Stifel Reports Third Quarter 2020 Results

October 27, 2020

Net revenues of $883.3 million, increased 7.5% with the year-ago quarter.
Net income available to common shareholders of $110.6 million, or $1.46 per diluted common share.
Non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share.
Annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 20.4%.
Non-GAAP annualized return on average tangible common shareholders’ equity ⁽¹⁾ was 22.2%.

ST. LOUIS, Oct. 27, 2020 (GLOBE NEWSWIRE) -- Stifel Financial Corp. (NYSE: SF) today reported net income available to common shareholders of $110.6 million, or $1.46 per diluted common share on net revenues of $883.3 million for the three months ended September 30, 2020, compared with net income available to common shareholders of $104.6 million, or $1.34 per diluted common share, on net revenues of $821.6 million for the third quarter of 2019.

For the three months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $120.5 million, or $1.59 per diluted common share. The Company’s reported GAAP net income for the three months ended September 30, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the “Non-GAAP Financial Matters” section.

Chairman’s Comments

“The financial performance during the quarter, and over the past few years, has been driven by a diverse business mix that’s enabled both our Institutional Group and Wealth Management segments to generate strong growth. This diversification is illustrated by record nine month Wealth Management revenues despite significant declines in net interest income and deposit sweep fees, both a result of the Federal Reserve’s implementation of a zero rate environment. Likewise, we achieved record nine-month Institutional Group revenues as record capital raising and brokerage revenues more than compensated for the 13% decline in advisory revenue,” stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, “Simply, Stifel is a growth company with diversified, balanced, and synergistic businesses. Over the last 12 months, Wealth Management, under both brokerage and fee-based models, has contributed 46% of net revenues. Institutional revenues, comprised of equity and fixed income, investment banking and trading, made up 41% of net revenues, while net interest income accounted for the remaining 13%. The complementary nature of these businesses is reflected in our return on tangible common equity, which is 23% over the past 12 months.”

Financial Highlights (Unaudited)	Three Months Ended
($ in 000s, except per share data)	GAAP 9/30/20			GAAP 9/30/19			% Change		GAAP 6/30/20			% Change			Non-GAAP ⁽²⁾9/30/20			Non-GAAP ⁽²⁾ 9/30/19			% Change
Net revenues	$	883,300		$	821,572			7.5	$	895,817			(1.4	)	$	883,300		$	821,572			7.5
Net income applicable to Stifel Financial Corp.	$	120,527		$	109,414			10.2	$	107,887			11.7		$	130,422		$	121,990			6.9
Preferred dividends		9,897			4,844			104.3		4,843			104.4			9,897			4,844			104.3
Net income available to common shareholders	$	110,630		$	104,570			5.8	$	103,044			7.4		$	120,525		$	117,146			2.9
Earnings per diluted common share	$	1.59		$	1.40			13.6	$	1.45			9.7		$	1.72		$	1.56			10.3
Earnings per diluted common share available to common shareholders	$	1.46		$	1.34			9.0	$	1.39			5.0		$	1.59		$	1.50			6.0
Compensation ratio		60.4	%		59.2	%				61.1	%					59.6	%		58.1	%
Non-compensation ratio		21.7	%		22.5	%				22.9	%					21.0	%		21.7	%
Pre-tax operating margin ⁽³⁾		17.9	%		18.3	%				16.0	%					19.4	%		20.2	%

For the nine months ended September 30, 2020, the Company reported net income available to common shareholders of $295.4 million, or $3.90 per diluted common share on record net revenues of $2.7 billion, compared with net income available to common shareholders of $305.2 million, or $3.87 per diluted common share, on net revenues of $2.4 billion for the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported non-GAAP net income available to common shareholders of $327.8 million, or $4.33 per diluted common share.

Financial Highlights (Unaudited)	Nine Months Ended
($ in 000s, except per share data)	GAAP 9/30/20			GAAP 9/30/19			% Change			Non-GAAP ⁽²⁾9/30/20			Non-GAAP ⁽²⁾9/30/19			% Change
Net revenues	$	2,692,151		$	2,392,779			12.5		$	2,692,330		$	2,392,779			12.5
Net income applicable to Stifel Financial Corp.	$	315,003		$	317,706			(0.9	)	$	347,377		$	345,513			0.5
Preferred dividends		19,584			12,476			57.0			19,584			12,476			57.0
Net income available to common shareholders	$	295,419		$	305,230			(3.2	)	$	327,793		$	333,037			(1.6	)
Earnings per diluted common share	$	4.16		$	4.03			3.2		$	4.59		$	4.38			4.8
Earnings per diluted common share available to common shareholders	$	3.90		$	3.87			0.8		$	4.33		$	4.22			2.6
Compensation ratio		61.6	%		59.0	%					60.7	%		58.3	%
Non-compensation ratio		22.9	%		22.8	%					22.2	%		22.1	%
Pre-tax operating margin ⁽⁴⁾		15.5	%		18.2	%					17.1	%		19.6	%

Net Revenues

Net revenues were $883.3 million for the third quarter of 2020, a 7.5% increase from the third quarter of 2019 and a 1.4% decrease from the second quarter of 2020. Net revenues, compared with the third quarter of 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower net interest income and advisory fee revenues. Net revenues, compared with the second quarter of 2020, reflected increased asset management and services fees and capital raising revenues, partially offset by lower advisory fee revenues, principal transaction fee revenues, net interest income, and commission revenues.

