Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q3 2015 Earnings Presentation
32 slides from Stifel Financial's earnings presentation, Nov 4, 2015
Slide 1: 3rd Quarter 2015 Financial Results Presentation
3rd Quarter 2015 Financial Results Presentation November 4, 2015
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 "A challenging market environment contributed to a generally slow quarter for investment banking services and fixed income trading, which negatively impacted our results. Our recent acquisitions mitigated the revenue decline in our legacy businesses and also added to our operatin
Slide 4: Market Overview
Market Overview Market Valuations Rates Volatility / Volumes Underwriting Volumes and M&A Municipal U.S. U.S. U.S. 10yr Equity Corporate U.S. ECM U.S. DCM Bond DCM Announced Completed S&P 500 Dow Yield VIX ADV Bond ADV ($) ($) ($) M&A ($) M&A ($) 2015 Q3 1,920 16,285 2.04% 24.5 7,321 20,294 40,343 4
Slide 5: Financial Results
Financial Results 4
Slide 6: Stifel Financial Corp. Results
Stifel Financial Corp. Results Three months ended September 30, 2015 Three Months Ended September 30, 2015 Three Months Ended (1) (2) (2) ($ in thousands, except per share amounts) Non-GAAP Adjustments GAAP 9/30/14 % Change 6/30/15 % Change Total revenues $ 601,371 $ - $ 601,371 $ 536,243 12.1% $ 60
Slide 7: Non-GAAP Legacy vs. New Businesses - Summary
Non-GAAP Legacy vs. New Businesses - Summary New Businesses Contributed $36.7 million to Total Net Revenues in 3Q15 vs. 2Q15 Q3'15 vs Q3'15 vs Q3'15 vs Q3'15 vs Q3'15 vs Q3'15 vs Total Q2'15 Q3'14 Legacy Business Q2'15 Q3'14 New Businesses Q2'15 Q3'14 $'s in 000's Q3 2015 Q2 2015 Q3 2014 Change Chan
Slide 8: Noteworthy Items
Noteworthy Items September 30, 2015 • Non-GAAP net revenues decreased $6.1 million from June 30, 2015 – Challenging market environment: Legacy business down 8% ($42.8 million) – New Businesses added $36.7 million • Additional net revenue items – Net revenues include Stifel Bank $14.7 million gain on
Slide 9: Q3 2015 Non-GAAP Results vs. Estimates
Q3 2015 Non-GAAP Results vs. Estimates Note: In millions, except diluted EPS and share data. 8
Slide 10: Stifel Financial Corp. Results
Stifel Financial Corp. Results Nine months ended September 30, 2015 Nine Months Ended September 30, 2015 Nine Months Ended (1) (2) ($ in thousands, except per share amounts) Non-GAAP Adjustments GAAP 9/30/14 % Change Total revenues $ 1,783,221 $ - $ 1,783,221 $ 1,664,132 7.2% Interest expense 30,170
Slide 11: Source of Revenues
Source of Revenues Three Months Ended Nine Months Ended % % % ($ in thousands) 9/30/15 9/30/14 Change 6/30/15 Change 9/30/15 9/30/14 Change Commissions $ 194,083 $ 167,601 15.8% $ 184,866 5.0% $ 562,249 $ 510,070 10.2% Principal transactions 95,593 94,828 0.8% 86,597 10.4% 281,794 318,312 (11.5%) Br
Slide 12: Brokerage & Investment Banking Revenues
Brokerage & Investment Banking Revenues Three Months Ended Nine Months Ended ($ in thousands) 9/30/15 9/30/14 % Change 6/30/15 % Change 9/30/15 9/30/14 % Change Global Wealth Management $ 169,319 $ 157,550 7.5% $ 158,803 6.6% $ 486,342 $ 478,389 1.7% Institutional Group Equity brokerage 59,769 57,40
Slide 13: Non-GAAP Non-Interest Expenses
Non-GAAP Non-Interest Expenses Three months ended September 30, 2015 Three Months Ended % of Net revenues (1) (1) ($ in thousands) 9/30/15 9/30/14 % Change 6/30/15 % Change 9/30/15 9/30/14 6/30/15 Net revenues $ 591,607 $ 524,681 12.8% $ 597,751 (1.0%) 100.0% 100.0% 100.0% Compensation and benefits
Slide 14: Non-GAAP Non-Interest Expenses
Non-GAAP Non-Interest Expenses Nine months ended September 30, 2015 Nine Months Ended % of Net revenues (1) (1) ($ in thousands) 9/30/15 9/30/14 % Change 9/30/15 9/30/14 Net revenues $ 1,753,051 $ 1,634,580 7.2% 100.0% 100.0% Compensation and benefits 1,027,452 946,973 8.5% 58.6% 58.0% Transitional
Slide 15: Non-GAAP Segment Comparison
Non-GAAP Segment Comparison Three Months Ended Nine Months Ended % % % ($ in thousands) 9/30/15 9/30/14 Change 6/30/15 Change 9/30/15 9/30/14 Change Net revenues: Global Wealth Management $ 357,306 $ 317,241 12.6% $ 343,382 4.1% $ 1,030,097 $ 921,671 11.8% Institutional Group 232,125 215,160 7.9% 25
Slide 16: Global Wealth Management
