Stifel Financial Corporation · NYSE:SF
Stifel Financial — JMP Conference (September 2015)
39 slides from Stifel Financial's conference presentation, September 2015
Slide 1: Stifel Financial Corp.
Stifel Financial Corp. September 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 Core Net Revenue - $2,213 million (2014) Global Wealth Management (GWM) Institutional Group (IG) Net Revenue - $1,233 million (2014) Net Revenue - $994 million (2014) Private Client Equity & Fixed Income Capital
Slide 5: Leading broker-dealer providing wealth management and institutional services
Leading broker-dealer providing wealth management and institutional services to consumers and companies Stifel’s Differentiated Value Proposition: Growth, Scale and Stability Bulge Bracket Boutique Size / scale Firm focus Large distribution Good research Size / scale Trading Growth inv
Slide 6: Well-diversified, low risk business model with balanced retail and institutional exposure
Well-diversified, low risk business model with balanced retail and institutional exposure Unburdened by capital constraints Low leverage business model and conservative risk management Limited balance sheet risk Stable wealth management business is augmented by profitable and growing institu
Slide 7: Demonstrated ability to grow through all market environments
Demonstrated ability to grow through all market environments while maintaining solid profitability Non-GAAP Net Revenues ($MM) Non-GAAP Net Income ($MM) CAGR: 22% CAGR: 23% Financial Crisis Financial Crisis 7
Slide 8: Strategic Vision
Strategic Vision
Slide 9: To build the premier wealth management and investment banking firm
Strategic Vision To build the 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 2,800 $22B in total $4.8B in assets Experienced Compr
Slide 10: How We Look at Strategic Opportunities
How We Look at Strategic Opportunities Strategic combinations need to be accretive to: Shareholders Expected revenue and EPS growth in a reasonable timeframe Associates Add additional capabilities and new geographies Clients Be more relevant and expand product offerings New partners Retain a
Slide 11: Significant Growth
Significant Growth 1500% 2015 Barclays Wealth & 1300% 1466% Investment Management (Pending), 1100% Sterne Agee, 274% 2014 Sidoti Joint Venture, 900% De La Rosa, Leumi Partners 700% Oriel Securities, Collaboration Agreement 121% 2013 1919 Investment 500% Acacia Bank & Counsel, 300% 2013 Merchant Capi
Slide 12: A Powerful Combination of Breadth and Depth
Stifel to Acquire Barclays' Wealth and Investment Management, Americas A Powerful Combination of Breadth and Depth Barclays Wealth Americas brings a highly focused organization with deep, high conviction, investment capabilities Stifel brings significant breadth of product and service capabilities t
Slide 13: Combining Breadth and Depth
Combining Breadth and Depth Barclays - Depth Stifel - Breadth ● 12-office footprint covers all major wealth ● National presence in over 340 offices centers in the U.S. ● Broad Investment Advisory Platform offers new ● Full suite of high-conviction investment investment managers and strategies to Bar
Slide 14: Segment Overview – Global Wealth Management
Segment Overview – Global Wealth Management
Slide 15: Global Wealth Management
Global Wealth Management Acquisitions and hiring have grown GWM to a $1.3 billion segment Customized investment advisory and trust services November 2014 Private Client Private Client – 350 financial advisors and support 56 UBS Branches Revenue production has exceeded expectations October
Slide 16: Global Wealth Management
Global Wealth Management Provides Securities Brokerage Services and Stifel Bank Products Overview National Presence Grown from 600+ financial advisors in 2005 to over 2,800(1) financial advisors currently Proven organic growth and acquirer of private client business Individual investors are ge
