Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q1 2010 Earnings Presentation
31 slides from Stifel Financial's earnings presentation, Apr 29, 2010
Slide 1: 1st Quarter 2010 Earnings Conference Call
TIFEL INANCIAL 1st Quarter 2010 Earnings Conference Call April 29, 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation that relate to Stifel Financial Corp., as well as Stifel, Nicolaus and Company, Inc. and its other subsidiaries (collectively, “Stifel” or the “Company”) and the announced acquisition of Thomas Weisel Partners Group, Inc. (“Thomas Weisel Par
Slide 3: Additional Information and Where to Find it
Additional Information and Where to Find it In connection with the proposed merger, Stifel will be filing a registration statement on Form S-4 that will include a proxy statement of Thomas Weisel Partners that also constitutes a prospectus of Stifel and other relevant documents relating to the acqui
Slide 4: Chairman's Comments
Chairman’s Comments “I am very pleased with our first quarter results particularly in light of the fact that net revenues, net income and earnings per share are second only to our previous record for net revenue, net income and earnings per share set in our 2009 fourth quarter. Our Global Wealth Man
Slide 5: 1st Quarter 2010 Highlights
st 1 Quarter 2010 Highlights Net revenues of $312 million, a 42% increase over the 1st quarter of 2009 (1Q09) and a 2% decrease from the 4th quarter of 2009 (4Q09). The Global Wealth Management (GWM) segment posted net revenues of $197 million, a 73% increase over 1Q09 and a 7% increase over 4Q0
Slide 6: Stifel Financial Corp. Income Statements
Stifel Financial Corp. Income Statements Quarter Ended % % ($ in thousands) 03/31/10 03/31/09 Change 12/31/09 Change Net revenues $ 312,030 $ 219,981 41.8% $ 319,467 (2.3%) Compensation and benefits 206,242 147,840 39.5% 201,263 2.5% Non-comp operating expenses 66,223 49,986 32.5% 76,890 (13.9%) Tot
Slide 7: Source of Revenues
Source of Revenues Quarter Ended % of Net % of Net Revenues Revenues % % ($ in thousands) Change Change 3/31/10 3/31/09 3/31/10 3/31/09 12/31/09 12/31/09 Revenues Principal transactions $ 117,420 $ 97,278 20.7% 37.6% 44.2% $ 116,410 0.9% 36.4% Commissions 105,035 74,610 40.8% 33.7% 33.9% 99,285 5.8%
Slide 8: Principal Transactions
Principal Transactions Quarter Ended ($ in thousands) % % 3/31/10 3/31/09 Change 12/31/09 Change Principal transactions: Taxable debt $ 64,691 $ 65,156 (0.7%) $ 66,210 (2.3%) Municipal debt 16,842 16,455 2.4% 16,102 4.6% Equities 22,284 8,570 160.0% 21,113 5.5% Other 13,603 7,097 91.7% 12,985 4.8% $
Slide 9: Stifel Income Statements Non-Interest Expenses
Stifel Income Statements Non-Interest Expenses Quarter Ended % of Net revenues % % % of Net ($ in thousands) 3/31/10 3/31/09 Change 3/31/10 3/31/09 12/31/09 Change revenues Net revenues $ 312,030 $ 219,981 41.8% 100.0% 100.0% $ 319,467 (2.3%) 100.0% Non-interest expenses: Compensation and benefits 1
Slide 10: Segment Comparison
Segment Comparison Quarter Ended % % ($ in thousands) 03/31/10 03/31/09 Change 12/31/09 Change Net revenues: Global Wealth Management $ 197,195 $ 114,164 72.7% $ 184,704 6.8% Institutional Group 113,292 105,472 7.4% 133,305 (15.0%) Other 1,543 345 347.3% 1,458 5.8% $ 312,030 $ 219,981 41.8% $ 319,46
Slide 11: YTD Segment Comparison (Excludes Acquisitions)
