Financial Data and Key Metrics Changes - The company reported revenue of over $1.05 billion with a non-GAAP EPS of $1.20, reflecting a pretax margin of 19% and a return on tangible common equity of 17% [4][17] - Revenue was approximately $20 million below consensus estimates due to delays in four advisory transactions, which are expected to close in the third quarter [5][10] - Net interest income (NII) declined to $292 million, with updated full-year NII guidance set at approximately $1.17 billion [7][10] Business Line Data and Key Metrics Changes - Global wealth management revenue increased 9% to a record $758 million, with pre-tax margins rising to 40%, an increase of 450 basis points year-on-year [17] - Institutional group revenue totaled $276 million, with investment banking revenue at $167 million, below guidance due to delayed closings [8] - Equity revenues increased by 6% year-on-year to $76 million, while fixed income generated net revenue of $113 million, up 10% sequentially [8] Market Data and Key Metrics Changes - The company noted a decline in commercial deposits by nearly $1 billion quarter-over-quarter, attributed to high-cost wholesale deposits that were deemed unnecessary [58] - The nonperforming asset ratio stood at 4 basis points, with charge-offs less than $600,000, indicating strong credit metrics [18] Company Strategy and Development Direction - The company aims to streamline operations and rightsizing the business, with a focus on maintaining profitability despite a challenging investment banking environment [10][11] - Continued investment in wealth management resources and technology is expected to support advisor performance and recruitment [5][16] Management Comments on Operating Environment and Future Outlook - Management expressed uncertainty in the market for the remainder of 2023 and into 2024, with revenue expectations for the full year aligning with the Street at $4.5 billion [10] - The outlook for the second half of 2023 anticipates a 7% increase in wealth management and a 23% increase in institutional business revenue [10] Other Important Information - The company ranked number one in J.D. Power's annual employee advisor satisfaction survey, which is expected to enhance recruitment efforts [4][16] - The effective tax rate for the quarter was 25.9%, slightly higher than anticipated due to losses in foreign operations [19] Q&A Session Summary Question: Capital return and buyback strategy - Management noted that buybacks were muted due to being out of the market for most of April, but they repurchased $87 million during the quarter, approximately 70% of GAAP net income [24][25] Question: NII expectations and modeling - Management confirmed that current NII guidance is reasonable, factoring in potential rate cuts and the impact of recent hires on net interest earning assets [50][51] Question: Institutional revenue guidance and market conditions - Management indicated that the guidance for the back half of the year does not assume a significant improvement in the operating environment, focusing instead on visible pipelines [36][38] Question: Recruiting environment and competitive landscape - Management highlighted strong recruiting momentum, particularly among larger teams, and noted that the J.D. Power results have positively impacted their profile in the market [57][67] Question: Non-comp expenses and cost management - Management acknowledged higher non-comp expenses due to increased FDIC assessments and investments in brand marketing, but emphasized the long-term benefits of these investments [69][83]

Financial Performance - For the three months ended March 31, 2023, net revenues decreased 0.9% to $1.11 billion from $1.12 billion during the comparable period in 2022[229]. - Net income available to common shareholders decreased 9.7% to $148.2 million, or $1.28 per diluted common share, compared to $164.2 million, or $1.39 per diluted common share during the same period in 2022[229]. - Commission revenues decreased 13.5% to $169.6 million from $195.9 million in the comparable period in 2022[236]. - Principal transaction revenues decreased 27.5% to $115.5 million from $159.3 million in the comparable period in 2022[237]. - Investment banking revenues decreased 16.9% to $211.9 million from $254.8 million in the comparable period in 2022[239]. - Capital-raising revenues decreased 17.2% to $60.8 million for the three months ended March 31, 2023, from $73.5 million in the comparable period in 2022[240]. - Advisory revenues decreased 16.7% to $151.1 million for the three months ended March 31, 2023, from $181.4 million in the comparable period in 2022[241]. - For the three months ended March 31, 2023, asset management revenues decreased by 7.6% to $315.6 million from $341.6 million in the comparable period in 2022[243]. - Other income for the same period decreased by 125.8% to a loss of $2.3 million from a gain of $8.9 million in the comparable period, primarily due to investment losses[244]. Interest Income and Expenses - Interest income increased 