SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9305
STIFEL FINANCIAL CORP.
----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 43-1273600
- ---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
501 N. Broadway, St. Louis, Missouri 63102-2102
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-342-2000
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes[x] No[ ]
Shares of common stock outstanding at July 31, 1999: 6,831,817,
par value $0.15.
2
Stifel Financial Corp. And Subsidiaries
Form 10-Q Index
June 30, 1999
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition --
June 30, 1999 and December 31, 1998........................ 3 - 4
Consolidated Statements of Operations --
Three Months Ended June 30, 1999 and June 30, 1998......... 5
Consolidated Statements of Operations --
Six Months Ended June 30, 1999 and June 30, 1998........... 6
Consolidated Statements of Cash Flows--
Six Months Ended June 30, 1999 and June 30, 1998........... 7 - 8
Notes to Consolidated Financial Statements................... 9 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 12 - 15
Item 3. Quantitative and Qualitative Disclosures about Market
Risk......................................................... 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 16
Item 6. Exhibit(s) and Report(s) on Form 8-K.................... 16
Signatures....................................................... 17
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) (In thousands, except par values and share amounts)
June 30, December 31,
1999 1998
------------ ------------
ASSETS
Cash and cash equivalents $ 19,367 $ 12,835
Cash segregated for the exclusive
benefit of customers 179 177
Receivable from brokers and dealers 32,759 23,946
Receivable from customers, net of
allowance for doubtful receivables of
$561 and $556, respectively 233,377 213,709
Securities owned, at fair value 23,112 38,632
Membership in exchanges, at cost 513 513
Office equipment and leasehold
improvements, at cost, net of
allowances for depreciation and
amortization of $13,125 and $12,361,
respectively 6,922 5,315
Goodwill, net of accumulated amortization
of $692 and $1,721, respectively 1,677 3,874
Notes receivable from and advances to
officers and employees, net of allowance
for doubtful receivables from former
employees of $448 and $482, respectively 6,547 6,460
Deferred tax asset 3,410 3,213
Other assets 31,956 26,331
------------ ------------
Total Assets $ 359,819 $ 335,005
============ ============
4
STIFEL FINACIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
(UNAUDITED) (In thousands, except par values and share amounts)
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Short-term borrowings from banks $ 59,750 $ 62,890
Payable to brokers and dealers 125,032 104,769
Payable to customers 44,467 37,306
Securities sold, but not yet purchased, at
fair value 2,869 998
Drafts payable 11,011 18,210
Accrued employee compensation 14,414 18,320
Obligations under capital leases 1,398 848
Accounts payable and accrued expenses 13,772 16,117
Long-term debt 29,968 20,570
------------ ------------
Total Liabilities 302,681 280,028
Stockholders' Equity
Preferred stock -- $1 par value; authorized
3,000,000 shares; none issued - - - -
Common stock -- $0.15 par value; authorized
10,000,000 shares; issued 7,376,176
and 7,219,335 shares, respectively 1,106 1,084
Additional paid-in capital 43,270 41,867
Retained earnings 21,529 18,291
------------ ------------
65,905 61,242
Less:
Treasury stock, at cost, 503,894 and
222,743 shares, respectively 4,964 2,162
Unamortized expense of restricted
stock awards 885 1,081
Unearned employee stock ownership plan
shares, at cost, 227,733 and 235,866
shares, respectively 2,918 3,022
------------ ------------
Total Stockholders' Equity 57,138 54,977
------------ ------------
$ 359,819 $ 335,005
============ ============
See Notes to Consolidated Financial Statements.
