<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9305
STIFEL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1273600
(State or other jurisdiction of incorporation(I.R.S. Employer
Identification No.)
or organization)
500 N. Broadway, St. Louis, Missouri 63102-2188
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-342-2000
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Shares of common stock outstanding at September 26, 1997:
5,238,685 par value $.15.
Exhibit Index is on page 1.
<PAGE> 2
Stifel Financial Corp. And Subsidiaries
Form 10-Q Index
September 26, 1997
PAGE
PART I. FINANCIAL CONDITION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition --
September 26, 1997 and December 31, 1996 3-4
Consolidated Statements of Operations --
Three Months Ended September 26, 1997 and September 27, 1996 5
Consolidated Statements of Operations --
Nine Months Ended September 26, 1997 and September 27, 1996 6
Consolidated Statements of Cash Flows--
Nine Months Ended September 26, 1997 and September 27, 1996 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE> 3
PART I. FINANCIAL CONDITION
Item 1. Financial Statements (Unaudited)
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) (In thousands)
September 26, December 31,
1997 1996
ASSETS -------------- ------------
Cash and cash equivalents $ 6,151 $7,960
Cash segregated for the exclusive benefit
of customers 241 483
Receivable from brokers and dealers 15,243 14,836
Receivable from customers, net of
allowance for doubtful accounts of
$578 and $582, respectively 218,967 235,216
Securities owned, at fair value 17,234 18,913
Membership in exchanges, at cost 513 513
Office equipment and leasehold
improvements, at cost, net of
allowances for depreciation and
amortization of $10,599 and $10,125,
respectively 2,380 2,233
Goodwill, net of accumulated amortization
of $1,338 and $1,107, respectively 4,257 4,488
Notes receivable from and advances to
officers and employees, net of
allowance for doubtful receivables of
$2,325 and $2,552, respectively 2,939 3,373
Refundable income taxes 355 358
Deferred tax asset 2,955 3,671
Other assets 10,261 9,300
-------- --------
$281,496 $301,344
======== ========
<PAGE> 4
STIFEL FINANCIAL CORP. AND SECURITIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
(UNAUDITED) (In thousands)
September 26, December 31,
1997 1996
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Short-term borrowings from banks $ 61,675 $ 132,400
Payable to brokers and dealers 102,240 47,148
Payable to customers 23,467 32,095
Securities sold, but not yet purchased, at
fair value 3,337 3,229
Drafts payable 11,046 15,287
Accrued employee compensation 16,366 14,756
Obligations under capital leases 564 581
Accounts payable and accrued expenses 10,545 8,096
Convertible debt 7,500 10,000
-------- --------
Total Liabilities 236,740 263,592
Stockholders' Equity
Preferred stock -- $1 par value; authorized
3,000,000 shares; none issued
Common stock -- $0.15 par value; authorized
10,000,000 shares; issued 5,297,139
and 4,767,715 shares, respectively;
outstanding 5,238,685 and 4,632,260
shares, respectively 795 715
Additional paid-in capital 25,436 21,403
Retained earnings 20,889 16,733
-------- --------
47,120 38,851
Less treasury stock, at cost 58,454
and 135,455 shares, respectively 646 892
Less unamortized expense of note and
restricted stock awards 1,718 207
-------- --------
Total Stockholders' Equity 44,756 37,752
-------- --------
$281,496 $301,344
======== ========
See Notes to Consolidated Financial Statements.
<PAGE> 5
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
September 26, September 27,
1997 1996
------------- --------------
REVENUES
Commissions $ 13,505 $ 9,916
Principal transactions 4,565 4,651
Investment banking 8,406 2,983
Interest 5,957 3,510
Other 4,212 3,143
--------- ---------
36,645 24,203
EXPENSES
Employee compensation and benefits 22,031 14,437
Commissions and floor brokerage 774 689
Communications and office supplies 1,669 1,684
Occupancy and equipment rental 2,048 1,979
Interest 3,931 2,093
Other operating expenses 2,828 2,546
---------- ---------
33,281 23,428
---------- ---------
INCOME BEFORE INCOME TAXES 3,364 775
Provision for income taxes 1,352 317
---------- ---------
NET INCOME $ 2,012 $ 458
========== =========
Net income per share:
Primary $ 0.40 $ 0.10
Fully diluted $ 0.34 $ 0.09
Dividends declared per share $ 0.03 $ --
Average common equivalent shares
outstanding:
Primary 5,079 4,788
Fully Diluted 6,193 6,238
See Notes to Consolidated Financial Statements.
