Stifel Financial Corporation · NYSE:SF
Stifel Financial — Q3 2015 Earnings Presentation
32 slides from Stifel Financial's earnings presentation, Nov 4, 2015
Slide 1: 3rd Quarter 2015 Financial Results Presentation
3rd Quarter 2015 Financial Results Presentation November 4, 2015
Slide 2: 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
Slide 3: Chairman's Comments
Chairman’s Comments "A challenging market environment contributed to a generally slow quarter for investment banking services and fixed income trading, which negatively impacted our results. Our recent acquisitions mitigated the revenue decline in our legacy businesses and also added to our operatin
Slide 4: Market Overview
Market Overview Note: Volumes are in million $, except trading volumes which are in million shares. Source: Dealogic, SIFMA, Bloomberg, Strategic Insight Simfund and KBW Research.
Slide 5: Financial Results
Financial Results
Slide 6: Stifel Financial Corp. Results Three months ended September 30, 2015
Stifel Financial Corp. Results Three months ended September 30, 2015 Adjustments consist primarily of acquisition related expenses, which management believes are duplicative and will be eliminated, stock-based compensation and other expenses which in managements view are not representative of ongoin
Slide 7: Non-GAAP Legacy vs. New Businesses - Summary
Non-GAAP Legacy vs. New Businesses - Summary New Businesses Contributed $36.7 million to Total Net Revenues in 3Q15 vs. 2Q15 Note: New Businesses include Oriel Securities, Sterne Agee, Merchant Capital, new Private Client branches, and 1919 Investment Counsel.
Slide 8: Noteworthy Items
Noteworthy Items September 30, 2015 Non-GAAP net revenues decreased $6.1 million from June 30, 2015 Challenging market environment: Legacy business down 8% ($42.8 million) New Businesses added $36.7 million Additional net revenue items Net revenues include Stifel Bank $14.7 million gain on sale of A
Slide 9: Q3 2015 Non-GAAP Results vs. Estimates
Note: In millions, except diluted EPS and share data. Q3 2015 Non-GAAP Results vs. Estimates
Slide 10: Stifel Financial Corp. Results Nine months ended September 30, 2015
Stifel Financial Corp. Results Nine months ended September 30, 2015 Adjustments consist primarily of acquisition related expenses, which management believes are duplicative and will be eliminated, stock-based compensation and other expenses which in managements view are not representative of ongoing
Slide 11: Source of Revenues
Source of Revenues (S in thousands) Commissions Principal transactions Brokerage revenues Capital raising Advisory Investment banking Asset mgt and service fees Other Total operating revenues Interest revenue Total revenues Interest expense Net revenues STIFEL % % 9/30/15 9/30/14 Change 6/30/15 Chan
Slide 12: Brokerage & Investment Banking Revenues
Brokerage & Investment Banking Revenues
Slide 13: Non-GAAP Non-Interest Expenses Three months ended September 30, 2015
Non-GAAP Non-Interest Expenses Three months ended September 30, 2015 _________________________________________________________ Excludes adjustments for duplicative items associated with the integration of acquired businesses (merger-related expenses). Transition pay includes amortization of retentio
Slide 14: Non-GAAP Non-Interest Expenses Nine months ended September 30, 2015
Non-GAAP Non-Interest Expenses Nine months ended September 30, 2015 _________________________________________________________ Excludes adjustments for duplicative items associated with the integration of acquired businesses (merger-related expenses). Transition pay includes amortization of retention
Slide 15: Non-GAAP Segment Comparison
Non-GAAP Segment Comparison Excludes the other segment. _________________________________________________________
Slide 16: Global Wealth Management
