Stifel Reports Third Quarter 2015 Financial Results
/EINPresswire.com/ -- ST. LOUIS, MO--(Marketwired - November 04, 2015) -
Highlights for the three months ended September 30, 2015:
- Net revenues of $591.6 million, increased 13.0% compared with the year-ago quarter.
- Non-GAAP net income of $47.7 million, or $0.60 per diluted common share.
- Net income of $17.2 million, or $0.22 per diluted common share.
- Repurchased 1.5 million shares for approximately $65.9 million.
- On November 3, 2015, the Board of Directors authorized an additional 5.0 million shares for repurchase under the current buyback plan.
Highlights for the nine months ended September 30, 2015:
- Record net revenues of $1.75 billion, increased 7.4% compared with the year-ago period.
- Non-GAAP net income of $152.7 million, or $1.95 per diluted share.
- Net income of $81.2 million, or $1.04 per diluted share.
Stifel Financial Corp. (NYSE: SF) today reported net income of $17.2 million, or $0.22 per diluted common share on net revenues of $591.6 million for the three months ended September 30, 2015, compared with net income of $39.9 million, or $0.52 per diluted common share, on net revenues of $523.5 million for the third quarter of 2014.
For the three months ended September 30, 2015, the Company reported non-GAAP net income of $47.7 million, or $0.60 per diluted common share. These non-GAAP results exclude merger-related expenses of $30.5 million (after-tax), primarily related to the acquisition of Sterne Agee.
For the nine months ended September 30, 2015, the Company reported net income of $81.2 million, or $1.04 per diluted common share on record net revenues of $1.75 billion, compared with net income of $130.9 million, or $1.72 per diluted share, on net revenues of $1.63 billion for the comparable period in 2014.
For the nine months ended September 30, 2015, the Company reported non-GAAP net income of $152.7 million, or $1.95 per diluted share. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."
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Three Months Ended
(in 000s) 9/30/15 9/30/14 % Change 6/30/15 % Change
----------- ----------- --------- ----------- ---------
Net revenues $ 591,575 $ 523,455 13.0 $ 597,751 (1.0)
Net income $ 17,179 $ 39,903 (56.9) $ 20,888 (17.8)
Non-GAAP net $ $ $
income(1) 47,705 48,508 (1.7) 55,091 (13.4)
Earnings per common
share:
Basic $ 0.25 $ 0.60 (58.3) $ 0.31 (19.4)
Diluted $ 0.22 $ 0.52 (57.7) $ 0.27 (18.5)
Non-GAAP net $ $ $
income1 0.60 0.64 (6.3) 0.71 (15.5)
Weighted average number of common shares
outstanding:
Basic 69,633 66,691 4.4 68,370 1.8
Diluted 79,759 76,681 4.0 77,856 2.4
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-----------------------------------------------------
Nine Months Ended
(in 000s) 9/30/15 9/30/14 % Change
---------- ----------- ---------
Net revenues $1,750,308 $1,630,348 7.4
Net income $ 81,164 $ 130,886 (38.0)
Non-GAAP net $ $
income(1) 152,734 149,235 2.3
Earnings per common
share:
Basic $ 1.18 $ 1.97 (40.1)
Diluted $ 1.04 $ 1.72 (39.5)
Non-GAAP net $ $
income1 1.95 1.96 (0.5)
Weighted average
number of common
shares
outstanding:
Basic 68,675 66,344 3.5
Diluted 78,326 76,011 3.0
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(1) A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
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 operating expenses. As a result, compared to the 2nd quarter of 2015, revenues declined by $6.1 million while non-compensation operating expenses increased $13.0 million, resulting in a decline in pre-tax operating margin from 15.5% to 12.2%," stated Ronald J. Kruszewski, Chairman and CEO of Stifel.
Kruszewski continued, "In the quarter, Stifel continued to build a premier balanced wealth management and institutional services company. Our operating model provides us tremendous leverage to invest in the future while at the same time providing shareholders a strong return. We are well positioned to take advantage of opportunities as they arrive and offer our clients excellent advice and services.
We expect the Barclays transaction, announced on June 8, 2015, to close on December 4, 2015. We are excited to welcome these highly talented associates to Stifel."
