Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q2 2012 Earnings Presentation
26 slides from Stifel Financial's earnings presentation, Aug 8, 2012
Slide 1: 2nd Quarter 2012 Financial Results Presentation
2nd Quarter 2012 Financial Results Presentation August 8, 2012
Slide 2: Disclaimer
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 futu
Slide 3: Chairman's Comments
Chairman’s Comments “The operating environment in the second quarter was challenging, especially compared with the strong start to the year. The headwinds in the equity and bond markets, as well as macro economic factors affected the industry, our business and client activity. In the quarter, asset
Slide 4: Market Overview
Market Overview Average Daily Share Volume ($M) Equity Mutual Fund Flows ($B) $40 5,000 28 NYSE NASDAQ $20 4,000 2,135 $0 2,053 3,000 1,995 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1,825 1,802 1,764 ($20) -10 -18 -22 2,000 ($40) 1,578 1,698 1,000 1,383 1,412 1,202 1,234 ($60) -64 0 ($80) Q1 11 Q2 11 Q3 1
Slide 5: Financial Results
Financial Results
Slide 6: Stifel Financial Corp. Results
Stifel Financial Corp. Results Three months ended June 30, 2012 Three Months Ended (1) ($ in thousands, except per share amounts) 6/30/12 6/30/11 % Change 3/31/12 % Change Net revenues $ 374,407 $ 358,857 4.3% $ 400,333 (6.5%) Compensation and benefits 239,374 229,939 4.1% 254,704 (6.0%) Non-comp op
Slide 7: Stifel Financial Corp. Results
Stifel Financial Corp. Results Six months ended June 30, 2012 Six Months Ended (1) ($ in thousands, except per share amounts) 6/30/12 6/30/11 % Change Net revenues $ 774,740 $ 725,470 6.8% Compensation and benefits 494,078 461,105 7.2% Non-comp operating expenses 177,534 209,806 (15.4%) Total non-in
Slide 8: Source of Revenues
Source of Revenues Quarter Ended Six Months Ended % % ($ in thousands) 6/30/12 6/30/11 Change 3/31/12 % Change 6/30/12 6/30/11 Change Commissions $ 127,427 $ 138,315 (7.9%) $ 123,303 3.3% $ 250,730 $ 294,101 (14.7%) Principal transactions 91,564 79,741 14.8% 116,233 (21.2%) 207,797 172,600 20.4% Cap
Slide 9: Brokerage Revenues
Brokerage Revenues Quarter Ended Six Months Ended % % % ($ in thousands) 6/30/12 6/30/11 Change 3/31/12 Change 6/30/12 6/30/11 Change Principal transactions: Taxable debt $ 47,831 $ 43,020 11.2% $ 61,433 (22.1%) $ 109,264 $ 94,439 15.7% Municipal debt 23,851 18,850 26.5% 21,826 9.3% 45,677 38,388 19
Slide 10: Non-Interest Expenses
Non-Interest Expenses Three months ended June 30, 2012 Quarter Ended % of Net revenues (1) ($ in thousands) 6/30/12 6/30/11 % Change 3/31/12 % Change 6/30/12 6/30/11 3/31/12 Compensation and benefits 219,004 212,333 3.1% 236,332 (7.3%) 58.5% 59.2% 59.0% Transitional pay (2) 20,370 17,606 15.7% 18,37
Slide 11: Non-Interest Expenses
Non-Interest Expenses Six months ended June 30, 2012 Six Months Ended % of Net revenues (1) ($ in thousands) 6/30/12 6/30/11 % Change 6/30/12 6/30/11 Compensation and benefits 455,336 424,738 7.2% 58.8% 58.6% Transitional pay (2) 38,742 36,367 6.5% 5.0% 5.0% Total compensation and benefits 494,078 4
Slide 12: Segment Comparison
Segment Comparison Quarter Ended Six Months Ended % % % ($ in thousands) 6/30/12 6/30/11 Change 3/31/12 Change 6/30/12 6/30/11 Change Net revenues: Global Wealth Management $ 240,029 $ 225,645 6.4% $ 248,348 (3.3%) $ 488,377 $ 464,091 5.2% Institutional Group 135,297 132,915 1.8% 148,504 (8.9%) 283,
Slide 13: Global Wealth Management
Global Wealth Management Quarter Ended Six Months Ended ($ in thousands) 6/30/12 6/30/11 % Change 3/31/12 % Change 6/30/12 6/30/11 % Change Commi s s i ons $ 88,423 $ 93,593 (5.5%) $ 91,023 (2.9%) $ 179,446 $ 195,355 (8.1%) Pri nci pa l tra ns a cti ons 55,628 51,263 8.5% 59,045 (5.8%) 114,673 107,4
Slide 14: Stifel Bank & Trust
Stifel Bank & Trust (an operating unit of GWM) 6/30/12 6/30/11 % Change 3/31/12 % Change (in 000s, except percentages) Assets $ 3,058,971 $ 1,807,859 69.2 $ 2,611,828 17.1 Investment securities 1,849,622 1,177,850 57.0 1,673,866 10.5 Retained loans, net 709,079 476,764 48.7 657,081 7.9 Loans held fo
Slide 15: Institutional Group
Institutional Group Quarter Ended Six Months Ended ($ in thousands) 6/30/12 6/30/11 % Change 3/31/12 % Change 6/30/12 6/30/11 % Change Commi s s i ons $ 39,004 $ 44,721 (12.8%) $ 32,280 20.8% $ 71,284 $ 98,746 (27.8%) Pri nci pa l tra ns a cti ons 35,936 28,477 26.2% 57,188 (37.2%) 93,124 65,173 42.
