Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q4 2008 Earnings Presentation
27 slides from Stifel Financial's earnings presentation, Feb 12, 2009
Slide 1: Stifel Financial Corp. 4th Quarter 2008 Fiscal Year Earnings Conference Call
Stifel Financial Corp. 4th Quarter 2008 Fiscal Year Earnings Conference Call February 12, 2009
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: Chairman's Comments
Chairman’s Comments Chairman and Chief Executive Officer, Ronald J. Kruszewski, commented, "Simply put, 2008 was uniquely challenging for the financial services industry. Our Company has been fortunate to have sidestepped many of the issues which plagued a number of our brethren. While we are mindfu
Slide 4: 4th Quarter 2008 Business Highlights
4th Quarter 2008 Business Highlights Record net revenues of $228.2 million, a 8% increase from 2007. Balanced business model drives record revenues in uncertain markets. Core net income of $21.7 million, or $0.72 per diluted share, a 6% increase from the prior year fourth quarter. Core earnings pre-
Slide 5: YTD Highlights
YTD Highlights Record net revenues of $867.5 million, a 14% increase over 2007. 13th consecutive annual increase in net revenue is driven by record revenues from FICM, PCG, and Stifel Bank. Core net income of $73.1 million, or $2.60 per diluted share, a 9% increase from the prior year core net incom
Slide 6: Summary Income Statement
Summary Income Statement Core Net Revenues GAAP Net Revenues
Slide 7: Unusual Items in the Fourth Quarter
Unusual Items in the Fourth Quarter
Slide 8: ARS Redemption Overview
ARS Redemption Overview Value of ARS in Client Account $25,000 $50,000 $75,000 $100, 000+ Number of Accounts 445 201 210 297 1,153 Beginning ARS Balance 11,125,000 10,050,000 15,750,000 146,275,000 183,200,000 ARS Redeemed 11,125,000 5,025,000 5,250,000 15,800,000 37,200,000 Remaining ARS - 5,025,00
Slide 9: Stifel Outlook
Stifel Outlook Unstable conditions in the Private Client market presents opportunity for Stifel to continue to grow organically and through M&A The uncertainty surrounding the largest domestic and European private client platforms impacts thousands of US-based Financial Advisors. Balanced business m
Slide 10: 2008 Growth
2008 Growth Total 2008 As of Business Units Additions 12/31/2008 Private Client Group Financial Advisors* . . . 269 1,315 Offices . . . . . . . . . 52 204 Equity Capital Markets Equity Sales & Trading Professionals . . . 23 115 Investment Banking Professionals . . . . . 40 137 Fixed Income Capital M
Slide 11: Market Turmoil = Opportunity
Market Turmoil = Opportunity
Slide 12: Source of Revenues
Source of Revenues (8 in thousands) Revenues Commissions Principal Transactions Investment Banking Asset Management and Service Fees Other Revenues Operating Revenues Interest Income Total Revenues Interest Expense Net Revenues Quarters Ended % Change YTD % Change 12/31/08 12/31/07 12/31/08 12/31/07
Slide 13: Principal Transactions
Princi al Transactions (8 in thousands) Principal transactions Taxable Debt Muni Debt Equities Other Total Principal Transactions Three Months Ended Years Ended sot sot % %of %of % 12/31/08 _tota_ _12/31/07__ rota Change | 12/81/08 Tota _12/31/07__total_Change $ 59,774 64.6% § 27,120 56.9% 120% | $1
Slide 14: Level 3 Assets
Level 3 Assets December 31, 2008 Carrying ($ in thousands) Cost Value Auction Rate Securities $ 20,625 $ 18,508 Stifel Bank & Trust Investments 14,121 10,423 Trading Secunties 4,472 4,161 Other Investments 5,926 5,170 $ 45,144 $ 38,262 Percentage of Equity 6%
Slide 15: 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 16: Segment Comparison excluding acquisitions
Segment Comparison excluding acquisitions Total net revenues increased 8% despite rapidly deteriorating economic conditions in 4Q08. Weakness in PCG & ECM were more than offset by FICM results
Slide 17: Private Client Group - Income Statement
Private Client Group - Income Statement Commission & fee growth impacted by 4Q08 market uncertainty Margins were modestly lower due to the opening of 52 new offices and 269 FA's in 2008, including the 18 offices and 75 FA's from Butler Wick which joined us on 12/31/08.
Slide 18: Equity Capital Markets - Income Statement
Equity Capital Markets - Income Statement Commissions & principal transactions increased 26% during the quarter Continued weakness in capital raising
Slide 19: Fixed Income Capital Markets - Income Statement
Fixed Income Capital Markets - Income Statement Distribution model and scale drove revenue growth and margin expansion Opened more than 450 new institutional accounts in 2008
Slide 20: Stifel Bank - Income Statement
Stifel Bank - Income Statement Continued build-out to serve Stifel Nicolaus clients and potential clients.
Slide 21: Reconciliation of GAAP to Core Earnings
Reconciliation of GAAP to Core Earnings
Slide 22: GAAP to Core Earnings
GAAP to Core Earnings ($ in thousands) Core Net Income Acquisiton Related Expens es -net of fax GAAP Net Income Core Diluted EPS Non-Core Diluted EPS GAAP Diluted EPS % Change Quarters Ended % Change YID 12/31/08 _ 12/31/07 12/31/08 _ 12/31/07 $ 21,738 $ 20,491 | § 73,090 $ 66,787 982) (6,656) 40%]
Slide 23: Annual Income Statement Impact
Annual Income Statement Impact FY 2006A Acquisiton Related Expenses FY 2007A FY 2008A FY 2009E Total (8 in thousands) ‘Legg Mason Acquisition Charges $ 41,371 $ 25,082 $ 25,650 fx $ 92,103 Ryan Beck Acquisition Charges : 31,692 504 : 32,196 Pre Tax Acquisition Charges 41,389 36,774 26,154 5 124317 A
Slide 24: Balance Sheet Graphs
Balance Sheet Graphs Total Assets Total Capitalization Capitalization Ratio Book Value Per Share
Slide 25: Capital Structure
Capital Structure (8 in thousands) Total Assets $ 1,561,599 Stockholders’ Equity $ 594,895 Debentures to: Stifel Financial Capital Trust I - LIBOR plus 1.70% (fixed at 6.38% until 9/30/10), due 9/30/35 35,000 Stifel Financial Capital Trust II - LIBOR plus 1.85% (fixed at 6.79% until 6/6/12), due 6/6
Slide 26: Other Financial Data
Other Financial Data Bank Assets (000's) SN & SF Assets (000's) Total Assets (00's) Stockholders Equity (00's) Book value Per Share Financial Advis ors* Full Time Employees Locations “Includes all etal Financial Advisors. $ 343417 $ 327,279 $ 248,982 $1,215,999 $ 1,714,146 $ 1,250,459 $ 1,559,416 $
Slide 27: Q&A - Questions and Answers
Q&A - Questions and Answers