Stifel Reports First Quarter 2018 Financial Results

• Net revenues of $750.4 million, increased 11% compared with the year-ago quarter.
• Record net revenues and pre-tax operating income in Global Wealth Management.
• Net income available to common shareholders of $86.4 million, or $1.06 per diluted common share.
• Non-GAAP net income available to common shareholders of $93.8 million, or $1.15 per diluted common share.
• Record client assets of $274.7 billion, increased 9% compared with the year-ago quarter and 1% sequentially.
• Completed the acquisition of Ziegler Wealth Management.
• Repurchased approximately $2.8 million of the Company's common stock during the first quarter of 2018.
• Increase in quarterly dividend by 20% to $0.12 per common share during the first quarter of 2018.

ST. LOUIS, April 30, 2018 (GLOBE NEWSWIRE) -- Stifel Financial Corp. SF today reported net income available to common shareholders of $86.4 million, or $1.06 per diluted common share on net revenues of $750.4 million for the three months ended March 31, 2018, compared with net income available to common shareholders of $63.2 million, or $0.78 per diluted common share, on net revenues of $675.5 million for the first quarter of 2017.

For the three months ended March 31, 2018, the Company reported non-GAAP net income available to common shareholders of $93.8 million, or $1.15 per diluted common share. The Company's reported GAAP net income for the three months ended March 31, 2018 was primarily impacted by merger-related expenses. Details discussed below and in the "Non-GAAP Financial Matters" section.

Chairman's Comments

"Our first quarter revenue represented the strongest first quarter performance in Stifel's history, as net revenue of $750 million increased by 11% from the same quarter a year ago. We continue to benefit from growth in recurring revenues, which represented 41% of total revenue in the first quarter, as bank revenue and asset management & service fee revenue were both quarterly records. We also generated 39% growth in investment banking revenue as our advisory revenue nearly doubled and equity underwriting revenue was up nearly 50% from the first quarter of 2017. As a result of our revenue growth and focus on expense management, our non-GAAP pre-tax margins improved to 17.3% from 14.9% a year ago. We continue to have a positive outlook for our business as economic growth continues to accelerate and the operating environment remains solid despite increased volatility. Given the increased diversity of our business model, we believe Stifel remains well positioned for continued growth," stated Ronald J. Kruszewski, Chairman & CEO of Stifel.

Financial Highlights (Unaudited)		Three Months Ended
(in 000s, except per share data)		GAAP 3/31/18				GAAP 3/31/17				% Change				GAAP (1)  12/31/17				% Change					Non- GAAP (2)  3/31/18				Non- GAAP (2) 3/31/17				% Change
Net revenues		$	750,358			$	675,531				11.1			$	804,085				(6.7	)			$	750,549			$	677,515				10.8
Net income/(loss)		$	88,761			$	65,512				35.5			$	(1,988	)		n/m					$	96,147			$	61,806				55.6
Preferred dividend			2,344				2,344				—				2,344				—					2,344				2,344				—
Net income/(loss) available to common shareholders		$	86,417			$	63,168				36.8			$	(4,332	)		n/m					$	93,803			$	59,462				57.8
Earnings per diluted common share		$	1.09			$	0.81				34.6			$	(0.03	)		n/m					$	1.18			$	0.77				53.2
Earnings per diluted common share available to common shareholders		$	1.06			$	0.78				35.9			$	(0.06	)		n/m					$	1.15			$	0.74				55.4
Compensation ratio			61.0	%			64.6	%							77.1	%								60.5	%			62.3	%
Non-compensation ratio			23.0	%			23.7	%							23.0	%								22.2	%			22.8	%
Pre-tax operating margin (3)			16.0	%			11.7	%							(0.1	)%								17.3	%			14.9	%

Brokerage Revenues

Brokerage revenues, defined as commissions and principal transactions, were $263.6 million, a 9.8% decrease compared with the first quarter of 2017 and a 0.9% decrease compared with the fourth quarter of 2017.

