Stifel Financial Corp. (NYSE: SF) today reported unaudited quarterly net
income of $14.3 million, or $0.81 per diluted share, on revenue of
$211.4 million for the quarter ended March 31, 2008. For the comparable
quarter of 2007, net income was $8.8 million, or $0.58 per diluted
share, on revenue of $157.0 million.
At March 31, 2008, our equity was $436.8 million, resulting in book
value per share of $28.07.
After adjusting for acquisition related charges, non-GAAP net income,
our “Core earnings”,
and non-GAAP earnings per diluted share were $18.3 million and $1.03,
respectively for the first quarter of 2008 compared to 2007 first
quarter non-GAAP earnings of $13.2 million and non-GAAP earnings per
diluted share of $0.86. A reconciliation between our GAAP results and
non-GAAP measures is included.
Current year first quarter results include the operations of Ryan Beck
and Company and Stifel Bank and Trust for the full three months compared
to the prior year first quarter results which include Ryan Beck
operations for one month and no activity for Stifel Bank and Trust, as
the acquisitions were made on February 28, 2007 and April 2, 2007,
respectively.
Stifel Financial Corp. Summary of Results of Operations
(Unaudited) ($ In Thousands, Except Per Share Amounts)
Three Months Ended
Percent Change From
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Total Revenues
$
217,242
$
219,122
$
162,498
-1
%
34
%
Net Revenues
$
211,477
$
212,186
$
156,961
0
%
35
%
Non-GAAP Net Income (1)
$
18,318
$
20,491
$
13,179
-11
%
39
%
Net Income
$
14,347
$
13,835
$
8,829
4
%
62
%
Per Share Information
Three Months Ended
Percent Change From
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Non-GAAP Earnings Per Share: Diluted (1)
$
1.03
$
1.14
$
0.86
-10
%
20
%
Earnings Per Share: Diluted
$
0.81
$
0.77
$
0.58
5
%
40
%
Weighed average common equivalent share Computations: Diluted
shares
17,763
18,022
15,315
-1
%
16
%
(1) See “Reconciliation
of Core Earnings” table
First Quarter Business Highlights
Net revenue of $211.5 million a 35% increase over the prior year first
quarter and down slightly from the fourth quarter 2007.
GAAP net income of $14.3 million, or $0.81 per diluted share, a 62%
increase over the prior year first quarter and a 4% increase from the
fourth quarter 2007.
Core net income of $18.3 million, or $1.03 per diluted share, a 39%
increase over the prior year first quarter and a 11% decrease from the
fourth quarter 2007
Commission and principal transactions increased $64.7 million, 74%
over the previous year first quarter.
Asset management and service fees increased 56% to $30.3 million as
compared to the prior year first quarter.
For the three months ended March 31, 2008, utilizing Core earnings,
pretax margin was 14%.
For the three months ended March 31, 2008, utilizing Core earnings,
annualized return on average equity was 17%.
The number of Financial Advisors increased to 972 from 956.
The Fixed Income Capital Markets segment recorded record net revenues
of $44.0 million and record income before income taxes of $14.9
million.
Stock Split
The board of Stifel Financial Corp. authorized a 50% stock dividend
which will be made in the form of a three-for-two stock split. The
additional shares will be distributed on June 12, 2008, to shareholders
of record May 29, 2008. Each shareholder will receive one additional
share for every two shares owned. Cash will be distributed in lieu of
fractional shares. The Company has approximately 15.7 million shares
outstanding and, after the split, will have approximately 23.5 million
shares outstanding.
Chairman’s
Comments
Chairman and Chief Executive Officer, Ronald J. Kruszewski, commented, “Despite
turbulent and difficult markets, Stifel Financial achieved its second
best quarter ever in terms of net revenue and third all-time with
respect to core net income. Our ability to avoid many of the
difficulties experienced in our industry is a result of our conservative
balance sheet with assets of $1.6 billion supported by $532 million of
equity and subordinated trust preferred. Despite our conservative
leverage, we achieved a 17% annualized return on average equity,
utilizing core earnings.
