![]() 4 th Quarter and Full-Year 2013 Financial Results Presentation February 24, 2014 Exhibit 99.2 |
![]() Disclaimer Forward-Looking Statements This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks, assumptions, and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel, Nicolaus & Company, Incorporated and its subsidiaries (collectively, “SF” or the “Company”). These statements can be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” and similar expressions. In particular, these statements may refer to our goals, intentions, and expectations, our business plans and growth strategies, our ability to integrate and manage our acquired businesses, estimates of our risks and future costs and benefits, and forecasted demographic and economic trends relating to our industry. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-looking statements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws. Actual results may differ materially and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ are included in the Company’s annual and quarterly reports and from time to time in other reports filed by the Company with the Securities and Exchange Commission and include, among other things, changes in general economic and business conditions, actions of competitors, regulatory and legal actions, changes in legislation, and technology changes. Use of 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 an additional measure to aid in understanding and analyzing the Company’s financial results for the three and six months ended June 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 periods 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 financial performance. |
![]() Chairman’s Comments “We are very pleased to post our 18th consecutive year of record net revenues. This speaks to the dedication of our over 5,800 professionals, as well as to our balanced business model. Non-GAAP net income from continuing operations for the year improved over the prior year as a result of both better market conditions and the benefits of our recent acquisitions. Looking forward, we will continue to take advantage of opportunities in the marketplace that add to shareholder value.” |
![]() Market Overview Domestic Equity Flows Equity Risk Premium (1) (1) Based on the Daily Treasury Yield Curve Rates I10 year) Source: Investment Company Institute |
![]() 2013: A Year in Review Stifel’s 18 th Consecutive Year of Record Net Revenues • Successfully completed the merger and integration with KBW. • Acquired and integrated the fixed income business of Knight Capital Group in July of 2013, adding to Stifel’s already impressive fixed income capabilities. • The Institutional Group achieved record flow levels and record investment banking revenues. Continued to gain market share in the year and completed a number of unique and high profile financings for clients. • Assets at Stifel Bank reached $5.1 billion, while the risk profile remained conservative. • Welcomed Ziegler Lotsoff Capital Management to the firm’s asset management efforts. • Welcomed 138 new Financial Advisors to the Private Client Group and opened 11 new offices in 2013. • Strong stock performance, which ended the year at $47.92 up 49% from the start of the year. In the last fifteen years SF is up over 1,340%. |
![]() Stifel’s Stock Performance |
![]() Top Performing Stock Cumulative Price Appreciation as of December 31, 2013 |
