Stifel Reports Second Quarter 2013 Financial Results Record Quarterly Revenues

Marketwired

ST. LOUIS, MO--(Marketwired - Aug 8, 2013) - Stifel Financial Corp. (NYSE: SF)

Financial highlights for the three months ended June 30, 2013:

  • Record total revenues of $511.4 million, increased 33% compared with the year-ago quarter.
  • Investment banking revenues of $122.1 million, increased 81% compared with the year-ago quarter.
  • Non-GAAP net income of $44.4 million, or $0.60 per diluted share.
  • Net income of $29.4 million, or $0.40 per diluted share.

Financial highlights for the six months ended June 30, 2013:

  • Record total revenues of $964.7 million, increased 22% compared with the year-ago period.
  • Non-GAAP net income of $84.2 million, or $1.18 per diluted share.
  • Net income of $44.1 million, or $0.62 per diluted share.

Stifel Financial Corp. (NYSE: SF) today reported record total revenues of $511.4 million for the three months ended June 30, 2013. The Company reported non-GAAP net income of $44.4 million, or $0.60 per diluted share. On a GAAP basis, the Company reported net income of $29.4 million, or $0.40 per diluted share for the three months ended June 30, 2013, compared with net income of $26.1 million, or $0.42 per diluted share, on total revenues of $384.3 million for the second quarter of 2012. The Company reported non-GAAP net income of $39.9 million, or $0.58 per diluted share, on total revenues of $453.2 million for the three months ended March 31, 2013. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

For the six months ended June 30, 2013, the Company reported record total revenues of $964.7 million. The Company reported non-GAAP net income of $84.2 million, or $1.18 per diluted share. On a GAAP, basis, the Company reported net income of $44.1 million, or $0.62 per diluted share for the six months ended June 30, 2013, compared with net income of $60.9 million, or $0.97 per diluted share, on total revenues of $793.6 million for the six months ended June 30, 2012. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

"We are pleased to announce record revenues for the second quarter and for the first six months of 2013 in both the Global Wealth Management and the Institutional Group, especially against the challenging market conditions in the quarter. We are very encouraged with our investment banking results, which demonstrate the breadth of our capabilities. The merger with KBW continues to exceed our expectations, and we are gaining market share in the financial institutions space," said Ronald J. Kruszewski, Chairman, President and CEO of Stifel.

Kruszewski continued, "This quarter, we look forward to the contributions from the institutional fixed income sales and trading professionals who joined us from Knight Capital Group."

Summary Results of Operations (Unaudited)

    Three Months Ended   Six Months Ended  
(in 000s)   6/30/13   6/30/12   % Change     3/31/13   % Change   6/30/13   6/30/12   % Change  
  Total revenues   $ 511,421   $ 384,264   33.1     $ 453,240   12.8   $ 964,661   $ 793,607   21.6  
  Net revenues   $ 498,736   $ 374,407   33.2     $ 441,780   12.9   $ 940,516   $ 774,740   21.4  
  Net income   $ 29,435   $ 26,136   12.6     $ 14,619   101.3   $ 44,054   $ 60,909   (27.7 )
  Non-GAAP net income (1)   $ 44,356   $ 26,136   69.7     $ 39,876   11.2   $ 84,240   $ 60,909   38.3  
Earnings per share:                                              
  Basic   $ 0.46   $ 0.49   (6.1 )   $ 0.24   91.7   $ 0.71   $ 1.14   (37.7 )
  Diluted   $ 0.40   $ 0.42   (4.8 )   $ 0.21   90.5   $ 0.62   $ 0.97   (36.1 )
  Non-GAAP diluted 1   $ 0.60   $ 0.42   42.9     $ 0.58   3.4   $ 1.18   $ 0.97   21.6  
Weighted average number of common shares outstanding:                      
  Basic     64,505     53,569   20.4       60,054   7.4     62,292     53,406   16.6  
  Diluted     74,090     62,678   18.2       69,189   7.1     71,627     62,700   14.2  
                                                 
