Stifel Financial Corp.
) reported its first-quarter 2014 net income of 69 cents per share
from continuing operations. Though earnings lagged the Zacks
Consensus Estimate of 70 cents, it compared favorably with the
prior-year quarter figure of 58 cents.
Results benefited from an improved top line and a strong capital
position. However, higher operating expense was a downside.
On a GAAP basis, Stifel Financial reported net income from
continuing operations of $48.0 million or 63 cents per share,
compared with net income of $14.6 million or 21 cents per share in
the prior-year quarter. Results for both quarters included certain
Performance in Detail
Net revenues were recorded at $546.7 million, up 24.7% year over
year. Additionally, it outpaced the Zacks Consensus Estimate of
$539.0 million. The results were driven by higher global wealth
management and institutional group revenues.
Global Wealth Management and Institutional Group segments' net
revenues increased 11.3% and 44.2%, respectively, on a
year-over-year basis. Other revenues were a negative $0.4 million
compared with negative $1.7 million in the prior-year quarter.
Stifel Financial's non-interest expenses were $468.6 million, up
12.9% from the year-ago quarter. The mounting non-interest
operating expenses was due to a rise in all the expenses including
higher compensation and benefits expenses, elevated
non-compensation operating expenses, higher occupancy and equipment
rental and other operating expenses.
Credit quality improved in the quarter. Allowance as a percentage
of loans fell to 0.94% from 1.01% in the prior-year quarter.
Moreover, non-performing assets as a percentage of total assets
declined to 0.03% from 0.04% in the preceding-year quarter.
Stifel Financial' capital position was strong during the quarter.
As of Mar 31, 2014, total assets jumped 15.0% to $9.4 billion from
$8.1 billion as of Mar 31, 2013. Book value came in at $32.09 per
share, up from $30.13 in the prior-year quarter. Stockholders'
equity increased 10.0% year over year to $2.1 billion.
As of Mar 31, 2014, the company's Tier 1 leverage capital ratio was
15.1% and Tier 1 risk-based capital ratio was 25.9%.
Stifel Financial's previously announced deal to acquire De La Rosa
& Co., a California-based public finance investment banking
boutique, was closed on Apr 3, 2014.
Concurrent to the first-quarter earnings release, the company
declared its plan to acquire Oriel Securities, the London-based
stock-broking and investment banking firm. Though the terms have
not been disclosed, the deal is expected to close by third-quarter
Stifel Financial with its solid business model and strategic
acquisitions is well poised for growth. While the sluggish economic
recovery, regulatory issues and low interest rate environment
remain headwinds for the bank, we believe that its sound capital
position, improving credit quality and robust top-line performance
will help it in the long run.
Stifel Financial currently carries a Zacks Rank #3 (Hold). Other
investment brokerage firms worth considering include
Investment Technology Group Inc.
Piper Jaffray Companies
). All of these stocks hold a Zacks Rank #1 (Strong Buy).
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