sf investor presentation march 2017 - stifel · this presentation may contain “forward-looking...
TRANSCRIPT
Investor PresentationWells Fargo Securities Asset Managers, Brokers & Exchange Forum
March 21, 2017
Disclaimer
2
Forward-Looking Statements
This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks,assumptions, and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel,Nicolaus & Company, Incorporated and its subsidiaries (collectively, “SF” or the “Company”). These statements can be identified by the use of the words “may,”“will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” and similar expressions. In particular,these statements may refer to our goals, intentions, and expectations, our business plans and growth strategies, our ability to integrate and manage our acquiredbusinesses, estimates of our risks and future costs and benefits, and forecasted demographic and economic trends relating to our industry.
You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-lookingstatements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws.
Actual results may differ materially and reported results should not be considered as an indication of future performance. Factors that could cause actual results todiffer are included in the Company’s annual and quarterly reports and from time to time in other reports filed by the Company with the Securities and ExchangeCommission and include, among other things, changes in general economic and business conditions, actions of competitors, regulatory and legal actions, changes inlegislation, and technology changes.
Use of 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 threemonths and 12 months ended December 31, 2016. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certainitems 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 abetter 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 priorand 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 financialinformation should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financialperformance 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 ongoing business. Management has not included costs which they believe are duplicative in the analysis below, which is a changefrom prior periods.
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 theCompany’s business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measuresand the same respective non-GAAP measures of the Company’s financial performance should be considered together.
3
Our Strategy
Strategic Vision
4
To build a premier wealth management and investment banking firm
Global Wealth ManagementGlobal Wealth Management Institutional Institutional
Private Client
2,282 financial advisors in 360 branches with
more than $200B in client
assets
Asset Management
$27B in total assets
managed through various
strategies
Bank
$13B in assets funded by client
deposits
Equities Sales + Trading
Fixed Income Sales + Trading
Investment Banking
Research
Experienced sales force with
extensive distribution capabilities
Comprehensive platform including research,
strategy and DCM teams
Over 400 professionals with extensive
experience across all
products and industry verticals
Largest research
platform with approximately 1,300 U.S. and 290 European stocks covered
A History of Growth
5
2005Legg Mason’s Capital
Markets Division
2008Butler Wick
200956 UBS Private Client
Branches
2010Thomas Weisel
Partners
2007Ryan Beck Acquisition
Stifel Bank & Trust
2011Stone & Youngberg
2012Miller Buckfire
2013Knight Capital Group’s Fixed Income Division
2014De La Rosa,
Oriel Securities,1919 Investment Counsel,
Merchant Capital
2013Keefe, Bruyette &
Woods
2013Acacia Bank & Ziegler
Lotsoff
2015Barclays Wealth & Investment
Management,Sterne Agee,
Sidoti Joint Venture,Leumi Partners Collaboration
Agreement
2016Eaton Partners
ISM Capital
2017City Securities
Driving Shareholder Value Through Deal Integration &
Balance Sheet Growth
6
7
Infrastructure
Build
Balance Sheet Growth
Ratio 2008 2009 2010 2011 2012 2013 2014 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 4Q17ETier 1 Leverage 32.3% 30.5% 25.6% 21.4% 17.7% 15.4% 16.5% 16.4% 16.6% 11.6% 11.5% 11.8% 10.2% 10.0%Tier 1 Risk Based Capital 49.4% 40.5% 29.1% 27.4% 26.8% 26.7% 25.0% 29.4% 26.3% 21.3% 20.9% 22.0% 20.3% 20.0%Risk Weighting Assets Density 64.9% 56.2% 67.3% 62.7% 57.0% 50.7% 58.2% 52.0% 46.6% 49.0% 49.1% 46.2% 46.5% 46.5%