Global Wealth Management (Sin thousands) 9/30/15 9/30/14 % Change 6/30/15 % Change | 9/30/15 9/30/14 % Change Commis $ 134476 $113,177 188% = $125,121 75% |$ 375811 $ 338,378 Principal transactions 34,843 44,373 (21.5%) 33,682 3.4% | 110,531 140,011 (21.1%) ‘Asset management &service fees 129,032 96
Slide 17: Stifel Bank & Trust (an operating unit of GWM)
Stifel Bank & Trust (an operating unit of GWM) Note: Actual amounts presented above are as of period-end and yields are based off of quarter-to-date averages. Investment securities includes available-for-sale and held-to-maturity securities. Includes loans held for sale. Figures include intercompany
Slide 18: Institutional Group
Institutional Group (Sin thousands) 9/30/15 9/30/14 % Change _ 6/30/15 __% Change Net revenues $ 232,125 $ 215,160 7.9% $ 258538 (10.2%) Compensation and benefits 143,911 131,589, 9.4% 160,077 (10.1%) i 2 54071 15.3% 206,272 __ 185,660 11.1% __ 216,596 (4.8%) $25,853 _$ 29500 __(12.4%) $41,942 __ (3
Slide 19: Acquisition Updates
Acquisition Updates
Slide 20: Sterne Agee Integration Update
Sterne Agee Integration Update Fixed Income integration complete Private Client conversion and integration complete Trust Company integration and Asset Management migration to 1919 Investment Counsel well under way Successful cross selling with other Stifel divisions Issued 1.4 million shares of Sti
Slide 21: Barclays Update
Barclays Update October 30, 2015 Balance Sheet Advisors & AUM Pre-tax Margins Approximately $1.2 billion of on-balance sheet assets Approximately $900 million of client loans held through Barclays clearing firm Approximately $2.0 billion of client cash Revenue¹ $210 - $230 million Shares Issued Appr
Slide 22: Non-GAAP Deal Integration Costs
Non-GAAP Deal Integration Costs _________________________________________________________ Assumes an effective income tax rate of 40.0%.
Slide 23: Financial Condition
Financial Condition
Slide 24: Capital Structure
Capital Structure (in thousands, except ratios) _________________________________________________________ Debt to equity ratio includes the debentures to Stifel Financial Capital Trusts and Senior Notes divided by stockholders’equity.
Slide 25: Other Financial Data
Other Financial Data _________________________________________________________ Includes 755, 139, and 736 independent contractors as of September 30, 2015, September 30, 2014, and June 30, 2015, respectively. Excludes independent contractors. (1) (2)
Slide 26: Financial Performance Trends
Financial Performance Trends
Slide 27: Key Financial Targets
Key Financial Targets Stifel is Positioned to Significantly Benefit From 3 Key Factors Integrating Acquisitions: Sterne Agee and Barclays Optimizing Current Capital Base, and Poised for Revenue Growth in a Rising Interest Rate Environment Note: Targets noted above are based on Non-GAAP results.
Slide 28: Growth Drivers
Growth Drivers
Slide 29: Optimizing Capital Through Growth
Optimizing Capital Through Growth ($ in millions) Pause 43% CAGR Stifel has resumed growth and has the potential to further leverage existing capital base Note: (1) Total asset growth expected to occur by 12-31-15 is comprised of approximately $2 billion from the Barclays transaction and $1 billion
Slide 30: Impact of a Rising Interest Rate Environment
Impact of a Rising Interest Rate Environment Projected Increase in Annual Pre-Tax Earnings from a 100 BPS Rise in Short-Term Rates ($ millions; as of September 30, 2015) Key Assumptions: Based on static balances as of September 30, 2015 and an instantaneous change in short-term rates. Ultimately, th
Slide 31: Operating Model Potential
Operating Model Potential Stifel is Positioned to Significantly Benefit From 3 Key Factors Barclays + 4th Quarter Growth Fully Leveraged Growth¹ 100 bps Rate Increase Note: (1) This represents the potential growth that could occur by leveraging the balance sheet to a 17.5% Tier 1 Risk Based Capital
Slide 32: Q&A
Q&A