313 0 Kommentare Stifel Reports Third Quarter 2017 Financial Results

ST. LOUIS, MO--(Marketwired - October 30, 2017) - Stifel Financial Corp. (NYSE: SF)

Net revenues of $721.2 million, increased 12.3% compared with the year-ago quarter and decreased 0.6% sequentially.
Record net revenues and pre-tax operating income in Global Wealth Management.
Record pre-tax operating margin in Institutional Group.
Net income available to common shareholders of $64.2 million, or $0.79 per diluted common share.
Non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.
Record client assets of $264.7 billion, increased 12.9% compared with the year-ago quarter and 2.6% sequentially.
Payment of regular quarterly dividend of $0.10 per common share.
Issuance of $225 million of Senior Notes (settled in October 2017).
Assets of $20.5 billion, increased 4.9% from June 30, 2017.
Bank net interest margin of 2.80% increased 3 basis points sequentially.

Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $64.2 million, or $0.79 per diluted common share on net revenues of $721.2 million for the three months ended September 30, 2017, compared with net income available to common shareholders of $16.3 million, or $0.21 per diluted common share, on net revenues of $642.0 million for the third quarter of 2016.

For the three months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $71.6 million, or $0.89 per diluted common share.

For the nine months ended September 30, 2017, the Company reported net income available to common shareholders of $177.8 million, or $2.21 per diluted common share on record net revenues of $2.1 billion, compared with net income available to common shareholders of $53.1 million, or $0.69 per diluted share, on net revenues of $1.9 billion for the comparable period in 2016.

For the nine months ended September 30, 2017, the Company reported non-GAAP net income available to common shareholders of $202.8 million, or $2.52 per diluted common share.

Chairman's Comments

"We are pleased with our results in the third quarter, as we generated the second highest quarterly revenue in our firm's history, down modestly from our record results in the previous quarter. Additionally, we generated our highest pre-tax operating margin in nearly seven years during the quarter as our focus on expense management continues to improve our bottom line growth. Less than two years ago, I commented that we would focus on optimizing our existing business to deliver stronger top and bottom line results. Our performance in the third quarter underscores the progress we've made in a relatively short period of time as the investments we made in the business in the past few years continue to drive growth despite market cyclicality," stated Ronald J. Kruszewski, Chairman & CEO of Stifel.


Financial Highlights (Unaudited)		Three Months Ended
(in 000s, except per share data)		GAAP 9/30/17		GAAP 9/30/16		% Change	GAAP 6/30/17		% Change		Non- GAAP ⁽¹⁾ 9/30/17		Non- GAAP ⁽¹⁾ 6/30/17		% Change
Net revenues		$	721,169	$	641,986	12.3	$	725,647	(0.6	)	$	721,169	$	725,647	(0.6	)
Net income		$	66,536	$	17,814	273.5	$	52,811	26.0		$	73,949	$	73,991	(0.1	)
	Preferred dividend		2,343		1,563	49.9		2,344	(0.0	)		2,343		2,344	(0.0	)
Net income available to common shareholders		$	64,193	$	16,251	295.0	$	50,467	27.2		$	71,606	$	71,647	(0.1	)
Earnings per diluted common share		$	0.82	$	0.23	256.5	$	0.66	24.2		$	0.91	$	0.92	(1.1	)
Earnings per diluted common share available to common shareholders		$	0.79	$	0.21	276.2	$	0.63	25.4		$	0.89	$	0.90	(1.1	)
	Compensation ratio		62.2%		67.6%			62.5%				61.1%		61.4%
	Non-compensation ratio		22.8%		28.0%			26.0%				22.1%		22.3%
	Pre-tax operating margin		15.0%		4.4%			11.5%				16.8%		16.3%