Slide 17: Global Wealth Management – Key Operating Metrics
Global Wealth Management Key Operating Metrics Financial Advisors(1) Branches Accounts Total Client Assets(2) ($MM) (1) Includes Independent Contractors. (2) Q2 2015 total client assets does not include Sterne Agee client assets. 17
Slide 18: Stifel Bank and Trust
Stifel Bank and Trust Overview Strength of Brokerage Position Acquired FirstService Bank, a St. Louis-based, Offers banking products (securities based loans and Missouri-chartered commercial bank, in April 2007 mortgage loans) within the GWM client base, including establishing trust services S
Slide 19: Growing Asset Management Capabilities
Growing Asset Management Capabilities Total Assets: $22.68 Billion¹ Assets¹ Location Baltimore, New York, $10.1 Billion Cincinnati, Philadelphia Chicago, Milwaukee, $9.2 Billion St. Louis $2.2 Billion Baltimore, MD $850 Million Florham Park, NJ $330 Million San Francisco, CA ¹Assets as of June 30, 2
Slide 20: Segment Overview – Institutional Group
Segment Overview – Institutional Group
Slide 21: Building Scale and Capabilities into a $1.0 billion Segment
Building Scale and Capabilities into a $1.0 billion Segment Growth Focused Investment Banking, Research, Sales and Trading July 2010 Equities Core of our Institutional sales, trading and research group December 2005 Highly complementary fixed income platforms June 2015 Expands Public
Slide 22: Institutional Group
Institutional Group Overview Net Revenues ($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 23: Institutional Group – Equity Sales and Trading
Institutional Group – Equity Sales and Trading Powerful Platform Spanning North America and Europe Institutional Equity Sales Equity Trading 80 person sales force, commission based 53 sales traders located in Experts in small and mid cap growth and value Team based sales model with 2-4 sales
Slide 24: 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 $500 billion 69-person Fixed Income Research and Strategy Group Other, 9% 8 perso
Slide 25: Institutional Group – Public Finance
Institutional Group – Public Finance Overview Stifel has ranked in the top ten nationally for senior Specialty sectors: managed negotiated underwritings for the past three Education years, and Stifel has ranked #1nationally for senior Local Government/Municipal managed K-12 negotiated underw
Slide 26: Investment Banking
Investment Banking Accomplished U.S. Equity Underwriting Franchise – All Equity Transactions All Managed Equity Deals Since 2010 Bookrun Equity Deals Since 2010 ($ in billions) # of $ ($ in billions) # of $ Rank Firm Deals Volume Rank Firm Deals Volume 1 Bank of America Merrill Lynch 1,293 $722.5 1
Slide 27: Institutional Group – Research
Institutional Group – Research Largest U.S. Equity Research Platform U.S. Equity Research Coverage (1) Stifel Research Highlights Companies Under Coverage Rank Firm Overall Mid Cap Small Cap Largest provider of U.S. Equity Research 1 Stifel/KBW 1388 488 438 2 BofA Merrill Lynch 1139 438 155 3 JPMo
Slide 28: Financial Overview
Financial Overview
Slide 29: Stifel Financial Results
Stifel Financial Results Six months ended June 30, 2015 Six Months Ended June 30, 2015 Six Months Ended (1) ($ in thousands, except per share amounts) Non-GAAP Adjustments GAAP 6/30/14 (2) % Change Total revenues $ 1,181,850 $ - $ 1,181,850 $ 1,127,890 4.8% Interest expense 20,405 2,712 23,117 17,99
Slide 30: Sources of Revenues
Sources of Revenues Three Months Ended Six Months Ended % % % ($ in thousands) 6/30/15 6/30/14 Change 3/31/15 Change 6/30/15 6/30/14 Change Commissions $ 183,770 $ 164,371 11.8% $ 180,302 1.9% $ 364,073 $ 336,614 8.2% Principal transactions 85,543 110,717 (22.7%) 100,205 (14.6%) 186,275 221,399 (15.