The operating environment continued to recover during the third quarter of 2020 from the impact of the COVID-19 pandemic earlier in the year as global economic activity significantly rebounded following a sharp decrease in the second quarter, market volatility declined modestly, and monetary and fiscal policy remained accommodative. As a result, global equity prices increased and credit spreads tightened compared with the end of the second quarter of 2020.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $313.5 million, a 19.8% increase compared with the third quarter of 2019 and an 8.6% decrease compared with the second quarter of 2020.

	Three Months Ended
($ in 000s)	9/30/20		9/30/19		% Change		6/30/20		% Change
Global Wealth Management	$	162,627	$	160,117		1.6	$	159,123		2.2
Institutional brokerage:
Equity capital markets		54,204		41,037		32.1		63,193		(14.2	)
Fixed income capital markets		96,706		60,613		59.5		120,731		(19.9	)
Total institutional brokerage		150,910		101,650		48.5		183,924		(17.9	)
Total brokerage revenues ⁽⁵⁾	$	313,537	$	261,767		19.8	$	343,047		(8.6	)

Global Wealth Management brokerage revenues were $162.6 million, a 1.6% increase compared with the third quarter of 2019 and a 2.2% increase compared with the second quarter of 2020.
Institutional equity brokerage revenues were $54.2 million, a 32.1% increase compared with the third quarter of 2019 and a 14.2% decrease compared with the second quarter of 2020.
Institutional fixed income brokerage revenues were $96.7 million, a 59.5% increase compared with the third quarter of 2019 and a 19.9% decrease compared with the second quarter of 2020.

Investment Banking Revenues

Investment banking revenues were $218.1 million, a 9.7% increase compared with the third quarter of 2019 and a 0.5% increase compared with the second quarter of 2020.

	Three Months Ended
($ in 000s)	9/30/20		9/30/19		% Change			6/30/20		% Change
Capital raising:
Global Wealth Management	$	8,113	$	9,855		(17.7	)	$	8,016		1.2

Equity capital markets		78,462		53,006		48.0			63,277		24.0
Fixed income capital markets		50,717		31,082		63.2			47,904		5.9
Institutional Group		129,179		84,088		53.6			111,181		16.2
Total capital raising ⁽⁵⁾		137,292		93,943		46.1			119,197		15.2
Advisory fees ⁽⁵⁾		80,842		104,847		(22.9	)		97,838		(17.4	)
Total investment banking	$	218,134	$	198,790		9.7		$	217,035		0.5

Global Wealth Management capital raising revenues were $8.1 million, a 17.7% decrease compared with the third quarter of 2019 and a 1.2% increase compared with the second quarter of 2020.
Institutional equity capital raising revenues were $78.5 million, a 48.0% increase compared with the third quarter of 2019 and a 24.0% increase compared with the second quarter of 2020.
Institutional fixed income capital raising revenues were $50.7 million, a 63.2% increase compared with the third quarter of 2019 and a 5.9% increase compared with the second quarter of 2020.
Advisory fee revenues were $80.8 million, a 22.9% decrease compared with the third quarter of 2019 and a 17.4% decrease compared with the second quarter of 2020.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $230.8 million, a 6.0% increase compared with the third quarter of 2019 and a 16.0% increase compared with the second quarter of 2020. The increase from the comparative period in 2019 is primarily attributable to higher asset values and strong fee-based asset flows. See Asset Management and Service Fee Break-down table.

Net Interest Income

Net interest income was $100.6 million, a 25.3% decrease compared with the third quarter of 2019 and a 12.7% decrease compared with the second quarter of 2020. See Net Interest Income Analysis table.

Interest income was $114.4 million, a 36.0% decrease compared with the third quarter of 2019 and a 10.9% decrease compared with the second quarter of 2020.
Interest expense was $13.8 million, a 68.7% decrease compared with the third quarter of 2019 and a 5.6% increase compared with the second quarter of 2020.

Compensation and Benefits Expenses

For the quarter ended September 30, 2020, compensation and benefits expenses were $533.6 million, which included $6.8 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $486.2 million in the third quarter of 2019 and $547.2 million in the second quarter of 2020. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 59.6% in the third quarter of 2020 (non-GAAP measure).

The increase in compensation and benefits expenses, compared with the third quarter of 2019, is primarily attributable to higher volume and revenue-related expense and investments.