Financial Highlights (Unaudited)		Nine Months Ended
(in 000s, except per share data)		GAAP 9/30/17		GAAP 9/30/16		% Change	Non- GAAP ⁽¹⁾ 9/30/17		Non- GAAP ⁽¹⁾ 9/30/16		% Change
Net revenues		$	2,122,347	$	1,914,105	10.9	$	2,124,331	$	1,918,207	10.7
Net income		$	184,859	$	54,640	238.3	$	209,789	$	133,083	57.6
	Preferred dividend		7,031		1,563	349.8		7,031		1,563	349.8
Net income available to common shareholders		$	177,828	$	53,077	235.0	$	202,758	$	131,520	54.2
Earnings per diluted common share		$	2.29	$	0.71	222.5	$	2.60	$	1.74	49.4
Earnings per diluted common share available to common shareholders		$	2.21	$	0.69	220.3	$	2.52	$	1.72	46.5
	Compensation ratio		63.1%		68.2%			61.6%		63.0%
	Non-compensation ratio		24.2%		27.2%			22.4%		24.2%
	Pre-tax operating margin		12.7%		4.6%			16.0%		12.8%

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $249.6 million, a 13.4% decrease compared with the third quarter of 2016 and a 6.8% decrease compared with the second quarter of 2017.


		Three Months Ended
(in 000s)		9/30/17		9/30/16		% Change		6/30/17		% Change
Global Wealth Management brokerage revenues		$	158,334	$	165,476	(4.3	)	$	168,085	(5.8	)
Institutional brokerage:
	Equity		45,209		51,004	(11.4	)		50,869	(11.1	)
	Fixed income		46,079		71,794	(35.8	)		49,013	(6.0	)
Total institutional brokerage			91,288		122,798	(25.7	)		99,882	(8.6	)
Total brokerage revenues		$	249,622	$	288,274	(13.4	)	$	267,967	(6.8	)

Global wealth management brokerage revenues were $158.3 million, a 4.3% decrease compared with the third quarter of 2016 and a 5.8% decrease compared with the second quarter of 2017.
Institutional equity brokerage revenues were $45.2 million, an 11.4% decrease compared with the third quarter of 2016 and an 11.1% decrease compared with the second quarter of 2017.
Institutional fixed income brokerage revenues were $46.1 million, a 35.8% decrease compared with the third quarter of 2016 and a 6.0% decrease compared with the second quarter of 2017.

Investment Banking Revenues

Investment banking revenues were $181.9 million, a 25.6% increase compared with the third quarter of 2016 and a 1.8% decrease compared with the second quarter of 2017.


			Three Months Ended
(in 000s)			9/30/17		9/30/16		% Change			6/30/17		% Change
Capital raising:
	Global Wealth Management		$	9,072	$	12,212		(25.7	)	$	10,641		(14.7	)

		Equity		43,277		20,782		108.2			45,664		(5.2	)
		Fixed income		27,573		25,483		8.2			46,495		(40.7	)
	Institutional Group			70,850		46,265		53.1			92,159		(23.1	)
		Capital raising		79,922		58,477		36.7			102,800		(22.3	)
Advisory fees				101,982		86,322		18.1			82,461		23.7
Total investment banking			$	181,904	$	144,799		25.6		$	185,261		(1.8	)

Global wealth management capital raising revenues were $9.1 million, a 25.7% decrease compared with the third quarter of 2016 and a 14.7% decrease compared with the second quarter of 2017.
Institutional equity capital raising revenues were $43.3 million, a 108.2% increase compared with the third quarter of 2016 and a 5.2% decrease compared with the second quarter of 2017.
Institutional fixed income capital raising revenues were $27.6 million, an 8.2% increase compared with the third quarter of 2016 and a 40.7% decrease compared with the second quarter of 2017.
Advisory fee revenues were $102.0 million, an 18.1% increase compared with the third quarter of 2016 and a 23.7% increase compared with the second quarter of 2017.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $179.8 million, a 24.7% increase compared with the third quarter of 2016 and a 4.0% increase compared with the second quarter of 2017. The increase from the comparative period in 2016 is primarily attributable to the growth in the value of fee-based accounts and an increase in the Federal Funds rate, which increased fees earned on cash balances.

Net Interest Income

Record net interest income of $100.2 million, an 80.6% increase compared with the third quarter of 2016 and an 8.6% increase compared with the second quarter of 2017.

Interest income was $117.9 million, a 57.4% increase compared with the third quarter of 2016 and an 8.2% increase compared with the second quarter of 2017. Interest income was impacted by the continued growth of interest-earning assets.
Interest expense was $17.6 million, a 9.1% decrease compared with the third quarter of 2016 and a 5.9% increase compared with the second quarter of 2017.