Slide 31: Brokerage & Investment Banking Revenues
Brokerage & Investment Banking Revenues Three Months Ended Six Months Ended ($ in thousands) 6/30/15 6/30/14 % Change 3/31/15 % Change 6/30/15 6/30/14 % Change Global Wealth Management $ 158,803 $ 160,540 (1.1%) $ 157,995 0.5% $ 317,024 $ 320,840 (1.2%) Institutional Group Equity brokerage 58,551 60
Slide 32: Non-GAAP Non-Interest Expenses
Non-GAAP Non-Interest Expenses Six months ended June 30, 2015 Six Months Ended % of Net revenues (1) (1) ($ in thousands) 6/30/15 6/30/14 % Change 6/30/15 6/30/14 Net revenues $ 1,161,445 $ 1,109,899 4.6% 100.0% 100.0% Compensation and benefits 674,693 649,633 3.9% 58.1% 58.6% Transitional pay (2) 4
Slide 33: Non-GAAP Segment Comparison
Non-GAAP Segment Comparison Three and six months ended June 30, 2015 Three Months Ended Six Months Ended % % % ($ in thousands) 6/30/15 6/30/14 Change 3/31/15 Change 6/30/15 6/30/14 Change Net revenues: Global Wealth Management $ 343,382 $ 307,247 11.8% $ 329,410 4.2% $ 672,792 $ 604,430 11.3% Insti
Slide 34: Global Wealth Management
Global Wealth Management Three Months Ended Six Months Ended ($ in thousands) 6/30/15 6/30/14 % Change 3/31/15 % Change 6/30/15 6/30/14 % Change Commi s s i ons $ 125,121 $ 112,205 11.5% $ 116,214 7.7% $ 241,335 $ 225,202 7.2% Pri nci pa l tra ns a ctions 33,682 48,335 (30.3%) 41,781 (19.4%) 75,689
Slide 35: Stifel Bank & Trust
Stifel Bank & Trust An Operating Unit of GWM As of 6/30/15 As of 6/30/14 As of 3/31/15 % Change Actual ($) Yield (%) Actual ($) Yield (%) Actual ($) Yield (%) Q215 v Q214 Q215 v Q115 Assets Cash 116,387 0.19 132,843 0.37 48,131 0.24 (12.4) 141.8 (1) Investment securities 1,907,282 2.26 2,915,236 2.4
Slide 36: Institutional Group
Institutional Group Three Months Ended Six Months Ended ($ in thousands) 6/30/15 6/30/14 % Change 3/31/15 % Change 6/30/15 6/30/14 % Change Net revenues $ 258,538 $ 255,670 1.1% $ 238,607 8.4% $ 497,145 $ 505,647 (1.7%) Compens a tion a nd benefi ts 160,077 157,500 1.6% 149,411 7.1% 309,488 311,734
Slide 37: Capital Structure
Capital Structure As of June 30, 2015 As of As of ($ in thousands) 6/30/15 6/30/14 3/31/15 Total Assets $10,139,542 $ 9,575,012 $ 9,373,137 Stockholders' Equity 2,520,251 2,173,191 2,363,244 4.250% senior notes, due 2024 $ 300,000 $ - $ 300,000 5.375% senior notes, due 2022 150,000 150,000 150,000 6
Slide 38: Other Financial Data
Other Financial Data As of As of 6/30/15 6/30/14 % Change 3/31/15 % Change Total assets (000s): Stifel Nicolaus & Stifel Financial $ 5,353,294 $ 4,535,016 18.0% $ 4,083,788 31.1% Stifel Bank 4,786,248 5,039,996 (5.0%) 5,289,349 (9.5%) Total assets 10,139,542 $ 9,575,012 5.9% 9,373,137 8.2% Total sha
Slide 39: Non-GAAP Deal Integration Expenses
Non-GAAP Deal Integration Expenses Three months ended 6/30/15 Estimate ($ in thousands) Actual Estimate 9/30/15 12/31/15 3/31/16 6/30/16 Existing acquisitions Sterne Agee - Stock-based compensation 22,837 32,000 4,000 Duplicative operating expenses: Acacia Federal Savings Bank - - - - - - De La Rosa