![]() Financial Results |
![]() Stifel Financial Corp. Results Three months ended December 31, 2013 (1) Non-core adjustments consist of merger-related revenues and expenses associated with our acquisitions of KBW, the Knight Capital Fixed Income business, and Miller Buckfire and discontinued operations of SN Canada. (2) Core (non-GAAP) results for the three months ended December 31, 2012 are the same as GAAP results. Results for the three months ended September 30, 2013 are Core (non-GAAP). _________________________________________________________ ($ in thousands, except per share amounts) Non-GAAP Non-Core GAAP 12/31/12 % Change 9/30/13 % Change Total revenues 576,236 $ (2,080) $ 574,156 $ 419,885 $ 37.2% 491,169 $ 17.3% Interest expense 11,555 75 11,630 8,602 34.3% 11,535 0.2% Net revenues 564,681 (2,155) 562,526 411,283 37.3% 479,634 $ 17.7% Compensation and benefits 347,263 5,944 353,207 258,148 34.5% 297,374 16.8% Non-comp operating expenses 126,990 4,340 131,330 92,784 36.9% 116,817 8.7% Total non-interest expenses 474,253 10,284 484,537 350,932 35.1% 414,191 14.5% Income from continuing operations before income taxes 90,428 (12,439) 77,989 60,351 49.8% 65,443 38.2% Provision for income taxes 30,609 (4,746) 25,863 17,067 79.3% 25,795 18.7% Net income from continuing operations 59,819 $ (7,693) $ 52,126 $ 43,284 $ 38.2% 39,648 $ 50.9% Discontinued operations: Loss from discontinued operations, net - (3,857) (3,857) (3,330) nm - - Net income 59,819 $ (11,550) $ 48,269 $ 39,954 $ 49.7% 39,648 $ 50.9% Earnings per diluted common share: Income from continuing operations 0.79 $ (0.10) $ 0.69 $ 0.80 $ (1.3%) 0.53 $ 49.1% Loss from discontinued operations - (0.05) (0.05) $ (0.06) - Earnings per diluted common share 0.79 $ (0.15) $ 0.64 $ 0.74 $ 6.8% 0.53 $ 49.1% Weighted average number of shares outstanding: Diluted 75,495 75,495 63,301 19.3% 75,191 0.4% Ratios to net revenues : Compensation and benefits 61.5% 62.8% 62.7% 62.0% Non-comp operating expenses 22.5% 23.3% 22.6% 24.4% Income from continuing operations before income taxes 16.0% 13.9% 14.7% 13.6% Three Months Ended December 31, 2013 Three Months Ended (1) (2) (2) |
![]() Stifel Financial Corp. Results Year ended December 31, 2013 (1) Non-core adjustments consist of charges related to expensing stock awards issued as retention in connection with the acquisitions of KBW and the Knight Capital Fixed Income business and other merger-related revenues and expenses associated with our acquisitions of KBW, the Knight Capital Fixed Income business, Miller Buckfire and a U.S. tax benefit in connection with discontinuing operations of SN Canada. (2) Core (non-GAAP) results for the year ended December 31, 2012 are the same as GAAP results. _________________________________________________________ ($ in thousands, except per share amounts) Non-GAAP Non-Core GAAP 12/31/12 % Change Total revenues 2,024,538 $ (4,724) $ 2,019,814 $ 1,627,483 $ 24.4% Interest expense 46,198 170 46,368 33,370 38.4% Net revenues 1,978,340 (4,894) 1,973,446 1,594,113 24.1% Compensation and benefits 1,236,991 74,395 1,311,386 1,010,140 22.5% Non-comp operating expenses 446,265 30,566 476,831 354,226 26.0% Total non-interest expenses 1,683,256 104,961 1,788,217 1,364,366 23.4% Income from continuing operations before income taxes 295,084 (109,855) 185,229 229,747 28.4% Provision for income taxes 110,426 (98,104) 12,322 84,451 30.8% Net income from continuing