Stifel Financial Corporation · NYSE:SF
Stifel Financial — Investor Presentation (June 2012)
38 slides from Stifel Financial's investor presentation, Jun 7, 2012
Slide 1: Stifel Financial Investor Presentation
Stifel Financial Investor Presentation June 2012
Slide 2: Disclaimer
Disclaimer Table of Contents 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 op
Slide 3: I. Market Overview
STIFEL FINANCIAL I. Market Overview
Slide 4: Indices Since 1/1/07 to 5/31/12
Indices Since 1/1/07 to 5/31/12 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% 2007 2008 2009 2010 2011 2012 Nasdaq Dow S&P 500 Russell 2000 2007 2008 2009 2010 2011 Q1 2012 Q2 QTD 2012 YTD 2007 - Current Nasdaq 9.8% -40.5% 43.9% 16.9% -1.8% 18.7% -11.2% 8.5% 20.3% Dow 6.4% -33.8% 18.8% 11.0%
Slide 5: Interest Rate Environment
Interest Rate Environment 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2005 2006 2007 2008 2009 2010 2011 2012 10 Year Fed Funds 2007 2008 2009 2010 2011 Current* 2 Year 3.05% 0.76% 1.14% 0.61% 0.25% 0.27% 5 Year 3.45% 1.55% 2.69% 2.01% 0.83% 0.67% 10 Year 4.04% 2.25% 3.85% 3.30%
Slide 6: Europe
Europe Headline Driven Market 6
Slide 7: Where Has All the Volume Gone?
Where Has All the Volume Gone? 2012 U.S. equity volume is on pace to decline for the third consecutive calendar year, following a decade of double-digit growth. This has only occurred in two other periods since 1900: 1930 – 1932: Great Depression 1940 – 1942: World War II Key drivers of th
Slide 8: What Drives Equity Volume?
What Drives Equity Volume? In the short-run, trading activity is highly correlated with volatility. Particularly in range-bound markets ADV to VIX correlation = 70% U.S. Equity ADV vs. VIX 16 70 U.S. Equity 30 DMA ADV (Billions, left scale) 14 60 VIX 30 DMA (right scale) 12 50 10 40 8 30 6 20
Slide 9: Equity Volume Has Round-Tripped to 2007 Levels
Equity Volume Has Round-Tripped to 2007 Levels ADV is down 30% from highs. What has changed structurally? HFT activity down 50-60% Bank/hedge fund deleveraging Persistent retail outflows from equity funds Risk appetite has fallen off dramatically since 2009 ~6B share ADV run rate is sust
Slide 10: Positive Long Run Trends
Positive Long Run Trends Since 1888, average daily volume has grown 13% annually. Rolling 20yr CAGR is currently 15% Rolling 3yr and 5yr CAGRs have both turned negative This downturn could be more secular in nature U.S. Equity ADV Growth by Decade Rolling 20yr CAGR Decade Avg. Daily Volume*
Slide 11: Reversion to the Mean?
Reversion to the Mean? Rolling 3yr growth has turned negative for the first time since 1990. Deep recessions and financial crises typically take 3-5 years to recover Postwar expansion cycles have averaged 12 years from peak to trough Given the magnitude of the 2008 crisis, we expect this rec
Slide 12: What could get us going?
