STIFEL FINANCIAL. Investor Presentation. November 2009

Transcription

1 STIFEL FINANCIAL Investor Presentation November 2009

2 Forward-Looking Statements This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks, assumptions and uncertainties, including statements relating to the market opportunity and future business prospects of Stifel Financial Corp., as well as Stifel, Nicolaus and Company, Inc. and its other subsidiaries (collectively, SF or the Company ). These statements can be identified by the use of the words may, will, should, could, would, plan, potential, estimate, project, believe, intend, anticipate, expect and similar expressions. In particular, these statements may refer to our goals, intentions and expectations, our business plans and growth strategies, our ability to integrate and manage our acquired businesses, estimates of our risks and future costs and benefits, and forecasted demographic and economic trends relating to our industry. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-looking statements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws. Actual results may differ materially and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ are included in the Company s annual and quarterly reports and from time to time in other reports filed by the Company with the Securities and Exchange Commission and include, among other things changes in general economic and business conditions, actions of competitors, regulatory actions, changes in legislation and technology changes. To supplement our financial statements presented in accordance with Generally Accepted Accounting Principles ( GAAP ), management uses certain non-gaap measures of financial performance and liquidity. These non-gaap measures are in addition to results prepared by the Company in accordance with GAAP, and should only be considered together with the Company s GAAP results. Page 1

3 Stifel Today LTM Net Revenues: $931mm Global Wealth Management (GWM) Capital Markets Capital Markets 48% Other 1% GWM 51% 1,900 (1) Financial Advisors in 273 offices throughout the United States Offers through Stifel Bank and Trust, lending products and services to private client customers as well as corporate clients Debt and Equity Markets Approximately 512 associates in 21 U.S. offices and 3 in Europe. Comprehensive coverage of domestic and European institutions Investment Banking and Public Finance 161 investment banking associates in 12 U.S. offices 65 public finance associates in 9 U.S. offices LTM Operating Contribution Capital Markets 58% GWM 42% (1) Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors. Locations 298 Full Time Employees 4,289 Page 2

4 We See Opportunity Stifel is well-positioned in the current market: Dislocation creating opportunity for market share gains Ability to add talented professionals Evolving regulatory framework (Stifel is already regulated by the Fed) Strong balance sheet Page 3

5 Why We Are Different Successful Creator of Shareholder Value Core Diluted EPS 5 Year CAGR of 27% (1) $1,250 $1,000 $750 $500 $250 $188 $217 $247 Growth $ in millions Net Revenues Research Coverage by Market Cap YTD 6/30/09 Net Revenues ` $264 $452 $763 $870 $963 $1,250 >2bn 47% Middle Market Focus 22% 31% <$500mm Capital Markets Diverse Product Offering 48% 52% Global Wealth Management M09 Run Annld Rate Annld National Platform with European Presence $500mm-$2bn Successful Acquirer STIFEL Former UBS Locations 298 Full Time Employees 4,289 (1) CAGR based on Core Diluted EPS from 2003 to 2008 which excludes merger-related equity compensation expenses and restructuring charges. LEGG MASON CAPITAL MARKETS RYAN BECK FIRST SERVICE BANK MILLER JOHNSON POWELL JOHNSON HANIFEN IMHOFF BUTLER WICK UBS BRANCH ACQUISITION Page 4

6 Stifel is a Growth Story Net Revenues ($MM) Core Net Income ($MM) (1) Total Equity ($MM) (3) $1,500 $1,200 $900 $600 $300 $188 $217 $247 $264 $452 $963 $870 $ M 09 Annld $1,250 Run Rate Annld $80 $64 $48 $32 $16 $3 $15 $23 $21 $40 $67 $73 $ H '08 $29 1H '09 $1,000 $750 $500 $250 $795 $593 $425 $220 $131 $155 $80 $ Q2'09 Total Client Assets ($BN) (2) Financial Advisors (2) Book Value Per Share ($) $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $16 $20 $20 $27 $35 $59 $52 $ Current 2,000 1,500 1, ,163 1,315 1, Current (1) excludes merger-related equity compensation expenses and restructuring charges. All other years reflect GAAP net income. (2) Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors. (3) Pro forma for equity offering competed September 2009 $30.00 $24.00 $18.00 $12.00 $ $9.02$10.21 $7.23 $5.91 $12.35 $18.36 $24.86 $ Q2'09 Page 5

