Stifel Reports Record Fourth Quarter and Full-Year Results

24^th consecutive year of record net revenues of $3.3 billion, an increase of 10.3% compared with 2018.
Quarterly record net revenues of $944.3 million, an increase of 14.9% over our previous record quarter.
Record quarterly net income available to common shareholders of $125.8 million, or $1.62 per diluted common share.
Record non-GAAP net income available to common shareholders of $146.6 million, or $1.88 per diluted common share.
Record client assets of $329.5 billion, increased 22.1% compared with the year-ago quarter.
Quarterly GAAP return on tangible common equity of 26.3%.
Quarterly non-GAAP return on tangible common equity of 30.6%.
Increasing quarterly dividend by 13% to $0.17 per common share starting in first quarter of 2020.

ST. LOUIS, Jan. 30, 2020 (GLOBE NEWSWIRE) -- Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $125.8 million, or $1.62 per diluted common share on record net revenues of $944.3 million for the three months ended December 31, 2019, compared with net income available to common shareholders of $111.7 million, or $1.38 per diluted common share, on net revenues of $793.4 million for the fourth quarter of 2018.

For the three months ended December 31, 2019, the Company reported non-GAAP net income available to common shareholders of $146.6 million, or $1.88 per diluted common share. The Company’s reported GAAP net income for the three months ended December 31, 2019 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“2019 was a remarkable year for Stifel as we achieved our 24th consecutive year of record net revenues. We continued to execute on our long-term strategy of combining organic growth with accretive acquisitions. As evidenced by our record non-GAAP earnings per share of $6.10, non-GAAP return on tangible equity of nearly 25%, and the return of more than $300 million to common shareholders through repurchases and dividends, we have been able to grow our business and enhance shareholder value," stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, "As I look to 2020, I am optimistic about our success. The market environment remains strong and we enter the year with record client assets, robust recruiting and investment banking pipelines, and incremental revenue from the six acquisitions we closed in 2019. In short, Stifel remains well positioned to capitalize on current market trends as the diversity of our business model enables us to generate strong results in various operating environments."

Fourth Quarter Review

Quarterly Highlights

Record net revenues of $944.3 million, increased 19.0% with the year-ago quarter, and increased 14.9% sequentially.
Record net revenues in Global Wealth Management and Institutional Group segments.
Record net income available to common shareholders of $125.8 million, or $1.62 per diluted common share.
Record non-GAAP net income available to common shareholders of $146.6 million, or $1.88 per diluted common share.
Bank net interest margin of 3.19% increased 5 basis points sequentially.
Repurchased approximately 0.6 million shares of the Company’s common stock at an average price of $54.15 per share.
Completed the acquisitions of MainFirst and the Capital Markets business of GMP Capital Inc.

Financial Highlights (Unaudited)	Three Months Ended
($ in 000s, except per share data)	GAAP 12/31/19			GAAP 12/31/18			% Change		GAAP 9/30/19			% Change		Non- GAAP ⁽¹⁾12/31/19			Non- GAAP ⁽¹⁾12/31/18			% Change
Net revenues	$	944,251		$	793,449			19.0	$	821,572			14.9	$	944,425		$	793,449			19.0
Net income applicable to Stifel Financial Corp.	$	130,690		$	114,062			14.6	$	109,414			19.4	$	151,442		$	129,134			17.3
Preferred dividends		4,843			2,344			106.6		4,844		n/m			4,843			2,344			106.6
Net income available to common shareholders	$	125,847		$	111,718			12.6	$	104,570			20.3	$	146,599		$	126,790			15.6
Earnings per diluted common share	$	1.68		$	1.41			19.1	$	1.40			20.0	$	1.95		$	1.60			21.9
Earnings per diluted common share available to common shareholders	$	1.62		$	1.38			17.4	$	1.34			20.9	$	1.88		$	1.57			19.7
Compensation ratio		60.0	%		56.5	%				59.2	%				58.3	%		56.0	%
Non-compensation ratio		22.8	%		23.8	%				22.5	%				21.2	%		22.1	%
Pre-tax operating margin ⁽²⁾		17.2	%		19.7	%				18.3	%				20.5	%		21.9	%

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $289.6 million, a 16.5% increase compared with the fourth quarter of 2018 and a 10.6% increase compared with the third quarter of 2019.

	Three Months Ended
($ in 000s)	12/31/19		12/31/18		% Change			9/30/19		% Change
Global Wealth Management	$	174,000	$	157,331		10.6		$	160,117		8.7
Institutional brokerage:
Equity capital markets		45,989		48,705		(5.6	)		41,037		12.1
Fixed income capital markets		69,563		42,463		63.8			60,613		14.8
Total institutional brokerage		115,552		91,168		26.7			101,650		13.7
Total brokerage revenues	$	289,552	$	248,499		16.5		$	261,767		10.6

Global Wealth Management brokerage revenues were $174.0 million, a 10.6% increase compared with the fourth quarter of 2018 and an 8.7% increase compared with the third quarter of 2019.
Institutional equity brokerage revenues were $46.0 million, a 5.6% decrease compared with the fourth quarter of 2018 and a 12.1% increase compared with the third quarter of 2019.
Institutional fixed income brokerage revenues were $69.6 million, a 63.8% increase compared with the fourth quarter of 2018 and a 14.8% increase compared with the third quarter of 2019.