5
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
June 30, June 30,
1999 1998
---------- ----------
REVENUES
Commissions $ 17,411 $ 13,982
Principal transactions 5,983 5,979
Investment banking 2,502 3,703
Interest 4,425 5,115
Other 7,514 5,293
---------- ----------
37,835 34,072
EXPENSES
Employee compensation and benefits 22,950 21,239
Communications and office supplies 2,340 2,121
Occupancy and equipment rental 2,948 2,223
Interest 2,102 2,883
Commissions and floor brokerage 676 701
Other operating expenses 3,414 2,805
---------- ----------
34,430 31,972
---------- ----------
INCOME BEFORE INCOME TAXES 3,405 2,100
Provision for income taxes 1,161 876
---------- ----------
NET INCOME $ 2,244 $ 1,224
Net income per share:
Basic $ 0.33 $ 0.18
Diluted $ 0.32 $ 0.17
Dividends declared per share $ 0.03 $ 0.03
Average common equivalent shares
outstanding:
Basic 6,728 6,864
Diluted 7,089 7,293
See Notes to Consolidated Financial Statements.
6
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Six Months Ended
June 30, June 30,
1999 1998
---------- ----------
REVENUES
Commissions $ 34,676 $ 27,591
Principal transactions 12,424 15,519
Investment banking 5,514 7,266
Interest 8,903 9,870
Other 13,335 9,665
---------- ----------
74,852 69,911
EXPENSES
Employee compensation and benefits 46,807 43,883
Communications and office supplies 4,366 4,086
Occupancy and equipment rental 5,511 4,328
Interest 4,072 5,423
Commissions and floor brokerage 1,449 1,350
Other operating expenses 6,427 5,324
---------- ----------
68,632 64,394
---------- ----------
INCOME BEFORE INCOME TAXES 6,220 5,517
Provision for income taxes 2,189 2,241
---------- ----------
NET INCOME $ 4,031 $ 3,276
Net income per share:
Basic $ 0.59 $ 0.48
Diluted $ 0.56 $ 0.45
Dividends declared per share $ 0.06 $ 0.06
Average common equivalent shares
outstanding:
Basic 6,785 6,824
Diluted 7,138 7,231
See Notes to Consolidated Financial Statements.
7
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands)
Six Months Ended
June 30, June 30,
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,031 $ 3,276
Noncash items included in
earnings:
Depreciation and amortization 882 837
Bonus notes amortization 840 336
Gain on sale of subsidiary 1,496 - -
Deferred items (184) 901
Restricted stock awards amortization 202 217
---------- ----------
7,267 5,567
Decrease (increase) in assets:
Operating receivables (28,481) (12,472)
Cash segregated for the exclusive
benefit of customers (2) (3)
Securities owned 15,520 (11,587)
Notes receivable from officers and
employees (927) (2,541)
Other assets (3,920) (1,938)
Increase (decrease) in liabilities:
Operating payables 27,424 55,780
Securities sold, but not yet purchased 1,871 (756)
Drafts payable, accrued employee
compensation, and accounts payable
and accrued expenses (13,033) (11,076)
---------- ----------
Cash Flows From Operating Activities 5,719 20,974
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of property 12 - -
Sale of subsidiary 4,609 51
Payments for:
Acquisition of office equipment and
leasehold improvements (1,459) (2,221)
Acquisition of investments (6,012) (5,828)
---------- ----------
Cash Flows From Investing Activities (2,850) (7,998)
8
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
UNAUDITED (In Thousands)
Six Months Ended
June 30, June 30,
1999 1998
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net $ (3,140) $ (19,550)
Proceeds from:
Issuance of stock 1,466 1,397
Issuance of long-term debt 9,398 370
Payments for:
Repurchase of stock (3,252) (86)
Principal payments under capital
lease obligation (374) (177)
Cash dividends (435) (402)
---------- ----------
Cash Flows From Financing Activities 3,663 (18,448)
Increase (decrease) in cash and
cash equivalents 6,532 (5,472)
Cash and cash equivalents -
beginning of period 12,835 15,366
---------- ----------
Cash and Cash Equivalents - end of period $ 19,367 $ 9,894
========== ==========
Supplemental disclosure of cash
flow information:
Income tax payments $ 2,269 $ 3,867
Interest payments $ 4,117 $ 5,371
Schedule of noncash investing and
financing activities:
Employee stock ownership plan $ 77 - -
Fixed assets acquired under
capital lease $ 924 $ 495
Restricted stock awards and stock
units, net of forfeitures $ 361 $ 1,015
Stock Dividend $ 77 $ 30
See Notes to Consolidated Financial Statements.