7 Stifel s Investment in Expanding Client Capabilities Revenue ($M) $300 $250 $200 $150 $100 $50 $- Revenue Price Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Stifel s Quarterly Revenue and Stock Price Growth Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 Q1 Q2 Stock Price $60 $50 $40 $30 $20 $10 $- Capital Markets Global Wealth Management Research Coverage Victor Nesi hired as Director of Investment Banking and Co-Director of Capital Markets Hired 13 new Managing Directors over past 18 months Professionals & Support Financial Advisors, Bank Associates & Support (1) 3,178 3,000 2,000 1, January 21, 2009 Stifel research sweeps both #1 rankings in 2008 StarMine Survey May 19, 2009 Stifel research analysts win fourteen awards in FT / StarMine Analyst Survey June 4, 2009 Stifel analysts win six awards in the Wall Street Journal s Best on the Street Survey Companies Covered 1, Current 2004 Current (1) Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors Current Page 6

8 Growth The Numbers Business Units 2004 Total As of 9/30/09 % Change Since 2004 YTD YTD Net Additions Global Wealth Management Financial Advisors 621 (1) 1, % 44% 583 Branch Support 284 1, % 62% 388 Offices % 32% 66 Stifel Bank & Trust Support Associates 0 74 n/a 21% 13 Capital Markets Sales and Trading Professionals % 11% 34 Investment Banking / Analyst / Public Finance / Support % 17% 57 Infrastructure Support Associates % 34% 128 Total Associates 1,384 4, % 39% 1,203 (1) Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors. Page 7

9 Correlation between Associates and Revenue Growth 4,500 $1,400 4,000 3,500 3,000 $1,200 $1,000 2,500 $800 2,000 $600 1,500 1, $400 $ Q 09 Annld Run Rate Annld Total Associates Net Revenues (millions)

10 Significant Employee Ownership Insider (1) 40% Institutional 27% 33% Other (1) Approximate percentages include all fully diluted shares, units, options and shares owned by Stifel s former Chairman as of September 4, Page 9

11 Recent Equity Offerings Type Date Shared Issued Price Net Proceeds Secondary September-08 1,495,000 $45.00 $64.4 ATM June-09 1,000,000 $45.00 $43.9 Subtotal $108.3 Secondary September-09 1,725,000 $56.00 $91.8 Total $200.1 Page 10

12 Execution of Growth Strategy The September 2008 and June 2009 common offerings netted proceeds of $108 million Since September 1, 2008, Stifel has invested approximately $172 million of capital through both organic growth and acquisitions ( $ M ) $ 200 $ 180 $ 160 $ 140 $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $9 $ 7 6 $ 8 7 $ B utl er Wi ck UB S Or gani c Gr owth T otal Uti l i zed Organic Growth Capi tal Page 11

13 Overall Growth Strategy Expand private client footprint in the U.S. Expand institutional equity business both domestically and internationally Grow investment banking Focus on asset generation within banking operations Enhance and accelerate Stifel Bank and Trust strategy Approach acquisition opportunities with discipline Consolidation and Industry Retrenchments Drive our Growth Page 12

14 Global Wealth Management Overview Provides securities brokerage services and Stifel Bank products 1,900 Financial Advisors in 273 branch offices in 41 states and the District of Columbia at October 16, 2009* Proven organic growth and acquirer of private client business Organically grown to hire 320 advisors in 25 offices in 2009 Acquired Butler Wick & Company, Inc., adding 75 advisors in 23 offices across three states in December 2008 Acquired 56 branches from UBS Financial Services, Inc. with 322 advisors Strategy focused on recruiting experienced advisors with established client relationships and further expanding our U.S. footprint Strengths of our Brokerage Position Rank Company Headquarters RRs (1) Client Assets (2) 1 Citigroup/Smith Barney New York, NY 19,296 $1,034 2 Wells Fargo Securities St. Louis, MO 16,678 1, Merrill Lynch & Co. New York, NY 15,880 1,475 4 Edward D. Jones St. Louis, MO 10, UBS Financial Services, Inc. Weehawken, NJ 8, RBC Dain Rauscher Minneapolis, MN 2, Stifel Proforma St. Louis, MO 1, Oppenheimer New York, NY 1,395 NA 9 Raymond James Financial New York, NY 1, Morgan Keegan & Co. Memphis, TN 1,075 NA 11 Janney Montgomery Philadelphia, PA 857 NA 12 Robert Baird Milwaukee, WI 591 NA 13 Hilliard Lyons Louisville, KY 410 NA Net Revenues ($MM) Operating Contribution ($MM) Fee-Based Account Assets and # of Accounts (00 s) $800 $600 $400 $200 $187 $197 $231 $441 $471 $ M09 Annld $750 Run Rate Annld $150 $120 * Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors. (1) Source: SIFMA 2008 Year Book Retail RRs. (2) Source: Company Data, Goldman Sachs Research. $ in billions. $90 $60 $30 $48 $48 $50 $96 $98 $ M09 Annld ($B) $80 $60 $40 $20 $71.3 $48.9 $ ,177 24,988 $11.8 $ ,010 7,616 9,635 $ , /30/09 Total AUM # of Accounts 40,000 30,000 20,000 10,000 0 Page 13