Slide 16: Institutional Group Revenues
Institutional Group Revenues Quarter Ended Six Months Ended ($ in thousands) 6/30/12 6/30/11 % Change 3/31/12 % Change 6/30/12 6/30/11 % Change Sales and trading: Equity $ 38,466 $ 41,695 (7.7%) $ 44,172 (12.9%) $ 82,638 $ 94,093 (12.2%) Fixed income 36,474 31,503 15.8% 45,296 (19.5%) 81,770 69,826
Slide 17: Financial Condition
Financial Condition
Slide 18: Capital Structure
Capital Structure As of June 30, 2012 (in thousands, except ratios) Total Assets $ 6,138,535 Stockholders' Equity $ 1,371,845 Debentures to: Stifel Financial Capital Trust II - LIBOR plus 1.70%, due 9/30/35 $ 35,000 Stifel Financial Capital Trust III - LIBOR plus 1.85% (fixed at 6.79% until 6/6/12),
Slide 19: Other Financial Data
Other Financial Data As of As of 6/30/12 6/30/11 % Change 3/31/12 % Change Total assets (000s): Stifel Nicolaus & Stifel Financial $ 3,079,564 $ 2,705,749 13.8% $ 2,853,866 7.9% Stifel Bank 3,058,971 1,807,859 69.2% 2,611,828 17.1% Total assets $ 6,138,535 $ 4,513,608 36.0% $ 5,465,694 12.3% Total s
Slide 20: Level 3 Assets
Level 3 Assets Carrying Value ($ in thousands) 6/30/12 12/31/11 (1) Auction Rate Securities (ARS) $ 175,270 $ 181,801 Stifel Bank & Trust Investments 29,000 12,000 Trading Securities 12,808 3,742 (2) Other Investments 39,091 37,033 Level 3 assets (excluding ARS) 80,899 52,775 Total Level 3 assets $
Slide 21: Market & Company Overview
Market & Company Overview
Slide 22: Markets Going Forward
Markets Going Forward 1,600 4.00 1,400 3.50 1,200 3.00 Yield 1,000 2.50 S&P 500¹ 7.4% 800 2.00 10 YR 1.6% Risk premium 5.8% 600 1.50 400 1.00 200 0.50 0 0.00 Jan-11 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 S&P 500 10 YR 21 Date range includes January 1, 2011 through August 7, 2012. Source: Factset.
Slide 23: Stifel's Strategy
Stifel’s Strategy Position the Company to take advantage of opportunities. • Unburdened by capital constraints • Utilize a low leverage business model and conservative risk management • Built the Company through nine acquisitions since 2005 • Prudently evaluate all opportunities 22
Slide 24: Execution of Strategy Impacting Margins
Execution of Strategy Impacting Margins 2012 Investments: • Hired 103 financial advisors YTD • Opened 12 private client offices YTD and 25 since Jan. 1, 2011 • Building our fixed income sales and trading operations Hired 52 professionals • Selectively hired professionals in areas we see opportunity
Slide 25: Legacy Business vs. Investments
Legacy Business vs. Investments ($ in thousands, except per share amounts) 6M 2012 Legacy¹ Investments Total Net revenues 760,512 14,228 774,740 Compensation and benefits 476,560 17,518 494,078 Non-comp operating expenses 166,658 10,875 177,534 Total non-interest expenses 643,219 28,393 671,612 Inco
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