Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q1 2009 Earnings Presentation
31 slides from Stifel Financial's earnings presentation, May 11, 2009
Slide 1: 1st Quarter 2009 Earnings Conference Call
TIFEL INANCIAL 1st Quarter 2009 Fiscal Year Earnings Conference Call May 11, 2009
Slide 2: Forward-Looking Statements
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
Slide 3: 1st Quarter 2009 Highlights
st 1 Quarter 2009 Highlights ¾ Net revenues of $220.0 million, a 4% increase from the 1Q08. ¾ The PCG segment recorded net revenues of $110.5 million, a 4% decrease from the 1Q08. ¾ The ECM segment recorded net revenues of $47.1 million, a 4% decrease over the 1Q08. ¾ The FICM segment recorded net r
Slide 4: Chairman's Comments
Chairman’s Comments Keys to the Quarter • 1Q09 PCG and ECM results were negatively impacted by continuing difficult market conditions for investment banking and reduced valuations of customers’ assets • Excellent performance by our Fixed Income Capital Markets and Stifel Bank • Overhead costs increa
Slide 5: Summary Income Statements
Summary Income Statements Quarters Ended ($ in thousands) 3/31/2009 3/31/2008 % Change Net revenues $ 219,981 $ 211,477 4% Compensation and benefits 147,840 139,733 6% Non-compensation operating expenses 49,986 41,189 21% Total non-interest expenses 197,826 180,921 9% Income before income taxes 22,1
Slide 6: 1st Quarter Normalized Pro Forma
st 1 Quarter Normalized Pro Forma Pre-Tax Net Operating % of Revenues Contributions Net Rev As Reported $ 219,981 $ 22,155 10.1% Pro Forma Adjustments Private Client Group (PCG) PCG established business 16,444 8,439 PCG new business - 3,272 Equity Capital Markets 10,000 5,000 Fixed Income Capital Ma
Slide 7: Source of Revenues
Source of Revenues Quarters Ended % of % of 3/31/2009 Net Rev 3/31/2008 Net Rev % Change Revenues Commissions $ 74,610 33.9% $ 85,701 40.5% -13% Principal transactions 97,278 44.2% 66,937 31.7% 45% Investment banking 15,504 7.0% 21,844 10.3% -29% Asset management and service fees 24,933 11.3% 30,278
Slide 8: Principal Transactions
Principal Transactions Quarters Ended %of %of ($ in thousands) 3/31/2009 To ta l 3/31/2008 To ta l % Change Principal transactions Taxable debt $ 65,156 67.0% $ 48,512 72.5% 34% Muni debt 16,455 16.9% 9,971 14.9% 65% Equities 8,570 8.8% 4,251 6.4% 102% Other 7,097 7.3% 4,203 6.3% 69% Total principal
Slide 9: Segment Comparison
Segment Comparison Excluding Acquisitions ¾ Total net revenues increased 4% despite difficult market conditions in 1Q09. ¾ Weakness in PCG & ECM were more than offset by FICM and Stifel Bank results Quarters Ended Net Revenues 3/31/09 3/31/08 % Change Private Client $ 110,524 $ 114,853 -4% Equity Ca
Slide 10: 1st Quarter Segment Comparison (Excludes Acquisitions)
1st Quarter Segment Comparison (Excludes Acquisitions) ¾ Balanced business model facilitates growth during volatile markets ¾ Stable PCG business is augmented by profitable and growing Capital Markets. Revenue Operating Profit Bank Bank Bank Bank 1.6% 1.0% 4% 0.6% Cap PCG Cap Cap PCG Mkts PCG 36% Mk
Slide 11: Private Client Group
Private Client Group Income Statements Quarters Ended ($ in thousands) 3/31/09 3/31/08 % Change ¾ Commission & fee Commissions and principal transactions $ 81,653 $ 77,952 5% growth impacted by Investment banking 2,070 4,103 -50% market decline Asset management and service fees 24,831 30,147 -18% Ne
Slide 12: Equity Capital Markets
Equity Capital Markets Income Statements Quarters Ended ¾ Commissions & principal ($ in thousands) 3/31/09 3/31/08 % Change transactions increased 6% Flow business $ 36,787 $ 34,654 6% Capital raising 693 6,758 -90% during the quarter Advisory fee 9,405 7,509 25% Investment banking 10,098 14,267 -29
Slide 13: Fixed Income Capital Markets
Fixed Income Capital Markets Income Statements Quarters Ended ($ in thousands) 3/31/09 3/31/08 % Change ¾ Distribution model and Flow business & trading $ 53,448 $ 40,032 34% scale drove revenue growth Capital raising 2,736 2,170 26% and margin expansion Advisory fee 601 1,304 -54% ¾ Fixed income ma
Slide 14: Stifel Bank & Trust
Stifel Bank & Trust Income Statements Quarters Ended ($ in thousands) 3/31/09 3/31/08 % Change Revenues Interest 3,656 3,551 3% Other revenues 670 247 171% Total revenues 4,326 3,798 14% Less: interest expense 686 1,716 -60% Total net revenues 3,640 2,082 75% Compensation and benefits 411 759 -46% N
Slide 15: Stifel Bank & Trust
Stifel Bank & Trust Asset Growth ¾ Total assets increased $187 million, or 54%, from 12/31/2008 ¾ Cash and cash equivalents increased $199 million from 12/31/2008 to $226 million, resulting in significant on- balance sheet liquidity ¾ Retained loan portfolio declined $10 million, or 5%, from 12/31/2