9
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - REPORTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of
Stifel Financial Corp. and its subsidiaries (collectively
referred to as the "Company"). The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the three and six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1999. For further information,
refer to the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
Where appropriate, prior years' financial information has been
reclassified to conform with the current year presentation.
Comprehensive Income
The Company has no components of other comprehensive income,
therefore comprehensive income equals net income.
NOTE B - NET CAPITAL REQUIREMENT
The Company's principal subsidiary, Stifel, Nicolaus &
Company, Incorporated ("SN & Co."), is subject to the Uniform Net
Capital Rule 15c3-1 under the Securities Exchange Act of 1934, as
amended (the "Rule"), which requires the maintenance of minimum
net capital, as defined. SN & Co. has elected to use the
alternative method permitted by the Rule which requires
maintenance of minimum net capital equal to the greater of
$250,000 or 2 percent of aggregate debit items arising from
customer transactions, as defined. The Rule also provides that
equity capital may not be withdrawn and cash dividends may not be
paid if resulting net capital would be less than 5 percent of
aggregate debit items.
At June 30, 1999, SN & Co. had net capital of $32,659,000,
which was 13.12% of its aggregate debit items, and $27,680,000 in
excess of the minimum required net capital.
10
NOTE C - SEGMENT REPORTING
The Company's reportable segments include private client,
capital markets, and other. The private client segment includes
52 branch offices and 112 independent contractor offices of the
Company's broker-dealer subsidiaries located throughout the U.S.,
primarily in the Midwest. These branches provide securities
brokerage services, including the sale of equities, mutual funds,
fixed income products, and insurance, to their private clients.
The capital markets segment includes management and participation
in underwritings (exclusive of sales credits, which are included
in the private client segment), mergers and acquisitions, public
finance, trading, research, and market making. Investment
advisory fees and clearing income is included in other.
Intersegment revenues and charges are eliminated between
segments. The Company evaluates the performance of its segments
and allocates resources to them based on various factors,
including prospects for growth, return on investment, and return
on revenues.
Information concerning operations in these segments of
business is as follows (in thousands):
- -----------------------------------------------------------------
Three Months Ended June 30, 1999 1998
- -----------------------------------------------------------------
Revenues
Private Client $ 31,478 $ 28,224
Capital Markets 3,436 3,991
Other 2,921 1,857
- -----------------------------------------------------------------
Total Revenues $ 37,835 $ 34,072
=================================================================
Operating Contribution
Private Client $ 4,890 $ 4,346
Capital Markets 396 296
Other 1,950 536
- -----------------------------------------------------------------
Total Operating Contribution 7,236 5,178
- -----------------------------------------------------------------
Unallocated Overhead (3,831) (3,078)
- -----------------------------------------------------------------
Pre-Tax Income $ 3,405 $ 2,100
=================================================================
- -----------------------------------------------------------------
Six Months Ended June 30, 1999 1998
- -----------------------------------------------------------------
Revenues
Private Client $ 62,119 $ 57,053
Capital Markets 8,159 7,981
Other 4,574 4,877
- -----------------------------------------------------------------
Total Revenues $ 74,852 $ 69,911
=================================================================
Operating Contribution
Private Client $ 10,557 $ 9,967
Capital Markets 438 1,353
Other 2,493 770
- -----------------------------------------------------------------
Total Operating Contribution 13,488 12,090
Unallocated Overhead (7,268) (6,573)
- -----------------------------------------------------------------
Pre-Tax Income $ 6,220 $ 5,517
=================================================================
The Company has not disclosed asset information by segment, as
the information is not produced internally and its preparation is
impracticable.