Mr. Kruszewski continued, “As compared to the
first quarter of 2007, net revenue increased 35% driven by the addition
of Ryan Beck’s private client business and an
exceptional quarter for Fixed Income Capital Markets, offset by a
difficult quarter for investment banking industry-wide from which we
were not immune. Excluding Ryan Beck private client revenue, net
revenues increased 12% from the first quarter of 2007. Principal
transactions increased 152% driven in large part by the record quarter
in fixed income. Other revenue was a negative $1.2 million due primarily
to mark to market losses of $2.4 million in the quarter as compared to
investment gains of $400,000 and $1.9 million for the first and fourth
quarter of 2007, respectively. Looking forward, while the current market
for investment banking remains challenging, we see the environment and,
consequently, our banking results improving in the second half of the
year.
“During the quarter, we completed a secondary
offering of our common stock selling the majority of BankAtlantic’s
position in Stifel Financial. We would like to welcome our new
shareholder’s and thank them for their
investment in our company. We are also pleased to announce a 50% stock
dividend, which underscores our confidence and will serve to add
liquidity to our common stock.”
Summary of Financial Results
Stifel Financial Corp. Summary of Results of Operations
(Unaudited) ($ In Thousands, Except Per Share Amounts)
Three Months Ended
Three Months Ended
Percent Change From
3/31/2008
% of Net Revenues
12/31/2007
% of Net Revenues
3/31/2007
% of Net Revenues
12/31/2007
3/31/2007
Revenues
Commissions
$
85,701
40.5
%
$
90,584
42.7
%
$
61,376
39.1
%
-5
%
40
%
Principal transactions
66,937
31.7
%
47,670
22.5
%
26,566
16.9
%
40
%
152
%
Investment banking
21,844
10.3
%
31,449
14.8
%
43,066
27.4
%
-31
%
-49
%
Asset management and service fees
30,278
14.3
%
29,592
13.9
%
19,373
12.3
%
2
%
56
%
Other
(1,207
)
-0.6
%
4,127
1.9
%
1,417
0.9
%
n/a
n/a
Total operating revenues
203,553
96.3
%
203,422
95.9
%
151,798
96.7
%
0
%
34
%
Interest revenue
13,689
6.5
%
15,700
7.4
%
10,700
6.8
%
-13
%
28
%
Total revenues
217,242
102.7
%
219,122
103.3
%
162,498
103.5
%
-1
%
34
%
Less: Interest expense
5,765
2.7
%
6,936
3.3
%
5,537
3.5
%
-17
%
4
%
Net revenues
211,477
100.0
%
212,186
100.0
%
156,961
100.0
%
0
%
35
%
Non-Interest Expenses
Employee compensation and benefits
146,030
69.1
%
141,758
66.8
%
110,834
70.6
%
3
%
32
%
Occupancy and equipment rental
15,716
7.4
%
17,029
8.0
%
10,608
6.8
%
-8
%
48
%
Communication and office supplies
11,947
5.6
%
11,052
5.2
%
8,094
5.2
%
8
%
48
%
Commissions and floor brokerage
481
0.2
%
2,675
1.3
%
1,615
1.0
%
-82
%
-70
%
Other operating expenses
13,378
6.3
%
16,579
7.8
%
10,993
7.0
%
-19
%
22
%
Total non-interest expenses
187,552
88.7
%
189,093
89.1
%
142,144
90.6
%
-1
%
32
%
Income before income taxes
23,925
11.3
%
23,093
10.9
%
14,817
9.4
%
4
%
61
%
Provision for income taxes
9,578
4.5
%
9,258
4.4
%
5,988
3.8
%
3
%
60
%
Net income
$
14,347
6.8
%
$
13,835
6.5
%
$
8,829
5.6
%
4
%
62
%
Per Share Information
Three Months Ended
Percent Change From
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Earnings Per Share:
Basic
$
0.92
$
0.92
$
0.67
2
%
40
%
Diluted
$
0.81
$
0.77
$
0.58
5
%
40
%
Weighted average common equivalent shares
Basic shares
15,517
15,089
13,107
3
%
18
%
Diluted shares
17,763
18,022
15,315
-1
%
16
%
Balance Sheet Information
Total Assets (in thousands)
$
1,613,215
$
1,499,440
$
1,427,407
8
%
13
%
Total Liabilities & Sub Debt (in thousands)
$
1,176,176
$
1,074,803
$
1,084,766
9
%
8
%
Stockholders' Equity (in thousands)
$
437,038
$
424,637
$
342,641
3
%
28
%
Statistical Information
Book Value Per Share
$
28.07
$
27.54
$
23.16
2
%
21
%
Financial Advisors
