Stifel Reports First Quarter 2021 Results
Stifel reported record net revenues of $1.1 billion for Q1 2021, marking a 24.3% year-over-year increase. Net income available to common shareholders reached $164.7 million, or $1.40 per diluted share, up from $81.7 million last year. Key drivers included strong performances in Global Wealth Management and Institutional Group segments. The company's assets also rose to $378.6 billion, an increase of 36.9% YoY. The Board declared a quarterly dividend of $0.15, a 36% increase.
- Record net revenues of $1.1 billion, a 24.3% increase YoY.
- Net income available to common shareholders rose to $164.7 million, doubling from $81.7 million YoY.
- Increased client assets to $378.6 billion, a 36.9% YoY growth.
- Record investment banking revenues at $339.3 million, up 89.1% YoY.
- Board declared a $0.15 quarterly dividend, up 36% from the prior quarter.
- Net interest income decreased by 17.3% YoY to $113.1 million, largely due to lower interest rates.
- Compensation and benefits expenses increased to $697.9 million, impacting profit margins.
- Record net revenues of
$1.1 billion , increased24.3% with the year-ago quarter. - Record net revenues in Global Wealth Management and Institutional Group segments.
- Net income available to common shareholders of
$164.7 million , or$1.40 per diluted common share. - Non-GAAP net income available to common shareholders of
$176.4 million , or$1.50 per diluted common share. - Record client assets of
$378.6 billion , increased36.9% compared with the year-ago quarter and5.9% sequentially. - Annualized return on average tangible common shareholders’ equity (1) was
26.5% . - Non-GAAP annualized return on average tangible common shareholders’ equity (1) was
28.4% . - The Board of Directors declared a
$0.15 quarterly dividend per share, an increase of36% from the prior quarter.
ST. LOUIS, April 27, 2021 (GLOBE NEWSWIRE) -- Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of
For the three months ended March 31, 2021, the Company reported non-GAAP net income available to common shareholders of
Chairman’s Comments
“I am pleased with our first quarter results as we generated record net revenue and the second highest earnings per share in Stifel’s history,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel. “The strength of our performance was driven by record revenue in both our operating segments, Global Wealth Management and Institutional Group. The operating environment in 2021 has been a tailwind to our business as the equity markets are up, client engagement is strong, credit remains solid, and investment banking activity surged. Our results in the quarter again illustrate the benefits of our diverse business as the investments we have made have enabled us to participate in these robust market conditions to a far greater magnitude than we could have in years past. Looking forward, Stifel is well positioned for another strong year.”
| Financial Highlights (Unaudited) | Three Months Ended | ||||||||||||||||||||||||||||||||
| ($ in 000s, except per share data) | GAAP 3/31/21 | GAAP 3/31/20 | % Change | GAAP 12/31/20 | % Change | Non-GAAP (3) 3/31/21 | Non-GAAP (3) 3/31/20 | % Change | |||||||||||||||||||||||||
| Net revenues | $ | 1,134,789 | $ | 913,034 | 24.3 | $ | 1,059,910 | 7.1 | $ | 1,134,980 | $ | 913,213 | 24.3 | ||||||||||||||||||||
| Net income | $ | 173,015 | $ | 86,589 | 99.8 | $ | 188,469 | (8.2 | ) | $ | 184,714 | $ | 96,777 | 90.9 | |||||||||||||||||||
| Preferred dividends | 8,289 | 4,844 | 71.1 | 7,677 | 8.0 | 8,289 | 4,844 | 71.1 | |||||||||||||||||||||||||
| Net income available to common shareholders | $ | 164,726 | $ | 81,745 | 101.5 | $ | 180,792 | (8.9 | ) | $ | 176,425 | $ | 91,933 | 91.9 | |||||||||||||||||||
| Earnings per diluted common share (2) | $ | 1.47 | $ | 0.75 | 96.0 | $ | 1.61 | (8.7 | ) | $ | 1.57 | $ | 0.84 | 86.9 | |||||||||||||||||||
| Earnings per diluted common share available to common shareholders (2) | $ | 1.40 | $ | 0.71 | 97.2 | $ | 1.55 | (9.7 | ) | $ | 1.50 | $ | 0.80 | 87.5 | |||||||||||||||||||
| Compensation ratio | 61.5 | % | 63.2 | % | 58.6 | % | 60.9 | % | 62.5 | % | |||||||||||||||||||||||
| Non-compensation ratio | 18.4 | % | 24.2 | % | 19.3 | % | 17.7 | % | 23.4 | % | |||||||||||||||||||||||
| Pre-tax operating margin (4) | 20.1 | % | 12.6 | % | 22.1 | % | 21.4 | % | 14.1 | % | |||||||||||||||||||||||
Net Revenues
Net revenues were a record
Brokerage Revenues
Brokerage revenues, defined as commissions and principal transactions, were
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Global Wealth Management | $ | 201,104 | $ | 179,879 | 11.8 | $ | 185,719 | 8.3 | ||||||||||||
| Institutional brokerage: | ||||||||||||||||||||
| Equity capital markets | 79,121 | 70,195 | 12.7 | 69,201 | 14.3 | |||||||||||||||
| Fixed income capital markets | 98,395 | 99,688 | (1.3 | ) | 87,664 | 12.2 | ||||||||||||||
| Total institutional brokerage | 177,516 | 169,883 | 4.5 | 156,865 | 13.2 | |||||||||||||||
| Total brokerage revenues (5) | $ | 378,620 | $ | 349,762 | 8.3 | $ | 342,584 | 10.5 | ||||||||||||
- Global Wealth Management brokerage revenues were
$201.1 million , an11.8% increase compared with the first quarter of 2020 and an8.3% increase compared with the fourth quarter of 2020. - Institutional equity brokerage revenues were
$79.1 million , a12.7% increase compared with the first quarter of 2020 and a14.3% increase compared with the fourth quarter of 2020. - Institutional fixed income brokerage revenues were
$98.4 million , a1.3% decrease compared with the first quarter of 2020 and a12.2% increase compared with the fourth quarter of 2020.
