Stifel Financial Corporation · NYSE:SF
Stifel Financial — Merger or Acquisition (November 2012)
42 slides from Stifel Financial's merger presentation, Nov 13, 2012
Slide 1: Stifel Financial Investor Presentation
Stifel Financial Investor Presentation November 2012 STIFEL FINANCIAL
Slide 2: Disclaimer: Forward-Looking Statements
STIFEL Disclaimer FINANCIAL Forward-Looking Statements Statements in this presentation that relate to the future plans, events, expectations, performance, objectives and the like of Stifel Financial Corp,, as well as Stifel, Nicolaus and Company, Ine. and its other subsidiaries (collectively, “Stife
Slide 3: Disclaimer: Non-GAAP Measures and Additional Information
STIFEL Disclaimer FINANCIAL Note Regarding the 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
Slide 4: Stifel Financial Overview
STIFEL FINANCIAL Stifel Financial Overview
Slide 5: Building the Premier Middle-Market Investment Bank
STIFEL Building the Premier Middle-Market Investment Bank FINANCIAL Organic Growth Acquisitions Stifel is Well-Positioned to Take Advantage of Opportunities Unburdened by capital constraints Low leverage business model and conservative risk management Built the Company through nine acquisitions sinc
Slide 6: Stifel's Market Opportunity
STIFEL Stifel’s Market Opportunity FINANCIAL Stiel’s Differentiated Value Proposition. Growth, Scale, and Stability Bulge Bracket STIFEL Middle Market = Size / scale m Large distribution = Investment Banking = Retail m Trading Issues m Deleverage m Raise common equity = Changing business models = He
Slide 7: A Growth Story...
STIFEL A Growth Story... FINANCIAL Net Revenues ($MM)( Core Net Income ($MM) Total Equity (6$MM)@) $1,800 593 9150 $1,600 CAGR:26% $1,595 CAGR:25% a sit cacr:s% sur i sao S1AI7 25 apy $1302 $1,500 $1382 SIAL ‘$0. sid sist © 51.200 $1,200 S191 $90 ‘A $873 70 73 $76 $900, ve Sage $800 7 Py $59 $100 45
Slide 8: Building Scale...
Building Scale... STIFEL FINANCIAL STONE & YOUNGBERG az Thomas Weisel Partners 56 UBS Branches Each merger has been accretive to Stifel Retention remains high FIG Investrnent Banking FIGSales and Trading FIG Research Announced Novernber 2012 myButlerWick Fixed Income IB Fixed Income Sales and Tradin
Slide 9: Strong Balance Sheet Facilitates Growth
STIFEL Strong Balance Sheet Facilitates Growth FINANCIAL As September 30, 2012 Total Assets ($ in Billions) Total Capitalization ($ in Billions) S18 5 2006 ©2007 «2008 «= «2009 2010S 209/30 Stockholders Equity TrustPreferred Securities Leverage Ratio Book Value Per Share 9/30 2006 © 2007 «S008 «2009
Slide 10: Top Performing Stock Over Multiple Years
Top Performing Stock Over 5 and 10 Years STIFEL FINANCIAL Cumulative Price Appreciation As of October 31, 2012 Since 12/3/11 FER & Co. Goldman Sachs Group Piper Jaffray Greenhill & Co. Raymond James Financial Morgan Stanley Lazard S&P 500 Index KEW Legg Mason Evercore Partners Jefferies Group Oppenh
Slide 11: Opportunities Drive our Growth
Opportunities Drive our Growth STIFEL FINANCIAL Init es = Attract and retain high-quality talent = — Continue to expand our private client footprint in the U.S. = — Continue to expand fixed income businesses = Continue to expand investment banking capabilities = Focus on quality asset generation wit
Slide 12: Merger With KBW
STIFEL FINANCIAL Merger With KBW
Slide 13: Why this Combination Makes Sense
Why this Combination Makes Sense STIFEL FINANCIAL KBW Including Equ search, Equi ee pebehenege aire Highly ComplementaryInvestment Banking, Research and Sales & Trading Platforms Significant Synergies While Maintaining KBW’s Premier Brand The Financial Institutions Sector is Poised to Benefit from I
Slide 14: Stifel Financial and KBW Today
Stifel Financial and KBW Today STIFEL FINANCIAL STIFEL FINANCIAL = Fulkservice, publicly traded investment bank (NYSE:SF) = Over 5,000 associates in 330 global locations m= Demonstrating growth, scale and stability with balanced business model = Investment Banking = #1U.S. equity underwriter for iss
Slide 15: Balanced Business Mix
STIFEL = Balanced Business Mix FINANCIAL ($in millions) Stifel Net Revenue Mix (9 mo 2012) Combined Net Revenue Mix (9 mo 2012) GWM 62% STIFEL STIFEL +B FINANCIAL FINANCIAL Annualized Net Revenue: $1,593 mm Annualized Net Revenue: $1324 mm s “ov sba weathatnagent s “1 restutond crup (1) _Annualisedn