                                                 
                                                 
Business Segment Results
 
Summary Segment Results (Unaudited)
    Three Months Ended   Six Months Ended  
(in 000s)   6/30/13     6/30/12     % Change   3/31/13     % Change   6/30/13     6/30/12     % Change  
Net revenues:                                                      
  Global Wealth Management   $ 282,717     $ 239,300     18.1   $ 266,957     5.9   $ 549,674     $ 486,908     12.9  
  Institutional Group     220,476       136,026     62.1     176,437     25.0     396,913       285,270     39.1  
  Other     (4,457 )     (919 )   384.9     (1,614 )   176.3     (6,071 )     2,562     (337.0 )
    $ 498,736     $ 374,407     33.2   $ 441,780     12.9   $ 940,516     $ 774,740     21.4  
Operating contribution: (2)                                                      
  Global Wealth Management   $ 78,924     $ 61,036     29.3   $ 69,499     13.6   $ 148,423     $ 129,914     14.2  
  Institutional Group     30,059       17,863     68.3     28,137     6.8     58,196       41,867     39.0  
  Other     (35,057 )     (35,025 )   0.1     (33,944 )   3.3     (69,001 )     (68,653 )   0.5  
    $ 73,926     $ 43,874     68.5   $ 63,692     16.1   $ 137,618     $ 103,128     33.4  
                                                       
                                                       

Global Wealth Management

For the quarter ended June 30, 2013, the Global Wealth Management ("GWM") segment generated pre-tax operating income of $78.9 million, compared with $61.0 million in the second quarter of 2012 and $69.5 million in the first quarter of 2013. Net revenues for the quarter were $282.7 million, compared with $239.3 million in the second quarter of 2012, and $267.0 million in the first quarter of 2013. The increase in net revenues both from the second quarter of 2012 and the first quarter of 2013 is primarily attributable to (1) an increase in commission revenues; (2) increase in investment banking revenues; (3) growth in asset management and service fees; and (4) increased net interest revenues.

  • The Private Client Group reported record net revenues of $257.3 million, a 17% increase compared with the second quarter of 2012 and a 6% increase compared with the first quarter of 2013.
  • Stifel Bank reported net revenues of $25.4 million, a 34% increase compared with the second quarter of 2012 and a 6% increase compared with the first quarter of 2013.

Institutional Group

For the quarter ended June 30, 2013, the Institutional Group segment generated pre-tax operating income of $30.1 million, compared with $17.9 million in the second quarter of 2012 and $28.1 million in the first quarter of 2013. Net revenues for the quarter were $220.5 million, compared with $136.0 million in the second quarter of 2012 and $176.4 million in the first quarter of 2013. The increase in net revenues from the second quarter of 2012 was primarily attributable to (1) an increase in advisory fees; (2) higher equity institutional brokerage revenues; (3) an increase in equity capital raising revenues; and (4) higher fixed income institutional brokerage revenues. The increase in net revenues from the first quarter of 2013 was primarily attributable to (1) an increase in advisory fees; (2) higher equity capital raising revenues; and (3) an increase in equity institutional brokerage revenues, offset by (1) lower fixed income institutional brokerage revenues; and (2) a decline in fixed income capital raising revenues. Net revenue growth, both year-over-year and sequentially, is attributable to the acquisitions of KBW and, to a lesser extent, Miller Buckfire.

Institutional brokerage revenues were $107.7 million, a 43% increase compared with the second quarter of 2012 and an 11% increase compared with the first quarter of 2013.

  • Equity brokerage revenues were $66.8 million, a 74% increase compared with the second quarter of 2012 and a 28% increase compared with the first quarter of 2013.
  • Fixed income brokerage revenues were $40.9 million, an 11% increase compared with the second quarter of 2012 and a 10% decrease compared with the first quarter of 2013.

