Stifel Financial Annual Report 2017

FY2017 Annual Report · Stifel Financial

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ANNUAL REPORT
2017

STATEMENT OF
COMMITMENT

TO OUR ASSOCIATES: current and future, our
commitment is to provide an entrepreneurial
environment that encourages unconfined, long-term
thinking. We seek to reward hard-working team
players that devote their energy and attention to client
needs. At work, at home, and in their communities, we
seek to be their Firm of Choice.

TO OUR CLIENTS: individual, institutional, corporate,
and municipal, our commitment is to listen and
consistently deliver innovative financial solutions.
Putting the welfare of clients and community first,
we strive to be the Advisor of Choice in the industry.
Pursuit of excellence and a desire to exceed clients’
expectations are the values that empower our
Company to achieve this status.

TO OUR SHAREHOLDERS: small and large, our
commitment is to create value and maximize your
return on investment through all market cycles.
By achieving the status of Firm of Choice for our
professionals and Advisor of Choice for our clients,
we are able to deliver value to our shareholders as
their Investment of Choice.

INVESTMENT
OF CHOICE

ADVISOR
OF CHOICE

FIRM
OF CHOICE

ABOUT STIFEL

Stifel Financial Corp. is a financial services holding
company headquartered in St. Louis, Missouri, that
conducts its banking, securities, and financial services
business through several wholly owned subsidiaries.
Stifel’s broker-dealer clients are served in the
United States through Stifel, Nicolaus & Company,
Incorporated; Keefe, Bruyette & Woods, Inc.; Miller
Buckfire & Co., LLC; Century Securities Associates, Inc.;
and Eaton Partners, LLC and in the United Kingdom and
Europe through Stifel Nicolaus Europe Limited. The
Company’s broker-dealer affiliates provide securities
brokerage, investment banking, trading, investment
advisory, and related financial services to individual
investors, professional money managers, businesses,
and municipalities. Stifel Bank & Trust offers a full range
of consumer and commercial lending solutions. Stifel
Trust Company, N.A. and Stifel Trust Company Delaware,
N.A. offer trust and related services.

FINANCIAL HIGHLIGHTS

OPERATING RESULTS:1
in thousands, except per share amounts

2013

2014

2015

2016

2017

Total Revenues

$2,019,814

$2,249,685

$2,376,993

$2,642,370

$2,996,462

Net Income Available to Common Shareholders

$172,907

$179,130

Earnings Per Diluted Common Share
Non-GAAP Net Income2
Non-GAAP Earnings Per Diluted Common Share2

$2.35

$172,191

$2.34

$2.35

$205,579

$2.69

$92,336

$1.18

$149,252

$1.90

$77,614

$1.00

$173,496

$2.14

$185,705

$323,383

$2.39

$3.99

FINANCIAL POSITION:
in thousands, except per share amounts

Total Assets

Shareholders’ Equity

2013

2014

2015

2016

2017

$9,008,870

$9,518,151

$13,326,051

$19,129,356

$21,383,953

$2,058,849

$2,322,038

$2,492,416

$2,738,408

$2,861,576

Book Value Per Common Share

$32.30

$35.00

$37.19

$38.84

$38.26

1 The operating results are from continuing operations. The results for SN Canada are classified as discontinued operations for all periods presented.
2 Non-GAAP net income and non-GAAP earnings per diluted common share represent GAAP net income and GAAP earnings per diluted common share adjusted
for: (1) acquisition-related charges other than duplicative expenses; (2) litigation-related expenses; (3) actions taken by the Company in response to the tax
legislation that was enacted in the fourth quarter of 2017 to maximize tax savings; (4) the favorable impact of the adoption of new accounting guidance during
2017 associated with stock-based compensation; (5) the revaluation of the Company’s deferred tax assets as a result of the enacted tax legislation; and (6) the
U.S. tax benefit in 2013 arising out of the Company’s investment in SN Canada. See Reconciliation of GAAP net income to non-GAAP net income on page 18.

TOTAL REVENUES
(In millions)

NON-GAAP NET INCOME2
(In millions)

340

255

170

NON-GAAP EARNINGS
PER DILUTED COMMON SHARE2
4.00

3.00

2.00

1.00

TOTAL ASSETS
(In millions)

SHAREHOLDERS’ EQUITY
(In millions)