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions revenues, were $289.7 million, a 10.4% increase compared with the third quarter of 2014 and a 6.7% increase compared with the second quarter of 2015.
- Global wealth management brokerage revenues were $169.3 million, a 7.5% increase compared with the third quarter of 2014 and a 6.6% increase compared with the second quarter of 2015.
- Institutional equity brokerage revenues were $59.8 million, a 4.1% increase compared with the third quarter of 2014 and a 1.5% decrease compared with the second quarter of 2015.
- Institutional fixed income brokerage revenues were $60.6 million, a 27.6% increase compared with the third quarter of 2014 and a 16.6% increase compared with the second quarter of 2015.
Investment Banking Revenues
Investment banking revenues were $118.8 million, which was consistent with the third quarter of 2014 and a 25.2% decrease compared with the second quarter of 2015.
- Equity capital raising revenues were $36.6 million, a 29.2% decrease compared with the third quarter of 2014 and a 31.3% decrease compared with the second quarter of 2015.
- Fixed income capital raising revenues were $32.4 million, a 101.7% increase compared with the third quarter of 2014 and a 22.8% decrease compared with the second quarter of 2015.
- Advisory fee revenues were $49.8 million, a 2.3% decrease compared with the third quarter of 2014 and a 21.8% decrease compared with the second quarter of 2015.
Asset Management and Service Fee Revenues
Asset management and service fee revenues were $130.6 million, a 35.2% increase compared with the third quarter of 2014 and a 8.9% increase compared with the second quarter of 2015. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets and revenues from our acquisition of 1919 Investment Counsel in the fourth quarter of 2014.
Compensation and Benefits Expenses
For the quarter ended September 30, 2015, compensation and benefits expenses were $404.2 million, which included $32.2 million of merger-related expenses, compared with $331.4 million in the third quarter of 2014, and $410.0 million in the second quarter of 2015. Compensation and benefits expense included merger-related expenses of $7.2 million in the third quarter of 2014 and $39.6 million in the second quarter of 2015.
Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 62.9% in the third quarter of 2015, compared with 61.8% in the third quarter of 2014 and 62.0% in the second quarter of 2015. Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, as a percentage of net revenues was 3.7% in the third quarter of 2015, compared with 5.1% in the third quarter of 2014 and 3.7% in the second quarter of 2015.
Non-Compensation Operating Expenses
For the quarter ended September 30, 2015, non-compensation operating expenses were $165.0 million, which included merger-related expenses of $17.4 million, compared with $126.2 million in the third quarter of 2014, and $149.7 million in the second quarter of 2015.
Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2015 was 24.9%, compared with 23.3% in the third quarter of 2014 and 22.5% in the second quarter of 2015.
Provision for Income Taxes
The effective income tax rate for the quarter ended September 30, 2015 was 23.1% compared with 39.0% in the third quarter of 2014, and 45.1% in the second quarter of 2015. The effective tax rate for the third quarter of 2015 was positively impacted by a decrease in the Company's FIN 48 reserve and adjustments associated with the filing of the 2014 Corporate tax return.
Assets and Capital
Assets
- Assets increased 0.4% to $9.4 billion as of September 30, 2015 from $9.3 billion as of September 30, 2014. The increase is primarily attributable to acquired assets from our acquisitions and an increase in the loan portfolio at Stifel Bank, offset by a decrease in Stifel Bank's investment portfolio and financial instruments owned, at fair value.
- At September 30, 2015, the Company's Level 3 assets of $116.3 million, or 1.2% of total assets, consisted of $57.5 million of auction rate securities and $58.8 million of partnership interests, private company investments, private equity, and fixed income securities. The Company's Level 3 assets as a percentage of total assets measured at fair value was 6.7% at September 30, 2015.
- Non-performing assets as a percentage of total assets as of September 30, 2015 was 0.03%.
Capital
- The Company's Tier 1 leverage capital ratio was 16.4% at September 30, 2015 and Tier 1 risk-based capital ratio was 29.4% at September 30, 2015.
- At September 30, 2015, book value per common share was $36.63 based on 68.1 million common shares outstanding.
