Beck acquisitions, principally stock based awards offered to key associates of the LM Capital Markets in January 2006.
A limitation of utilizing these non-GAAP measures of compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share is that the GAAP accounting effects of these acquisitions do in fact reflect the underlying financial results of our business and these effects should not be ignored in evaluating and analyzing our financial results. Therefore, our management believes that both GAAP measures of net revenues, compensation and benefits operating expenses, income before income taxes, income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share and the same respective non-GAAP measures of our financial performance should be considered together.
We expect to grant stock based awards and other share-based compensation in the future. We do not expect to make such substantial grants to employees outside of our regular compensation and hiring process, as we did when we granted the restricted stock units in connection with our LM Capital Markets acquisition.
The following provides details with respect to reconciling net revenues, compensation and benefits, operating expenses, income before income taxes, provision for income taxes, net income, compensation ratio, pre-tax margin and basic and diluted earnings per share on a GAAP basis for the three and six months ended June 30, 2008 to the aforementioned captions on a non-GAAP basis in the same respective period.
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Stifel Financial Corp. |
Reconciliation of Core Earnings (Unaudited) |
($ In Thousands) |
| | Three Months Ended June 30, 2008 | Three Months Ended June 30, 2007 |
| | GAAP | Acquisition Related | | Core Business | % of Revenues | GAAP | Acquisition Related | | Core Business | % of Revenues |
Revenues | | | | | | | | | | |
Net Revenues | $208,951 | - - | | $208,951 | 100% | $210,935 | $313 | a | 211,248 | 100% |
Non Interest Expenses | | | | | | | | | | |
Compensation and Benefits | 144,795 | (6,367) | b | 138,428 | 66% | 163,777 | (27,124) | d | 136,653 | 65% |
Operating Expenses | 44,006 | (147) | c | 43,859 | 21% | 44,494 | (2,264) | c | 42,230 | 20% |
Total non-interest expenses | 188,801 | (6,514) | | 182,287 | 87% | 208,271 | (29,388) | | 178,883 | 85% |
Income before income taxes | 20,150 | 6,514 | | 26,664 | 13% | 2,664 | 29,701 | | 32,365 | 15% |
Provision for income taxes | 7,818 | 2,527 | e | 10,345 | 5% | 1,216 | 12,298 | e | 13,514 | 6% |
Net income | $12,332 | $3,987 | f | $16,319 | 8% | $1,448 | $17,403 | f | $18,851 | 9% |
Compensation Ratios (g) | 69% | | | 66% | | 78% | | | 65% | |
Return on average equity (j) | 11% | | | 14% | | 2% | | | 20% | |
Pretax Margin(h) | 10% | | | 13% | | 1% | | | 15% | |
Earnings per share-Diluted (i) | $0.45 | $0.15 | | $0.60 | | $0.06 | $0.66 | | $0.72 | |
| | Six Months Ended June 30, 2008 | Six Months Ended June 30, 2007 |
| | GAAP | Acquisition Related | | Core Business | % of Revenues | GAAP | Acquisition Related | | Core Business | % of Revenues |
Revenues | | | | | | | | | | |
Net Revenues | $420,428 | - - | | $420,428 | 100% | $367,896 | $ 313 | a | $368,209 | 100% |
Non Interest Expenses | | | | | | | | | | |
Compensation and Benefits | 290,825 | (12,665) | b | 278,160 | 66% | 274,611 | (33,287) | d | 241,324 | 65% |
Operating Expenses | 85,528 | (481) | c | 85,047 | 20% | 75,804 | (3,402) | c | 72,402 | 20% |
Total non-interest expenses | 376,353 | (13,146) | | 363,207 | 86% | 350,415 | (36,689) | | 313,726 | 85% |
Income before income taxes | 44,075 | 13,146 | | 57,221 | 14% | 17,481 | 37,002 | | 54,483 | 15% |
Provision for income taxes | 17,396 | 5,188 | e | 22,584 | 6% | 7,204 | 15,248 | e | 22,452 | 6% |
Net income | $26,679 | $7,958 | f | $34,637 | 8% | $10,277 | $21,754 | f | $32,031 | 9% |
Compensation Ratios (g) | 69% | | | 66% | | 75% | | | 66% | |
Return on average equity (j) | 12% | | | 16% | | 6% | | | 20% | |
Pretax Margin (h) | 10% | | | 14% | | 5% | | | 15% | |
Earnings per share-Diluted (i) | $0.99 | $0.30 | | $1.29 | | $0.42 | $0.89 | | $1.31 | |
- The adjustment represents the pre-tax revenues for recognition of pre-acquisition investment banking backlog.
- The adjustment primarily represents the pre-tax expense with respect to the amortization of the stock based awards awarded to LM Capital Markets associates in January 2006.
- The adjustment represents the pre-tax adjustment for operating expenses related to the LM Capital Markets and the Ryan Beck acquisitions.
- The adjustment primarily represents the pre-tax adjustment for the amortization of the stock-based awards awarded to the LM Capital Markets associates and compensation expenses principally for the acceleration of the vesting for Ryan Beck deferred compensation plans.
- The adjustment to provision for income taxes represents the tax effect resulting from the addition or deductions from a-d above.
- The adjustment to net income is the after-tax adjustments for items a-e above.
- The three and six month ended June 30, 2008 and 2007 compensation ratios were calculated by dividing compensation and benefits by net revenues.
- The three and six month ended June 30, 2008 and 2007 pre-tax margins were calculated by dividing income before income taxes expense by net revenues.
- The diluted weighted average of common equivalent shares outstanding were not adjusted.
- The three and six month ended June 30, 2008 and 2007 annualized returns on average equity were calculated by dividing net income by average equity.
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Statement of Financial Condition Highlights
Total assets increased 12% to $1.7 billion from $1.5 billion at December 31, 2007. Total stockholders' equity increased $40.4 million, or 10%, to $465.0 million, principally due to amortization of stock-based award and net income.
At June 30, 2008, the Company reported total securities owned at fair value of $256.2 million which included trading securities and available for sale securities categorized as level 3 of $16.1 million and $11.0 million, respectively.
Conference Call Information
Stifel Financial Corp. will hold a conference call Tuesday August 12, 2008, at 10:00 a.m. Eastern. This call will be Web cast and slides can be accessed on the Investor Relations portion of the Stifel Financial Corp. website at www.stifel.com, as well as on all sites within Thomson/CCBN's Investor Distribution Network. Questions may be posed to management by participants on the call, and in response the company may disclose additional material information. To participate in the question and answer portion on the call, please dial 888-676-3684 and request the Stifel Financial Corp. earnings call. The subjects to be covered may also contain forward-looking information.
Company Information
Stifel Financial Corp. operates 184 offices in 31 states and the District of Columbia through its principal subsidiary, Stifel Nicolaus and Company, Inc., and 3 European offices through Stifel Nicolaus Limited. Stifel Nicolaus provides securities brokerage, investment banking, trading, investment advisory, commercial and retail banking 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. To learn more about Stifel, please visit the Company's web site at www.stifel.com.
Forward-Looking Statements
This press 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 press release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this press 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 the acquired companies; a material adverse change in the financial condition,; the risk of borrower, depositor and other customer attrition; a change in general business and economic cond itions; 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 with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Stifel disclaims any intent or obligation to update these forward-looking statements.
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