Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q3 2008 Earnings Presentation
25 slides from Stifel Financial's earnings presentation, Nov 3, 2008
Slide 1: 3rd Quarter 2008 Earnings Conference Call
Stifel Financial Corp. 3rd Quarter 2008 Fiscal Year Earnings Conference Call November 3, 2008
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: 3rd Quarter 2008 Business Highlights
3rd Quarter 2008 Business Highlights Record Net Revenues of $218.9 million, up 20% from 3Q07. Revenue growth in PCG, ECM and Stifel Bank was offset by Investment Banking weakness GAAP net income of $12.8 million, or $0.46 per diluted share, a 53% increase over the $0.30 per diluted share reported in
Slide 4: YTD Highlights
YTD Highlights Record nine month revenues of $639.4 million, a 16% increase compared to 2007. PCG record revenue, up 11%, FICM record revenue, up 185%. GAAP net income of $39.5 million, or $1.44 per diluted share, a 115% increase for the nine months as compared to 2007. Book value per common share i
Slide 5: Summary Income Statement
Summary Income Statement Core Net Revenues GAAP Net Revenues
Slide 6: Growth Strategy
Growth Strategy Disruption in Private Client Market presents significant opportunities Wachovia+WFC, Merrill+BOA, Lehman Bros. bankruptcy, and the collapse of Bear Stearns has caused thousands of Financial Advisors to ponder their future. The Wall Street principal business model under scrutiny Delev
Slide 7: 2008 Growth by Business Unit
2008 Growth Total 2008 As of Business Units Additions 9/30/2008 Private Client Group Financial Advisors* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 1,228 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 194 Equity
Slide 8: Market Turmoil = Opportunity
Market Turmoil=Oportunity Stifel has one of the fastest growing Private Wealth Management businesses in the industry. Stifel Equity Research is 6th largest research department in the U.S. and the 2nd largest provider of small cap coverage. (1) (1) Source: StarMine
Slide 9: Source of Revenues
Source of Revenues ($ in thousands) Revenues Commissions Princip al transactions Investment banking Asset management and service fees Other Total operating revenues Interest revenue Total revenues Less: Interest emense Netrevenues Three Months Ended Nine Months Ended wornet sorter sorter sorter % %
Slide 10: Principal Transactions
Principal Transactions Three Months Ended Nine Months Ended %ot %ot % %ot %ot % (8 in thousands) 9130/08 _ Total 9430/07 Total Change | 9/30/08 _ Total 9/30/07 Total Change. Principal transactions Taxable Debt $ 39,197 575% $ 17,221 543% 128% |$ 1246g6 62.1% $ 53973 589% 131% Muni Debt 10993 16.1% 5
Slide 11: Volatility of Investment Account
Volatility of Investment Account
Slide 12: 2008 YTD Segment Comparison (excluding Acquisitions)
2008 YTD Segment Comparison (excluding Acquisitions) Balanced business model facilitates growth during volatile markets Stable PCG business is augmented by profitable and growing Capital Markets.
Slide 13: Segment Comparison excluding acquisitions
Segment Comparison excluding acquisitions Total net revenues increased 20% despite unprecedented equity & credit market dislocations. Revenues increased in each vertical and margins improved in 3 out of 4 operating segments
Slide 14: Private Client Group - Income Statement
Private Client Group - Income Statement Strong commission & fee growth was offset by a weaker syndicate calendar Margins were modestly lower due to the opening of 21 new offices in 2008
Slide 15: New Branches
New Branches (S in millions) Trailing 12% Proforma Net Revenue $10.3 100% $39.1 100% Comp and Benefits $74 72% $21.9 56% Operating Expenses $3.7 36% $6.3 18% Preliminary Contribution (Loss) ($0.8) 2% $10.9 28% One time Expenses $3.1 30% $0.0 0% Transition Pay $1.4 = 14% $4.7 12% Contribution (Loss)
Slide 16: Equity Capital Markets - Income Statement
Equity Capital Markets - Income Statement Record quarterly flow business (cash equities) Variable cost business model leaves room for continued margin expansion
Slide 17: Fixed Income Capital Markets - Income Statement
Fixed Income Capital Markets - Income Statement Volatility, expanded distribution and client focused model drive record results Opened more than 375 new institutional accounts YTD in 2008
Slide 18: Stifel Bank - Income Statement
Stifel Bank - Income Statement Continued build-out to serve Stifel Nicolaus clients and potential clients.
Slide 19: Reconciliation of GAAP to Core Earnings
Reconciliation of GAAP to Core Earnings
Slide 20: GAAP to Core Earnings
GAAP to Core Earnings % Change Quarters Ended —_|% Change YTD ($ in thousands) 9/30/08 _ 9/30/07 9/30/08 —_9/30/07 Core Net Income $ 16,714 $ 14,266 1%] $ 51,352 $ 46,297 Acquisiton Related Expenses-net of fax G,937) (6,208) -37%| (11,896) (27,962) GAAP Net Income $ 12,777 $ 8,058 59%| $ 39,456 $ 18
Slide 21: Income Statement Impact
Income Statement Impact Actual Estimated Q1.2008 Q4 2008 Acquisiton Related Expenses 2009 (8 in thousands) LM Capital Markets Acquisition $ 6,306 $ 6,380 $ 6476 $ 19162 $ 6400 $ 25,562 z Ryan Beck Acquisition 325 134 30 489 100 589 E Pre Tax Acquisition Charges ........ 6,631 6,514 6,506 19,651 6,50
Slide 22: Balance Sheet Graphs
Balance Sheet Graphs Total Assets Total Capitalization Capitalization Ratio Book Value Per Share
Slide 23: Capital Structure
Capital Structure (8 in thousands) Total Assets § 2,041,425 Stockholders’ Equity $ 565,387 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 24: Other Financial Data
Other Financial Data Bank Assets SN & SF Assets Total Assets (00's) Stockholders Equity (00's) Book value Per Share Financial Advis ors* Full Time Employees Locations “Includes all etal Financial Advisors. $327,279 $301,511 $229,231 $1,714,146 $1,384,326 $1,270,210 $2,041,425 $1,685,837 $1,499,441 $
Slide 25: Q&A - Questions and Answers
Q&A - Questions and Answers