- Stockholders' equity as of September 30, 2015 increased $254.5 million, or 11.4%, to $2.5 billion from $2.2 billion as of September 30, 2014.
- The Company repurchased $65.9 million, or 1.5 million shares, of its common stock pursuant to the current buyback plan during the third quarter of 2015. On November 3, 2015, the Board of Directors authorized the repurchase of an additional 5.0 million shares. Under existing Board authorizations at November 4, 2015, the Company is permitted to buy an additional 6.8 million shares.
Conference Call Information
Stifel Financial Corp. will host its third quarter 2015 financial results conference call on Wednesday, November 4, 2015, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.
All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #43107515. 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. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. The Company's broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. offers trust and related services. To learn more about Stifel, please visit the Company's web site at www.stifel.com.
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.
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Summary Results of Operations (Unaudited)
Three Months Ended
------------------------------------------------
(in thousands, except per
share amounts) 9/30/15 9/30/14 % Change 6/30/15 % Change
--------- --------- --------- -------- ---------
Revenues:
Commissions $ 194,083 $ 167,601 15.8 $184,866 5.0
Principal transactions 95,593 94,828 0.8 86,597 10.4
------- ------- ------- ------- -------
Brokerage revenues 289,676 262,429 10.4 271,463 6.7
Investment banking 118,753 118,717 * 158,857 (25.2)
Asset management and
service fees 130,636 96,638 35.2 119,936 8.9
Other income 18,930 4,803 294.1 13,742 37.8
--------- --------- --------- -------- ---------
Operating revenues 557,995 482,587 15.6 563,998 (1.1)
Interest revenue 43,376 52,096 (16.7) 43,851 (1.1)
--------- --------- --------- -------- ---------
Total revenues 601,371 534,683 12.5 607,849 (1.1)
Interest expense 9,796 11,228 (12.8) 10,098 (3.0)
--------- --------- --------- -------- ---------
Net revenues 591,575 523,455 13.0 597,751 (1.0)
--------- --------- --------- -------- ---------
Non-interest expenses:
Compensation and benefits 404,205 331,440 22.0 409,998 (1.4)
Occupancy and equipment
rental 53,282 41,611 28.0 48,346 10.2
Communications and office
supplies 35,678 27,464 29.9 31,114 14.7
Commission and floor
brokerage 12,430 9,971 24.7 9,124 36.2
Other operating expenses 63,632 47,203 34.8 61,098 4.1
--------- --------- --------- -------- ---------
Total non-interest
expenses 569,227 457,689 24.4 559,680 1.7
Income from continuing
operations before income
taxes 22,348 65,766 (66.0) 38,071 (41.3)
Provision for income taxes 5,169 25,673 (79.9) 17,183 (69.9)
--------- --------- --------- -------- ---------
Net income from continuing
operations 17,179 40,093 (57.2) 20,888 (17.8)
Discontinued operations:
Loss from discontinued
operations, net of tax - (190) - - -
Net income $ 17,179 $ 39,903 (56.9)$ 20,888 (17.8)
--------- --------- --------- -------- ---------
Earnings per basic common
share:
Income from continuing
operations $ 0.25 $ 0.60 (58.3)$ 0.31 (19.4)
Loss from discontinued
operations - - - - -
--------- --------- --------- -------- ---------
Earnings per basic common
share $ 0.25 $ 0.60 (58.3)$ 0.31 (19.4)
--------- --------- --------- -------- ---------
Earnings per diluted common
share:
Income from continuing
operations $ 0.22 $ 0.52 (57.7)$ 0.27 (18.5)
Loss from discontinued
operations - - - - -
--------- --------- --------- -------- ---------
Earnings per basic diluted
share $ 0.22 $ 0.52 (57.7)$ 0.27 (18.5)
--------- --------- --------- -------- ---------
Weighted average number of common shares
outstanding:
Basic 69,633 66,691 4.4 68,370 1.8
Diluted 79,759 76,681 4.0 77,856 2.4
---------------------------
* Percentage not
meaningful.
