Highlights
- The Company reported net revenues of
$1.2 billion , the second best quarter in its history, driven by higher asset management revenues, transactional revenues, and capital raising revenues. - Non-GAAP net income available to common shareholders of
$1.49 per diluted common share. - Record asset management revenues, up 16% over the year-ago quarter.
- Capital raising revenues increased 56% over the year-ago quarter.
- Record client assets of
$467.7 billion , up 15% over the year-ago quarter. - Recruited 22 financial advisors during the quarter, including 4 experienced employee advisors and 11 experienced independent advisors.
- Credit rating upgrade from
S&P Global Ratings to BBB, from BBB-, with a stable outlook. - Non-GAAP pre-tax margin of 19.8% as the Company maintained its focus on expense discipline, while continuing to invest in the business.
- Annualized return on tangible common equity (ROTCE) (5) of 21%.
- Tangible book value per common share (7) of
$30.67 , up 2% from prior year.
Financial Summary (Unaudited) | ||||
(000s) | 1Q 2024 | 1Q 2023 | ||
GAAP Financial Highlights: | ||||
Net revenues | ||||
Net income (1) | ||||
Diluted EPS (1) | ||||
Comp. ratio | 58.4% | 58.8% | ||
Non-comp. ratio | 22.8% | 22.2% | ||
Pre-tax margin | 18.8% | 19.0% | ||
Non-GAAP Financial Highlights: | ||||
Net revenues | ||||
Net income (1) (2) | ||||
Diluted EPS (1) (2) | ||||
Comp. ratio (2) | 58.0% | 58.0% | ||
Non-comp. ratio (2) | 22.2% | 21.5% | ||
Pre-tax margin (3) | 19.8% | 20.5% | ||
ROCE (4) | 14.3% | 13.9% | ||
ROTCE (5) | 20.9% | 19.9% | ||
Global Wealth Management (assets and loans in millions) | ||||
Net revenues | ||||
Pre-tax net income | ||||
Total client assets | ||||
Fee-based client assets | ||||
Bank loans (6) | ||||
Net revenues | ||||
Equity | ||||
Fixed Income | ||||
Pre-tax net income |
Global Wealth Management
Global Wealth Management reported record net revenues of
Highlights
- Recruited 22 financial advisors during the quarter, including 4 experienced employee advisors, and 11 experienced independent advisors, with total trailing 12 month production of
$7 million . - Client assets of
$467.7 billion , up 15% over the year-ago quarter. - Fee-based client assets of
$177.1 billion , up 18% over the year-ago quarter.
Net revenues increased 4% from a year ago:
- Transactional revenues increased 13% over the year-ago quarter reflecting an increase in client activity.
- Asset management revenues increased 17% over the year-ago quarter reflecting higher asset values.
- Net interest income decreased 16% over the year-ago quarter driven by changes in deposit mix, partially offset by higher interest rates.
Total Expenses:
- Compensation expense as a percent of net revenues increased to 49.3% primarily as a result of higher compensable revenues.
- Provision for credit losses was primarily impacted by changes in the outlook for macroeconomic conditions.
- Non-compensation operating expenses as a percent of net revenues increased to 13.9% primarily as a result of higher litigation-related and
FDIC insurance expense, partially offset by revenue growth over the year-ago quarter.
Summary Results of Operations | |||||
(000s) | 1Q 2024 | 1Q 2023 | |||
Net revenues | $790,500 | $757,186 | |||
Transactional revenues | 181,753 | 161,255 | |||
Asset management | 367,450 | 315,537 | |||
Net interest income | 236,269 | 281,932 | |||
Investment banking | 4,280 | 4,158 | |||
Other income | 748 | (5,696) | |||
Total expenses | $499,752 | $441,077 | |||
Compensation expense | 389,536 | 342,423 | |||
Provision for credit losses | 4,968 | 4,920 | |||
Non-comp. opex | 105,248 | 93,734 | |||
Pre-tax net income | $290,748 | $316,109 | |||
Compensation ratio | 49.3% | 45.2% | |||
Non-compensation ratio | 13.9% | 13.1% | |||
Pre-tax margin | 36.8% | 41.7% |
Highlights
Investment banking revenues increased 1% from a year ago:
- Advisory revenues decreased 21% from the year-ago quarter driven by lower levels of completed advisory transactions.
- Fixed income capital raising revenues increased 57% over the year-ago quarter primarily driven by higher bond issuances.
- Equity capital raising revenues increased 63% over the year-ago quarter driven by higher volumes.
