Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q2 2020 Earnings Presentation
17 slides from Stifel Financial's earnings presentation, Jul 29, 2020
Slide 1: 2nd Quarter 2020 Financial Results Presentation
2nd Quarter 2020 Financial Results Presentation July 29, 2020 Quarterly Earnings Report
Slide 2: Diversity
Diversity STIFEL FINANCIAL CORP. 2019 ANNUAL REPORT “We can do much better with regard to diversity among our associates in particular. The business case for this effort is simple, as greater diversity – in all its forms – provides more opportunities to grow while reducing the risks of blinkered, na
Slide 3: Second Quarter Snapshot
Second Quarter Snapshot 2Q20 RESULTS millions, except per share and ratios NET REVENUES NET EARNINGS EPS GAAP $895.8 NON-GAAP $895.8 GAAP $103.0 NON-GAAP $115.3 GAAP $1.39 NON-GAAP $1.55 ANNUALIZED ROE ANNUALIZED ROTCE BOOK VALUE PER SHARE GAAP 12.6% NON-GAAP 14.1% GAAP 20.7% NON-GAAP 23.2% TBV $30.
Slide 4: Second Quarter Results
Second Quarter Results FINANCIAL RESULTS SECOND QUARTER HIGHLIGHTS Sequential millions 2Q20 Y/Y Change YTD VS 2019 Change ■ Second quarter Non-GAAP Net Revenue of $896 million, up 12% Y/Y. Global Wealth Management $506 -5% -13% $1,089 4% ■ Record Institutional Group Net Revenue of $398 million, up 4
Slide 5: Global Wealth Management
Global Wealth Management GLOBAL WEALTH MANAGEMENT REVENUE HIGHLIGHTS Sequential millions 2Q20 Y/Y Change Change YTD VS 2019 ■ Record 6-Month Net Revenue of $1.1 billion, up% 4 Y/Y Brokerage $159 -2% -12% $339 7% ■ Pre-tax Pre-provision Margin of 34.7% Asset Management & Service Fees 199 -6% -16% 437
Slide 6: Wealth Management Metrics
Wealth Management Metrics RECRUITING DRIVES REVENUE GROWTH DYNAMIC BUSINESS $180 250 ■ 85% of FAs joined Stifel in past 10 years came through organic $160 recruiting, 15% through acquisitions $140 200 Financial Advisors $120 ■ Recruiting remotely during pandemic 150 millions $100 ■ Growth of average
Slide 7: Institutional Group
Institutional Group INSTITUTIONAL GROUP REVENUE HIGHLIGHTS Sequential millions 2Q20 Y/Y Change YTD VS 2019 Change ■ Record Quarterly Revenue of $398 million, up 47% Y/Y Advisory $98 18% 29% $174 -7% ■ Record Institutional Brokerage of $184 million, up 86% Y/Y Capital Raising $111 29% 19% $204 51% ■
Slide 8: Institutional Equities & Fixed Income
Institutional Equities & Fixed Income INSTITUTIONAL EQUITIES REVENUE INSTITUTIONAL FIXED INCOME REVENUE Sequential Sequential millions 2Q20 Y/Y Change YTD VS 2019 millions 2Q20 Y/Y Change YTD VS 2019 Change Change Brokerage $63 55% -10% $133 68% Brokerage $121 107% 21% $220 75% Capital Raising $63 7
Slide 9: Investment Banking Revenue
Investment Banking Revenue INVESTMENT BANKING REVENUE HIGHLIGHTS Sequential millions 2Q20 Y/Y Change YTD VS 2019 ■ Third Strongest Investment Banking Quarter Change Capital Raising: ■ Second Strongest Record Capital Raising Quarter ■ Strongest Verticals were Financials, Healthcare, Technology, and E
Slide 10: Net Interest Income
Net Interest Income CONDENSED NET INTEREST INCOME NET INTEREST COMMENTARY 2Q20 Y/Y Change Sequential Change ■ 2Q20 NII within previous guidance range, but negatively impacted by Average Average Average Average Average Average rate environment & impact of senior note issuance Balance Interest Balance
Slide 11: Investment Portfolio & CLOs
Investment Portfolio & CLOs INVESTMENT PORTFOLIO HIGHLIGHTS millions Total Portfolio % of Portfolio ■ AAA /AA CLOs with a Portfolio Credit Enhancement of 28.6% CLO $4,396 70% ■ 83% of CLO Collateral is BB/B Agency MBS 752 12% ■ Using Severely Adverse Default Expectations Results in Remaining Credit
Slide 12: Stifel Bancorp Inc. Loan Portfolio
Stifel Bancorp Inc. Loan Portfolio HIGHLIGHTS LOAN PORTFOLIO ■ Lending facilities for Stifel WM and Institutional clients, as well as % of Total banking relationships outside of Stifel millions 2Q20 Portfolio ■ Over 50% of the loan portfolio is to Wealth Management clients Residential Real Estate $3
Slide 13: CECL Impact
CECL Impact ASSUMPTIONS CECL 2Q20 FACTORS Economic Factors ■ Moody’s forecast: $13.2 ■ 40% Baseline (sudden sharp Portfolio Changes recession) $5.9 - Changes to Economic Factors macro-economic - New loans, less variables ■ 30% Downside (double dip $14.3 amortization, and recession) credit Portfolio
Slide 14: Expenses
Expenses NON-GAAP EXPENSES & PRE-TAX INCOME COMPENSATION RATIO Sequential 65.0% millions 2Q20 Y/Y Change YTD VS 2019 Change 62.5% Compensation $537 16% -6% $1,108 21% 63.0% Ex. IB Gross Up & Loan Loss Provision $167 2% -10% $355 10% 3.5% 61.0% 60.0% Loan Loss Provision & IB Gross Up $32 114% 18% $58
Slide 15: Capital & Liquidity
Capital & Liquidity FIRM-WIDE ASSETS & CAPITAL RATIOS HIGHLIGHTS $25,896 $26,000 $25,624 25.0% ■ Sweep Balances Continued to Increase in 2Q20 23.0% ■ Capital Ratios Increased Meaningfully in 2Q20 $25,000 $24,610 $24,344 21.0% $24,161 ■ Projecting No Material Change in the Size or Composition of the
Slide 16: Quarterly Earnings Report
Quarterly Earnings Report
Slide 17: 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