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Stifel Reports Record Fourth Quarter and Full-Year Results

Written by Customer Service on . Posted in Public Companies.

25th consecutive year of record net revenues of $3.8 billion, an increase of 12.4% compared with 2019.Quarterly record net revenues of $1.1 billion, an increase of 20.0% over the third quarter of 2020.Record quarterly net income available to common shareholders of $180.8 million, or $1.55 per diluted common share.(1)Record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1)Record client assets of $357.4 billion, increased 8.5% compared with the year-ago quarter.Annualized return on average tangible common shareholders’ equity(2) was 30.8%.Non-GAAP annualized return on average tangible common shareholders’ equity(2) was 33.3%.Increasing quarterly dividend by approximately 32% to $0.15 per common share starting in first quarter of 2021.ST. LOUIS, Jan. 29, 2021 (GLOBE NEWSWIRE) — Stifel Financial Corp. (NYSE: SF) today reported record net income available to common shareholders of $180.8 million, or $1.55 per diluted common share(1) on record net revenues of $1.1 billion for the three months ended December 31, 2020, compared with net income available to common shareholders of $125.8 million, or $1.08 per diluted common share,(1) on net revenues of $944.3 million for the fourth quarter of 2019.For the three months ended December 31, 2020, the Company reported record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1) The Company’s reported GAAP net income for the three months ended December 31, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.Chairman’s Comments“Stifel’s performance in 2020 was a testament to the strength of our business model as we were able to navigate market challenges and generated our 25th consecutive year of record net revenue. We entered the year expecting two of our primary growth drivers to be continued strength in net interest income and advisory revenue. However, following the pandemic outbreak, Stifel and our associates were able to successfully pivot to the subsequent changes in the market environment and we finished the year with record results from our brokerage and capital raising businesses. Our record revenue also generated record non-GAAP earnings per share of $4.56 and non-GAAP return on tangible equity of nearly 25%,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.Mr. Kruszewski continued, “We entered 2021 with record recruiting and investment banking pipelines, record client assets, and more than $500 million of excess capital. These factors, combined with our long history of profitable growth, drive my optimism for 2021 and beyond.”Fourth Quarter ReviewQuarterly HighlightsRecord net revenues of $1.1 billion, increased 12.2% with the year-ago quarter, and increased 20.0% sequentially.Record net revenues in Global Wealth Management and Institutional Group segments.Record net income available to common shareholders of $180.8 million, or $1.55 per diluted common share.(1)Record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1)Net RevenuesNet revenues were a record $1.1 billion for the fourth quarter of 2020, a 12.2% increase from the fourth quarter of 2019 and a 20.0% increase from the third quarter of 2020. Net revenues, compared with the fourth quarter of 2019, reflected higher brokerage revenues, an increase in capital raising and advisory fee revenues and asset management and service fees, partially offset by a decline in net interest income. Net revenues, compared with the third quarter of 2020, reflected increased capital raising and advisory fee revenues, growth in brokerage revenues and asset management and services fees, as well as higher net interest income.Brokerage RevenuesBrokerage revenues, defined as commissions and principal transactions, were $342.6 million, an 18.3% increase compared with the fourth quarter of 2019 and a 9.3% increase compared with the third quarter of 2020.Global Wealth Management brokerage revenues were $185.7 million, a 6.7% increase compared with the fourth quarter of 2019 and a 14.2% increase compared with the third quarter of 2020.Institutional equity brokerage revenues were $69.2 million, a 50.5% increase compared with the fourth quarter of 2019 and a 27.7% increase compared with the third quarter of 2020.Institutional fixed income brokerage revenues were $87.7 million, a 26.0% increase compared with the fourth quarter of 2019 and a 9.3% decrease compared with the third quarter of 2020.Investment Banking RevenuesInvestment banking revenues were a record $337.7 million, a 21.8% increase compared with the fourth quarter of 2019 and a 54.8% increase compared with the third quarter of 2020.Global Wealth Management capital raising revenues were $9.6 million, a 3.1% increase compared with the fourth quarter of 2019 and a 17.9% increase compared with the third quarter of 2020.Institutional equity capital raising revenues were $104.1 million, a 61.7% increase compared with the fourth quarter of 2019 and a 32.7% increase compared with the third quarter of 2020.Institutional fixed income capital raising revenues were $50.6 million, a 5.0% increase compared with the fourth quarter of 2019 and a 0.2% decrease compared with the third quarter of 2020.Advisory fee revenues were $173.4 million, an 11.6% increase compared with the fourth quarter of 2019 and a 114.5% increase compared with the third quarter of 2020.Asset Management and Service Fee RevenuesAsset management and service fee revenues were a record $249.9 million, an 11.6% increase compared with the fourth quarter of 2019 and an 8.3% increase compared with the third quarter of 2020. The increase from the comparative period in 2019 is primarily attributable to higher asset values and strong fee-based asset flows. Please refer to the Asset Management and Service Fee Break-down table for additional details.Net Interest IncomeNet interest income of $105.4 million, a 22.3% decrease compared with the fourth quarter of 2019 and a 4.7% increase compared with the third quarter of 2020. The decrease from the fourth quarter of 2019 was primarily driven by the impact of lower interest rates. Please refer to the Net Interest Income Analysis table for additional details.Interest income was $119.9 million, a 28.3% decrease compared with the fourth quarter of 2019 and a 4.8% increase compared with the third quarter of 2020.Interest expense was $14.5 million, a 53.8% decrease compared with the fourth quarter of 2019 and a 5.0% increase compared with the third quarter of 2020.Annual ReviewAnnual HighlightsRecord net revenues of $3.8 billion, increased 12.4% compared with 2019.Record net revenues in Global Wealth Management.Record net revenues and pre-tax operating income in Institutional Group.Record net income available to common shareholders of $476.2 million, or $4.16 per diluted common share.