Bank Drove Significant Balance Sheet & Revenue Growth
8
Impact of Bank Growth LTM on Consolidated Results
(mil.) 12/31/2015 12/31/2016
Total consolidated assets $13,326 $19,129
Investment securities $4,235 $7,145
Loans $3,333 $5,820
Total deposits $6,638 $11,527
Total equity $2,492 $2,738
Annual NII $134 $227
Tier 1 Risk Based Capital 26.3% 20.3%
Tier 1 Leverage 16.6% 10.2%
NIM (Bank) 2.47% 2.24%
ROAA (Bank) 1.17% 1.16%
ROAE (Bank) 16.7% 18.4%
NPAs/Assets 0.03% 0.21%
Bank growth has been balanced between loans and investments:
Loans:• Comprised of securities based loans, C&I, and
residential mortgages
• Focused lending to high net worth retail clients
• Effective duration of approximately 1. 7 years as of 12/31/16
AFS & HTM Investments:• 58% of the portfolio is fully guaranteed by a US
GSE or rated AAA as of 12/31/16
• Portfolio primarily GSE MBS, ABS, and Corporate bonds
• Effective duration of approximately 2.2 years
Balance Sheet Comparison
9
Source: SNL Financial(1) Excludes loans held for sale
10
Stifel Overview
Stifel – Premier Investment Bank and Wealth Management Firm
11
Stifel at a Glance GAAP Net Revenue - $2.6 billion
Stifel at a Glance GAAP Net Revenue - $2.6 billion
Global Wealth Management (GWM)Net Revenue - $1.6 billion
Global Wealth Management (GWM)Net Revenue - $1.6 billion
Institutional Group (IG)Net Revenue - $1.0 billion
Institutional Group (IG)Net Revenue - $1.0 billion
Private Client Stifel Bank & Trust Margin and Securities-based Lending Asset Management
Private Client Stifel Bank & Trust Margin and Securities-based Lending Asset Management
Equity & Fixed Income Capital Raising M&A Advisory / Restructuring Institutional Equity and Fixed Income Brokerage Independent Research
Equity & Fixed Income Capital Raising M&A Advisory / Restructuring Institutional Equity and Fixed Income Brokerage Independent Research
Low leverage (7x) (1) (2), $2.7 billion stockholders’ equity (2) and $3.6 billion market capitalization (3)
34% Insider ownership aligns employees' interests with other shareholders (4)
Over 7,000 associates(2)
Balanced business mix (61% GWM / 39% IG) (2016 net revenues)
National presence with 2,282 financial advisors(2)
Largest U.S. equity research platform with roughly 1,300 stocks under coverage(3)
Broad investment banking and institutional sales and trading capabilities – domestic and international
(1) Assets / equity.(2) As of 12/31/2016. (3) As of 2/14/2017.(4) Insider ownership percentage includes all fully diluted shares, units outstanding and options outstanding, as of 2/17/2017.
Leading broker-dealer providing wealth management and institutional services to consumers and companies
12
Bulge Bracket Boutique Size / scale
Large distribution
Trading
Retail
Issues Lack of focus
Banker turnover
Lack of commitment
Research indifference
Lack of growth investors
Firm focus
Good research
Growth investor access
Issues Financial / firm stability
Trading support
Few with retail
Size / scale
Firm focus
Stability (financial & personnel)
Large distribution
Trading
Outstanding research
Retail
Institutional Wealth Management LARGEST provider of U.S. equity research
2nd LARGEST Equity trading platform in the U.S. outside
of the Bulge Bracket firms(1)
FULL SERVICE investment banking with expertise
across products and industry sectors
ACCESS TO top ten private client platform
#7 Largest Retail Brokerage Network(2)
Rank Firm Brokers
1 16,069
2
Bank of America Merrill Lynch
15,856
3 Wells Fargo Securities 15,086
4UBS 7,0875
Raymond James 7,146
6Stifel 2,2827
RBC Capital Markets 2,0008
Oppenheimer & Co 1,1779
JPMorgan 2,560
Morgan Stanley Wealth Management
(1) Based on 2015 U.S. trading volume per Bloomberg.(2) Source: SIFMA and publicly available information for U.S. brokerage networks. Includes investment banks only.
Well-diversified, Low Risk Business Model with Balanced Retail and Institutional Exposure
13
Unburdened by capital constraints
Low leverage business model and conservative risk management
Limited balance sheet risk
Stable wealth management business is augmented by profitable and growing institutional business
Drive revenue synergies by leveraging the wealth management and institutional business
Net Revenues
2015 2016
Operating Contribution
2015 2016
Balanced business model facilitates growth in all market environments
Note: Net revenues and operating contribution percentages excludes the Other segment.