972
966
956
1
%
2
%
Employees
2,882
2,834
2,766
2
%
4
%
Locations
179
175
178
2
%
1
%
Total Client Assets (in thousands)
$
57,283,000
$
59,299,000
$
36,464,000
-3
%
57
%
Business Segment Results
Stifel Financial Corp. Summary of Segment Data &
Statistical Information (Unaudited) ($ In Thousands)
Three Months Ended
Percent Change From
Net Revenues
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Private Client
$
114,853
$
119,260
$
85,527
-4
%
34
%
Equity capital markets
49,228
59,421
52,530
-17
%
-6
%
Fixed income capital markets
44,002
23,794
14,615
85
%
201
%
Stifel Bank
2,082
1,871
0
11
%
n/a
Other
1,312
7,840
4,289
-83
%
-69
%
Total net revenues
$
211,477
$
212,186
$
156,961
0
%
35
%
Operating Contribution
Private Client
$
25,605
$
27,484
$
18,091
-7
%
42
%
Equity capital markets
6,927
10,213
13,418
-32
%
-48
%
Fixed income capital markets
14,913
4,785
1,887
212
%
690
%
Stifel Bank
309
347
0
-11
%
n/a
Other/unallocated overhead
(23,829
)
(19,736
)
(18,579
)
n/a
n/a
Income before income taxes
$
23,925
$
23,093
$
14,817
4
%
61
%
Private Client Group Segment First
Quarter Highlights
Net revenue of $114.9 million a 34% increase over the prior year first
quarter and a 4% decrease from the fourth quarter 2007.
Commission and principal transactions increased 51% over the previous
year first quarter and decreased 5% from the fourth quarter 2007.
Asset management and service fees increased 57% to $30.1 million as
compared to the prior year first quarter and a 2% increase from the
fourth quarter 2007.
For the three months ended March 31, 2008, employee compensation and
benefits was 63% of net revenue compared to 64% for the previous year
first quarter.
The number of Financial Advisors increased to 972 from 956.
Mr. Kruszewski, commented, "Our Private Client Group (PCG) continued its
growth in the 1st quarter of 2008 as evidenced by the addition of 32
financial advisors and the opening of five new offices in: Oconomowoc,
WI; Brevard, NC; Memphis, TN; Lincoln Hills, CA; and Oxnard, CA. PCG
revenue increased 34% from the 1st quarter of 2007 reflecting our
successful integration of Ryan Beck. The increase in revenue was driven
by a 57% increase in asset management and service fees and a 51%
increase in commissions and principal transactions which offset a 67%
decline in investment banking revenue. The decline in investment banking
was due to both the difficult market conditions and to a decline in
closed-end fund offerings as compared to the 1st quarter of 2007.
Sequentially, while revenue and pre-tax income declined 4% and 7%,
respectively, from the record preceding quarter, our results were
outstanding given market conditions."
Stifel Financial Corp. Private Client Group Segment Data
& Statistical Information (Unaudited) ($ in thousands)
Three Months Ended
Percent Change From
Revenues:
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Commissions and principal transactions
$
77,952
$
81,929
$
51,730
-5
%
51
%
Investment banking
4,103
4,705
12,288
-13
%
-67
%
Asset management and service fees
30,147
29,578
19,227
2
%
57
%
Net interest & other
2,651
3,048
2,282
-13
%
16
%
Total Net Revenue
114,853
119,260
85,527
-4
%
34
%
Non-interest expenses:
Employee compensation & benefits
72,845
72,151
54,956
1
%
33
%
Other non-interest expenses
16,403
19,625
12,480
-16
%
31
%
Total non-interest expenses
89,248
91,776
67,436
-3
%
32
%
Income before income taxes
$
25,605
$
27,484
$
18,091
-7
%
42
%
Ratios to Net Revenues
Employee compensation & benefits
63
%
60
%
64
%
Other non-interest expenses
15
%
17
%
15
%
Net Margins
22
%
23
%
21
%
Equity Capital Markets Segment First
Quarter Highlights
Net revenue of $49.3 million a 6% decrease over the prior year first
quarter and a 17% decrease from the fourth quarter 2007.
