Investment bank and brokerage Stifel Financial Corp. (SF) on Monday reported a 48 percent surge in profit for the fourth quarter on strong revenue growth at the company's global wealth management and institutional group segments. Earnings per share for the quarter beat analysts' estimates, while revenues missed their expectations.
Global Wealth Management revenues for the quarter rose 14 percent from the year-ago period to $255.08 million. The higher revenues reflect growth in asset management and service fees due to an increase in client assets and positive gains in market performance, growth in commission revenues, higher sales credits from investment banking underwritings, and increased net interest revenues as a result of the growth of net interest-earning assets at Stifel Bank.
Total client assets at the end of the quarter were $137.86 billion, up 13 percent from $122.47 billion at the end of the year-ago period.
Meanwhile, Institutional Group revenues increased 23 percent to $165.06 million. The increase was due to higher equity and fixed income capital raising revenues, higher fixed income and equity institutional brokerage, and realized as well as unrealized gains recognized on the company's investment in Knight Capital Group Inc. (KCG). These were offset by a decrease in advisory fees.
Ronald Kruszewski, Chairman, President and CEO of Stifel said, "Both segments, Global Wealth Management and Institutional Group, reflected strong underlying performance, even in light of the political and economic uncertainty in the quarter. We continue to selectively add talented professionals to expand our product offerings and gain market share."
St. Louis, Missouri-based Stifel's net income for the fourth quarter increased to $39.95 million or $0.63 per share from $27.02 million or $0.43 per share in the same period last year.
The latest quarter's results were impacted by gains recognized on the company's investment in Knight Capital Group, offset by merger-related and other unusual expenses. The after-tax impact of these items was a gain of $0.02 per share.
On average, eight analysts polled by Thomson Reuters expected the company to earn $0.60 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 17 percent to $417.83 million from $356.88 million in the year-ago period, but missed analysts' consensus estimate of $418.40 million.
For fiscal 2012, Stifel's net income rose to $138.57 million or $2.20 per share from $84.13 million or $1.33 per share in the previous year. Net revenues grew 14 percent to $1.61 billion from $1.42 billion in the prior year.
Analysts expected the company to earn $2.13 per share for the year on revenues of $1.60 billion.
In early November 2012, Stifel and smaller rival KBW Inc. (KBW) agreed to merge in a deal valued at $575 million.
SF closed Monday's trading at $37.61, down $0.43 or 1.13 percent on a volume of 738,646 shares.
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