operations 184,658 $ (11,751) $ 172,907 $ 145,296 $ 27.1% Discontinued operations: Loss from discontinued operations, net - (10,894) (10,894) (6,723) (100.0%) Net income 184,658 $ (22,645) $ 162,013 $ 138,573 $ 33.3% Earnings per diluted common share: Income from continuing operations 2.51 $ (0.16) $ 2.35 $ 2.31 $ 8.7% Loss from discontinued operations, net - (0.15) (0.15) (0.11) (100.0%) Earnings per diluted common share 2.51 $ (0.31) $ 2.20 $ 2.20 $ 14.1% Weighted average number of shares outstanding: Diluted 73,504 73,504 62,937 16.8% Ratios to net revenues : Compensation and benefits 62.5% 66.5% 63.4% Non-comp operating expenses 22.6% 24.1% 22.2% Income from continuing operations before income taxes 14.9% 9.4% 14.4% Year Ended December 31, 2013 Year Ended |
![]() Source of Revenues ($ in thousands) 12/31/13 12/31/12 % Change 9/30/13 % Change 12/31/13 12/31/12 % Change Commissions 152,451 $ 131,327 $ 16.1% 145,837 $ 4.5% 598,949 $ 501,434 $ 19.4% Principal transactions 118,815 97,515 21.8% 122,583 (3.1%) 459,968 408,935 12.5% Brokerage revenues 271,266 228,842 18.5% 268,420 1.1% 1,058,917 910,369 16.3% Capital raising 71,379 �� 46,320 54.1% 53,665 33.0% 246,631 185,761 32.8% Advisory 87,481 26,618 228.7% 39,186 123.2% 201,429 95,519 110.9% Investment banking 158,860 72,938 117.8% 92,851 71.1% 448,060 281,280 59.3% Asset mgt and service fees 83,928 68,971 21.7% 76,710 9.4% 305,639 257,981 18.5% Other 19,391 19,157 1.2% 13,063 48.4% 64,659 69,148 (6.5%) Total operating revenues 533,445 389,908 36.8% 451,044 18.3% 1,877,275 1,518,778 23.6% Interest revenue 40,711 29,977 35.8% 39,130 4.0% 142,539 108,705 31.1% Total revenues 574,156 419,885 36.7% 490,174 17.1% 2,019,814 1,627,483 24.1% Interest expense 11,630 8,602 35.2% 11,535 0.8% 46,368 33,370 39.0% Net revenues 562,526 $ 411,283 $ 36.8% 478,639 $ 17.5% 1,973,446 $ 1,594,113 $ 23.8% Three Months Ended Year Ended |
![]() ($ in thousands) 12/31/13 12/31/12 % Change 9/30/13 % Change 12/31/13 12/31/12 % Change Private client group 159,958 $ 146,585 $ 9.1% 158,085 $ 1.2% 637,325 $ 586,878 $ 8.6% Equity brokerage 60,204 38,659 55.7% 58,677 2.6% 232,392 151,308 53.6% Fixed income brokerage 51,103 43,598 17.2% 51,658 (1.1%) 189,200 172,183 9.9% Institutional brokerage 111,307 82,257 35.3% 110,335 0.9% 421,592 323,491 30.3% Total Brokerage Revenues 271,265 $ 228,842 $ 18.5% 268,420 $ 1.1% 1,058,917 $ 910,369 $ 16.3% Three Months Ended Year Ended Brokerage Revenues by Segment |
![]() ($ in thousands) 12/31/13 (1) 12/31/12 % Change 9/30/13 % Change 12/31/13 (1) 12/31/12 9/30/13 Net revenues 564,681 $ 411,283 $ 37.3% 479,634 $ 17.7% 100.0% 100.0% 100.0% Compensation and benefits 324,569 237,465 36.7% 275,503 17.8% 57.5% 57.7% 57.4% Transitional pay (2) 22,694 20,683 9.7% 21,871 3.8% 4.0% 5.0% 4.6% Total compensation and benefits 347,263 258,148 34.5% 297,374 16.8% 61.5% 62.8% 62.0% Occupancy and equipment rental 40,892 33,589 21.7% 39,856 2.6% 7.2% 8.2% 8.3% Communication and office supplies 24,974 19,291 29.5% 25,105 (0.5%) 4.4% 4.7% 5.2% Commissions and floor brokerage 8,213 7,271 13.0% 9,775 (16.0%) 1.5% 1.8% 2.0% Other operating expenses 52,911 32,633 62.1% 42,080 25.7% 9.3% 7.9% 8.7% Total non-comp operating expenses 126,990 92,784 36.9% 116,816 8.7% 22.4% 22.6% 24.4% Total non-interest expense 474,253 350,932 35.1% 414,190 14.5% 84.0% 85.3% 86.4% Income from continuing operations before income taxes 90,428 60,351 49.8% 65,444 38.2% 