Stifel Investor Presentation October 2013
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. Note Regarding the 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. 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 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 the overall understanding of the Company’s current financial performance.
Market Overview
Market Overview Activity Summary Second Quarter Results Volumes are in million $, except trading volumes w hich are in million shares. Data as of 6/30/2013. 2013 Q2 2013 Q1 2012 Q4 2012 Q3 2012 Q2 QoQ YoY S&P 500 1,606 1,569 1,426 1,441 1,362 2% 18% U.S. Treasury 10yr Yield 2.49% 1.85% 1.76% 1.63% 1.65% 64 bps 85 bps Equity ADV 6,594 6,372 6,084 5,981 6,917 3% -5% Corporate Bond ADV 20,285 20,736 16,347 16,364 17,147 -2% 18% U.S. ECM ($) 70,090 66,130 57,479 72,721 63,108 6% 11% U.S. ECM (#) 264 248 208 198 183 6% 44% U.S. DCM ($) 537,406 638,092 585,195 640,538 545,330 -16% -1% U.S. DCM (#) 2,255 2,418 2,236 2,448 2,491 -7% -9% Municipal Bond DCM ($) 93,171 83,481 97,126 87,670 115,009 12% -19% U.S. Announced M&A ($) 193,501 310,801 354,156 217,632 228,327 -38% -15% U.S. Announced M&A (#) 2,275 2,654 3,303 2,896 2,968 -14% -23% U.S. Completed M&A ($) 204,022 234,295 321,526 211,896 302,631 -13% -33% U.S. Completed M&A (#) 2,145 2,645 3,307 2,855 2,886 -19% -26% Equity Risk Premium Domestic Equity Flows 4
Stifel Overview
Stifel Overview Stifel Financial (NYSE: SF) Financial services firm demonstrating growth , scale and stability $2.7 billion market capitalization (1) 2012 Represented Stifel’s 17 th year of consecutive record net revenues Balanced business model Top performing financial stock over the past ten years 35% Insider ownership (2) Global Wealth Management Institutional Group Private Client Independent Research Stifel Bank & Trust Institutional Equity & Fixed Income Customer Financing Brokerage Asset Management Equity & Fixed Income Capital Raising M&A Advisory / Restructuring Largest U.S. equity research platform National presence with over 2,000 Financial Advisors Broad product portfolio & industry expertise $151 billion in total client assets (1) As of 9/25/13. (2) Insider ownership percentage includes all fully diluted shares, units outstanding, options outstanding, as well as shares owned by Stifel’s former Chairman as of 8/8/13. 6
Stifel’s Market Opportunity Stifel’s Differentiated Value Proposition: Growth, Scale, and Stability Bulge Bracket Middle Market Size / scale Size / scale Firm focus Large distribution Firm focus Good research Stability (financial & Investment Banking Growth investor access personnel) Retail Large distribution Trading Growth investor access Issues Issues Investment Banking Financial / firm stability Deleverage Retail Trading support Raise common equity Outstanding research Few with retail Changing business Trading models Headcount Large-cap focused 7
Strategy: Building the Premier Investment Bank Position Stifel to Take Advantage of Opportunities Unburdened by capital constraints Low leverage business model and conservative risk management Built the Company through 11 acquisitions since 2005; prudently evaluate all opportunities Capitalize on headwinds across the industry Select growth of high-quality talent Drive revenue synergies by leveraging the global wealth and institutional businesses 17 th Consecutive Year of Record Net Revenues $1,800 $1,613 Net Revenues ($MM) $1,600 $1,382 $1,417 $1,400 $1,200 $1,091 $1,000 $870 $763 $800 $600 $452 $400 $110 $123 $127 $141 $177.5 $177.9 $188 $217 $247 $264 $200 $87 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 8
A Growth Story… Net Revenues ($MM) (1) Core Net Income ($MM) (1) Total Equity ($MM) CAGR: 24% CAGR: 23% CAGR: 41% Financial Advisors (3) Total Client Assets ($BN) (2) Book Value Per Share (4) CAGR: 23% CAGR: 26% CAGR: 18% (1) CAGR reflects years 2006 to 2012. (2) Client assets - Includes FDIC-insured products as of 6/30 for years 2008-2013 (3) Includes Independent Contractors. (4) Book Value Per Share adjusted for April 2011 three-for-two stock split (2006-2010). 9
Building Scale… Each merger has been accretive to Stifel Retention remains high Private Client Fixed Income Sales and Revenue production has exceeded ght Knight Trading – U.S. & Europe 56 UBS Branches expectations Fixed Income Research Fixed Income October 2009 July 2013 FIG Investment Banking Private Client FIG Sales and Trading Public Finance FIG Research Seamless & efficient integration February 2013 December 2008 Bank holding company Restructuring advisory Financial holding company December 2012 Grown assets from ~ $100M to $3.2B April 2007 Private Client Fixed Income IB Capital Markets Fixed Income Sales and Trading Achieved cost savings objectives Private Client February 2007 Seamless & efficient integration October 2011 Significant enhancement to our Growth Focused Capital Markets business Investment Banking Achieved cost savings objectives Research, Sales and Trading December 2005 Achieved cost efficiencies July 2010 10
Stability Achieved Through A Balanced Business Model Balanced business model facilitates growth during volatile markets Stable GWM business is augmented by profitable and growing Institutional Group Proven ability to grow all businesses Net Revenues Operating Contribution 6 mo 2012 6 mo 2013 6 mo 2012 6 mo 2013 Note: Net revenues and operating contribution excludes the Other segment. 11 11
Strong Balance Sheet Facilitates Growth As June 30, 2013 Total Assets ($ in Billions) Total Capitalization ($ in Billions) Leverage Ratio Book Value Per Share (1) (1) Per share information adjusted for April 2011 three-for-two stock split 12
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