BOOK VALUE PER COMMON SHARE

3,000

2,250

1,500

750

40.00

30.00

20.00

10.00

3,000

2,250

1,500

750

22,000

16,500

11,000

5,500

20 YEARS OF GROWTH

1997

2017

Net Revenues

$122.8 million

$2.9 billion

Global Wealth Management

$95.0 million

$1.8 billion

Institutional Group

$24.0 million

$1.1 billion

Net Income

Total Assets

$5.7 million

$173.5 million

$315.5 million

$21.4 billion

Assets Under Management

$3.4 million

$273 billion

Share Price

Market Cap

$5.111

$59.562

$27.7 million

$4.2 billion

Stockholders’ Equity

$50.1 million

$2.9 billion

Book Value Per Share

$7.60

$38.26

1 On December 31, 1997
2 On December 29, 2017

FOOTPRINT
45

STATES

1997

STATES
+ EUROPE
2017

FINANCIAL ADVISORS

ASSOCIATES

OFFICES

262
1997

2,244
2017

855
1997

7,128
2017

39
1997

391
2017

CHAIRMAN’S LETTER

RONALD J. KRUSZEWSKI
Chairman of the Board
Chief Executive Officer

Dear Fellow Shareholders, Clients, and Associates,

Reflection. Typically, my shareholder letter reflects back over the past
year. And while this letter will certainly detail our outstanding performance
in 2017, I feel that a one-year snapshot could not sufficiently illustrate just
how far we’ve come as a firm. Therefore, I’d like to reflect not just on the
past year, but on my 20 years as CEO as well.

The only constant is change, and unquestionably, the world in
1997 was vastly different than the one in which we currently live.
For example, in 1997:

•

People explored the World Wide Web using search engines like
Alta Vista, Excite, and Lycos. Google would launch a year later.

A three-year-old online bookseller called Amazon had its initial
public offering.

A 13-year old named Mark Zuckerberg was seven years away from
creating Facebook. Twitter would come along two years later.

Steve Jobs’ Apple was on the verge of bankruptcy before Bill Gates
stepped in and made a $150 million investment in the company.

•

A company called Netflix started renting DVDs through the mail.

•

Citicorp and Travelers Group merged, creating Citigroup, which
ultimately resulted in the repeal of the Glass-Steagall Act.

A list of leading firms in our industry would include several that no
longer exist today.

As for Stifel, we’ve grown exponentially over the last 20 years. Consider
the following:

•

In 1997, Stifel generated $123 million in net revenues. Today, we’re
approaching nearly $3 billion in annual revenue, a compound annual
growth rate of 17%.

Our market cap 20 years ago totaled $28 million. Today, it’s $4.2
billion.

In 1997, we had 855 associates. Today, more than 7,100 client-focused
men and women call Stifel their Firm of Choice.

From the beginning of 1997 through the end of 2017, Stifel’s stock
price outperformed the S&P 500 nearly ten-fold, increasing 2,529%
as compared to 263% for the S&P 500.

As I reflect on the past two decades, it is clear that as much as things
have changed, the foundation upon which we have built Stifel remains
consistent: our commitment to our values. Our company embraces an
entrepreneurial spirt and a culture of meritocracy, while adhering to the
Golden Rule of treating others as one would wish to be treated. Equally
consistent has been our strategy to position ourselves to take advantage
of opportunity, and to embrace a long-term view.

Stifel’s 2017 results reflect this long-term view as we recorded our 22nd
consecutive year of record net revenues, increasing our revenue 13.5%
to over $2.9 billion. Net income under generally accepted accounting
principles (“GAAP”) was $173 million, or $2.14 per diluted share. On a non-
GAAP basis, our net income was $323 million, or $3.99 per diluted share.

These non-GAAP results exclude the impact of: 1) expenses associated
with the actions taken by Stifel to maximize tax savings in response to the
Tax Cuts and Jobs Act (“Tax Legislation”), which was enacted in the fourth
quarter of 2017; 2) merger-related expenses; 3) litigation-related expenses
associated with previously disclosed legal matters; 4) the favorable impact
to our results in the first quarter of 2017 resulting from new accounting
guidance associated with stock-based compensation adopted by our
company during 2017; and 5) the revaluation of our deferred tax assets
as a result of the enacted Tax Legislation.

Since 1997, we have made more than 25 acquisitions that helped to drive
our substantial top- and bottom-line growth. In turn, Stifel has emerged
as a leading investment bank and wealth management firm that is capable
of providing a wide array of products to both our institutional and private
clients. Having established a larger platform, we spent the last two years
focused on improving our operational efficiency through cost reductions and
further integration of our businesses. These steps, combined with our growth
in revenue, have resulted in a meaningful improvement in our non-GAAP
performance metrics. In just the past two years, our:

•

Compensation ratio improved to 61.2% vs. 64.5%;

•

Non-compensation expense ratio improved to 21.7% vs. 25.5%;

•

Pre-tax margin improved to 17.1% vs. 10%; and

•

Return on tangible equity improved to 20.1% vs. 10%.

The 2017 market environment was shaped by accommodative Federal Reserve
monetary policy, which supported higher asset values, tighter credit spreads,
and historically low levels of volatility. This environment, in turn, was positive
for our Wealth Management and Investment Banking businesses yet served
as a significant headwind for our Equity and Fixed Income Institutional Trading
businesses.