	Three Months Ended						Nine Months Ended
($ in 000s)	9/30/20			9/30/19			9/30/20			9/30/19
GAAP compensation and benefits	$	533,638		$	486,160		$	1,657,991		$	1,411,135
As a percentage of net revenues		60.4	%		59.2	%		61.6	%		59.0	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related and severance		(6,770	)		(8,827	)		(22,907	)		(16,063	)
Non-GAAP compensation and benefits	$	526,868		$	477,333		$	1,635,084		$	1,395,072
As a percentage of non-GAAP net revenues		59.6	%		58.1	%		60.7	%		58.3	%

Non-Compensation Operating Expenses

For the quarter ended September 30, 2020, non-compensation operating expenses were $191.3 million, which included $6.2 million of merger-related expenses (non-GAAP adjustments). This compares with $184.7 million in the third quarter of 2019 and $205.7 million in the second quarter of 2020. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2020 were 21.0% (non-GAAP measure).

The increase in non-compensation operating expenses, compared with the third quarter of 2019, is primarily attributable to volume-related expenses, net provisions for regulatory matters, and professional fees, partially offset by decreases in travel and conference-related expenses as a result of COVID-19. In addition, the third quarter of 2020 was positively impacted by the adjustments associated with the accounting for credit losses under the CECL standard ⁽⁷⁾.

	Three Months Ended						Nine Months Ended
($ in 000s)	9/30/20			9/30/19			9/30/20			9/30/19
GAAP non-compensation expenses	$	191,269		$	184,658		$	617,701		$	545,099
As a percentage of net revenues		21.7	%		22.5	%		22.9	%		22.8	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related		(6,219	)		(6,023	)		(19,672	)		(13,699	)
Litigation-related		—			—			—			(3,507	)
		(6,219	)		(6,023	)		(19,672	)		(17,206	)
Non-GAAP non-compensation expenses	$	185,050		$	178,635		$	598,029		$	527,893
As a percentage of non-GAAP net revenues		21.0	%		21.7	%		22.2	%		22.1	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended September 30, 2020 was 23.9%. This compares with an effective income tax rate of 27.1% for the third quarter of 2019 and 24.5% for the second quarter of 2020. The adjusted non-GAAP effective income tax rate for the quarter ended September 30, 2020 was 23.9%.

	Three Months Ended						Nine Months Ended
($ in 000s)	9/30/20			9/30/19			9/30/20			9/30/19
GAAP provision for income taxes	$	37,866		$	40,632		$	101,456		$	117,227
GAAP effective tax rate		23.9	%		27.1	%		24.4	%		27.0	%
Non-GAAP adjustments:⁽⁶⁾
Merger-related, litigation-related, and severance		3,084			3,994			10,370			8,949
Other		10			(1,720	)		14			(3,487	)
		3,094			2,274			10,384			5,462
Non-GAAP provision for income taxes	$	40,960		$	42,906		$	111,840		$	122,689
Non-GAAP effective tax rate		23.9	%		26.0	%		24.4	%		26.2	%

Conference Call Information

Stifel Financial Corp. will host its third quarter 2020 financial results conference call on Wednesday, October 28, 2020, at 9:30 a.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 (877) 876-9938 and referencing conference ID 6093315. 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, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc. 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 and Stifel Bank & Trust offer 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 website at www.stifel.com. For global disclosures, please visit www.stifel.com/investor-relations/press-releases.

Cautionary Note Regarding 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. For information about the risks and important factors that could affect the Company’s future results, financial condition and liquidity, see “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020 and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as to the date they are made. The Company 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.

Statements about the effects of the COVID-19 pandemic on the Company’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.

Summary Results of Operations (Unaudited)
	Three Months Ended													Nine Months Ended
($ in 000s, except per share amounts)	9/30/20			9/30/19		% Change			6/30/20		% Change			9/30/20		9/30/19		% Change
Revenues:
Commissions	$	172,654		$	163,920		5.3		$	177,028		(2.5	)	$	560,780	$	484,350		15.8
Principal transactions		140,883			97,847		44.0			166,017		(15.1	)		445,566		298,343		49.3
Brokerage revenues		313,537			261,767		19.8			343,045		(8.6	)		1,006,346		782,693		28.6

Advisory fees		80,842			104,847		(22.9	)		97,838		(17.4	)		254,752		292,648		(12.9	)
Capital raising		137,292			93,943		46.1			119,197		15.2			359,885		247,599		45.3
Investment banking		218,134			198,790		9.7			217,035		0.5			614,637		540,247		13.8
Asset management and service fees		230,782			217,628		6.0			198,939		16.0			667,496		624,066		7.0
Other income		20,258			8,747		131.6			21,514		(5.8	)		50,979		34,461		47.9
Operating revenues		782,711			686,932		13.9			780,533		0.3			2,339,458		1,981,467		18.1
Interest revenue		114,411			178,784		(36.0	)		128,368		(10.9	)		403,956		557,795		(27.6	)
Total revenues		897,122			865,716		3.6			908,901		(1.3	)		2,743,414		2,539,262		8.0
Interest expense		13,822			44,144		(68.7	)		13,084		5.6			51,263		146,483		(65.0	)
Net revenues		883,300			821,572		7.5			895,817		(1.4	)		2,692,151		2,392,779		12.5

