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STIFEL FINANCIAL CORP (SF)·Q2 2025 Earnings Summary

Executive Summary

  • Best second quarter in company history with record second‑quarter net revenues and strong core EPS; management highlighted late‑quarter improvement after a weak April and expressed confidence for 2H25 given recruiting momentum and Institutional strength .
  • Revenue and EPS beat S&P Global consensus; CFO cited stronger investment banking (late closes), higher institutional transactional revenue, and higher NII as key upside drivers versus the Street .
  • Segment performance was balanced: Global Wealth Management delivered record 2Q revenue on higher asset management and NII; Institutional saw record fixed income transactional revenue and better pre‑tax margin YoY .
  • Near‑term catalysts: accelerating bank M&A (KBW share leadership), strongest FA recruiting quarter since 4Q15, and Q3 guidance for bank NII ($265–$275mm) with stable comp/non‑comp ratios; tax rate expected to fall to 20%–22% for FY25 .

What Went Well and What Went Wrong

  • What Went Well

    • “Best second quarter in our history” with non‑GAAP EPS of $1.71 and strong ROTCE; CEO emphasized diversified, advice‑driven model and momentum into 2H25 .
    • Street beat: revenue roughly 4% (~$50mm) above consensus on stronger IB (six end‑of‑quarter closings), higher institutional transactional revenue, and higher NII; fixed income underwriting notably above Street .
    • Record fixed income transactional revenue (+21% YoY) and stronger equity transactional revenue (+16% YoY) on higher client activity and volatility; GWM asset management and NII both up YoY .

  • What Went Wrong

    • Advisory revenue down 3% YoY; overall IB roughly flat YoY, reflecting a slow April and uneven ECM (healthcare soft) before late‑quarter recovery .
    • Expense mix headwinds: GAAP comp ratio rose to 60.3% (vs. 59.3% LY); provision for credit losses increased (specific reserves and loan growth); non‑comp ratio up YoY .
    • Non‑GAAP adjustments elevated by $27mm severance tied to European restructuring and $20mm merger‑related costs, partially offset by tax effects; management is pivoting Europe toward advisory and away from day‑to‑day trading .

Financial Results

Headline results and margin mix

MetricQ2 2024Q1 2025Q2 2025
Net Revenues ($USD Millions)$1,217.9 $1,255.5 $1,284.3
Diluted EPS (GAAP) ($)$1.41 $0.39 $1.34
Non-GAAP EPS (Diluted) ($)$1.60 $0.49 $1.71
Compensation Ratio (GAAP)59.3% 58.3% 60.3%
Non-Compensation Ratio (GAAP)22.1% 36.7% 23.1%
Pre-tax Margin (GAAP)18.6% 5.0% 16.6%

Vs S&P Global consensus (Q2 2025)

MetricActualS&P Consensus*Outcome
Net Revenues ($USD Millions)$1,284.3 $1,229.6*Beat
Non-GAAP EPS (Diluted) ($)$1.71 $1.61*Beat

Values retrieved from S&P Global.

Segment performance

SegmentQ2 2024Q1 2025Q2 2025
Global Wealth Management Net Revenues ($MM)$801.1 $850.6 $845.6
Global Wealth Management Pre-tax Net Income ($MM)$299.2 $126.4 $306.1
Global Wealth Management Pre-tax Margin37.3% 14.9% 36.2%
Institutional Group Net Revenues ($MM)$390.7 $384.9 $419.8
Institutional Group Pre-tax Net Income ($MM)$48.8 $27.4 $61.0
Institutional Group Pre-tax Margin12.5% 7.1% 14.5%

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Total Client Assets ($B)$474.1 $485.9 $516.5
Fee-based Client Assets ($B)$179.7 $189.7 $206.3
Financial Advisors Added (Quarter)n/a52 82
Consolidated Net Interest Margin3.04% 2.97% 3.10%
Stifel Bancorp Deposits ($B)$27.14 $29.64 $28.67
Effective Tax Rate (GAAP)27.1% 16.4% 27.5%
Share Repurchases ($MM)$17.6 $210.9 $83.0
Tier 1 Common Capital Ratio14.8% 14.7% 14.5%

Notes and adjustments

  • Non‑GAAP adjustments in Q2 2025 included $27.0mm severance and $20.4mm merger‑related costs; non‑GAAP comp ratio 58.0% and non‑GAAP pre‑tax margin 20.3% .
  • Institutional fixed income transactional revenue benefited from an aircraft leasing gain (~$28mm) in the quarter .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Bank Net Interest Income ($MM)Q3 2025Not quantified previously$265–$275 New/Updated
Compensation Ratio (firm-wide)Q3 2025~58% run‑rate ~58% Maintained
Non-comp Operating Ratio (firm-wide)Q3 2025~20% range (midpoint of adjusted guide) ~20% Maintained
Effective Tax RateQ3 2025~25% (implied) ~25%–26% (Q3); FY25 20%–22% Updated lower FY
Fully Diluted Shares (mm)Q3 2025n/a~110.2 New
Loans (Balance Growth)2H 2025n/a+~$1B expected in 2H25 New
Dividend (common)Q3 2025 pay date$0.46 (prior quarter) $0.46 payable Sep 16, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Bank M&A/KBW positioningQ1 2025: strong IB YoY; KBW leadership in municipals and financials; heavy legal expense weighed on margins CEO: vied on 84% of disclosed bank & thrift deal value YTD; accelerating consolidation; confident to lead/participate across sizes Improving
Investment banking mixQ1 2025: Advisory +15% YoY; equity CR +22% YoY; fixed income CR −9% YoY Advisory −3% YoY; FI CR +12% YoY; ECM −4% YoY; late‑quarter closings drove beat Stabilizing with late‑quarter recovery
AI/technologyNot highlighted in Q1 release; operational focus and legal accrual dominated CEO: deploying agent‑based models for compliance, onboarding, analytics; “amplifier” of human productivity; off‑the‑shelf scaled with training Expanding
Wealth recruiting/Net new assetsQ1 2025: added 52 FAs; record GWM revenue; margins impacted by legal accrual Strongest recruiting since 4Q15 (82 FAs); June annualized NNA ~5%; record client and fee‑based assets Improving
NII/Deposits mixQ1 2025: NIM 2.97%; deposits $29.6B; SmartRate seasonality NIM 3.10%; deposit mix shift to lower‑cost non‑wealth helped; Q3 NII guide $265–$275mm Slightly improving
Europe strategyQ1 2025: expenses elevated; international comp pressure Restructuring Europe to focus on advisory/banking; $28mm severance in Q2 Restructuring/Improving profitability focus
Macro (tariffs/volatility)Q1 call backdrop: uncertainty on tariffs/tax weighed on April; CEO referenced prior remarks Sentiment improved late‑quarter as clarity emerged; cautious on valuations/speculative pockets Improving market tone with caution