11
NOTE D - EARNINGS PER SHARE ("EPS")
Basic EPS is calculated by dividing net income by the weighted-
average number of common shares outstanding. Diluted EPS is
similar to basic EPS but adjusts for the effect of potential
common shares.
The components of the basic and diluted earnings per share
calculation for the three and six months ended June 30, are as
follows (in thousands, except per share amounts):
- -----------------------------------------------------------------
Three Months Ended June 30, 1999 1998
- -----------------------------------------------------------------
Income Available to Common Stockholders
Net Income $ 2,244 $ 1,224
- -----------------------------------------------------------------
Weighted Average Shares Outstanding
Basic Weighted Average Shares Outstanding: 6,728 6,864
Potential Common Shares From Employee
Benefit Plans 361 429
Diluted Weighted Average Shares Outstanding 7,089 7,293
- -----------------------------------------------------------------
Basic Earnings Per Share $ 0.33 $ 0.18
Diluted Earnings Per Share $ 0.32 $ 0.17
=================================================================
- -----------------------------------------------------------------
Six Months Ended June 30, 1999 1998
- -----------------------------------------------------------------
Income Available to Common Stockholders
Net Income $ 4,031 $ 3,276
- -----------------------------------------------------------------
Weighted Average Shares Outstanding
Basic Weighted Average Shares Outstanding: 6,785 6,824
Potential Common Shares From Employee
Benefit Plans 353 407
Diluted Weighted Average Shares Outstanding 7,138 7,231
- -----------------------------------------------------------------
Basic Earnings Per Share $ 0.59 $ 0.48
Diluted Earnings Per Share $ 0.56 $ 0.45
=================================================================
NOTE E- SALE OF SUBSIDIARY
On April 27, 1999, the Company completed the sale of one of
its investment advisory subsidiaries, Todd Investment Advisors to
a subsidiary of Western & Southern Life Insurance Company
("W&S"), a significant shareholder. The Company recorded a pre-
tax gain of approximately $1.5 million and is included in other
income.
NOTE F - SUBSEQUENT EVENTS
On July 29, 1999, the Company's Board of Directors declared a
regular quarterly cash dividend of $0.03 per share, payable on
August 25, 1999 to stockholders of record as of the close of
business on August 11, 1999.
On July 30, 1999, the Company issued an additional $5,000,000
long term notes payable to W&S, due June 30, 2004 with interest
payable monthly at the rate of 8% per annum.
******
12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Six months ended June 1999 as compared to six months ended June
1998
The Company recorded net earnings of $4.0 million or $0.56 per
diluted share on total revenues of $74.9 million for the six
months ended June 30, 1999 compared to net earnings of $3.3
million or $0.45 per diluted share on total revenues of $69.9
million for the same period one year earlier.
The Company's expansion of its Private Client Group, which
began in 1998, was evident during 1999 when compared to the same
period one year earlier. Private client branch offices,
investment executives, and independent contractors increased by
10, 24, and 35, respectively over 1998 representing increases of
24%, 9%, and 30%, respectively. Additionally, investor confidence
in the equity markets remained strong as indicated by the
increase in the major market index_The Dow Jones Industrial
Average (the "Dow") _ and increased trading volumes on the New
York Stock Exchange ("NYSE") and NASDAQ. From June 30, 1998 to
June 30, 1999, the Dow increased 2,019 (23%) from 8,952 to
10,971, while trading volumes on the NYSE and NASDAQ increased
29% and 30%, respectively, over 1998 which contributed to a 24%
increase in the number of customer trades by the Company.
Total revenues increased $4.9 million (7%) primarily as a
result of growth in commissions and other revenues which
increased $7.1 million (26%) and $3.7 million (38%) respectively,
partially offset by decreases in principal transactions,
investment banking and interest revenues, which declined $3.1
million (20%), $1.8 million (24%) and $967,000 (10%)
respectively.
