Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q1 2009 Earnings Presentation
31 slides from Stifel Financial's earnings presentation, May 11, 2009
Slide 1: Stifel Financial Corp. 1st Quarter 2009 Earnings Conference Call
Stifel Financial Corp. 1st Quarter 2009 Fiscal Year Earnings Conference Call May 11, 2009
Slide 2: Forward Statements
Forward 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 future business prospect
Slide 3: 1st Quarter 2009 Highlights
1st Quarter 2009 Highlights Net revenues of $220.0 million, a 4% increase from the 1Q08. The PCG segment recorded net revenues of $110.5 million, a 4% decrease from the 1Q08. The ECM segment recorded net revenues of $47.1 million, a 4% decrease over the 1Q08. The FICM segment recorded net revenues o
Slide 4: Chairman's Comments
Chairman's Comments 1Q09 PCG and ECM results were negatively impacted by continuing difficult market conditions for investment banking and reduced valuations of customers' assets Excellent performance by our Fixed Income Capital Markets and Stifel Bank Overhead costs increased as we continued to mak
Slide 5: Summary Income Statements
Summary Income Statements Quarters Ended (8 in thousands) 3/31/2009 3/31/2008 _% Change Netrevennes $ 219981 $ 211477 &% Compensation and benefits 147840 139,733 % Non-compensation operating expenses 49986 41,189 21% Total nan-inter est expenses 197826 180,921 m% Incame before incame taxes 30,556 2%
Slide 6: 1st Quarter Normalized Pro Forma
1st Quarter Normalized Pro Forma
Slide 7: Source of Revenues
Source of Revenues Quarters Ended ot ot 3/31/2009 Net Rev 3/31/2008 Net Rev % Change Revenues Commissions $ 74,610 33.9% $ 85,701 40.5% -13% Principal transactions 97,278 44.2% 66,937 31.7% 45% Investment banking 15,504 7.0% 21,844 10.3% -29% Asset management and service fees 24,933 11.3% 30,278 14.
Slide 8: Principal Transactions
Principal Transactions Quarters Ended Yok Yok (S$ in thousands) 3/31/2009 Total «3/31/2008 ~— Total ~=% Change Principal transactions Taxable debt $ 65,156 67.0% $ 48,512 72.5% 34% Muni debt 16,455 16.9% 9,971 14.9% 65% Equities 8,570 8.8% 4,251 6.4% 102% Other 7,097 7.3% 4,203 6.3% 69% Total princi
Slide 9: Segment Comparison Excluding Acquisitions
Segment Comparison Excluding Acquisitions Total net revenues increased 4% despite difficult market conditions in 1Q09. Weakness in PCG & ECM were more than offset by FICM and Stifel Bank results
Slide 10: 1st Quarter Segment Comparison (Excludes Acquisitions)
1st Quarter Segment Comparison (Excludes Acquisitions) Balanced business model facilitates growth during volatile markets Stable PCG business is augmented by profitable and growing Capital Markets.
Slide 11: Private Client Group Income Statements
Private Client Group Income Statements Commission & fee growth impacted by market decline Margins were lower due to market conditions, decline of managed money balances, and the opening of new offices and hiring Financial Advisors.