Investment Banking Revenues

Investment banking revenues were a record $277.2 million, a 37.7% increase compared with the fourth quarter of 2018 and a 39.4% increase compared with the third quarter of 2019.

	Three Months Ended
($ in 000s)	12/31/19		12/31/18		% Change		9/30/19		% Change
Capital raising:
Global Wealth Management	$	9,278	$	7,915		17.2	$	9,855		(5.9	)

Equity capital markets		64,384		51,839		24.2		53,006		21.5
Fixed income capital markets		48,181		30,390		58.5		31,082		55.0
Institutional Group		112,565		82,229		36.9		84,088		33.9
Total capital raising		121,843		90,144		35.2		93,943		29.7
Advisory fees		155,331		111,089		39.8		104,847		48.2
Total investment banking	$	277,174	$	201,233		37.7	$	198,790		39.4

Global Wealth Management capital raising revenues were $9.3 million, a 17.2% increase compared with the fourth quarter of 2018 and a 5.9% decrease compared with the third quarter of 2019.
Institutional equity capital raising revenues were $64.4 million, a 24.2% increase compared with the fourth quarter of 2018 and a 21.5% increase compared with the third quarter of 2019.
Institutional fixed income capital raising revenues were $48.2 million, a 58.5% increase compared with the fourth quarter of 2018 and a 55.0% increase compared with the third quarter of 2019.
Advisory fee revenues were $155.3 million, a 39.8% increase compared with the fourth quarter of 2018 and a 48.2% increase compared with the third quarter of 2019.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $224.0 million, a 6.6% increase compared with the fourth quarter of 2018 and a 2.9% increase compared with the third quarter of 2019. The increase from the comparative period in 2018 is primarily attributable to the growth in fee-based accounts, as a result of market appreciation and new client assets. See Asset Management and Service Fee Break-down table.

Net Interest Income

Net interest income of $135.7 million, a 7.1% increase compared with the fourth quarter of 2018 and a 0.7% increase compared with the third quarter of 2019. See Net Interest Income Analysis table.

Interest income was $167.1 million, a 9.5% decrease compared with the fourth quarter of 2018 and a 6.5% decrease compared with the third quarter of 2019.
Interest expense was $31.4 million, a 45.7% decrease compared with the fourth quarter of 2018 and a 28.8% decrease compared with the third quarter of 2019.

Annual Review

Annual Highlights

Record net revenues of $3.3 billion, increased 10.3% compared with 2018.
Record net revenues and pre-tax operating income in Global Wealth Management.
Record net revenues in Institutional Group.
Record net income available to common shareholders of $431.1 million, or $5.49 per diluted common share.
Record non-GAAP net income available to common shareholders of $479.6 million, or $6.10 per diluted common share.

For year ended December 31, 2019, the Company reported net income available to common shareholders of $431.1 million, or $5.49 per diluted common share on record net revenues of $3.3 billion, compared with net income available to common shareholders of $384.6 million, or $4.73 per diluted common share, on net revenues of $3.0 billion for the comparable in 2018.

For the year ended December 31, 2019, the Company reported non-GAAP net income available to common shareholders of $479.6 million, or $6.10 per diluted common share. The Company’s reported GAAP net income for the year ended December 31, 2019 was primarily impacted by merger-related expenses. Details are discussed below and in the “Non-GAAP Financial Matters” section.

Financial Highlights (Unaudited)	Year Ended
($ in 000s, except per share data)	GAAP 12/31/19			GAAP 12/31/18			% Change		Non- GAAP ⁽¹⁾12/31/19			Non- GAAP ⁽¹⁾12/31/18			% Change
Net revenues	$	3,337,030		$	3,024,881			10.3	$	3,337,204		$	3,024,906			10.3
Net income applicable to Stifel Financial Corp.	$	448,396		$	393,968			13.8	$	496,955		$	438,817			13.2
Preferred dividends		17,319			9,375			84.7		17,319			9,375			84.7
Net income available to common shareholders	$	431,077		$	384,593			12.1	$	479,636		$	429,442			11.7
Earnings per diluted common share	$	5.71		$	4.84			18.0	$	6.32		$	5.40			17.0
Earnings per diluted common share available to common shareholders	$	5.49		$	4.73			16.1	$	6.10		$	5.28			15.5
Compensation ratio		59.3	%		58.5	%				58.3	%		58.0	%
Non-compensation ratio		22.7	%		23.8	%				21.8	%		22.4	%
Pre-tax operating margin ⁽³⁾		18.0	%		17.7	%				19.9	%		19.6	%

Brokerage Revenues

Brokerage revenues were $1.1 billion, a 6.3% increase compared with 2018.

	Year Ended
($ in 000s)	12/31/19		12/31/18		% Change
Global Wealth Management	$	649,699	$	638,173		1.8
Institutional brokerage:
Equity capital markets		166,577		185,960		(10.4	)
Fixed income capital markets		255,969		184,977		38.4
Total institutional brokerage		422,546		370,937		13.9
Total brokerage revenues	$	1,072,245	$	1,009,110		6.3

Global Wealth Management brokerage revenues were $649.7 million, a 1.8% increase compared with 2018.
Institutional equity brokerage revenues were $166.6 million, a 10.4% decrease compared with 2018.
Institutional fixed income brokerage revenues were $256.0 million, a 38.4% increase compared with 2018.