<PAGE> 6
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Nine Months Ended
September 26, September 27,
1997 1996
------------ ------------
REVENUES
Commissions $ 36,804 $ 32,454
Principal transactions 14,681 14,668
Investment banking 20,130 8,034
Interest 16,004 10,069
Other 11,530 13,123
---------- ---------
99,149 78,348
EXPENSES
Employee compensation and benefits 59,625 47,155
Commissions and floor brokerage 2,208 2,021
Communications and office supplies 5,121 5,040
Occupancy and equipment rental 5,969 5,917
Interest 10,414 6,100
Other operating expenses 8,132 8,841
---------- ---------
91,469 75,074
---------- ---------
INCOME BEFORE INCOME TAXES 7,680 3,274
Provision for income taxes 3,100 1,305
---------- ---------
NET INCOME $ 4,580 $ 1,969
========== =========
Net income per share:
Primary $ 0.93 $ 0.41
Fully diluted $ 0.80 $ 0.39
Dividends declared per share $ 0.09 $ 0.06
Average common equivalent shares
outstanding:
Primary 4,936 4,770
Fully Diluted 6,110 6,234
See Notes to Consolidated Financial Statements.
<PAGE> 7
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands)
Nine Months Ended
September 26, September 27,
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,580 $ 1,969
Noncash items included in earnings:
Depreciation and amortization 1,150 1,202
Provision for litigation and bad debts 620 2,188
Net (gains) losses on investments (217) 36
Bonus notes amortization 906 787
Deferred compensation 642 380
Deferred tax provision 716 499
Amortization of restricted stock awards 96 42
---------- ----------
8,493 7,103
Decrease (increase) in operating receivables:
Customers 16,253 (350)
Brokers and dealers (407) (5,725)
(Decrease) increase in operating payables:
Customers (8,628) (10,352)
Brokers and dealers 55,092 58,578
Decrease (increase) in assets:
Cash segregated for the
exclusive benefit of customers 242 294
Securities owned 1,679 397
Notes receivable from officers and employees (575) (1,030)
Other assets 981 (1,216)
Increase (decrease) in liabilities:
Securities sold, but not yet purchased 108 750
Drafts payable, accounts payable and
accrued expenses, and accrued
employee compensation (1,340) (11,806)
---------- ----------
Cash Provided By Operating Activities $ 71,898 $ 36,643
See Notes to Consolidated Financial Statements.
<PAGE> 8
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)(In thousands)
Nine Months Ended
September 26, September 27,
1997 1996
Cash Provided By Operating Activities ------------- -------------
- - from previous page $ 71,898 $ 36,643
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net (70,725) (36,225)
Proceeds from:
Subordinated borrowings 8,000 - -
Employee stock purchase plan 727 617
Exercised stock options 59 - -
Dividend reinvestment plan 5 10
Payments for:
Subordinated borrowings (8,000) (50)
Settlement of debt - - (760)
Purchases of stock for treasury (1,315) (190)
Principal payments under capital
lease obligation (308) (253)
Cash dividends (425) (492)
--------- ---------
Cash Used For Financing Activities (71,982) (37,343)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of office equipment 70 23
Sale of investments 57 3,520
Payments for:
Acquisition of office equipment
and leasehold improvements (882) (362)
Acquisition of investments (970) (1,584)
--------- ---------
Cash (Used For) Provided By
Investing Activities (1,725) 1,597
--------- ---------
(Decrease) increase in cash and
cash equivalents (1,809) 897
Cash and cash equivalents -
beginning of period 7,960 6,344
--------- ---------
Cash and Cash Equivalents - end of period $ 6,151 $ 7,241
========= =========
Supplemental disclosure of cash flow
information:
Income tax payments $ 1,964 $ 904
Interest payments $ 10,315 $ 6,379
Schedule of noncash investing and
financing activities:
Fixed assets acquired under capital lease $ 357 $ 240
Employee stock ownership plan
shares issued $ 287 - -
Note and restricted stock awards,
net of forfeitures $ 1,607 $ 13
Debt converted into stock $ 2,500 - -
Assumption of debt for investment - - $ 150
See Notes to Consolidated Financial Statements.