YTD Segment Comparison (Excludes Acquisitions) Balanced business model facilitates growth during volatile markets Stable GWM business is augmented by profitable and growing Institutional Group. Revenue Operating Profit IG GWM 36% IG GWM IG 40% GWM 48% 52% 43% GWM IG 64% 57% 60% 2010 2009 2010 20
Slide 12: Global Wealth Management Income Statements
Global Wealth Management Income Statements Quarter Ended % % ($ in thousands) 3/31/10 3/31/09 Change 12/31/09 Change Net revenues $ 197,195 $ 114,164 72.7% $ 184,704 6.8% Compensation and benefits 109,867 64,252 71.0% 105,147 4.5% Transition pay 14,871 8,377 77.5% 11,841 25.6% Total compensation and
Slide 13: Stifel Bank & Trust Income Statements
Stifel Bank & Trust Income Statements Quarter Ended % ($ in thousands) 03/31/10 03/31/09 Change 12/31/09 % Change Net revenues: Interest $ 8,087 $ 3,656 121.2% $ 7,888 2.5% Other income 2,113 670 215.4% 1,828 15.6% Total revenues 10,200 4,326 135.8% 9,716 5.0% Interest expense 448 686 (34.7%) 2,044
Slide 14: Stifel Bank & Trust Balance Sheet
Stifel Bank & Trust Balance Sheet Assets increased 122% to $1,115.3 million at March 31, 2010 from $503.3 million at March 31, 2009. Investment portfolio increased $495.5 million to $549.1 million at March 31, 2010, primarily as a result of the expansion of our investment strategy. • Agency MBS
Slide 15: Institutional Group Income Statements
Institutional Group Income Statements Quarter Ended % % ($ in thousands) 3/31/10 3/31/09 Change 12/31/09 Change Net revenues $ 113,292 $ 105,472 7.4% $ 133,305 (15.0%) Compensation and benefits 62,221 59,024 5.4% 70,355 (11.6%) Transition pay 4,083 3,494 16.9% 3,229 26.4% Total compensation and bene
Slide 16: Institutional Group Revenues
Institutional Group Revenues Quarter Ended % % ($ in thousands) 3/31/10 3/31/09 Change 12/31/09 Change Sales and trading: Equity $ 38,651 $ 36,787 5.1% $ 38,668 (0.0%) Fixed income 44,346 53,448 (17.0%) 47,308 (6.3%) 82,997 90,235 (8.0%) 85,976 (3.5%) Investment Banking: Capital raising 20,004 3,429
Slide 17: Statement of Financial Condition Graphs
Statement of Financial Condition Graphs $4,000 $1,250 $3,167 $3,227 $956 $995 $1,000 $83 $3,000 $83 $676 $750 $520 $83 $2,000 $1,558 $1,499 $500 $912 $95 $842 $1,085 $225 $290 $873 $1,000 $250 $135 $166 $70 $593 $412 $382 $35 $70 $425 $35 $220 $100 $131 $155 $0 $0 2003 2004 2005 2006 2007 2008 2009
Slide 18: Capital Structure
Capital Structure As of March 31, 2010 (in thousands, except percentages and ratios) Total Assets $ 3,227,383 Stockholders' Equity $ 912,404 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 - LI
Slide 19: Level 3 Assets
Level 3 Assets Carrying Value ($ in thousands) 3/31/10 12/31/09 Change Auction Rate Securities (ARS) $ 75,691 $ 56,003 35.2% Stifel Bank & Trust Investments - 2,693 (100.0%) Trading Securities 7,042 1,243 466.5% Other Investments 5,418 5,426 (0.1%) Level 3 assets (excluding ARS) 12,460 9,362 366.4%
Slide 20: Other Financial Data
Other Financial Data As of % Change Q1 10 vs. Q1 10 vs. 3/31/10 12/31/09 3/31/09 Q409 Q109 Total assets (000s): Stifel Nicolaus and Stifel Financial $ 2,112,054 $ 2,025,348 $ 1,511,416 4.3% 39.7% Stifel Bank 1,115,329 1,142,008 503,282 (2.3%) 121.6% $ 3,227,383 $ 3,167,356 $ 2,014,698 1.9% 60.2% Sha
