Stifel Loans Accelerate as Net Interest Income Rises
Bank loans climbed 15.7% from a year earlier to $24.81 billion, supporting higher interest income.
Stifel Financial (SF), the wealth-management and investment-banking firm, increased consolidated net interest income to $288.1 million in the second quarter from $263.6 million in the first quarter and $270.3 million a year earlier. Interest revenue rose 5.6% sequentially while interest expense was nearly unchanged.
Bank loans reached $24.81 billion at June 30, rising 15.7% YoY and 11.8% QoQ as fund-banking demand strengthened. The advance extended an acceleration that had taken shape in April and May. Global Wealth Management net interest income rose 8% YoY to $274.6 million as balance-sheet growth more than offset lower interest rates.
That balance-sheet contribution helped make Global Wealth Management the stronger segment sequentially. Pretax income increased 9.4% QoQ and 18.2% YoY to $361.8 million, while its pretax margin widened 160 bps from a year earlier to 37.8%. Institutional Group pretax income declined 5.9% QoQ, though it rose 51.0% YoY to $92.2 million.
Investment-banking revenue rose 42.2% YoY to $332.0 million and slipped 2.8% QoQ. Capital-raising revenue increased 41.9% sequentially to $174.5 million, while advisory revenue fell 27.9% to $157.5 million. Trading was softer: fixed-income transactional revenue declined 26% YoY to $95.0 million, partly against a prior-year aircraft-business gain of roughly $30 million, and equity transactional revenue fell 4% to $59.1 million as a European Equities restructuring reduced revenue by $9 million.
Asset-management revenue increased 13.1% YoY to $456.6 million on higher market values and net new assets, though it edged down 0.6% from the first quarter. Across the company, net revenue growth of 13.0% outpaced a 7.6% increase in non-interest expense. The compensation ratio fell 290 bps to 57.4%, helping lift the GAAP pretax margin 400 bps to 20.6%.
Stifel returned more capital while maintaining elevated regulatory ratios. Its estimated Tier 1 common capital ratio rose 20 bps YoY to 14.7%, and the Tier 1 leverage ratio increased 40 bps to 11.2%. The company repurchased $177.0 million of common stock, more than double the year-earlier amount, and raised its quarterly dividend 9.7% YoY to $0.34 a share.
Faster loan growth carried a higher credit cost. The provision for credit losses rose to $12.5 million from $6.5 million in the first quarter and $8.3 million a year earlier, reflecting growth in retained loans and specific reserves on individual credits.
Funding trends remained uneven as the quarter progressed. Treasury deposits rose 7% MoM in April to $11.12 billion before declining 3% in May to $10.81 billion, still 76% above the prior-year level. Client money-market and insured-product balances fell 7% in April and slipped again in May to $24.97 billion, 3% below a year earlier, leaving deposit composition as the key counterweight to the loan-driven interest-income expansion.