Fixed income transactional revenues increased 24% from a year ago:
- Fixed income transactional revenues increased from the year-ago quarter driven by improved market conditions and increased client activity.
Equity transactional revenues increased 3% from a year ago:
- Equity transactional revenues increased from the year-ago quarter primarily driven by higher trading gains.
Total Expenses:
- Compensation expense as a percent of net revenues decreased to 61.4% primarily as a result of higher revenues.
- Non-compensation operating expenses as a percent of net revenues remained consistent with the year-ago quarter.
Summary Results of Operations | |||||
(000s) | 1Q 2024 | 1Q 2023 | |||
Net revenues | $351,376 | $332,613 | |||
Investment banking | 209,669 | 207,721 | |||
Advisory | 119,252 | 151,063 | |||
Fixed income capital raising | 50,116 | 31,986 | |||
Equity capital raising | 40,301 | 24,672 | |||
Fixed income transactional | 88,654 | 71,428 | |||
Equity transactional | 54,083 | 52,389 | |||
Other | (1,030) | 1,075 | |||
Total expenses | $314,267 | $298,893 | |||
Compensation expense | 215,749 | 205,905 | |||
Non-comp. opex. | 98,518 | 92,988 | |||
Pre-tax net income | $37,109 | $33,720 | |||
Compensation ratio | 61.4% | 61.9% | |||
Non-compensation ratio | 28.0% | 28.0% | |||
Pre-tax margin | 10.6% | 10.1% |
Other Matters
Highlights
- The Company repurchased
$159.3 million of its outstanding common stock during the first quarter, including$98.6 million in connection with net-share settlements under its equity compensation plan. - Weighted average diluted shares outstanding decreased primarily as a result of share repurchases. The Company has repurchased 6.6 million shares since the first quarter of 2023.
- Credit rating upgrade from
S&P Global Ratings to BBB, from BBB-, with a stable outlook. - The Board of Directors declared a
$0.42 quarterly dividend per share payable onMarch 15, 2024 to common shareholders of record onMarch 1, 2024 . - The Board of Directors declared a quarterly dividend on the outstanding shares of the Company’s preferred stock payable on
March 15, 2024 to shareholders of record onMarch 1, 2024 .
1Q 2024 | 1Q 2023 | |||
Common stock repurchases | ||||
Repurchases (000s) | ||||
Number of shares (000s) | 2,254 | 2,752 | ||
Average price | ||||
Period end shares (000s) | 102,649 | 106,172 | ||
Weighted average diluted shares outstanding (000s) | 109,985 | 115,390 | ||
Effective tax rate | 25.2% | 24.9% | ||
Tier 1 common capital ratio | 14.3% | 13.9% | ||
Tier 1 risk based capital ratio | 17.3% | 16.8% | ||
Tier 1 leverage capital ratio | 10.6% | 10.9% | ||
Tier 1 capital (MM) | ||||
Risk weighted assets (MM) | ||||
Average assets (MM) | ||||
Quarter end assets (MM) | ||||
Agency | Rating | Outlook | ||
Fitch Ratings | BBB+ | Stable | ||
BBB | Stable |
Conference Call Information
All interested parties are invited to listen to Stifel’s Chairman and CEO,
Company Information
A financial summary follows. Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the financial supplement. Both the earnings release and the financial supplement are available online in the Investor Relations section at www.stifel.com/investor-relations.