IG41%
GWM59%
IG39%
GWM61%
IG27%
GWM73%
IG28%
GWM72%
A Stable Track Record Through Multiple Business Cycles
14
Non-GAAP Net Revenues ($MM) Total Equity ($MM)
Total Client Assets(1) ($BN) Book Value Per Share(2)
(1) Excludes impact of sale of Sterne Agee Independent Contractor & Correspondent Clearing businesses(2) Book Value Per Share adjusted for April 2011 three-for-two stock split (2006-2010) and represents common equity per shares outstanding
15
Global Wealth Management
Global Wealth Management (GWM)
16
Provides Securities Brokerage Services and Stifel Bank ProductsOverview National Presence
Grown from 600+ financial advisors in 2005 to approximately 2,300 financial advisors currently
Proven organic growth and acquirer of private client business
Strategy of recruiting experienced advisors with established client relationships
Expanding U.S. footprint
Net Revenues ($MM) Operating Contribution ($MM)
Building Scale and Capabilities into a $1.6B Revenue Segment
17
Private Client
Asset Management
Bank
56 UBS Branches Private Client – 350 financial advisors and support Revenue production has exceeded expectations October 2009
Private Client – 75 financial advisors Public Finance December 2008
Private Client – 400 financial advisors Capital Markets February 2007
Asset Management Over $4 billion in assets November 2013
Customized investment advisory and trust services November 2014
~100 advisors managing over $20B in AUM December 2015
~130 advisors managing ~ $10B in AUM June 2015
Bank holding company Grown assets from ~ $100M to $7.3B April 2007
One-branch community bank; 95% of loan portfolio sold in 3Q15 October 2013
GWM - Private Client Group
18
Key Operating Metrics
Accounts(1)
Financial Advisors(1)
Total Client Assets(1) ($MM)
Branches(1)
(1) Excludes Legacy Sterne Agee Independent Contractor Business.
GWM – Stifel Bank & Trust
19
Acquired FirstService Bank, a St. Louis-based, Missouri-chartered commercial bank, in April 2007
Stifel Financial became a bank holding company and financial services holding company
Substantial Balance sheet growth with low-risk assets
Funded by Stifel Nicolaus client deposits
Maintain high levels of liquidity
Overview Key Statistics (000s) (4)
Total assets $12,798,000
Total deposits 11,527,000
Total equity 912,000
ROAA 1.2%
ROAE 18.4%
Tier 1 Risk Based Capital 16.0%
Tier 1 Leverage 7.1%
NPAs/Assets 0.2%
Investment Portfolio(2) Loan Portfolio(3) (Gross)Interest Earnings Assets(1)
Note: Data as of 12/31/16.(1) Average interest earning assets for quarter ended 12/31/16, levels of cash elevated due to sweep of deposits at beginning of quarter.(2) Non-agency MBS makes up less than 1% of Investment Portfolio.(3) Other includes construction and land, consumer loans, and home equity lines of credit. (4) NPAs include: nonaccrual loans, restructured loans, loans 90+ days past due, and other real estate owned.
Growing Asset Management Capabilities
20
Asset Management Subsidiaries with $26.9¹ Billion in Client Assets
¹Stifel affiliated asset managers excludes $1.2 billion in AUM from Sagewood Asset Management, which was spun off to management on January 1, 2017EquityCompass Strategies is a research and investment advisory unit of Choice Financial Partners, Inc. (“Choice”). Choice and Ziegler Capital Management, LLC (“ZCM”) are wholly-owned subsidiaries and affiliated SEC Registered Investment Advisers of Stifel Financial Corp. (“Stifel”). 1919ic is an SEC Registered Investment Adviser and indirect subsidiary of Stifel. 1919 IC&T is an OCC-regulated national trust company that is a wholly-owned subsidiary of Stifel. Washington Crossing Advisors is a Stifel investment advisory program. Assets Under Management represents the aggregate fair value of all discretionary and non-discretionary assets, including fee-paying and non-fee-paying portfolios. Assets Under Advisement represent advisory-only assets where the firm provides a model portfolio and does not have trading authority over the assets.