Compensation and Benefits Expenses

For the quarter ended September 30, 2017, compensation and benefits expenses were $448.4 million, which included $8.1 million of merger-related and severance expenses. This compares with $434.2 million in the third quarter of 2016 and $453.9 million in the second quarter of 2017. Excluding merger-related expenses, compensation and benefits as a percentage of net revenues were 61.1% in the third quarter of 2017.


		Three Months Ended 9/30/17			Nine Months Ended 9/30/17
GAAP compensation and benefits		$	448,410		$	1,338,673
	As a percentage of net revenues		62.2	%		63.1	%
Non-GAAP adjustments:⁽²⁾
	Merger-related		(5,518	)		(20,874	)
	Severance		(2,538	)		(9,493	)
			(8,056	)		(30,367	)
Non-GAAP compensation and benefits		$	440,354		$	1,308,306
	As a percentage of non-GAAP net revenues		61.1	%		61.6	%

Non-Compensation Operating Expenses

For the quarter ended September 30, 2017, non-compensation operating expenses were $164.6 million, which included merger-related expenses of $4.7 million. This compares with $179.8 million in the third quarter of 2016 and $188.6 million in the second quarter of 2017. Excluding litigation and merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2017 were 22.1%.


		Three Months Ended 9/30/17			Nine Months Ended 9/30/17
GAAP non-compensation expenses		$	164,620		$	513,318
	As a percentage of net revenues		22.8	%		24.2	%
Non-GAAP adjustments:⁽²⁾
	Merger-related		(4,725	)		(16,899	)
	Litigation-related		-			(20,000	)
			(4,725	)		(36,899	)
Non-GAAP non-compensation expenses		$	159,895		$	476,419
	As a percentage of non-GAAP net revenues		22.1	%		22.4	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.5%. This compares with an effective income tax rate of 36.3% for the third quarter of 2016 and 36.5% for the second quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended September 30, 2017 was 38.9%.


		Three Months Ended 9/30/17			Nine Months Ended 9/30/17
GAAP provision for income taxes		$	41,603		$	85,497
	GAAP effective tax rate		38.5	%		31.6	%
Non-GAAP adjustments:⁽²⁾
	Litigation and merger-related and severance		5,072			26,869
	Excess tax benefits from stock-based compensation ⁽³⁾		297			17,452
			5,369			44,321
Non-GAAP provision for income taxes		$	46,972		$	129,818
	Non-GAAP effective tax rate		38.9	%		38.2	%

Conference Call Information

Stifel Financial Corp. will host its third quarter 2017 financial results conference call on Monday, October 30, 2017, at 5:00 p.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 (888) 676-3684 and referencing conference ID #3699219. 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 Information

Stifel 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; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc.; and Eaton Partners LLC, and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. 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 & Trust offers 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 web site at www.stifel.com.

Forward-Looking Statements

This 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.


Summary Results of Operations (Unaudited)

				Three Months Ended										Nine Months Ended
(in 000s, except per share amounts)				9/30/17		9/30/16		% Change		6/30/17		% Change		9/30/17		9/30/16		% Change
Revenues:
	Commissions			$	162,612	$	171,272	(5.1	)	$	172,264	(5.6	)	$	510,150	$	551,306	(7.5	)
	Principal transactions				87,010		117,002	(25.6	)		95,703	(9.1	)		299,570		364,376	(17.8	)
		Brokerage Revenues			249,622		288,274	(13.4	)		267,967	(6.8	)		809,720		915,682	(11.6	)

	Capital raising				79,922		58,477	36.7			102,800	(22.3	)		256,638		178,193	44.0
	Advisory fees				101,982		86,322	18.1			82,461	23.7			237,379		200,389	18.5
		Investment banking			181,904		144,799	25.6			185,261	(1.8	)		494,017		378,582	30.5
	Asset management and service fees				179,848		144,206	24.7			172,914	4.0			515,501		433,305	19.0
	Other income				9,558		9,209	3.8			7,198	32.8			25,508		33,804	(24.5	)
Operating Revenue					620,932		586,488	5.9			633,340	(2.0	)		1,844,746		1,761,373	4.7
	Interest Revenue				117,862		74,881	57.4			108,951	8.2			327,766		203,488	61.1
Total Revenue					738,794		661,369	11.7			742,291	(0.5	)		2,172,512		1,964,861	10.6
	Interest Expense				17,625		19,383	(9.1	)		16,644	5.9			50,165		50,756	(1.2	)
Net Revenue					721,169		641,986	12.3			725,647	(0.6	)		2,122,347		1,914,105	10.9