Accordingly, Global Wealth Management posted record revenue of $1.8 billion,
an increase of 17% over 2016, and achieved record profitability. Noteworthy
is the level of recurring revenue, defined as asset management fees and
net interest income, which totaled $1.1 billion or 61% of this segment’s net
revenue. Ten years ago, this ratio was 26%. Stifel Bank ended the year
with approximately $15 billion in assets while maintaining a conservative
risk profile. In addition, we announced the acquisition of Ziegler Wealth
Management, which brought us 55 financial advisors with approximately
$5 billion in client assets. I am pleased to welcome these talented associates
to Stifel.

We are pleased to report that Stifel ranked 3rd in the J.D. Power 2018 U.S. Full
Service Investor Satisfaction Study. The Study, now in its 16th year, measures
overall investor satisfaction across eight factors (in order of importance):
financial advisor, account information, investment performance, firm
interaction, product offerings, commissions and fees, information resources,
and problem resolution.

2017 RESULTS

(in thousands)

2017

TOTAL FIRM
Total Revenues

Non-GAAP Net Income

Non-GAAP EPS

$2,996,462

323,383

3.99

GLOBAL WEALTH MANAGEMENT
Net Revenues

1,822,218

Contribution

AUM

626,906

272,591,000

INSTITUTIONAL
Equity Net Revenues

Fixed Income Net Revenues

Net Revenues

Contribution

728,921

381,847

1,110,768

217,981

INSTITUTIONAL CLIENT SERVICES
Equity

199,526

Fixed Income

Total

INVESTMENT BANKING
Equity

Fixed Income

Total

Capital Raising

Advisory

214,870

414,396

513,893

212,870

726,763

366,147

360,616

(12)

(14)

(29)

(23)

Percent represents the increase/(decrease) over prior year results.

Looking forward, we believe there exists opportunity, and it is critically important, to combine digital and mobile technologies with great
relationships and human, goals-based advice. Attracting millennial investors, who will inherit the majority of the estimated $30 trillion in
generational wealth transfer, will require the seamless integration of human advice and technology. Stifel has long fostered a culture that
emphasizes the importance of the advisor-client relationship. We believe that a compelling digital and mobile experience that helps investors
organize and manage their financial affairs will be enhanced by frequent communication with an advisor in the context of a goals-based
investment strategy.

Against this backdrop, we are enhancing the client experience by investing in state-of-art technology, including;

•

Integrated eSignature Capabilities – Through this digital effort, we are redefining client interaction at Stifel and leaving the industry’s antiquated
account-based service model. This enhancement will secure and speed common client requests and make account opening streamlined and
efficient. Our Financial Advisors, in turn, will have more time for advising clients.

Mobile Technology – By embracing the ease and convenience of mobile technology, we are bringing more of Stifel’s broad capabilities directly
to clients. Through a single mobile interface, clients can closely track and understand their investments, easily connect with their Advisors,
accomplish important financial tasks, and even access the convenience of Stifel Bank.

inTYCESM – inTYCESM allows users to securely aggregate assets from multiple sources, examine them through custom visualization tools, review
research, and track markets, budgets, spending, and more. What’s more, inTYCESM offers a seamless way for advisors to better understand
individual goals and circumstances and enables them to deliver better customized advice.

Enhanced Client Reporting – We are developing a new suite of client reporting capabilities that will dramatically enhance how we present
our clients’ financial pictures and advise on their individual situations. The technology behind this enhancement is cutting edge and offers
tremendous flexibility and display capability.

We look forward to delivering all of these innovations, as we believe each will help our clients understand and see the value of the trusted advice we
precisely tailor and bring to their individual or family situations – rather than a one-size-fits-all solution.

Turning to our Institutional Group, which comprises Institutional Client Services and Investment Banking, revenues for 2017 were a record $1.1 billion
with record profitability.

Market conditions were favorable for our Wealth Management and Investment Banking businesses (which I will discuss in detail later); however,
several factors, both secular and cyclical, negatively impacted our trading revenues. Institutional trading for debt and equity recorded revenue of $414
million, down 23%. Equity brokerage revenues totaled $200 million, a decline of 14%, while fixed income brokerage revenues were $215 million,
down 29%. The factors impacting these results included:

•

Increased asset flows to passive strategies and away from active strategies;

•

Increased use of electronic execution platforms vs. high-touch trading platforms;

•

Increased regulations, primarily MIFID II;

•

Historically low volatility levels;

•

A flattening yield curve; and

•

Lower overall trading volumes.

These market conditions not only impacted institutional brokers but also weighed on our institutional clients (asset managers), resulting in further
declines in trading revenues across the brokerage industry and for Stifel in 2017. Although the operating environment remains challenging entering
2018, we will continue to adapt our business model, as we have in the past, in order to provide highly valued research and trading strategies to our
clients while maintaining our expense discipline.