		Three Months Ended
(in 000s)		3/31/18				3/31/17				% Change				12/31/17				% Change
Global Wealth Management		$	162,734			$	171,494				(5.1	)		$	163,421				(0.4	)
Institutional brokerage:
Equity capital markets			48,085				53,820				(10.7	)			49,628				(3.1	)
Fixed income capital markets			52,738				66,817				(21.1	)			52,961				(0.4	)
Total institutional brokerage			100,823				120,637				(16.4	)			102,589				(1.7	)
Total brokerage revenues		$	263,557			$	292,131				(9.8	)		$	266,010				(0.9	)

• Global wealth management brokerage revenues were $162.7 million, a 5.1% decrease compared with the first quarter of 2017 and a 0.4% decrease compared with the fourth quarter of 2017.
  
  
• Institutional equity brokerage revenues were $48.1 million, a 10.7% decrease compared with the first quarter of 2017 and a 3.1% decrease compared with the fourth quarter of 2017.
• Institutional fixed income brokerage revenues were $52.7 million, a 21.1% decrease compared with the first quarter of 2017 and a 0.4% decrease compared with the fourth quarter of 2017.

Investment Banking Revenues

Investment banking revenues were $176.4 million, a 39.0% increase compared with the first quarter of 2017 and a 24.2% decrease compared with record investment banking revenues in the fourth quarter of 2017.

		Three Months Ended
(in 000s)		3/31/18						3/31/17						% Change				12/31/17				% Change
Capital raising:
Global Wealth Management		$	7,688					$	11,854						(35.1	)		$	8,899				(13.6	)
Equity capital markets			52,707						35,981						46.5				57,800				(8.8	)
Fixed income capital markets			18,294						26,081						(29.9	)			42,820				(57.3	)
Institutional Group			71,001						62,062						14.4				100,620				(29.4	)
Total capital raising (4)			78,689						73,916						6.5				109,519				(28.2	)
Advisory fees (4)			97,673						52,936						84.5				123,227				(20.7	)
Total investment banking		$	176,362					$	126,852						39.0			$	232,746				(24.2	)

• Global wealth management capital raising revenues were $7.7 million, a 35.1% decrease compared with the first quarter of 2017 and a 13.6% decrease compared with the fourth quarter of 2017.
• Institutional equity capital raising revenues were $52.7 million, a 46.5% increase compared with the first quarter of 2017 and an 8.8% decrease compared with the fourth quarter of 2017.
• Institutional fixed income capital raising revenues were $18.3 million, a 29.9% decrease compared with the first quarter of 2017 and a 57.3% decrease compared with the fourth quarter of 2017.
• Advisory fee revenues were $97.7 million, an 84.5% increase compared with the first quarter of 2017 and a 20.7% decrease compared with record advisory fee revenues in the fourth quarter of 2017.

Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which provides accounting guidance on the recognition of revenues from contracts and requires gross presentation of certain costs that were previously offset against revenue. This change was applied prospectively from January 1, 2018 and there is no impact on our previously presented results. The adoption of the new revenue standard resulted in a reduction of beginning retained earnings of $3.9 million after-tax as a cumulative effect of adoption of an accounting change.

The impact of adoption is primarily related to investment banking revenues that were previously recognized in prior periods, which would have been deferred as of December 31, 2017 under the new revenue standard.

With our adoption of the new revenue recognition standard on January 1, 2018, capital raising and advisory fee revenues are no longer presented net of the related out-of-pocket deal expenses. As a result, capital raising and advisory fee revenues and other operating expenses are higher in the first quarter of 2018 by an identical $8.6 million, with no impact to net income.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were a record $195.8 million, a 20.3% increase compared with the first quarter of 2017 and a 5.0% increase compared with the fourth quarter of 2017. The increase from the comparative period in 2017 is primarily attributable to the growth in the value of fee-based accounts and an increase in interest rates. See asset management and service fee break-down below.

Net Interest Income

Record net interest income of $111.3 million, a 30.8% increase compared with the first quarter of 2017 and a 4.2% increase compared with the fourth quarter of 2017.

• Interest income was $137.7 million, a 36.4% increase compared with the first quarter of 2017 and an 8.8% increase compared with the fourth quarter of 2017.
• Interest expense was $26.5 million, a 66.4% increase compared with the first quarter of 2017 and a 33.2% increase compared with the fourth quarter of 2017.

Compensation and Benefits Expenses

For the quarter ended March 31, 2018, compensation and benefits expenses were $457.9 million, which included $3.7 million of merger-related and severance expenses (non-GAAP adjustments). This compares with $436.4 million in the first quarter of 2017 and $620.3 million in the fourth quarter of 2017. Excluding the non-GAAP adjustments, compensation and benefits as a percentage of net revenues were 60.5% in the first quarter of 2018 (non-GAAP measure).