15 Global Wealth Management Growth GWM Broker Growth GWM Account Growth December 2004 December December 2004 December , ,639 December 2006 December ,163 December 2006 December , ,235 December 2008 October ,315 1,900 December 2008 October ,165 * * 651, ,000 1,500 2,000 Investment Executives 0 100, , , , , , ,000 Retail Accounts Since the acquisition of Butler Wick, 717 Financial Advisors have joined Stifel, 397 through both the Butler Wick and UBS acquisitions* Stifel expects to see opportunities resulting from continued dislocation from competitors mergers * Represents total after UBS acquisition completed October 16, 2009 and Independent Contractors. December 2004 December 2005 December 2006 December 2007 December 2008 October 2009 GWM Branch Growth Retail Branches * Page 14

16 ACAT Fee Reimbursement Automated Customer Account Transfer System Qtr No. ACAT Reimbursed Fees No. ACAT Reimbursed Fees Q1 4,872 ($406,000) 15,857 ($1,384,000) Q2 7,708 (653,000) 39,151 (3,657,000) Total 12,580 ($1,059,000) 55,008 ($5,041,000) Page 15

17 Same Store Sales Commission ($ Millions) FAs Hired Prior to January 2008 $700 $600 $500 $400 $300 $200 $328 $ Financial Advisors Page 16

18 Same Store Sales Commission ($ Millions) FAs Hired Prior to January 2008 $700 $600 $500 $400 10% YOY $300 $200 $328 $296 $ Annualized Financial Advisors Page 17

19 Same Store Sales Commission ($ Millions) FAs Hired Prior to January 2008 $700 $600 1% YOY $500 $400 $300 $200 $328 $296 $332 $ Annualized 2009 Last 2 Mo Annlzd 830 Financial Advisors Page 18

20 $700 $600 Potential GWM Commission ($ Millions) $622 $500 $400 $300 $200 $100 $ Financial Advisors $ New Financial Advisors Potential 2008 Group New Hires Potential GWM Commissions Page 19

21 Stifel Bank Overview April Acquired First Service Financial Company and its wholly-owned subsidiary FirstService Bank, a St. Louis-based Missouri commercial bank Growth since acquisition Assets of $1 billion, up over 600% from $130 million at acquisition announcement Deposits of $1 billion, up over 900% from $99 million at acquisition announcement Strategy and Opportunity Maintains high asset quality: $1.9 million Non-performing loans to gross loans $1.7 million LTM losses to average loans Offer banking products within the GWM client base Establish trust services during 2010 Annualized Interest Earning Assets Current Investment Portfolio Current Loan Portfolio 40% Total: $1 Billion 14% 46% Cash $145MM Investment Securities & Cash $495MM Loans Receivable $418MM 6% 3% 8% 8% 75% Total: $495MM ABS $15MM Corporates $41MM Agencies $1MM CMBS $38MM Agency MBS $367MM MBS $32MM Muni's $1MM 14% 10% 9% 59% Total: $418MM 8% Residential Real Real Estate $51.5MM Estate Commercial Real Real Estate $36.3MM Estate Consumer Consumer.4MM Home Equity Lines of Credit $33.2 Lines of Credit Commercial Commercial $29MM Construction and and Land $1.1MM Land Stock Secured Stock LoansSecured Loans $225.8MM Page 20

22 Capital Markets Overview Provides securities brokerage, trading, research services, as well as underwriting and corporate advisory 738 associates located in 21 offices in the U.S. Opportunistically expanding talent pool Victor Nesi, Director of Investment Banking and Co-Director of Capital Markets (June 2009) William Heinzerling, Head of Fixed Income Capital Markets (May 2009) Hired 11-person sales & trading team from Bear Stearns, a four-person convertible securities team from Banc of America, and strategic hires from Wachovia, JPMorgan, Barclays and others Highlights Recognized Industry Expertise and Execution Capabilities June 4, 2009 Stifel analysts win six awards in the Wall Street Journal s Best on the Street Survey May 19, 2009 Stifel research analysts win fourteen awards in FT / StarMine Analyst Survey April 22, Stifel M&A Advisory and Corporate Finance Transactions win Deal of the Year honors March 19, 2009 Stifel Nicolaus wins Consumer M&A Deal of the Year Award January 21, 2009 Stifel research sweeps both #1 rankings in 2008 StarMine Survey Research Coverage Stats (62 senior analysts covering 898 companies across 12 industry sectors) Net Revenues ($MM) Operating Contribution ($MM) # of Employees $600 $400 $200 $56 $61 $204 $305 $390 $ M 09 Annld $500 Run Rate Annld $15 $16 $43 $61 $92 $ M09 Annld 1, /30/09 Page 21