Additionally, we continue to invest in research. Our Stifel and Keefe, Bruyette & Woods (KBW) franchises combine to make us the largest provider of
U.S. research. Together, we achieved the No. 1 ranking in the Thomson Reuters Analyst Awards for the second straight year. This marks our fourth
No. 1 ranking since 2010 and eleventh consecutive top 10 finish. In addition, Stifel and KBW each won one award in the Thomson Reuters Analyst
Awards in the United Kingdom/Ireland, and KBW won one award in Canada.

Although Institutional brokerage revenues have been pressured, our investments in Investment Banking and the integration of it with our brokerage
business have more than offset those declines. Investment Banking revenues increased to a record $727 million in 2017, an increase of 42% from
2016. Banking revenues were equally divided between capital-raising and advisory revenue. Capital-raising revenues increased 43% to $366 million
in 2017. Advisory revenue was $361 million, up 41% from 2016.

On the advisory front, we completed 105 M&A strategic advisory assignments, including Dassault Systems’ $402 million acquisition of Exa, Pinnacle
Financial Partners’ $1.9 billion acquisition of BNC Bancorp, and Hennessy Capital’s $702 million merger with Daseke. Stifel and our Miller Buckfire
affiliate also assisted Caesars Entertainment Operating Company in its successful emergence from bankruptcy through a unique spin-off of the
company’s assets into a newly formed REIT, VICI, a subsequent acquisition for VICI, and VICI’s $1.4 billion IPO in January 2018.

I would be remiss if I did not highlight the outstanding year for KBW, which posted its strongest annual results since we acquired it in 2013, as a focus
on deregulation in Washington benefitted financial companies and helped to drive a surge in bank mergers. In 2017, KBW advised on 10 of the 12
largest, and 25 of the top 50, bank mergers. KBW’s specialized focus on the financial sector and long-standing client relationships resulted in a surge
in advisory assignments that was a key factor to our record advisory revenue in 2017.

With respect to equity capital raising, we managed or co-managed 277 offerings, of which 148 were book-run deals. Our strength across key sectors,
including financial institutions, healthcare, and technology, continued with book-managed transactions for a number of clients, including Bluegreen
Vacations, Hurricane Energy, Luther Burbank, and Zogenix.

A HISTORY OF GROWTH – NET REVENUES, IN MILLIONS

1 7 %

C A G R

3
2
1
$

7
2
1
$

1
4
1
$

7
7
1
$

8
8
1
$

7
1
2
$

7
4
2
$

4
6
2
$

3
6
7
2 $
5
4
$

4
9
5
,
1
$

2
8
3
,
1
$

3
9
3
,
1
$

1
9
0
,
1
$

0
7
8
$

6
2
9
,
2
$

5
7
5
,
2
$

2
3
3
,
2
$

8
0
2
,
2
$

3
7
9
,
1
$

1997

1998 1999 2000 2001 2002 2003 2004

2005 2006 2007 2008 2009 2010 2011

2012

2013

2014

2015

2016

2017

$3,000

$2,500

$2,000

$1,500

$1,000

$500

In the United Kingdom, Stifel leads the market in fund-raising in investment funds, oil & gas,
and real estate. Our ability to offer both debt and equity advice tailored to the specific needs
of our clients is a key differentiator. Stifel represented Hurricane Energy in a $530 million book-
run equity and convertible note offering, which was the largest oil & gas raise on AIM ever and
the largest raise for a pre-production oil & gas company in London in the last five years.

Stifel’s debt capital raising is anchored by our Public Finance business, which is driven by both
geographic and sector diversification. For the fourth consecutive year, Stifel led the nation
in the number of municipal negotiated issues, serving as sole or senior manager for 781
transactions with a total par value of approximately $18 billion. In addition, Stifel ranked
No. 1 nationally in underwriting bonds for primary education (K-12) with 391 issues totaling
more than $8 billion, issues supporting economic development and redevelopment with 114
issues raising $3.7 billion, and issues to finance the construction or renovation of multi-family
housing projects with 68 issues raising over $1 billion across the country.

Our Institutional businesses have been recognized for excellence as well. For the third time
in five years, Stifel was named Mid-Market Equity House of the Year by Thomson Reuters’
International Financing Review.

As planned, 2017 represented a year of growth in company assets, primarily interest-earning
assets in Stifel Bank. We grew our assets by 12%, ending the year with over $21 billion.
In addition, we ended the year with a Tier 1 leverage ratio of 9.5% and risk-based capital
ratio of 19.0%. Looking forward, our future organic asset growth will be funded primarily by
retained earnings.

As we contemplate the year ahead, we believe the U.S. and global growth outlook is strong.
In early 2018, the International Monetary Fund (IMF) increased its forecast for global growth
by 0.2 percentage points to 3.9% for both 2018 and 2019, compared with growth of 3.7% in
2017, citing broad-based growth in the U.S., Europe, and Asia. In April, the IMF followed that
announcement with a further 0.2 percentage point increase in its U.S. growth estimate to 2.9%
in 2018 and 2.7% in 2019, driven by a more positive capital spending outlook associated with
the $1.5 trillion Tax Legislation. We also believe deregulation has had a positive impact on
business sentiment, further supporting investment, hiring, and growth.

