Stifel Financial : 2020 4th Quarter Earnings

January 29, 2021

FOR IMMEDIATE RELEASE

Media Contact: Neil Shapiro [phone]

Investor Contact: Joel Jeffrey [phone]

www.stifel.com/investor-relations

STIFEL REPORTS RECORD FOURTH QUARTER AND FULL-YEAR RESULTS

• 25th consecutive year of record net revenues of $3.8 billion, an increase of 12.4% compared with 2019.
• Quarterly record net revenues of $1.1 billion, an increase of 20.0% over the third quarter of 2020.
• Record quarterly net income available to common shareholders of $180.8 million, or $1.55 per diluted common share.(1)
• Record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1)
• Record client assets of $357.4 billion, increased 8.5% compared with the year-ago quarter.
• Annualized return on average tangible common shareholders' equity(2) was 30.8%.
• Non-GAAPannualized return on average tangible common shareholders' equity(2) was 33.3%.
• Increasing quarterly dividend by approximately 32% to $0.15 per common share starting in first quarter of 2021.

ST. LOUIS, MO - Stifel Financial Corp. (NYSE: SF) today reported record net income available to common shareholders of $180.8 million, or $1.55 per diluted common share(1) on record net revenues of $1.1 billion for the three months ended December 31, 2020, compared with net income available to common shareholders of $125.8 million, or $1.08 per diluted common share,(1) on net revenues of $944.3 million for the fourth quarter of 2019.

For the three months ended December 31, 2020, the Company reported record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1) The Company's reported GAAP net income for the three months ended December 31, 2020 was primarily impacted by merger-related expenses. Details discussed below and in the "Non-GAAP Financial Matters" section.

Chairman's Comments

"Stifel's performance in 2020 was a testament to the strength of our business model as we were able to navigate market challenges and generated our 25th consecutive year of record net revenue. We entered the year expecting two of our primary growth drivers to be continued strength in net interest income and advisory revenue. However, following the pandemic outbreak, Stifel and our associates were able to successfully pivot to the subsequent changes in the market environment and we finished the year with record results from our brokerage and capital raising businesses. Our record revenue also generated record non-GAAP earnings per share of $4.56 and non-GAAP return on tangible equity of nearly 25%," stated Ronald J. Kruszewski, Chairman and Chief Executive Officer of Stifel.

Mr. Kruszewski continued, "We entered 2021 with record recruiting and investment banking pipelines, record client assets, and more than $500 million of excess capital. These factors, combined with our long history of profitable growth, drive my optimism for 2021 and beyond."

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Fourth Quarter Review

Quarterly Highlights

• Record net revenues of $1.1 billion, increased 12.2% with the year-ago quarter, and increased 20.0% sequentially.
• Record net revenues in Global Wealth Management and Institutional Group segments.
• Record net income available to common shareholders of $180.8 million, or $1.55 per diluted common share.(1)
• Record non-GAAP net income available to common shareholders of $195.1 million, or $1.67 per diluted common share.(1)

Financial Highlights (Unaudited)										Three Months Ended
																				Non-			Non-
			GAAP			GAAP	%			GAAP	%			GAAP (3)		GAAP (3)	%
($ in 000s, except per share data)		12/31/20		12/31/19			Change	9/30/20			Change			12/31/20		12/31/19			Change
Net revenues		$	1,059,910			$	944,251			12.2		$	883,300			20.0			$	1,059,883			$	944,425			12.2
Net income applicable to Stifel Financial Corp.		$	188,469			$	130,690			44.2		$	120,527			56.4			$	202,731			$	151,442			33.9
Preferred dividends			7,677				4,843			58.5			9,897			(22.4	)			7,677				4,843			58.5
Net income available to common shareholders	$	180,792			$	125,847			43.7		$	110,630			63.4		$	195,054			$	146,599			33.1
Earnings per diluted common share (1)		$	1.61			$	1.12			43.8		$	1.06			51.9			$	1.74			$	1.30			33.8
Earnings per diluted common share available to
common shareholders (1)	$	1.55		$	1.08		43.5	$	0.97		59.8		$	1.67		$	1.26		32.5
Compensation ratio			58.6	%			60.0	%					60.4	%						57.9	%			58.3	%
Non-compensation ratio			19.3	%			22.8	%					21.7	%						18.3	%			21.2	%
Pre-tax operating margin (4)			22.1	%			17.2	%					17.9	%						23.8	%			20.5	%