		Three Months Ended 3/31/18				Three Months Ended 3/31/17
GAAP compensation and benefits		$	457,893			$	436,387
As a percentage of net revenues			61.0	%			64.6	%
Non-GAAP adjustments: (5)
Merger-related			(3,453	)			(9,805	)
Severance			(286	)			(4,535	)
			(3,739	)			(14,340	)
Non-GAAP compensation and benefits		$	454,154			$	422,047
As a percentage of non-GAAP net revenues			60.5	%			62.3	%

Non-Compensation Operating Expenses

For the quarter ended March 31, 2018, non-compensation operating expenses were $172.9 million, which included merger-related expenses (non-GAAP adjustments) of $6.0 million. This compares with $160.1 million in the first quarter of 2017 and $184.6 million in the fourth quarter of 2017. Excluding the non-GAAP adjustments, non-compensation operating expenses as a percentage of net revenues for the quarter ended March 31, 2018 were 22.2% (non-GAAP measure).

		Three Months Ended 3/31/18				Three Months Ended 3/31/17
GAAP non-compensation expenses		$	172,911			$	160,125
As a percentage of net revenues			23.0	%			23.7	%
Non-GAAP adjustments: (5)
Merger-related			(6,023	)			(5,325	)
Non-GAAP non-compensation expenses		$	166,888			$	154,800
As a percentage of non-GAAP net revenues			22.2	%			22.8	%

Provision for Income Taxes

The GAAP effective income tax rate for the quarter ended March 31, 2018 was25.8%. This compares with an effective income tax rate of 17.1% for the first quarter of 2017 and (142.4%) for the fourth quarter of 2017. The adjusted non-GAAP effective income tax rate for the quarter ended March 31, 2018 was 25.8%.

The provision for income taxes for the three months ended March 31, 2018 was primarily impacted by the tax reform enacted in the fourth quarter of 2017 that, among other things, lowered the federal corporate income tax rate from 35% to 21% and the adoption of new accounting guidance during 2017 associated with stock-based compensation.

		Three Months Ended 3/31/18				Three Months Ended 3/31/17
GAAP provision for income taxes		$	30,793			$	13,507
GAAP effective tax rate			25.8	%			17.1	%
Non-GAAP adjustments: (5)
Merger-related and severance			2,712				8,412
Other			(145	)			—
Excess tax benefits from stock-based compensation			—				16,943
			2,567				25,355
Non-GAAP provision for income taxes		$	33,360			$	38,862
Non-GAAP effective tax rate			25.8	%			38.6	%

Conference Call Information

Stifel Financial Corp. will host its first quarter 2018 financial results conference call on Monday, April 30, 2018, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (800) 651-2240 and referencing conference ID #9685027. A live audio webcast of the call, as well as a presentation highlighting the Company's results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. SF is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel's broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; Century Securities Associates, Inc.; and Eaton Partners LLC, and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited. The Company's broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer trust and related services. To learn more about Stifel, please visit the Company's web site at www.stifel.com.