The stock market historically anticipates the future, and equity prices began to sharply increase
in the third quarter of 2017 in advance of economic growth and U.S. tax legislation. By the
end of January 2018, investors had begun to assess the positive impact of these changes on
employment, consumption, and inflation, growing wary of the potential for higher interest rates
in a market for which the price-to-earnings measure of valuation was already elevated. After
peaking in late January 2018, stock market indices weakened in the first quarter. Looking out
for the balance of 2018, we anticipate measured Federal Reserve interest rate increases, strong
corporate earnings, and only moderate inflation, which collectively should support stock prices
over the course of the year.

As I mentioned earlier, these last two decades of growth have brought many changes to our
firm. But amid these changes, our core values have remained the same, and they always will.
Safeguarding the money of others as if it were our own. Providing an entrepreneurial, client-
focused culture and enduring client focus. Seizing opportunities as they present themselves.
These principles form the foundation on which we’ve made Stifel one of the nation’s leading
full-service wealth management and investment banking firms, and they will help drive our
long-term strategy in the years to come.

As always, we sincerely thank our shareholders and clients for their support, as well as our
more than 7,100 associates for their commitment to excellence.

RONALD J. KRUSZEWSKI
Chairman of the Board and Chief Executive Officer

VICTOR J. NESI
Co-President and
Director,
Institutional Group

JAMES M. ZEMYLAK
Co-President and
Chief Financial Officer

In the accompanying Chairmanʼs Letter, Ron
reflects on the past 20 years of his leadership
of Stifel. He also discusses his vision for Stifel’s
future, one driven by human advice and interaction,
enhanced by technology. As Co-Presidents, we
fully embrace this vision and are, through action
and words, driving that vision throughout the
Stifel organization.

Stifel is not a monolithic organization; we
are a collection of talented, client-focused
individuals. We are committed to fostering an
environment that recognizes their importance
and unique strengths. We have shown over the
years the benefits of combining diversity and
entrepreneurialism with a collaborative approach
to achieve outstanding results for our clients and
a rewarding workplace for our associates.

As Ron highlights, Stifel has expanded
tremendously over the last 20 years, but no
matter how far we have come, there is always
more to do. Creating a culture and a workplace
environment that is conducive to teamwork and
cross-disciplinary cooperation is a constantly
evolving opportunity. Whether through
increased gender diversity encouraged by our
recently launched firm-wide Women’s Initiative
Network, or our investments in new relationship
management technology, the ultimate goal is
the same – providing our professionals with
the best opportunity to advance and achieve
their own goals and those of our clients. In turn,
that success will accrue to benefit the entire
organization, and you, our shareholders.

WEALTH MANAGEMENT

PRIVATE CLIENT GROUP
An industry leader with a client-first, advisor-centric culture

J.D. Power ranked Stifel

3rd

in its 2018 U.S.
Full Service Investor
Satisfaction Study

Stifel has grown to become one of the nation’s largest wealth management firms, ranking No. 7 in terms of
number of financial advisors.

At the heart of our success is a culture built on respect. Respect for our clients and the financial advisors who
serve them. To that end, we foster an entrepreneurial environment for our advisors, empowering them to do
what’s best for their clients. We also provide our advisors with the tools and support to deliver outstanding
service and address even the most complex client needs.

Our client-first approach continues to pay off, as evidenced by our No. 3 ranking in the 2018 J.D. Power Full
Service Investor Satisfaction Study.

122

355

FINANCIAL ADVISORS
JOINED STIFEL

PRIVATE CLIENT GROUP
BRANCHES

$273
BILLION

IN ASSETS UNDER
MANAGEMENT

ASSET MANAGEMENT
Providing investment management and
services to individuals and institutions and
over a breadth of asset classes

Stifel Asset Management Affiliates

A Stifel Company

STIFEL BANK
Delivering a full range of lending
services, including mortgages
and securities-based lending

$15 billion in assets

STIFEL TRUST
Offering trust and fiduciary
services to clients

$4.3 billion in assets
under administration

RANK

FIRM

ADVISORS

Bank of America Merrill Lynch

17,221

Morgan Stanley Wealth Management

15,759

Wells Fargo Advisors

Raymond James

UBS

JPMorgan

Stifel

RBC Capital Markets

Oppenheimer & Co.

14,564

7,346

6,861

2,581

2,252

2,028

1,117

7th
LARGEST

FULL-SERVICE
INVESTMENT FIRM
IN THE NATION IN
NUMBER OF
FINANCIAL
ADVISORS

Source: SIFMA and publicly available information for U.S. brokerage networks as of 9/30/17. Includes full-service firms only.

