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STIFEL FINANCIAL CORP (SF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered quarterly record net revenues of $1.36B and GAAP diluted EPS of $2.09; non-GAAP EPS was $2.23, with GAAP pre-tax margin of 19.5% and compensation ratio of 58.3% .
  • Strength was broad-based: Investment banking revenue rose 48% YoY to $304.4M (advisory +47%, equity +52%, fixed income +53%); Global Wealth Management set quarterly record revenue of $865.2M; Institutional Group revenue jumped 33% YoY to $478.3M .
  • Management guided FY 2025 net revenue to $5.25–$5.75B, operating revenue to $4.1–$4.55B, and NII to $1.1–$1.2B; Q1 2025 NII guided to $260–$270M. Compensation ratio guide: 56–58%; non-compensation ratio: 19–21% .
  • Board raised the quarterly common dividend 10% to $0.46 starting Q1 2025 (payable Mar 17, 2025) and highlighted strong capital ratios (Tier 1 risk-based 18.2%) and excess capital for deployment .

What Went Well and What Went Wrong

What Went Well

  • Investment banking outperformed: advisory $189.9M (+47% YoY), equity underwriting $47.9M (+52% YoY), fixed income underwriting $61.4M (+53% YoY); firm-wide IB $304.4M (+48% YoY) .
  • Asset management set a quarterly record ($405.8M, +22.8% YoY) on higher asset values and net inflows; total client assets reached a record $501.4B (+13% YoY) .
  • CEO emphasized positioning for 2025 tailwinds with improving capital markets and regulatory backdrop: “Stifel generated record net revenue… well positioned to capitalize on improving market conditions in 2025” ; “favorable regulatory framework… new administration will appoint 8 new regulators… should benefit the capital market and M&A” .

What Went Wrong

  • Non-compensation expenses ran high versus Street due to legal and provision: non-comp came in 9% above consensus; credit loss provision elevated by macro forecast and C&I reserve increases .
  • Compensation ratio remained at the high end historically (58.3% in Q4), reflecting mix and back-end accruals; management seeks leverage as NII grows in 2025 but stayed cautious near term .
  • Credit metrics showed pressure: nonperforming assets rose to $160.9M (0.51% of assets), and allowance increased to $170.0M; C&I ACL at 2.28% with a $12.9M quarterly build .

Financial Results

Consolidated Performance (GAAP and non-GAAP)

MetricQ2 2024Q3 2024Q4 2024
Net Revenues ($MM)$1,217.9 $1,224.7 $1,364.7
Diluted EPS (GAAP)$1.41 $1.34 $2.09
Diluted EPS (non-GAAP)$1.60 $1.50 $2.23
Pre-tax Margin (%)18.6% 17.7% 19.5%
Compensation Ratio (%)59.3% 58.6% 58.3%
Non-Comp Ratio (%)22.1% 23.7% 22.2%

Segment Breakdown

SegmentQ2 2024 Net Rev ($MM)Q3 2024 Net Rev ($MM)Q4 2024 Net Rev ($MM)Q2 2024 Pre-tax ($MM)Q3 2024 Pre-tax ($MM)Q4 2024 Pre-tax ($MM)
Global Wealth Management$801.1 $827.1 $865.2 $299.2 $301.7 $316.3
Institutional Group$390.7 $372.4 $478.3 $48.8 $41.8 $95.7

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Total Client Assets ($B)$474.1 $496.3 $501.4
Fee-based Client Assets ($B)$179.7 $190.8 $192.7
ROTCE – non-GAAP (%)21.9% 19.5% 28.3%
Net Interest Margin – Consolidated (%)3.09% 3.09% 3.12%
Effective Tax Rate (%)27.1% 26.8% 8.3%
Tier 1 Risk-Based Capital Ratio (%)17.8% 17.9% 18.2%

Actuals vs Estimates

ItemVariance vs StreetNotes
Net Revenue+$~80M; +6% Broad beat; IB > half of beat
Transactional Revenue+10% Fixed income drove variance
Asset Management Revenue+1% Higher fee capture and sweep deposits
Net Interest Income+3% NIM above expectations
Compensation RatioSlightly above Street In line with guidance
Non-Comp Expenses+9% vs Street Higher legal and provision
Tax RateBelow consensus Stock-based comp benefit

Note: S&P Global consensus estimates were unavailable due to API limits; variance data reflects management’s commentary relative to Street consensus .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Net RevenueFY 2025—$5.25B–$5.75B New
Operating RevenueFY 2025—$4.10B–$4.55B New
Net Interest IncomeFY 2025—$1.10B–$1.20B New
NIIQ1 2025—$260M–$270M New
Compensation RatioFY 202557.5%–58% (FY 2024) 56%–58% Potentially lower range
Non-Comp OpEx RatioFY 202519%–21% (FY 2024) 19%–21% Maintained
Common DividendQ1 2025$0.42 (Q4 2024) $0.46 Raised 10%

