Stifel Financial Corporation · NYSE:SF
Stifel Financial — Investor Presentation (December 2015)
51 slides from Stifel Financial's investor presentation, December 2015
Slide 1: Stifel Financial Corp.
Stifel Financial Corp. December 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: Stifel Overview
Stifel Overview
Slide 4: Stifel – Premier Investment Bank and Full-Service Investment Firm
Stifel – Premier Investment Bank and Full-Service Investment Firm Stifel at a Glance Non-GAAP Net Revenue - $1,753 million (Nine Months 2015) Global Wealth Management (GWM) Institutional Group (IG) Net Revenue - $1,030 million (Nine Months 2015) Net Revenue - $729 million (Nine Months 2015) Privat
Slide 5: Leading broker-dealer providing wealth management and institutional services
Leading broker-dealer providing wealth management and institutional services to consumers and companies Stifel’s Differentiated Value Proposition: Growth, Scale and Stability Bulge Bracket Boutique Size / scale Firm focus Large distribution Good research Size / scale Trading Growth inv
Slide 6: Well-diversified, low risk business model with balanced retail and institutional exposure
Well-diversified, low risk business model with balanced retail and institutional exposure Unburdened by capital constraints Low leverage business model and conservative risk management Limited balance sheet risk Stable wealth management business is augmented by profitable and growing institu
Slide 7: A Stable Track Record Through Multiple Business Cycles
A Stable Track Record Through Multiple Business Cycles Non-GAAP Net Revenues ($MM) Non-GAAP Net Income ($MM) CAGR: 22% CAGR: 23% Financial Crisis Financial Crisis Note: CAGR reflects years 2006 to 2014. 7
Slide 8: Our Strategy
Our Strategy
Slide 9: Strategic Vision
Strategic Vision To build a premier wealth management and investment banking firm Global Wealth Management Institutional Private Asset Bank Equities Fixed Investment Research Client Management Sales + Income Banking Trading Sales + Trading Over 2,900 $22B in total $4.6B in assets Experienced Compreh
Slide 10: Significant Growth
Significant Growth 300% 2015 Eaton Partners (Pending) 200% +157% Barclays Wealth & Investment Management, +144% Sterne Agee, 100% 2014 Sidoti Joint Venture, +81% De La Rosa, Leumi Partners +53% Oriel Securities, Collaboration Agreement 0% 2013 1919 Investment -34% Acacia Bank & Counsel, 2013 Merchan
Slide 11: Our Growth Initiatives and Acquisition Criteria
Our Growth Initiatives and Acquisition Criteria Our Focus: 1) Take advantage of opportunities 2) Emphasize quality over quantity in all of our endeavors Growth Initiatives Acquisition Criteria Attract and retain high-quality talent Strategic combinations need to be accretive to: Further expand o
Slide 12: Acquisition Updates
Acquisition Updates
Slide 13: Sterne Agee
Sterne Agee Transaction Strategic Rationale Announced February 23, 2015 Accretive to Stifel Closed June 5, 2015 Leverages both the wealth management and institutional platforms Transaction value of ~$150M, issued approximately 1.4 million shares of Significantly increases financial advis
Slide 14: Barclays’ Wealth & Investment Management, Americas
Barclays’ Wealth & Investment Management, Americas Transaction Strategic Rationale Accretive to Stifel Announced June 8, 2015 Combination of breadth and depth Closed Dec. 4, 2015 • Barclays brings a highly focused organization with Investment will match the deep, high-conviction investment
Slide 15: Eaton Partners, LLC
Eaton Partners, LLC Transaction Strategic Rationale Expands Stifel’s core advisory business and leverages Announced November 9, 2015 direct placements with Stifel’s high net worth platform Expected closing January 2016 Brings together both firms middle market clients Transaction terms not
Slide 16: Financial Performance Trends and Growth Drivers