Investment Banking Revenues

Investment banking revenues were $817.4 million, a 15.5% increase compared with 2018.

	Year Ended
($ in 000s)	12/31/19		12/31/18		% Change
Capital raising:
Global Wealth Management		37,915		31,293		21.2

Equity capital markets		204,405		213,633		(4.3	)
Fixed income capital markets		127,122		91,262		39.3
Institutional Group		331,527		304,895		8.7
Total capital raising		369,442		336,188		9.9
Advisory fees ⁽⁴⁾		447,979		371,482		20.6
Total investment banking	$	817,421	$	707,670		15.5

Global Wealth Management capital raising revenues were $37.9 million, a 21.2% increase compared with 2018.
Institutional equity capital raising revenues were $204.4 million, a 4.3% decrease compared with 2018.
Institutional fixed income capital raising revenues were $127.1 million, a 39.3% increase compared with 2018.
Advisory fee revenues were $448.0 million, a 20.6% increase compared with 2018.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $848.0 million, a 5.2% increase compared with 2018. The increase is primarily attributable to the growth in fee-based accounts, as a result of market appreciation and new client assets.

Net Interest Income

Net interest income of $547.0 million, a 14.8% increase compared with 2018. The increase is primarily attributable to growth of interest-earning assets and interest-bearing liabilities, as well as higher interest rates.

Interest income was $724.9 million, a 12.1% increase compared with 2018.
Interest expense was $177.9 million, a 4.6% increase compared with 2018.

Fourth Quarter & Full Year 2019

Compensation and Benefits Expenses

For the quarter ended December 31, 2019, compensation and benefits expenses were $567.0 million, which included $16.3 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $448.4 million in the fourth quarter of 2018 and $486.2 million in the third quarter of 2019. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 58.3% in the fourth quarter of 2019 (non-GAAP measure).

For the year ended December 31, 2019, compensation and benefits expenses were $2.0 billion, which included $32.4 million of merger-related and severance expenses (non-GAAP adjustments), compared to $1.8 billion in 2018. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 58.3% in the year ended December 31, 2019 (non-GAAP measure).

	Three Months Ended						Year Ended
($ in 000s)	12/31/19			12/31/18			12/31/19			12/31/18
GAAP compensation and benefits	$	566,981		$	448,375		$	1,978,116		$	1,770,762
As a percentage of net revenues		60.0	%		56.5	%		59.3	%		58.5	%
Non-GAAP adjustments:⁽⁵⁾
Merger-related and severance		(16,304	)		(4,044	)		(32,367	)		(17,333	)
Non-GAAP compensation and benefits	$	550,677		$	444,331		$	1,945,749		$	1,753,429
As a percentage of non-GAAP net revenues		58.3	%		56.0	%		58.3	%		58.0	%

Non-Compensation Operating Expenses

For the quarter ended December 31, 2019, non-compensation operating expenses were $214.7 million, which included $15.0 million of merger-related expenses (non-GAAP adjustments). This compares with $189.1 million in the fourth quarter of 2018 and $184.7 million in the third quarter of 2019. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended December 31, 2019 were 21.2% (non-GAAP measure).

For the year ended December 31, 2019, non-compensation operating expenses were $759.8 million, which included $32.2 million of merger-related expenses (non-GAAP adjustments), compared with $719.8 million in 2018. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the year ended December 31, 2019 were 21.8% (non-GAAP measure).

	Three Months Ended						Year Ended
($ in 000s)	12/31/19			12/31/18			12/31/19			12/31/18
GAAP non-compensation expenses	$	214,677		$	189,143		$	759,776		$	719,757
As a percentage of net revenues		22.8	%		23.8	%		22.7	%		23.8	%
Non-GAAP adjustments:⁽⁵⁾
Merger-related		(14,964	)		(13,670	)		(28,663	)		(33,862	)
Litigation-related		—			(18	)		(3,507	)		(6,792	)
		(14,964	)		(13,688	)		(32,170	)		(40,654	)
Non-GAAP non-compensation expenses	$	199,713		$	175,455		$	727,606		$	679,103
As a percentage of non-GAAP net revenues		21.2	%		22.1	%		21.8	%		22.4	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended December 31, 2019 was 19.6%. This compares with an effective income tax rate of 26.9% for the fourth quarter of 2018 and 27.1% for the third quarter of 2019. The adjusted non-GAAP effective income tax rate for the quarter ended December 31, 2019 was 22.0%.

The GAAP effective income tax rate for the year ended December 31, 2019 was 25.0%, compared with 26.3% in 2018. The adjusted non-GAAP effective income tax rate for the year ended December 31, 2019 was 25.0%.

