Business & Finance
Business and FinanceBusiness and Finance 
Tue, February 15, 2011
Mon, February 14, 2011
Stifel Financial Corp. Reports Fourth Quarter and Full-Year 2010 Results
ST. LOUIS, MO--(Marketwire - February 15, 2011) - Stifel Financial Corp. (
Quarterly results:
-- Record GAAP net revenues of $401.6 million. -- Record non-GAAP net income of $47.3 million(1), or $1.11 per diluted share, on net revenues of $402.8 million. -- Record GAAP net income of $41.4 million, or $0.97 per diluted share.
Full-Year 2010 results:
-- Record GAAP net revenues of $1.4 billion; 15th consecutive year of record net revenues. -- Record non-GAAP net income of $124.8 million(1), or $3.24 per diluted share. -- GAAP net income of $1.9 million, or $0.05 per diluted share. -- As of December 31, 2010, stockholders' equity was $1.3 billion; book value per share was $36.76.
Stifel Financial Corp. (
For the year ended December 31, 2010, the company reported record GAAP net revenues of $1.4 billion, which represents the fifteenth consecutive year of record net revenues. The company reported non-GAAP net income of $124.8 million, or $3.24 per diluted share(1), compared to net income of $75.8 million, or $2.35 per diluted share, on net revenues of $1.1 billion for the comparable period in 2009. The company reported GAAP net income of $1.9 million, or $0.05 per diluted share, for the year ended December 31, 2010, which includes expenses associated with the previously announced modification of the company's deferred compensation plan and merger-related expenses of $122.9 million after-tax ($207.2 million pre-tax). A reconciliation of the company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."
Two items significantly impacted GAAP results for 2010:
-- A non-cash charge of $106.4 million after-tax ($179.5 million pre-tax), or $2.77 per diluted share, related to the acceleration of deferred compensation in the third quarter of 2010 as a result of a modification of the company's deferred compensation plan. -- Merger-related expenses of $16.5 million after-tax ($27.7 million pre-tax), or $0.43 per diluted share, related to the previously announced merger with TWPG.
"We are very pleased to report our 15th consecutive year of record net revenues and equally pleased with the success of our merger with Thomas Weisel Partners (TWPG). Our record quarterly revenues and record quarterly investment banking revenues demonstrate the power of the franchise and underscore the success of the merger with TWPG. There are clear signs of the retail investor re-engaging, as well as increased activity in the capital markets, both of which contributed to our results. Looking forward, we are well positioned to continue to gain market share, which is accomplished through the addition of talented, entrepreneurial people who share our vision to build the premier middle-market investment banking firm," commented Ronald J. Kruszewski, Chairman, President and Chief Executive Officer of Stifel Financial.
Summary Results of Operations (Unaudited) Three Months Ended ---------------------------------------------------------- (in 000s) 12/31/10 12/31/09 Change 9/30/10 Change ----------- ----------- ---------- ---------- ---------- Net revenues $ 401,599 $ 319,467 25.7% $ 340,388 18.0% Non-GAAP net revenues (1) $ 402,787 $ 319,467 26.1% $ 341,327 18.0% Net income/ (loss) $ 41,394 $ 24,668 67.8% $ (84,336) 149.1% Non-GAAP net income (1) (2) $ 47,318 $ 24,668 91.8% $ 29,639 59.6% Earnings per share: Basic $ 1.21 $ 0.82 47.6% $ (2.47) 149.0% Diluted $ 0.97 $ 0.71 36.6% $ (2.47) 139.3% Non-GAAP diluted (1) (2) $ 1.11 $ 0.71 56.3% $ 0.72 54.2% Year Ended --------------------------------- (in 000s) 12/31/10 12/31/09 Change ----------- ----------- --------- Net revenues $ 1,382,026 $ 1,090,636 26.7% Non-GAAP net revenues (1) $ 1,384,152 $ 1,090,636 26.9% Net income/ (loss) $ 1,907 $ 75,798 (97.5)% Non-GAAP net income (1) (2) $ 124,760 $ 75,798 64.6% Earnings per share: Basic $ 0.06 $ 2.68 (97.8)% Diluted $ 0.05 $ 2.35 (97.9)% Non-GAAP diluted (1) (2) $ 3.24 $ 2.35 37.9% (1) A reconciliation of the company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures." (2) GAAP earnings per share for the three months ended September 30, 2010 is calculated using the basic weighted average number of common shares outstanding, not fully diluted shares, as they are anti-dilutive in periods a loss is incurred. Non-GAAP net loss for the three months ended September 30, 2010, using fully dilutive shares of 41.2 million was $2.05.