Investment Banking Revenues
Investment banking revenues were a record
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Capital raising: | ||||||||||||||||||||
| Global Wealth Management | $ | 13,549 | $ | 10,314 | 31.4 | $ | 9,562 | 41.7 | ||||||||||||
| Equity capital markets | 147,419 | 60,195 | 144.9 | 104,097 | 41.6 | |||||||||||||||
| Fixed income capital markets | 47,838 | 32,887 | 45.5 | 50,613 | (5.5 | ) | ||||||||||||||
| Institutional Group | 195,257 | 93,082 | 109.8 | 154,710 | 26.2 | |||||||||||||||
| Total capital raising (5) | 208,806 | 103,396 | 101.9 | 164,272 | 27.1 | |||||||||||||||
| Advisory fees | 130,482 | 76,072 | 71.5 | 173,395 | (24.7 | ) | ||||||||||||||
| Total investment banking (5) | $ | 339,288 | $ | 179,468 | 89.1 | $ | 337,667 | 0.5 | ||||||||||||
- Global Wealth Management capital raising revenues were
$13.5 million , a31.4% increase compared with the first quarter of 2020 and a41.7% increase compared with the fourth quarter of 2020. - Institutional equity capital raising revenues were
$147.4 million , a144.9% increase compared with the first quarter of 2020 and a41.6% increase compared with the fourth quarter of 2020. - Institutional fixed income capital raising revenues were
$47.8 million , a45.5% increase compared with the first quarter of 2020 and a5.5% decrease compared with the fourth quarter of 2020. - Advisory fee revenues were
$130.5 million , a71.5% increase compared with the first quarter of 2020 and a24.7% decrease compared with the fourth quarter of 2020.
Asset Management and Service Fee Revenues
Asset management and service fee revenues were a record
Net Interest Income
Net interest income was
- Interest income was
$127.5 million , a20.9% decrease compared with the first quarter of 2020 and a6.4% increase compared with the fourth quarter of 2020. - Interest expense was
$14.4 million , a40.7% decrease compared with the first quarter of 2020 and a0.5% decrease compared with the fourth quarter of 2020.
Compensation and Benefits Expenses
For the quarter ended March 31, 2021, compensation and benefits expenses were
The increase in compensation and benefits expenses, compared with the first quarter of 2020, is primarily attributable to revenue growth, as well as the change in the composition of revenues.
| Three Months Ended | ||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | ||||||
| GAAP compensation and benefits | $ | 697,914 | $ | 577,179 | ||||
| As a percentage of net revenues | 61.5 | % | 63.2 | % | ||||
| Non-GAAP adjustments: (6) | ||||||||
| Merger-related and severance | (6,174 | ) | (6,427 | ) | ||||
| Non-GAAP compensation and benefits | $ | 691,740 | $ | 570,752 | ||||
| As a percentage of non-GAAP net revenues | 60.9 | % | 62.5 | % | ||||
Non-Compensation Operating Expenses
For the quarter ended March 31, 2021, non-compensation operating expenses were
The decrease in non-compensation operating expenses, compared with the first quarter of 2020, is primarily attributable to the release of the allowance for credit losses driven by improvements in the outlook for macroeconomic conditions, and lower travel, entertainment, and conference-related expenses. In addition, the net provisions for litigation matters were lower. These decreases were partially offset by higher volume-related expenses, including investment banking transaction expenses, reflecting an increase in activity levels. In addition, occupancy expense and professional fees were higher. In addition, non-compensation operating expenses for the three months ended March 31, 2020 were impacted by an increase in the provision for credit losses as a result of the impact of COVID-19 on the broader economic environment.