16.0% 14.7% 13.6% Provision for income taxes 30,609 17,067 79.3% 25,795 18.7% 5.4% 4.0% 5.4% Non-GAAP net income from continuing operations 59,819 $ 43,284 $ 38.2% 39,649 $ 50.9% 10.6% 10.5% 8.3% Non-core expenses (after-tax) (7,693) - 35,280 GAAP net income from continuing operations 52,126 $ 43,284 $ 74,929 $ Three Months Ended % of Net revenues Core Non-Interest Expenses Three months ended December 31, 2013 _________________________________________________________ (1) Excludes non-core adjustments consisting of merger-related revenues and expenses associated with our acquisitions of KBW, the Knight Capital Fixed Income business, and Miller Buckfire. (2) Transition pay includes amortization of retention awards, signing bonuses, and upfront notes. |
![]() Core Non-Interest Expenses Year ended December 31, 2013 _________________________________________________________ (1) Excludes non-core adjustments consisting of charges related to expensing stock awards issued as retention in connection with the acquisitions of KBW and the Knight Capital Fixed Income business and other merger-related revenues and expenses associated with our acquisitions of KBW, the Knight Capital Fixed Income business, Miller Buckfire and a U.S. tax benefit in connection with discontinuing operations of SN Canada. ($ in thousands) 12/31/13 (1) 12/31/12 % Change 12/31/13 (1) 12/31/12 Net revenues 1,978,340 $ 1,594,113 $ 24.1% 100.0% 100.0% Compensation and benefits 1,150,883 937,066 22.8% 58.2% 58.8% Transitional pay 86,108 73,074 17.8% 4.4% 4.6% Total compensation and benefits 1,236,991 1,010,140 22.5% 62.5% 63.4% Occupancy and equipment rental 149,488 128,365 16.5% 7.6% 8.1% Communication and office supplies 95,539 79,406 20.3% 4.8% 5.0% Commissions and floor brokerage 35,812 29,610 20.9% 1.8% 1.9% Other operating expenses 165,426 116,845 41.6% 8.4% 7.3% Total non-comp operating expenses 446,265 354,226 26.0% 22.6% 22.2% Total non-interest expense 1,683,256 1,364,366 23.4% 85.1% 85.6% Income from continuing operations before income taxes 295,084 229,747 28.4% 14.9% 14.4% Provision for income taxes 110,426 84,451 30.8% 5.6% 5.2% Non-GAAP net income from continuing operations 184,658 $ 145,296 $ 27.1% 9.3% 9.1% Non-core expenses (after-tax) (11,751) - GAAP net income from continuing operations 172,907 $ 145,296 $ Year Ended % of Net revenues |
![]() Segment Comparison - Core (1) Core (non-GAAP) results for the three and twelve months ended December 31, 2012 are the same as GAAP results. (2) Contribution margin for the other segment is divided by consolidated net revenues. _________________________________________________________ ($ in thousands) 12/31/13 12/31/12 (1) % Change 9/30/13 % Change 12/31/13 12/31/12 (1) % Change Net revenues: Global Wealth Management 292,836 $ 253,775 $ 15.4% 274,669 $ 6.6% 1,117,179 $ 991,597 $ 12.7% Institutional Group 267,282 160,693 66.3% 205,132 30.3% 861,158 604,654 42.4% Other 4,563 (3,185) (243.3%) (167) nm 3 (2,138) (100.1%) 564,681 $ 411,283 $ 37.3% 479,634 $ 17.7% 1,978,340 $ 1,594,113 $ 24.1% Operating contribution: Global Wealth Management 79,022 $ 68,737 $ 15.0% 72,128 $ 9.6% 299,572 $ 266,669 $ 12.3% Institutional Group 48,590 21,678 124.1% 34,986 38.9% 142,889 101,487 40.8% Other (37,184) (30,064) 23.7% (41,671) (10.8%) (147,377) (138,409) 6.5% 90,428 $ 60,351 $ 49.8% 65,443 $ 38.2% 295,084 $ 229,747 $ 28.4% Operating contribution (2) Global Wealth Management 27.0 27.1 26.3 26.8 26.9 Institutional Group 18.2 13.5 17.1 16.6 16.8 Other (6.6) (7.3) (8.7) (7.4) (8.7) 16.0 14.7 13.6 14.9 14.4 As a percentage of net revenues: Three Months Ended Year Ended |
