Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q4 2008 Earnings Presentation
27 slides from Stifel Financial's earnings presentation, Feb 12, 2009
Slide 1: 4th Quarter 2008 Fiscal Year Earnings Conference Call
TIFEL INANCIAL 4th Quarter 2008 Fiscal Year Earnings Conference Call February 12, 2009
Slide 2: Forward Statements
Forward Statements This presentation may contain “forward-looking statements” that involve risks and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp. and Stifel Nicolaus (“SF” or the “Company”). Actual results may differ m
Slide 3: Chairman's Comments
Chairman’s Comments Chairman and Chief Executive Officer, Ronald J. Kruszewski, commented, "Simply put, 2008 was uniquely challenging for the financial services industry. Our Company has been fortunate to have sidestepped many of the issues which plagued a number of our brethren. While we are mindfu
Slide 4: 4Q08 Highlights
4Q08 Highlights ¾ Record net revenues of $228.2 million, a 8% increase from 2007. ¾Balanced business model drives record revenues in uncertain markets. ¾ Core net income of $21.7 million, or $0.72 per diluted share, a 6% increase from the prior year fourth quarter. ¾Core earnings pre-tax margin was
Slide 5: YTD Highlights
YTD Highlights ¾ Record net revenues of $867.5 million, a 14% increase over 2007. ¾13th consecutive annual increase in net revenue is driven by record revenues from FICM, PCG, and Stifel Bank. ¾ Core net income of $73.1 million, or $2.60 per diluted share, a 9% increase from the prior year core net
Slide 6: Summary Income Statements
Summary Income Statements Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Net Revenues $ 228,161 $ 212,160 8% $ 867,516 $ 763,369 14% Compensation and Benefits 135,276 133,018 2% 557,179 493,908 13% Non-Comp Operating Expenses 57,278 46,175 24% 189,909 158,8
Slide 7: Source of Revenues
Source of Revenues Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Revenues Commissions $ 83,599 $ 90,584 -8% $ 341,090 $ 315,514 8% Principal Transactions 92,492 47,670 94% 293,285 139,248 111% Investment Banking 15,775 31,449 -50% 83,710 169,413 -51% Asset
Slide 8: Principal Transactions
Principal Transactions Three Months Ended Years Ended %of %of % %of %of % ($ in thousands) 12/31/08 To tal 12/31/07 To tal Change 12/31/08 To tal 12/31/07 To tal Change Principal transactions Taxable Debt $ 59,774 64.6% $ 27,120 56.9% 120% $ 184,471 62.9% $ 81,093 58.2% 127% Muni Debt 15,273 16.5% 7
Slide 9: Unusual Items in the Fourth Quarter
Unusual Items in the Fourth Quarter Quarters Ended 12/31/08 12/31/07 Core Diluted EPS $ 0.72 $ 0.76 Diluted EPS effect: Gain on Extinguishment of Debt (0.11) (0.07) Unrealized Loss on ARS 0.06 - Unrealized Loss on Investments 0.04 - Charitable Foundation 0.02 - Net Diluted EPS Effect of Unusual Item
Slide 10: ARS Redemption Overview
ARS Redemption Overview Value of ARS in Client Account $25,000 $50,000 $75,000 $100,000+ TOTAL Number of Accounts 445 201 210 297 1,153 Beginning ARS Balance 11,125,000 10,050,000 15,750,000 146,275,000 183,200,000 ARS Redeemed 11,125,000 5,025,000 5,250,000 15,800,000 37,200,000 Remaining ARS - 5,0
Slide 11: 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 ¾ The uncertainty surrounding the largest domestic and European private client platforms impacts thousands of US-based Financial Advisors. ¾ Balanced busi
Slide 12: Market Turmoil = Opportunity
Market Turmoil = Opportunity ¾ Stifel has one of the fastest growing private wealth management businesses in the industry. $461 204 $500 $436 1,500 1,315 200 1,163 147 1,000 111 $231 735 92 $197 647 621 644 79 82 86 $250 $187 543 100 $163 $136 500 $0 0 0 2002 2003 2004 2005 2006 2007 2008 2002 2003
Slide 13: 2008 Growth
2008 Growth Total 2008 As of Business Units Additions 12/31/2008 Private Client Group Financial Advisors* . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 1,315 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 204 Equity Capital Markets Equity Sales & Tra