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Summary Results of Operations (Unaudited)
Nine Months Ended
---------------------------------
(in thousands, except per
share amounts) 9/30/15 9/30/14 % Change
---------- ----------- ----------
Revenues:
Commissions $ 562,249 $ 510,070 10.2
Principal transactions 281,794 318,312 (11.5)
--------- --------- --------
Brokerage revenues 844,043 828,382 1.9
Investment banking 400,302 390,848 2.4
Asset management and
service fees 364,442 280,039 30.1
Other income 44,471 18,745 137.2
---------- ----------- ----------
Operating revenues 1,653,258 1,518,014 8.9
Interest revenue 129,964 141,035 (7.8)
---------- ----------- ----------
Total revenues 1,783,222 1,659,049 7.5
Interest expense 32,914 28,701 14.7
---------- ----------- ----------
Net revenues 1,750,308 1,630,348 7.4
---------- ----------- ----------
Non-interest expenses:
Compensation and benefits 1,169,896 1,033,478 13.2
Occupancy and equipment
rental 145,798 125,110 16.5
Communications and office
supplies 96,026 78,151 22.9
Commission and floor
brokerage 31,623 28,247 12.0
Other operating expenses 176,480 143,945 22.6
---------- ----------- ----------
Total non-interest
expenses 1,619,823 1,408,931 15.0
Income from continuing
operations before income
taxes 130,485 221,417 (41.1)
Provision for income taxes 49,321 87,774 (43.8)
---------- ----------- ----------
Net income from continuing
operations 81,164 133,643 (39.3)
Discontinued operations:
Loss from discontinued
operations, net of tax - (2,757) *
Net income $ 81,164 $ 130,886 (38.0)
---------- ----------- ----------
Earnings per basic common
share:
Income from continuing
operations $ 1.18 $ 2.01 (40.1)
Loss from discontinued
operations - (0.04) *
---------- ----------- ----------
Earnings per basic common
share $ 1.18 $ 1.97 (40.1)
---------- ----------- ----------
Earnings per diluted common
share:
Income from continuing
operations $ 1.04 $ 1.76 (39.5)
Loss from discontinued
operations - (0.04) *
---------- ----------- ----------
Earnings per basic diluted
share $ 1.04 $ 1.72 (39.5)
---------- ----------- ----------
Weighted average number of
common shares outstanding:
Basic 68,675 66,344 3.5
Diluted 78,326 76,011 3.0
---------------------------
* Percentage not
meaningful.
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Statistical Information
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(in thousands, except per share, employee and location amounts)
9/30/15 9/30/14 % Change 6/30/15 % Change
------------- ------------- -------- ------------ --------
Statistical
Information:
Book value per
share $ 36.63 $ 33.92 8.0 $ 36.35 0.8
Financial
advisors (2) 2,846 2,096 35.8 2,823 0.8
Full-time
associates
(3) 6,865 5,944 15.5 6,819 0.7
Locations 391 360 8.6 398 (1.8)
Total client
assets $ 208,085,000 $ 172,742,000 20.5 $208,628,000 (0.3)
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(2) Includes 755, 139, and 736 independent contractors as of September 30, 2015, September 30, 2014, and June 30, 2015. (3) Excludes independent contractors.