<PAGE> 9
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Stifel Financial Corp. and its subsidiaries (collectively
referred to as "the Company"). The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the nine months ended September 26, 1997 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the
financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1996.
Where appropriate, prior years' financial information has been
reclassified to conform with the current year presentation.
NOTE B - NET CAPITAL REQUIREMENT
The Company's principal subsidiary, Stifel, Nicolaus &
Company, Incorporated ("SN & Co."), is subject to the Uniform Net
Capital Rule 15c3-1 under the Securities Exchange Act of 1934
(the "rule"), which requires the maintenance of minimum net
capital, as defined. SN & Co. has elected to use the alternative
method permitted by the rule which requires maintenance of
minimum net capital equal to the greater of $250,000 or 2 percent
of aggregate debit items arising from customer transactions, as
defined. The rule also provides that equity capital may not be
withdrawn or cash dividends paid if resulting net capital would
be less than 5 percent of aggregate debit items.
At September 26, 1997, SN & Co. had net capital of $26,900,000
which was 11.18% of its aggregate debit items and $22,090,000 in
excess of the minimum required net capital.
<PAGE> 10
NOTE C - CONVERTIBLE DEBT
At December 31, 1996, the Company had outstanding $10,000,000
aggregate principal amount of 11.25% Senior Convertible Notes
(the "Notes") due September 1, 1997, through September 1, 2000,
in equal installments. The convertible feature allows the Notes
to be converted into shares of the Company's $0.15 par value
common stock at any time prior to maturity, unless previously
redeemed, at a conversion price of $7.0536 per share. The first
installment was due September 1, 1997, in the amount of
$2,500,000.
On August 27, 1997, the option to convert the $2,500,000
installment into 354,424 shares of common stock was exercised.
Subsequently, on October 24, 1997, the Company was notified that
the conversion privileges on the remaining $7,500,000 in Notes
will be exercised and converted into 1,063,283 shares of common
stock.
NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS 128,
"Earnings per Share," and SFAS 129, "Disclosure of Information
about Capital Structure," which are to be implemented by
companies whose fiscal year ends after December 15, 1997. The
adoption of these accounting standards will not have a material
impact on the Company's reported earnings per share or
consolidated financial statements.
Additionally, the Financial Accounting Standards Board has
issued SFAS 130, "Reporting Comprehensive Income," and SFAS 131,
"Disclosures about Segments of an Enterprise and Related
Information," which are to be implemented by companies whose
fiscal year begins after December 15, 1997. Management has not
determined the impact, if any, that the adoption of these
accounting standards will have on the Company's consolidated
financial statements.
NOTE E - SUBSEQUENT EVENT
On October 28, 1997, the Company's Board of Directors declared
a regular quarterly dividend of $0.03 per share, payable on
November 25, 1997 to stockholders of record November 11, 1997.
******
<PAGE> 11
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
Three months ended September 1997 and September 1996
The Company recorded net income of $2,012,000 or $0.40 per
primary share on record revenues of $36,645,000 for the third
quarter ended September 26, 1997, compared to $458,000 or $.10
per primary share on revenues of $24,203,000 for the same period
one year earlier.
The increase in the firm's profitability is attributed
principally to the increase in total revenues which increased
$12,442,000 (51.4%) as investor activity remained strong combined
with improved investment executive production and increased
investment banking activity.
Commissions increased $3,589,000 (36.2%) to $13,505,000 from
$9,916,000 resulting from the strong markets and improvement in
average investment executive production.
Investment banking revenue increased $5,423,000 (181.8%) to
$8,406,000 from $2,983,000 from the previous quarter as a result
of increased number of underwritings principally for regional
financial institutions and Real Estate Investment Trusts
("REITs") as favorable market conditions fueled new issue
underwritings. Revenue from financial advisory fees increased
$1,036,000 to $1,051,000 from $15,000 as merger activity among
banks and thrift institutions increased.
Other revenues increased $1,069,000 (34.0%) to $4,212,000 from
$3,143,000 resulting from increased revenue from managed account
fees, investment advisory fees, and money market distribution
fees.
Interest revenues increased $2,447,000 (69.7%) to $5,957,000
from $3,510,000 as result of rising average customer receivables
which increased $127,067,000 (79.0%) to 287,899,000 for the
quarter ended September 26, 1997, from $160,832,000 for the
quarter ended September 27, 1996, as individual investors
increased their borrowings.