Slide 14: Segment Comparison
Segment Comparison Excluding Acquisitions ¾ Total net revenues increased 8% despite rapidly deteriorating economic conditions in 4Q08. ¾ Weakness in PCG & ECM were more than offset by FICM results Quarters Ended % Change YTD % Change Net Revenues 12/31/08 12/31/07 12/31/08 12/31/07 Private Client $
Slide 15: YTD 2008 Segment Comparison (Ex Acquisitions)
YTD 2008 Segment Comparison (Ex Acquisitions) ¾ Balanced business model facilitates growth during volatile markets ¾ Stable PCG business is augmented by profitable and growing Capital Markets. % of Revenues % of Op Profit Bank Bank 1% 0.3% PCG Cap Mkts 45% Cap Mkts 52% PCG 48% 54% Page 14
Slide 16: Private Client Group
Private Client Group Income Statements ¾ Commission & fee growth impacted by 4Q08 market uncertainty ¾Margins were modestly lower due to the opening of 52 new offices and 269 FA’s in 2008, including the 18 offices and 75 FA’s from Butler Wick which joined us on 12/31/08. Quarters Ended % Change YTD
Slide 17: Equity Capital Markets
Equity Capital Markets Income Statements ¾ Commissions & principal transactions increased 26% during the quarter ¾ Continued weakness in capital raising Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Revenues: Commissions and principal transactions $ 44,268
Slide 18: Fixed Income Capital Markets
Fixed Income Capital Markets Income Statements ¾ Distribution model and scale drove revenue growth and margin expansion ¾ Opened more than 450 new institutional accounts in 2008 Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Revenues Commissions & Principal
Slide 19: Stifel Bank & Trust
Stifel Bank & Trust Income Statements ¾ Continued build-out to serve Stifel Nicolaus clients and potential clients. Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Revenues Interest $ 3,763 $ 3,645 3% $ 15,253 $ 9,542 60% Other Revenues (1,961) 218 n/a (358)
Slide 20: Reconciliation of GAAP to Core Earnings
Reconciliation of GAAP to Core Earnings Page 19
Slide 21: GAAP to Core Earnings
GAAP to Core Earnings Quarters Ended % Change YTD % Change ($ in thousands) 12/31/08 12/31/07 12/31/08 12/31/07 Core Net Income $ 21,738 $ 20,491 6% $ 73,090 $ 66,787 9% Acquisiton Related Expenses-net of tax (3,982) (6,656) -40% (15,878) (34,617) -54% GAAP Net Income $ 17,756 $ 13,835 28% $ 57,212
Slide 22: Annual Income Statement Impact
Annual Income Statement Impact FY 2006A FY 2007A FY 2008A FY 2009E Total Acquisiton Related Expenses ($ in thousands) Legg M ason Acquisition Charges . . . . . . . $ 41,371 $ 25,082 $ 25,650 $ - $ 92,103 Ryan Beck Acquisition Charges . . . . . . . - 31,692 504 - 32,196 Pre T ax Acquisition Charges .
Slide 23: Stifel Financial Balance Sheet Graphs
Stifel Financial Balance Sheet Graphs $750 $681 $2,000 $520 $84 $1,499 $1,559 $1,600 $500 $95 $1,085 $1,200 $290 $598 $842 $225 $800 $250 $166 $70 $425 $423 $412 $382 $115 $135 $70 $400 $35 $220 $35 $35 $155 $131 $80 $100 $0 $0 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 To
Slide 24: Capital Structure
Capital Structure ($ in thousands) Total Assets $ 1,561,599 Stockholders' Equity $ 594,895 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 Stifel Financial Capital Trust III - LIBOR plus 1.85% (fixed at 6.79% until 6/6/12), due 6
Slide 25: Level 3 Assets
Level 3 Assets December 31, 2008 Carrying ($ in thousands) Cost Value Auction Rate Securities $ 20,625 $ 18,508 Stifel Bank & Trust Investments 14,121 10,423 Trading Securities 4,472 4,161 Other Investments 5,926 5,170 $ 45,144 $ 38,262 Percentage of Equity 6% Page 24
Slide 26: Other Financial Data
Other Financial Data Quarterly Data % Change vs vs Other Data 12/31/2008 9/30/2008 12/31/2007 Q3 2008 Q4 2007 Bank Assets (000's) $ 343,417 $ 327,279 $ 248,982 5% 38% SN & SF Assets (000's) $ 1,215,999 $ 1,714,146 $ 1,250,459 -29% -3% Total Assets (000's) $ 1,559,416 $ 2,041,425 $ 1,499,441 -24% 4%
Slide 27: Page 26
Page 26