Fourth Quarter
Consolidated Net Revenues
For the quarter ended December 31, 2010, net revenues were a record $401.6 million, a 26% increase compared to the fourth quarter of 2009, and an 18% increase compared to the third quarter of 2010.
Our revenue growth was primarily derived from improved equity market conditions, which has contributed to an increase in capital raising and strategic advisory fee revenues, as well as underwriting fees. The increase in financial advisors, client assets and productivity and the improving equity capital markets have contributed to the increase in our commissions and asset management fee revenues. Principal transactions revenues were down compared to the year-ago period and to the third quarter of 2010 due to challenging market conditions for fixed income during the fourth quarter.
Consolidated Compensation and Benefits Expenses
For the quarter ended December 31, 2010, compensation and benefits expenses were $237.1 million, an 18% increase compared to the fourth quarter of 2009, and a 40% decrease compared to the third quarter of 2010. The increase in compensation and benefits expenses from the comparable period in 2009 is primarily due to the merger with TWPG, the purchase of certain UBS branches completed in October 2009, and increased revenue production and profitability. The decrease in compensation and benefits expenses from the third quarter of 2010 is primarily due to the non-cash charge related to the acceleration of deferred compensation taken during the third quarter.
Excluding the non-cash charge in the third quarter of 2010, compensation and benefits as a percentage of net revenues was 59% compared to 63% in the fourth quarter of 2009 and 62% in the third quarter of 2010.
Consolidated Non-Compensation Operating Expenses
For the quarter ended December 31, 2010, non-compensation operating expenses of $97.7 million, which included $8.6 million of merger-related expenses, increased 27% compared to the fourth quarter of 2009 and increased 12.2% from the third quarter of 2010. Excluding merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses were $89.0 million for the fourth quarter of 2010, a 16% increase compared to the fourth quarter of 2009 and a 13% increase compared to the third quarter of 2010. The increase in non-compensation operating expenses is primarily due to an increase in occupancy and other operating expenses related to the merger with TWPG, the purchase of certain UBS branches completed in October 2009, and increased revenue production.
Excluding the merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses as a percentage of net revenues was 22% compared to 24% in the fourth quarter of 2009 and 23% in the third quarter of 2010.
Business Segment Results
Global Wealth Management
For the quarter ended December 31, 2010, the Global Wealth Management ("GWM") segment generated pre-tax operating income of $62.7 million, compared to $34.3 million in the fourth quarter of 2009 and $51.7 million in the third quarter of 2010. Net revenues for the quarter were $236.4 million, compared to $186.1 million in the fourth quarter of 2009, and $207.5 million in the third quarter of 2010. GWM experienced revenue growth across all revenue line items, which is primarily attributable to an increase in the number of financial advisors and client assets resulting from the purchase of certain UBS branches completed in October 2009.
-- The Private Client Group reported net revenues of $226.6 million, a 27% increase compared to the fourth quarter of 2009 and a 15% increase compared to the third quarter of 2010. -- Stifel Bank reported net revenues of $9.8 million, a 27% increase compared to the fourth quarter of 2009 and a 4% decrease compared to the third quarter of 2010.
Compensation and benefits expenses for the quarter were $136.0 million, an increase of 16% compared to the fourth quarter of 2009 and an increase of 14% compared to the third quarter of 2010. The increases are the direct result of increased revenue production. For the fourth quarter of 2010, compensation and benefits as a percentage of net revenues was 58% compared to 63% in the fourth quarter of 2009 and 57% in the third quarter of 2010.
Non-compensation operating expenses for the quarter were $37.7 million, a 9% increase compared to the fourth quarter of 2009 and a 3% increase compared to the third quarter of 2010, primarily due to the acquisition of certain UBS branches completed in October 2009. For the fourth quarter of 2010, non-compensation operating expenses as a percentage of net revenues was 16% compared to 19% in the fourth quarter of 2009 and 18% in the third quarter of 2010.