| Three Months Ended | ||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | ||||||
| GAAP non-compensation expenses | $ | 208,983 | $ | 220,749 | ||||
| As a percentage of net revenues | 18.4 | % | 24.2 | % | ||||
| Non-GAAP adjustments: (6) | ||||||||
| Merger-related | (9,064 | ) | (6,904 | ) | ||||
| Non-GAAP non-compensation expenses | $ | 199,919 | $ | 213,845 | ||||
| As a percentage of non-GAAP net revenues | 17.7 | % | 23.4 | % | ||||
Provision for Income Taxes
The GAAP effective income tax rate for the quarter ended March 31, 2021 was
| Three Months Ended | ||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | ||||||
| GAAP provision for income taxes | $ | 54,877 | $ | 28,517 | ||||
| GAAP effective tax rate | 24.1 | % | 24.8 | % | ||||
| Non-GAAP adjustments: (6) | ||||||||
| Merger-related and severance | 3,670 | 3,300 | ||||||
| Other | 60 | 22 | ||||||
| 3,730 | 3,322 | |||||||
| Non-GAAP provision for income taxes | $ | 58,607 | $ | 31,839 | ||||
| Non-GAAP effective tax rate | 24.1 | % | 24.8 | % | ||||
Conference Call Information
Stifel Financial Corp. will host its first quarter 2021 financial results conference call on Tuesday, April 27, 2021, at 9:30 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 (877) 876-9938 and referencing conference ID 7880334. 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, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, 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 website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.
Cautionary Note Regarding 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. For information about the risks and important factors that c ould affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Forward-looking statements speak only as to the date they are made. The Company 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.
Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.
| Summary Results of Operations (Unaudited) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s, except per share amounts) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Revenues: | ||||||||||||||||||||
| Commissions | $ | 213,614 | $ | 211,098 | 1.2 | $ | 199,847 | 6.9 | ||||||||||||
| Principal transactions | 165,006 | 138,666 | 19.0 | 142,737 | 15.6 | |||||||||||||||
| Brokerage revenues | 378,620 | 349,764 | 8.3 | 342,584 | 10.5 | |||||||||||||||
| Capital raising | 208,806 | 103,396 | 101.9 | 164,276 | 27.1 | |||||||||||||||
| Advisory fees | 130,482 | 76,072 | 71.5 | 173,395 | (24.7 | ) | ||||||||||||||
| Investment banking | 339,288 | 179,468 | 89.1 | 337,671 | 0.5 | |||||||||||||||
| Asset management and service fees | 278,147 | 237,775 | 17.0 | 249,928 | 11.3 | |||||||||||||||
| Other income | 25,634 | 9,207 | 178.4 | 24,366 | 5.2 | |||||||||||||||
| Operating revenues | 1,021,689 | 776,214 | 31.6 | 954,549 | 7.0 | |||||||||||||||
| Interest revenue | 127,540 | 161,177 | (20.9 | ) | 119,876 | 6.4 | ||||||||||||||
| Total revenues | 1,149,229 | 937,391 | 22.6 | 1,074,425 | 7.0 | |||||||||||||||
| Interest expense | 14,440 | 24,357 | (40.7 | ) | 14,515 | (0.5 | ) | |||||||||||||
| Net revenues | 1,134,789 | 913,034 | 24.3 | 1,059,910 | 7.1 | |||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 697,914 | 577,179 | 20.9 | 621,344 | 12.3 | |||||||||||||||
| Occupancy and equipment rental | 72,032 | 66,073 | 9.0 | 73,729 | (2.3 | ) | ||||||||||||||
| Communication and office supplies | 41,825 | 41,124 | 1.7 | 40,443 | 3.4 | |||||||||||||||
| Commissions and floor brokerage | 15,703 | 14,842 | 5.8 | 12,687 | 23.8 | |||||||||||||||
| Provision for credit losses | (5,252 | ) | 16,068 | (132.7 | ) | — | n/m | |||||||||||||
| Other operating expenses | 84,675 | 82,642 | 2.5 | 77,006 | 10.0 | |||||||||||||||
| Total non-interest expenses | 906,897 | 797,928 | 13.7 | 825,209 | 9.9 | |||||||||||||||
| Income before income taxes | 227,892 | 115,106 | 98.0 | 234,701 | (2.9 | ) | ||||||||||||||
| Provision for income taxes | 54,877 | 28,517 | 92.4 | 46,232 | 18.7 | |||||||||||||||