Non-interest expenses:
Compensation and benefits		533,638			486,160		9.8			547,174		(2.5	)		1,657,991		1,411,135		17.5
Occupancy and equipment rental		68,598			58,649		17.0			66,264		3.5			200,935		178,566		12.5
Communication and office supplies		40,123			36,817		9.0			43,046		(6.8	)		124,293		107,583		15.5
Commissions and floor brokerage		13,254			10,542		25.7			15,177		(12.7	)		43,273		32,506		33.1
Provision for credit losses		(1,353	)		929	n/m				19,210	n/m				33,925		5,565		509.6
Other operating expenses		70,647			77,721		(9.1	)		61,986		14.0			215,275		220,879		(2.5	)
Total non-interest expenses		724,907			670,818		8.1			752,857		(3.7	)		2,275,692		1,956,234		16.3
Income before income taxes		158,393			150,754		5.1			142,960		10.8			416,459		436,545		(4.6	)
Provision for income taxes		37,866			40,632		(6.8	)		35,073		8.0			101,456		117,227		(13.5	)
Net income		120,527			110,122		9.4			107,887		11.7			315,003		319,318		(1.4	)
Net income applicable to non-controlling interests		—			708	n/m				—		—			—		1,612	n/m
Net income applicable to Stifel Financial Corp.		120,527			109,414		10.2			107,887		11.7			315,003		317,706		(0.9	)
Preferred dividends		9,897			4,844		104.3			4,843		104.4			19,584		12,476		57.0
Net income available to common shareholders	$	110,630		$	104,570		5.8		$	103,044		7.4		$	295,419	$	305,230		(3.2	)
Earnings per common share:
Basic	$	1.57		$	1.47		6.8		$	1.46		7.5		$	4.17	$	4.21		(1.0	)
Diluted	$	1.46		$	1.34		9.0		$	1.39		5.0		$	3.90	$	3.87		0.8

Cash dividends declared per common share	$	0.17		$	0.15		13.3		$	0.17		—		$	0.51	$	0.45		13.3

Weighted average number of common shares outstanding:
Basic		70,627			71,197		(0.8	)		70,527		0.1			70,814		72,512		(2.3	)
Diluted		75,850			78,144		(2.9	)		74,387		2.0			75,712		78,826		(4.0	)

Summary Segment Results (Unaudited)
	Three Months Ended															Nine Months Ended
($ in 000s)	9/30/20			9/30/19			% Change			6/30/20			% Change			9/30/20			9/30/19			% Change
Net revenues:
Global Wealth Management	$	526,836		$	534,571			(1.4	)	$	505,782			4.2		$	1,615,574		$	1,577,614			2.4
Institutional Group		363,365			290,222			25.2			398,096			(8.7	)		1,093,699			822,110			33.0
Other		(6,901	)		(3,221	)	n/m				(8,061	)	n/m				(17,122	)		(6,945	)	n/m
Total net revenues	$	883,300		$	821,572			7.5		$	895,817			(1.4	)	$	2,692,151		$	2,392,779			12.5

Operating expenses:
Global Wealth Management	$	347,906		$	331,748			4.9		$	349,457			(0.4	)	$	1,086,152		$	987,949			9.9
Institutional Group		286,524			241,599			18.6			315,047			(9.1	)		892,069			701,981			27.1
Other		90,477			97,471			(7.2	)		88,353			2.4			297,471			266,304			11.7
Total operating expenses	$	724,907		$	670,818			8.1		$	752,857			(3.7	)	$	2,275,692		$	1,956,234			16.3

Operating contribution:
Global Wealth Management	$	178,930		$	202,823			(11.8	)	$	156,325			14.5		$	529,422		$	589,665			(10.2	)
Institutional Group		76,841			48,623			58.0			83,049			(7.5	)		201,630			120,129			67.8
Other		(97,378	)		(100,692	)		(3.3	)		(96,414	)		1.0			(314,593	)		(273,249	)		15.1
Income before income taxes	$	158,393		$	150,754			5.1		$	142,960			10.8		$	416,459		$	436,545			(4.6	)

As a percentage of net revenues:
Compensation and benefits
Global Wealth Management		52.7			49.0						51.1						51.7			48.9
Institutional Group		58.0			59.1						60.6						60.2			59.2
Non-comp. operating expenses
Global Wealth Management		13.3			13.1						18.0						15.5			13.7
Institutional Group		20.9			24.1						18.5						21.4			26.2
Income before income taxes
Global Wealth Management		34.0			37.9						30.9						32.8			37.4
Institutional Group		21.1			16.8						20.9						18.4			14.6
Consolidated pre-tax margin		17.9			18.3						16.0						15.5			18.2

