10q10k10q10k.net

What changed in STIFEL FINANCIAL CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of STIFEL FINANCIAL CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+446 added−456 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in STIFEL FINANCIAL CORP's 2023 10-K

446 paragraphs added · 456 removed · 343 edited across 3 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

140 edited+53 added−72 removed57 unchanged
Biggest changeOur liquidity could be negatively affected by the inability of our subsidiaries to generate cash in the form of dividends from earnings, liquidity or capital requirements applicable to our subsidiaries that may prevent us from upstreaming cash to the parent company, limited or no accessibility to credit markets for secured and unsecured borrowings by our subsidiaries, diminished access to the capital markets for our company, and other commitments or restrictions on capital as a result of adverse legal settlements, judgments, or regulatory sanctions.
Biggest changeOur liquidity could be negatively affected by: any inability of our subsidiaries to generate cash to distribute to the parent company, liquidity or capital requirements that may prevent our subsidiaries from distributing cash, limitations on our subsidiaries’ access to credit markets for secured and unsecured borrowings, diminished access to the credit and capital markets, and other commitments or restrictions on capital as a result of adverse legal settlements, judgments, regulatory sanctions, or an adverse change in our credit rating by one or more of the national rating agencies that rate us.
We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we have underwritten at the anticipated price levels.
We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we have underwritten at anticipated price levels.
Any failure, termination, or constraint of these intermediaries could adversely affect our ability to execute transactions, service our clients, and manage our exposure to risk. Our ability to engage in routine trading and funding transactions could be affected adversely by the actions and commercial soundness of other financial institutions.
Any failure, termination, or constraint of these intermediaries could adversely affect our ability to execute transactions, service our clients, and manage our exposure to risk. Our ability to engage in routine trading and funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
In addition to the SEC, various states have adopted, or are considering adopting, laws and regulations seeking to impose new standards of conduct on broker-dealers that, as written, differ from the SEC’s new regulations and may lead to additional implementation costs.
In addition to the SEC, various states have adopted, or are considering adopting, laws and regulations seeking to impose new standards of conduct on broker-dealers that, as written, differ from the SEC’s regulations and may lead to additional implementation costs.
Regulatory actions brought against us may result in judgments, settlements, fines, penalties or other results, any of which could have a material adverse effect on our business, financial condition or results of operations. There is no assurance that regulators will be satisfied with the policies and procedures implemented by our company and its subsidiaries.
Regulatory actions brought against us may result in judgments, settlements, fines, penalties, or other results, any of which could have a material adverse effect on our business, financial condition, reputation, or results of operations. There is no assurance that regulators will be satisfied with the policies and procedures implemented by our company and its subsidiaries.
Further, successful cyber attacks at other large financial institutions or other market participants, whether or not we are affected, could lead to a general loss of customer confidence in financial institutions that could negatively affect us, including harming the market perception of the effectiveness of our security measures or the financial system in general, which could result in reduced use of our financial products and services.
Further, successful cyber attacks at other large financial institutions or other market participants, whether or not we are affected, could lead to a general loss of confidence in financial institutions that could negatively affect us, including harming the market perception of the effectiveness of our security measures or the financial system in general, which could result in reduced use of our financial products and services.
We may not be able to obtain additional outside financing to fund our operations on favorable terms, or at all. The impact of a credit rating downgrade to a level below investment grade would result in our breaching provisions in our credit agreements, and may result in decreased levels of available credit or a request for immediate payment.
We may not be able to obtain additional outside financing to fund our operations on favorable terms, or at all. The impact of a credit rating downgrade to a level below investment grade would result in our breaching provisions in certain of our credit agreements, and may result in decreased levels of available credit or a request for immediate payment.
We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including by reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions, or margins.
We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts 16 they are willing to pay, including by reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions, or margins.
In addition, accounting standard setters and those who interpret the accounting 18 standards may change or even reverse their previous interpretations or positions on how these standards should be applied. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
In addition, accounting standard setters and those who interpret the accounting standards may change or even reverse their previous interpretations or positions on how these standards should be applied. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
Further, new business initiatives and efforts to expand existing businesses generally require that we incur compensation and benefits expense before generating additional revenues. 14 Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices.
Further, new business initiatives and efforts to expand existing businesses generally require that we incur compensation and benefits expense before generating additional revenues. Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices.
We are subject to risks relating to environmental, social, and governance (“ESG”) matters that could adversely affect our reputation, business, financial condition, and results of operations. We are subject to a variety of risks, including reputational risk, associated with ESG issues. The public holds diverse and often conflicting views on ESG topics.
