Stifel(US:SF)2023-05-03 16:00Financial 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].