173.0% to $451.6 million from $165.4 million in the comparable period in 2022[234]. - Net interest income increased to $296.6 million for the three months ended March 31, 2023, up from $156.0 million in the comparable period in 2022[247]. - Interest revenue surged by 173.0% to $451.6 million from $165.4 million in the comparable period, driven by higher interest rates and interest-earning assets[248]. - Interest expense rose to $155.0 million from $9.5 million during the same period, mainly due to increased interest rates and interest-bearing liabilities[249]. - Interest expense rose significantly to $148.6 million in Q1 2023 from $7.2 million in Q1 2022, reflecting higher interest rates and interest-bearing liabilities[277]. - Interest expense increased significantly to $137.4 million from $1.0 million, reflecting a rise in average interest-bearing liabilities from $23.2 billion to $27.1 billion[284]. Non-Interest Expenses - Total non-interest expenses for the three months ended March 31, 2023, were $896.9 million, a slight increase of 0.8% from $889.4 million in the comparable period[250]. - Compensation and benefits expense decreased by 3.3% to $651.2 million from $673.7 million in the comparable period, attributed to lower variable compensation[251]. - Other operating expenses increased by 36.0% to $98.1 million from $72.1 million in the comparable period, driven by higher travel, litigation, and professional fees[258]. - Non-interest expenses decreased by 3.3% to $441.1 million in Q1 2023, down from $456.3 million in Q1 2022[268]. - Compensation and benefits expense decreased by 6.2% to $342.4 million, with a percentage of net revenues dropping from 53.5% to 45.2%[288][289]. Client and Asset Management - Global Wealth Management net revenues increased 11.1% to a record $757.2 million for the three months ended March 31, 2023, compared to $681.7 million in the same period in 2022[269]. - Total revenues for the Global Wealth Management segment rose 31.5% to $905.8 million in Q1 2023, compared to $688.9 million in Q1 2022[268]. - Client assets totaled $405.99 billion as of March 31, 2023, a decrease of 3.7% from $421.41 billion a year earlier[273]. - The number of client accounts increased by 4.2% to 1,188,000 as of March 31, 2023, compared to 1,140,000 in the same period in 2022[273]. - Asset management revenues fell 7.6% to $315.5 million in Q1 2023, down from $341.6 million in Q1 2022, mainly due to lower asset values[272]. Regulatory and Compliance - The company operates in a highly regulated environment, with its broker-dealer subsidiaries consistently exceeding minimum net capital requirements[374]. - Stifel Bancorp is subject to regulatory capital requirements by the Federal Reserve and FDIC, with failure to meet these requirements potentially impacting financial statements[405]. Acquisitions and Strategic Moves - The Company acquired Torreya Partners LLC, a leading independent M&A and private capital advisory firm, on March 1, 2023[228]. - On March 1, 2023, the company acquired Torreya Partners LLC, enhancing its advisory capabilities in the life sciences sector[373]. Liquidity and Capital Management - Cash and cash equivalents increased by $565.8 million to $2.8 billion at March 31, 2023, from $2.2 billion at December 31, 2022[325]. - Total deposits increased to $28.3 billion as of March 31, 2023, up from $27.1 billion at December 31, 2022[350]. - The company has borrowing capacity with the Federal Home Loan Bank of $5.8 billion as of March 31, 2023, with no outstanding advances[358]. - The company performed daily liquidity reviews and reported no violations of internal liquidity policy limits[345]. - Available cash and highly liquid investments comprised approximately 19% of Stifel Bancorp's assets as of March 31, 2023, exceeding internal targets[344]. Risk Management - The company has established limits for acceptable interest rate risk and portfolio value risk, with quarterly analyses presented to the Board of Directors[393]. - Operational risk management includes policies to mitigate risks from business disruptions and technology deficiencies, with business continuity plans for critical systems[402]. - Legal risk encompasses potential claims for sales practice violations and regulatory compliance, with extensive procedures in place to address these issues[403]. - Concentration risk is monitored carefully, especially regarding large positions or loans to single counterparties or groups within the same industry[401]. Future Projections - Future estimated amortization expense of upfront notes is projected to be $121.2 million for 2024, decreasing in subsequent years[369]. - The future estimated compensation expense for deferred awards is projected to be $181.5 million in 2023, $213.3 million in 2024, and decreasing to $43.8 million thereafter[372]. - The estimated change in net interest income based on shifts in interest rates shows a potential increase of 10.3% with a +200 basis points shift and a decrease of 7.9% with a -200 basis points shift[394].