| Net income | 173,015 | 86,589 | 99.8 | 188,469 | (8.2 | ) | ||||||||||||||
| Preferred dividends | 8,289 | 4,844 | 71.1 | 7,677 | 8.0 | |||||||||||||||
| Net income available to common shareholders | $ | 164,726 | $ | 81,745 | 101.5 | $ | 180,792 | (8.9 | ) | |||||||||||
| Earnings per common share: (2) | ||||||||||||||||||||
| Basic | $ | 1.53 | $ | 0.76 | 101.3 | $ | 1.70 | (10.0 | ) | |||||||||||
| Diluted | $ | 1.40 | $ | 0.71 | 97.2 | $ | 1.55 | (9.7 | ) | |||||||||||
| Cash dividends declared per common share (2) | $ | 0.15 | $ | 0.11 | 36.4 | $ | 0.11 | 36.4 | ||||||||||||
| Weighted average number of common shares outstanding: (2) | ||||||||||||||||||||
| Basic | 107,746 | 106,929 | 0.8 | 106,041 | 1.6 | |||||||||||||||
| Diluted | 117,875 | 114,929 | 2.6 | 116,828 | 0.9 | |||||||||||||||
| Summary Segment Results (Unaudited) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Net revenues: | ||||||||||||||||||||
| Global Wealth Management | $ | 631,495 | $ | 582,956 | 8.3 | $ | 575,252 | 9.8 | ||||||||||||
| Institutional Group | 506,081 | 332,238 | 52.3 | 489,448 | 3.4 | |||||||||||||||
| Other | (2,787 | ) | (2,160 | ) | n/m | (4,790 | ) | n/m | ||||||||||||
| Total net revenues | $ | 1,134,789 | $ | 913,034 | 24.3 | $ | 1,059,910 | 7.1 | ||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Global Wealth Management | $ | 408,264 | $ | 388,789 | 5.0 | $ | 378,790 | 7.8 | ||||||||||||
| Institutional Group | 388,893 | 290,498 | 33.9 | 365,793 | 6.3 | |||||||||||||||
| Other | 109,740 | 118,641 | (7.5 | ) | 80,626 | 36.1 | ||||||||||||||
| Total operating expenses | $ | 906,897 | $ | 797,928 | 13.7 | $ | 825,209 | 9.9 | ||||||||||||
| Operating contribution: | ||||||||||||||||||||
| Global Wealth Management | $ | 223,231 | $ | 194,167 | 15.0 | $ | 196,462 | 13.6 | ||||||||||||
| Institutional Group | 117,188 | 41,740 | 180.8 | 123,655 | (5.2 | ) | ||||||||||||||
| Other | (112,527 | ) | (120,801 | ) | (6.8 | ) | (85,416 | ) | 31.7 | |||||||||||
| Income before income taxes | $ | 227,892 | $ | 115,106 | 98.0 | $ | 234,701 | (2.9 | ) | |||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||
| Compensation and benefits | ||||||||||||||||||||
| Global Wealth Management | 53.3 | 51.2 | 52.8 | |||||||||||||||||
| Institutional Group | 59.6 | 62.0 | 58.1 | |||||||||||||||||
| Non-comp. operating expenses | ||||||||||||||||||||
| Global Wealth Management | 11.4 | 15.5 | 13.0 | |||||||||||||||||
| Institutional Group | 17.2 | 25.4 | 16.6 | |||||||||||||||||
| Income before income taxes | ||||||||||||||||||||
| Global Wealth Management | 35.3 | 33.3 | 34.2 | |||||||||||||||||
| Institutional Group | 23.2 | 12.6 | 25.3 | |||||||||||||||||
| Consolidated pre-tax margin | 20.1 | 12.6 | 22.1 | |||||||||||||||||
| Financial metrics (unaudited): | As of and For the Three Months Ended | ||||||||
| ($ in 000s, except percentages and per share amounts) | 3/31/21 | 3/31/20 | 12/31/20 | ||||||
| Total assets | $ | 28,141,581 | $ | 25,896,006 | $ | 26,604,254 | |||
| Total shareholders' equity | $ | 4,318,872 | $ | 3,470,326 | $ | 4,238,766 | |||
| Book value per common share (2) (7) | $ | 35.96 | $ | 30.75 | $ | 35.91 | |||
| Return on common equity (8) | 17.6 | % | 10.0 | % | 20.0 | % | |||
| Non-GAAP return on common equity (3) (8) | 18.8 | % | 11.2 | % | 21.6 | % | |||
| Return on tangible common equity (1) | 26.5 | % | 16.6 | % | 30.8 | % | |||
| Non-GAAP return on tangible common equity (1) (3) | 28.4 | % | 18.6 | % | 33.3 | % | |||
| Tier 1 common capital ratio (9) | 16.0 | % | 14.3 | % | 16.5 | % | |||
| Tier 1 risk based capital ratio (9) | 19.4 | % | 16.6 | % | 20.2 | % | |||
| Tier 1 leverage capital ratio (9) | 11.5 | % | 9.6 | % | 11.9 | % | |||
| Pre-tax margin on net revenues | 20.1 | % | 12.6 | % | 22.1 | % | |||
| Non-GAAP pre-tax margin on net revenues (3) (4) | 21.4 | % | 14.1 | % | 23.8 | % | |||
| Effective tax rate | 24.1 | % | 24.8 | % | 19.7 | % | |||
| Non-GAAP effective tax rate (3) | 24.1 | % | 24.8 | % | 19.7 | % | |||