Forward-Looking Statements

This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions.  The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities:  the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission.  Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Summary Results of Operations (Unaudited)
		Three Months Ended
(in 000s, except per share amounts)		3/31/18						3/31/17						% Change						12/31/17						% Change
Revenues:
Commissions		$	165,775					$	175,274						(5.4	)				$	168,754						(1.8	)
Principal transactions			97,782						116,857						(16.3	)					97,256						0.5
Brokerage Revenues			263,557						292,131						(9.8	)					266,010						(0.9	)
Capital raising			78,690						73,916						6.5						109,509						(28.1	)
Advisory fees			97,672						52,936						84.5						123,237						(20.7	)
Investment banking			176,362						126,852						39.0						232,746						(24.2	)
Asset management and service fees			195,801						162,739						20.3						186,563						5.0
Other income			3,357						8,752						(61.6	)					12,016						(72.1	)
Operating Revenue			639,077						590,474						8.2						697,335						(8.4	)
Interest Revenue			137,734						100,953						36.4						126,615						8.8
Total Revenue			776,811						691,427						12.3						823,950						(5.7	)
Interest Expense			26,453						15,896						66.4						19,865						33.2
Net Revenue			750,358						675,531						11.1						804,085						(6.7	)
Non-interest Expenses:
Compensation and benefits			457,893						436,387						4.9						620,256						(26.2	)
Occupancy and equipment rental			57,595						52,545						9.6						54,844						5.0
Communication and office supplies			33,499						33,844						(1.0	)					30,807						8.7
Commissions and floor brokerage			9,365						10,723						(12.7	)					10,945						(14.5	)
Provision for loan losses			2,043						6,134						(66.7	)					5,340						(61.7	)
Other operating expenses			70,409						56,879						23.8						82,713						(14.9	)
Total non-interest expenses			630,804						596,512						5.7						804,905						(21.6	)
Income/(loss) before income taxes			119,554						79,019						51.3						(820	)				n/m
Provision for income taxes			30,793						13,507						128.0						1,168					n/m
Net income/(loss)			88,761						65,512						35.5						(1,988	)				n/m
Preferred dividends			2,344						2,344						—						2,344						—
Net income/(loss) available to common shareholders		$	86,417					$	63,168						36.8					$	(4,332	)				n/m
Earnings per common share: (1)
Basic		$	1.20					$	0.92						30.4					$	(0.06	)				n/m
Diluted		$	1.06					$	0.78						35.9					$	(0.06	)				n/m
Weighted average number of common shares outstanding:
Basic			71,999						68,386						5.3						68,782						4.7
Diluted			81,789						80,695						1.4						68,782						18.9
Cash dividends declared per common share		$	0.12					$	—					n/m						$	0.10						20.0

Summary Segment Results (Unaudited)
		Three Months Ended
(in 000s)		3/31/18				3/31/17						% Change				12/31/17				% Change
Net revenues:
Global Wealth Management		$	485,575			$	442,732						9.7			$	473,938				2.5
Institutional Group			270,078				237,467						13.7				332,401				(18.7	)
Other			(5,295	)			(4,668	)					(13.4	)			(2,254	)			(134.9	)
Total net revenues		$	750,358			$	675,531						11.1			$	804,085				(6.7	)
Operating expenses:
Global Wealth Management		$	308,804			$	300,680						2.7			$	304,077				1.6
Institutional Group			225,508				197,595						14.1				258,901				(12.9	)
Other			96,492				98,237						(1.8	)			241,927				(60.1	)
Total operating expenses		$	630,804			$	596,512						5.7			$	804,905				(21.6	)
Operating contribution:
Global Wealth Management		$	176,771			$	142,052						24.4			$	169,861				4.1
Institutional Group			44,570				39,872						11.8				73,500				(39.4	)
Other			(101,787	)			(102,905	)					(1.1	)			(244,181	)			(58.3	)
Income/(loss) before income taxes		$	119,554			$	79,019						51.3			$	(820	)		n/m
As a percentage of net revenues:
Compensation and benefits
Global Wealth Management			49.8				51.6										48.9
Institutional Group			59.0				60.5										59.7
Non-comp. operating expenses
Global Wealth Management			13.8				16.3										15.3
Institutional Group			24.5				22.7										18.2
Income before income taxes
Global Wealth Management			36.4				32.1										35.8
Institutional Group			16.5				16.8										22.1
Consolidated pre-tax margin			16.0				11.7										(0.1	)

Stifel Financial Corp.
Financial metrics (unaudited):	As of and For the Three Months Ended
(in 000s, except percentages and per share amounts)		3/31/18			3/31/17		12/31/17
Total assets	$	21,715,342		$	19,135,892		$	21,383,953
Total equity		2,917,540			2,777,903			2,861,576
Book value per common share	$	38.49		$	38.40		$	38.26
Return on common equity (6)		13.0	%		10.0	%		(0.3	%)
Non-GAAP return on common equity (2) (6)		14.0	%		9.5	%		17.9	%
Return on tangible common equity (7)		21.5	%		17.2	%		(0.5	%)
Non-GAAP return on tangible common equity (2) (7)		23.3	%		16.2	%		29.5	%
Tier 1 common capital ratio (8)		16.6	%		18.4	%		16.9	%
Tier 1 risk based capital ratio (8)		18.7	%		20.8	%		19.0	%
Tier 1 leverage capital ratio (8)		9.6	%		10.1	%		9.5	%
Pre-tax margin on net revenues		16.0	%		11.7	%		(0.1	%)
Non-GAAP pre-tax margin on net revenues (2)		17.3	%		14.9	%		20.1	%
Effective tax rate		25.8	%		17.1	%		(142.4	%)
Non-GAAP effective tax rate (2)		25.8	%		38.6	%		23.9	%