Financial Data and Key Metrics Changes - Stifel Financial reported revenue of $1.11 billion for Q1 2023, marking the third strongest first quarter and consistent with the average revenue over the previous four quarters [20][32] - Earnings per share (EPS) for the quarter was $1.40, with a pretax margin of 21% and a return on tangible common equity of 20% [32] - Net interest income (NII) totaled $297 million, reflecting a sequential decline attributed to a one-time benefit in the previous quarter [46][108] - The consolidated net interest margin increased to 3.57% from 2.13% a year ago, while the yield on assets rose to 5.43% from 2.26% [113] Business Line Data and Key Metrics Changes - Global Wealth Management revenue increased by 11% to a record $757 million, with pretax margins rising by 860 basis points to 42% [45] - The Institutional Group generated total revenue of $333 million, with investment banking revenue at $212 million, aligning with the high end of guidance [23] - Fixed income generated net revenue of $103 million, with capital raising activity improving by 15% sequentially, although transactional revenue declined by 8% [116] Market Data and Key Metrics Changes - The bank's total loans reached approximately $21 billion, with growth in the residential mortgage portfolio and fund banking business [22] - Client cash has shifted significantly, with transactional balances decreasing by $8 billion while savings balances increased by over $10 billion [14] - Third-party money market funds increased by $1.5 billion over the past year, indicating a shift in client asset management strategies [15] Company Strategy and Development Direction - Stifel aims to continue recruiting high-quality financial advisers and targets $1 trillion in assets under management, leveraging its adviser-friendly culture and competitive compensation [18] - The company plans to opportunistically invest in its Institutional Group while focusing on enhancing its commercial banking capabilities [19] - Stifel's strategy includes reinvesting excess capital into the business to generate risk-adjusted returns and enhance client relevance [42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant uncertainty in the operating environment for 2023 but expressed confidence in Stifel's ability to perform through economic cycles [27] - The company anticipates that cash sorting will slow down, potentially leading to organic net new asset growth in the second half of the year [39][71] - Management remains optimistic about benefiting from strong net interest income and asset management revenue, despite the cyclicality of the institutional business [69] Other Important Information - The company has a robust liquidity profile with high-quality deposits and low levels of uninsured deposits [106] - Stifel's Tier 1 common equity ratio remains strong at 12.7%, even when factoring in potential unrealized losses [35] - The bank's credit metrics are solid, with nonperforming assets at just 4 basis points and charge-offs essentially at zero [11] Q&A Session Summary Question: Can you unpack your assumptions regarding Fed policy actions and NII? - Management discussed the impact of cash inflows and market uncertainty on NII, noting that they held cash in response to volatility [56] Question: What is the outlook for M&A opportunities in the current banking environment? - Management indicated that while the environment is uncertain, they remain open to attractive M&A opportunities [60] Question: How do you see the fund finance space evolving? - Management noted increased activity in fund banking and venture banking, suggesting opportunities due to market disruptions [91] Question: What are your expectations for expense management given the shifting revenue environment? - Management expressed confidence in maintaining their comp ratio guidance despite current challenges [92]

Financial Performance - Net revenue for the first quarter was $1107 million, a decrease of 1% year-over-year[7] - Non-GAAP net income available to common shareholders was $161 million, with diluted EPS of $1.40[7] - Global Wealth Management net revenue was $757 million, an increase of 11% year-over-year[22] - Institutional Group revenue was $333 million, a decrease of 23% year-over-year[22] - Net Interest Income increased 90% year-over-year[29] Capital and Liquidity - Tier 1 Leverage Ratio was 10.9%[8] - CET 1 Ratio was 13.9%[8] - Total assets reached $38598 million[80] - Deposits totaled $27138 million[29] Wealth Management - Total Global Wealth Management Net Revenue was $757 million, an increase of 11% year-over-year[24] - Client AUA was $405988 million, a decrease of 4% year-over-year[24] - Fee-based Client Assets were $149541 million, a decrease of 5% year-over-year[24] Institutional Group - Institutional Equities revenue totaled $77 million, a decrease of 10% year-over-year[66] - Institutional Fixed Income revenue totaled $103 million, a decrease of 36% year-over-year[70]