(1)Record non-GAAP net income available to common shareholders of $522.8 million, or $4.56 per diluted common share.(1)For year ended December 31, 2020, the Company reported record net income available to common shareholders of $476.2 million, or $4.16 per diluted common share(1) on record net revenues of $3.8 billion, compared with net income available to common shareholders of $431.1 million, or $3.66 per diluted common share,(1) on net revenues of $3.3 billion for the comparable in 2019.For the year ended December 31, 2020, the Company reported non-GAAP net income available to common shareholders of $522.8 million, or $4.56 per diluted common share.(1) The Company’s reported GAAP net income for the year ended December 31, 2020 was primarily impacted by merger-related expenses. Details are discussed below and in the “Non-GAAP Financial Matters” section.Net RevenuesNet revenues were a record $3.8 billion for the year ended December 31, 2020, a 12.4% increase compared with 2019. Net revenues, compared with 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower net interest income and advisory fee revenues.Brokerage RevenuesBrokerage revenues were $1.3 billion, a 25.8% increase compared with 2019.Global Wealth Management brokerage revenues were $687.3 million, a 5.8% increase compared with 2019.Institutional equity brokerage revenues were $256.8 million, a 54.2% increase compared with 2019.Institutional fixed income brokerage revenues were $404.8 million, a 58.1% increase compared with 2019.
Investment Banking RevenuesInvestment banking revenues were $952.3 million, a 16.5% increase compared with 2019.Global Wealth Management capital raising revenues were $36.0 million, a 5.0% decrease compared with 2019.Institutional equity capital raising revenues were $306.0 million, a 49.7% increase compared with 2019.Institutional fixed income capital raising revenues were $182.1 million, a 43.3% increase compared with 2019.Advisory fee revenues were $428.1 million, a 4.4% decrease compared with 2019.Asset Management and Service Fee RevenuesAsset management and service fee revenues were $917.4 million, an 8.2% increase compared with 2019. The increase is primarily attributable to higher asset values and strong fee-based asset flows.Net Interest IncomeNet interest income of $458.1 million, a 16.3% decrease compared with 2019. The decrease is primarily driven by the impact of lower interest rates.Interest income was $523.8 million, a 27.7% decrease compared with 2019.Interest expense was $65.8 million, a 63.0% decrease compared with 2019.Fourth Quarter & Full Year 2020Compensation and Benefits ExpensesFor the quarter ended December 31, 2020, compensation and benefits expenses were $621.3 million, which included $7.4 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $567.0 million in the fourth quarter of 2019 and $533.6 million in the third quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 57.9% in the fourth quarter of 2020 (non-GAAP measure).For the year ended December 31, 2020, compensation and benefits expenses were $2.3 billion, which included $30.3 million of merger-related and severance expenses (non-GAAP adjustments), compared to $2.0 billion in 2019. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 59.9% in the year ended December 31, 2020 (non-GAAP measure).The increase in compensation and benefits expenses was primarily attributable to the change in the composition of revenues as compared to 2019.Non-Compensation Operating ExpensesFor the quarter ended December 31, 2020, non-compensation operating expenses were $203.9 million, which included $10.4 million of merger-related expenses (non-GAAP adjustments). This compares with $214.7 million in the fourth quarter of 2019 and $191.3 million in the third quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended December 31, 2020 were 18.3% (non-GAAP measure).The decrease in non-compensation operating expenses compared with the fourth quarter of 2019 was primarily due to significantly lower travel, entertainment, and conference-related expenses. In addition, the provision for credit losses and 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.For the year ended December 31, 2020, non-compensation operating expenses were $821.6 million, which included $30.1 million of merger-related expenses (non-GAAP adjustments), compared with $759.8 million in 2019. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the year ended December 31, 2020 were 21.1% (non-GAAP measure).The increase in non-compensation operating expenses compared with 2019 was primarily attributable to an increase in the provision for credit losses as a result of the impact of COVID-19 on the broader economic environment (incorporating the impact of accounting for credit losses under the CECL standard)(8) and higher volume-related expenses, including investment banking transaction expenses, reflecting an increase in activity levels. In addition, occupancy expense and professional fees were higher. These increases were partially offset by significant decreases in travel, entertainment, and conference-related expenses as a result of the global pandemic.Provision for Income TaxesThe GAAP effective income tax rate for the quarter ended December 31, 2020 was 19.7%. This compares with an effective income tax rate of 19.6% for the fourth quarter of 2019 and 23.9% for the third quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended December 31, 2020 was 19.7%.The GAAP effective income tax rate for the year ended December 31, 2020 was 22.7%, compared with 25.0% in 2019. The adjusted non-GAAP effective income tax rate for the year ended December 31, 2020 was 22.7%.Conference Call InformationStifel Financial Corp. will host its fourth quarter 2020 financial results conference call on Friday, January 29, 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 1145988. 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.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. 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.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 December 31, 2020, December 31, 2019, and September 30, 2020 and the years ended December 31, 2020 and 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 December 31, 2020, December 31, 2019, and September 30, 2020, and the years ended December 31, 2020 and 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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