Investment banking revenues were $106.8 million, an 81% increase compared with the second quarter of 2012 and a 59% increase compared with the first quarter of 2013.

  • Equity capital raising revenues were $44.6 million, a 153% increase compared with the second quarter of 2012 and an 83% increase compared with the first quarter of 2013.
  • Fixed income capital raising revenues were $14.2 million, a 4% decrease compared with the second quarter of 2012 and a 10% decrease compared with the first quarter of 2013.
  • Advisory fee revenues were $48.0 million, an 80% increase compared with the second quarter of 2012 and a 77% increase compared with the first quarter of 2013.

Consolidated Compensation and Benefits Expenses

For the quarter ended June 30, 2013, compensation and benefits expenses were $321.3 million, which included merger-related expenses of $6.0 million, compared with $239.4 million in the second quarter of 2012 and $315.7 million in the first quarter of 2013.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 63.0% in the second quarter of 2013, compared with 63.9% in the second quarter of 2012 and 63.8% in the first quarter of 2013. Transition pay, which primarily consists of amortization of upfront notes, signing bonuses and retention awards, as a percentage of net revenues was 4.2% in the second quarter of 2013, compared with 5.0% in the second quarter of 2012 and 4.7% in the first quarter of 2013.

Consolidated Non-Compensation Operating Expenses

For the quarter ended June 30, 2013, non-compensation operating expenses were $126.2 million, which included $15.0 million of merger-related expenses, compared with $91.2 million in the second quarter of 2012 and $102.7 million in the first quarter of 2013.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended June 30, 2013 was 22.2%, compared with 24.4% in the second quarter of 2012 and 21.8% in the first quarter of 2013.

Provision for Income Taxes

The effective income tax rate for the quarter ended June 30, 2013 was 43% compared with 40% in the second quarter of 2012 and 37% in the first quarter of 2013. The higher tax rate in the second quarter of 2013 was attributable to the impact of the results of our foreign subsidiaries to the income tax provision.

Statement of Financial Condition (Unaudited)

Total assets increased 38% to $8.5 billion as of June 30, 2013 from $6.1 billion as of June 30, 2012. The increase is primarily attributable to growth of Stifel Bank, the Company's bank subsidiary, which as of June 30, 2013 has grown its assets to $4.3 billion from $3.1 billion as of June 30, 2012. As of June 30, 2013, Stifel Bank's investment portfolio of $3.0 billion increased 60% from June 30, 2012, with more than 99% of the investment portfolio comprised of investment grade securities, of which more than 70% were Government-Sponsored Enterprise guaranteed MBS or AAA-rated investments. The increase in total assets from June 30, 2012 is also attributable to the acquisition of KBW that was completed in the first quarter of 2013. In addition to the net assets acquired, the Company recognized goodwill of $310.7 million, which is based on preliminary estimates and is subject to change upon the completion of the valuation. The Company's broker-dealer subsidiaries gross assets and liabilities, including trading inventory, stock loan/borrow, receivables and payables from/to brokers, dealers and clearing organizations and clients, fluctuate with business levels and overall market conditions.

Total stockholders' equity as of June 30, 2013 increased $526.1 million, or 38%, to $1.9 billion from $1.4 billion as of June 30, 2012. The increase is primarily attributable to the Company's acquisition of KBW.

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 additional measures to aid in understanding and analyzing the Company's financial results for the three and six months ended June 30, 2013. 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 investors' overall understanding of the Company's current financial performance. These non-GAAP amounts exclude compensation expense related to the granting of stock awards with no continuing service requirement issued as retention as part of the acquisition of KBW and certain compensation and non-compensation operating expenses associated with the acquisitions of KBW, Miller Buckfire and the Knight Capital Fixed Income business.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures of 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 and the same respective non-GAAP measures of the Company's financial performance should be considered together.

The following table provides details with respect to reconciling 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 on a GAAP basis for the three and six months ended June 30, 2013 to the aforementioned expenses on a non-GAAP basis for the same period.

