Stifel Financial Corp.
) third-quarter 2013 earnings per share of 53 cents were in line
with the Zacks Consensus Estimate. The reported earnings also
compared unfavorably with 60 cents per share earned in the
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Results reflected organic growth aided by increase in revenues
and growth in loans and deposits. However, rise in expenses was a
Including some one-time items, the company reported GAAP net
income of $74.9 million, up from $37.4 million in the prior-year
Notably, on Aug 21, 2013, the company announced its intention to
discontinue the business operations of its Canadian subsidiary,
Stifel Nicolaus Canada, Inc., which is expected to be closed by
the end of the second quarter of 2014.
Quarter in Detail
Total revenue came in at $478.6 million, up 15.6% year over year.
The rise was mainly due to higher revenues in the Global Wealth
Management unit as well as the Institutional Group unit. However,
total revenue was below Zacks Consensus Estimate of $489.0
Global Wealth Management unit reported revenues of $274.7
million, up 9.5% year over year. Additionally, Institutional
Group reported revenues of $205.1 million, up 24.6% from the
prior-year quarter. The Other segment reported negative revenues
of $1.2 million compared with negative revenues of $1.4 million
in the prior-year quarter.
The company's total non-interest expense (on GAAP basis) was
$447.6 million, up 26.8% year over year. The rise was due to
increase in compensation and benefits expenses, occupancy and
equipment rental costs, communications and office supplies
expenses, commission and floor brokerage expenses as well as
other operating expenses.
As of Sep 30, 2013, total assets were $4.5 billion, up 40.9% year
over year. Net retained loans were $1.6 billion, up 42.2% from
the prior-year quarter. Further, total deposits rose 44.6% year
over year to $4.2 billion.
Stifel Financial maintained a strong capital position in the
quarter. Book value per share was $31.46, up 18.2% year over
year. The company's Tier 1 leverage capital ratio was 14.8% as of
Sep 30, 2013 and Tier 1 risk-based capital ratio was 23.2% as of
Sep 30, 2013. Stockholders' equity in the reported quarter
increased 40% to $2.0 billion from $1.4 billion as of Sep 30,
Stifel Financial's asset quality deteriorated in the quarter. The
company's allowance as a percentage of loans was 1.23%, up from
0.85% in the prior-year quarter and 1.10% in the prior quarter.
Additionally, nonperforming assets as a percentage of total
assets was 0.32%, up from 0.07% in the prior-year quarter and
0.03% in the prior quarter.
Performance of Competitors
Among other investment brokers,
) third-quarter 2013 earnings beat the Zacks Consensus Estimate
Interactive Brokers Group, Inc.
) results were in line with the same. On the other hand,
) fiscal fourth-quarter 2013 earnings (ended Sep 30) beat the
Zacks Consensus Estimate.
Stifel Financial's ability to grow revenues amid the volatile
operating environment bodes well going forward. Further, rising
trading activities will likely boost the company's financials.
Moreover, the interest rate scenario, though still low, is
expected to be stable and consequently aid the company's
profit-making activities in the medium term. However, the
stringent regulatory environment and rising expenses remain
matters of concern.
Stifel Financial currently carries a Zacks Rank #3 (Hold).