21
Institutional Group
Institutional Group
22
Net Revenues ($MM)(2)(3)
Fixed Income Brokerage + Investment Banking
Overview
Equity Brokerage + Investment Banking
Provides securities brokerage, trading, research, underwriting and corporate advisory services
Largest provider of U.S. Equity Research
2nd largest Equity trading platform in the U.S. outside of the Bulge Bracket(1)
Full-service Investment Bank
Comprehensive Fixed Income platform
(1) Based on 2015 U.S. trading volume per Bloomberg. (2) Includes Thomas Weisel historical investment banking revenues for years 2006 through September 30, 2010.(3) 2012 includes realized and unrealized gains on the Company’s investment in Knight Capital Group, Inc. of $39.0 million.
Equities
Fixed Income
Investment Banking
Equities
Fixed Income
Investment Banking
Building Scale and Capabilities into a $1.0B Revenue Segment
23
Growth Focused Investment Banking, Research, Sales and Trading July 2010
Core of our Institutional sales, trading and research group December 2005
Knight
Fixed Income IB, Sales and Trading, Private Client October 2011
Fixed Income Sales and Trading – U.S. & Europe, Fixed Income Research July 2013
California-based investment bank and bond underwriter April 2014
Expands Public Finance in Southeast December 2014
Highly complementary fixed income platforms June 2015
Enhances European debt capital markets capabilities February 2016
FIG Investment Banking/FIG Sales and Trading / Research February 2013
Restructuring advisory December 2012
UK-based full service investment bank July 2014
One of the largest, global fund placement and advisory firms January 2016
Institutional Group – Investment Banking
24
Accomplished U.S. Equity Underwriting Franchise – All Equity TransactionsBookrun Equity Deals Since 2010All Managed Equity Deals Since 2010
($ in billions) # of $Rank Firm Deals Volume
1 JPMorgan 1,522 $850.92 Bank of America Merrill Lynch 1,513 $843.13 Citi 1,375 $822.54 Morgan Stanley 1,345 $799.65 Barclays 1,249 $696.06 Credit Suisse 1,232 $694.67 Wells Fargo Securities 1,212 $622.08 Goldman Sachs 1,146 $718.99 Deutsche Bank 1,097 $648.810 Stifel / KBW 1,089 $338.311 RBC Capital Markets 1,074 $508.112 UBS 819 $449.413 Raymond James & Associates 801 $333.314 Piper Jaffray & Co 682 $259.215 Jefferies LLC 636 $147.316 Robert W Baird & Co 592 $160.917 JMP Securities LLC 514 $95.818 Cowen & Company LLC 513 $97.419 Oppenheimer & Co Inc 498 $121.020 William Blair & Co LLC 473 $118.921 KeyBanc Capital Markets 471 $201.122 BMO Capital Markets 440 $168.723 Canaccord Genuity Corp 397 $53.324 SunTrust Robinson Humphrey 383 $185.425 Roth Capital Partners 331 $15.2
($ in billions) # of $Rank Firm Deals Volume
1 Bank of America Merrill Lynch 1,386 $160.62 JPMorgan 1,374 $181.73 Morgan Stanley 1,235 $178.24 Citi 1,214 $161.45 Barclays 1,059 $142.36 Goldman Sachs 1,048 $168.57 Credit Suisse 1,036 $131.28 Deutsche Bank 875 $98.39 Wells Fargo Securities 862 $66.910 UBS 597 $58.111 RBC Capital Markets 548 $42.312 Jefferies LLC 534 $29.113 Stifel / KBW 383 $18.014 Raymond James & Associates 268 $12.015 Piper Jaffray & Co 262 $10.216 Cowen & Company LLC 251 $8.917 Leerink Partners LLC 183 $8.318 BMO Capital Markets 167 $10.819 Roth Capital Partners 164 $2.720 Robert W Baird & Co 155 $6.021 KeyBanc Capital Markets 110 $6.422 Aegis Capital Corp 108 $1.423 William Blair & Co LLC 105 $3.924 Sandler O'Neill & Partners 92 $6.425 Canaccord Genuity Corp 85 $3.2
Source: Dealogic. Rank eligible SEC registered IPOs and Follow-On offerings since 2010. Includes demutualizations. As of 1/31/16. Overlapping deals between Stifel and its acquired firms have been removed.Note: $ Volume represents full credit to underwriter for All Managed Equity Deals and apportioned credit to bookrunner for Bookrun Equity Deals. Bold font indicates middle-market firms.