We are subject to risks relating to environmental, social, and governance (“ESG”) matters that could adversely affect our reputation, business, financial condition, and results of operations. We are subject to a variety of risks, including reputational risk, associated with ESG matters. The public holds diverse and often conflicting views on ESG topics.
Furthermore, as a bank holding company, we may become subject to prohibitions or limitations on our ability to pay dividends and/or repurchase our stock. Certain of our regulators have the authority, and under certain circumstances, the duty, to prohibit or to limit dividend payments by regulated subsidiaries to their parent.
Furthermore, as a bank holding company, we may become subject to prohibitions or limitations on our ability to pay dividends to our shareholders and/or repurchase our stock. Certain of our regulators have the authority, and under certain circumstances, the duty, to prohibit or to limit dividend payments by regulated subsidiaries to their parent company.
Many of these transactions expose us to credit risk in the event of default of our counterparty 15 or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us.
Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us.
The regulation imposes heightened standards on broker-dealers, and we have incurred substantial costs in order to review and modify our policies and procedures, including associated supervisory and compliance controls. We anticipate that we will continue to incur costs in the future to comply with the standard.
The regulation imposes heightened standards on broker-dealers, and we have incurred substantial costs in order to review and modify our policies and procedures, including associated supervisory and compliance controls. We anticipate that we will continue to incur incremental costs in the future to comply with the standard.
A continued trend toward passive investments or changes in market values or in the fee structure of asset management accounts would affect our revenues, business, and financial condition. Our underwriting, market-making, trading, and other business activities place our capital at risk.
A continued trend toward passive investments or changes in market values or in the fee structure of asset management accounts would negatively affect our revenues, business, and financial condition. Our underwriting, market-making, trading, and other business activities place our capital at risk.
ITEM 1A. R ISK FACTORS Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our business, financial condition, results of operations, liquidity and the trading price of our common stock.
ITEM 1A. R ISK FACTORS 11 Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our business, financial condition, results of operations, liquidity and the trading price of our common stock.
We may amend or supplement these risk factors from time to time in other reports we file with the SEC. MARKET AND LIQUIDITY RISKS Lack of liquidity or access to capital could impair our business and financial condition.
We may amend or supplement these risk factors from time to time in other reports we file with the SEC. MARKET AND LIQUIDITY RISKS Lack of funding, liquidity, or access to capital could impair our business and financial condition.
We also incur credit risk by lending to businesses and individuals through the offering of loans, including commercial and industrial loans, commercial and residential mortgage loans, tax-exempt loans, home equity lines of credit, and other loans generally collateralized by securities. We also incur credit risk through our investments.
We also incur credit risk by lending to businesses and individuals through the offering of loans, including commercial and industrial loans, commercial and residential mortgage loans, tax-exempt loans, home equity lines of credit, and other loans generally collateralized by securities. We also incur credit risk through certain of our investments.
Third parties with which we do business could also be 16 a source of operational risk, including with respect to breakdowns or failures of the systems or misconduct by the employees of such parties.
Third parties with which we do business could also be a source of operational risk, including with respect to breakdowns or failures of the systems or misconduct by the employees of such parties.
Financial services institutions are interrelated as a result of trading, clearing, funding, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients.
Financial services institutions are interdependent as a result of trading, clearing, funding, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients.
If we were to lose the services of any of our investment bankers, senior equity research, sales and trading professionals, asset managers, or executive officers to a competitor or otherwise, we may not be able to retain valuable relationships and some of our clients could choose to use the services of a competitor instead of our services.
If we were to lose the services of any of our financial advisors, investment bankers, senior equity research, sales and trading professionals, asset managers, or executive officers to a competitor or otherwise, we may not be able to retain valuable relationships and some of our clients could choose to use the services of a competitor instead of our services.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money laundering, cybersecurity and privacy, record keeping, and sales and trading practices.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money laundering, cybersecurity and privacy, record keeping, sales and trading practices, and associate misconduct.
In addition, from time to time, the Company and its affiliates may become subject to additional findings with respect to supervisory, compliance or other regulatory deficiencies, which could subject us to additional liability, including penalties, and restrictions on our business activities.
In addition, from time to time, the Company and its subsidiaries may become subject to additional findings with respect to supervisory, compliance, or other regulatory deficiencies, which could subject us to additional liability, including penalties, and restrictions on our business activities.
The inability to reduce our positions in specific securities may not only increase the market and credit risks associated with such positions, but also increase the level of risk-weighted assets on our balance sheet, thereby increasing our capital requirements, which could have an adverse effect on our business results, financial condition and liquidity.
The inability to reduce our positions in specific securities may not only increase the market and credit risks associated with such positions, but also increase the level of risk-weighted assets on our balance sheet, thereby increasing our capital requirements, which could have an adverse effect on our business results, financial condition and liquidity. We are exposed to credit risk.