Total expenses increased $9,853,000 (42.1%) to $33,281,000
from $23,428,000.
Employee compensation and benefits increased $7,594,000
(52.6%) to $22,031,000 from $14,437,000. The variable portion of
compensation and benefits increased $6,983,000 (70.7%) to
$16,858,000 from $9,875,000 in conjunction with increased revenue
production and increased profitability. The fixed portion of
compensation and benefits increased $611,000 (13.4%) to
$5,173,000 from $4,562,000 as a result of increased staffing,
primarily in revenue production support personnel, and normal
year-to-year pay adjustments.
<PAGE> 12
Interest expense increased $1,838,000 (87.8%) to $3,931,000
from $2,093,000 mainly as a result of increased borrowings for
customer trading activity.
Other expense increased $282,000 (11.1%) to $2,828,000 from
$2,546,000 primarily as a result of increases in consulting fees
and attorney's fees.
Nine months ended September 1997 and September 1996
The reasons noted for variances in revenue and expense
categories in the three months ended September 26, 1997
Management's Discussion and Analysis of Results of Operations are
applicable to the nine months ended discussion unless otherwise
noted.
The Company recorded net earnings of $4,580,000 or $0.93 per
primary share on total revenues of $99,149,000 for the nine
months ended September 26, 1997, compared to net earnings of
$1,969,000 or $0.41 per primary share on total revenues of
$78,348,000 for the same period one year earlier.
The increase in net income for the first nine months of 1997
over the first nine months of 1996 can be attributed primarily to
the increase in revenues. Total revenues increased $20,801,000
(26.5%) to $99,149,000 from $78,348,000.
Commission revenue increased $4,350,000 (13.4%) to $36,804,000
from $32,454,000 resulting from the continued strong markets
coupled with improved investment executive production.
Investment banking revenue increased $12,096,000 (150.6%) to
$20,130,000 from $8,034,000.
Interest revenues increased $5,935,000 (58.9%) to $16,004,000
from $10,069,000 primarily as a result of rising average customer
receivables which increased $110,628,000 (72.1%) to $264,005,000
for the nine months ended September 26, 1997, from $153,377,000
for the nine months ended September 27, 1996.
Other revenues decreased $1,593,000 (12.1%) to $11,530,000
from $13,123,000 principally due to the gain on an investment of
$3,297,000 recorded in the second quarter of 1996 with no like
revenue in 1997. Excluding the gain on investment recorded in
1996 other revenues increased $1,704,000, principally from
managed account fees, investment advisory fees, and money market
distribution fees.
Total expenses increased $16,395,000 (21.8%) to $91,469,000
from $75,074,000.
<PAGE> 13
Employee compensation and benefits increased $12,470,000
(26.4%) to $59,625,000 from $47,155,000. The variable portion of
compensation and benefits increased $11,011,000 (32.6%) to
$44,815,000 from $33,804,000 as a result of increased revenue
production and increased profitability. The fixed portion of
compensation increased $1,459,000 (10.9%) to $14,810,000 from
$13,351,000 resulting from increased staffing levels primarily
for revenue production support personnel and normal year to year
salary increases.
Interest expense increased $4,314,000 (70.7%) to $10,414,000
from $6,100,000 mainly as a result of increased borrowings for
customer trading activity.
Liquidity and Capital Resources
The Company's assets are highly liquid, consisting mainly of
cash or assets readily convertible into cash. These assets are
financed primarily by the Company's equity capital, customer
credit balances, short-term bank loans, proceeds from securities
lending, senior convertible notes, and other payables. Changes
in securities market volumes, related customer borrowing demands,
underwriting activity, and levels of securities inventory affect
the amount of the Company's financing requirements. Because of
the nature of the Company's business, the changes in operating
assets and liability account balances relative to net income for
any particular accounting period can be quite large and somewhat
arbitrary and therefore are not very useful indicators of long-
term trends in the Company's cash flow from operations.