	Three Months Ended						Year Ended
($ in 000s)	12/31/19			12/31/18			12/31/19			12/31/18
GAAP provision for income taxes	$	31,925		$	41,869		$	149,152		$	140,394
GAAP effective tax rate		19.6	%		26.9	%		25.0	%		26.3	%
Non-GAAP adjustments:⁽⁵⁾
Merger-related, litigation-related, and severance		7,203			4,262			16,152			15,242
Other		3,487			(1,602	)		—			(2,079	)
		10,690			2,660			16,152			13,163
Non-GAAP provision for income taxes	$	42,615		$	44,529		$	165,304		$	153,557
Non-GAAP effective tax rate		22.0	%		25.6	%		25.0	%		25.9	%

Conference Call Information

Stifel Financial Corp. will host its fourth quarter 2019 financial results conference call on Thursday, January 30, 2020, at 8:00 a.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 (888) 676-3684 and referencing conference ID #8290063. 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’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc., in the United Kingdom and Europe through Stifel Nicolaus Europe Limited, and in Canada through Stifel Nicolaus Canada, Inc. 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 and Stifel Bank & Trust offer a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer 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.


Summary Results of Operations (Unaudited)
	Three Months Ended													Year Ended
($ in 000s, except per share amounts)	12/31/19			12/31/18		% Change			9/30/19		% Change			12/31/19		12/31/18		% Change
Revenues:
Commissions	$	183,144		$	167,039		9.6		$	163,920		11.7		$	667,494	$	657,732		1.5
Principal transactions		106,408			81,460		30.6			97,847		8.7			404,751		351,378		15.2
Brokerage revenues		289,552			248,499		16.5			261,767		10.6			1,072,245		1,009,110		6.3

Advisory fees		155,331			111,089		39.8			104,847		48.2			447,979		371,482		20.6
Capital raising		121,843			90,144		35.2			93,943		29.7			369,442		336,188		9.9
Investment banking		277,174			201,233		37.7			198,790		39.4			817,421		707,670		15.5
Asset management and service fees		223,969			210,063		6.6			217,628		2.9			848,035		806,175		5.2
Other income		17,917			6,996		156.1			8,747		104.8			52,378		25,553		105.0
Operating revenues		808,612			666,791		21.3			686,932		17.7			2,790,079		2,548,508		9.5
Interest revenue		167,087			184,534		(9.5	)		178,784		(6.5	)		724,882		646,449		12.1
Total revenues		975,699			851,325		14.6			865,716		12.7			3,514,961		3,194,957		10.0
Interest expense		31,448			57,876		(45.7	)		44,144		(28.8	)		177,931		170,076		4.6
Net revenues		944,251			793,449		19.0			821,572		14.9			3,337,030		3,024,881		10.3

Non-interest expenses:
Compensation and benefits		566,981			448,375		26.5			486,160		16.6			1,978,116		1,770,762		11.7
Occupancy and equipment rental		64,327			57,158		12.5			58,649		9.7			242,893		222,384		9.2
Communication and office supplies		39,845			36,786		8.3			36,817		8.2			147,428		140,254		5.1
Commissions and floor brokerage		11,505			11,169		3.0			10,542		9.1			44,011		41,967		4.9
Provision for loan losses		4,412			5,122		(13.9	)		929		374.9			9,977		18,366		(45.7	)
Other operating expenses		94,588			78,908		19.9			77,721		21.7			315,467		296,786		6.3
Total non-interest expenses		781,658			637,518		22.6			670,818		16.5			2,737,892		2,490,519		9.9
Income before income taxes		162,593			155,931		4.3			150,754		7.9			599,138		534,362		12.1
Provision for income taxes		31,925			41,869		(23.8	)		40,632		(21.4	)		149,152		140,394		6.2
Net income		130,668			114,062		14.6			110,122		18.7			449,986		393,968		14.2
Net income/(loss) applicable to non-controlling interests		(22	)		—	n/m				708		(103.1	)		1,590		—	n/m
Net income applicable to Stifel Financial Corp.		130,690			114,062		14.6			109,414		19.4			448,396		393,968		13.8
Preferred dividends		4,843			2,344		106.6			4,844	n/m				17,319		9,375		84.7
Net income available to common shareholders	$	125,847		$	111,718		12.6		$	104,570		20.3		$	431,077	$	384,593		12.1
Earnings per common share:
Basic	$	1.79		$	1.56		14.7		$	1.47		21.8		$	5.99	$	5.36		11.8
Diluted	$	1.62		$	1.38		17.4		$	1.34		20.9		$	5.49	$	4.73		16.1

Cash dividends declared per common share	$	0.15		$	0.12		25.0		$	0.15		—		$	0.60	$	0.48		25.0

Weighted average number of common shares outstanding:
Basic		70,470			71,666		(1.7	)		71,197		(1.0	)		71,998		71,786		0.3
Diluted		77,813			80,706		(3.6	)		78,144		(0.4	)		78,585		81,321		(3.4	)


Summary Business Segment Results (Unaudited)
	Three Months Ended														Year Ended
($ in 000s)	12/31/19			12/31/18			% Change		9/30/19			% Change			12/31/19			12/31/18			% Change
Net revenues:
Global Wealth Management	$	552,945		$	509,256			8.6	$	534,571			3.4		$	2,130,559		$	1,990,319			7.0
Institutional Group		391,907			286,640			36.7		290,222			35.0			1,214,017			1,055,495			15.0
Other		(601	)		(2,447	)		75.4		(3,221	)		81.3			(7,546	)		(20,933	)		64.0
Total net revenues	$	944,251		$	793,449			19.0	$	821,572			14.9		$	3,337,030		$	3,024,881			10.3