| Statistical Information (unaudited): | As of and For the Three Months Ended | |||||||||||||||||||
| ($ in 000s, except financial advisors and locations) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Financial advisors | 2,182 | 2,130 | 2.4 | 2,187 | (0.2 | ) | ||||||||||||||
| Independent contractors | 92 | 94 | (2.1 | ) | 93 | (1.1 | ) | |||||||||||||
| Total financial advisors | 2,274 | 2,224 | 2.2 | 2,280 | (0.3 | ) | ||||||||||||||
| Locations | 446 | 447 | (0.2 | ) | 450 | (0.9 | ) | |||||||||||||
| Total client assets | $ | 378,615,000 | $ | 276,627,000 | 36.9 | $ | 357,429,000 | 5.9 | ||||||||||||
| Fee-based client assets | $ | 137,804,000 | $ | 93,633,000 | 47.2 | $ | 129,372,000 | 6.5 | ||||||||||||
| Client money market and insured product | $ | 23,616,000 | $ | 17,234,000 | 37.0 | $ | 22,837,000 | 3.4 | ||||||||||||
| Secured client lending (10) | $ | 3,124,545 | $ | 3,148,790 | (0.8 | ) | $ | 2,816,973 | 10.9 | |||||||||||
| Asset Management and Service Fee Break-down (unaudited) | ||||||||||||||||||||
| Asset Management and Service Fee Revenues: | Three Months Ended | |||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Private Client Group (11) | $ | 233,805 | $ | 193,260 | 21.0 | $ | 208,238 | 12.3 | ||||||||||||
| Asset Management | 30,114 | 29,762 | 1.2 | 28,298 | 6.4 | |||||||||||||||
| Third-party Bank Sweep Program | 2,102 | 3,308 | (36.5 | ) | 2,782 | (24.4 | ) | |||||||||||||
| Other (12) | 12,126 | 11,445 | 6.0 | 10,610 | 14.3 | |||||||||||||||
| Total asset management and service fee revenues | $ | 278,147 | $ | 237,775 | 17.0 | $ | 249,928 | 11.3 | ||||||||||||
| Fee-based Assets: | Three Months Ended | |||||||||||||||||||
| ($ in millions) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Private Client Group (11) | $ | 119,836 | $ | 80,617 | 48.6 | $ | 111,995 | 7.0 | ||||||||||||
| Asset Management | 31,115 | 22,752 | 36.8 | 29,864 | 4.2 | |||||||||||||||
| Elimination (13) | (13,147 | ) | (9,736 | ) | 35.0 | (12,487 | ) | 5.3 | ||||||||||||
| Total fee-based assets | $ | 137,804 | $ | 93,633 | 47.2 | $ | 129,372 | 6.5 | ||||||||||||
| Third-party Bank Sweep Program | $ | 6,455 | $ | 1,491 | 332.9 | $ | 6,555 | (1.5 | ) | |||||||||||
| ROA (bps) (14) | ||||||||||||||||||||
| Private Client Group (11) | 83.5 | 83.9 | 83.8 | |||||||||||||||||
| Asset Management | 38.7 | 38.0 | 37.9 | |||||||||||||||||
| Third-party Bank Sweep Program | 12.3 | 95.0 | 18.9 | |||||||||||||||||
| Consolidated Net Interest Income Analysis (Unaudited): | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
| ($ 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 | $ | 1,812.2 | $ | 0.9 | 0.20 | % | $ | 931.8 | $ | 3.7 | 1.58 | % | $ | 1,545.2 | $ | 1.1 | 0.28 | % | ||||||||||||||||||
| Financial instruments owned | 807.8 | 2.9 | 1.43 | 1,076.6 | 4.6 | 1.70 | 670.9 | 2.2 | 1.33 | |||||||||||||||||||||||||||
| Margin balances | 961.6 | 6.1 | 2.53 | 1,231.7 | 10.1 | 3.29 | 869.0 | 5.9 | 2.70 | |||||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 4,724.6 | 21.3 | 1.80 | 4,538.5 | 37.0 | 3.26 | 4,826.6 | 21.5 | 1.78 | |||||||||||||||||||||||||||
| Mortgage-backed securities | 905.9 | 3.3 | 1.44 | 1,094.2 | 6.0 | 2.18 | 758.8 | 2.6 | 1.38 | |||||||||||||||||||||||||||
| Corporate fixed income securities | 639.8 | 5.4 | 3.37 | 732.8 | 5.0 | 2.76 | 602.8 | 4.1 | 2.74 | |||||||||||||||||||||||||||
| Other | 6.4 | — | 2.06 | 22.3 | 0.1 | 2.14 | 6.8 | 0.1 | 2.10 | |||||||||||||||||||||||||||
| Total Investments | 6,276.7 | 30.0 | 1.91 | 6,387.8 | 48.1 | 3.01 | 6,195.0 | 28.3 | 1.83 | |||||||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 4,573.6 | 39.5 | 3.45 | 3,560.3 | 38.0 | 4.27 | 4,206.7 | 32.7 | 3.11 | |||||||||||||||||||||||||||
| Residential real estate | 3,994.5 | 27.0 | 2.71 | 3,416.1 | 25.3 | 2.96 | 3,820.8 | 27.7 | 2.90 | |||||||||||||||||||||||||||
| Securities-based loans | 2,002.3 | 9.7 | 1.94 | 2,063.8 | 16.5 | 3.19 | 1,899.7 | 9.6 | 2.03 | |||||||||||||||||||||||||||
| Commercial real estate | 371.0 | 3.3 | 3.51 | 445.0 | 5.8 | 5.22 | 379.1 | 3.3 | 3.52 | |||||||||||||||||||||||||||