Slide 16: Summary of Key Transaction Terms
Summary of Key Transaction Terms FINANCIAL STIFEL Transaction Excess Capital Consideration g a a is e Synergy Opportunities Management Retention Board Seats Approvals oft Stifel Financial Corp. (“SF”) to acquire 100% of KBW, Ine. (“KBW”) common stock $250 million in KBW excess capital is estimated t
Slide 17: Transaction Financials - Valuation Metrics
Transaction Financials - Valuation Metrics STIFEL a FINANCIAL Ei (im 000s, except per share) Gash Stock | Toul Sharehelders" 8 s04410 § 228,908 |§ 592,718, Restricted Stock 7 45,098 | 45,096 Purchase Price soaai0 273,405] 577,815 Excess Capital (250,000) =| 250,000) Adjusted Purchase Price «$5410 §
Slide 18: Accretive Transaction Delivers 10% - 16% ROE
STIFEL Accretive Transaction Delivers 10% - 16% ROE FINANCIAL Ei ($i 000s) Attractive Returns Based on Conservative Modeling Equi tment Calculation Purchase Price? $577,815 SY eEttege Aftertax Retention 34,200 Investment Less: Excess Capital (250,000) Total Investment $ 362,015 Less: On Balance Shee
Slide 19: This is the Time to Invest in Financial Services
STIFEL This is the Time to Invest in Financial Services FINANCIAL FIG isa large driver of the US. economy and comprises 22% of the Russell 2000 Expected Increase in Capital Markets, M&A & FI Activity Financials Outperforming for the First Year Since 2006... " Capital Markets Drivers .. And market pa
Slide 20: KBW: Dominant Force in Financial Services
STIFEL FINANCIAL KBW Dominant Force in Financial Servic STIFEL + [sau INVESTMENT BANKING > Leading Financial Services IPO & Follow-on Bookrunner > #1 Depository Bookrunner)) » #1 Conversion Advisox®) > #LFIG M&A Advisor) The Most Trusted Advisor to Financial Institutions EQUITY RESEARCH > #1 US, Equ
Slide 21: Operating Strategy
STIFEL FINANCIAL Operating Strategy The addition of KBVW adheres to Stifel’s philosophy of building out highly focused specialized businesses within an integrated platform STIFEL FINANCIAL Global Wealth Management Institutional Group I Middle-Market Experts Financial Institution Experts « Award-winn
Slide 22: Maintaining the KBW Culture and Brand
STIFEL Maintaining the KBW Culture and Brand FINANCIAL KBW = Combined KBW & Stifel FIG investment banking franchise to be run under the premier “KBW" brand. + KBWto become Stifel’s Financial Institutions brand + Bestperformers on both teams joined together to drive future growth m Separate KBW resea
Slide 23: The Largest U.S. Equity Research Platform
The Largest U.S. Equity Research Platform STIFEL FINANCIAL KBW #2 Provider of small-cap equities coverage #1 Provider of Technology, Transportation, REITs and now FIG FIG Research Coverage Research Coverage Raymond James Citi Sidoti & Company LLC Walls Fargo Seouritias Goldman Sache Credit Suisse Mo
Slide 24: The Premier Middle-Market Equities Platform
The Premier Middle-Market Equities Platform STIFEL FINANCIAL KBW Strategic Rationale = Affirms industry leading equity research platform = Enhances full-service middle-market platform with opportunities for additional market share gains = Substantially strengthens FIG sales & trading with aleading m
Slide 25: The Premier Middle-Market Investment Bank
STIFEL cnt The Premier Middle-Market Investment Bank FINANCIAL All Managed Equity Offerings Since 2005 0 Bookrun Equity Offerings <8500M Mkt Cap Since 2005 ix Batons) ix Bilions) Rank Fim # $Volume Rank Firm # $Volume 1 Bankof America MerrillLynch 1,489 $9433 1 Bank of america Merrill Lynch 240 $154
Slide 26: Dominant Force in Financial Services
A STIFEL FINANCIAL KBW Dominant Force in Financial Services —_ Hane & FO Bookrunner Since 20050) FIG Financial Advisor Since 20052) Finn Rank Firm # SNW/KEW 1 SNW/KBW. 461 1 Keefe ruyette Woods, ne 1 Keefe ayette € Woods, a 2 Gane ONeill & Pastneny LP a 2 Sandler ORlell Pater LP =e 3 Stifel Nicolaus
Slide 27: Highly Complementary FIG Investment Banking
Highly Complementary FIG Investment Banking STIFEL M&A and Capital Offerings Activity Between 2005 - 2012 FINANCIAL Mm @ . 357 iow ‘ STIFEL ‘Transactions M&A® aceon Capital Markets (ECM & DCM)? W ai 468 275 610% Transactions STIFEL Transactions STIFEL Transactions HE Depositories Insmance Il]. Diver
Slide 28: Strengthens Fixed Income Capabilities