Operating expenses:
Global Wealth Management	$	356,650		$	320,296			11.4	$	331,748			7.5		$	1,344,599		$	1,253,316			7.3
Institutional Group		336,366			244,488			37.6		241,599			39.2			1,038,347			898,444			15.6
Other		88,642			72,734			21.9		97,471			(9.1	)		354,946			338,759			4.8
Total operating expenses	$	781,658		$	637,518			22.6	$	670,818			16.5		$	2,737,892		$	2,490,519			9.9

Operating contribution:
Global Wealth Management	$	196,295		$	188,960			3.9	$	202,823			(3.2	)	$	785,960		$	737,003			6.6
Institutional Group		55,541			42,152			31.8		48,623			14.2			175,670			157,051			11.9
Other		(89,243	)		(75,181	)		18.7		(100,692	)		(11.4	)		(362,492	)		(359,692	)		0.8
Income before income taxes	$	162,593		$	155,931			4.3	$	150,754			7.9		$	599,138		$	534,362			12.1

As a percentage of net revenues:
Compensation and benefits
Global Wealth Management		49.7			48.5					49.0						49.1			48.6
Institutional Group		63.7			62.0					59.1						60.6			60.0
Non-compensation operating expenses
Global Wealth Management		14.8			14.4					13.1						14.0			14.4
Institutional Group		22.1			23.3					24.1						24.9			25.1
Income before income taxes
Global Wealth Management		35.5			37.1					37.9						36.9			37.0
Institutional Group		14.2			14.7					16.8						14.5			14.9
Consolidated pre-tax margin		17.2			19.7					18.3						18.0			17.7


Financial metrics (unaudited):	As of and For the Three Months Ended
($ in 000s, except percentages and per share amounts)	12/31/19			12/31/18			9/30/19
Total assets	$	24,610,225		$	24,519,598		$	24,160,777
Total Stifel Financial shareholders' equity		3,614,791			3,167,593			3,501,715
Book value per common share ⁽⁶⁾	$	48.37		$	42.62		$	46.34
Return on common equity ⁽⁷⁾		15.6	%		14.9	%		13.2	%
Non-GAAP return on common equity ^{(1) (7)}		18.2	%		16.9	%		14.8	%
Return on tangible common equity ⁽⁸⁾		26.3	%		24.1	%		21.6	%
Non-GAAP return on tangible common equity ^{(1) (8)}		30.6	%		27.3	%		24.2	%
Tier 1 common capital ratio ⁽⁹⁾		15.2	%		16.8	%		15.6	%
Tier 1 risk based capital ratio ⁽⁹⁾		17.6	%		18.2	%		18.1	%
Tier 1 leverage capital ratio ⁽⁹⁾		10.0	%		9.3	%		10.0	%
Pre-tax margin on net revenues		17.2	%		19.7	%		18.3	%
Non-GAAP pre-tax margin on net revenues ^{(1) (2)}		20.5	%		21.9	%		20.2	%
Effective tax rate		19.6	%		26.9	%		27.1	%
Non-GAAP effective tax rate ⁽¹⁾		22.0	%		25.6	%		26.0	%


Statistical Information (unaudited):	As of and For the Three Months Ended
($ in 000s, except financial advisors and locations)	12/31/19		12/31/18		% Change			9/30/19		% Change
Financial advisors ⁽¹⁰⁾		2,127		2,051		3.7			2,097		1.4
Independent contractors		95		101		(5.9	)		96		(1.0	)
Total financial advisors		2,222		2,152		3.3			2,193		1.3
Locations		446		404		10.4			426		4.7
Total client assets	$	329,495,000	$	269,862,000		22.1		$	311,819,000		5.7
Fee-based client assets	$	117,189,000	$	90,174,000		30.0		$	108,138,000		8.4
Client money market and insured product	$	14,841,000	$	16,109,000		(7.9	)	$	14,246,000		4.2
Secured client lending ⁽¹¹⁾	$	3,363,450	$	2,893,074		16.3		$	3,299,359		1.9


	Asset Management and Service Fee Break-down (unaudited)
Asset Management and Service Fee Revenues:	Three Months Ended
($ in 000s)	12/31/19			12/31/18			% Change			9/30/19			% Change
Private Client Group ⁽¹²⁾	$	177,987		$	159,775			11.4		$	172,124			3.4
Asset Management		31,653			28,670			10.4			30,650			3.3
Third-party Bank Sweep Program		3,821			11,062			(65.5	)		4,907			(22.1	)
Other ⁽¹³⁾		10,508			10,556			(0.5	)		9,947			5.6
Total asset management and service fee revenues	$	223,969		$	210,063			6.6		$	217,628			2.9

Fee-based Assets:	Three Months Ended
($ in millions)	12/31/19			12/31/18			% Change			9/30/19			% Change
Private Client Group ⁽¹²⁾	$	92,110		$	66,097			39.4		$	85,163			8.2
Asset Management		36,525			30,269			20.7			33,698			8.4
Elimination ⁽¹⁴⁾		(11,446	)		(6,192	)		84.9			(10,723	)		6.7
Total fee-based assets	$	117,189		$	90,174			30.0		$	108,138			8.4

Individual Program Banks	$	1,185		$	2,569			(53.9	)	$	1,225			(3.3	)