Non-interest Expenses:
	Compensation and benefits				448,410		434,236	3.3			453,876	(1.2	)		1,338,673		1,305,372	2.6
	Occupancy and equipment rental				57,427		62,453	(8.0	)		57,892	(0.8	)		167,864		178,455	(5.9	)
	Communication and office supplies				34,650		31,182	11.1			34,192	1.3			102,686		105,268	(2.5	)
	Commissions and floor brokerage				11,232		10,777	4.2			11,232	-			33,187		34,653	(4.2	)
	Provision for loan losses				7,990		3,561	124.4			5,856	36.4			19,980		9,643	107.2
	Other operating expenses				53,321		71,795	(25.7	)		79,401	(32.8	)		189,601		193,026	(1.8	)
			Total non-interest expenses		613,030		614,004	(0.2	)		642,449	(4.6	)		1,851,991		1,826,417	1.4
Income before income taxes					108,139		27,982	286.5			83,198	30.0			270,356		87,688	208.3
	Provision for income taxes				41,603		10,168	309.2			30,387	36.9			85,497		33,048	158.7
Net income					66,536		17,814	273.5			52,811	26.0			184,859		54,640	238.3
	Preferred dividends				2,343		1,563	49.9			2,344	(0.0	)		7,031		1,563	349.8
Net income available to common shareholders				$	64,193	$	16,251	295.0		$	50,467	27.2		$	177,828	$	53,077	235.0
Earnings per common share:
	Basic			$	0.94	$	0.24	291.7		$	0.74	27.0		$	2.60	$	0.79	229.1
	Diluted			$	0.79	$	0.21	276.2		$	0.63	25.4		$	2.21	$	0.69	220.3

Weighted average number of common shares outstanding:
	Basic				68,522		66,482	3.1			68,556	(0.0	)		68,488		66,950	2.3
	Diluted				80,881		77,544	4.3			80,021	1.1			80,562		76,612	5.2


Summary Segment Results (Unaudited)

			Three Months Ended													Nine Months Ended
(in 000s)			9/30/17			9/30/16			% Change		6/30/17			% Change		9/30/17			9/30/16			% Change
Net revenues:
	Global Wealth Management		$	453,558		$	390,032		16.3		$	451,990		0.3		$	1,348,280		$	1,155,875		16.6
	Institutional Group			264,747			258,800		2.3			276,153		(4.1	)		778,367			760,996		2.3
	Other			2,864			(6,846	)	141.8			(2,496	)	214.7			(4,300	)		(2,766	)	(55.5	)
		Total net revenues	$	721,169		$	641,986		12.3		$	725,647		(0.6	)	$	2,122,347		$	1,914,105		10.9

Operating expenses:
	Global Wealth Management		$	291,802		$	280,953		3.9		$	298,753		(2.3	)	$	891,235		$	848,409		5.0
	Institutional Group			213,030			213,877		(0.4	)		223,261		(4.6	)		633,886			644,368		(1.6	)
	Other			108,198			119,174		(9.2	)		120,435		(10.2	)		326,870			333,640		(2.0	)
		Total operating expenses	$	613,030		$	614,004		(0.2	)	$	642,449		(4.6	)	$	1,851,991		$	1,826,417		1.4

Operating contribution:
	Global Wealth Management		$	161,756		$	109,079		48.3		$	153,237		5.6		$	457,045		$	307,466		48.6
	Institutional Group			51,717			44,923		15.1			52,892		(2.2	)		144,481			116,628		23.9
	Other			(105,334	)		(126,020	)	(16.4	)		(122,931	)	(14.3	)		(331,170	)		(336,406	)	(1.6	)
		Income before income taxes	$	108,139		$	27,982		286.5		$	83,198		30.0		$	270,356		$	87,688		208.3