Strengthens Fixed Income Capabilities STIFEL FINANCIAL KBW = KBW FIG fixed income expertise integrated into Stifel’s substantial fixed income platform = Major growth initiative at Stifel, having hired 65 fixed income sales and trading professionals year- to-date = Stifel’s comprehensive platform has
Slide 29: Leverages Stifel's Global Wealth Management Platform
Leverages Stifel’s Global Wealth Management Platform STIFEL a FINANCIAL Ei Leverages Stifel’s GWM Platform = Leverages a substantial Private Client platform with over 2,000 advisors with over § 136 billion in client assets = Provides enhanced product suite to financial advisors = Enhances fixed inco
Slide 30: Global Wealth Management
STIFEL FINANCIAL Global Wealth Management
Slide 31: Global Wealth Management
STIFEL Global Wealth Management FINANCIAL Provides Securities Brokerage Services and Stifel Bank Products Grown from 600+ financial advisors in 2005 to over 2,000) financial advisors currently Proven organic growth and acquirer of private client business (56 UBS branches, Butler Wick, Ryan Beck) Ret
Slide 32: Global Wealth Management: Opportunity Through Growth
STIFEL Global Wealth Management FINANCIAL Opportunity Through Growth GWM Broker Growth GWM Branch Growth 2.400 x si ee ee a) os 285 20 100 1315 200 196 1168 1.200 us 150 735 ut mm, 100 400 so ° ° 2006 20s 209201020930 ce Account Grow! sets Under Management Grow! GWM it Growth ced a t Gi a MM) 00,000
Slide 33: Global Wealth Management - Stifel Bank & Trust
Global Wealth Management - Stifel Bank & Trust STIFEL FINANCIAL = Acquired FirstService Bank, a St. Louis-based, Missouri-chartered commercial bank, in April 2007 = Stifel Financial became a bank holding company and financial services holding company m= Balancesheet growth with low-risk assets = Fun
Slide 34: Institutional Group
STIFEL FINANCIAL Institutional Group
Slide 35: Institutional Group
STIFEL Institutional Group FINANCIAL review NetRevenven oy S800 CAGR: 20%" a Provides securities brokerage, trading, research, underwriting and corporate advisory services oS 5626 iis ¢ iia ‘$587 al m One of the largest providers of U.S. Equity Research se $507 a 2"4largestEquity trading platformin
Slide 36: Financial Results
STIFEL FINANCIAL Financial Results
Slide 37: Stifel Financial Corp. Results: Three Months Ended September 30, 2012
STIFEL Stifel Financial Corp. Results FINANCIAL Three months ended September 30, 2012 ‘Three Months Ended (8 tn thousands, eacept per share amounts) 902 © 9/30/11 % Change 6/30/12 % Change Net revenues $ 420,080 $ 334,214 25.7% | $ 374,407 12.2% Compensation and benefits 267,652 210,573 27.1% 239,37
Slide 38: Stifel Financial Corp. Results: Nine Months Ended September 30, 2012
STIFEL Stifel Financial Corp. Results FINANCIAL Nine months ended September 30, 2012 Nine Months Ended (8 te thousands, except per share amounts) gpo2 9/30/11 ‘% Change Net revenues $1,194820 $1,059,684 12.8% Compensation and benefits 761,730 671,678 13.4% Nor-comp operating expenses 268,285 294,424
Slide 39: Sources of Revenues
STIFEL Sources of Revenues FINANCIAL % % % in frousands) 980A2 9/30/11 Change 6/30/12 Change 9/30/12 9/30/11 Change Commissions $127,966 $143,243 (10.7%) $127,427 Ot |B 378,696 $$ 497,344 3.4%) Principal transactions 102,979 76650 B4.3% = 91,564 12.5% 310,776 249,250 24.7% Capital raising 45,733 252
Slide 40: Non-Interest Expenses
Non-Interest Expenses STIFEL FINANCIAL Three months ended September 30, 2012 Quarter Ended dh of Net revermes on ob 8 inthowcands) 9p0f2 9/30/11 __Change 6/30/12 Change | 9802 9/30/11 6/30/12 Compensation and benefits 247964 © 193,818 ©2790 219,004 13.206 59.0% 58.0% 585% Transitional pay? 19688 16,
Slide 41: Segment Comparison
Segment Comparison STIFEL FINANCIAL 6 in teousrnds) Net revenues: Global Wealth Management Institutional Group Other Operating contribution: Global Wealth Management Institutional Group Other ®) Quarter Ended Nine Months Ended % % % yysofi2 «9/30/11 Change «6/30/12. Change | 9poq2 9/30/11 Change $ 2
Slide 42: 2012 Legacy Business and Investments
2012 Legacy Busin Investments STIFEL FINANCIAL 2012 Investments include hiring 132 financial advisors and 65 fixed income sales and trading professionals YTD* Reported 6 ix Brousands except per share amounts) Investments -2012 Compar' Legacy + Investments Total 9m2012 @ @ a Net revenues 1,165,461 29
Stifel Financial — Merger or Acquisition (November 2012) on 6ix