Statistical Information (unaudited):		As of and For the Three Months Ended
(in 000s)		3/31/18				3/31/17				% Change				12/31/17				% Change
Financial advisors (9)			2,266				2,299				(1.4	)			2,244				1.0
Locations			397				399				(0.5	)			391				1.5
Total client assets		$	274,651,000			$	252,448,000				8.8			$	272,591,000				0.8
Fee-based client assets		$	89,031,000			$	75,414,000				18.1			$	87,560,000				1.7
Client money market and insured product		$	16,659,000			$	19,058,000				(12.6	)		$	17,286,000				(3.6	)
Secured client lending (10)		$	3,119,473			$	2,962,936				5.3			$	3,079,737				1.3

		Asset Management and Service Fee Break-down
		Three Months Ended
(in 000s)		3/31/18				12/31/17				9/30/17				6/30/17				3/31/17
Private Client Group (11)		$	146,769			$	137,622			$	130,351			$	123,205			$	116,029
Asset Management			27,104				27,328				26,252				25,677				24,600
Third-party Bank Sweep Program			11,603				11,437				13,355				14,724				12,232
Other (12)			10,325				10,176				9,890				9,308				9,878
Total asset management and service fee revenues		$	195,801			$	186,563			$	179,848			$	172,914			$	162,739
		Three Months Ended
(in millions)		3/31/18				12/31/17				9/30/17				6/30/17				3/31/17
Private Client Group (11)		$	66,255			$	64,613			$	61,595			$	58,126			$	54,406
Asset Management			29,086				29,349				28,787				28,002				27,478
Elimination (13)			(6,310	)			(6,402	)			(7,383	)			(6,951	)			(6,470	)
Total fee-based assets		$	89,031			$	87,560			$	82,999			$	79,177			$	75,414
Individual Program Banks		$	3,676			$	3,879			$	4,530			$	4,530			$	5,943
ROA (bps) (14)
Private Client Group (11)			90.9				89.4				89.7				90.6				94.2
Asset Management			37.3				37.2				36.5				36.7				35.8
Individual Program Banks			121.7				112.4				109.2				99.0				74.6

Stifel Bank & Trust - a component of Global Wealth Management
Selected operating data (unaudited):	Three Months Ended
(in 000s, except percentages)	3/31/18				3/31/17				% Change				12/31/17				% Change
Net Interest Income	$	107,627			$	84,003				28.1			$	103,985				3.5
Bank loan loss provision		2,043				6,134				(66.7	)			5,340				(61.7	)
Charge-offs		(14	)			—			n/m					105			n/m
Net Interest Margin		2.89	%			2.66	%			8.6				2.85	%			1.4

Financial Metrics (unaudited):		As of
(in 000s, except percentages)		3/31/18				3/31/17				12/31/17
Total Assets		$	15,154,798			$	13,232,940			$	14,995,795
Total Equity			1,081,041				931,913				1,058,488
Total Loans, net (includes loans held for sale)			7,337,749				6,071,272				7,173,827
Total Deposits			13,329,623				11,700,961				13,411,935
Available-for-sale securities, at fair value			3,705,918				3,371,187				3,766,372
Held-to-maturity securities, at amortized cost			3,842,889				3,185,813				3,694,377
Residential real estate			2,634,069				2,214,356				2,593,576
Commercial and industrial			2,553,671				1,830,865				2,437,938
Securities-based loans			1,809,281				1,728,516				1,819,206
Commercial real estate			101,591				78,522				116,258
Loans held for sale			261,467				206,724				226,068
Common equity tier 1 capital ratio (8)			14.6	%			15.4	%			14.3	%
Tier 1 capital ratio (8)			14.6	%			15.4	%			14.3	%
Total capital ratio (8)			15.6	%			16.2	%			15.3	%
Tier 1 leverage ratio (8)			7.2	%			7.2	%			7.1	%
Credit Metrics:
Allowance for loan losses		$	69,497			$	51,298			$	67,466
Allowance as a percentage of retained loans			0.97	%			0.87	%			0.96	%
Net charge-offs as a percentage of average loans			0.00	%			0.00	%			0.00	%
Total nonperforming assets		$	21,826			$	28,036			$	27,030
Nonperforming assets as % of total assets			0.14	%			0.21	%			0.18	%