Slide 21: Announced Merger of Stifel Financial Corp. and Thomas Weisel Partners
Announced Merger of Stifel Financial Corp. and Thomas Weisel Partners Page 20
Slide 22: Summary of Key Transaction Terms
Summary of Key Transaction Terms Transaction Stifel to acquire 100% of TWP’s common stock in a tax-free exchange Fixed exchange ratio of 0.1364 Stifel shares for each TWPG share No caps or collars Consideration $7.60 per share based on an SF price of $55.74 (at 4/23/10) $318 million of agg
Slide 23: Transaction Financials
Transaction Financials ($ in 000s, except per share) Transaction Value Calculation TWP Book Value Analysis SF Stock Price (4/23/10) $55.74 As Reported Book Value (12/31/09) Total Shareholders' Equity $129,837 TWPG Stock Price (4/23/10) $4.36 Basic Common Shares Outstanding 31,693 Fixed Exchange Rati
Slide 24: Why this Combination Makes Sense
Why this Combination Makes Sense Highly Complementary Investment Banking, Research and Sales and Trading Platforms Additive, not duplicative: • 623 combined offerings completed between 2005 - 2009 and only 4 overlap • 1,143 unique U.S. companies under research coverage. Only 8% overlap Expands i
Slide 25: Highly Complementary Investment Banking Industry Coverage
Highly Complementary Investment Banking Industry Coverage Capital Markets Activity Between 2005 - 2009 Of the 623 combined offerings completed between 2005 - 2009 ONLY 4 overlap (1) # Offerings Offering Value Industry Stifel TWP Combined Overlap ($B) % Stifel Core Competencies FIG 99 12 111 0 $ 33
Slide 26: Highly Complementary Investment Banking Industry Coverage
Highly Complementary Investment Banking Industry Coverage Completed M&A Transactions Between 2005 - 2009 (1) # Transactions Transaction Value Industry Stifel TWP Combined ($B) % Stifel Core Competencies Real Estate 4 0 4 $ 8.6 25.9% Financial Institutions 36 3 39 5.5 16.6% Industrials 13 4 17 0.5 1.
Slide 27: Creates the Largest U.S. Equity Research Platform
Creates the Largest U.S. Equity Research Platform Pro Forma U.S. Research Coverage U.S. Research Coverage (1) 1,143 unique U.S. companies under coverage. Only 8% overlap(1) Rank Firm # Companies 93 senior research analysts Stifel (pro forma, ex. overlap) 1,143 #1 U.S. equities coverage 1. JPMo
Slide 28: Stifel's Track Record in Integrating Transactions
Stifel’s Track Record in Integrating Transactions: Low Risk Opportunity Successfully integrated Legg’s sales and trading, research and investment banking platforms to Stifel’s platform Majority of Legg Mason Investment Banking Managing Directors remain with Stifel today Achieved cost savings o
Slide 29: Driving Value for Stakeholders
Driving Value for Stakeholders Expands services across Institutional Group and Global Wealth Management platforms Broader industry focus Clients Deeper talent pool for serving clients Complementary investment banking and research platforms with almost no overlap provide continuity of client
Slide 30: Pro Forma Effect of Unit Awards Modification
Pro Forma Effect of Unit Awards Modification Shareholders' Outstanding Book (in thousands, except share and per share data) Equity Shares Value March 31, 2010, as reported $ 912,404 30,926,500 $ 29.50 Assume unit vesting and conversion 60,454 4,710,450 12.83 Pro forma $ 972,858 35,636,950 $ 27.30 Ch
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