| Loans held for sale | 534.4 | 2.8 | 2.09 | 374.5 | 4.0 | 4.26 | 489.1 | 3.0 | 2.45 | |||||||||||||||||||||||||||
| Other | 639.9 | 4.9 | 3.07 | 500.1 | 5.6 | 4.46 | 649.3 | 4.9 | 3.02 | |||||||||||||||||||||||||||
| Total Loans | 12,115.7 | 87.2 | 2.88 | 10,359.8 | 95.2 | 3.67 | 11,444.7 | 81.2 | 2.84 | |||||||||||||||||||||||||||
| Other interest-bearing assets | 596.2 | 0.4 | 0.32 | 607.9 | (0.5 | ) | (0.30 | ) | 469.6 | 1.2 | 1.00 | |||||||||||||||||||||||||
| Total interest-earning assets/interest income | 22,570.2 | 127.5 | 2.26 | 20,595.6 | 161.2 | 3.13 | 21,194.4 | 119.9 | 2.26 | |||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Senior notes | 1,112.5 | 12.1 | 4.35 | 1,017.1 | 11.2 | 4.40 | 1,311.0 | 14.4 | 4.39 | |||||||||||||||||||||||||||
| Deposits | 17,629.6 | 1.3 | 0.03 | 15,377.9 | 9.6 | 0.25 | 16,429.1 | 1.2 | 0.03 | |||||||||||||||||||||||||||
| FHLB | 15.8 | — | 0.29 | 590.5 | 2.4 | 1.59 | 137.0 | 0.1 | 0.34 | |||||||||||||||||||||||||||
| Other interest-bearing liabilities | 1,209.6 | 1.0 | 0.34 | 1,719.4 | 1.2 | 0.29 | 513.9 | (1.2 | ) | (0.94 | ) | |||||||||||||||||||||||||
| Total interest-bearing liabilities/interest expense | $ | 19,967.5 | $ | 14.4 | 0.29 | % | $ | 18,704.9 | $ | 24.4 | 0.52 | % | $ | 18,391.0 | $ | 14.5 | 0.32 | % | ||||||||||||||||||
| Net interest income/margin | $ | 113.1 | 2.00 | % | $ | 136.8 | 2.66 | % | $ | 105.4 | 1.99 | % | ||||||||||||||||||||||||
| Stifel Bancorp, Inc. (15) Net Interest Income Analysis (Unaudited): | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
| ($ 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 | $ | 962.3 | $ | 0.3 | 0.12 | % | $ | 446.0 | $ | 1.2 | 1.10 | % | $ | 546.7 | $ | 0.2 | 0.15 | % | ||||||||||||||||||
| Investments | 6,276.7 | 30.0 | 1.91 | 6,387.8 | 48.1 | 3.01 | 6,195.0 | 28.3 | 1.83 | |||||||||||||||||||||||||||
| Loans | 12,115.7 | 87.2 | 2.88 | 10,359.8 | 95.2 | 3.67 | 11,444.7 | 81.2 | 2.84 | |||||||||||||||||||||||||||
| Other interest-bearing assets | 40.7 | 0.2 | 2.23 | 59.6 | 0.6 | 4.02 | 42.8 | 0.4 | 3.20 | |||||||||||||||||||||||||||
| Total interest-earning assets/interest income | 19,395.4 | 117.7 | 2.43 | 17,253.2 | 145.1 | 3.36 | 18,229.2 | 110.1 | 2.42 | |||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Deposits | 17,629.6 | 1.3 | 0.03 | 15,377.9 | 9.6 | 0.25 | 16,429.1 | 1.2 | 0.03 | |||||||||||||||||||||||||||
| FHLB | 15.8 | — | 0.29 | 590.5 | 2.4 | 1.59 | 137.0 | 0.1 | 0.34 | |||||||||||||||||||||||||||
| Other interest-bearing liabilities | 1.4 | — | 7.92 | 1.6 | — | 7.09 | 1.4 | 0.1 | 9.87 | |||||||||||||||||||||||||||
| Total interest-bearing liabilities/interest expense | $ | 17,646.8 | 1.3 | 0.03 | % | $ | 15,970.0 | 12.0 | 0.30 | % | $ | 16,567.5 | 1.4 | 0.03 | % | |||||||||||||||||||||
| Net interest income/margin | $ | 116.4 | 2.40 | % | $ | 133.1 | 3.09 | % | $ | 108.7 | 2.39 | % | ||||||||||||||||||||||||
| Stifel Bancorp, Inc. (15) - a component of Global Wealth Management | |||||||||||||||||||
| Selected operating data (unaudited): | Three Months Ended | ||||||||||||||||||
| ($ in 000s, except percentages) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | ||||||||||||||
| Net interest income | $ | 116,387 | $ | 133,131 | (12.6 | ) | $ | 108,699 | 7.1 | ||||||||||
| Credit loss provision/(release) | (5,252 | ) | 16,068 | (132.7 | ) | — | n/m | ||||||||||||
| Charge-offs | 934 | 20 | n/m | — | n/m | ||||||||||||||
| Net interest margin | 2.40 | % | 3.09 | % | (69) bps | 2.39 | % | 1 bps | |||||||||||
| Financial Metrics (unaudited): | As of | |||||||||||
| ($ in 000s, except percentages) | 3/31/21 | 3/31/20 | 12/31/20 | |||||||||
| Total assets | $ | 20,500,414 | $ | 18,442,914 | $ | 18,867,133 | ||||||
| Total shareholders' equity | 1,474,473 | 1,224,307 | 1,399,382 | |||||||||
| Total loans, net (includes loans held for sale) | 12,422,234 | 10,565,287 | 11,558,008 | |||||||||
| Total deposits | 18,715,133 | 16,880,933 | 17,396,497 | |||||||||