Institutional Group – Research
25
Largest U.S. Equity Research Platform
U.S. Equity Research Coverage (1)
Coverage Balanced Across All Market Caps (1)
Stifel Research Highlights
Largest provider of U.S. Equity Research
Largest provider of U.S. Small Cap Research²
#1 U.S. provider of Financial Services coverage
Only firm ranked in the Top 12 each year for the last ten years in the Wall Street Journal’s “Best on the Street” Survey
(1) Source: StarMine rankings as of 1/31/17. Overall coverage includes only companies with a rating & domiciled in the U.S. Does not include Closed End Funds. Small Cap includes market caps less than $1 billion; Mid Cap includes market caps less than $5 billion.
(2) Small Cap includes market caps less than $1 billion.
Companies Under Coverage
Rank Firm Overal l Mid Cap Smal l Cap
1 Stifel / KBW 1,273 451 372
2 JPMorgan 1,096 395 148
3 BofA Merrill Lynch 1,060 384 118
4 Wells Fargo Securities, Llc 1,033 358 178
5 Jefferies & Co. 975 332 207
6 Citi 943 299 125
7 Goldman Sachs 905 286 67
8 Morgan Stanley 902 278 101
9 Raymond James 902 329 239
10 Barclays 891 280 98
11 Deutsche Bank Securities 886 287 107
12 RBC Capital Markets 791 251 99
13 Credit Suisse 770 246 115
14 UBS 729 193 78
15 Robert W. Baird & Co., Inc. 664 228 129
16 Piper Jaffray 658 235 206
17 Suntrust Robinson Humphrey 629 254 125
18 Cowen And Company 627 189 175
19 Morningstar, Inc. 562 127 14
20 BMO Capital Markets 555 161 66
Institutional Group – Equity Sales and Trading
26
Powerful Platform Spanning North America and EuropeInstitutional Equity Sales Equity Trading
Extensive Distribution Network Relationships with over 3,500 institutional accounts globally
Active daily market maker in over 3,700 stocks
Traded over 7.4 billion shares in 2016
Complete coverage of North America and Europe for North American listed equities
Major liquidity provider to largest equity money management complexes
Multi-execution venues: high-touch, algorithms, program trading, and direct market access
Dedicated convertible sales, trading, and research desk
28 sales traders located in
Baltimore, New York, Boston, Dallas, San Francisco, and London
12 position traders covering each major industry
13 specialized traders focused on: Option Trading
Profitable model with advantages of scale
80 person sales force, commission-based Experts in small and mid cap growth and value Team-based sales model with 2 - 4 coverage sales people per
account Team leaders have an average of 15 years experience Offices in all major institutional markets in North America &
Europe Accounts range from large mutual funds to small industry-focused
investors Managed over 732 non-deal roadshow days in 2015 Extensive experience with traditional and overnight corporate
finance transactions
Institutional Group – Fixed Income Capital Markets
27
Strong Fixed Income Brokerage Capabilities
Overview Client Distribution (1)(2)
Platform & Products
Comprehensive platform 125 traders with annual client trade volume approaching
$500 billion 50-person Fixed Income Research and Strategy Group
Widespread distribution More than 220 Institutional sales professionals covering
over 12,000 accounts 49 institutional fixed income offices nationwide International offices in London, Zurich and Madrid
Customer-driven
Focus on long-only money managers and income funds, depositories, and hedge funds
Consistency of execution
Identification of relative value through asset class/security selection
US Government and Agency Securities
Mortgage-Backed Securities (MBS) Whole Loans Government-Guaranteed Loans Asset-Backed Securities (ABS) Commercial Mortgage-Backed
Securities (CMBS) Certificates of Deposit
High Yield and Distressed Credit Loan Trading Group Aircraft Finance & Credit Solutions Hybrid Securities Emerging Markets Structured Products Investment Grade Credit Municipal Sales and Trading and Public Finance UK Sales and Trading (former Knight Capital team)
(1) Client Distribution is as of 8/10/2016 (2) Other category includes: Credit Union, Corporation, Hedge Fund, Pension Fund, Trust Company, Foundation, Endowment, University & Non-Profit.