Financial Performance Trends and Growth Drivers
Slide 17: 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 Note: (1) Total asset growth expected to occur by 12-31-15 is comprised of approximately $2 billion from the Barclays transaction and $1 billion of organic
Slide 18: Impact of a Rising Interest Rate Environment
Impact of a Rising Interest Rate Environment Projected Increase in Annual Pre-Tax Earnings from a 100 BPS Rise in Short-Term Rates ($ 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 19: 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 $0.45 Note: (1) This represents t
Slide 20: Key Financial Targets
Key Financial Targets Stifel is Positioned to Significantly Benefit From 3 Key Factors 1. Integrating Acquisitions: Sterne Agee and Barclays 2. Optimizing Current Capital Base, and 3. Poised for Revenue Growth in a Rising Interest Rate Environment Key Performance Indicator 2014 YTD 2015 3Q 2015 Actu
Slide 21: Financial Overview
Financial Overview
Slide 22: Selected Financial Highlights
Selected Financial Highlights Non-GAAP Net Revenues ($MM)(1) Non-GAAP Net Income ($MM)(1) Total Equity ($MM) (1) CAGR: 22% CAGR: 23% CAGR: 32% Total Client Assets(1) (2) ($BN) Book Value Per Share(1) (3) CAGR: 24% CAGR: 19% (1) CAGR reflects years 2006 through 2014 for income statement metrics and y
Slide 23: Appendix
Appendix
Slide 24: Global Wealth Management
Global Wealth Management
Slide 25: Global Wealth Management (GWM)
Global Wealth Management (GWM) Provides Securities Brokerage Services and Stifel Bank Products Overview National Presence Grown from 600+ financial advisors in 2005 to over 2,800(1) financial advisors currently Proven organic growth and acquirer of private client business Strategy of recruitin
Slide 26: Building Scale and Capabilities into a $1.4B Revenue Segment
Building Scale and Capabilities into a $1.4B Revenue Segment… ~100 advisors managing over $20B in AUM December 2015 Customized investment advisory and trust services November 2014 Private Client 56 UBS Branches Private Client – 350 financial advisors and support Revenue production has exc
Slide 27: GWM - Private Client Group
GWM - Private Client Group Key Operating Metrics Financial Advisors(1) Branches Accounts Total Client Assets ($MM) (1) Includes Independent Contractors. 27
Slide 28: GWM - Stifel Bank & Trust
GWM - Stifel Bank & Trust Overview Key Statistics (9/30/15) Acquired FirstService Bank, a St. Louis-based, Total Assets $4,618,323 Missouri-chartered commercial bank, in April 2007 Total Deposits 4,121,591 Stifel Financial became a bank holding company and Total Equity 356,897 financial services
Slide 29: Growing Asset Management Capabilities
Growing Asset Management Capabilities Total Assets: $21.8 Billion¹ Assets¹ Location Baltimore, New York, $9.5 Billion Cincinnati, Philadelphia Chicago, Milwaukee, $9.0 Billion St. Louis $2.1 Billion Baltimore, MD $851 Million Florham Park, NJ $329 Million San Francisco, CA ¹Assets as of September 30
Slide 30: Institutional Group
Institutional Group
Slide 31: Institutional Group
Institutional Group Overview Net Revenues ($MM)(2)(3) Provides securities brokerage, trading, research, underwriting and corporate advisory services Largest provider of U.S. Equity Research 2nd largest Equity trading platform in the U.S. outside of the Bulge Bracket(1) Full-service Investmen
Slide 32: Building Scale and Capabilities into a $1.0B Revenue Segment
Building Scale and Capabilities into a $1.0B Revenue Segment… Growth Focused Investment Banking, Research, Sales and Trading Equities July 2010 Core of our Institutional sales, trading and research group December 2005 Highly complementary fixed income platforms June 2015 Expands Publ
Slide 33: Institutional Group – Investment Banking