Management Commentary

  • “We achieved the best second quarter in our history, generating over $1.28 billion in net revenue and $1.71 in core EPS despite a challenging April… We are confident about the second half of the year and beyond.” — Ronald J. Kruszewski, CEO .
  • “We beat the street estimate by 4% or $50 million on stronger investment banking and transactional revenue as well as higher net interest income… six transactions closed right at the end of the quarter that were not in our forecast.” — James Marischen, CFO .
  • “We view AI… as a platform to enhance how we serve clients, manage data, and accelerate insights… AI will help us work faster and smarter, but should not replace the human side of Stifel.” — CEO .
  • “In 2025 we vied on 84% of total disclosed bank and thrift deal value… Bank M&A is accelerating… we’re well positioned.” — CEO .

Q&A Highlights

  • NII outlook: Q3 bank NII guided to $265–$275mm; 2Q NIM lift from lower cash balances, higher loan yields, lower deposit costs, and ~$4mm venture banking fees; sold ~$500mm of higher‑yielding middle‑market C&I loans (near‑term headwind) .
  • Institutional revenue quality: Fixed income transactional benefited from $28mm aircraft leasing gain; normalized fixed income run‑rate referenced ($100mm by 4Q seasonality) .
  • Capital allocation: With equity valuations back near start‑of‑year levels, tilt returns to bank growth while continuing buybacks; ~8.2mm shares remain authorized .
  • Recruiting/NNA: June annualized NNA ~5%; strongest recruiting since 4Q15 with 82 FAs; JD Power #1 for employee advisor satisfaction (3rd year) seen as recruiting advantage .
  • Europe restructuring: Pivoting toward advisory; $28mm severance taken in Q2; intent to improve equity business margins and overall Institutional pre‑tax margin toward >20% over time .

Estimates Context

Beat/miss versus S&P Global consensus

PeriodNet Revenues ($MM) Actual*Net Revenues ($MM) Consensus*EPS (Primary) Actual*EPS (Primary) Consensus*
Q4 2024$1,373.6*$1,284.8*$2.23*$1.98*
Q1 2025$1,243.4*$1,272.5*$0.49*$1.64*
Q2 2025$1,275.96*$1,229.65*$1.71*$1.61*

Values retrieved from S&P Global.

Implications: Q2’s broad‑based beat (revenue and EPS) reverses Q1’s miss and, coupled with late‑quarter deal closings and stronger transactional activity, is likely to drive estimate revisions higher for IB‑sensitive lines (advisory/underwriting) and modestly higher bank NII, while expense ratios (comp at ~58%) and non‑GAAP add‑backs (severance/merger) temper full‑year operating leverage near‑term .

Key Takeaways for Investors

  • Quality beat with improving breadth: upside in IB and institutional brokerage plus higher NII, alongside resilient GWM, supports multi‑engine earnings into 2H25 .
  • Cyclical tailwinds aligning: accelerating bank M&A (KBW positioning), early signs of broader ECM reopening, and stabilizing macro backdrop post‑April should lift fee revenues .
  • Structural initiatives matter: European refocus and AI deployment target equity/Institutional margin expansion over time; watch for step‑ups in 2H25/2026 .
  • Banking metrics constructive: NIM improved; Q3 NII guide $265–$275mm; deposit mix shifting favorably; expect ~$1B loan growth in 2H25, supporting run‑rate NII .
  • Expense discipline with nuance: GAAP comp ratio elevated (60.3%) and severance/merger costs were sizable; non‑GAAP comp ratio steady at 58% with scope to leverage if revenue mix improves .
  • Capital deployment flexible: Continued repo/buybacks (8.2mm shares authorized) but greater emphasis on bank growth given valuation context; dividend maintained at $0.46 .
  • Trading setup: Positive estimate revisions and 2H deal visibility are near‑term supports; monitor ECM breadth, advisory close rates, and Institutional margin trajectory for confirmation .

Appendix: Additional Context from Q2 Materials

  • Global Wealth: record client assets $516.5B; fee‑based assets $206.3B; GWM pre‑tax margin rebounded to 36.2% from Q1’s legal‑impacted 14.9% .
  • Institutional: record fixed income transactional revenue (+21% YoY), equity transactional +16% YoY; segment pre‑tax margin improved to 14.5% .
  • Capital/credit: Tier 1 common 14.5%; allowance to loans ~0.80%; NPAs 0.51% of assets .

All company figures are sourced from Stifel’s Q2 2025 8‑K, press release, financial supplement, and earnings call transcript as cited. Consensus figures marked with an asterisk are from S&P Global.