Broker/Dealer 7%
Corporation 1%
Credit Union 1%
Money Manager 58%Government
3%
Bank or thrift 17%
Hedge Fund 3%
Insurance Company 7%
Trust Company 1% Other 2%
Institutional Group – Public Finance
28
Overview
Stifel has ranked in the top ten nationally for senior managed negotiated underwritings for the past five years, and Stifel has ranked #1 nationally for senior managed K-12 negotiated underwritings for 2016.
Stifel’s Public Finance Group ranked #1 in municipal negotiated issues in 2016
Total of 26 Public Finance offices
Nearly 150 Public Finance professionals
Specialty sectors: Education Local Government/Municipal Healthcare Public-Private Partnerships/Development Housing
Source: Thomson Reuters: SDC (True Economics to Book) Ranked by number of transactions.
29
Financial Information
4th Quarter Highlights
30
Financial Highlights Non-GAAP
(000s, except per share data) 4Q16 4Q15 3Q16 4Q16
U.S. GAAP
Net revenues $661,391 $581,286 $641,986 $661,392
Compensation ratio 63.6% 68.6% 67.6% 62.3%
Non-compensation ratio 28.1% 29.5% 28.0% 24.2%
Pre-tax operating margin 8.3% 1.9% 4.4% 13.5%
Net income $26,880 $11,172 $17,814 $56,528
Preferred dividend $2,343 $1,563 $2,343
Net income available to common shareholders $24,537 $11,172 $16,251 $54,185
Earnings per diluted share available to common shareholders $0.31 $0.14 $0.21 $0.68
Three Months Ended
Brokerage & Investment Banking Revenue
31
Brokerage:
(000s) 4Q16 4Q15 % Change 3Q16 % Change
Global Wealth Management brokerage revenue $160,017 $166,339 -3.8% $165,475 -3.3%
Institutional brokerage:
Equity 64,007 54,837 16.7% 51,004 25.5%
Fixed income 65,712 73,574 -10.7% 71,794 -8.5%
Total institutional brokerage 129,719 128,411 1.0% 122,798 5.6%
Total brokerage revenue $289,736 $294,750 -1.7% $288,273 0.5%
Three Months Ended
Investment banking:
(000s) 4Q16 4Q15 % Change 3Q16 % Change
Investment banking:
Capital raising:
Equity $48,393 $40,536 19.4% $32,546 48.7%
Fixed income 29,811 29,632 0.6% 25,931 15.0%
Total capital raising 78,204 70,168 11.5% 58,477 33.7%
Advisory fees: 56,248 32,643 72.3% 86,322 -34.8%
Total investment banking $134,452 $102,811 30.8% $144,799 -7.1%
Three Months Ended
GAAP to Non-GAAP ReconciliationThree months ended December 31, 2016
32
GAAP ResultsThree months
ended
(000s) 12/31/16
Total GAAP Compensation & benefits expense $420,664
GAAP comp. ratio 63.6%
Total GAAP non-compensation expense $185,853
GAAP non-comp. ratio 28.1%
GAAP pre-tax margin 8.3%
Adjusted Non-GAAP Resul tsThree months
ended
(000s) 12/31/16
Total Adjusted Non-GAAP Compensation & benefits expense $412,374
Adjusted Non-GAAP comp. ratio 62.3%
Total adjusted Non-GAAP non-compensation expense $159,897
Adjusted Non-GAAP non-comp. ratio 24.2%
Adjusted Non-GAAP pre-tax margin 13.5%
GAAP to Non-GAAP Reconciliation for Fourth Quarter 2016
(000s) 12/31/16
GAAP Net Income $26,880
Preferred Dividend 2,343
Net Income available to common Shareholders $24,537
Non-GAAP Adjustments
Acquistion-Related 14,226
Litigation-Related 20,000
Non-Deductible Settlement Tax Impact 8,880 Provision for Income Taxes (13,458)
Total Non-GAAP Adjustments 29 ,648
Non-GAAP Net Income Available to Common Shareholders $54,185
Balance Sheet & Net Interest Margin
33
Net Interest Income Drivers:• Total assets increased to $19.1 bil. up 11%
sequentially & 44% Y/Y• Average interest earning assets increased to
$15.6 bil. up 27% sequentially & 111% Y/Y• NIM increased to 191 bps , up 10 bps
sequentially but down 5 bps Y/Y.• NIM at Stifel Bank of 225 bps decreased 15bps
sequentially & 20 bps Y/Y• NIM at Stifel Bank in December was 252 bps
• Firm-wide NII of $74.7 mil. increased 35% sequentially and 106% Y/Y.