 
Reconciliation of GAAP to Non-GAAP Earnings (Unaudited)
         
    Three Months Ended June 30, 2013   Six Months Ended June 30, 2013
(in 000s, except per share amounts)   GAAP   Merger-related     Non-GAAP   GAAP   Merger-related     Non-GAAP
Net revenues   $ 498,736   $ 1,736     $ 500,472   $ 940,516   $ 1,744     $ 942,260
                                         
Non-interest expenses:                                        
  Compensation and benefits     321,331     (6,018 )     315,313     637,058     (39,804 )     597,254
  Non-compensation operating expenses     126,207     (14,974 )     111,233     228,914     (21,526 )     207,388
    Total non-interest expenses     447,538     (20,992 )     426,546     865,972     (61,330 )     804,642
Income before income taxes     51,198     22,728       73,926     74,544     63,074       137,618
  Provision for income taxes     21,763     7,807       29,570     30,490     22,888       53,378
Net income   $ 29,435   $ 14,921     $ 44,356   $ 44,054   $ 40,186     $ 84,240
                                         
Earnings per share::                                        
  Basic   $ 0.46   $ 0.23     $ 0.69   $ 0.71   $ 0.64     $ 1.35
  Diluted   $ 0.40   $ 0.20     $ 0.60   $ 0.62   $ 0.56     $ 1.18
                                         
As a percentage of net revenues:                                        
  Compensation and benefits     64.4             63.0     67.7             63.4
  Non-compensation operating expenses     25.3             22.2     24.4             22.0
  Income before income taxes     10.3             14.8     7.9             14.6
                                         

Conference Call Information

Stifel Financial Corp. will host its second quarter 2013 financial results conference call on Thursday, August 8, 2013, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel's Chairman, President, and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #24850913. A live audio webcast of the call, as well as a presentation highlighting the Company's results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) 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 clients are served through Stifel, Nicolaus & Company, Incorporated in the U.S., through Stifel Nicolaus Canada Inc. in Canada, through Stifel Nicolaus Europe Limited in the United Kingdom and Europe, and through Keefe, Bruyette & Woods, Inc. in the U.S. and Europe. 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. offers trust and related services. To learn more about Stifel, please visit the Company's web site at www.stifel.com.

Forward-Looking Statements

This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

 
 
 
   Summary Results of Operations (Unaudited)    
    Three Months Ended     Six Months Ended  
(in thousands, except per share amounts)   6/30/13   6/30/12   % Change     3/31/13   % Change     6/30/13   6/30/12   % Change  
Revenues:                                                
  Commissions   $ 157,168   $ 127,427   23.3     $ 148,648   5.7     $ 305,816   $ 250,730   22.0  
  Principal transactions     111,448     91,564   21.7       107,244   3.9       218,692     207,797   5.2  
  Investment banking     122,114     67,363   81.3       78,379   55.8       200,493     137,801   45.5  
  Asset management and service fees     76,088     65,311   16.5       68,912   10.4       145,000     126,129   15.0  
  Other income     11,670     5,418   115.4       20,212   (42.3 )     31,882     18,712   70.4  
    Operating revenues     478,488     357,083   34.0       423,395   13.0       901,883     741,169   21.7  
  Interest revenue     32,933     27,181   21.2       29,845   10.3       62,778     52,438   19.7  
    Total revenues     511,421     384,264   33.1       453,240   12.8       964,661     793,607   21.6  
  Interest expense     12,685     9,857   28.7       11,460   10.7       24,145     18,867   28.0  
    Net revenues     498,736     374,407   33.2       441,780   12.9       940,516     774,740   21.4  
                                                 