Revenues from commissions rose due to private client expansion
and strong markets as referred to above. Main components of the
increase were from sales of over-the-counter equities, insurance
products, and mutual funds, which increased 48%, 67%, and 18%
respectively.
Revenues from principal transactions decreased primarily due
to decreases in revenues generated by the sale of unit investment
trusts. During the first quarter of 1998, the Company underwrote
a unit investment trust, which generated $3.8 million in
revenues.
Investment banking revenues declined principally due to a
decrease in municipal bond underwritings of $957,000 (34%) and
decreased new issue equity underwritings and participations in
corporate offerings of $1.7 million (41%) offset by an increase
in financial advisory fees for private placements of $864,000
(266%).
13
Interest revenue declined as a result of decreased borrowings
by customers, combined with decreases in the rates charged to
those customers.
Other revenues increased, principally due to growth in managed
account service fees, and growth in money market account fees
which increased 21% and 45%, respectively and the Company's $1.5
million pre-tax gain on the sale of one of its investment
advisory subsidiaries, Todd Investment Advisors, Inc. completed
on April 27, 1999.
Total expenses increased $4.2 million (7%) principally as a
result of increased compensation and benefits and increased
expenses related to the Company's expansion.
Employee compensation and benefits, a significant portion of
the Company's total expense, increased $2.9 million (7%) in the
first six months of 1999. The fixed component of compensation,
primarily salaries, increased $1.5 million (13%) as a result of
normal year-to-year salary increases and the addition of 29 non-
sales associates. The majority of personnel increases resulted
from the expansion of the Private Client Group, and related
product support departments. The increase in the variable
component of compensation of $1.4 million (5%) grew in
conjunction with the increases in revenues and profitability.
Occupancy and Equipment Rental increased $1.2 million (27%),
principally due to the addition of ten branch offices and
increased depreciation expense related to increases in
capitalized equipment to upgrade technology and support private
client expansion.
Interest expense declined $1.4 million (25%) due to decreased
borrowings by the Company to finance customer margin accounts,
combined with decreases in the rates paid on those borrowings.
Other Operating Expenses increased $1.1 million (21%)
principally due to increases in the provision for future
litigation related primarily to the Company's former Oklahoma
operations offset by decreases in professional fees.
The effective tax rate for the first six months ended June 30,
1999 decreased to 35.2 % from 40.6 % for the same period one year
earlier primarily due to the tax effect of the gain on the
disposition of Todd and reduced state taxes.
14
Three months ended June 1999 as compared to three months ended
June 1998
The Company recorded net earnings of $2.2 million or $0.32 per
diluted share on total revenues of $37.8 million for the second
quarter ended June 30, 1999 compared to net earnings of $1.2
million or $0.17 per diluted share on total revenues of $34.1
million for the same period one year earlier. The explanation of
revenue and expense fluctuations presented for the six month
period are generally applicable to the three month operations
with exception of the following items:
Principal transactions remained relatively unchanged for the
three months ended June 30, 1999 when compared to the same period
one-year earlier. Despite strong markets for equity products,
demand for stocks in which the Company makes a market in,
primarily financial institutions, declined, offset by increased
demand for fixed income products.
Year 2000
The Year 2000 issue is the result of computer programs
currently written in two-digit format, rather than four-digit, to
define the applicable year, which affects the ability of computer
systems to accurately process dates ending after December 31,
1999.
As of June 1999, the Company has completed all remedies and
testing on its internal computer systems which the Company
believes are necessary to prepare for the Year 2000. In addition,
the Company believes the third party vendor that provides record
keeping and transaction processing for the Company's customer
accounts has adequately demonstrated its readiness for Year 2000.
The Company participated in the industry-wide testing of
securities transaction processing in a simulated Year 2000
environment with the third party vendor in March and April 1999
with no significant problems noted. The Company has also reviewed
the testing of other record keeping functions on the third party
vendor's system that was performed in January 1999 by other users
of the vendor's system. No significant items were noted. The
Company will continue to perform record keeping testing through
the remainder of 1999.