Net Revenues

Net revenues were a record $1.1 billion for the fourth quarter of 2020, a 12.2% increase from the fourth quarter of 2019 and a 20.0% increase from the third quarter of 2020. Net revenues, compared with the fourth quarter of 2019, reflected higher brokerage revenues, an increase in capital raising and advisory fee revenues and asset management and service fees, partially offset by a decline in net interest income. Net revenues, compared with the third quarter of 2020, reflected increased capital raising and advisory fee revenues, growth in brokerage revenues and asset management and services fees, as well as higher net interest income.

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $342.6 million, an 18.3% increase compared with the fourth quarter of 2019 and a 9.3% increase compared with the third quarter of 2020.

($ in 000s)						Three Months Ended
	12/31/20				12/31/19				% Change				9/30/20			% Change
Global Wealth Management			$	185,719		$	174,000				6.7			$	162,627			14.2
Institutional brokerage:
Equity capital markets				69,201				45,989				50.5				54,204			27.7
Fixed income capital markets				87,664				69,563	26.0				96,706			(9.3)
Total institutional brokerage				156,865				115,552				35.8				150,910			3.9
Total brokerage revenues			$	342,584			$	289,552			18.3			$	313,537			9.3

• Global Wealth Management brokerage revenues were $185.7 million, a 6.7% increase compared with the fourth quarter of 2019 and a 14.2% increase compared with the third quarter of 2020.
• Institutional equity brokerage revenues were $69.2 million, a 50.5% increase compared with the fourth quarter of 2019 and a 27.7% increase compared with the third quarter of 2020.
• Institutional fixed income brokerage revenues were $87.7 million, a 26.0% increase compared with the fourth quarter of 2019 and a 9.3% decrease compared with the third quarter of 2020.

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Investment Banking Revenues

Investment banking revenues were a record $337.7 million, a 21.8% increase compared with the fourth quarter of 2019 and a 54.8% increase compared with the third quarter of 2020.

($ in 000s)					Three Months Ended
	12/31/20			12/31/19		% Change		9/30/20			% Change
Capital raising:
Global Wealth Management			$	9,562		$	9,278		3.1		$	8,113	17.9
Equity capital markets			104,097			64,384		61.7			78,462	32.7
Fixed income capital markets				50,613			48,181		5.0			50,717			(0.2	)
Institutional Group				154,710			112,565		37.4			129,179			19.8
Total capital raising (6)				164,272			121,843		34.8			137,292			19.7
Advisory fees			173,395			155,331		11.6			80,842	114.5
Total investment banking (6)			$	337,667		$	277,174		21.8		$	218,134			54.8

• Global Wealth Management capital raising revenues were $9.6 million, a 3.1% increase compared with the fourth quarter of 2019 and a 17.9% increase compared with the third quarter of 2020.
• Institutional equity capital raising revenues were $104.1 million, a 61.7% increase compared with the fourth quarter of 2019 and a 32.7% increase compared with the third quarter of 2020.
• Institutional fixed income capital raising revenues were $50.6 million, a 5.0% increase compared with the fourth quarter of 2019 and a 0.2% decrease compared with the third quarter of 2020.
• Advisory fee revenues were $173.4 million, an 11.6% increase compared with the fourth quarter of 2019 and a 114.5% increase compared with the third quarter of 2020.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $249.9 million, an 11.6% increase compared with the fourth quarter of 2019 and an 8.3% increase compared with the third quarter of 2020. The increase from the comparative period in 2019 is primarily attributable to higher asset values and strong fee-based asset flows. Please refer to the Asset Management and Service Fee Breakdown table for additional details.

