Net revenues of $913.0 million, increased 18.5% with the year-ago quarter.Net income available to common shareholders of $81.7 million, or $1.07 per diluted common share.Non-GAAP net income available to common shareholders of $91.9 million, or $1.20 per diluted common share.Annualized return on average tangible common shareholders’ equity (1) was 17.4%.Non-GAAP annualized return on average tangible common shareholders’ equity (1) was 19.5%.The Board of Directors declared a $0.17 quarterly dividend per share, an increase of 13% from the prior quarter.The Company repurchased $56.2 million of its outstanding common stock.ST. LOUIS, April 30, 2020 (GLOBE NEWSWIRE) — Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $81.7 million, or $1.07 per diluted common share on net revenues of $913.0 million for the three months ended March 31, 2020, compared with net income available to common shareholders of $96.9 million, or $1.22 per diluted common share, on net revenues of $770.4 million for the first quarter of 2019.For the three months ended March 31, 2020, the Company reported non-GAAP net income available to common shareholders of $91.9 million, or $1.20 per diluted common share. The Company’s reported GAAP net income for the three months ended March 31, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.Chairman’s Comments“Given the impact of the current healthcare crisis on the economy and our daily lives, I’d like to say how proud I am of my Stifel partners and associates who have shown resolve, creativity, and teamwork to achieve the dual objectives of promoting the safety of our people while delivering essential and exceptional service to our clients. Our results in the first quarter illustrate the value of our diversified business as we generated our second highest quarterly revenue despite the sudden and dramatic change in the economy following the COVID -19 outbreak. Record Global Wealth Management revenue and our second strongest quarter for our Institutional Group was driven by record brokerage revenue as well as strong investment banking, net interest income and fee-based revenue. Given the operating conditions in the quarter, I believe that our brokerage results deserve special praise. In a matter of days, and with a focus on employee safety, we rapidly deployed our business continuity plan that resulted in more than 90% of our employees working remotely and enabled our Institutional Group to go from eight primary trading desks to more than 180 separate trading locations. This underscores the value of the investments we have made over the years in both people and technology,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.Mr. Kruszewski continued, “The next few months have a high level of uncertainty, which can drive a wide range of economic outcomes. Longer term, we believe the world and our economy will overcome this pandemic. Looking forward, Stifel is well positioned because of its diversified business model, solid and liquid balance sheet, and our associates’ commitment to excellence.”
Net RevenuesNet revenues were $913.0 million for the first quarter of 2020, an 18.5% increase from the first quarter of 2019 and a 3.3% decrease from our record fourth quarter of 2019. Net revenues, compared with the first quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower advisory fee revenues and net interest income. Net revenues, compared with the fourth quarter of 2019, reflected significantly lower advisory fee revenues and a decline in capital raising revenues, partially offset by an increase in brokerage revenues, asset management and service fees, and net interest income.The operating environment, notably in March, was impacted by the spread of the COVID-19 virus which caused a sharp contraction in global economic activity and increased market volatility. The decline of asset prices, reduction in interest rates, widening of credit spreads, lending and counterparty credit deterioration, market volatility, and reduced investment banking activity had the most immediate negative impacts on the Company’s first quarter results. At the same time, high levels of client trading activity related to market volatility significantly impacted brokerage revenues.Brokerage RevenuesBrokerage revenues, defined as commissions and principal transactions, were $349.8 million, a 34.8% increase compared with the first quarter of 2019 and a 20.8% increase compared with the fourth quarter of 2019.Global Wealth Management brokerage revenues were $179.9 million, a 17.4% increase compared with the first quarter of 2019 and a 3.4% increase compared with the fourth quarter of 2019.Institutional equity brokerage revenues were $70.2 million, an 80.5% increase compared with the first quarter of 2019 and a 52.6% increase compared with the fourth quarter of 2019.Institutional fixed income brokerage revenues were $99.7 million, a 47.9% increase compared with the first quarter of 2019 and a 43.3% increase compared with the fourth quarter of 2019.Investment Banking RevenuesInvestment banking revenues were $179.5 million, a 10.9% increase compared with the first quarter of 2019 and a 35.3% decrease compared with the fourth quarter of 2019.Global Wealth Management capital raising revenues were $10.3 million, a 25.4% increase compared with the first quarter of 2019 and an 11.2% increase compared with the fourth quarter of 2019.Institutional equity capital raising revenues were $60.2 million, a 116.1% increase compared with the first quarter of 2019 and a 6.5% decrease compared with the fourth quarter of 2019.Institutional fixed income capital raising revenues were $32.9 million, a 57.6% increase compared with the first quarter of 2019 and a 31.7% decrease compared with the fourth quarter of 2019.Advisory fee revenues were $76.1 million, a 27.5% decrease compared with the first quarter of 2019 and a 51.0% decrease compared with the fourth quarter of 2019.
