Stifel(US:SF)2024-05-08 13:16Financial Performance - For the three months ended March 31, 2024, net revenues increased by 5.1% to $1.2 billion from $1.1 billion during the comparable period in 2023[230]. - Net income available to common shareholders rose by 4.1% to $154.3 million, or $1.40 per diluted common share, compared to $148.2 million, or $1.28 per diluted common share in the same period last year[230]. - Commission revenues increased by 9.4% to $185.5 million from $169.6 million in the comparable period in 2023[239]. - Principal transaction revenues grew by 20.3% to $139.0 million from $115.5 million in the same period last year[241]. - Capital-raising revenues surged by 55.7% to $94.7 million from $60.8 million in the comparable period in 2023[244]. - Asset management revenues increased by 16.4% to $367.5 million from $315.6 million in the same period last year[247]. - Advisory revenues decreased by 21.1% to $119.3 million from $151.1 million in the comparable period in 2023, primarily due to lower completed advisory transactions[245]. - Other income increased 315.9% to $5.0 million from a loss of $2.3 million in Q1 2023, driven by lower investment losses and higher rental income[248]. Expenses and Income - Interest expense rose by 64.3% to $254.7 million from $155.0 million in the comparable period in 2023[237]. - Total non-interest expenses increased 5.3% to $944.3 million from $896.9 million in Q1 2023, with compensation and benefits being the largest component[255]. - Compensation and benefits expense increased 4.4% to $679.7 million from $651.2 million in Q1 2023, attributed to higher compensable revenues[256]. - Provision for credit losses increased 7.1% to $5.3 million from $4.9 million in Q1 2023, reflecting changes in macroeconomic outlook[261]. - The provision for income taxes was $55.1 million with an effective tax rate of 25.2%, compared to $52.3 million and 24.9% in Q1 2023[264]. Interest and Assets - Net interest income decreased to $252.2 million from $296.6 million in Q1 2023, reflecting changes in interest rates and asset volumes[251]. - Interest revenue increased 12.2% to $506.8 million from $451.6 million in Q1 2023, due to higher interest rates and interest-earning assets[252]. - Average interest-earning assets increased to $30.2 billion in Q1 2024 from $29.7 billion in Q1 2023, with average interest rates rising to 6.16% from 5.58%[252]. - For the three months ended March 31, 2024, interest revenue increased to $465.0 million from $415.2 million in the comparable period in 2023, representing a growth of 12.0%[288]. - Interest expense surged 64.2% to $244.1 million, reflecting higher interest rates and interest-bearing liabilities[282]. Client and Advisor Metrics - Client assets grew 15.2% to $467.7 billion from $406.0 billion year-over-year, with fee-based client assets increasing 18.4% to $177.1 billion[278]. - The number of financial advisors increased slightly to 2,356 from 2,350, while the number of independent contractors rose to 114 from 102[274]. Acquisitions and Agreements - The company signed a definitive agreement to acquire Finance 500, Inc. and CB Resource, Inc., expecting to close the acquisition in Q3 2024[228]. - The company signed a definitive agreement to acquire Finance 500 and CB Resource, expecting to close the acquisition in Q3 2024[381]. Liquidity and Capital - As of March 31, 2024, the company had $13.0 billion of cash or assets readily convertible into cash[321]. - As of March 31, 2024, the company held $3.41 billion in cash and cash equivalents, an increase from $3.36 billion at December 31, 2023[348]. - Available cash and highly liquid investments comprised approximately 22% of Stifel Bancorp's assets as of March 31, 2024, exceeding its internal target[344]. - The company had $27.6 billion in deposits as of March 31, 2024, up from $27.3 billion at December 31, 2023[351]. - The company has a borrowing capacity with the Federal Home Loan Bank of $5.8 billion as of March 31, 2024, with no outstanding advances[363]. Risk Management - The company manages operational risk through specific policies and procedures designed to identify and mitigate risks across various departments[411]. - Regulatory compliance is critical, with the company subject to extensive regulation by the SEC, FINRA, and the Federal Reserve, among others[412]. - The company has established lending limits and monitoring procedures to manage concentration risk associated with large positions or loans[410]. - The fair value gain in derivative contracts indicates potential credit risk, which is minimized by engaging high-quality counterparties[408]. - The company is exposed to equity price risk due to its market-making activities in equity securities, with constant monitoring of security positions[404]. Future Projections - The future estimated amortization expense of upfront demand notes is projected to be $131.1 million in 2024, decreasing to $156.8 million in 2028 and thereafter[375]. - The future estimated compensation expense for deferred awards is projected to be $190.5 million in 2024, increasing to $217.1 million in 2025, and decreasing to $54.8 million in 2028 and thereafter[380]. - The estimated change in net interest income based on shifts in interest rates indicates a potential increase of 3.8% with a +200 basis points shift and a decrease of 4.0% with a -200 basis points shift[403].