![]() Global Wealth Management ($ in thousands) 12/31/13 12/31/12 % Change 9/30/13 % Change 12/31/13 12/31/12 % Change Commissions 104,149 $ 93,043 $ 11.9% 99,427 $ 4.7% 410,238 $ 361,871 $ 13.4% Principal transactions 55,809 53,542 4.2% 58,658 (4.9%) 227,087 225,007 0.9% Asset management & service fees 82,964 68,631 20.9% 76,667 8.2% 304,541 257,257 18.4% Net interest 31,092 21,182 46.8% 27,665 12.4% 104,748 79,328 32.0% Investment banking 9,568 10,818 (11.6%) 9,394 1.8% 45,400 44,919 1.1% Other income 9,254 6,559 41.1% 2,858 223.9% 25,165 23,215 8.4% Net revenues 292,836 253,775 15.4% 274,669 6.6% 1,117,179 991,597 12.7% Compensation and benefits 167,980 146,311 14.8% 159,949 5.0% 648,681 576,744 12.5% Non-comp operating expenses 45,834 38,727 18.4% 42,592 7.6% 168,926 148,184 14.0% Total non-interest expenses 213,814 185,038 15.6% 202,541 5.6% 817,607 724,928 12.8% Income before income taxes 79,022 $ 68,737 $ 15.0% 72,128 $ 9.6% 299,572 $ 266,669 $ 12.3% Ratios to net revenues : Compensation and benefits 57.4% 57.7% 58.2% 58.1% 58.2% Non-comp operating expenses 15.6% 15.2% 15.5% 15.1% 14.9% Income before income taxes 27.0% 27.1% 26.3% 26.8% 26.9% Three Months Ended Year Ended |
![]() Stifel Bank & Trust (an operating unit of GWM) As of 12/31/13 12/31/12 % Change 9/30/13 % Change Assets $ 5,027,023 $ 3,650,235 37.7 $ 4,547,071 10.6 Investment securities 3,062,549 2,327,316 31.6 2,949,080 3.8 Retained loans, net 1,412,136 822,711 71.6 1,061,313 33.1 Loans held for sale 109,110 214,531 (49.1) 75,440 44.6 Deposits 4,663,323 3,346,133 39.4 4,228,405 10.3 Allowance for loan losses 12,668 $ 8,145 $ 55.5 13,233 $ (4.3) Allowance as a percentage of loans 0.89 % 0.99 % 1.23 % Non-performing loans 1,504 $ 1,808 $ (16.8) 14,759 $ (89.8) Other non-performing assets 131 373 (64.9) - 100.0 Non-performing assets 1,635 $ 2,181 $ (25.0) 14,759 $ (88.9) Non-performing assets as a percentage of total assets 0.03 % 0.06 % 0.32 % As of |
![]() Institutional Group ($ in thousands) 12/31/13 12/31/12 % Change 9/30/13 % Change 12/31/13 12/31/12 % Change Net revenues 267,282 $ 160,693 $ 66.3% 205,132 $ 30.3% 861,158 $ 604,654 $ 42.4% Compensation and benefits 165,779 105,025 57.8% 119,874 38.3% 524,870 380,185 38.1% Non-comp operating expenses 52,913 33,990 55.7% 50,272 5.3% 193,399 122,982 57.3% Total non-interest expenses 218,692 139,015 57.3% 170,146 28.5% 718,269 503,167 42.7% Income before income taxes 48,590 $ 21,678 $ 124.1% 34,986 $ 38.9% 142,889 $ 101,487 $ 40.8% Ratios to net revenues: Compensation and benefits 62.0% 65.4% 58.4% 60.9% 62.9% Non-comp operating expenses 19.8% 21.1% 24.5% 22.5% 20.3% Income before income taxes 18.2% 13.5% 17.1% 16.6% 16.8% Three Months Ended Year Ended |
![]() Institutional Group Revenues ($ in thousands) 12/31/13 12/31/12 % Change 9/30/13 % Change 12/31/13 12/31/12 % Change Institutional brokerage: Equity 60,204 $ 38,659 $ 55.7% 58,677 $ 2.6% 232,392 $ 151,308 $ 53.6% Fixed income 51,103 43,598 17.2% 51,658 (1.1%) 189,200 172,183 9.9% 111,307 82,257 35.3% 110,335 0.9% 421,592 323,491 30.3% Investment Banking: Capital raising Equity 46,634 16,947 175.2% 30,739 51.7% 142,636 81,818 74.3% Fixed income 14,677 18,555 (20.9%) 13,531 8.5% 58,096 59,024 (1.6%) 61,311 35,502 72.7% 44,270 38.5% 200,732 140,842 42.5% Advisory fees 87,981 26,618 230.5% 39,186 124.5% 201,928 95,519 111.4% Investment banking 149,292 62,120 140.3% 83,456 78.9% 402,660 236,361 70.4% Other (1) 6,683 16,316 (59.0%) 11,341 (41.1%) 36,906 44,802 (17.6%) Total net revenue 267,282 $ 160,693 $ 66.3% 205,132 $ 30.3% 861,158 $ 604,654 $ 42.4% Three Months Ended Year Ended _________________________________________________________ (1) Includes net interest and other income. |