Institutional Group
For the quarter ended December 31, 2010, the Institutional Group segment generated pre-tax operating income of $43.7 million, compared to $37.8 million in the fourth quarter of 2009, and $27.7 million in the third quarter of 2010. Net revenues for the quarter were $165.9 million, compared to $133.3 million in the fourth quarter of 2009 and $138.0 million in the third quarter of 2010. The growth in revenue over the comparable periods was driven by an increase in advisory services activity, which was primarily related to the merger with TWPG, in addition to strong equity and debt originations. The increase in activity was offset by a decline in fixed income institutional brokerage revenues, which was negatively impacted by the challenging market conditions present during the fourth quarter of 2010.
Institutional brokerage revenues were $82.6 million, a 4% decrease compared to the fourth quarter of 2009 and a 6% decrease compared to the third quarter of 2010.
-- Equity institutional brokerage revenues were $46.5 million, a 20% increase compared to the fourth quarter of 2009 and a 6% increase compared to the third quarter of 2010. -- Fixed income institutional brokerage revenues were $36.1 million, a 24% decrease compared to the fourth quarter of 2009 and an 18% decrease compared to the third quarter of 2010.
Investment banking revenues were $81.6 million, an 82% increase compared to the fourth quarter of 2009 and a 79% increase compared to the third quarter of 2010.
-- Equity capital raising revenues were $34.5 million, a 48% increase compared to the fourth quarter of 2009 and a 91% increase compared to the third quarter of 2010. -- Fixed income capital raising revenues were $6.2 million, a 12% increase compared to the fourth quarter of 2009 and a 38% increase compared to the third quarter of 2010. -- Equity advisory fee revenues were $38.1 million, a 148% increase compared to the fourth quarter of 2009, and an 88% increase compared to the third quarter of 2010. -- Fixed income advisory fee revenues were $2.8 million, a 300% increase compared to the fourth quarter of 2009 and unchanged from the third quarter of 2010.
Compensation and benefits expenses for the quarter were $94.3 million, a 28% increase compared to the fourth quarter of 2009 and a 15% increase compared to the third quarter of 2010. For the fourth quarter of 2010, compensation and benefits as a percentage of net revenues was 57% compared to 55% in the fourth quarter of 2009 and 60% in the third quarter of 2010. The increase in compensation and benefits expenses over the comparable periods is primarily related to associates who joined in connection with the TWPG merger.
Non-compensation operating expenses for the quarter were $28.0 million, a 28% increase compared to the fourth quarter in 2009 and a 1% decrease compared to the third quarter of 2010. The increase in other non-compensation expenses over the comparable period in 2009 is primarily attributable to increased activity in all expense categories related to the merger with TWPG. For the fourth quarter of 2010, non-compensation operating expenses as a percentage of net revenues was 17% compared to 16% in the fourth quarter of 2009 and 21% in the third quarter of 2010.
Full Year 2010
Consolidated Net Revenues
For the year ended December 31, 2010, net revenues were a record $1.4 billion, a 27% increase compared to $1.1 billion during the comparable period in 2009, which represents our fifteenth consecutive annual increase in net revenues.
Our revenue growth was primarily derived from improved equity market conditions and the recently completed merger with TWPG and the acquisition of certain UBS branches at the end of 2009. The increase in financial advisors, client assets and productivity and the improving equity capital markets have contributed to the increase in our commissions and asset management fee revenues. The improved market conditions and our merger with TWPG has contributed to the improvement in our investment banking revenues over the comparable period in 2009, as there has been an increase in capital raising and strategic advisory fee revenues, as well as underwriting fees. Principal transactions revenues were flat compared to the year-ago period mainly driven by improved equity markets, offset by the changing fixed income environment.
Consolidated Compensation and Benefits Expenses
For the year ended December 31, 2010, compensation and benefits expenses were $1.1 billion, which included $186.1 million related to the modification of the company's deferred compensation plan and merger-related expenses, a 47% increase compared to $718.1 million in 2009. Excluding the charges for the modification of the company's deferred compensation plan in the third quarter and merger-related expenses in the third and fourth quarters of 2010, compensation and benefits expenses for 2010 increased 21% compared to 2009. Excluding these expenses, compensation and benefits as a percentage of net revenues was 63% compared to 66% in 2009.
