Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q3 2008 Earnings Presentation
25 slides from Stifel Financial's earnings presentation, Nov 3, 2008
Slide 1: 3rd Quarter 2008 Earnings Conference Call
TIFEL INANCIAL 3rd Quarter 2008 Fiscal Year Earnings Conference Call November 3, 2008
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: 3Q08 Highlights
3Q08 Highlights ¾ Record Net Revenues of $218.9 million, up 20% from 3Q07. ¾ Revenue growth in PCG, ECM and Stifel Bank was offset by Investment Banking weakness ¾ GAAP net income of $12.8 million, or $0.46 per diluted share, a 59% increase over 3Q07. ¾ Balanced business model continues to thrive in
Slide 4: YTD Highlights
YTD Highlights ¾ Record nine month revenues of $639.4 million, a 16 % increase compared to 2007. ¾PCG record revenue, up 11%, FICM record revenue, up 185%. ¾ GAAP net income of $39.5 million, or $1.44 per diluted share, a 115% increase for the nine months as compared to 2007. ¾ Book value per common
Slide 5: Summary Income Statements
Summary Income Statements Quarters Ended YTD ($ in thousands) 9/30/08 9/30/07 % Change 9/30/08 9/30/07 % Change Core Net Revenues $ 218,927 $ 183,000 20% $ 639,355 $ 551,209 16% Compensation and Benefits 143,743 119,566 20% 421,903 360,891 17% Non-Comp Operating Expenses 47,584 40,263 18% 132,631 11
Slide 6: Growth Strategy
Growth Strategy ¾ Disruption in Private Client Market presents significant opportunities ¾ Wachovia+WFC, Merrill+BOA, Lehman Bros. bankruptcy, and the collapse of Bear Stearns has caused thousands of Financial Advisors to ponder their future. ¾ The Wall Street principal business model under scrutiny
Slide 7: 2008 Growth
2008 Growth Total 2008 As of Business Units Additions 9/30/2008 Private Client Group Financial Advisors* . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 1,228 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 194 Equity Capital Markets Equity Sales & Trad
Slide 8: Market Turmoil = Opportunity
Market Turmoil = Opportunity ¾ Stifel has one of the fastest growing Private Wealth Management businesses in the industry. $466 194 $500 $436 1,500 200 1,163 1,228 147 111 $231 1,000 735 92 647 621 644 79 82 86 $250 $187 $197 543 100 $136 $163 500 $0 0 0 2002 2003 2004 2005 2006 2007 2008 2002 2003
Slide 9: Source of Revenues
Source of Revenues Three Months Ended Nine Months Ended % o f Net % o f Net % o f Net % o f Net % % ($ in thousands) 9/30/08 Revenues 9/30/07 Revenues Change 9/30/08 Revenues 9/30/07 Revenues Change Revenues Commissions $ 88,727 40.5% $ 82,917 45.3% 7% $ 257,491 40.3% $ 224,930 40.8% 14% Principal t
Slide 10: Principal Transactions
Principal Transactions Three Months Ended Nine Months Ended %of %of % %of %of % ($ in thousands) 9/30/08 To tal 9/30/07 To tal Change 9/30/08 To tal 9/30/07 To tal Change Principal transactions Taxable Debt $ 39,197 57.5% $ 17,221 54.3% 128% $ 124,696 62.1% $ 53,973 58.9% 131% Muni Debt 10,993 16.1%
Slide 11: Volatility of Investment Account
Volatility of Investment Account Quarters Ended YTD ($ in thousands) 9/30/08 9/30/07 % Change 9/30/08 9/30/07 % Change Deferred Comp Hedge $ (1,899) $ 859 -321% $ (2,446) $ 1,090 -324% NYSE Euronext (245) 119 -306% (1,039) (385) 170% Stifel CAPCO (532) (283) 88% (1,379) (673) 105% Other Investments
Slide 12: YTD 2008 Segment Comparison (Ex Acquisitions)
YTD 2008 Segment Comparison (Ex Acquisitions) ¾ Balanced business model facilitates growth during volatile markets ¾ Stable PCG business is augmented by profitable and growing Capital Markets. % of Revenues % of Op Profit Bank Bank 1% 1% Cap Mkts Cap Mkts 44% 43% PCG 56% PCG 55% Page 11
Slide 13: Segment Comparison