Global Wealth Management Three Months Ended Nine Months Ended ($ in thousands) 9/30/15 9/30/14 % Change 6/30/15 % Change 9/30/15 9/30/14 % Change Commi s s i ons $ 134,476 $ 113,177 18.8% $ 125,121 7.5% $ 375,811 $ 338,378 11.1% Pri nci pa l tra ns a ctions 34,843 44,373 (21.5%) 33,682 3.4% 110,531
Slide 17: Stifel Bank & Trust
Stifel Bank & Trust (an operating unit of GWM) As of 9/30/15 As of 9/30/14 As of 6/30/15 % Change Actual ($) Yield (%) Actual ($) Yield (%) Actual ($) Yield (%) Q315 v Q314 Q315 v Q215 Assets Cash $ 22,173 0.26 $ 142,444 0.39 $ 116,387 0.19 (84.4) (80.9) (1) Investment securities 1,749,590 2.30 2,72
Slide 18: Institutional Group
Institutional Group Three Months Ended Nine Months Ended ($ in thousands) 9/30/15 9/30/14 % Change 6/30/15 % Change 9/30/15 9/30/14 % Change Net revenues $ 232,125 $ 215,160 7.9% $ 258,538 (10.2%) $ 729,269 $ 720,849 1.2% Compens ati on a nd benefi ts 143,911 131,589 9.4% 160,077 (10.1%) 453,399 443
Slide 19: Acquisition Updates
Acquisition Updates 18
Slide 20: Sterne Agee Integration Update
Sterne Agee Integration Update Updated Economic Investment Highlights Purchase Price 150.0 Fixed Income integration complete Private Client conversion and integration complete Income Statement Expense Retention 58.3 Trust Company integration and Asset Management Restructuring one time 25.0 migration
Slide 21: Barclays Update
Barclays Update October 30, 2015 Advisors 95 - 105 advisors & $25B in AUM AUM Approximately $1.2 billion of on-balance sheet assets Balance Sheet Approximately $900 million of client loans held through Barclays clearing firm Approximately $2.0 billion of client cash Revenue¹ $210 - $230 million 20%
Slide 22: Non-GAAP Deal Integration Costs
Non-GAAP Deal Integration Costs Three months ended 6/30/2015 9/30/15 Estimate ($ in thousands) Actual Actual Estimate 12/31/15 3/31/16 6/30/16 9/30/16 Existing acquisitions Sterne Agee - Stock-based compensation - 1,000 1,000 - - - - Sterne Agee - Employee notes - 10,000 - - - - - Sterne Agee - Deal
Slide 23: Financial Condition
Financial Condition 22
Slide 24: Capital Structure
Capital Structure (in thousands, except ratios) As of As of ($ in thousands) 9/30/15 9/30/14 6/30/15 Total Assets $ 9,359,179 $ 9,326,117 $10,139,542 Stockholders' Equity 2,493,090 2,238,549 2,520,251 4.250% senior notes, due 2024 $ 300,000 $ 300,000 $ 300,000 5.375% senior notes, due 2022 150,000 1
Slide 25: Other Financial Data
Other Financial Data As of As of 9/30/15 9/30/14 % Change 6/30/15 % Change Total assets (000s): Stifel Nicolaus & Stifel Financial $ 4,740,086 $ 4,348,923 9.0% $ 5,353,294 (11.5%) Stifel Bank 4,619,093 4,977,194 (7.2%) 4,786,248 (3.5%) Total assets 9,359,179 $ 9,326,117 0.4% 10,139,542 (7.7%) Total
Slide 26: Financial Performance Trends
Financial Performance Trends 25
Slide 27: Key Financial Targets
Key Financial Targets Stifel is Positioned to Significantly Benefit From 3 Key Factors 1. Integrating Acquisitions: Sterne Agee and Barclays 2. Optimizing Current Capital Base, and 3. Poised for Revenue Growth in a Rising Interest Rate Environment Key Performance Indicator 2014 YTD 2015 3Q 2015 Actu
Slide 28: Growth Drivers
Growth Drivers 27
Slide 29: Optimizing Capital Through Growth
Optimizing Capital Through Growth ($ in millions) Stifel has resumed growth and has the potential to further leverage existing capital base Pause (1) (2) Note: (1) Total asset growth expected to occur by 12-31-15 is comprised of approximately $2 billion from the Barclays transaction and $1 billion o
Slide 30: Impact of a Rising Interest Rate Environment
Impact of a Rising Interest Rate Environment Projected Increase in Annual Pre-Tax Earnings from a 100 BPS Rise in Short-Term Rates ($ millions; as of September 30, 2015) Key Assumptions: ~$40mm ~$66MM (~23%)* • Based on static balances as of Barclays - ~$8mm September 30, 2015 and an Barclays - ~$16
Slide 31: Operating Model Potential
Operating Model Potential Stifel is Positioned to Significantly Benefit From 3 Key Factors Barclays + 4th Fully Potential 100 bps Rate Incremental Quarter Leveraged Increase Growth Growth¹ Earnings Annualized EPS $0.35 to $0.45 $1.25 $0.55 to to $1.55 $0.65 $0.35 to $0.45 Note: (1) This represents t
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