23 Capital Markets Market Opportunity $150 billion annually with dislocation and deleveraging resulting in significant share opportunity Large Available Market Competitive Opportunity Investment Banking Revenues (1) D ebt C apital M arkets $ 14 billio n Equity C apital M arkets $ 13 billio n M o rtgages $ 54 billio n 45% 40% 35% 30% 25% Peer Avg. 38% A dviso ry $ 21 billio n 20% 15% 10% C o rpo rates $ 9 billio n Equities $ 13 billio n T reasuries & A gencies $ 30 billio n 5% 0% JMP KBW PJC RJF TWPG SF Investment Banking (% of Capital Markets Rev.) ~$50 billion annually in Investment Banking Fees (2) $100+ billion annually in Secondary Commissions Strong opportunity to grow our investment banking share Sources: Investment Banking fees per Dealogic. (1) Revenue data as of the first six months of (2) Excludes fees for restructuring services driven by accelerating default rates and maturities. Page 22

24 Run Rate Annualized Estimated Revenue Global Wealth Management $700 - $800 Capital Markets $450 - $550 Total $1,150 - $1,350 $1,250 $1,000 $750 $500 $250 $183 $211 $243 $259 $435 $743 $862 $963 $1, Q2 09 Annld GWM CM Run Rat e Annld Page 23

25 Pre-Tax Margins $1,200 20% $1,000 15% 14% 14% 15% $800 $600 10% 10% $400 $200 $452 $763 $868 $963 5% M09 Annld 0% Net Revenues (millions) *2006 through 2008 reflects CORE earnings reflects GAAP. Core Pre-Tax Margins

26 ($ in thousands) Normalized Pro Forma Net Revenues Pre-Tax Operating Contributions % of Net Rev As Reported $ 481,486 $ 48,264 10% Pro Forma Adjustments Private Client Group (PCG) Six Months ended June 30, 2009 PCG established business 22,207 9,929 PCG new business (29,445) 6,110 Bank excess liquidity 3,000 3,000 Firm overhead - 3,360 Pro Forma $ 477,248 $ 70,663 15% Note: Excludes merger-related equity compensation expenses and restructuring charges. Page 25

27 Stifel Balance Sheet $2,400 $1,800 $1,200 $ x 3.0x 2.0x 1.0x $423 $412 $382 Total Assets ($ millions) Total Capitalization ($ millions) (1) ` $842 $1,085 $1,499 $1,562 Leverage Ratio (2) $2, Q x 3.1x 2.3x 3.7x 3.7x 2.9x 2.3x 2.7x $1,000 $750 $500 $250 $25.00 $20.00 $15.00 $10.00 $5.00 $115 $135 $35 $80 $35 $100 $35 $131 $70 $155 $70 $220 $95 $425 $82 $595 $82 $ Q $5.91 $7.23 $166 $225 Book Value Per Share $9.02 $10.21 $290 $12.35 $520 $18.36 $678 $22.75 $877 $ x Q Q (1) Defined as stockholder s equity plus the trust preferred securities. Total assets at 6/30/09 with September 2009 offering proceeds. (2) Defined as assets divided by total capitalization (equity + trust preferred). 6/30/09 includes September 2009 offering proceeds. Page 26

28 Capital Structure ($ in thousands) Total Assets (1) $ 2,379,792 Stockholders' Equity (2) $ 794,502 Debentures to: Stifel Financial Capital Trust II - LIBOR plus 1.70% (fixed at 6.38% until 9/30/10), due 9/30/35 $ 35,000 Stifel Financial Capital Trust III - LIBOR plus 1.85% (fixed at 6.79% until 6/6/12), due 6/6/37 35,000 Stifel Financial Capital Trust IV - LIBOR plus 1.85% (fixed at 6.78% until 9/6/12), due 9/6/37 12,500 Total Debentures (average 6.64% per annum) $ 82,500 Total Capitalization $ 877,002 Ratios: Equity to Assets 33% Capitalization to Assets 37% Debentures to Equity 10% Leverage Ratio (3) 2.7x Equity Capitalization (4) 3.0x (1) Total assets at 6/30/09 with September 2009 offering proceeds (2) Stockholders Equity at 6/30/09 with September 2009 offering proceeds (3) Defined as assets divided by total capitalization. (4) Defined as assets divided by equity. Page 27

29 Level 3 Assets Carrying Value ($ in thousands) 9/30/09 12/31/08 Change Auction Rate Securities $ 55,786 $ 18,509 $ 37,277 Stifel Bank & Trust Investments 11,700 10,423 1,277 Trading Securities 767 4,161 (3,394) Other Investments 5,093 5,169 (76) $ 73,346 $ 38,262 $ 35,084 Percentage of Equity 9% 7% Page 28

30 Why Buy Stifel Financial (SF) Diversified well balanced business Growth story Industry dislocation provides significant growth opportunities Scalable platform Disciplined acquirer and skilled integrator Proven steward of investor capital Page 29

31 Q&A Page 30