ROA (bps) ⁽¹⁵⁾
Private Client Group ⁽¹²⁾		83.6			89.4						85.0
Asset Management		34.7			37.9						36.4
Individual Program Banks		123.7			159.3						145.3


Consolidated Net Interest Income Analysis (Unaudited):

	Three Months Ended
	December 31, 2019							December 31, 2018							September 30, 2019
($ in millions, except percentages)	Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	805.7	$	3.6		1.80	%	$	689.1	$	4.3		2.52	%	$	1,056.3	$	5.7		2.15	%
Financial instruments owned		1,074.2		5.1		1.91			1,275.9		5.8		1.81			1,157.8		5.7		1.96
Margin balances		1,291.7		11.6		3.58			1,245.0		13.2		4.24			1,308.3		13.3		4.08
Investments:
Asset-backed securities		4,511.8		38.8		3.44			4,909.1		49.2		4.01			4,367.8		42.4		3.88
Mortgage-backed securities		987.9		5.1		2.06			1,599.4		9.0		2.18			1,253.4		6.6		2.10
Corporate fixed income securities		663.7		4.8		2.89			1,143.9		8.4		2.98			743.7		5.7		3.06
State and municipal securities		27.7		0.2		2.22			72.8		0.3		2.02			34.3		0.2		2.27
Other		4.5		—		2.02			—		—		—			4.5		—		5.98
Total Investments		6,195.6		48.9		3.16			7,725.2		66.9		3.47			6,403.7		54.9		3.43
Loans:
Commercial and industrial		3,380.0		36.9		4.37			3,245.7		38.9		4.79			3,330.2		39.7		4.77
Residential real estate		3,144.9		24.0		3.06			2,844.8		21.1		2.96			3,003.8		23.2		3.08
Securities-based loans		2,064.7		18.5		3.59			1,844.9		19.3		4.18			1,959.3		19.9		4.06
Commercial real estate		386.2		5.8		6.03			322.1		4.8		5.94			377.2		5.2		5.52
Loans held for sale		335.3		4.0		4.80			236.5		2.3		3.97			209.7		1.7		3.21
Other		503.4		6.1		4.75			280.2		3.7		5.43			444.9		5.7		5.23
Total Loans		9,814.5		95.3		3.88			8,774.2		90.1		4.11			9,325.1		95.4		4.09
Other interest-bearing assets		642.4		2.6		1.59			836.5		4.2		2.00			678.7		3.8		2.19
Total interest-earning assets/interest income		19,824.1		167.1		3.37			20,545.9		184.5		3.59			19,929.9		178.8		3.59
Interest-bearing liabilities:
Short-term borrowings		31.5		0.1		1.66			58.7		0.5		3.09			21.0		0.1		2.63
Senior notes		1,016.8		11.1		4.38			1,016.0		11.0		4.38			1,016.6		11.1		4.38
Deposits		14,672.8		13.6		0.37			14,631.2		33.0		0.90			14,926.2		24.8		0.67
FHLB		513.0		2.1		1.67			994.2		4.6		1.85			270.1		1.1		1.70
Other interest-bearing liabilities		1,595.6		4.5		1.12			1,532.0		8.8		2.27			1,673.0		7.0		1.66
Total interest-bearing liabilities/interest expense	$	17,829.7	$	31.4		0.71	%	$	18,232.1	$	57.9		1.27	%	$	17,906.9	$	44.1		0.99	%
Net interest income/margin			$	135.7		2.74	%			$	126.6		2.47	%			$	134.7		2.70	%


Stifel Bancorp, Inc. ⁽¹⁶⁾ Net Interest Income Analysis (Unaudited):

	Three Months Ended
	December 31, 2019							December 31, 2018							September 30, 2019
($ in millions, except percentages)	Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	255.7	$	1.2		1.83	%	$	311.3	$	1.8		2.32	%	$	540.8	$	3.2		2.36	%
Investments		6,195.6		48.9		3.16			7,725.2		66.9		3.47			6,403.7		54.9		3.43
Loans		9,814.5		95.3		3.88			8,774.2		90.1		4.11			9,325.1		95.4		4.09
Other interest-bearing assets		57.4		0.5		3.77			72.9		0.8		4.16			46.7		0.4		3.04
Total interest-earning assets/interest income	$	16,323.2	$	145.9		3.58		$	16,883.6	$	159.6		3.78		$	16,316.3	$	153.9		3.77
Interest-bearing liabilities:
Deposits		14,672.8		13.6		0.37			14,631.2		33.0		0.90			14,926.2		24.8		0.67
FHLB		513.0		2.1		1.67			994.2		4.6		1.85			270.1		1.1		1.70
Other interest-bearing liabilities		1.6		—		7.85			21.0		0.2		3.99			1.7		0.1		6.49
Total interest-bearing liabilities/interest expense	$	15,187.4		15.7		0.41	%	$	15,646.4		37.8		0.97	%	$	15,198.0		26.0		0.68	%
Net interest income/margin			$	130.2		3.19	%			$	121.8		2.89	%			$	127.9		3.14	%