Financial metrics (unaudited):	As of and For the Three Months Ended
($ in 000s, except percentages and per share amounts)	9/30/20			9/30/19			6/30/20
Total assets	$	25,549,182		$	24,160,777		$	25,624,225
Total Stifel Financial shareholders' equity	$	4,030,687		$	3,501,715		$	3,884,060
Book value per common share ⁽⁸⁾	$	50.95		$	46.34		$	48.84
Return on common equity ⁽⁹⁾		12.8	%		13.2	%		12.6	%
Non-GAAP return on common equity ^{(2) (9)}		14.0	%		14.8	%		14.1	%
Return on tangible common equity ⁽¹⁾		20.4	%		21.1	%		20.7	%
Non-GAAP return on tangible common equity ^{(1) (2)}		22.2	%		23.7	%		23.2	%
Tier 1 common capital ratio ⁽¹⁰⁾		15.4	%		15.6	%		15.3	%
Tier 1 risk based capital ratio ⁽¹⁰⁾		19.2	%		18.1	%		19.3	%
Tier 1 leverage capital ratio ⁽¹⁰⁾		11.3	%		10.0	%		11.0	%
Pre-tax margin on net revenues		17.9	%		18.3	%		16.0	%
Non-GAAP pre-tax margin on net revenues ^{(2) (3)}		19.4	%		20.2	%		17.8	%
Effective tax rate		23.9	%		27.1	%		24.5	%
Non-GAAP effective tax rate ⁽²⁾		23.9	%		26.0	%		24.5	%

Statistical Information (unaudited):	As of and For the Three Months Ended
($ in 000s, except financial advisors and locations)	9/30/20		9/30/19		% Change			6/30/20		% Change
Financial advisors		2,177		2,097		3.8			2,138		1.8
Independent contractors		94		96		(2.1	)		94		—
Total financial advisors		2,271		2,193		3.6			2,232		1.7
Locations		451		426		5.9			447		0.9
Total client assets	$	325,159,000	$	311,819,000		4.3		$	306,235,000		6.2
Fee-based client assets	$	115,162,000	$	108,138,000		6.5		$	106,218,000		8.4
Client money market and insured product	$	20,367,000	$	14,246,000		43.0		$	18,664,000		9.1
Secured client lending ⁽¹¹⁾	$	2,783,138	$	3,299,359		(15.6	)	$	2,563,773		8.6

	Asset Management and Service Fee Break-down (unaudited)
Asset Management and Service Fee Revenues:	Three Months Ended
($ in 000s)	9/30/20			9/30/19			% Change			6/30/20			% Change
Private Client Group ⁽¹²⁾	$	190,799		$	172,124			10.8		$	164,403			16.1
Asset Management		27,539			30,650			(10.2	)		23,769			15.9
Third-party Bank Sweep Program		1,623			4,907			(66.9	)		522			210.9
Other ⁽¹³⁾		10,821			9,947			8.8			10,245			5.6
Total asset management and service fee revenues	$	230,782		$	217,628			6.0		$	198,939			16.0

Fee-based Assets:	Three Months Ended
($ in millions)	9/30/20			9/30/19			% Change			6/30/20			% Change
Private Client Group ⁽¹²⁾	$	99,374		$	85,163			16.7		$	91,360			8.8
Asset Management		27,196			33,698			(19.3	)		25,706			5.8
Elimination ⁽¹⁴⁾		(11,408	)		(10,723	)		6.4			(10,848	)		5.2
Total fee-based assets	$	115,162		$	108,138			6.5		$	106,218			8.4

Individual Program Banks	$	4,691		$	1,225			282.9		$	3,007			56.0

ROA (bps) ⁽¹⁵⁾
Private Client Group ⁽¹²⁾		83.5			85.0						81.6
Asset Management		40.5			36.4						37.0
Individual Program Banks		15.2			145.3						7.1

Consolidated Net Interest Income Analysis (Unaudited):

	Three Months Ended
	September 30, 2020								September 30, 2019							June 30, 2020
($ in millions, except percentages)	Average Balance		Interest Income/ Expense			Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense			Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	1,789.8	$	1.1			0.25	%	$	1,056.3	$	5.7		2.15	%	$	1,674.0	$	1.0			0.24	%
Financial instruments owned		801.3		2.9			1.46			1,157.8		5.7		1.96			761.7		2.9			1.50
Margin balances		872.5		5.8			2.66			1,308.3		13.3		4.08			981.5		6.4			2.59
Investments:
Asset-backed securities		4,838.7		25.3			2.09			4,367.8		42.4		3.88			4,842.0		32.6			2.70
Mortgage-backed securities		824.0		3.2			1.55			1,253.4		6.6		2.10			877.2		4.6			2.09
Corporate fixed income securities		551.8		3.5			2.50			743.7		5.7		3.06			648.9		4.2			2.59
State and municipal securities		2.4		—			1.97			34.3		0.2		2.27			12.2		0.1			2.19
Other		4.9		—			2.07			4.50		—		5.98			5.3		—			2.02
Total Investments		6,221.8		32.0			2.06			6,403.7		54.9		3.43			6,385.6		41.5			2.60
Loans:
Commercial and industrial		4,036.3		30.1			2.98			3,330.2		39.7		4.77			4,095.4		31.8			3.10
Residential real estate		3,711.2		26.1			2.81			3,003.8		23.2		3.08			3,589.2		25.6			2.85
Securities-based loans		1,787.1		9.2			2.05			1,959.3		19.9		4.06			1,789.2		9.9			2.22
Commercial real estate		400.0		3.8			3.76			377.2		5.2		5.52			402.6		4.0			3.98
Loans held for sale		460.1		2.6			2.25			209.7		1.7		3.21			486.7		3.3			2.68
Other		602.9		4.5			3.02			444.9		5.7		5.23			546.3		4.6			3.36
Total Loans		10,997.6		76.3			2.77			9,325.1		95.4		4.09			10,909.4		79.2			2.90
Other interest-bearing assets		547.7		(3.7	)		(2.69	)		678.7		3.8		2.19			476.3		(2.6	)		(2.15	)
Total interest-earning assets/interest income		21,230.7		114.4			2.16			19,929.9		178.8		3.59			21,188.5		128.4			2.42
Interest-bearing liabilities:
Short-term borrowings		—		—			—			21.0		0.1		2.63			11.4		0.1			2.83
Senior notes		1,411.8		15.4			4.37			1,016.6		11.1		4.38			1,195.0		13.1			4.38
Deposits		16,379.2		1.5			0.04			14,926.2		24.8		0.67			16,676.5		2.3			0.05
FHLB		157.1		0.5			1.31			270.1		1.1		1.70			250.8		0.7			1.09
Other interest-bearing liabilities		1,071.6		(3.6	)		(1.34	)		1,673.0		7.0		1.66			1,179.2		(3.1	)		(1.03	)
Total interest-bearing liabilities/interest expense	$	19,019.7	$	13.8			0.29	%	$	17,906.9	$	44.1		0.99	%	$	19,312.9	$	13.1			0.27	%
Net interest income/margin			$	100.6			1.90	%			$	134.7		2.70	%			$	115.3			2.18	%

