Stifel Reports Third Quarter 2020 Results

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Stifel Financial reported net revenues of $883.3 million for Q3 2020, up 7.5% from Q3 2019. Net income available to common shareholders rose to $110.6 million, or $1.46 per diluted share. Non-GAAP net income increased to $120.5 million, or $1.59 per diluted share. The company achieved an annualized return on average tangible common equity of 20.4%. Wealth Management contributed 46% of net revenues, while Institutional Group revenues accounted for 41%. Overall, Stifel displays strength through diversification and consistent growth in its business segments.

Positive

Net revenues increased by 7.5% year-over-year to $883.3 million.
Net income available to common shareholders rose to $110.6 million, up 5.8%.
Non-GAAP net income increased by 10.2% to $120.5 million.
Annualized return on average tangible common shareholders’ equity reached 20.4%.
Wealth Management revenue rose to record levels despite a decline in net interest income.

Negative

Merger-related expenses impacted GAAP net income.
Advisory revenue declined by 13%, affecting overall Institutional Group performance.

10/27/2020 - 04:10 PM

Net revenues of $883.3 million, increased 7.5% with the year-ago quarter.
Net income available to common shareholders of $110.6 million, or $1.46 per diluted common share.
Non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share.
Annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 20.4%.
Non-GAAP annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 22.2%.

ST. LOUIS, Oct. 27, 2020 (GLOBE NEWSWIRE) -- Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $110.6 million, or $1.46 per diluted common share on net revenues of $883.3 million for the three months ended September 30, 2020, compared with net income available to common shareholders of $104.6 million, or $1.34 per diluted common share, on net revenues of $821.6 million for the third quarter of 2019.

For the three months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share. The Company’s reported GAAP net income for the three months ended September 30, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“The financial performance during the quarter, and over the past few years, has been driven by a diverse business mix that’s enabled both our Institutional Group and Wealth Management segments to generate strong growth. This diversification is illustrated by record nine month Wealth Management revenues despite significant declines in net interest income and deposit sweep fees, both a result of the Federal Reserve’s implementation of a zero rate environment. Likewise, we achieved record nine-month Institutional Group revenues as record capital raising and brokerage revenues more than compensated for the 13% decline in advisory revenue,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, “Simply, Stifel is a growth company with diversified, balanced, and synergistic businesses. Over the last 12 months, Wealth Management, under both brokerage and fee-based models, has contributed 46% of net revenues. Institutional revenues, comprised of equity and fixed income, investment banking and trading, made up 41% of net revenues, while net interest income accounted for the remaining 13%. The complementary nature of these businesses is reflected in our return on tangible common equity, which is 23% over the past 12 months.”

Financial Highlights (Unaudited)	Three Months Ended
($ in 000s, except per share data)	GAAP 9/30/20			GAAP 9/30/19			% Change		GAAP 6/30/20			% Change			Non-GAAP ⁽²⁾9/30/20			Non-GAAP ⁽²⁾ 9/30/19			% Change
Net revenues	$	883,300		$	821,572			7.5	$	895,817			(1.4	)	$	883,300		$	821,572			7.5
Net income applicable to Stifel Financial Corp.	$	120,527		$	109,414			10.2	$	107,887			11.7		$	130,422		$	121,990			6.9
Preferred dividends		9,897			4,844			104.3		4,843			104.4			9,897			4,844			104.3
Net income available to common shareholders	$	110,630		$	104,570			5.8	$	103,044			7.4		$	120,525		$	117,146			2.9
Earnings per diluted common share	$	1.59		$	1.40			13.6	$	1.45			9.7		$	1.72		$	1.56			10.3
Earnings per diluted common share available to common shareholders	$	1.46		$	1.34			9.0	$	1.39			5.0		$	1.59		$	1.50			6.0
Compensation ratio		60.4	%		59.2	%				61.1	%					59.6	%		58.1	%
Non-compensation ratio		21.7	%		22.5	%				22.9	%					21.0	%		21.7	%
Pre-tax operating margin ⁽³⁾		17.9	%		18.3	%				16.0	%					19.4	%		20.2	%

For the nine months ended September 30, 2020, the Company reported net income available to common shareholders of $295.4 million, or $3.90 per diluted common share on record net revenues of $2.7 billion, compared with net income available to common shareholders of $305.2 million, or $3.87 per diluted common share, on net revenues of $2.4 billion for the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $327.8 million, or $4.33 per diluted common share.

Financial Highlights (Unaudited)

Nine Months Ended

($ in 000s, except per share data)

GAAP
9/30/20

GAAP
9/30/19

%
Change

Non-GAAP ⁽²⁾9/30/20

Non-GAAP ⁽²⁾9/30/19

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