Investment bank and brokerage Stifel Financial Corp. (SF) on Thursday reported a 58 percent decline in profit for the first quarter as merger-related expenses offset higher revenues. However, adjusted earnings per share beat analysts' expectations, while revenues missed their estimates.
Ronald Kruszewski, Chairman, President and CEO of Stifel said, "We are pleased with our performance for the quarter, which included record net revenues. While our profitability is clouded by merger-related charges, it is noteworthy that our Global Wealth Management segment posted record revenue and profitability, and our Institutional segment generated record quarterly revenue."
Global Wealth Management revenues for the quarter rose 8 percent from the year-ago period to $266.96 million. The higher revenues reflect an increase in commission revenues, growth in asset management and service fees and higher net interest revenues. These were partly offset by a decline in principal transactions revenues and lower investment banking revenues.
Total client assets at the end of the quarter were $147.12 billion, up 13 percent from $130.55 billion at the end of the year-ago period.
Meanwhile, Institutional Group revenues increased 18 percent to $176.44 million. The increase in revenues were due to higher advisory fees, realized and unrealized gains recognized on the company's investment in Knight Capital Group Inc. (KCG), higher equity institutional brokerage revenues and an increase in fixed income capital raising revenues. These were offset by a decrease in equity capital raising revenues and lower fixed income institutional brokerage revenues.
St. Louis, Missouri-based Stifel Financial's first-quarter net income was $14.62 million or $0.21 per share, down from $34.77 million or $0.55 per share in the same period last year.
The latest quarter's results included a non-cash charge of $0.28 per share related to expensing stock awards issued in connection with the acquisition of KBW Inc. (KBW), and merger-related expenses of 0.09 per share related to the previously announced acquisitions of KBW and Miller Buckfire.
In early November 2012, Stifel and smaller rival KBW agreed to merge in a deal valued at $575 million. The company recently completed the acquisition.
Adjusted net income for the quarter was $39.88 million or $0.58 per share. On average, seven analysts polled by Thomson Reuters expected the company to earn $0.57 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 10 percent to $441.78 million from $400.33 million in the year-ago period. Analysts had a consensus revenue estimate for the quarter of $450.31 million.
Total non-interest expenses rose 23 percent from the prior-year quarter to $418.43 million.
Kruszewski added, "Looking forward, we are focused on leveraging our new and established businesses to drive growth and profits across the platform. Additionally, we are on track this quarter to complete the acquisition of the U.S. institutional fixed income sales and trading team and hiring of the European team from Knight Capital Group."
SF closed Thursday's regular trading session at $34.16, down $0.11 or 0.32 percent on a volume of 352,828 shares.
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