Segment Comparison Excluding Acquisitions ¾ Total net revenues increased 20% despite unprecedented equity & credit market dislocations. ¾ Revenues increased in each vertical and margins improved in 3 out of 4 operating segments Quarters Ended % Change YTD % Change Net Revenues 9/30/08 9/30/07 9/30/0
Slide 14: Private Client Group
Private Client Group Income Statements ¾ Strong commission & fee growth was offset by a weaker syndicate calendar ¾ Margins were modestly lower due to the opening of 21 new offices in 2008 Quarters Ended % Change YTD % Change ($ in thousands) 9/30/08 9/30/07 9/30/08 9/30/07 Re venues: Commissions an
Slide 15: New Branches
New Branches Trailing 12 % Proforma % Net Revenue $10.3 100% $39.1 100% Comp and Benefits $7.4 72% $21.9 56% Operating Expenses $3.7 36% $6.3 16% Preliminary Contribution (Loss) ($0.8) -8% $10.9 28% One time Expenses $3.1 30% $0.0 0% Transition Pay $1.4 14% $4.7 12% Contribution (Loss) ($5.3) -51% $
Slide 16: Equity Capital Markets
Equity Capital Markets Income Statements ¾ Record quarterly flow business (cash equities) ¾ Variable cost business model leaves room for continued margin expansion Quarters Ended % Change YTD % Change ($ in thousands) 9/30/08 9/30/07 9/30/08 9/30/07 Revenues: Commissions and principal transactions $
Slide 17: Fixed Income Capital Markets
Fixed Income Capital Markets Income Statements ¾ Volatility, expanded distribution and client focused model drive record results ¾ Opened more than 375 new institutional accounts YTD in 2008 Quarters Ended % Change YTD % Change ($ in thousands) 9/30/08 9/30/07 9/30/08 9/30/07 Revenues: Commissions &
Slide 18: Stifel Bank & Trust
Stifel Bank & Trust Income Statements ¾ Continued build-out to serve Stifel Nicolaus clients and potential clients. Quarters Ended % Change YTD % Change ($ in thousands) 9/30/08 9/30/07 9/30/08 9/30/07 Reve nue s: Interest $ 4,129 $ 3,231 28% $ 11,491 $ 5,823 97% Other 493 423 17% 1,602 559 187% T o
Slide 19: Reconciliation of GAAP to Core Earnings
Reconciliation of GAAP to Core Earnings Page 18
Slide 20: GAAP to Core Earnings
GAAP to Core Earnings Quarters Ended % Change YTD % Change ($ in thousands) 9/30/08 9/30/07 9/30/08 9/30/07 Core Net Income $ 16,714 $ 14,266 17% $ 51,352 $ 46,297 11% Acquisiton Related Expenses-net of tax (3,937) (6,208) -37% (11,896) (27,962) -57% GAAP Net Income $ 12,777 $ 8,058 59% $ 39,456 $ 1
Slide 21: Income Statement Impact
Income Statement Impact Estimated Actual Actual Actual Estimated Full Year Q1 2008 Q2 2008 Q3 2008 YTD Q4 2008 2008 2009 Acquisiton Related Expenses ($ in thousands) LM Capital Markets Acquisition $ 6,306 $ 6,380 $ 6,476 $ 19,162 $ 6,400 $ 25,562 $ - Ryan Beck Acquisition 325 134 30 489 100 589 - Pr
Slide 22: Stifel Financial Balance Sheet Graphs
Stifel Financial Balance Sheet Graphs $2,041 $750 $660 $2,000 $1,499 $520 $95 $1,600 $500 $95 $1,085 $1,200 $290 $842 $225 $565 $800 $250 $166 $70 $425 $423 $412 $382 $115 $135 $70 $400 $35 $220 $35 $35 $155 $131 $80 $100 $0 $0 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 To
Slide 23: Capital Structure
Capital Structure ($ in thousands) Total Assets $ 2,041,425 Stockholders' Equity $ 565,387 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 - LIBOR plus 1.85% (fixed at 6.79% until 6/6/12), due 6
Slide 24: Other Financial Data
Other Financial Data Quarterly Data % Change vs vs Other Data 9/30/2008 6/30/2008 9/30/2007 Q2 2008 Q3 2007 Bank Assets $327,279 $301,511 $229,231 9% 43% SN & SF Assets $1,714,146 $1,384,326 $1,270,210 24% 35% Total Assets (000's) $2,041,425 $1,685,837 $1,499,441 21% 36% Stockholders Equity (000's)
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