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Cash sweep & Smart RateAddressed advisory sweep scrutiny; Smart Rate adoption, sweep avg $11k operational; offering up to 2% sweep tiers Sweep balances +$1.3B QoQ; deposit growth continues; January swings but linear step-up expected in 2025 Improving client cash trends
Rate sensitivity & NIINeutral to ±100bps; NIM 3.09%; NII stabilizing Slight Q1 2025 NIM pressure due to repricing; NII guided $260–$270M; bank balance sheet rate-neutral Stable to modest growth
Institutional recoveryUnderwriting-led rebound; YTD IB momentum; KBW #1 bank/thrift M&A deal value IB advisory +47% YoY; fixed income & ECM strong; targeting ~20% margin as normalize; backlogs improving Strengthening
RecruitingAdded 42 FAs in Q2; pipelines strong; J.D. Power #1 satisfaction Q4 added 8 FAs; management expects better 2025 recruiting volumes Building
Public finance leadership#1 by negotiated issues; ~15% market share Public finance revenue +40% YoY; continued leadership Sustained
Legal expensesElevated legal reserves impacted EPS (Q3) Non-comp 9% above Street on legal & provision Episodic headwind
Tax rateQ4 guidance 16–18% (Q3 call) Actual Q4 8.3% on stock-based comp benefit; FY25 outlook ~20–21% Lower in Q4, normalizing in FY25

Management Commentary

  • CEO: “Stifel generated record net revenue and the second highest earnings per share in our history in 2024… well positioned to capitalize on improving market conditions in 2025” .
  • CEO on macro/regulatory: “Favorable regulatory framework… new administration will appoint 8 new regulators… should benefit… M&A environment, especially for banks” .
  • CFO: “We beat on every line item… revenue nearly $80M or 6% above the Street… IB accounted for more than half the total revenue beat… NII was 3% above the Street” .
  • CFO on capital: “Tier 1 leverage 11.4%… ~$525M excess capital… repurchased ~410k shares at ~$111; dividend up 10%” .

Q&A Highlights

  • Compensation leverage: Management targets 56–58% comp ratio in 2025; expects leverage as NII grows and productivity improves; remains competitive in recruiting .
  • Institutional margins: Path to ~20% normalized margins with ~$200M additional revenue; upside tied to international efficiency and Bryan Garnier integration .
  • Loan demand and funding: Focus on fund banking, venture lending, retail mortgages; deposit growth (Smart Rate & venture) to fully fund asset growth; 2025 balance sheet growth forecast $3–$4B .
  • Provision & tax: Provision elevated by macro forecast; 2025 effective tax rate ~20–21% with seasonal Q4 benefits tied to share price and stock-based comp vesting .
  • Cash sweep dynamics: January sweep declines of a few hundred million can be seasonal; expected linear step-up through 2025; advisory cash generally operational with tiered sweep (up to 2%) and ticketed money funds as alternatives .

Estimates Context

  • S&P Global consensus data was unavailable due to system limits; management indicated net revenue beat of ~$80M (+6%), NII +3% vs Street, compensation ratio slightly above Street, non-comp +9% vs Street, and tax rate below consensus in Q4 .
  • Given the broad top-line beat and stronger IB, Street estimates for 2025 may drift higher in IB/advisory and transactional revenues; comp ratio trajectory could modestly improve if NII growth materializes .

Key Takeaways for Investors

  • Q4 was a clean beat on revenues with strong IB and record wealth revenues; growing client assets and fee-based mix support recurring revenue strength .
  • 2025 guide implies double-digit top-line growth and NII recovery driven by asset growth, not rate calls—lower execution risk versus rate-sensitive peers .
  • Institutional margin normalization to ~20% provides earnings torque; backlogs (KBW) and public finance leadership are tangible catalysts .
  • Watch expense cadence: comp leverage depends on NII and IB mix; non-comp episodics (legal) can create volatility—core non-comp ratio near 19–21% target .
  • Capital deployment remains balanced (dividend raise, selective buybacks, bank growth, M&A); robust Tier 1 ratios and ~$500M+ excess capital provide flexibility .
  • Near-term trading: Positive momentum in IB and fixed income transactional activity; any confirmation of M&A-friendly policy could be an upside catalyst .
  • Medium-term thesis: Diversified model with natural hedges (institutional vs NII) entering a period where both can contribute—supports pathway to $8 EPS and beyond in normalized conditions .