Market Overview What could get us going? Stifel is positioned for long-term growth 12
Slide 13: II. Stifel Financial Overview
II. Stifel Financial Overview
Slide 14: Successful Growth Strategy
Stifel Financial Overview Successful Growth Strategy Net Revenues & Market Cap Growth $2,500 Net Revenue Market Cap $2,000 ($ in millions) $1,500 $1,000 $500 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 Strategy Successful track record integrating transactions Capitalizing on headwinds across
Slide 15: Stifel Financial Overview
Stifel Financial Overview Stifel Financial (NYSE: SF) Financial services firm demonstrating growth, scale and stability $1.7 billion market capitalization(1) 2011 Represented our 16th year of consecutive record net revenues Balanced business model Top performing financial stock over the past
Slide 16: A Growth Story…
Stifel Financial Overview A Growth Story… Net Revenues ($MM)(1) Core Net Income ($MM)(1) Total Equity ($MM)(1) $1,500 $1,382 $1,417 $140 CAGR: 26% CAGR: 23% $125 $1,600 CAGR: 35% $120 $114 $1,343 $1,200 $1,091 $1,400 $1,254 $1,302 $100 $1,200 $870 $900 $763 $73 $76 $1,000 $80 $67 $873 $800 $600 $60
Slide 17: Building Scale…
Stifel Financial Overview Building Scale… Strategic Growth Through Acquisitions Investment Banking Sales and Trading 2005¹ 3/31/12 Private Client Retail October 2011 Financial Advisors 467 2,013 Brokerage Private Client Branches 94 297 Network Investment Banking Sales and Trading R
Slide 18: Stability Achieved Through A Balanced Business Model
Stifel Financial Overview Stability Achieved Through A Balanced Business Model Balanced business model facilitates growth during volatile markets Stable GWM business is augmented by profitable and growing Institutional Group Proven ability to grow all businesses Net Revenues Operating Contribu
Slide 19: Cumulative Price Appreciation
Stifel Financial Overview Cumulative Price Appreciation As of May 31, 2012 Since 12/31/11 Since 12/31/06 Since 12/31/01 Edelman Financial 30.75% Stifel Financial Corp. 82.33% Stifel Financial Corp. 808.28% FBR & Co. 29.76% Raymond James Financial 12.77% Raymond James Financial 116.51% Raymond James
Slide 20: III. Global Wealth Management
III. Global Wealth Management
Slide 21: Global Wealth Management
Global Wealth Management Provides Securities Brokerage Services and Stifel Bank Products Overview Grown from 600+ financial advisors in 2005 to over 2,000(1) financial advisors currently Proven organic growth and acquirer of private client business (56 UBS branches, Butler Wick, Ryan Beck) Ret
Slide 22: Global Wealth Management: Opportunity Through Growth
Global Wealth Management Opportunity Through Growth GWM Broker Growth (1) GWM Branch Growth 2,400 350 2,100 1,987 2,013 297 1,885 1,935 291 300 285 272 1,800 250 1,500 1,315 196 1,163 200 1,200 148 150 900 735 111 600 100 300 50 0 0 2006 2007 2008 2009 2010 2011 3/31 2006 2007 2008 2009 2010 2011 3/
Slide 23: Global Wealth Management – Stifel Bank & Trust
Global Wealth Management – Stifel Bank & Trust Overview Strength of Brokerage Position Acquired FirstService Bank, a St. Louis-based, Offers banking products (securities based loans Missouri-chartered commercial bank, in April 2007 and mortgage loans) within the GWM client base, including establ
Slide 24: IV. Institutional Group
STIFEL FINANCIAL IV. Institutional Group
Slide 25: Institutional Group
Institutional Group Overview Net Revenues ($MM)(2) $800 CAGR: 20% (3) Provides securities brokerage, trading, research, $668 underwriting and corporate advisory services $587 $626 $600 $559 $507 One of the largest providers of U.S. Equity Research $455 $400 2nd largest Equity trading platform
Slide 26: Institutional Group – Research