Net Interest Income

Net interest income of $105.4 million, a 22.3% decrease compared with the fourth quarter of 2019 and a 4.7% increase compared with the third quarter of 2020. The decrease from the fourth quarter of 2019 was primarily driven by the impact of lower interest rates. Please refer to the Net Interest Income Analysis table for additional details.

• Interest income was $119.9 million, a 28.3% decrease compared with the fourth quarter of 2019 and a 4.8% increase compared with the third quarter of 2020.
• Interest expense was $14.5 million, a 53.8% decrease compared with the fourth quarter of 2019 and a 5.0% increase compared with the third quarter of 2020.

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Annual Review

Annual Highlights

• Record net revenues of $3.8 billion, increased 12.4% compared with 2019.
• Record net revenues in Global Wealth Management.
• Record net revenues and pre-tax operating income in Institutional Group.
• Record net income available to common shareholders of $476.2 million, or $4.16 per diluted common share.(1)
• Record non-GAAP net income available to common shareholders of $522.8 million, or $4.56 per diluted common share.(1)

For year ended December 31, 2020, the Company reported record net income available to common shareholders of $476.2 million, or $4.16 per diluted common share(1) on record net revenues of $3.8 billion, compared with net income available to common shareholders of $431.1 million, or $3.66 per diluted common share,(1) on net revenues of $3.3 billion for the comparable in 2019.

For the year ended December 31, 2020, the Company reported non-GAAP net income available to common shareholders of $522.8 million, or $4.56 per diluted common share.(1) The Company's reported GAAP net income for the year ended December 31, 2020 was primarily impacted by merger-related expenses. Details are discussed below and in the "Non-GAAP Financial Matters" section.

Financial Highlights (Unaudited)										Year Ended
															Non-		Non-
			GAAP			GAAP	%			GAAP (3)	GAAP (3)	%
($ in 000s, except per share data)		12/31/20				12/31/19			Change			12/31/20				12/31/19			Change
Net revenues		$	3,752,061			$	3,337,030				12.4			$	3,752,213			$	3,337,204				12.4
Net income applicable to Stifel Financial Corp.	$	503,472		$	448,396			12.3		$	550,108			$	496,955			10.7
Preferred dividends			27,261				17,319				57.4				27,261				17,319				57.4
Net income available to common shareholders	$	476,211			$	431,077			10.5		$	522,847			$	479,636			9.0
Earnings per diluted common share (1)		$	4.39			$	3.80				15.5			$	4.80			$	4.22				13.7
Earnings per diluted common share available to common
shareholders (1)		$	4.16			$	3.66				13.7			$	4.56			$	4.07				12.0
Compensation ratio			60.7	%			59.3	%							59.9	%			58.3	%
Non-compensation ratio		21.9%			22.7%							21.1%			21.8%
Pre-tax operating margin (5)			17.4	%			18.0	%							19.0	%			19.9	%

Net Revenues

Net revenues were a record $3.8 billion for the year ended December 31, 2020, a 12.4% increase compared with 2019. Net revenues, compared with 2019, reflected significantly higher brokerage revenues, increased capital raising revenues, and asset management and service fees, partially offset by lower net interest income and advisory fee revenues.

Brokerage Revenues

Brokerage revenues were $1.3 billion, a 25.8% increase compared with 2019.

($ in 000s)					Year Ended
	12/31/20			12/31/19				% Change
Global Wealth Management			$	687,348		$	649,699				5.8
Institutional brokerage:
Equity capital markets				256,793			166,577				54.2
Fixed income capital markets				404,789			255,969				58.1
Total institutional brokerage				661,582			422,546				56.6
Total brokerage revenues			$	1,348,930		$	1,072,245			25.8

• Global Wealth Management brokerage revenues were $687.3 million, a 5.8% increase compared with 2019.
• Institutional equity brokerage revenues were $256.8 million, a 54.2% increase compared with 2019.
• Institutional fixed income brokerage revenues were $404.8 million, a 58.1% increase compared with 2019.

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