Non-interest expenses:                                                
  Compensation and benefits     321,331     239,374   34.2       315,727   1.8       637,058     494,078   28.9  
  Occupancy and equipment rental     41,821     32,320   29.4       34,048   22.8       75,869     63,111   20.2  
  Communications and office supplies     25,936     20,797   24.7       22,979   12.9       48,915     41,170   18.8  
  Commission and floor brokerage     10,031     7,747   29.5       9,058   10.8       19,089     15,359   24.3  
  Other operating expenses     48,419     30,295   59.8       36,622   32.2       85,041     57,894   46.9  
    Total non-interest expenses     447,538     330,533   35.4       418,434   7.0       865,972     671,612   28.9  
                                                 
Income before income taxes     51,198     43,874   16.7       23,346   119.3       74,544     103,128   (27.7 )
  Provision for income taxes     21,763     17,738   22.7       8,727   149.4       30,490     42,219   (27.8 )
Net income   $ 29,435   $ 26,136   12.6     $ 14,619   101.3     $ 44,054   $ 60,909   (27.7 )
                                                 
Earnings per share:                                                
  Basic   $ 0.46   $ 0.49   (6.1 )   $ 0.24   91.7     $ 0.71   $ 1.14   (37.7 )
  Diluted   $ 0.40   $ 0.42   (4.8 )   $ 0.21   90.5     $ 0.62   $ 0.97   (36.1 )
                                                 
Weighted average number of common shares outstanding:                                    
  Basic     64,505     53,569   20.4       60,054   7.4       62,292     53,406   16.6  
  Diluted     74,090     62,678   18.2       69,189   7.1       71,627     62,700   14.2  
                                                 
   
   
   
(in thousands, except per share, employee and location amounts)  
    6/30/13   6/30/12   % Change   3/31/13   % Change  
Statistical Information:                            
  Book value per share   $ 30.05   $ 25.63   17.2   $ 30.13   (0.3 )
  Financial advisors (1)     2,069     2,028   2.0     2,063   0.3  
  Full-time associates     5,759     5,196   10.8     5,680   1.4  
  Locations     357     332   7.5     357   -  
  Total client assets   $ 150,628,000   $ 131,026,000   15.0   $ 147,119,000   2.4  
   
   
   
Global Wealth Management Summary Results of Operations (Unaudited)  
    Three Months Ended     Six Months Ended  
(in 000s)   6/30/13   6/30/12   % Change   3/31/13   % Change     6/30/13   6/30/12   % Change  
Revenues:                                              
  Commissions   $ 104,576   $ 88,417   18.3   $ 102,086   2.4     $ 206,662   $ 179,437   15.2  
  Principal transactions     56,313     55,058   2.3     56,307   -       112,620     113,439   (0.7 )
  Asset management and service fees     75,976     65,169   16.6     68,934   10.2       144,910     125,755   15.2  
  Net interest     24,505     18,227   34.5     21,486   14.1       45,991     35,869   28.2  
  Investment banking     15,334     8,384   82.9     11,103   38.1       26,437     20,786   27.2  
  Other income     6,013     4,045   48.6     7,041   (14.6 )     13,054     11,622   12.3  
    Net revenues     282,717     239,300   18.1     266,957   5.9       549,674     486,908   12.9  
Non-interest expenses:                                              
  Compensation and benefits     163,156     140,629   16.0     157,596   3.5       320,752     283,980   12.9  
  Non-compensation operating expenses     40,637     37,635   8.0     39,862   1.9       80,499     73,014   10.3  
    Total non-interest expenses     203,793     178,264   14.3     197,458   3.2       401,251     356,994   12.4  
Income before income taxes   $ 78,924   $ 61,036   29.3   $ 69,499   13.6     $ 148,423   $ 129,914   14.2  
                                               
As a percentage of net revenues:                                              
  Compensation and benefits     57.7     58.8         59.0           58.4     58.3      
  Non-compensation operating expenses     14.4     15.7         15.0           14.6     15.0      
  Income before income taxes     27.9     25.5         26.0           27.0     26.7      
                       
                       
                       