In the nine months ended September 26, 1997, cash and cash
equivalents decreased $1,809,000 (22.7%) to $6,151,000 from
$7,960,000 at December 31, 1996. The decrease in cash was a
result of cash used by financing and investing activities of
$71,982,000 and $1,725,000, respectively, and offset by cash
provided by operating activities of $71,898,000. The cash
provided by operating activities was principally attributed to an
increase in operating payables of $46,464,000, decreases in
operating receivables and securities inventory owned of
$15,846,000 and $1,679,000, respectively, and net income,
adjusted for noncash charges, of $8,493,000. The cash provided
by operating activities was partly offset by cash used for a
decrease of drafts payable, accounts payable and accrued
expenses, and accrued employee compensation of $1,340,000. The
cash used for financing activity primarily consisted of net
payments for short-term borrowings of $70,725,000. The Company
used $1,852,000 for the acquisition of investments and fixed
assets.
SN & Co. is subject to requirements of the Securities and
Exchange Commission with regard to liquidity and capital
requirements (see Note B of the Notes to Consolidated Financial
Statements). At September 26, 1997, SN & Co. had net capital of
$26,900,000 which was 11.18% of its aggregate debit items and
$22,090,000 in excess of the minimum required net capital.
<PAGE> 14
During the first quarter ended March 27, 1997, SN & Co.
obtained and repaid a temporary subordinated note in the amount
of $8,000,000. The subordinated note was used to finance
underwritings.
The first installment of the Company's 11.25% Senior
Convertible Note (the "Note") was due September 1, 1997, in the
amount of $2,500,000. The convertible feature allows the notes
to be converted into shares of the Company's $0.15 par value
common stock at any time prior to maturity, unless previously
redeemed, at a conversion price of $7.0536 per share. On August
27, 1997, the holder of the notes exercised the option to convert
the $2,500,000 installment into 354,424 shares of common stock.
Subsequently, on October 24, 1997, the Company received notice
that the holder will exercise the conversion privilege of the
Note and convert the remaining $7,500,000 notes into 1,063,283
shares of common stock. The Company's outstanding shares after
the conversion will approximate 6,243,000 shares. The former
Note holder will hold approximately 22.7% of total outstanding
shares after the conversion.
Directors of the Company have approved the purchase of up to
250,000 shares of the Company's common stock. The Company plans
to buy shares from time to time in the open market or otherwise,
depending on market conditions. The stock will be used for
outstanding options exercises and other employee benefit plans.
Management believes the funds from operations and available
informal short-term credit arrangements of $198,325,000, at
September 26, 1997, will provide sufficient resources to meet the
present and anticipated financing needs.
<PAGE> 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
During the nine months ended September 26, 1997, the lawsuit
filed by the State of Oklahoma seeking $7.6 million in
compensatory damages and that these damages be trebled, was
dismissed and is currently on appeal in the United States
Court of Appeals for the Tenth Circuit. There were no other
material changes in the other legal proceedings previously
reported in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996. Such information is hereby
incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No.
(Reference to Item 601(b)
of Regulation S-K) Description
------------------------- -----------
11 Computation of
Earnings Per Share
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated July 2, 1997.
This report Form 8-K contained information under Item 5. Other
Events. On July 2, 1997, the Company announced that Gregory
F. Taylor, Director, President and Chief Executive Officer of
both Stifel Financial Corp. and Stifel, Nicolaus & Company,
Incorporated (the Registrant's wholly-owned broker-dealer
subsidiary) resigned as of July 31, 1997.
The Company filed a report on Form 8-K dated August 27,
1997. This report Form 8-K contained information under Item
5. Other Events. The first installment of the Company's
11.25% Senior Convertible Note was due September 1, 1997, in
the amount of $2,500,000. The convertible feature allows the
notes to be converted into shares of the Company's $0.15 par
value common stock at any time prior to maturity, unless
previously redeemed, at a conversion price of $7.0536 per
share. On August 27, 1997, the holder of the notes exercised
the option to convert the $2,500,000 installment into 354,424
shares of common stock.
The Company filed a report on Form 8-K dated September 26,
1997. This report Form 8-K contained information under Item
5. Other Events. The Company announced the appointment of
Ronald J. Kruszewski as President and Chief Executive Officer.
<PAGE> 16
SIGNATURES
Pursuant to the requirement of Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STIFEL FINANCIAL CORP.