Stifel Bancorp, Inc. ⁽¹⁶⁾ Net Interest Income Analysis (Unaudited):

	Three Months Ended
	September 30, 2020							September 30, 2019							June 30, 2020
($ in millions, except percentages)	Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate			Average Balance		Interest Income/ Expense		Average Interest Rate
Interest-earning assets:
Cash and federal funds sold	$	786.0	$	0.3		0.14	%	$	540.8	$	3.2		2.36	%	$	961.1	$	0.3		0.13	%
Investments		6,221.8		32.0		2.06			6,403.7		54.9		3.43			6,385.6		41.5		2.60
Loans		10,997.6		76.3		2.77			9,325.1		95.4		4.09			10,909.4		79.2		2.90
Other interest-bearing assets		42.9		0.2		2.86			46.7		0.4		3.04			46.7		0.3		2.46
Total interest-earning assets/interest income		18,048.3		108.8		2.41			16,316.3		153.9		3.77			18,302.8		121.3		2.65
Interest-bearing liabilities:
Deposits		16,379.2		1.5		0.04			14,926.2		24.8		0.67			16,676.5		2.3		0.05
FHLB		157.1		0.5		1.31			270.1		1.1		1.70			250.8		0.7		1.09
Other interest-bearing liabilities		1.5		—		6.08			1.7		0.1		6.49			1.5		—		6.71
Total interest-bearing liabilities/interest expense	$	16,537.8		2.0		0.05	%	$	15,198.0		26.0		0.68	%	$	16,928.8		3.0		0.07	%
Net interest income/margin			$	106.8		2.37	%			$	127.9		3.14	%			$	118.3		2.59	%

Stifel Bancorp, Inc. ⁽¹⁶⁾ - a component of Global Wealth Management

Selected operating data (unaudited):	Three Months Ended															Nine Months Ended
($ in 000s, except percentages)	9/30/20			9/30/19			% Change			6/30/20			% Change			9/30/20			9/30/19			% Change
Net interest income	$	106,812		$	127,942			(16.5	)	$	118,298			(9.7	)	$	358,241		$	390,220			(8.2	)
Credit loss provision/(release)		(4,731	)		929		n/m				19,210		n/m				30,547			5,565			448.9
Charge-offs		23			56			(58.9	)		150			(84.7	)		193			166			16.3
Net interest margin		2.37	%		3.14	%	(77) bps				2.59	%	(22) bps				2.67	%		3.14	%	(47) bps

Financial Metrics (unaudited):	As of
($ in 000s, except percentages)	9/30/20			9/30/19			6/30/20
Total assets	$	17,854,768		$	16,442,707		$	18,123,326
Total shareholders' equity		1,378,981			1,234,932			1,378,096
Total loans, net (includes loans held for sale)		10,932,235			9,367,233			10,923,212
Total deposits		16,400,001			14,836,646			16,302,281
Available-for-sale securities, at fair value		2,823,885			3,448,207			3,172,160
Held-to-maturity securities, at amortized cost		3,395,115			2,878,516			3,083,126
Commercial and industrial		4,080,939			3,315,706			4,149,307
Residential real estate		3,804,836			3,043,271			3,710,657
Securities-based loans		1,841,516			1,986,339			1,716,786
Commercial real estate		386,957			387,868			406,788
Loans held for sale		281,475			265,330			474,899
Stifel Bank & Trust:
Common equity tier 1 capital ratio ⁽¹⁰⁾		11.7	%		13.1	%		12.4	%
Tier 1 capital ratio ⁽¹⁰⁾		11.7	%		13.1	%		12.4	%
Total capital ratio ⁽¹⁰⁾		13.0	%		14.3	%		13.9	%
Tier 1 leverage ratio ⁽¹⁰⁾		7.2	%		7.3	%		7.2	%
Stifel Bank:
Common equity tier 1 capital ratio ⁽¹⁰⁾		18.0	%		17.9	%		18.8	%
Tier 1 capital ratio ⁽¹⁰⁾		18.0	%		17.9	%		18.8	%
Total capital ratio ⁽¹⁰⁾		19.3	%		19.1	%		20.1	%
Tier 1 leverage ratio ⁽¹⁰⁾		7.3	%		7.0	%		7.1	%