Consolidated Non-Compensation Operating Expenses
For the year ended December 31, 2010, non-compensation operating expenses of $326.1 million, which included $19.0 million of merger-related expenses, increased 29% compared to $252.1 million in 2009. Excluding merger-related expenses in the third and fourth quarters of 2010, non-compensation operating expenses increased 22% compared to 2009. The increase in non-compensation operating expenses is primarily due to the recently completed merger with TWPG and the acquisition of certain UBS branches completed in October 2009. Excluding the merger-related expenses, non-compensation operating expenses as a percentage of net revenues was 22% compared to 23% in 2009.
Business Segment Results
Global Wealth Management
For the year ended December 31, 2010, the GWM segment generated pre-tax operating income of $194.0 million, an 85% increase compared to $104.7 million in 2009. Net revenues for the year ended December 31, 2010 were $843.3 million, a 42% increase compared to $596.0 million in the comparable period of 2009. GWM experienced revenue growth across all revenue line items, which is primarily attributable to an increase in the number of financial advisors and client assets resulting from the purchase of certain UBS branches completed in October 2009.
-- The Private Client Group reported net revenues of $804.7 million, a 40% increase compared to $575.6 million in 2009. -- Stifel Bank reported net revenues of $38.6 million, a 90% increase compared to $20.4 million in 2009.
Compensation and benefits expenses for the year ended December 31, 2010 were $503.5 million; an increase of 36% compared to 2009, and the direct result of increased revenue production. For the year, compensation and benefits as a percentage of net revenues was 60% compared to 62% in 2009.
Non-compensation operating expenses for the year ended December 31, 2010 were $145.8 million, a 20% increase compared to 2009, primarily due to the acquisition of certain UBS branches completed in October 2009. For the year, non-compensation operating expenses as a percentage of net revenues was 17% compared to 20% in 2009.
Institutional Group
For the year ended December 31, 2010, the Institutional Group segment generated pre-tax operating income of $129.5 million, compared to $129.1 million in 2009. Net revenues for the year were $541.8 million, a 10% increase compared to $494.1 million in 2009. The growth in revenue over the comparable period was driven by an increase in advisory services activity, which was primarily related to the merger of TWPG, in addition to strong equity and debt originations. The increase in activity was offset by a decline in fixed income institutional brokerage revenues, which was negatively impacted by the challenging market conditions present throughout 2010.
Institutional brokerage revenues were $341.5 million, a 9% decrease compared to $375.3 million in 2009.
-- Equity institutional brokerage revenues were $173.0 million, a 13% increase compared to $153.3 million in 2009. -- Fixed income institutional brokerage revenues were $168.5 million, a 24% decrease compared to $222.0 million in 2009.
Investment banking revenues were $191.9 million, a 73% increase compared to $110.9 million in 2009.
-- Equity capital raising revenues were $87.4 million, a 96% increase compared to $44.6 million in 2009. -- Fixed income capital raising revenues were $21.1 million, a 24% increase compared to $17.1 million in 2009. -- Equity advisory fee revenues were $76.1 million, a 65% increase compared to $46.0 million in 2009. -- Fixed income advisory fee revenues were $7.3 million, a 128% increase compared to $3.2 million in 2009.
Compensation and benefits expenses for the year were $315.3 million, a 10% increase compared to $287.8 million in 2009. For the year, compensation and benefits as a percentage of net revenues was 58%, which was consistent with 2009. The increase in compensation and benefits expenses over the comparable periods is primarily related to associates who joined in connection with the TWPG merger and increased revenue production.
Non-compensation operating expenses for the year were $97.0 million, a 26% increase compared to $77.1 million in 2009. The increase in other non-compensation expenses over the comparable periods is primarily attributable to increased activity in all expense categories related to the merger with TWPG. For the year, non-compensation operating expenses as a percentage of net revenues was 18% compared to 16% in 2009.
Statement of Financial Condition (Unaudited)
Total assets increased 33% to $4.2 billion as of December 31, 2010 from $3.2 billion as of December 31, 2009. The increase is primarily attributable to growth of the company's bank subsidiary, which has grown its balance sheet to $1.8 billion as of December 31, 2010 from $1.2 billion as of December 31, 2009. As of December 31, 2010, Stifel Bank's investment portfolio of $1.0 billion has increased 75% from December 31, 2009. Over 75% of the investment portfolio is comprised of agency mortgage-backed securities. The increase in total assets is also attributable to the recently completed merger with TWPG. In addition to the net assets acquired in the merger with TWPG, the company recognized goodwill and intangible assets of $148.6 million. The company's broker-dealer subsidiary's gross assets and liabilities, including trading inventory, stock loan/borrow, receivables and payables from/to brokers, dealers and clearing organizations and clients, fluctuate with business levels and overall market conditions.