INVESTMENT BANKING

For the third time in five years
Stifel was named
Mid-Market Equity
House of the Year

Stifel is the industry’s preeminent middle-market investment bank. In
addition to advising on mergers and acquisitions and raising public and
private debt and equity, we have a dedicated financial sponsors and
venture capital effort, maintaining regular dialogue and transaction flow
with private equity firms focused on Stifel’s core industry groups.

by Thomson Reuters’
International Financing Review

We provide strategic advisory services to clients in the United States through Stifel, Nicolaus & Company,
Incorporated; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Eaton Partners, LLC, and in the
United Kingdom and Europe through Stifel Nicolaus Europe Limited.

The combination of a full-service product offering and more than 400 bankers’ deep domain and product
expertise empower us to provide solutions for our clients’ evolving needs.

SINCE 2010, IN THE MIDDLE MARKET,
STIFEL INVESTMENT BANKING IS …

No. 1

IN TOTAL NUMBER
OF MANAGED
EQUITY DEALS
UNDER $1 BILLION
IN MARKET CAP1

No. 2

IN TOTAL NUMBER
OF BOOKRUN
EQUITY DEALS
UNDER $1 BILLION
IN MARKET CAP1

No. 1

IN TOTAL NUMBER
OF PREFERRED & BABY
BONDS UNDER
$200 MILLION2

No. 1

IN TOTAL NUMBER OF
M&A DEALS UNDER
$1 BILLION3

Our Capabilities Include:
● M&A/Strategic Advisory Services
● Debt and Equity Financings
● Shareholder Activism Defense
● 144As
● Leveraged Finance
● Restructuring

Deep Domain Expertise:
● Consumer & Retail
● Diversified Services
● Industrials & Natural Resources
● Financial Institutions
● Gaming, Lodging & Leisure
● Healthcare
● Real Estate
● Technology

Source: Dealogic
1 Rank-eligible SEC-registered IPOs and follow-on offerings
2 Excludes closed-end funds and trust preferreds
3 M&A Analytics

NOTABLE
TRANSACTIONS

$530,000,000

$778,400,000

Equity & Convertible
Note Offering
Joint Bookrunning
Manager
June 2017

Has Been Acquired by

Advisor to Seller
September 2017

$1,325,000,000

$288,937,500

$18,400,000,000

$105,000,000

Has Acquired

Alkali Business

Advisor to Buyer
September 2017

Follow-on Offering
Joint Bookrunning
Manager
October 2017

Chapter 11
Restructuring
Advisor to the
Ad Hoc First Lien
Noteholders of CEOC
October 2017

Initial Public Offering
Left Bookrunning
Manager
November 2017

KEEFE, BRUYETTE & WOODS (KBW)
The premier advisor on financial services industry transactions

No. 1

INSTITUTIONAL
INVESTOR:
BEST SALESFORCE
FINANCIALS CATEGORY1

No. 1

M&A ADVISOR:
MOST COMPLETED
M&A TRANSACTIONS
SINCE 20002

No. 1

CAPITAL
MARKETS TEAM:
MOST IPOS AND FOLLOW-ON
OFFERINGS SINCE 20003

No. 1

SALES FORCE:
LARGEST FINANCIAL
SERVICES SPECIALIST
SALES FORCE

MILLER BUCKFIRE
A leader in restructuring and recapitalization

THE M&A ADVISOR
$250 MILLION+
DEALS OF THE YEAR
– MATERIALS – Molycorp
– RESTRUCTURING – Aéropostale
– INDUSTRIALS – Ultrapetrol

TURNAROUND
ATLAS AWARDS
OF THE YEAR

– TURNAROUND – City of Detroit
– PRIVATE EQUITY TURNAROUND
– Molycorp

EATON PARTNERS
One of the worldʼs largest fund placement and advisory firms

– PLACED OR ARRANGED MORE THAN
$75 BILLION OF COMMITMENTS SINCE 2004

– RECEIVED 1,100 COMMITMENTS
FOR 80 ALTERNATIVE INVESTMENT
FUNDS SINCE 2004

– NAMED PLACEMENT AGENT OF THE YEAR

IN NORTH AMERICA AND ASIA

BY PRIVATE EQUITY INTERNATIONAL

– 50% OF CLIENTS COME BACK TO RAISE
SUBSEQUENT FUNDS WITH EATON

1 Source: Institutional Investor Buy-Side Survey
2 Source: SNL Financial. Data includes Banking, Insurance, Securities & Investments, and Specialty Finance sectors; excludes government-assisted
transactions.
3 Source: Dealogic. Based on SEC-registered underwritten IPOs and follow-on offerings since 2000 for financial services companies in the U.S.,
Puerto Rico, Bermuda, and Cayman Islands.

INSTITUTIONAL SERVICES

EQUITY RESEARCH
Solid, studied investment advice has been a hallmark of Stifel’s approach
since our founding in 1890.

Through continuous investment in our research platform, we now rank as
the industry’s largest provider of U.S. equity research and maintain leading
positions among our peers in a number of categories. And while our
coverage growth has been nothing short of extraordinary, it’s the quality of
our research that sets us apart from our peers.