As a percentage of net revenues:
	Compensation and benefits
		Global Wealth Management		49.1			55.2					50.7					50.5			56.7
		Institutional Group		60.0			61.1					59.6					60.0			60.7
	Non-comp. operating expenses
		Global Wealth Management		15.2			16.9					15.4					15.6			16.7
		Institutional Group		20.5			21.5					21.2					21.4			24.0
	Income before income taxes
		Global Wealth Management		35.7			27.9					33.9					33.9			26.6
		Institutional Group		19.5			17.4					19.2					18.6			15.3
	Consolidated pre-tax margin ^{(4) (5)}			15.0			4.4					11.5					12.7			4.6


Stifel Financial Corp.
Selected Key Metrics
(Unaudited)

Financial metrics:		As of and For the Three Months Ended
*(in 000s, except percentages and per share amounts)*		9/30/17			9/30/16			6/30/17
	Total assets	$	20,484,080		$	17,204,908		$	19,533,575
	Total equity		2,932,405			2,691,690			2,845,309
	Book value per common share	$	40.67		$	38.38		$	39.47
	Return on common equity ⁽⁶⁾		9.7	%		2.8	%		7.9	%
	Non-GAAP return on common equity ^{(1) (6)}		10.8	%		8.7	%		11.1	%
	Return on tangible common equity ⁽⁷⁾		16.1	%		5.0	%		13.4	%
	Non-GAAP return on tangible common equity ^{(1) (7)}		17.8	%		15.3	%		18.8	%
	Tier 1 common capital ratio ⁽⁸⁾		18.3	%		19.5	%		18.2	%
	Tier 1 risk based capital ratio ⁽⁸⁾		20.5	%		22.0	%		20.5	%
	Tier 1 leverage capital ratio ⁽⁸⁾		10.4	%		11.8	%		10.3	%
	Pre-tax margin on net revenues		15.0	%		4.4	%		11.5	%
	Non-GAAP pre-tax margin on net revenues ⁽¹⁾		16.8	%		14.0	%		16.3	%
	Effective tax rate		38.5	%		36.3	%		36.5	%
	Non-GAAP effective tax rate ⁽¹⁾		38.9	%		39.4	%		37.3	%


Statistical Information
(in 000s)		9/30/17		9/30/16		% Change		6/30/17		% Change
Statistical Information:
	Financial advisors ⁽⁹⁾		2,252		2,280	(1.2	)		2,277	(1.1	)
	Locations		395		396	(0.3	)		399	(1.0	)
	Total client assets	$	264,717,000	$	234,490,000	12.9		$	258,097,000	2.6
	Fee-based client assets	$	82,999,000	$	67,927,000	22.2		$	79,177,000	4.8
	Client money market and insured product	$	17,420,000	$	18,478,000	(5.7	)	$	17,831,000	(2.3	)
	Secured client lending ⁽¹⁰⁾	$	3,037,158	$	2,770,783	9.6		$	2,999,461	1.3


Stifel Bank & Trust - a component of Global Wealth Management
Selected Key Metrics
(Unaudited)
Selected operating data:		Three Months Ended											Nine Months Ended
(in 000s, except percentages)		9/30/17			9/30/16			% Change	6/30/17			% Change	9/30/17			9/30/16			% Change
	Net Interest Income	$	97,300		$	57,994		67.8	$	90,795		7.2	$	272,114		$	152,183		78.8
	Bank loan loss provision		7,990			3,561		124.4		5,856		36.4		19,980			9,643		107.2
	Charge-offs		-			283		n/m		2,953		n/m		2,953			296		n/m
	Net Interest Margin		2.80	%		2.41	%	16.2		2.77	%	1.1		2.74	%		2.40	%	14.2