Institutional Group – Investment Banking Accomplished U.S. Equity Underwriting Franchise – All Equity Transactions All Managed Equity Deals Since 2010 Bookrun Equity Deals Since 2010 ($ in billions) # of $ ($ in billions) # of $ Rank Firm Deals Volume Rank Firm Deals Volume 1 Bank of America Merrill
Slide 34: Institutional Group – Research
Institutional Group – Research Largest U.S. Equity Research Platform U.S. Equity Research Coverage (1) Stifel Research Highlights Companies Under Coverage Rank Firm Overall Mid Cap Small Cap 1 Stifel/KBW 1,208 483 491 Largest provider of U.S. Equity Research 2 BofA Merrill Lynch 1,126 426 188 3 JP
Slide 35: Institutional Group – Equity Sales and Trading
Institutional Group – Equity Sales and Trading Powerful Platform Spanning North America and Europe Institutional Equity Sales Equity Trading 84 person sales force, commission based 28 sales traders located in Experts in small- and mid-cap growth and value Team based sales model with 2-4 sale
Slide 36: Institutional Group – Fixed Income Capital Markets
Institutional Group – Fixed Income Capital Markets Overview Client Distribution (1)(2) Comprehensive platform Government, Broker/Dealer 3% 96 traders with annual client trade volume 6% Insurance, 7% approaching $500 billion 69-person Fixed Income Research and Strategy Group Other, 9% Widespr
Slide 37: Institutional Group – Public Finance
Institutional Group – Public Finance Overview Stifel has ranked in the top ten nationally for senior Specialty sectors: managed negotiated underwritings for the past three Education years, and Stifel has ranked #1nationally for senior Local Government/Municipal managed K-12 negotiated underw
Slide 38: Financial Information
Financial Information
Slide 39: Stifel Financial Results
Stifel Financial Results Three months ended September 30, 2015 Three Months Ended September 30, 2015 Three Months Ended (1) (2) ($ in thousands, except per share amounts) Non-GAAP Adjustments GAAP 9/30/14 % Change 6/30/15 (2) % Change Total revenues $ 601,371 $ - $ 601,371 $ 536,243 12.1% $ 607,850
Slide 40: Stifel Financial Results
Stifel Financial Results Nine months ended September 30, 2015 Nine Months Ended September 30, 2015 Nine Months Ended (1) ($ in thousands, except per share amounts) Non-GAAP Adjustments GAAP 9/30/14(2) % Change Total revenues $ 1,783,221 $ - $ 1,783,221 $ 1,664,132 7.2% Interest expense 30,170 2,743
Slide 41: Sources of Revenues
Sources of Revenues Year Ended December 31, Nine Months Ended September 30, ($ in thousands) 2012 2013 2014 2014 2015 Commissions $ 518,803 $ 640,287 $ 674,418 $ 510,070 $ 562,249 Principal transactions 380,160 408,954 409,823 318,312 281,794 Brokerage revenues 898,963 1,049,241 1,084,241 828,382 84
Slide 42: Brokerage and Investment Banking Revenues
Brokerage and 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,
Slide 43: 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 44: 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% (2) Transitio
Slide 45: Non-GAAP Segment Comparison
Non-GAAP Segment Comparison Year Ended December 31, Nine Months Ended September 30, ($ in thousands) 2012 2013 2014 2014 2015 Net revenues: Global Wealth Management $ 991,597 $ 1,117,179 $ 1,232,651 $ 921,671 $ 1,030,097 Institutional Group 604,654 861,158 993,581 720,849 729,269 Other (2,138) 3 (13
Slide 46: 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 47: 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 2,720,
Slide 48: 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 a tion a nd benefi ts 143,911 131,589 9.4% 160,077 (10.1%) 453,399 443
Slide 49: Capital Structure
Capital Structure 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 150,000 150,000 150,000 6.70% senior no
Slide 50: 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 51: Non-GAAP Deal Integration Expenses
Non-GAAP Deal Integration Expenses 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 - D
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