(Registrant)
Date: November 7, 1997 By /s/ Ronald J. Kruszewski
Ronald J. Kruszewski
(President and
Chief Executive Officer)
Date: November 7, 1997 By /s/ Stephen J. Bushmann
Stephen J. Bushmann
(Principal Financial and
Accounting Officer)
<PAGE> 17
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
EXHIBIT INDEX
September 26, 1997
Exhibit
Number Description
11 Computation of Earnings Per Share
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)
EXHIBIT 11
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
(UNAUDITED)
Three Months Ended
September 26,1997 September 27,1996
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net income $ 2,012 $ 2,012 $ 458 $ 458
After-tax interest savings
assuming conversion of Senior
Convertible Notes _ 97 _ 129
------- ------- ------- -------
Net income adjusted for after-
tax interest savings $ 2,012 $ 2,109 $ 458 $ 587
======= ======= ======= =======
Average number of common shares
outstanding during the period 4,835 4,835 4,684 4,684
Additional shares assuming
exercise of stock options (2) 244 295 104 136
Additional shares assuming conversion
of Senior Convertible Notes (3) _ 1,063 _ 1,418
------- ------- ------- -------
Average number of common shares used
to calculate earnings per share 5,079 6,193 4,788 6,238
======= ======= ======= =======
Net earnings per share $ 0.40 $ 0.34 $ 0.10 $ 0.09
======= ======= ======= =======
Nine Months Ended
September 26,1997 September 27,1996
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net income $ 4,580 $ 4,580 $ 1,969 $ 1,969
After-tax interest savings
assuming conversion of Senior
Convertible Notes _ 290 _ 472
------- ------- ------- -------
Net income adjusted for after-
tax interest savings $ 4,580 $ 4,870 $ 1,969 $ 2,441
======= ======= ======= =======
Average number of common shares
outstanding during the period 4,752 4,752 4,680 4,680
Additional shares assuming
exercise of stock options (2) 184 295 90 136
Additional shares assuming conversion
of Senior Convertible Notes (3) _ 1,063 _ 1,418
------- ------- ------- -------
Average number of common shares used
to calculate earnings per share 4,936 6,110 4,770 6,234
======= ======= ======= =======
Net earnings per share $ 0.93 $ 0.80 $ 0.41 $ 0.39
======= ======= ======= =======
(1) Represents the after-tax interest savings resulting from
assumed conversion of $7,500,000 and $10,000,000,
respectively, aggregate principal 11.25% Senior Convertible
Notes.
(2) Represents the number of shares of common stock issuable
on the exercise of dilutive employee stock options less the
number of shares of common stock which could have been
purchased with the proceeds from the exercise of such options
and assumed purchases of stock from the Employee Stock
Purchase Plan (ESPP). For primary earnings per share
computations, these purchases were assumed to have been made
at the average market price of the common stock during the
period or that part of the period for which the option was
outstanding or shares assumed purchased through the ESPP. For
fully diluted earnings per share computations, these purchases
were assumed to have been made at the greater of the market
price of the common stock at the end of the period or average
market price of the common stock during the period or that
part of the period for which the option was outstanding or
shares assumed purchased through the ESPP.
(3) Represents the number of shares of common stock issuable
upon conversion of $7,500,000 and $10,000,000, respectively,
aggregate principal 11.25% Senior Convertible Notes at a
conversion price of $7.0536 per share.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DATED
SEPTEMBER 26, 1997 AND THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 26, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-26-1997
<CASH> 6,392
<RECEIVABLES> 226,409
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 10,740
<INSTRUMENTS-OWNED> 17,234
<PP&E> 2,380
<TOTAL-ASSETS> 281,496
<SHORT-TERM> 61,675
<PAYABLES> 65,566
<REPOS-SOLD> 0
<SECURITIES-LOANED> 98,662
<INSTRUMENTS-SOLD> 3,337
<LONG-TERM> 7,500
<COMMON> 795
0
0
<OTHER-SE> 45,441
<TOTAL-LIABILITY-AND-EQUITY> 282,976
<TRADING-REVENUE> 14,681
<INTEREST-DIVIDENDS> 16,004
<COMMISSIONS> 36,804
<INVESTMENT-BANKING-REVENUES> 20,130
<FEE-REVENUE> 2,146
<INTEREST-EXPENSE> 10,414
<COMPENSATION> 59,625
<INCOME-PRETAX> 7,680
<INCOME-PRE-EXTRAORDINARY> 7,680
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,580
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.80
</TABLE>