| Available-for-sale securities, at fair value | 2,189,664 | 3,363,961 | 2,229,878 | |||||||||
| Held-to-maturity securities, at amortized cost | 4,758,910 | 3,083,065 | 4,114,840 | |||||||||
| Commercial and industrial | 4,923,494 | 3,813,862 | 4,296,089 | |||||||||
| Residential real estate | 4,158,033 | 3,495,136 | 3,956,670 | |||||||||
| Securities-based loans | 2,089,747 | 1,945,371 | 1,933,974 | |||||||||
| Commercial real estate | 374,736 | 399,732 | 366,485 | |||||||||
| Loans held for sale | 330,521 | 570,787 | 551,248 | |||||||||
| Stifel Bank & Trust: | ||||||||||||
| Common equity tier 1 capital ratio (9) | 11.1 | % | 11.7 | % | 11.4 | % | ||||||
| Tier 1 capital ratio (9) | 11.1 | % | 11.7 | % | 11.4 | % | ||||||
| Total capital ratio (9) | 12.4 | % | 13.0 | % | 12.7 | % | ||||||
| Tier 1 leverage ratio (9) | 7.1 | % | 7.1 | % | 7.1 | % | ||||||
| Stifel Bank: | ||||||||||||
| Common equity tier 1 capital ratio (9) | 18.5 | % | 15.6 | % | 16.5 | % | ||||||
| Tier 1 capital ratio (9) | 18.5 | % | 15.6 | % | 16.5 | % | ||||||
| Total capital ratio (9) | 19.2 | % | 16.5 | % | 17.7 | % | ||||||
| Tier 1 leverage ratio (9) | 7.3 | % | 7.3 | % | 7.3 | % | ||||||
| Credit Metrics: | ||||||||||||
| Allowance for credit losses | $ | 129,109 | $ | 121,017 | $ | 135,295 | ||||||
| Allowance as a percentage of retained loans | 1.06 | % | 1.20 | % | 1.22 | % | ||||||
| Net charge-offs as a percentage of average loans | 0.01 | % | 0.00 | % | 0.00 | % | ||||||
| Total nonperforming assets | $ | 13,756 | $ | 14,616 | $ | 13,925 | ||||||
| Nonperforming assets as % of total assets | 0.07 | % | 0.08 | % | 0.07 | % | ||||||
| Global Wealth Management Summary Results of Operations (Unaudited) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Revenues: | ||||||||||||||||||||
| Commissions | $ | 147,505 | $ | 136,897 | 7.7 | $ | 139,594 | 5.7 | ||||||||||||
| Principal transactions | 53,599 | 42,982 | 24.7 | 46,125 | 16.2 | |||||||||||||||
| Brokerage revenues | 201,104 | 179,879 | 11.8 | 185,719 | 8.3 | |||||||||||||||
| Asset management and service fees | 278,109 | 237,760 | 17.0 | 249,907 | 11.3 | |||||||||||||||
| Net interest | 117,775 | 138,682 | (15.1 | ) | 110,521 | 6.6 | ||||||||||||||
| Investment banking (16) | 13,549 | 10,333 | 31.1 | 9,562 | 41.7 | |||||||||||||||
| Other income | 20,958 | 16,302 | 28.6 | 19,543 | 7.2 | |||||||||||||||
| Net revenues | 631,495 | 582,956 | 8.3 | 575,252 | 9.8 | |||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 336,721 | 298,370 | 12.9 | 303,961 | 10.8 | |||||||||||||||
| Non-compensation operating expenses | 71,543 | 90,419 | (20.9 | ) | 74,829 | (4.4 | ) | |||||||||||||
| Total non-interest expenses | 408,264 | 388,789 | 5.0 | 378,790 | 7.8 | |||||||||||||||
| Income before income taxes | $ | 223,231 | $ | 194,167 | 15.0 | $ | 196,462 | 13.6 | ||||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||
| Compensation and benefits | 53.3 | 51.2 | 52.8 | |||||||||||||||||
| Non-compensation operating expenses | 11.4 | 15.5 | 13.0 | |||||||||||||||||
| Income before income taxes | 35.3 | 33.3 | 34.2 | |||||||||||||||||
| Institutional Group Summary Results of Operations (Unaudited) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | % Change | 12/31/20 | % Change | |||||||||||||||
| Revenues: | ||||||||||||||||||||
| Commissions | $ | 66,109 | $ | 74,198 | (10.9 | ) | $ | 60,253 | 9.7 | |||||||||||
| Principal transactions | 111,407 | 95,685 | 16.4 | 96,612 | 15.3 | |||||||||||||||
| Brokerage revenues | 177,516 | 169,883 | 4.5 | 156,865 | 13.2 | |||||||||||||||
| Capital raising | 195,257 | 93,082 | 109.8 | 154,710 | 26.2 | |||||||||||||||
| Advisory fees | 130,482 | 76,053 | 71.6 | 173,399 | (24.8 | ) | ||||||||||||||
| Investment banking | 325,739 | 169,135 | 92.6 | 328,109 | (0.7 | ) | ||||||||||||||
| Other (17) | 2,826 | (6,780 | ) | n/m | 4,474 | (36.8 | ) | |||||||||||||
| Net revenues | 506,081 | 332,238 | 52.3 | 489,448 | 3.4 | |||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 301,624 | 205,988 | 46.4 | 284,607 | 6.0 | |||||||||||||||