Slide 12: Equity Capital Markets Income Statements
Equity Capital Markets Income Statements Commissions & principal transactions increased 6% during the quarter Industry wide slowdown in trading activity offset by market share gains Investment Banking weakness is driven by lack of public market activity Advisory business grew in the quarter
Slide 13: Fixed Income Capital Markets Income Statements
Fixed Income Capital Markets Income Statements Distribution model and scale drove revenue growth and margin expansion Fixed income markets remain favorable, in addition Stifel FICM continues to gain market share Continued strength in the flow business is driven by investments in Sales, Trading and B
Slide 14: Stifel Bank & Trust Income Statements
Stifel Bank & Trust Income Statements
Slide 15: Stifel Bank & Trust
Stifel Bank & Trust Total assets increased $187 million, or 54%, from 12/31/2008 Cash and cash equivalents increased $199 million from 12/31/2008 to $226 million, resulting in significant on-balance sheet liquidity Retained loan portfolio declined $10 million, or 5%, from 12/31/2008 Allowance as a p
Slide 16: Stifel Bank & Trust
Stifel Bank & Trust $226 million in on-balance sheet excess liquidity held in cash and cash equivalents The UBS transaction is expected to provide an additional $800 million in deposits available to the Bank Loan to Deposit Ratio of 47% Stock Secured (Reg. U) loans from the UBS transaction of approx
Slide 17: Stifel Financial Balance Sheet Graphs
Stifel Financial Balance Sheet Graphs Total Assets, Total Capitalization, Leverage Ratio, Book Value per Share
Slide 18: Capital Structure
Capital Structure (Sin thousands) _ 3/31/2009 3/31/2008 Total Assets $ 2,014,698 $ 1,613,215 Stockholders' Equity $ 630,802 $ 437,038 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 $ 35,000 Stifel Financial Capital Trust II - L
Slide 19: Level Assets
Level 3 Assets 3/31/2009 3/31/2008 Carrying Carrying (8 in thousands) Cost Value Value Auction Rate Securities $ 22,325 $ 20,038 $ - Stifel Bank & Trust Investments 9,097 8,335 19,014 Trading Securities 5,649 4,362 15,080 Other Investments 6,006 §,031 5,185 $ 43,077 S$ 37,766 $39,279 Percentage of a
Slide 20: Other Financial Data
Other Financial Data Quarterly Data Other Data 3/31/2009 12/31/2008 _ 3/31/2008 Bank assets (00's) $ 529.953 $ 343417. Ss 248,982 Stifel Nicolaus & Stifel Financial assets (00's) 1,484,745 1214728 1,364,233 Total assets (000's) $2,014,698 S$ 1558145 $ 1,613,215 Stockholders equity (00's) $630,802 S$
Slide 21: UBS Transaction Update
UBS Transaction Update Stifel announced today that it anticipates its principal operating subsidiary, Stifel, Nicolaus & Company, Incorporated, will acquire 55 branches from UBS Financial Services Inc. pursuant to its previously announced agreement to acquire certain UBS Wealth Management Americas b
Slide 22: UBS Transaction Furthers our Goals
UBS Transaction Furthers our Goals Extends our geographic presence Strengthens our brokerage position Enhances and accelerates Stifel Bank and Trust strategy Expected to be accretive in first year
Slide 23: Extends our Geographic Presence
Extends our Geographic Presence Map of our loacations
Slide 24: Strengthens our Brokerage Position
Strengthens our Brokerage Position Ranking of Company by RRs
Slide 25: Private Client Metrics Combined Stifel and UBS
Private Client Metrics Combined Stifel and UBS Gross revenue, Branch contribution margin, Financial Advisors, Assets under management, and Revenues per broker
Slide 26: What are we paying?
What are we paying? The UBS transaction is structured as an asset purchase for cash at a premium over certain balance sheet items, subject to adjustments. The payments to UBS include: Upfront cash payment of approximately $29 million based on actual number of branchas and Financial Advisors acauired
Slide 27: Key Takeaways
Key Takeaways Adds significant capability and an attractive geographic complement to Stifel's Private Client Business Solid Financial terms Extends our geographic presence Strengthens our brokerage position Enhances and accelerates Stifel Bank and Trust strategy Expected to be accretive in first yea
Slide 28: 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. Success with UBS si
Slide 29: Market Turmoil = Opportunity
Market Turmoil = Opportunity
Slide 30: Growth
Growth Total Additions As of Business Units 2008 Q1 2009 3/31/2009 Private Client Group Financial Advisors* . . 269 94 1,394 352 9 204 Equity Capital Markets Equity Sales & Trading Professionals . . 23 6 123 Investment Banking Professionals 40 4 140 Fixed Income Capital Markets Fixed Income Sales &
Slide 31: Q&A - Questions and Answers
Q&A - Questions and Answers