Total stockholders' equity as of December 31, 2010 increased $385.4 million, or 44%, to $1.3 billion from $873.4 million as of December 31, 2009. The increase is primarily attributable to the issuance of stock upon the completion of the merger with TWPG and the cumulative impact of the previously announced modification of the deferred compensation plan of $73.9 million after-tax, offset by the repurchase of $91.8 million, or 2.0 million shares, of the company's common stock pursuant to existing Board repurchase authorizations during the year ended December 31, 2010. Book value per share was $36.76 at December 31, 2010.
As of December 31, 2010, the company reported total securities owned and investments at fair value of $1.7 billion, which included securities categorized as Level 3 of $173.5 million. The company's Level 3 assets include auction rate securities, for which the auctions have failed, with a fair value of $94.8 million as of December 31, 2010.
Non-GAAP Financial Measures
The company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share as an additional measure to aid in understanding and analyzing the company's financial results for the three and twelve months ended December 31, 2010. Specifically, the company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the company's core operating results and business outlook. The company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the company's results in the current period to those in prior periods and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance. These non-GAAP amounts exclude compensation expense for the acceleration of deferred compensation as a result of the modification of the company's deferred compensation plan and certain compensation and non-compensation operating expenses associated with the merger of TWPG.
A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the company believes that GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share and the same respective non-GAAP measures of the company's financial performance should be considered together.
The following table provides details with respect to reconciling net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share on a GAAP basis for the three and twelve months ended December 31, 2010 to the aforementioned expenses on a non-GAAP basis for the same periods.
Reconciliation of GAAP to Non-GAAP Earnings (Unaudited) (in thousands, except per share amounts) Three Months Ended December 31, 2010 Year Ended December 31, 2010 --------------------------- -------------------------------- Merger- Merger- GAAP related Non-GAAP GAAP related Non-GAAP -------- ------- -------- ---------- -------- ---------- Net revenues $401,599 $ 1,188 $402,787 $1,382,026 $ 2,126 $1,384,152 Non-interest expenses: Compensation and benefits 237,117 242 237,359 1,056,202 (186,053) 870,149 Non- compensation operating expenses 97,665 (8,616) 89,049 326,053 (19,021) 307,032 -------- ------- -------- ---------- -------- ---------- Total non- interest expenses 334,782 (8,374) 326,408 1,382,255 (205,074) 1,177,181 -------- ------- -------- ---------- -------- ---------- Income/(loss) before income taxes/ (benefit) 66,817 9,562 76,379 (229) 207,200 206,971 Provision for income taxes/ (benefit) 25,423 3,638 29,061 (2,136) 84,347 82,211 -------- ------- -------- ---------- -------- ---------- Net income/ (loss) $ 41,394 $ 5,924 $ 47,318 $ 1,907 122,853 $ 124,760 ======== ======= ======== ========== ======== ========== Earnings per share Basic $ 1.21 $ $ 1.38 $ 0.06 $ $ 3.84 Diluted $ 0.97 $ $ 1.11 $ 0.05 $ $ 3.24 As a percentage of net revenues: Compensation and benefits 59.0% 58.9% 76.4% 62.9% Non- compensation operating expenses 24.4% 22.1% 23.6% 22.1% Income/ (loss) before income taxes/ (benefit) 16.6% 19.0% 0.0% 15.0%
Conference Call Information
Stifel Financial Corp. will host its fourth quarter and fiscal year 2010 financial results conference call on Tuesday, February 15, 2011, at 8:30 a.m. Eastern time. The conference call may include forward-looking statements.
All interested parties are invited to listen to the company's Chairman, President, and CEO, Ronald J. Kruszewski, by dialing (888) 676-3684 and referencing conference ID #42304629. A live audio webcast of the call, as well as a presentation highlighting the company's results, will be available through the company's web site, [ www.stifel.com ]. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.