Business Segment Results
----------------------------------------------------------------------------
Summary Segment Results (Unaudited)
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Three Months Ended
---------------------------------------------
(in 000s) 9/30/15 9/30/14 % Change 6/30/15 % Change
--------- -------- -------- -------- --------
Net revenues:
Global Wealth Management $ 357,306 $317,241 12.6 $343,382 4.1
Institutional Group 232,125 215,160 7.9 258,538 (10.2)
Other 2,144 (8,946) 124.0 (4,169) (151.4)
--------- -------- -------- -------- --------
$ 591,575 $523,455 13.0 $597,751 (1.0)
--------- -------- -------- -------- --------
Operating contribution: (4)
Global Wealth Management $ 97,227 $ 94,026 3.4 $ 93,975 3.5
Institutional Group 25,853 29,500 (12.4) 41,942 (38.4)
Other (51,128) (45,649) (12.0) (43,122) (18.6)
--------- -------- -------- -------- --------
$ 71,952 $ 77,877 (7.6)$ 92,795 (22.5)
--------- -------- -------- -------- --------
As a percentage of net revenues:
Compensation and benefits
Global Wealth Management 57.1 55.9 57.1
Institutional Group 62.0 61.2 61.9
Non-comp. operating expenses
Global Wealth Management 15.7 14.5 15.5
Institutional Group 26.9 25.1 21.9
Income before income taxes
Global Wealth Management 27.2 29.6 27.4
Institutional Group 11.1 13.7 16.2
--------- -------- --------
12.2 14.8 15.5
--------- -------- --------
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Summary Segment Results (Unaudited)
--------------------------------------------------------------
Nine Months Ended
------------------------------
(in 000s) 9/30/15 9/30/14 % Change
---------- ---------- --------
Net revenues:
Global Wealth Management $1,030,097 $ 921,671 11.8
Institutional Group 729,269 720,849 1.2
Other (9,058) (12,172) 25.6
---------- ---------- --------
$1,750,308 $1,630,348 7.4
---------- ---------- --------
Operating contribution: (4)
Global Wealth Management $ 290,049 $ 262,800 10.4
Institutional Group 100,124 117,812 (15.0)
Other (144,619) (137,034) (5.5)
---------- ---------- --------
$ 245,554 $ 243,578 0.8
---------- ---------- --------
As a percentage of net
revenues:
Compensation and benefits
Global Wealth Management 56.6 56.8
Institutional Group 62.2 61.5
Non-comp. operating expenses
Global Wealth Management 15.2 14.7
Institutional Group 24.1 22.2
Income before income taxes
Global Wealth Management 28.2 28.5
Institutional Group 13.7 16.3
---------- ----------
14.1 14.9
---------- ----------
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(4) A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."
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Global Wealth Management Summary Results of Operations (Unaudited)
Three Months Ended
---------------------------------------------
(in 000s) 9/30/15 9/30/14 % Change 6/30/15 % Change
--------- -------- -------- -------- --------
Revenues:
Commissions $ 134,476 $113,177 18.8 $125,121 7.5
Principal transactions 34,843 44,373 (21.5) 33,682 3.4
------- ------- ------- ------- -------
Brokerage revenues 169,319 157,550 7.5 158,803 6.6
Asset management and service
fees 129,032 96,354 33.9 119,734 7.8
Net interest 36,326 43,357 (16.3) 37,454 (3.0)
Investment banking 10,146 13,488 (24.8) 15,128 (32.9)
Other income 12,483 6,492 92.3 12,263 1.7
--------- -------- -------- -------- --------
Net revenues 357,306 317,241 12.6 343,382 4.1
--------- -------- -------- -------- --------
Non-interest expenses:
Compensation and benefits 203,959 177,296 15.0 196,234 3.9
Non-compensation operating
expenses 56,120 45,919 22.2 53,173 5.5
--------- -------- -------- -------- --------
Total non-interest expenses 260,079 223,215 16.5 249,407 4.3
--------- -------- -------- -------- --------
Income before income taxes $ 97,227 $ 94,026 3.4 $ 93,975 3.5
--------- -------- -------- -------- --------
As a percentage of net
revenues:
Compensation and benefits 57.1 55.9 57.1
Non-compensation operating
expenses 15.7 14.5 15.5
Income before income taxes 27.2 29.6 27.4
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------------------------------------------------------------
Global Wealth Management Summary Results of Operations
(Unaudited)
Nine Months Ended
----------------------------
(in 000s) 9/30/15 9/30/14 % Change
---------- -------- --------
Revenues:
Commissions $ 375,811 $338,378 11.1