Institutional Group – Research Among the Largest U.S. Equity Research Platform U.S. Equity Research Coverage (1) Stifel Research Highlights Companies Under Coverage Cover approximately 50% of the S&P 500 Rank Firm Overall Small Cap(2) Third largest provider of U.S. Small-Cap 1 JPMorgan 1,048 212
Slide 27: Institutional Group – Research: Proven, Consistent Research
Institutional Group – Research Proven, Consistent - Qualitative Research Research Model Award Highlights >50% of analysts worked in the field they #3 (tied) in 2012 FT/StarMine Survey cover Most #1 awards in 2011 FT/StarMine Survey ~43% of analysts initially joined as associates Average St
Slide 28: Institutional Group – Equity Sales and Trading
Institutional Group – Equity Sales and Trading Powerful Platform Spanning North America and Europe Institutional Equity Sales Equity Trading 130 person sales force, commission based 40 coverage traders located in Experts in small and mid cap growth and value Baltimore, New York, Boston, Dall
Slide 29: Institutional Group – Fixed Income
Institutional Group – Fixed Income Strong Fixed Income Capital Markets Capabilities Overview Client Distribution (1)(2) Comprehensive platform Approximately 78 traders averaging 14 years of Money Other Manager experience 6% 36% Annual client trade volume approaching $300 billion Government I
Slide 30: Institutional Group – Investment Banking
Institutional Group – Investment Banking Accomplished U.S. Equity Underwriting Franchise – All Equity Transactions All Managed Equity Deals Since 2005 Bookrun Equity Deals Since 2005 ($ in billions) # of $ ($ in billions) # of % $ Rank Firm Deals Volume Rank Firm Deals Bookrun Volume 1 Bank of Ameri
Slide 31: V. Financial Results
STIFEL FINANCIAL V. Financial Results
Slide 32: Stifel Financial Corp. Results
Stifel Financial Corp. Results Three months ended March 31, 2012 Three Months Ended ($ in thousands, except per share amounts) 3/31/12 3/31/11 Change 12/31/11 Change Net revenues $ 400,333 $ 366,613 9.2% $ 356,878 12.2% Compensation and benefits 254,704 231,166 10.2% 228,743 11.3% Non-comp operating
Slide 33: Sources of Revenues
Sources of Revenues Three Months Ended % ($ in thousands) 3/31/12 3/31/11 Change 12/31/11 % Change Commissions $ 123,303 $ 155,786 (20.9%) $ 123,737 (0.4%) Principal transactions 116,233 92,859 25.2% 93,963 23.7% Capital raising 54,833 32,358 69.5% 27,347 100.5% Advisory 15,605 9,060 72.2% 28,728 (4
Slide 34: Brokerage Revenues
Brokerage Revenues Three Months Ended % % ($ in thousands) 3/31/12 3/31/11 Change 12/31/11 Change Taxable debt $ 61,433 $ 51,419 19.5% $ 48,882 25.7% Municipal debt 21,826 19,538 11.7% 25,731 (15.2%) Equities 21,108 11,623 81.6% 7,920 166.5% Other 11,866 10,279 15.4% 11,430 3.8% Principal transactio
Slide 35: Segment Comparison
Segment Comparison Three Months Ended % % ($ in thousands) 3/31/12 3/31/11 Change 12/31/11 Change Net revenues: Global Wealth Management $ 248,348 $ 238,446 4.2% $ 224,569 10.6% Institutional Group 148,504 126,994 16.9% 134,229 10.6% Other 3,481 1,173 196.7% (1,920) 281.3% $ 400,333 $ 366,613 9.2% $
Slide 36: Statement of Financial Condition
Statement of Financial Condition As of March 31, 2012 Total Assets ($ in Billions) Total Capitalization ($ in Billions) $1.8 $6.0 $1.6 $5.5 $5.0 $1.5 $1.4 $0.2 $5.0 $1.3 $0.1 $0.1 $4.2 $0.1 $4.0 $1.2 $3.2 $1.0 $3.0 $0.9 $0.1 $0.7 $0.5 $0.1 $1.3 $1.3 $1.3 $2.0 $1.6 $0.6 $1.5 $0.1 $0.9 $1.1 $0.3 $1.0
Slide 37: VI. Conclusion
STIFEL FINANCIAL VI. Conclusion
Slide 38: Opportunities Drive our Growth
Opportunities Drive our Growth Stifel is Well-Positioned to Take Advantage of Opportunities Strategic Initiatives Attract and retain high-quality talent Continue building client facing, agency-only businesses Continue to expand private client footprint in the U.S. Continue to expand fixed in