Asset Management and Service Fee RevenuesAsset management and service fee revenues were $237.8 million, a 21.8% increase compared with the first quarter of 2019 and a 6.2% increase compared with the fourth quarter of 2019. The increase from the comparative period in 2019 is primarily attributable to higher asset levels at the beginning of the first quarter of 2020 and strong fee-based asset flows. See Asset Management and Service Fee Break-down table.Net Interest IncomeNet interest income of $136.8 million, a 3.4% decrease compared with the first quarter of 2019 and a 0.9% increase compared with the fourth quarter of 2019. See Net Interest Income Analysis table.Interest income was $161.2 million, a 15.6% decrease compared with the first quarter of 2019 and a 3.5% decrease compared with the fourth quarter of 2019.Interest expense was $24.4 million, a 50.7% decrease compared with the first quarter of 2019 and a 22.5% decrease compared with the fourth quarter of 2019.Compensation and Benefits ExpensesFor the quarter ended March 31, 2020, compensation and benefits expenses were $577.2 million, which included $6.4 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $458.1 million in the first quarter of 2019 and $567.0 million in the fourth quarter of 2019. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 62.5% in the first quarter of 2020 (non-GAAP measure).The increase in compensation and benefits expenses, compared with the first quarter of 2019, is primarily attributable to higher volume and revenue-related expense and investments.Non-Compensation Operating ExpensesFor the quarter ended March 31, 2020, non-compensation operating expenses were $220.7 million, which included $6.9 million of merger-related expenses (non-GAAP adjustments). This compares with $174.5 million in the first quarter of 2019 and $214.7 million in the fourth quarter of 2019. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2020 were 23.4% (non-GAAP measure).The increase in non-compensation operating expenses, compared with the first quarter of 2019, is primarily attributable to the increase in the provision for loan losses as a result of the impact of COVID-19 on the broader economic environment, volume-related expenses, net provisions for regulatory matters, and professional fees. In addition, the first quarter of 2020 included provisions related to growth in loans and the impact of accounting for credit losses under the CECL standard (6).
Provision for Income TaxesThe GAAP effective income tax rate for the quarter ended March 31, 2020 was 24.8%. This compares with an effective income tax rate of 27.9% for the first quarter of 2019 and 19.6% for the fourth quarter of 2019. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2020 was 24.8%.The effective income tax rate was primarily impacted by tax benefits on the settlement of employee share-based awards and the establishment of a valuation allowance on certain deferred tax assets in the first quarter of 2020.Conference Call InformationStifel Financial Corp. will host its first quarter 2020 financial results conference call on Thursday, April 30, 2020, 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 5496039. 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 InformationStifel 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 StatementsThis 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. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see Item 8.01 of the Company’s Report on Form 8-K dated April 30, 2020 and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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.
Non-GAAP Financial MeasuresThe 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, 2020, March 31, 2019, and December 31, 2019. 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, 2020, March 31, 2019, and December 31, 2019 to net income and earnings per diluted common share on a non-GAAP basis for the same period.
FootnotesMedia Contact: Neil Shapiro (212) 271-3447
Investor Contact: Joel Jeffrey (212) 271-3610
www.stifel.com/investor-relations
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