| Non-compensation operating expenses | 87,269 | 84,510 | 3.3 | 81,186 | 7.5 | |||||||||||||||
| Total non-interest expenses | 388,893 | 290,498 | 33.9 | 365,793 | 6.3 | |||||||||||||||
| Income before income taxes | $ | 117,188 | $ | 41,740 | 180.8 | $ | 123,655 | (5.2 | ) | |||||||||||
| As a percentage of net revenues: | ||||||||||||||||||||
| Compensation and benefits | 59.6 | 62.0 | 58.1 | |||||||||||||||||
| Non-compensation operating expenses | 17.2 | 25.4 | 16.6 | |||||||||||||||||
| Income before income taxes | 23.2 | 12.6 | 25.3 | |||||||||||||||||
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 March 31, 2021, March 31, 2020, and December 31, 2020. 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 March 31, 2021, March 31, 2020, and December 31, 2020 to net income and earnings per diluted common share on a non-GAAP basis for the same period.
| Three Months Ended | ||||||||||||
| ($ in 000s) | 3/31/21 | 3/31/20 | 12/31/20 | |||||||||
| GAAP net income | $ | 173,015 | $ | 86,589 | $ | 188,469 | ||||||
| Preferred dividend | 8,289 | 4,844 | 7,677 | |||||||||
| Net income available to common shareholders | 164,726 | 81,745 | 180,792 | |||||||||
| Non-GAAP adjustments: | ||||||||||||
| Merger-related and severance (18) | 15,429 | 13,510 | 17,706 | |||||||||
| Provision for income taxes (19) | (3,730 | ) | (3,322 | ) | (3,444 | ) | ||||||
| Total non-GAAP adjustments | 11,699 | 10,188 | 14,262 | |||||||||
| Non-GAAP net income available to common shareholders | $ | 176,425 | $ | 91,933 | $ | 195,054 | ||||||
| Weighted average diluted shares outstanding (2) | 117,875 | 114,929 | 116,828 | |||||||||
| GAAP earnings per diluted common share (2) | $ | 1.47 | $ | 0.75 | $ | 1.61 | ||||||
| Non-GAAP adjustments (2) | 0.10 | 0.09 | 0.13 | |||||||||
| Non-GAAP earnings per diluted common share (2) | $ | 1.57 | $ | 0.84 | $ | 1.74 | ||||||
| GAAP earnings per diluted common share available to common shareholders (2) | $ | 1.40 | $ | 0.71 | $ | 1.55 | ||||||
| Non-GAAP adjustments (2) | 0.10 | 0.09 | 0.12 | |||||||||
| Non-GAAP earnings per diluted common share available to common shareholders (2) | $ | 1.50 | $ | 0.80 | $ | 1.67 | ||||||
Footnotes
(1) Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Average deferred taxes on goodwill and intangible assets was
(2) All share and per share information has been retroactively adjusted to reflect the December 2020 three-for-two stock split.
(3) Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.”
(4) Non-GAAP pre-tax margin for the three months ended March 31, 2021 of
(5) Excludes revenue included in the Other segment.
(6) See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.”
(7) Book value per common share represents shareholders’ equity (excluding preferred stock) divided by period end common shares outstanding.
(8) Annualized return on average common shareholders’ equity (“ROE”) is calculated by dividing annualized net income applicable to common shareholders by average common shareholders’ equity or, in the case of non-GAAP ROE, calculated by dividing non-GAAP net income applicable to commons shareholders by average common shareholders’ equity.
(9) Capital ratios are estimates at time of the Company’s earnings release.
(10) Includes client margin balances held by the Company’s broker-dealer subsidiaries and securities-based loans held at the Company’s bank subsidiaries.
(11) Includes Private Client Group and Trust Business.
(12) Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.
(13) Asset management assets managed in Private Client Group or Trust accounts.
(14) 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.
(15) Includes Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A, and Stifel Trust Company Delaware, N.A.
(16) Includes capital raising and advisory fees.
(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, 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) 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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