Slide 16: Stifel Bank & Trust
Stifel Bank & Trust Significant Excess Liquidity ¾ $226 million in on-balance sheet excess liquidity held in cash and cash equivalents ¾ The UBS transaction is expected to provide an additional $800 million in deposits available to the Bank ¾ Loan to Deposit Ratio of 47% Earnings Growth Opportunitie
Slide 17: Stifel Financial Balance Sheet Graphs
Stifel Financial Balance Sheet Graphs $2,015 $750 $676 $714 $2,000 $83 $83 $1,499 $1,558 $520 $1,600 $500 $95 $1,200 $1,085 $290 $593 $631 $842 $225 $800 $250 $166 $70 $425 $423 $412 $382 $115 $135 $70 $220 $400 $35 $35 $35 $131 $155 $80 $100 $0 $0 2002 2003 2004 2005 2006 2007 2008 Q1 2009 2002 200
Slide 18: Capital Structure
Capital Structure ($ in thousands) 3/31/2009 3/31/2008 Total Assets $ 2,014,698 $ 1,613,215 Stockholders' Equity $ 630,802 $ 437,038 Debentures to: Stifel Financial Capital Trust II - LIBOR plus 1.70% (fixed at 6.38% until 9/30/10), due 9/30/35 $ 35,000 $ 35,000 Stifel Financial Capital Trust III -
Slide 19: Level 3 Assets
Level 3 Assets 3/31/2009 3/31/2008 Ca rrying Ca rrying ($ in thousands) Cost Va lue Va lue Auction Rate Securities $ 22,325 $ 20,038 $ - Stifel Bank & Trust Investments 9,097 8,335 19,014 Trading Securities 5,649 4,362 15,080 Other Investments 6,006 5,031 5,185 $ 43,077 $ 37,766 $ 39,279 Percentage
Slide 20: Other Financial Data
Other Financial Data Quarterly Data % Change vs vs Other Data 3/31/2009 12/31/2008 3/31/2008 Q4 2008 Q1 2008 Bank assets (000's) $ 529,953 $ 343,417 $ 248,982 54% 113% Stifel Nicolaus & Stifel Financial assets (000's) 1,484,745 1,214,728 1,364,233 22% 9% Total assets (000's) $ 2,014,698 $ 1,558,145
Slide 21: UBS Transaction Update
UBS Transaction Update • Stifel announced today that it anticipates its principal operating subsidiary, Stifel, Nicolaus & Company, Incorporated, will acquire 55 branches from UBS Financial Services Inc. pursuant to its previously announced agreement to acquire certain UBS Wealth Management Americas
Slide 22: UBS Transaction Furthers our Goals
UBS Transaction Furthers our Goals • Extends our geographic presence • Strengthens our brokerage position • Enhances and accelerates Stifel Bank and Trust strategy • Expected to be accretive in first year Page 21
Slide 23: Extends our Geographic Presence
Extends our Geographic Presence Page 22
Slide 24: Strengthens our Brokerage Position
Strengthens our Brokerage Position Rank Company Headquarters RRs 1. Citigroup / Smith Barney New York, NY 19,296 2. Wells Fargo Securities St. Louis, MO 16,678 3. Merrill Lynch & Co. New York, NY 15,880 4. Edward D. Jones St. Louis, MO 10,532 5. UBS Financial Services Inc. Weehawken, NJ 8,182 6. RBC
Slide 25: Private Client Metrics
Private Client Metrics Stifel UBS Branches Combined 2008 Gross revenue (millions) $473 $120 $593 Branch contribution margin 31% 35% 32% Financial Advisors - current 1,394 332 1,726 Assets under management (billions) $50 $15 $65 Revenues per broker (thousands) $428 (1) $426 (2) $428 (1) Excludes Cent
Slide 26: What are we paying?
What are we paying? The UBS transaction is structured as an asset purchase for cash at a premium over certain balance sheet items, subject to adjustments. The payments to UBS include: •An upfront cash payment of up to approximately $29 million based on the actual number of branches and Financial Adv
Slide 27: Key Takeaways
Key Takeaways Adds significant capability and an attractive geographic complement to Stifel’s Private Client Business Solid Financial terms Extends our geographic presence Strengthens our brokerage position Enhances and accelerates Stifel Bank and Trust strategy Expected to be accretive
Slide 28: Stifel Outlook
Stifel Outlook ¾ Unstable conditions in the Private Client market presents opportunity for Stifel to continue to grow organically and through M&A ¾The uncertainty surrounding the largest domestic and European private client platforms impacts thousands of US-based Financial Advisors. ¾Success with UB
Slide 29: Market Turmoil = Opportunity
Market Turmoil = Opportunity ¾ Stifel has one of the fastest growing private wealth management businesses in the industry. 186 210 $461 1,394 200 $500 $436 $442 1,500 1,315 1,163 147 1,000 111 $231 647 644 735 82 86 92 $250 $187 $197 621 100 79 $163 543 $136 500 $0 0 0 2002 2003 2004 2005 2006 2007
Slide 30: Growth
Growth Total Additions As of Business Units 2008 Q1 2009 3/31/2009 Private Client Group Financial Advisors* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 94 1,394 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 9 204 Equi
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