		Global Wealth Management Summary Results of Operations (Unaudited)
		Three Months Ended
(in 000s)		3/31/18						3/31/17						% Change						12/31/17				% Change
Revenues:
Commissions		$	119,205					$	120,577						(1.1	)				$	118,292				0.8
Principal transactions			43,529						50,917						(14.5	)					45,129				(3.5	)
Brokerage revenues			162,734						171,494						(5.1	)					163,421				(0.4	)
Asset management and service fees			195,789						162,664						20.4						186,373				5.1
Net interest			118,455						89,695						32.1						112,190				5.6
Investment banking			7,688						11,854						(35.1	)					8,899				(13.6	)
Other income			909						7,025						(87.1	)					3,055				(70.2	)
Net revenues			485,575						442,732						9.7						473,938				2.5
Non-interest expenses:
Compensation and benefits			241,760						228,471						5.8						231,736				4.3
Non-compensation operating expenses			67,044						72,209						(7.2	)					72,341				(7.3	)
Total non-interest expenses			308,804						300,680						2.7						304,077				1.6
Income before income taxes		$	176,771					$	142,052						24.4					$	169,861				4.1
As a percentage of net revenues:
Compensation and benefits			49.8						51.6												48.9
Non-compensation operating expenses			13.8						16.3												15.3
Income before income taxes			36.4						32.1												35.8

		Institutional Group Summary Results of Operations (Unaudited)
		Three Months Ended
(in 000s)		3/31/18						3/31/17						% Change						12/31/17				% Change
Revenues:
Commissions		$	46,570					$	54,697						(14.9	)				$	50,462				(7.7	)
Principal transactions			54,253						65,940						(17.7	)					52,127				4.1
Brokerage revenues			100,823						120,637						(16.4	)					102,589				(1.7	)
Capital raising			71,001						62,062						14.4						100,620				(29.4	)
Advisory fees			97,673						52,936						84.5						123,227				(20.7	)
Investment banking			168,674						114,998						46.7						223,847				(24.6	)
Other (15)			581						1,832						(68.4	)					5,965				(90.3	)
Net revenues			270,078						237,467						13.7						332,401				(18.7	)
Non-interest expenses:
Compensation and benefits			159,344						143,640						10.9						198,416				(19.7	)
Non-compensation operating expenses			66,164						53,955						22.6						60,485				9.4
Total non-interest expenses			225,508						197,595						14.1						258,901				(12.9	)
Income before income taxes		$	44,570					$	39,872						11.8					$	73,500				(39.4	)
As a percentage of net revenues:
Compensation and benefits			59.0						60.5												59.7
Non-compensation operating expenses			24.5						22.7												18.2
Income before income taxes			16.5						16.8												22.1

Non-GAAP Financial Measures

The Company utilized certain non-GAAP calculations as additional measures to aid in understanding and analyzing the Company's financial results for the three months ended March 31, 2018, March 31, 2017, and December 31, 2017. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company's results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. These non-GAAP measures primarily exclude expenses which management believes are, in some instances, non-recurring and not representative of on-going business.

A limitation of utilizing these non-GAAP measures is that the GAAP accounting effects of these charges do, in fact, reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures and the same respective non-GAAP measures of the Company's financial performance should be considered together. 

The following table provides details with respect to reconciling net income and earnings per diluted common share on a GAAP basis for the three months ended March 31, 2018, March 31, 2017, and December 31, 2017 to net income and earnings per diluted common share on a non-GAAP basis for the same period.