![]() ($ in thousands) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09 Investment banking 448,060 281,280 199,584 218,104 125,807 Year Ended Historical Investment Banking Revenues Note: Reflects total investment banking historical revenues. _________________________________________________________ |
![]() Financial Condition |
![]() Capital Structure As of December 31, 2013 (in thousands, except ratios) _________________________________________________________ (1) Debt to equity ratio includes the debentures to Stifel Financial Capital Trusts ($82.5m), and Senior Notes ($325.0m) divided by stockholders’equity. ($ in thousands) Total Assets 9,016,987 $ Stockholders' Equity 2,058,849 $ 6.70% senior notes, due 2022 175,000 $ 5.375% senior notes, due 2022 150,000 Debentures to Stifel Financial Capital Trusts II, III, & IV 82,500 Total Capitalization 2,466,349 $ Ratios: Debt to Equity (1) 12.5% Tier 1 Leverage Ratio 15.4% Tier 1 Risk-Based Capital Ratio 26.7% |
![]() Other Financial Data _________________________________________________________ (1) Includes 143, 151 and 145 independent contractors as of December 31, 2013, December 31, 2012 and September 30, 2013, respectively. (2) Includes money-market and FDIC-insured balances. Prior period amounts have been adjusted to conform to the current period presentation. As of 12/31/13 12/31/12 % Change 9/30/13 % Change Total assets (000s): Stifel Nicolaus & Stifel Financial 3,986,845 $ 3,313,507 $ 20.3% 4,162,388 $ (4.2%) Stifel Bank 5,030,142 3,652,633 37.7% 4,547,071 10.6% Total assets 9,016,987 $ 6,966,140 $ 29.4% 8,709,459 $ 3.5% Total stockholders' equity (000s): Stifel Nicolaus & Stifel Financial 1,736,272 $ 1,226,824 $ 41.5% 1,701,158 $ 2.1% Stifel Bank 322,577 267,837 20.4% 293,331 10.0% Total stockholders' equity 2,058,849 $ 1,494,661 $ 37.7% 1,994,489 $ 3.2% Leverage ratio: Stifel Nicolaus & Stifel Financial 1.9 2.2 (16.7%) 1.9 (4.4%) Stifel Bank 15.6 13.6 14.2% 15.5 0.6% Total leverage ratio 3.7 4.0 (8.0%) 3.6 2.2% Book value per common share 32.30 $ 27.24 $ 18.6% 31.46 $ 2.7% Financial advisors (1) 2,077 2,041 1.8% 2,075 0.1% Full-time associates 5,862 5,343 9.7% 5,780 1.4% Locations 357 340 5.0% 355 0.6% Total client assets (000s) (2) 165,570,000 $ 137,855,000 $ 20.1% 153,901,000 $ 7.6% As of |
![]() Recent Merger Updates |
![]() Recent Merger Updates Announced the acquisition of De La Rosa on January 30, 2014 and is expected to close in the first quarter. Plan to integrate under Stifel brand immediately. Investment bank and bond underwriter with a 25-year operating history. Stifel will become #1 underwriter in California negotiated underwriting in par value and number of issues. Stifel will become #1 underwriter in California in the following categories: • K-12 • COP & Lease Revenue Bonds • Tax Increment • Economical Development • Water & Sewer. Substantially all of the senior leadership has executed continuation agreements with Stifel. |
![]() Q&A |