Financial Metrics:		As of
(in 000s, except percentages)		9/30/17			9/30/16			6/30/17
	Total Assets	$	14,538,750		$	11,018,615		$	13,598,260
	Total Equity		1,019,257			740,348			978,626
	Total Loans, net		6,949,369			5,173,992			6,299,669
	Total Deposits		12,883,961			9,885,441			12,050,474
	Available-for-sale securities, at fair value		3,687,248			3,139,438			3,448,548
	Held-to-maturity securities, at amortized cost		3,550,962			2,237,112			3,304,090
	Residential real estate		2,517,543			1,804,112			2,248,528
	Commercial and industrial		2,380,417			1,558,284			2,064,052
	Securities-based loans		1,839,981			1,452,913			1,755,592
	Commercial real estate		78,614			63,680			71,517
	Loans held for sale		166,335			217,316			139,676
	Common equity tier 1 capital ratio ⁽⁸⁾		14.4	%		13.7	%		14.9	%
	Tier 1 capital ratio ⁽⁸⁾		14.4	%		13.7	%		14.9	%
	Total capital ratio ⁽⁸⁾		15.3	%		14.5	%		15.7	%
	Tier 1 leverage ratio ⁽⁸⁾		7.1	%		7.5	%		7.2	%
Credit Metrics:
	Allowance for loan losses	$	62,229		$	39,145		$	54,202
	Allowance as a percentage of retained loans		0.92	%		0.79	%		0.88	%
	Net charge-offs as a percentage of average loans		0.00	%		0.01	%		0.05	%
	Total nonperforming assets		21,776			28,301			21,219
	Nonperforming assets as % of total assets		0.15	%		0.25	%		0.15	%


Global Wealth Management Summary Results of Operations (Unaudited)
			Three Months Ended										Nine Months Ended
(in 000s)			9/30/17		9/30/16		% Change		6/30/17		% Change		9/30/17		9/30/16		% Change
Revenues:
	Commissions		$	115,410	$	117,596	(1.9	)	$	120,344	(4.1	)	$	356,331	$	376,390	(5.3	)
	Principal transactions			42,924		47,880	(10.4	)		47,741	(10.1	)		141,582		134,228	5.5
		Brokerage revenues		158,334		165,476	(4.3	)		168,085	(5.8	)		497,913		510,618	(2.5	)

	Asset management and service fees			179,830		143,152	25.6			172,889	4.0			515,383		431,864	19.3
	Net interest			102,831		63,981	60.7			95,698	7.5			288,224		170,036	69.5
	Investment banking			9,072		12,212	(25.7	)		10,641	(14.7	)		31,567		30,123	4.8
	Other income			3,491		5,211	(33.0	)		4,677	(25.4	)		15,193		13,234	14.8
		Net revenues		453,558		390,032	16.3			451,990	0.3			1,348,280		1,155,875	16.6
Non-interest expenses:
	Compensation and benefits			222,621		215,151	3.5			229,158	(2.9	)		680,250		655,119	3.8
	Non-compensation operating expenses			69,181		65,802	5.1			69,595	(0.6	)		210,985		193,290	9.2
		Total non-interest expenses		291,802		280,953	3.9			298,753	(2.3	)		891,235		848,409	5.0
Income before income taxes			$	161,756	$	109,079	48.3		$	153,237	5.6		$	457,045	$	307,466	48.6

As a percentage of net revenues:
	Compensation and benefits			49.1		55.2				50.7				50.5		56.7
	Non-compensation operating expenses			15.2		16.9				15.4				15.6		16.7
	Income before income taxes			35.7		27.9				33.9				33.9		26.6


Institutional Group Summary Results of Operations (Unaudited)
			Three Months Ended										Nine Months Ended
(in 000s)			9/30/17		9/30/16		% Change		6/30/17		% Change		9/30/17		9/30/16		% Change
Revenues:
	Commissions		$	47,202	$	53,676	(12.1	)	$	51,920	(9.1	)	$	153,819	$	174,916	(12.1	)
	Principal transactions			44,086		69,122	(36.2	)		47,962	(8.1	)		157,988		230,148	(31.4	)
		Brokerage revenues		91,288		122,798	(25.7	)		99,882	(8.6	)		311,807		405,064	(23.0	)
	Capital raising			70,850		46,265	53.1			92,159	(23.1	)		225,071		147,260	52.8
	Advisory fees			101,982		86,322	18.1			82,461	23.7			237,379		201,199	18.0
		Investment banking		172,832		132,587	30.4			174,620	(1.0	)		462,450		348,459	32.7
	Other ⁽¹¹⁾			627		3,415	(81.6	)		1,651	(62.0	)		4,110		7,473	(45.0	)
		Net revenues		264,747		258,800	2.3			276,153	(4.1	)		778,367		760,996	2.3
Non-interest expenses:
	Compensation and benefits			158,926		158,126	0.5			164,532	(3.4	)		467,098		462,115	1.1
	Non-compensation operating expenses			54,104		55,751	(3.0	)		58,729	(7.9	)		166,788		182,253	(8.5	)
		Total non-interest expenses		213,030		213,877	(0.4	)		223,261	(4.6	)		633,886		644,368	(1.6	)
Income before income taxes			$	51,717	$	44,923	15.1		$	52,892	(2.2	)	$	144,481	$	116,628	23.9