Our talented analysts, many of whom have hands-on experience in the
industries they cover, are committed to delivering new investment ideas
and better results for our advisors and their clients.

101 analysts
across 12 sectors

Top 10 provider of
U.S. equity coverage in:

∙ Consumer & Retail
∙ Diversified Industrials
∙ Financial Services
∙ Real Estate
∙ Technology
∙ Transportation

LARGEST
U.S. EQUITY
RESEARCH
PLATFORM

● 1,558 global stocks
under coverage

● Third largest provider of

global small-cap coverage

● Largest global provider

of financials

● 14th largest provider
of global coverage

No. 1

OUT OF 161 FIRMS

IN THE 2017
THOMSON REUTERS
ANALYST AWARDS

STIFEL’S
CONSISTENT
PERFORMANCE
HAS PRODUCED

ELEVEN
CONSECUTIVE
TOP TEN
FINISHES

IN THE
THOMSON REUTERS
ANALYST AWARDS, WITH

No. 1

RANKINGS IN
2012, 2016, AND 2017

Includes firms acquired by Stifel. See www.stifel.com/research for more information on the Thomson Reuters Analyst Awards.

8.4
BILLION

SHARES TRADED
IN 2017

$500
BILLION

FIXED INCOME VOLUME
IN 2017

WORLDWIDE
PRESENCE
LONDON, GENEVA,
ZURICH, AND MADRID

INSTITUTIONAL SALES AND TRADING

FIXED INCOME

NEARLY 200 FIXED

INCOME INSTITUTIONAL
SALES PROFESSIONALS
COVERING MORE THAN

8,500
ACCOUNTS

85 TRADERS

WITH ANNUAL CLIENT
TRADE VOLUME OF

$500 BILLION

○ 45-person Fixed Income

Research and Strategy Group

○ 40+ institutional Fixed Income

offices worldwide

EQUITIES

2nd
LARGEST

EQUITY TRADING
PLATFORM
IN THE U.S. OUTSIDE OF
THE BULGE BRACKET

ACTIVE DAILY MARKET
MAKER IN MORE THAN

3,700
STOCKS

○ Relationships with more than

3,500 institutional accounts globally

○ Major liquidity provider to the largest

equity money management complexes
worldwide

○ Dedicated convertible sales, trading,

and research desk

PUBLIC FINANCE

TOP-RANKED PUBLIC
FINANCE PLATFORM
○ No. 1 ranked senior manager of negotiated

BROAD GEOGRAPHIC AND
SECTOR COVERAGE
○ 162 bankers located in 30 offices in 22 states

municipal bond issues

○ Funding capital projects and supporting
governmental and not-for-profit clients

○ Broad diversity of experiences and depth of

resources to best serve our clients

○ Dedicated quantitative resources and sector groups

Negotiated New Issues

1st Ranked by number of issues

7th Ranked by par amount

K-12 Bonds

1st Ranked by number of issues

1st Ranked by par amount

Tax Increment Bonds

1st Ranked by number of issues

1st Ranked by par amount

Development District Bonds 1st Ranked by number of issues

1st Ranked by par amount

Multi-Family Housing

1st Ranked by number of issues 2nd Ranked by par amount

Taxable New Issues

1st Ranked by number of issues 8th Ranked by par amount

RANK

FIRM

# OF
ISSUES

PAR AMOUNT
(MILLIONS)

MARKET
SHARE

Stifel

RBC

Raymond James

Piper Jaffray & Co.

D.A. Davidson

Citi

BofA Merrill Lynch

Robert W. Baird

JPMorgan

Morgan Stanley

781

526

407

397

352

350

322

275

246

205

$18,068.8

11.9%

24,298.0

11,886.6

8.0

6.2

12,653.3

Stifel Home Office:
501 North Broadway
St. Louis, Missouri 63102

6.0

T
h
e
F
a
b
r
i
c
o
f
S
o
c
i
e
t
y
–
2
0
1
7

The Fabric
of Society

Fifty High School Seniors
From Around the Country
Reflect on School, Work, and
Their Communities

4,575.6

35,767.2

41,520.2

3,023.8

28,632.6

21,209.1

(314) 342-2000
(800) 488-0970 toll-free

www.stifel.com
Stifel, Nicolaus & Company, Incorporated
Member SIPC & NYSE

5.4

5.3

4.9

4.2

3.7

3.1

STIFEL’S
NATIONAL
SCHOLARSHIP
COMPETITION AWARDS

$2,000 TO

50 HIGH SCHOOL SENIORS
WHO COMPOSE ESSAYS
REFLECTING ON THEIR
CHALLENGES AND
ACCOMPLISHMENTS.

Source: Thomson Reuters SDC (True Economics to Book) senior managed negotiated
transactions ranked by number of transactions.

