Stifel Financial Corp. September 2015
Disclaimer 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 & Company, Incorporated and its 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 and legal actions, changes in legislation, and technology changes. Use of Non-GAAP Financial Measures The Company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin and diluted earnings per share as an additional measure to aid in understanding and analyzing the Company ’ s financial results for the three and six months ended June 30, 2015. 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 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 periods 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 financial performance. 2
Stifel Overview
Stifel – Premier Investment Bank and Full-Service Investment Firm Stifel at a Glance Core Net Revenue - $2,213 million (2014) Global Wealth Management (GWM) Institutional Group (IG) Net Revenue - $1,233 million (2014) Net Revenue - $994 million (2014) Private Client Equity & Fixed Income Capital Raising Stifel Bank & Trust M&A Advisory / Restructuring Institutional Equity and Fixed Income Brokerage Margin and Securities-based Lending Independent Research Asset Management Low leverage (3.3x) (1) (2) , $2.5 billion stockholders’ equity (2) and $3.2 billion market capitalization (3) 34% Insider ownership aligns employees' interests with other shareholders (4) Over 6,900 associates (2) Balanced business mix (55% GWM / 45% IG) (2014 net revenues) National presence with over 2,800 financial advisors (2) Largest U.S. equity research platform Largest U.S. equity research platforms with 1,500 stocks under coverage (3) Broad product portfolio & industry expertise Broad investment banking and institutional sales and trading capabilities – domestic and international (1) Assets / equity (as adjusted). (2) As of 6/30/2015. (3) As of 9/15/2015. (4) Insider ownership percentage includes all fully diluted shares, units outstanding and options outstanding, as of 12/31/2014. 4
Leading broker-dealer providing wealth management and institutional services to consumers and companies Stifel’s Differentiated Value Proposition: Growth, Scale and Stability Bulge Bracket Boutique Size / scale Firm focus Large distribution Good research Size / scale Trading Growth investor access Firm focus Retail Issues Stability (financial & personnel) Issues Financial / firm stability Large distribution Lack of focus Trading support Trading Banker turnover Few with retail Outstanding research Lack of commitment Retail Research indifference Lack of growth investors Institutional Wealth Management LARGEST provider of U.S. equity research #6 Largest Retail Brokerage Network (2) Rank Firm Brokers 2 nd LARGEST Equity trading platform in the U.S. 1 Bank of America Merrill Lynch 19,417 outside of the Bulge Bracket firms (1) 2 Morgan Stanley Wealth Management 16,316 3 Wells Fargo Securities 15,212 FULL SERVICE investment banking with 4 UBS 7,119 expertise across products and industry sectors 5 Raymond James 5,700 6 Stifel 2,823 ACCESS TO top ten private client platform 7 RBC Capital Markets 2,000 8 JPMorgan 1,506 9 Oppenheimer & Co Inc 1,390 10 Janney Montgomery Scott 738 (1) Based on 2014 U.S. trading volume per Bloomberg. (2) Source: SIFMA and publicly available information for U.S. brokerage networks. Includes investment banks only. Represents Wealth Management Americas segment only. 5
Well-diversified, low risk business model with balanced retail and institutional exposure Unburdened by capital constraints Low leverage business model and conservative risk management Limited balance sheet risk Stable wealth management business is augmented by profitable and growing institutional business Drive revenue synergies by leveraging the wealth management and institutional business Net Revenues Core Operating Contribution 6M 2014 6M 2015 6M 2014 6M 2015 Balanced business model facilitates growth in all market environments Note: Net revenues and operating contribution percentages excludes the Other segment. Refer to slide 30 for additional segment information. 6 6
Demonstrated ability to grow through all market environments while maintaining solid profitability Non-GAAP Net Revenues ($MM) Non-GAAP Net Income ($MM) CAGR: 22% CAGR: 23% Financial Crisis Financial Crisis 7
Strategic Vision
Strategic Vision To build the premier wealth management and investment banking firm Global Wealth Management Institutional Private Asset Bank Equities Fixed Investment Research Client Management Banking Sales + Income Trading Sales + Trading Over 2,800 $22B in total $4.8B in assets Experienced Comprehensive Over 350 Largest financial assets funded by sales force with platform professionals research advisors in 349 managed client deposits extensive including with extensive platform with branches with through distribution research, experience over 1,400 U.S. over $200B in various capabilities strategy and across all and 250 client assets strategies DCM teams products and European industry stocks covered verticals 9
How We Look at Strategic Opportunities Strategic combinations need to be accretive to: Shareholders Expected revenue and EPS growth in a reasonable timeframe Associates Add additional capabilities and new geographies Clients Be more relevant and expand product offerings New partners Retain authority coupled with the stability of Stifel’s size and scale 10
Significant Growth 2015 1500% Barclays Wealth & 1300% 1466% Investment Management (Pending), 1100% Sterne Agee, 274% 2014 Sidoti Joint Venture, 900% De La Rosa, Leumi Partners 700% Oriel Securities, Collaboration Agreement 1919 Investment 121% 2013 500% Counsel, Acacia Bank & 2013 Merchant Capital 300% Ziegler Lotsoff 89% Knight Capital 100% Group’s Fixed 2013 (31%) Income (100%) Keefe, Bruyette Division Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Aug-13 Jul-15 & Woods 2012 Acquisition Miller Buckfire 2011 Stone & Youngberg 2010 Thomas Weisel Partners 2009 56 UBS Private Client Branches Acquired 2008 Net Revenues ($M) Butler Wick 2007 Ryan Beck Acquisition Stifel Bank & Trust 2005 Legg Mason’s Capital Markets Division Acquired As of 6/30/15. 11
Stifel to Acquire Barclays' Wealth and Investment Management, Americas A Powerful Combination of Breadth and Depth Barclays Wealth Americas brings a highly focused organization with deep, high conviction, investment capabilities Stifel brings significant breadth of product and service capabilities that are complementary to Barclays Wealth Americas This combination of depth and breadth, joined with a culture of meritocracy and entrepreneurial, client first thinking = Premier Wealth Management Franchise Unique transaction structure whereby Stifel’s investment will match the business and professionals who join the firm 12
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