Stifel Bancorp, Inc. ⁽¹⁶⁾ - a component of Global Wealth Management

Selected operating data (unaudited):	Three Months Ended														Year Ended
($ in 000s, except percentages)	12/31/19			12/31/18			% Change			9/30/19			% Change		12/31/19			12/31/18			% Change
Net Interest Income	$	130,157		$	121,790			6.9		$	127,942			1.7	$	520,377		$	459,549			13.2
Bank loan loss provision		4,412			5,122			(13.9	)		929			374.9		9,977			18,366			(45.7	)
Charge-offs		220			—		n/m				56			292.9		386			14		n/m
Net Interest Margin		3.19	%		2.89	%	30 bps				3.14	%	5 bps			3.15	%		2.90	%	25 bps


Financial Metrics (unaudited):	As of
($ in 000s, except percentages)	12/31/19			12/31/18			9/30/19
Total assets	$	16,941,877		$	17,835,917		$	16,442,707
Total shareholders' equity		1,207,469			1,218,814			1,234,932
Total loans, net (includes loans held for sale)		10,013,735			8,723,172			9,367,233
Total deposits		15,332,581			15,863,613			14,836,646
Available-for-sale securities, at fair value		3,253,588			3,069,055			3,448,207
Held-to-maturity securities, at amortized cost		2,853,360			4,215,533			2,878,516
Commercial and industrial		3,438,953			3,304,234			3,315,706
Residential real estate		3,309,548			2,875,014			3,043,271
Securities-based loans		2,098,211			1,786,966			1,986,339
Commercial real estate		428,549			318,961			387,868
Loans held for sale		389,693			205,557			265,330
Stifel Bank & Trust:
Common equity tier 1 capital ratio ⁽⁹⁾		12.1	%		14.4	%		13.1	%
Tier 1 capital ratio ⁽⁹⁾		12.1	%		14.6	%		13.1	%
Total capital ratio ⁽⁹⁾		13.3	%		15.6	%		14.3	%
Tier 1 leverage ratio ⁽⁹⁾		7.1	%		7.1	%		7.3	%
Stifel Bank:
Common equity tier 1 capital ratio ⁽⁹⁾		17.0	%		12.3	%		17.9	%
Tier 1 capital ratio ⁽⁹⁾		17.0	%		12.3	%		17.9	%
Total capital ratio ⁽⁹⁾		18.0	%		13.5	%		19.1	%
Tier 1 leverage ratio ⁽⁹⁾		7.1	%		9.9	%		7.0	%

Credit Metrics:
Allowance for loan losses	$	95,579		$	85,833		$	91,360
Allowance as a percentage of retained loans		0.98	%		1.00	%		0.99	%
Net charge-offs as a percentage of average loans		0.00	%		0.00	%		0.00	%
Total nonperforming assets		14,748			24,455			18,031
Nonperforming assets as % of total assets		0.09	%		0.14	%		0.11	%


Global Wealth Management Summary Results of Operations (Unaudited)
	Three Months Ended											Year Ended
($ in 000s)	12/31/19		12/31/18		% Change		9/30/19		% Change			12/31/19		12/31/18		% Change
Revenues:
Commissions	$	129,129	$	117,006		10.4	$	118,061		9.4		$	477,401	$	472,135		1.1
Principal transactions		44,871		40,325		11.3		42,056		6.7			172,298		166,038		3.8
Brokerage revenues		174,000		157,331		10.6		160,117		8.7			649,699		638,173		1.8

Asset management and service fees		223,952		210,051		6.6		217,616		2.9			847,977		806,132		5.2
Net interest		138,060		132,402		4.3		137,937		0.1			558,891		503,185		11.1
Investment banking		9,278		7,915		17.2		9,855		(5.9	)		37,915		31,374		20.8
Other income		7,655		1,557		391.7		9,046		(15.4	)		36,077		11,455		214.9
Net revenues		552,945		509,256		8.6		534,571		3.4			2,130,559		1,990,319		7.0
Non-interest expenses:
Compensation and benefits		274,954		246,750		11.4		261,681		5.1			1,046,429		968,102		8.1
Non-compensation operating expenses		81,696		73,546		11.1		70,067		16.6			298,170		285,214		4.5
Total non-interest expenses		356,650		320,296		11.4		331,748		7.5			1,344,599		1,253,316		7.3
Income before income taxes	$	196,295	$	188,960		3.9	$	202,823		(3.2	)	$	785,960	$	737,003		6.6

As a percentage of net revenues:
Compensation and benefits		49.7		48.5				49.0					49.1		48.6
Non-compensation operating expenses		14.8		14.4				13.1					14.0		14.4
Income before income taxes		35.5		37.1				37.9					36.9		37.0


Institutional Group Summary Results of Operations (Unaudited)
	Three Months Ended											Year Ended
($ in 000s)	12/31/19		12/31/18		% Change		9/30/19			% Change		12/31/19		12/31/18		% Change
Revenues:
Commissions	$	54,015	$	50,034		8.0	$	45,859			17.8	$	190,093	$	185,597		2.4
Principal transactions		61,537		41,134		49.6		55,791			10.3		232,453		185,340		25.4
Brokerage revenues		115,552		91,168		26.7		101,650			13.7		422,546		370,937		13.9
Advisory fees		155,331		111,089		39.8		104,847			48.2		447,979		371,401		20.6
Capital raising		112,565		82,229		36.9		84,088			33.9		331,527		304,895		8.7
Investment banking		267,896		193,318		38.6		188,935			41.8		779,506		676,296		15.3
Other ⁽¹⁷⁾		8,459		2,154		292.7		(363	)	n/m			11,965		8,262		44.8
Net revenues		391,907		286,640		36.7		290,222			35.0		1,214,017		1,055,495		15.0
Non-interest expenses:
Compensation and benefits		249,574		177,782		40.4		171,534			45.5		736,298		633,297		16.3
Non-compensation operating expenses		86,792		66,706		30.1		70,065			23.9		302,049		265,147		13.9
Total non-interest expenses		336,366		244,488		37.6		241,599			39.2		1,038,347		898,444		15.6
Income before income taxes	$	55,541	$	42,152		31.8	$	48,623			14.2	$	175,670	$	157,051		11.9