Commission and principal transactions increased 41% over the previous
year first quarter and decreased 1% from the fourth quarter 2007.
For the three months ended March 31, 2008, employee compensation and
benefits was 64% of net revenue compared to 59% for the previous year
first quarter.
Mr. Kruszewski, commented, "Our results in Equity Capital Markets
reflect the difficult environment in investment banking. On the other
hand, our research driven flow business, as measured by commissions and
principal transactions, increased 41% over the comparable quarter of
2007. Despite the difficult quarter for banking our pipeline remains
strong and, as previously stated, we see this business improving in the
second half of the year.
Stifel Financial Corp. Equity Capital Markets Segment
Data & Statistical Information (Unaudited) (in thousands)
Three Months Ended
Percent Change From
Revenues:
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Commissions and principal transactions
$
34,654
$
35,100
$
24,621
-1
%
41
%
Capital raising
6,758
7,850
11,828
-14
%
-43
%
Advisory fees
7,509
16,322
15,654
-54
%
-52
%
Investment banking
14,267
24,172
27,482
-41
%
-48
%
Other
307
149
427
106
%
-28
%
Total Net Revenue
49,228
59,421
52,530
-17
%
-6
%
Non-interest expenses:
Employee compensation & benefits
31,294
38,099
30,889
-18
%
1
%
Other non-interest expenses
11,007
11,109
8,223
-1
%
34
%
Total non-interest expenses
42,301
49,208
39,112
-14
%
8
%
Income before income taxes
$
6,927
$
10,213
$
13,418
-32
%
-48
%
Ratios to Net Revenues
Employee compensation & benefits
64
%
64
%
59
%
Other non-interest expenses
22
%
19
%
15
%
Net Margins
14
%
17
%
26
%
Fixed Income Capital Markets Segment
First Quarter Highlights
Record net revenue of $44.0 million, a 201% increase over the prior
year first quarter and an 85% increase from the fourth quarter 2007.
Commissions and principal transactions increased 245% over the
previous year first quarter and increased 89% from the fourth quarter
2007.
For the three months ended March 31, 2008, employee compensation and
benefits was 59% of net revenue compared to 69% for the previous year
first quarter.
Net margins were 34% compared to 13% in the prior year first quarter
and 20% in the preceding 2007 fourth quarter.
Mr. Kruszewski, commented, "Our Fixed Income Capital Markets Group
recorded outstanding results with a 201% increase in net revenue and a
690% increase in pre-tax income. Our flow business, primarily in
corporate debt and mortgage backed securities, was the primary driver of
our records results. In addition, the successful integration of Ryan
Beck contributed to our record quarter."
Stifel Financial Corp. Fixed Income Capital Markets
Segment Data & Statistical Information (Unaudited) (in
thousands)
Three Months Ended
Percent Change From
Revenues:
3/31/2008
12/31/2007
3/31/2007
12/31/2007
3/31/2007
Commissions and principal transactions
$
40,033
$
21,225
$
11,592
89
%
245
%
Investment banking
3,474
2,571
3,296
35
%
5
%
Other
495
(2
)
(273
)
n/a
n/a
Total Net Revenue
44,002
23,794
14,615
85
%
201
%
Non-interest expenses:
Employee compensation & benefits
25,936
15,804
10,154
64
%
155
%
Other non-interest expenses
3,153
3,205
2,574
-2
%
22
%
Total non-interest expenses
29,089
19,009
12,728
53
%
129
%
Income before income taxes
$
14,913
$
4,785
$
1,887
212
%
690
%
Ratios to Net Revenues
Employee compensation & benefits
59
%
66
%
69
%
Other non-interest expenses
7
%
14
%
18
%
Net Margins
34
%
20
%
13
%
Stifel Bank Segment First Quarter
Highlights
Net revenue of increased 11% over the preceding quarter.