Credit and Operational Risks - The company is exposed to credit risk, particularly from third parties failing to meet obligations, which could lead to increased loan loss provisions and impact financial results [115]. - A deterioration in credit quality due to adverse economic conditions could lead to material impacts on net income and regulatory capital [121]. - Growth in the loan and investment portfolios of Stifel Bancorp has increased exposure to credit and operational risks, despite conservative underwriting policies [150]. - The company actively manages risks associated with credit limits and collateral evaluations to mitigate potential losses from counterparties [118]. - Economic downturns may lead to declines in loan demand and increased delinquencies, impacting earnings and necessitating higher reserves [133]. - The company is exposed to operational risks from inadequate internal processes and external events, which could disrupt business operations [157]. Market and Economic Conditions - Investment banking revenue is directly related to general economic conditions, with reduced expectations potentially leading to decreased financial market activity and lower revenues [125]. - The company’s operational performance is heavily influenced by macroeconomic conditions, including interest rates, employment levels, and consumer confidence [127]. - The company is sensitive to changes in interest rates and the yield curve due to a high percentage of assets and liabilities in interest-bearing instruments [151]. - The company has experienced a shift towards fee-based accounts, increasing the impact of market fluctuations on client assets and AUM, which could negatively affect revenues during market declines [141]. - Asset management fees are at risk of decline due to increased competition and a market shift towards lower-fee passive investment products [142]. - The company faces pricing pressures in trading margins and commissions, particularly in fixed income and equity trading, which may impair future revenue and profitability [149]. Regulatory and Compliance Challenges - The company is subject to increasing regulatory scrutiny, which may lead to financial liability and reputational harm due to adverse regulatory actions [188]. - The company’s operations are subject to overlapping regulations in different jurisdictions, which could require alterations in business practices and incur additional compliance costs [190]. - The company is subject to the Volcker Rule, leading to increased operational and compliance costs due to underwriting and market-making activities [193]. - Regulatory actions could result in civil and criminal liability, sanctions, or revocation of licenses, adversely affecting the company's financial condition and prospects [194]. - The Basel III regulatory capital standards impose additional capital requirements that could decrease profitability and restrict growth during favorable market conditions [201]. - Failure to comply with regulatory capital requirements could trigger mandatory actions by regulators, harming the company's operations and financial condition [202]. - The SEC's Regulation Best Interest has increased compliance costs as the company modifies policies and procedures to meet heightened standards [205]. - The DOL's reinstatement of the "five-part test" for fiduciaries may lead to incremental costs for the company as it adapts to new standards [207]. - Increased regulatory scrutiny and new rules for mutual funds and investment advisers may result in additional operational and compliance costs [210]. - Regulatory restrictions on dividend payments and stock repurchases could hinder the company's ability to access funds from subsidiaries [214]. Talent Acquisition and Retention - The competitive labor market has escalated recruitment costs, with increased compensation and flexibility offered by competitors potentially affecting talent retention [137]. - The company may incur significant expenses related to attracting and retaining skilled professionals, which could negatively impact financial results [138]. - The ability to attract qualified personnel may be hindered by claims of unfair hiring practices from competitors, potentially impacting recruitment efforts [140]. Technology and Cybersecurity - The company relies heavily on technology systems for operations, and any failure or inability to upgrade these systems could adversely impact business [161]. - Cybersecurity threats are a significant concern, with the company facing daily malicious activities aimed at its systems, although it has not yet experienced material losses [164]. Financial Reporting and Valuation - The company’s financial instruments require subjective judgment for fair value determinations, which may lead to adjustments and declines in earnings [172]. - The company’s risk management policies may not effectively predict future risk exposures, potentially impacting business and financial condition [177]. - The adoption of new accounting standards, particularly regarding credit losses, is not expected to materially impact the company’s consolidated financial statements [175]. - The company’s ability to integrate acquired businesses successfully is critical, as difficulties in integration could adversely affect financial condition and results of operations [185]. Legal and Liability Risks - The costs of defending against litigation and claims continue to rise, potentially adversely affecting the company's results of operations [199]. - The company may face significant legal liability due to claims related to negligence, fraud, and other issues, which could harm its business and reputation [196]. - The company faces risks related to environmental, social, and governance (ESG) matters that could adversely affect its reputation and business operations [186].