Internal remedies for the Company, performed over the past
several years, have included a review of all vendor supplied
software and replacement with Year 2000 compliant versions when
necessary and updates to programming code on its small number of
internally created AS/400 programs. The Company has also
replaced substantially all computer hardware with Year 2000
compliant systems as part of its business plan for upgrading its
technology capabilities.
15
The Company believes that the incremental costs associated
with modifications for internal software and systems has not been
material to the Company's financial statements. However, the
interdependent nature of securities transactions and the success
of the Company's external counterparties and vendors, including
the third-party vendor mentioned above, in dealing with this
issue could significantly influence the Company's estimate of the
impact the Year 2000 will have on its business.
The Company has identified and developed contingency plans for
its internally provided mission critical systems, i.e. staffing,
processing alternatives, etc. The Company is monitoring the
development of contingency plans by its mission critical third
party vendors. In particular, the third party vendor mentioned
above expects contingency plans to be fully developed by the
third quarter of 1999. Present plans by the third party vendor
include: extra staffing; increased communications with major
exchanges and utilities over the January 1, 2000 weekend;
moratoriums on staff vacations and time off during
December/January period; and readiness to invoke normal disaster
recovery plan (backup power, hot site readiness).
Forward-Looking Statements
The Management's Discussion and Analysis of financial
Condition and Results of Operations, including the discussion
under "Year 2000," contains forward-looking statements within the
meaning of federal securities laws. Actual results are subject to
risks and uncertainties, including both those specific to the
Company and those specific to the industry which could cause
results to differ materially from those contemplated. The risks
and uncertainties include, but are not limited to, third-party or
Company failures to achieve timely, effective remediation of the
Year 2000 issues, general economic conditions, actions of
competitors, regulatory actions, changes in legislation and
technology changes. Undue reliance should not be placed on the
forward-looking statements, which speak only as of the date of
this Quarterly Report. The Company does not undertake any
obligation to publicly update any forward-looking statements.
Liquidity and Capital Resources
The majority of the Company's assets are highly liquid,
consisting mainly of cash or assets readily convertible into
cash. These assets are financed primarily by the Company's equity
capital, customer credit balances, short-term bank loans,
proceeds from securities lending, long term notes payable, and
other payables. Changes in securities market volumes, related
customer borrowing demands, underwriting activity, and levels of
securities inventory affect the amount of the Company's financing
requirements.
Management believes the funds from operations, available
informal short-term credit arrangements, and long-term
borrowings, at June 30, 1999, will provide sufficient resources
to meet the present and anticipated financing needs.
Stifel, Nicolaus & Company, Incorporated, the Company's
principal broker-dealer subsidiary, is subject to certain
requirements of the Securities and Exchange Commission with
regard to liquidity and capital requirements. At June 30, 1999,
Stifel, Nicolaus had net capital of approximately $32.7 million
which exceeded the minimum net capital requirements by
approximately $27.7 million.
16
Item 3. Quantitative and Qualitative Disclosure about Market Risk
There have been no material changes from the information
provided in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material changes in the legal proceedings
previously reported in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998. Such information is hereby
incorporated by reference.
Item 6. Exhibit(s) and Report(s) on Form 8-K
(a) Exhibit No.
(Reference to Item 601(b)
of Regulation S-K) Description
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)
(b) Report(s) on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended June 30, 1999.
17
SIGNATURES
Pursuant to the requirement of Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STIFEL FINANCIAL CORP.
(Registrant)
Date: August 13, 1999 By/s/ Ronald J. Kruszewski
--------------------
Ronald J. Kruszewski
(President and
Chief Executive Officer)
Date: August 13, 1999 By/s/ James M. Zemlyak
----------------
James M. Zemlyak
(Principal Financial and
Accounting Officer)
18
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
EXHIBIT INDEX
June 30, 1999
Exhibit
Number Description
- -------------------------------------------------------------------------------
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)