Principal transactions 110,531 140,011 (21.1)
--------- ------- -------
Brokerage revenues 486,342 478,389 1.7
Asset management and service
fees 362,432 279,671 29.6
Net interest 111,703 114,458 (2.4)
Investment banking 35,374 35,752 (1.1)
Other income 34,246 13,401 155.5
---------- -------- --------
Net revenues 1,030,097 921,671 11.8
---------- -------- --------
Non-interest expenses:
Compensation and benefits 583,436 523,188 11.5
Non-compensation operating
expenses 156,612 135,683 15.4
---------- -------- --------
Total non-interest expenses 740,048 658,871 12.3
---------- -------- --------
Income before income taxes $ 290,049 $262,800 10.4
---------- -------- --------
As a percentage of net
revenues:
Compensation and benefits 56.6 56.8
Non-compensation operating
expenses 15.2 14.7
Income before income taxes 28.2 28.5
------------------------------------------------------------
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Stifel Bank & Trust (Unaudited)
Key Statistical Information
----------------------------------------------------------------------------
(in 000s, except
percentages) 9/30/15 9/30/14 % Change 6/30/15 % Change
---------- ---------- -------- ---------- --------
Other information:
Assets $4,619,093 $4,977,194 (7.2) $4,786,248 (3.5)
Investment
securities 1,749,590 2,720,860 (35.7) 1,907,282 (8.3)
Retained loans,
net 2,706,074 1,988,076 36.1 2,626,508 3.0
Loans held for
sale 179,588 104,277 72.2 183,991 (2.4)
Deposits 4,116,814 4,552,522 (9.6) 4,313,940 (4.6)
Allowance as a
percentage of
loans 1.13% 1.18% 0.98%
Non-performing
assets as a
percentage of
total assets 0.03% 0.07% 0.13%
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Institutional Group Summary Results of Operations (Unaudited)
Three Months Ended
--------------------------------------------
(in 000s) 9/30/15 9/30/14 % Change 6/30/15 % Change
-------- -------- -------- -------- --------
Revenues:
Commissions $ 59,607 $ 52,013 14.6 $ 58,821 1.3
Principal transactions 60,750 52,866 14.9 53,839 12.8
-------- -------- -------- -------- --------
Brokerage revenues 120,357 104,879 14.8 112,660 6.8
Capital raising 59,466 54,290 9.5 80,540 (26.2)
Advisory fees 49,142 50,939 (3.5) 63,189 (22.2)
-------- -------- -------- -------- --------
Investment banking 108,608 105,229 3.2 143,729 (24.4)
Other (5) 3,160 5,052 (37.5) 2,149 46.9
-------- -------- -------- -------- --------
Net revenues 232,125 215,160 7.9 258,538 (10.2)
-------- -------- -------- -------- --------
Non-interest expenses:
Compensation and benefits 143,911 131,589 9.4 160,077 (10.1)
Non-compensation operating
expenses 62,361 54,071 15.3 56,519 10.3
-------- -------- -------- -------- --------
Total non-interest expenses 206,272 185,660 11.1 216,596 (4.8)
-------- -------- -------- -------- --------
Income before income taxes $ 25,853 $ 29,500 (12.4)$ 41,942 (38.4)
-------- -------- -------- -------- --------
As a percentage of net
revenues:
Compensation and benefits 62.0 61.2 61.9
Non-compensation operating
expenses 26.9 25.1 21.9
Income before income taxes 11.1 13.7 16.2
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-----------------------------------------------------------
Institutional Group Summary Results of Operations
(Unaudited)
Nine Months Ended
--------------------------
(in 000s) 9/30/15 9/30/14 % Change
-------- -------- --------
Revenues:
Commissions $182,637 $164,423 11.1
Principal transactions 175,064 185,569 (5.7)
-------- -------- --------
Brokerage revenues 357,701 349,992 2.2
Capital raising 203,154 185,029 9.8
Advisory fees 161,773 170,068 (4.9)
-------- -------- --------
Investment banking 364,927 355,097 2.8
Other (5) 6,641 15,760 (57.9)
-------- -------- --------
Net revenues 729,269 720,849 1.2
-------- -------- --------
Non-interest expenses:
Compensation and benefits 453,399 443,104 2.3
Non-compensation operating
expenses 175,746 159,933 9.9
-------- -------- --------
Total non-interest expenses 629,145 603,037 4.3
-------- -------- --------
Income before income taxes $100,124 $117,812 (15.0)
-------- -------- --------
As a percentage of net
revenues:
Compensation and benefits 62.2 61.5
Non-compensation operating
expenses 24.1 22.2
Income before income taxes 13.7 16.3
-----------------------------------------------------------
(5) Includes net interest, other income, and asset management & service fees.