Company Information
Stifel Financial Corp. (
Forward-Looking Statements
This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
Stifel Financial Corp. Summary Results of Operations (Unaudited) (in thousands, except per share amounts) Three Months Ended ------------------------------------------------------ 12/31/10 12/31/09 Change 9/30/10 Change ---------- ---------- -------- --------- -------- Revenues: Principal transactions $ 89,996 $ 116,410 (22.7)% $ 123,194 (26.9)% Commissions 139,605 99,285 40.6 96,986 43.9 Investment banking 90,975 50,545 80.0 51,656 76.1 Asset management and service fees 57,042 39,091 45.9 50,876 12.1 Other income 10,497 2,990 251.1 3,656 187.1 ---------- ---------- -------- --------- -------- Operating revenues 388,115 308,321 25.9 326,368 18.9 Interest revenue 18,307 15,078 21.4 17,718 3.3 ---------- ---------- -------- --------- -------- Total revenues 406,422 323,399 25.7 344,086 18.1 Interest expense 4,823 3,932 22.7 3,698 30.4 ---------- ---------- -------- --------- -------- Net revenues 401,599 319,467 25.7 340,388 18.0 ---------- ---------- -------- --------- -------- Non-interest expenses: Compensation and benefits 237,117 201,263 17.8 395,936 (40.1) Occupancy and equipment rental 34,730 26,430 31.4 29,559 17.5 Communications and office supplies 19,709 15,342 28.5 19,877 (0.8) Commission and floor brokerage 7,313 6,249 17.0 7,972 (8.3) Other operating expenses 35,913 28,869 24.4 29,600 21.3 ---------- ---------- -------- --------- -------- Total non-interest expenses 334,782 278,153 20.4 482,944 (30.7) Income/(loss) before income taxes 66,817 41,314 61.7 (142,556) 146.9 Provision for income taxes/(benefit) 25,423 16,646 52.7 (58,220) 143.7 ---------- ---------- -------- --------- -------- Net income/(loss) $ 41,394 $ 24,668 67.8 % $ (84,336) 149.1% ========== ========== ======== ========= ======== Earnings per share: Basic $ 1.21 $ 0.82 47.6 % $ (2.47) 149.0% Diluted (3) $ 0.97 $ 0.71 36.6 % $ (2.47) 139.3% Weighted average number of common shares outstanding: Basic 34,179 30,209 13.1 % 34,134 0.1% Diluted 42,467 34,706 22.4 % 41,223 3.0% Year Ended ------------------------------ 12/31/10 12/31/09 Change --------- ---------- -------- Revenues: Principal transactions $ 453,533 $ 458,188 (1.0)% Commissions 445,260 345,520 28.9 Investment banking 218,104 125,807 73.4 Asset management and service fees 193,159 117,357 64.6 Other income 19,855 9,138 117.3 --------- ---------- -------- Operating revenues 1,329,911 1,056,010 25.9 Interest revenue 65,326 46,860 39.4 --------- ---------- -------- Total revenues 1,395,237 1,102,870 26.5 Interest expense 13,211 12,234 8.0 --------- ---------- -------- Net revenues 1,382,026 1,090,636 26.7 --------- ---------- -------- Non-interest expenses: Compensation and benefits 1,056,202 718,115 47.1 Occupancy and equipment rental 115,742 89,741 29.0 Communications and office supplies 69,929 54,745 27.7 Commission and floor brokerage 26,301 23,416 12.3 Other operating expenses 114,081 84,205 35.5 --------- ---------- -------- Total non-interest expenses 1,382,255 970,222 42.5 Income/(loss) before income taxes (229) 120,414 (100.0) Provision for income taxes/(benefit) (2,136) 44,616 (104.8) --------- ---------- -------- Net income/(loss) $ 1,907 $ 75,798 (97.5)% ========= ========== ======== Earnings per share: Basic $ 0.06 $ 2.68 (97.8)% Diluted (3) $ 0.05 $ 2.35 (97.9)% Weighted average number of common shares outstanding: Basic 32,482 28,297 14.8% Diluted 38,448 32,294 19.1% (3) Earnings per diluted common share are calculated using the basic weighted average number of common shares outstanding in periods a loss is incurred. Stifel Financial Corp. (in thousands, except per share, employee and location amounts) 12/31/10 12/31/09 Change 9/30/10 Change ------------- ------------ ------ ------------- ------ Statistical Information: Book value per share $ 36.76 $ 28.86 27.4% $ 35.52 3.5% Financial advisors (4) 1,935 1,885 2.7% 1,920 0.8% Full-time associates 4,906 4,434 10.6% 4,868 0.8% Locations 312 294 6.1% 311 0.3% Total client assets $ 110,593,000 $ 91,342,000 21.1% $ 100,289,000 10.3% (4) Includes 160, 166 and 165 independent contractors at December 31, 2010 and 2009 and September 30, 2010, respectively. Global Wealth Management Results and Statistical Information (Unaudited) (in thousands) Three Months Ended ----------------------------------------------------- 12/31/10 12/31/09 Change 9/30/10 Change --------- --------- --------- --------- --------- Revenues: Commissions $ 92,558 $ 75,584 22.5% $ 69,875 32.5% Principal transactions 58,520 54,136 8.1 62,785 (6.8) Asset management and service fees 56,953 38,836 46.7 50,449 12.9 Net interest 10,277 9,065 13.4 12,017 (14.5) Investment banking 5,015 5,730 (12.5) 6,957 (27.9) Other income 13,101 2,712 383.1 5,401 142.6 --------- --------- --------- --------- --------- Net revenues 236,424 186,063 27.1 207,484 13.9 --------- --------- --------- --------- --------- Non-interest expenses: Compensation and benefits 136,009 116,988 16.3 119,100 14.2 Non-compensation operating expenses 37,698 34,749 8.5 36,677 2.8 --------- --------- --------- --------- --------- Total non-interest expenses 173,707 151,737 14.5 155,777 11.5 --------- --------- --------- --------- --------- Income before income taxes $ 62,717 $ 34,326 82.7% $ 51,707 21.3% ========= ========= ========= ========= ========= As a percentage of net revenues: Compensation and benefits 57.5% 62.9% 57.4% Non-compensation operating expenses 16.0% 18.7% 17.7% Income before income taxes 26.5% 18.4% 24.9% Year Ended ------------------------------- 12/31/10 12/31/09 Change --------- --------- --------- Revenues: Commissions $ 321,541 $ 234,052 37.4% Principal transactions 239,851 194,384 23.4 Asset management and service fees 192,073 116,818 64.4 Net interest 44,834 27,188 64.9 Investment banking 22,768 14,906 52.7 Other income 22,202 8,626 157.4 --------- --------- --------- Net revenues 843,269 595,974 41.5 --------- --------- --------- Non-interest expenses: Compensation and benefits 503,456 370,157 36.0 Non-compensation operating expenses 145,790 121,118 20.4 --------- --------- --------- Total non-interest expenses 649,246 491,275 32.2 --------- --------- --------- Income before income taxes $ 194,023 $ 104,699 85.3% ========= ========= ========= As a percentage of net revenues: Compensation and benefits 59.7% 62.1% Non-compensation operating expenses 17.3% 20.3% Income before income taxes 23.0% 17.6% Stifel Bank & Trust (in thousands) 12/31/10 12/31/09 Change 9/30/10 Change ----------- ----------- ------ ----------- ------ Other information: Assets $ 1,773,720 $ 1,159,753 52.9% $ 1,516,484 17.0% Investment securities $ 1,012,714 $ 578,488 75.1% $ 830,127 22.0% Retained loans, net $ 388,265 $ 333,547 16.4% $ 364,732 6.5% Loans held for sale, net (5) $ 86,344 $ 91,117 (5.2)% $ 106,788 (19.1)% Deposits (6) $ 1,623,568 $ 1,047,211 55.0 % $ 1,375,984 18.0 % Allowance as a percentage of loans (7) 0.60% 0.51% 0.50% Non-performing assets as a percentage of total assets 0.18% 0.44% 0.16% (5) Balance at December 31, 2009 includes loans of $33.1 million held for sale as part of the branch sale. (6) Balance at December 31, 2009 includes deposits of $20.8 million held for sale as part of the branch sale. (7) Excluding acquired loans of $155.7 million, $171.0 million and $174.8 million, the allowance as a percentage of gross loans totaled 0.99%, 1.04% and 0.95% as of December 31, 2010 and 2009 and September 30, 2010, respectively. Institutional Group Results and Statistical Information (Unaudited) (in thousands) Three Months Ended ----------------------------------------------------- 12/31/10 12/31/09 Change 9/30/10 Change --------- --------- -------- --------- -------- Revenues: Principal transactions $ 35,564 $ 62,275 (42.9)% $ 60,408 (41.1)% Commissions 47,047 23,701 98.5 27,111 73.5 Capital raising 40,674 28,768 41.4 22,575 80.2 Advisory fees 40,909 16,047 154.9 23,063 77.4 --------- --------- -------- --------- -------- Investment banking 81,583 44,815 82.0 45,638 78.8 Other income (8) 1,708 2,514 (32.1) 4,886 (65.0) --------- --------- -------- --------- -------- Net revenues 165,902 133,305 24.5 138,043 20.2 --------- --------- -------- --------- -------- Non-interest expenses: Compensation and benefits 94,300 73,584 28.2 82,147 14.8 Non-compensation operating expenses 27,946 21,905 27.6 28,242 (1.0) --------- --------- -------- --------- -------- Total non-interest expenses 122,246 95,489 28.0 110,389 10.7 --------- --------- -------- --------- -------- Income before income taxes $ 43,656 $ 37,816 15.4% $ 27,654 57.9% ========= ========= ======== ========= ======== As a percentage of net revenues: Compensation and benefits 56.8% 55.2% 59.5% Non-compensation operating expenses 16.9% 16.4% 20.5% Income before income taxes 26.3% 28.4% 20.0% Year Ended ------------------------------- 12/31/10 12/31/09 Change --------- --------- -------- Revenues: Principal transactions $ 217,770 $ 263,804 (17.5)% Commissions 123,719 111,469 11.0 Capital raising 108,473 61,657 75.9 Advisory fees 83,425 49,244 69.4 --------- --------- -------- Investment banking 191,898 110,901 73.0 Other income (8) 8,452 7,918 6.7 --------- --------- -------- Net revenues 541,839 494,092 9.8 --------- --------- -------- Non-interest expenses: Compensation and benefits 315,329 287,835 9.6 Non-compensation operating expenses 96,975 77,124 25.7 --------- --------- -------- Total non-interest expenses 412,304 364,959 13.0 --------- --------- -------- Income before income taxes $ 129,535 $ 129,133 0.3% ========= ========= ======== As a percentage of net revenues: Compensation and benefits 58.2% 58.3% Non-compensation operating expenses 17.9% 15.6% Income before income taxes 23.9% 26.1% (8) Includes net interest and other income. Institutional Group Institutional Brokerage & Investment Banking Revenues (Unaudited) (in thousands) Three Months Ended ------------------------------------------------ 12/31/10 12/31/09 Change 9/30/10 Change --------- --------- -------- --------- -------- Institutional brokerage: Equity $ 46,521 $ 38,669 20.3% $ 43,711 6.4% Fixed Income 36,090 47,307 (23.7) 43,808 (17.6) --------- --------- -------- --------- -------- Institutional brokerage 82,611 85,976 (3.9) 87,519 (5.6) --------- --------- -------- --------- -------- Investment banking: Capital raising: Equity 34,458 23,213 48.4 18,060 90.8 Fixed Income 6,216 5,555 11.9 4,515 37.7 --------- --------- -------- --------- -------- Capital raising 40,674 28,768 41.4 22,575 80.2 Advisory fees: Equity 38,119 15,349 148.3 20,281 88.0 Fixed Income 2,790 698 299.7 2,782 0.3 --------- --------- -------- --------- -------- Advisory fees 40,909 16,047 154.9 23,063 77.4 --------- --------- -------- --------- -------- Investment banking $ 81,583 $ 44,815 82.0% $ 45,638 78.8% --------- --------- -------- --------- -------- Year Ended ---------------------------- 12/31/10 12/31/09 Change --------- --------- -------- Institutional brokerage: Equity $ 172,983 $ 153,267 12.9% Fixed Income 168,506 222,006 (24.1) --------- --------- -------- Institutional brokerage 341,489 375,273 (9.0) --------- --------- -------- Investment banking: Capital raising: Equity 87,415 44,636 95.8 Fixed Income 21,058 17,021 23.7 --------- --------- -------- Capital raising 108,473 61,657 75.9 Advisory fees: Equity 76,100 46,031 65.3 Fixed Income 7,325 3,213 128.0 --------- --------- -------- Advisory fees 83,425 49,244 69.4 --------- --------- -------- Investment banking $ 191,898 $ 110,901 73.0% --------- --------- --------