• Book value per share was $38.84
(in millions, except ratios) 4Q15 1Q16 2Q16 3Q16 4Q16
Total Assets $13,326 $14,214 $15,386 $17,205 $19,129
Total Equity $2,492 $2,417 $2,491 $2,692 $2,738
Tier 1 Leverage Ratio 16.6% 11.6% 11.5% 11.8% 10.2%
Tier 1 Risk Based Capital Ratio 26.3% 21.3% 20.9% 22.0% 20.3%
Capital Structure
34
Segment Results
Global Wealth Management
35
• Net revenue in the GWM segment was $408 mil., up 5% sequentially & 17% Y/Y
• Brokerage revenue declined 3% sequentially & 4% Y/Y
• Ex. Sterne IBC & Clearing, Brokerage revenue increased 6% sequentially
• Net interest income increased 23% sequentially & 87% Y/Y
• 2,282 total FAs up from 2,280 • $236.9 bil. in client AUA, up 1% sequentially
• Compensation ratio was 52.9% down 230 bps sequentially & 420 bps Y/Y
• Non-comp. ratio was 17.0% up 10 bps sequentially & 60 bps Y/Y
• Pre-tax margin was 30% up 220 bps sequentially & 360 bps Y/Y.
$0
$20
$40
$60
$80
$100
$120
$140
0%
5%
10%
15%
20%
25%
30%
35%
4Q15 1Q16 2Q16 3Q16 4Q16
Pre-
tax Co
ntrib
ution
(mil.)
Pre-
tax M
argin
GWM Pre-tax Margin & Contribution
Pre-tax Contribution Pre-tax Margin
36
Stifel Bank & Trust
Stifel Bank
(mil. except for %'s) 4Q16 4Q15 3Q16
Assets:
Investments $6,209 $3,479 79% $5,377
Mortgage Loans 2,161 429 404% 1,804
Commercial Loans 1,710 1,217 41% 1,558
Securities Based Loans 1,614 1,389 16% 1,453
Total Loans , net $5,591 $3,144 78% $4,957
Loans Held for Sale 229 190 20% 217
Total Assets $12,798 $7,158 79% $11,019
Liabil ities:
Deposits $11,527 $6,638 74% $9,885
Credit Metrics
Non-performing assets ($s) 27 1 2600% 28
Non-performing assets (%s) 0.21% 0.01% 200 bps 0.25%
Allowance as a percentage of loans 0.81% 0.95% -140 bps 0.79%
Net Interest Margin 2.24% 2.45% -210 bps 2.40%
%
Change
Institutional Group
37
• Total net revenue of $253 mil. decreased 2% sequentially but increased 3% Y/Y
• Investment banking revenue of $122 mil. decreased 8% sequentially & 32% Y/Y
• Equity underwriting of $40 mil. increased 88% sequentially & 2% Y/Y
• Debt underwriting of $28 mil. increased 9% sequentially & 19% Y/Y
• Advisory revenue of $56 mil. decreased 36% sequentially but increased 80% Y/Y
• Brokerage revenue of $130 mil. increased 6% sequentially & 1% Y/Y
• Equity brokerage revenue of $64 mil. was up 26% sequentially & 17% Y/Y
• Fixed income brokerage revenue of $66 mil. was down 9% sequentially & 11% Y/Y
• Pre-tax margin was 18.8% up 140 bps sequentially & 220 bps Y/Y.
• Pre-tax Contribution increased by 6% sequentially and 16% Y/Y
$0
$10
$20
$30
$40
$50
0%
5%
10%
15%
20%
4Q15 1Q16 2Q16 3Q16 4Q16
Pre-
tax
Cont
ribut
ion
(mil.)
Pre-
ax M
argi
n
Institutional Group Pre-tax Margin & Contribution
Pre-tax Contribution Pre-tax Margin