20172017

STIFEL EUROPE

STIFEL EUROPE HAS RAISED
$12 BILLION FOR CLIENTS ACROSS
150 TRANSACTIONS SINCE 2014

○ Stifel has built a full-service investment bank in Europe,

focusing on the mid-market and based in London

○ Our operations are organized along sector lines and offer debt
and equity advice to both companies and institutional clients

○ The success of this strategy can be seen from Stifel Europeʼs

more than 79 transactions in our core sectors of investment
funds, oil & gas, and real estate, which have raised
$10.5 billion for our clients since 2014

IPOs

INVESTMENT FUNDS/REAL ESTATE

FUNDS RAISED
(In millions)

NUMBER OF
SECONDARY ISSUES

$8,500

9,000

6,750

4,500

2,250

FUNDS RAISED
(In millions)

$2,000

2,240

1,680

1,120

560

Figures represent since 2014

OIL & GAS

NUMBER OF
SECONDARY ISSUES

18.75

12.5

6.25

BOARD OF DIRECTORS

Ronald J. Kruszewski
Chairman of the Board
and Chief Executive Officer

Thomas W. Weisel
Co-Chairman of the Board

Kathleen Brown
Partner
Manatt, Phelps & Phillips, LLP

Michael W. Brown
Former Vice President and
Chief Financial Officer
Microsoft Corporation

John P. Dubinsky
President and Chief Executive Officer
Westmoreland Associates, LLC

Robert E. Grady
Partner
Gryphon Investors

Frederick O. Hanser
Board of Managers
Retired Vice Chairman
St. Louis Cardinals, LLC

Maura Markus
Former President and
Chief Operating Officer
Bank of the West

James M. Oates
Chairman
Hudson Castle Group, Inc.

David A. Peacock
President and Chief Operating Officer
Schnuck Markets, Inc.

Kelvin R. Westbrook
President and Chief Executive Officer
KRW Advisors, LLC

Michael J. Zimmerman
Vice Chairman
Continental Grain Company

SHAREHOLDER
INFORMATION

ANNUAL MEETING
The 2018 annual meeting of shareholders will be held at Stifel’s
headquarters, One Financial Plaza, 501 North Broadway, 2nd Floor,
St. Louis, Missouri, on Wednesday, June 6, 2018, at 9:30 a.m.

TRANSFER AGENT
The transfer agent and registrar for Stifel Financial Corp. is
Computershare Trust Company, N.A., Canton, Massachusetts.

STOCK LISTINGS
The common stock of Stifel Financial Corp. is traded on the New York Stock Exchange and Chicago Stock Exchange
under the symbol “SF.” The high/low sales prices for Stifel Financial Corp. common stock for each full quarterly
period for the calendar years are as follows:

SALES PRICE

2016

2017

CASH DIVIDENDS
2017

High

Low

High

Low

First Quarter

41.67

25.00

56.62

46.14

Second Quarter

Third Quarter

Fourth Quarter

38.52

39.96

52.88

27.33

28.49

36.71

51.07

54.07

61.47

41.93

44.44

50.94

—

0.10

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
A reconciliation of GAAP Net Income to Non-GAAP Net Income and GAAP Net Income Per Diluted Common Share,
the most directly comparable measure under GAAP, to Non-GAAP Earnings Per Diluted Common Share is included

in the table below.

GAAP net income

Preferred dividends

2013

2014

2015

2016

2017

$172,907

$179,130

$92,336

$81,520

$182,871

—

3,906

9,375

GAAP net income available to common shareholders

172,907

179,130

92,336

77,614

173,496

Tax reform, net of tax

Litigation charges, net of tax

Acquisition revenues, net of tax

Acquisition charges, net of tax

Compensation

Other non-compensation

Severance, net of tax

U.S. tax benefit 1

Non-GAAP net income

GAAP earnings per diluted common share

Adjustments

Non-GAAP earnings per diluted common share

(in thousands, except per share amounts)

—

85,426

22,667

3,095

3,513

2,367

2,681

1,251

44,193

12,149

—

(60,153)

16,111

38,356

63,718

14,879

6,825

16,193

41,692

14,930

—

6,887

—

3,847

$172,191

$205,579

$149,252

$185,705

$323,383

$2.35

(0.01)

$2.34

$2.35

0.34

$2.69

$1.18

0.72

$1.90

$1.00

1.39

$2.39

$2.14

1.85

$3.99

1 U.S. tax benefit in connection with discontinuing the operations of Stifel Nicolaus Canada, Inc. in 2013 and the favorable impact of the adoption of new
accounting guidance associated with stock-based compensation and the revaluation of the Company’s deferred tax assets as a result of the enacted
Tax Legislation in 2017.

STIFEL LOCATIONS

Public Finance

Private Client Group

Investment Banking

Institutional Equity & Fixed Income

Stifel Financial Corp. | www.stifel.com
One Financial Plaza | 501 North Broadway | St. Louis, Missouri 63102