As a percentage of net revenues:
	Compensation and benefits			60.0		61.1				59.6				60.0		60.7
	Non-compensation operating expenses			20.5		21.5				21.2				21.4		24.0
	Income before income taxes			19.5		17.4				19.2				18.6		15.3

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 three months ended September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 30, 2017 and 2016. 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 September 30, 2017, June 30, 2017, and September 30, 2016 and the nine months ended September 30, 2017 and 2016 to net income and earnings per diluted common share on a non-GAAP basis for the same period.


		Three Months Ended									Nine Months Ended
*(in 000s)*		9/30/17			9/30/16			6/30/17			9/30/17			9/30/16
GAAP net income		$	66,536		$	17,814		$	52,811		$	184,859		$	54,640
	Preferred dividend		2,343			1,563			2,344			7,031			1,563
Net income available to common shareholders			64,193			16,251			50,467			177,828			53,077

Non-GAAP adjustments:
	Merger-related ⁽¹²⁾		10,244			50,446			12,400			39,758			117,790
	Litigation-related ⁽¹³⁾		-			11,796			20,000			20,000			11,796
	Severance		2,538			-			2,420			9,493			-
	Provision for income taxes		(5,369	)		(25,337	)		(13,640	)		(44,321	)		(51,143	)
Total non-GAAP adjustments			7,413			36,905			21,180			24,930			78,443
Non-GAAP net income available to common shareholders		$	71,606		$	53,156		$	71,647		$	202,758		$	131,520

Weighted average diluted shares outstanding			80,881			77,544			80,021			80,562			76,612

GAAP earnings per diluted common share		$	0.82		$	0.23		$	0.66		$	2.29		$	0.71
Non-GAAP adjustments			0.09			0.48			0.26			0.31			1.03
Non-GAAP earnings per diluted common share		$	0.91		$	0.71		$	0.92		$	2.60		$	1.74

GAAP earnings per diluted common share available to common shareholders		$	0.79		$	0.21		$	0.63		$	2.21		$	0.69
Non-GAAP adjustments			0.10			0.48			0.27			0.31			1.03
Non-GAAP earnings per diluted common share available to common shareholders		$	0.89		$	0.69		$	0.90		$	2.52		$	1.72

Footnotes

(1) Reconciliations of the Company's GAAP results to these non-GAAP measures are discussed within and under "Non-GAAP Financial Measures."
(2) See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."
(3) During the first quarter of 2017, the Company adopted new accounting guidance associated with stock-based compensation.
(4) Non-GAAP pre-tax margin for the three months ended September 30, 2017 of 16.8% is calculated by adding merger-related and severance non-GAAP adjustments of $12.8 million to our GAAP income before income taxes of $108.1 million and dividing it by non-GAAP net revenues for the quarter of $721.2 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures."
(5) Non-GAAP pre-tax margin for the nine months ended September 30, 2017 of 16.0% is calculated by adding litigation and merger-related and severance non-GAAP adjustments of $69.3 million to our GAAP income before income taxes of $270.4 million and dividing it by non-GAAP net revenues for the quarter of $2,124.3 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures."
(6) Computed by dividing annualized net income by average common shareholders' equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average common shareholders' equity.
(7) Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total common shareholders' equity less goodwill and identifiable intangible assets.
(8) Capital ratios are estimates at time of the Company's earning release.
(9) Includes 116, 125, and 119 independent contractors at September 30, 2017, September 30, 2016, and June 30, 2017, respectively.
(10) Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank.
(11) Includes net interest, asset management and service fees, and other income.
(12) Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company's on-going business.
(13) Primarily related to costs associated with the Company's previously disclosed legal matters.