----------------------------------------------------------------------------
Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
Three Months Ended
--------------------------------------------
(in 000s) 9/30/15 9/30/14 % Change 6/30/15 % Change
-------- -------- -------- -------- --------
Institutional brokerage:
Equity $ 59,769 $ 57,408 4.1 $ 60,701 (1.5)
Fixed income 60,588 47,471 27.6 51,959 16.6
-------- -------- -------- -------- --------
Institutional brokerage $120,357 $104,879 14.8 $112,660 6.8
Investment banking:
Capital raising:
Equity $ 33,332 $ 41,517 (19.7)$ 47,400 (29.7)
Fixed income 26,134 12,773 104.6 33,140 (21.1)
-------- -------- -------- -------- --------
Capital raising 59,466 54,290 9.5 80,540 (26.2)
Advisory fees: 49,142 50,939 (3.5) 63,189 (22.2)
-------- -------- -------- -------- --------
Investment banking $108,608 $105,229 3.2 $143,729 (24.4)
-------- -------- -------- -------- --------
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Institutional Group Brokerage & Investment Banking Revenues
(Unaudited)
Nine Months Ended
--------------------------
(in 000s) 9/30/15 9/30/14 % Change
-------- -------- --------
Institutional brokerage:
Equity $180,318 $182,847 (1.4)
Fixed income 177,383 167,145 6.1
-------- -------- --------
Institutional brokerage $357,701 $349,992 2.2
Investment banking:
Capital raising:
Equity $123,151 $146,913 (16.2)
Fixed income 80,003 38,116 109.9
-------- -------- --------
Capital raising 203,154 185,029 9.8
Advisory fees: 161,773 170,068 (4.9)
-------- -------- --------
Investment banking $364,927 $355,097 2.8
-------- -------- --------
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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 additional measures to aid in understanding and analyzing the Company's financial results for the three and nine months ended September 30, 2015. 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 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 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 primarily exclude 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 business.
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 nine months ended September 30, 2015 to the aforementioned expenses on a non-GAAP basis for the same period.
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Three Months Ended September 30,
2015
-----------------------------------
(in 000s, except per share amounts) Non-GAAP Adjustments GAAP
----------- ----------- -----------
Net revenues $ 591,607 $ (32) $ 591,575
Non-interest expenses:
Compensation and benefits 372,023 32,182 404,205
Non-compensation operating expenses 147,632 17,390 165,022
----------- ----------- -----------
Total non-interest expenses 519,655 49,572 569,227
Income before income taxes 71,952 (49,604) 22,348
Provision for income taxes 24,247 (19,078) 5,169
----------- ----------- -----------
Net income $ 47,705 $ (30,526) $ 17,179
----------- ----------- -----------
Earnings per share::
Basic $ 0.69 $ (0.44) $ 0.25
Diluted $ 0.60 $ (0.38) $ 0.22
As a percentage of net revenues:
Compensation and benefits 62.9 68.3
Non-compensation operating expenses 24.9 27.9
Income before income taxes 12.2 3.8
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Nine Months Ended September 30, 2015
-------------------------------------
(in 000s, except per share amounts) Non-GAAP Adjustments GAAP
----------- ----------- -------------
Net revenues $ 1,753,051 $ (2,743) $ 1,750,308
Non-interest expenses:
Compensation and benefits 1,094,664 75,232 1,169,896
Non-compensation operating expenses 412,833 37,094 449,927
----------- ----------- -------------
Total non-interest expenses 1,507,497 112,326 1,619,823
Income before income taxes 245,554 (115,069) 130,485
Provision for income taxes 92,820 (43,499) 49,321
----------- ----------- -------------
Net income $ 152,734 $ (71,570) $ 81,164
----------- ----------- -------------
Earnings per share::
Basic $ 2.22 $ (1.04) $ 1.18
Diluted $ 1.95 $ (0.91) $ 1.04
As a percentage of net revenues:
Compensation and benefits 62.4 66.8
Non-compensation operating expenses 23.5 25.7
Income before income taxes 14.1 7.5
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Investor Relations
Sarah Anderson
(415) 364-2500
investorrelations@stifel.com
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