The information provided herein and in the financial supplement, including information provided on the Company’s earnings conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such measures to the comparable
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
Summary Results of Operations (Unaudited) | ||||||||||
Three Months Ended | ||||||||||
(000s, except per share amounts) | % Change | % Change | ||||||||
Revenues: | ||||||||||
Commissions | $ 185,476 | 9.4 | 6.8 | |||||||
Principal transactions | 139,014 | 115,522 | 20.3 | 154,377 | (10.0) | |||||
Investment banking | 213,949 | 211,879 | 1.0 | 205,664 | 4.0 | |||||
Asset management | 367,476 | 315,569 | 16.4 | 330,536 | 11.2 | |||||
Other income | 4,950 | (2,293) | 315.9 | 9,687 | (48.9) | |||||
Operating revenues | 910,865 | 810,227 | 12.4 | 873,878 | 4.2 | |||||
Interest revenue | 506,828 | 451,564 | 12.2 | 516,213 | (1.8) | |||||
Total revenues | 1,417,693 | 1,261,791 | 12.4 | 1,390,091 | 2.0 | |||||
Interest expense | 254,655 | 154,998 | 64.3 | 243,712 | 4.5 | |||||
Net revenues | 1,163,038 | 1,106,793 | 5.1 | 1,146,379 | 1.5 | |||||
Non-interest expenses: | ||||||||||
Compensation and benefits | 679,695 | 651,190 | 4.4 | 674,437 | 0.8 | |||||
Non-compensation operating expenses | 264,652 | 245,720 | 7.7 | 265,947 | (0.5) | |||||
Total non-interest expenses | 944,347 | 896,910 | 5.3 | 940,384 | 0.4 | |||||
Income before income taxes | 218,691 | 209,883 | 4.2 | 205,995 | 6.2 | |||||
Provision for income taxes | 55,116 | 52,344 | 5.3 | 43,511 | 26.7 | |||||
Net income | 163,575 | 157,539 | 3.8 | 162,484 | 0.7 | |||||
Preferred dividends | 9,320 | 9,320 | 0.0 | 9,320 | 0.0 | |||||
Net income available to common shareholders | $154,255 | 4.1 | 0.7 | |||||||
Earnings per common share: | ||||||||||
Basic | $1.48 | 8.8 | 0.7 | |||||||
Diluted | $1.40 | 9.4 | 1.4 | |||||||
Cash dividends declared per common share | $0.42 | 16.7 | 16.7 | |||||||
Weighted average number of common shares outstanding: | ||||||||||
Basic | 104,275 | 108,754 | (4.1) | 103,934 | 0.3 | |||||
Diluted | 109,985 | 115,390 | (4.7) | 111,330 | (1.2) |
Non-GAAP Financial Measures (9) | ||||
Three Months Ended | ||||
(000s, except per share amounts) | ||||
GAAP net income | $163,575 | |||
Preferred dividend | 9,320 | 9,320 | ||
Net income available to common shareholders | 154,255 | 148,219 | ||
Non-GAAP adjustments: | ||||
Merger-related(10) | 12,154 | 17,386 | ||
Provision for income taxes(11) | (3,063) | (4,337) | ||
Total non-GAAP adjustments | 9,091 | 13,049 | ||
Non-GAAP net income available to common shareholders | $163,346 | |||
Weighted average diluted shares outstanding | 109,985 | 115,390 | ||
GAAP earnings per diluted common share | $1.48 | |||
Non-GAAP adjustments | 0.09 | 0.12 | ||
Non-GAAP earnings per diluted common share | $1.57 | |||
GAAP earnings per diluted common share available to common shareholders | $1.40 | |||
Non-GAAP adjustments | 0.09 | 0.12 | ||
Non-GAAP earnings per diluted common share available to common shareholders | $1.49 |
GAAP to Non-GAAP Reconciliation (9) | ||||
Three Months Ended | ||||
(000s) | ||||
GAAP compensation and benefits | ||||
As a percentage of net revenues | 58.4% | 58.8% | ||
Non-GAAP adjustments: | ||||
Merger-related (10) | (5,533) | (9,253) | ||
Non-GAAP compensation and benefits | ||||
As a percentage of non-GAAP net revenues | 58.0% | 58.0% | ||
GAAP non-compensation expenses | ||||
As a percentage of net revenues | 22.8% | 22.2% | ||
Non-GAAP adjustments: | ||||
Merger-related (10) | (6,621) | (8,136) | ||
Non-GAAP non-compensation expenses | ||||
As a percentage of non-GAAP net revenues | 22.2% | 21.5% | ||
Total merger-related expenses | $12,154 | $17,386 |
Footnotes | |
(1) | Represents available to common shareholders. |
(2) | Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation.” |
(3) | Non-GAAP pre-tax margin is calculated by adding total merger-related expenses (non-GAAP adjustments) and dividing it by non-GAAP net revenues. See “Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation.” |
(4) | Return on average common equity (“ROCE”) is calculated by dividing annualized net income applicable to common shareholders by average common shareholders’ equity or, in the case of non-GAAP ROCE, calculated by dividing non-GAAP net income applicable to commons shareholders by average common shareholders’ equity. |
(5) | Return on average tangible common equity (“ROTCE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTCE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible common equity. Tangible common equity, also a non-GAAP financial measure, 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 |
(6) | Includes loans held for sale. |
(7) | Tangible book value per common share represents shareholders’ equity (excluding preferred stock) divided by period end common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. |
(8) | Capital ratios are estimates at time of the Company’s earnings release, |
(9) | The Company prepares its Consolidated Financial Statements using accounting principles generally accepted in |
(10) | Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards, debentures, and promissory notes issued as retention, additional earn-out expense, 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. |
(11) | Primarily represents the Company’s effective tax rate for the period applied to the non-GAAP adjustments. |
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