Credit Metrics:
Allowance for credit losses	$	135,275		$	91,360		$	139,949
Allowance as a percentage of retained loans		1.26	%		0.99	%		1.32	%
Net charge-offs as a percentage of average loans		0.00	%		0.00	%		0.00	%
Total nonperforming assets	$	14,615		$	18,031		$	14,602
Nonperforming assets as % of total assets		0.08	%		0.11	%		0.08	%

Global Wealth Management Summary Results of Operations (Unaudited)
	Three Months Ended												Nine Months Ended
($ in 000s)	9/30/20		9/30/19		% Change			6/30/20		% Change			9/30/20		9/30/19		% Change
Revenues:
Commissions	$	120,600	$	118,061		2.2		$	116,156		3.8		$	373,653	$	348,272		7.3
Principal transactions		42,027		42,056		(0.1	)		42,967		(2.2	)		127,976		127,427		0.4
Brokerage revenues		162,627		160,117		1.6			159,123		2.2			501,629		475,699		5.5

Asset management and service fees		230,765		217,616		6.0			198,921		16.0			667,446		624,025		7.0
Net interest		108,181		137,937		(21.6	)		121,564		(11.0	)		368,427		420,831		(12.5	)
Investment banking ⁽¹⁷⁾		8,113		9,855		(17.7	)		8,016		1.2			26,462		28,637		(7.6	)
Other income		17,150		9,046		89.6			18,158		(5.6	)		51,610		28,422		81.6
Net revenues		526,836		534,571		(1.4	)		505,782		4.2			1,615,574		1,577,614		2.4
Non-interest expenses:
Compensation and benefits		277,903		261,681		6.2			258,291		7.6			834,564		771,475		8.2
Non-compensation operating expenses		70,003		70,067		(0.1	)		91,166		(23.2	)		251,588		216,474		16.2
Total non-interest expenses		347,906		331,748		4.9			349,457		(0.4	)		1,086,152		987,949		9.9
Income before income taxes	$	178,930	$	202,823		(11.8	)	$	156,325		14.5		$	529,422	$	589,665		(10.2	)

As a percentage of net revenues:
Compensation and benefits		52.7		49.0					51.1					51.7		48.9
Non-compensation operating expenses		13.3		13.1					18.0					15.5		13.7
Income before income taxes		34.0		37.9					30.9					32.8		37.4

Institutional Group Summary Results of Operations (Unaudited)
	Three Months Ended													Nine Months Ended
($ in 000s)	9/30/20		9/30/19			% Change			6/30/20		% Change			9/30/20		9/30/19		% Change
Revenues:
Commissions	$	52,054	$	45,859			13.5		$	60,875		(14.5	)	$	187,127	$	136,078		37.5
Principal transactions		98,856		55,791			77.2			123,049		(19.7	)		317,590		170,916		85.8
Brokerage revenues		150,910		101,650			48.5			183,924		(17.9	)		504,717		306,994		64.4
Advisory fees		80,842		104,847			(22.9	)		97,838		(17.4	)		254,733		292,647		(13.0	)
Capital raising		129,179		84,088			53.6			111,181		16.2			333,442		218,963		52.3
Investment banking		210,021		188,935			11.2			209,019		0.5			588,175		511,610		15.0
Other ⁽¹⁸⁾		2,434		(363	)	n/m				5,153		(52.8	)		807		3,506		(77.0	)
Net revenues		363,365		290,222			25.2			398,096		(8.7	)		1,093,699		822,110		33.0
Non-interest expenses:
Compensation and benefits		210,754		171,534			22.9			241,420		(12.7	)		658,162		486,724		35.2
Non-compensation operating expenses		75,770		70,065			8.1			73,627		2.9			233,907		215,257		8.7
Total non-interest expenses		286,524		241,599			18.6			315,047		(9.1	)		892,069		701,981		27.1
Income before income taxes	$	76,841	$	48,623			58.0		$	83,049		(7.5	)	$	201,630	$	120,129		67.8

As a percentage of net revenues:
Compensation and benefits		58.0		59.1						60.6					60.2		59.2
Non-compensation operating expenses		20.9		24.1						18.5					21.4		26.2
Income before income taxes		21.1		16.8						20.9					18.4		14.6

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, 2020, September 30, 2019, and June 30, 2020. 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 and nine months ended September 30, 2020 and 2019, and the three months ended June 30, 2020 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)	9/30/20			9/30/19			6/30/20			9/30/20			9/30/19
GAAP net income applicable to Stifel Financial Corp.	$	120,527		$	109,414		$	107,887		$	315,003		$	317,706
Preferred dividend		9,897			4,844			4,843			19,584			12,476
Net income available to common shareholders		110,630			104,570			103,044			295,419			305,230