As a percentage of net revenues:
Compensation and benefits		63.7		62.0				59.1					60.6		60.0
Non-compensation operating expenses		22.1		23.3				24.1					24.9		25.1
Income before income taxes		14.2		14.7				16.8					14.5		14.9

Non-GAAP Financial Measures

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company’s financial results for the three months ended December 31, 2019, December 31, 2018, and September 30, 2019 and the years ended December 31, 2019 and 2018. 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 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. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these 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 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 income and earnings per diluted common share on a GAAP basis for the three months ended December 31, 2019, December 31, 2018, and September 30, 2019, and the years ended December 31, 2019 and 2018 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

	Three Months Ended									Year Ended
($ in 000s)	12/31/19			12/31/18			9/30/19			12/31/19			12/31/18
GAAP net income applicable to Stifel Financial Corp.	$	130,690		$	114,062		$	109,414		$	448,396		$	393,968
Preferred dividends		4,843			2,344			4,844			17,319			9,375
Net income available to common shareholders		125,847			111,718			104,570			431,077			384,593

Non-GAAP adjustments:
Merger-related and severance ⁽¹⁸⁾		31,442			17,714			14,850			61,204			51,220
Litigation-related ⁽¹⁹⁾		—			18			—			3,507			6,792
Provision for income taxes ⁽²⁰⁾		(10,690	)		(2,660	)		(2,274	)		(16,152	)		(13,163	)
Total non-GAAP adjustments		20,752			15,072			12,576			48,559			44,849
Non-GAAP net income available to common shareholders	$	146,599		$	126,790		$	117,146		$	479,636		$	429,442

Weighted average diluted shares outstanding		77,813			80,706			78,144			78,585			81,321

GAAP earnings per diluted common share	$	1.68		$	1.41		$	1.40		$	5.71		$	4.84
Non-GAAP adjustments		0.27			0.19			0.16			0.61			0.56
Non-GAAP earnings per diluted common share	$	1.95		$	1.60		$	1.56		$	6.32		$	5.40

GAAP earnings per diluted common share available to common shareholders	$	1.62		$	1.38		$	1.34		$	5.49		$	4.73
Non-GAAP adjustments		0.26			0.19			0.16			0.61			0.55
Non-GAAP earnings per diluted common share available to common shareholders	$	1.88		$	1.57		$	1.50		$	6.10		$	5.28

Footnotes

⁽¹⁾Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.”
⁽²⁾Non-GAAP pre-tax margin for the three months ended December 31, 2019 of 20.5% is calculated by adding non-GAAP adjustments of $31.4 million to our GAAP income before income taxes of $162.6 million and dividing it by non-GAAP net revenues for the quarter of $944.4 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”
⁽³⁾Non-GAAP pre-tax margin for the year ended December 31, 2019 of 19.9% is calculated by adding non-GAAP adjustments of $64.7 million to our GAAP income before income taxes of $599.1 million and dividing it by non-GAAP net revenues of $3.3 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”
⁽⁴⁾Excludes revenue included in the Other segment.
⁽⁵⁾See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.”
⁽⁶⁾Book value per common share represents shareholders’ equity (excluding preferred stock and non-controlling interests) divided by period end common shares outstanding.
⁽⁷⁾Computed by dividing annualized net income by average Stifel Financial common shareholders’ equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average Stifel Financial common shareholders’ equity.
⁽⁸⁾Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total Stifel Financial common shareholders' equity less goodwill and identifiable intangible assets.
⁽⁹⁾Capital ratios are estimates at time of the Company’s earnings release.
⁽¹⁰⁾Reflects change in the definition of producing brokers as of January 1, 2019. Prior period amounts have been restated to conform with current period presentation.
⁽¹¹⁾Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at our bank subsidiaries.
⁽¹²⁾Includes Private Client Group and Trust Business.
⁽¹³⁾Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.
⁽¹⁴⁾Asset management assets managed in Private Client Group or Trust accounts.
⁽¹⁵⁾Return on assets (ROA) is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for Individual Program Banks.
⁽¹⁶⁾Includes Stifel Bank & Trust, Stifel Bank, and Stifel Trust Company, N.A.
⁽¹⁷⁾Includes net interest, asset management and service fees, and other income.
⁽¹⁸⁾Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company’s on-going business.
⁽¹⁹⁾Primarily related to costs associated with Company’s legal matters.
⁽²⁰⁾See details of non-GAAP adjustments under “Provision for Income Taxes.”

Media Contact: Neil Shapiro (212) 271-3447
Investor Contact: Joel Jeffrey (212) 271-3610
www.stifel.com/investor-relations

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