                       
Stifel Bank & Trust (Unaudited)  
Key Statistical Information  
(in 000s, except percentages)   6/30/13   6/30/12   % Change   3/31/13   % Change  
Other information:                            
  Assets   $ 4,306,447   $ 3,052,867   41.1   $ 3,872,677   11.2  
  Investment securities     2,956,073     1,844,875   60.2     2,440,146   21.1  
  Retained loans, net     983,788     709,079   38.7     886,597   11.0  
  Loans held for sale     152,246     117,166   29.9     165,698   (8.1 )
  Deposits     4,007,050     2,776,684   44.3     3,556,568   12.7  
                               
  Allowance as a percentage of loans     1.10%     0.88%         1.01%      
  Non-performing assets as a percentage of total assets     0.03%     0.08%         0.04%      
                             
 
 
 
Institutional Group Summary Results of Operations (Unaudited)
    Three Months Ended     Six Months Ended
(in 000s)   6/30/13   6/30/12   % Change   3/31/13   % Change     6/30/13   6/30/12   % Change
Revenues:                                            
  Commissions   $ 52,592   $ 39,010   34.8   $ 46,562   13.0     $ 99,154   $ 71,293   39.1
  Principal transactions     55,135     36,506   51.0     50,938   8.2       106,073     94,358   12.4
                                             
  Capital raising     58,813     32,349   81.8     40,095   46.7       98,908     74,780   32.3
  Advisory fees     47,967     26,630   80.1     27,180   76.5       75,147     42,235   77.9
  Investment banking     106,780     58,979   81.0     67,275   58.7       174,055     117,015   48.7
  Other (2)     5,969     1,531   289.7     11,662   (48.8 )     17,631     2,604   577.0
    Net revenues     220,476     136,026   62.1     176,437   25.0       396,913     285,270   39.1
Non-interest expenses:                                            
  Compensation and benefits     136,481     85,109   60.4     107,636   26.8       244,117     179,539   36.0
  Non-compensation operating expenses     53,936     33,054   63.2     40,664   32.6       94,600     63,864   48.1
    Total non-interest expenses     190,417     118,163   61.1     148,300   28.4       338,717     243,403   39.2
Income before income taxes   $ 30,059   $ 17,863   68.3   $ 28,137   6.8     $ 58,196   $ 41,867   39.0
                                             
As a percentage of net revenues:                                            
  Compensation and benefits     61.9     62.6         61.0           61.5     62.9    
  Non-compensation operating expenses     24.5     24.3         23.1           23.8     22.4    
  Income before income taxes     13.6     13.1         15.9           14.7     14.7    
 
 
 
Institutional Group Brokerage & Investment Banking Revenues (Unaudited)
    Three Months Ended     Six Months Ended
(in 000s)   6/30/13   6/30/12   % Change     3/31/13   % Change     6/30/13   6/30/12   % Change
Institutional brokerage:                                              
  Equity   $ 66,788   $ 38,466   73.6     $ 52,000   28.4     $ 118,788   $ 82,638   43.7
  Fixed income     40,939     37,050   10.5       45,500   (10.0 )     86,439     83,013   4.1
Institutional brokerage     107,727     75,516   42.7       97,500   10.5       205,227     165,651   23.9
                                               
Investment banking:                                              
  Capital raising:                                              
    Equity     44,640     17,651   152.9       24,380   83.1       69,020     49,201   40.3
    Fixed income     14,173     14,698   (3.6 )     15,715   (9.8 )     29,888     25,579   16.8
      Capital raising     58,813     32,349   81.8       40,095   46.7       98,908     74,780   32.3
  Advisory fees:     47,967     26,630   80.1       27,180   76.5       75,147     42,235   77.9
Investment banking   $ 106,780   $ 58,979   81.0     $ 67,275   58.7     $ 174,055   $ 117,015   48.7
                                               
                                               
                                               

1 A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."

2 A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."

3 Includes 145, 156 and 148 independent contractors at June 30, 2013 and 2012 and March 31, 2013, respectively.

4 Includes net interest and other income.

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Sarah Anderson
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