Non-GAAP adjustments:
Merger-related and severance ⁽¹⁹⁾		12,989			14,850			16,259			42,758			29,762
Litigation-related ⁽²⁰⁾		—			—			—			—			3,507
Provision for income taxes ⁽²¹⁾		(3,094	)		(2,274	)		(3,968	)		(10,384	)		(5,462	)
Total non-GAAP adjustments		9,895			12,576			12,291			32,374			27,807
Non-GAAP net income available to common shareholders	$	120,525		$	117,146		$	115,335		$	327,793		$	333,037

Weighted average diluted shares outstanding		75,850			78,144			74,387			75,712			78,826

GAAP earnings per diluted common share	$	1.59		$	1.40		$	1.45		$	4.16		$	4.03
Non-GAAP adjustments		0.13			0.16			0.17			0.43			0.35
Non-GAAP earnings per diluted common share	$	1.72		$	1.56		$	1.62		$	4.59		$	4.38

GAAP earnings per diluted common share available to common shareholders	$	1.46		$	1.34		$	1.39		$	3.90		$	3.87
Non-GAAP adjustments		0.13			0.16			0.16			0.43			0.35
Non-GAAP earnings per diluted common share available to common shareholders	$	1.59		$	1.50		$	1.55		$	4.33		$	4.22

Footnotes

⁽¹⁾	Annualized return on average tangible common shareholders’ equity (“ROTE”) is calculated by dividing annualized net income applicable to common shareholders by average tangible shareholders’ equity or, in the case of non-GAAP ROTE, calculated by dividing non-GAAP net income applicable to common shareholders by average tangible shareholders’ equity. Tangible common shareholders’ equity equals total Stifel Financial common shareholders’ equity less goodwill and identifiable intangible assets and the deferred taxes on goodwill and intangible assets. Average deferred taxes on goodwill and intangible assets was $49.6 million, $45.3 million, and $48.5 million, as of September 30, 2020 and 2019, and June 30, 2020, respectively. Historical periods have been restated to conform with the current period presentation.
⁽²⁾	Reconciliations of the Company’s GAAP results to these non-GAAP measures are discussed within and under “Non-GAAP Financial Measures.”
⁽³⁾	Non-GAAP pre-tax margin for the three months ended September 30, 2020 of 19.4% is calculated by adding non-GAAP adjustments of $13.0 million to our GAAP income before income taxes of $158.4 million and dividing it by non-GAAP net revenues for the quarter of $883.3 million. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”
⁽⁴⁾	Non-GAAP pre-tax margin for the nine months ended September 30, 2020 of 17.1% is calculated by adding non-GAAP adjustments of $42.8 million to our GAAP income before income taxes of $416.5 million and dividing it by non-GAAP net revenues of $2.7 billion. Reconciliations of the Company’s GAAP results to certain non-GAAP measures is discussed within and under “Non-GAAP Financial Measures.”
⁽⁵⁾	Excludes revenue included in the Other segment.
⁽⁶⁾	See further discussion of non-GAAP adjustments under “Non-GAAP Financial Measures.”
⁽⁷⁾	In the first quarter of 2020, the Company adopted ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments,” which amends several aspects of the measurement of credit losses on certain financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (CECL) model. For further information about ASU No. 2016-13, see Note 2 “Summary of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
⁽⁸⁾	Book value per common share represents shareholders’ equity (excluding preferred stock and non-controlling interests) divided by period end common shares outstanding.
⁽⁹⁾	Annualized return on average common shareholders’ equity (“ROE”) is calculated by dividing annualized net income applicable to common shareholders by average Stifel Financial common shareholders’ equity or, in the case of non-GAAP ROE, calculated by dividing non-GAAP net income applicable to commons shareholders by average Stifel Financial common shareholders’ equity.
⁽¹⁰⁾	Capital ratios are estimates at time of the Company’s earnings release.
⁽¹¹⁾	Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at our bank subsidiaries.
⁽¹²⁾	Includes Private Client Group and Trust Business.
⁽¹³⁾	Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.
⁽¹⁴⁾	Asset management assets managed in Private Client Group or Trust accounts.
⁽¹⁵⁾	Return on assets (ROA) is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for Individual Program Banks.
⁽¹⁶⁾	Includes Stifel Bank & Trust, Stifel Bank, Stifel Trust Company, N.A, and Stifel Trust Company Delaware, N.A.
⁽¹⁷⁾	Includes capital raising and advisory fees.
⁽¹⁸⁾	Includes net interest, asset management and service fees, and other income.
⁽¹⁹⁾	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.
⁽²⁰⁾	Primarily related to costs associated with Company’s legal matters.
⁽²¹⁾	See details of non-GAAP adjustments under “Provision for Income Taxes.”

Media Contact: Neil Shapiro (212) 271-3447
Investor Contact: Joel Jeffrey (212) 271-3610
www.stifel.com/investor-relations

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