Total loans, net increased 16% over the preceding quarter.
Total assets increased 16% over the preceding quarter.
Total deposits increased 19% over the preceding quarter.
Non performing loans as a percentage of total loans decreased from
1.51% in the preceding quarter to 1.42%.
Mr. Kruszewski, commented, "We continue to grow Stifel Bank & Trust in a
balanced and prudent manner. Our strategic rational for our bank is to
provide a full range of banking products to our clients."
Stifel Financial Corp. Stifel Bank & Trust Segment Data
& Statistical Information (Unaudited) ($ in thousands)
From Application
Virtualization to Xen, a
round-up of the
virtualization themes &
topics being discussed in
NYC June 23-24, 2008 by
the world-class speaker
faculty at the 3rd
International
Virtualization Conference
& Expo being held by
SYS-CON Events in The
Roosevelt Hotel, in mi
Verizon Wireless is
snubbing Google's
Linux-based Android
initiative to go with the
LiMo Foundation's mobile
Linux spec for its next
wave of mobile phones
expected next year. Along
with Verizon, Mozilla
signed up - giving the
consortium its first
major open source ISV -
and a key
Zoho announced that it is
welcoming Google and
Yahoo users with a
unified login designed to
encourage those users to
try Zoho applications.
Now, Google and Yahoo
users who visit Zoho can
simply log into Zoho
using the usernames and
passwords associated with
their Google and Yahoo
Google has taken its
Postini investment and
turned out Google Web
Security for the
Enterprise, which is
supposed to protect
against spyware, viruses
and zero-hour threats in
real-time whether the
user is on the corporate
network or working
remotely like at a hotel
or in an airpor
It's only taken Borland
two years but it's
finally dumped its
CodeGear tools division,
responsible for Borland's
hereditary JBuilder,
Delphi and C++ Builder
lines as well as its new
web ventures into PHP and
Ruby, said to be used by
7.5 million developers.
Embarcadero Technologie
Microsoft, which spent $6
billion on aQuantive and
was chasing Yahoo for its
ads before it came to a
dead stop, has been
supporting - as in
helping write -
legislation in New York
and Connecticut that
would regulate the data
that companies like Yahoo
and Google collect for
target
SUBSCRIBE TO THE WORLD'S MOST POWERFUL NEWSLETTERS
SUBSCRIBE TO OUR RSS FEEDS & GET YOUR SYS-CON NEWS LIVE!
Click to Add our RSS Feeds to the Service of Your Choice:
About Newsfeeds / Video Feeds
.gif)
From Application
Virtualization to Xen, a
round-up of the
virtualization themes &
topics being discussed in
NYC June 23-24, 2008 by
the world-class speaker
faculty at the 3rd
International
Virtualization Conference
& Expo being held by
SYS-CON Events in The
Roosevelt Hotel, in mi
Verizon Wireless is
snubbing Google's
Linux-based Android
initiative to go with the
LiMo Foundation's mobile
Linux spec for its next
wave of mobile phones
expected next year. Along
with Verizon, Mozilla
signed up - giving the
consortium its first
major open source ISV -
and a key
Google has taken its
Postini investment and
turned out Google Web
Security for the
Enterprise, which is
supposed to protect
against spyware, viruses
and zero-hour threats in
real-time whether the
user is on the corporate
network or working
remotely like at a hotel
or in an airpor
It's only taken Borland
two years but it's
finally dumped its
CodeGear tools division,
responsible for Borland's
hereditary JBuilder,
Delphi and C++ Builder
lines as well as its new
web ventures into PHP and
Ruby, said to be used by
7.5 million developers.
Embarcadero Technologie
Microsoft, which spent $6
billion on aQuantive and
was chasing Yahoo for its
ads before it came to a
dead stop, has been
supporting - as in
helping write -
legislation in New York
and Connecticut that
would regulate the data
that companies like Yahoo
and Google collect for
target 