Financial Data and Key Metrics Changes - Stifel reported total revenues of $4.4 billion for 2022, with earnings per share of $5.74, marking a 6% increase in book value and a 9% increase in tangible book value [6][7][46] - The company achieved a return-on-tangible common equity of 22% [5][46] - Net revenue increased by 86% since 2015, with net interest income rising nearly 600% and advisory revenue up 300% [8] Business Line Data and Key Metrics Changes - Global Wealth Management revenue increased by 10% to a record $744 million, with pretax margins rising by 810 basis points to 43% [18] - Institutional Group revenue for the quarter was $354 million, with full-year institutional revenue exceeding $1.5 billion [19] - Investment banking revenue totaled $224 million in Q4, with a total of $971 million for the year, marking the second strongest year ever despite a challenging market [19][46] Market Data and Key Metrics Changes - The S&P 500 experienced a 19% decline in 2022, impacting capital raising and strategic activity [25] - Stifel's market share for negotiated transactions increased to 15.3% in 2022, outperforming competitors by 710 basis points [20] Company Strategy and Development Direction - Stifel aims to reach $1 trillion in total client assets through strong recruiting and market appreciation, with a focus on long-term growth [10][12] - The company plans to continue reinvesting in its business while also returning capital to shareholders through dividends and share repurchases [14][46] - Stifel's strategy includes expanding its Wealth Management segment, which is expected to comprise a greater percentage of revenue in the future [12][104] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment in 2022 due to inflation and geopolitical turmoil but expressed optimism for 2023, particularly in the Global Wealth segment [25][75] - The company anticipates further growth in net interest income and a strong recruiting pipeline, which will contribute to net new asset growth [75][67] Other Important Information - The Board of Directors approved a 20% increase in the common dividend, raising it to $1.44 annually [7] - Stifel repurchased approximately 1.3 million shares for about $75 million during the quarter, with 8.7 million shares remaining on the current repurchase authorization [14] Q&A Session Summary Question: What are the underlying assumptions for investment banking revenue guidance in 2023? - Management indicated that guidance is based on consensus estimates, assuming a similar environment to 2022, with capital raising expected to improve while advisory fees may decline [51][52] Question: What are the biggest drivers or opportunities for Stifel in the coming years? - Management highlighted a strong recruiting pipeline and the potential for accretive acquisitions as key growth drivers [55] Question: How does the company plan to balance growth capital allocation between Wealth Management and Institutional? - Management emphasized a focus on Wealth Management while remaining opportunistic in the Institutional space, particularly in middle-market opportunities [141][104] Question: What is the outlook for share repurchases and capital management? - Management stated that while they have significant excess capital, decisions on buybacks will depend on market conditions and other opportunities [115][118]

| --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------|-----------------------|--------------------------|----------------------------------|---------------------------| | NET REVENUE \nGAAP & NON-GAAP $4,391 | PRE-TAX \nGAAP 20.2% | MARGIN \nNON-GAAP 21.7% | NET \nGAAP $625 | EARNINGS \nNON-GAAP $675 | | | | | | | | EPS | | ROCE | | ROTCE* | | GAAP $5.32 NON-GAAP $5.74 | GAAP 13.9% | NON-GAAP 15.0% | GAAP 20.2% | NON-GAAP 21.8% | | * Please see o ...

Stifel Financial Corp. (NYSE:SF) Q3, 2022, Earnings Call October 26, 2022 9:00 AM ET Company Participants Joel Jeffrey - Head of Investor Relations Ron Kruszewski - Chairman and Chief Executive Officer Jim Marischen - Chief Financial Officer Conference Call Participants Devin Ryan - JMP Securities Alex Blostein - Goldman Sachs Operator Good day. And welcome to Stifel Financial Third Quarter 2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the confe ...

Third Quarter 2022 Financial Results Presentation October 26, 2022 Quarterly Earnings Report Stifel's "FORCES" statue by Harry Weber | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------------------|--------|---------------------------------------------------------------------|----------|-------------------|------------------------------------------------------------------------------| | Third Quarter & YTD Snapshot | 3Q22 | 3Q22 & YTD Results millions, exce ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-09305 STIFEL FINANCIAL CORP. (Exact name of registrant as specified in its charter) Delaware 43-1273600 (State or other jurisdic ...