		Three Months Ended
(in 000s)		3/31/18				3/31/17				12/31/17
GAAP net income/(loss)		$	88,761			$	65,512			$	(1,988	)
Preferred dividend			2,344				2,344				2,344
Net income/(loss) available to common shareholders			86,417				63,168				(4,332	)
Non-GAAP adjustments:
Merger-related (16)			9,667				17,114				9,447
Severance			286				4,535				1,432
Tax reform (17)			—				—				135,525
Litigation-related (18)			—				—				15,961
Provision for income taxes (19)			(2,567	)			(25,355	)			(37,408	)
Total non-GAAP adjustments			7,386				(3,706	)			124,957
Non-GAAP net income available to common shareholders		$	93,803			$	59,462			$	120,625
Weighted average diluted shares outstanding			81,789				80,695				82,267
GAAP earnings per diluted common share (1)		$	1.09			$	0.81			$	(0.03	)
Non-GAAP adjustments			0.09				(0.04	)			1.52
Non-GAAP earnings per diluted common share		$	1.18			$	0.77			$	1.49
GAAP earnings per diluted common share available to common shareholders (1)		$	1.06			$	0.78			$	(0.06	)
Non-GAAP adjustments			0.09				(0.04	)			1.53
Non-GAAP earnings per diluted common share available to common shareholders		$	1.15			$	0.74			$	1.47

Footnotes

⁽¹⁾ GAAP earnings per share for the three months ended December 31, 2017 is calculated using the basic weighted average number of common shares outstanding, not fully dilutive shares, as they are anti-dilutive in periods a loss is incurred.

⁽²⁾ Reconciliations of the Company's GAAP results to these non-GAAP measures are discussed within and under "Non-GAAP Financial Measures."

⁽³⁾ Non-GAAP pre-tax margin for the three months ended March 31, 2018 of 17.3% is calculated by adding merger-related non-GAAP adjustments of $10.0 million to our GAAP income before income taxes of $119.6 million and dividing it by non-GAAP net revenues for the quarter of $750.5 million. Reconciliations of the Company's GAAP results to certain non-GAAP measures is discussed within and under "Non-GAAP Financial Measures."

⁽⁴⁾ Excludes revenue included in the Other segment.

⁽⁵⁾ See further discussion of non-GAAP adjustments under "Non-GAAP Financial Measures."

⁽⁶⁾ Computed by dividing annualized net income by average common shareholders' equity or, in the case of non-GAAP return on common equity, computed by dividing non-GAAP net income by average common shareholders' equity.

⁽⁷⁾ Computed by dividing annualized net income by average tangible shareholders' equity or, in the case of non-GAAP return on tangible common equity, computed by dividing non-GAAP net income by average tangible shareholders' equity. Tangible common shareholders' equity equals total common shareholders' equity less goodwill and identifiable intangible assets.

⁽⁸⁾ Capital ratios are estimates at time of the Company's earnings release.

⁽⁹⁾ Includes 109, 121, and 112 independent contractors at March 31, 2018, March 31, 2017, and December 31, 2017, respectively.

⁽¹⁰⁾ Includes client margin balances held by our broker-dealer subsidiaries and securities-based loans held at Stifel Bank.

⁽¹¹⁾ Includes Private Client Group and Trust Business.

⁽¹²⁾ Includes fund networking fees, retirement fees, transaction/handling fees, and ACAT fees.

⁽¹³⁾ Asset management assets included in Private Client Group or Trust accounts.

⁽¹⁴⁾ Return on assets is calculated based on prior period-end balances for Private Client Group, period-end balances for Asset Management, and average quarterly balances for individual Program Banks.

⁽¹⁵⁾ Includes net interest, asset management and service fees, and other income.

⁽¹⁶⁾ Primarily related to charges attributable to integration-related activities, signing bonuses, amortization of restricted stock awards and promissory notes issued as retention, professional fees, and amortization of intangible assets acquired. These costs were directly related to acquisitions of certain businesses and are not representative of the costs of running the Company's on-going business.

⁽¹⁷⁾ Primarily related to actions taken by the Company in response to the Tax Legislation that was enacted in the fourth quarter of 2017 to maximize tax savings.

⁽¹⁸⁾ Primarily related to costs associated with the Company's previously disclosed legal matters.

⁽¹⁹⁾ Primarily related to 1) actions taken by the Company in response to the Tax Legislation that was enacted in the fourth quarter of 2017 to maximize tax savings; 2) the favorable impact of the adoption of new accounting guidance during 2017 associated with stock-based compensation; and 3) the revaluation of the Company's deferred tax assets as a result of the enacted Tax Legislation.

Media Contact:  Neil Shapiro  (212) 271-3447

Investor Contact:  Joel Jeffrey  (212) 271-3610

www.stifel.com/investor-relations