We also rely on numerous third party service providers to conduct other aspects of our business operations, and we face similar risks relating to them. While we regularly conduct security assessments on these third party vendors, we cannot be certain that their 17 information security protocols are sufficient to withstand a cyber attack or other security breach.
We also rely on numerous third-party service providers to conduct other aspects of our business operations, and we face similar risks relating to them. While we regularly conduct security assessments and external scans on these third-party vendors, we cannot be certain that their information security protocols are sufficient to withstand a cyber attack or other security breach.
Significant deterioration in the credit quality of one of our counterparties could lead to widespread concerns about the credit quality of other counterparties in the same industry, thereby exacerbating our credit risk exposure. We permit our clients to purchase securities on margin.
Significant deterioration in the credit quality of one of our counterparties could lead to widespread concerns about the credit quality of other counterparties in the same industry, thereby exacerbating our credit risk. In addition, we permit our clients to purchase securities on margin.
Substantial legal liability could have a material adverse financial impact or cause us significant reputational harm, which, in turn, could seriously harm our business and future business prospects. 21 In addition to the foregoing financial costs and risks associated with potential liability, the costs of defending individual litigation and claims continue to increase over time.
Substantial legal liability could have a material adverse financial impact or cause us significant reputational harm, which, in turn, could seriously harm our business and future business prospects. In addition to the foregoing financial costs and risks associated with potential liability, the costs of defending individual litigation and claims and/or regulatory matters continue to increase over time.
In particular, our financial results may be adversely affected by the costs we incur in connection with any upfront loans or other incentives we may offer to newly recruited financial advisors and other key personnel.
Our financial results may be adversely affected by the costs we incur in connection with any loans or other incentives we may offer to newly recruited financial advisors and other key personnel.
A sharp change in the security market values utilized in these transactions may result in losses if counterparties to these transactions fail to honor their commitments. We manage the risk associated with these transactions by establishing and monitoring credit limits, as well as by evaluating collateral and transaction levels on a recurring basis.
A sharp change in the market values of the securities utilized in these transactions may result in losses if counterparties to these transactions fail to honor their commitments. We manage the risk associated with these transactions by establishing and monitoring credit limits, as well as by evaluating collateral and transaction levels on a recurring basis.
Our diverse operations expose us to risk of loss resulting from inadequate or failed internal processes, people, and systems external events, including technological or connectivity failures either at the exchanges in which we do business or between our data centers, operations processing sites, or our branches.
We are exposed to operational risk. Our diverse operations expose us to risk of loss resulting from inadequate or failed internal processes, people, and systems external events, including technological or connectivity failures either at the exchanges in which we do business or between our data centers, operations processing sites, or our branches.
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial 18 statements, and the reported amounts of revenues and expenses for the reporting period.
During periods of steep declines in securities prices, the value of the collateral securing client margin loans may fall below the amount of the purchaser’s indebtedness. If clients are unable to provide additional collateral for these margin loans, we may incur losses on those margin transactions.
During periods of steep declines in securities prices, the value of the collateral securing client margin loans may fall below the amount of the loan. If clients are unable to provide additional collateral for these margin loans, we may incur losses on those margin transactions.
Although we seek to maintain a robust suite of authentication and layered information security controls, including our cyber threat analytics, data encryption and tokenization technologies, anti-malware defenses and vulnerability management program, any one or combination of these controls could fail to detect, mitigate or remediate these risks in a timely manner.
Although we seek to maintain a robust suite of authentication and layered information security controls, including our cyber threat analytics, data encryption, and monitoring technologies, anti-malware defenses, and vulnerability management programs, any one or combination of these controls could fail to detect, mitigate, or remediate these risks in a timely manner.
Numerous regulatory changes and enhanced regulatory and enforcement activity relating to the asset management business may increase our compliance and legal costs and otherwise adversely affect our business.
Numerous regulatory changes and enhanced regulatory and enforcement activity relating to our asset management activities may increase our compliance and legal costs and otherwise adversely affect our business.
Our risk management and conflict of interest policies and procedures may leave us exposed to unidentified or unanticipated risk.
Our risk management and conflicts of interest policies and procedures may leave us exposed to unidentified or unanticipated risk.
We compete directly with national full-service broker-dealers, investment banking firms, and commercial banks, and to a lesser extent, with discount brokers and dealers and investment advisers. In addition, we face competition from more recent entrants into the market and increased use of alternative sales channels by other firms.
We compete directly with other national full-service broker-dealers, investment banking firms, commercial banks, and investment managers, and to a lesser extent, with discount brokers and dealers and investment advisers. We face competition from more recent entrants into the market, including fintechs, and increased use of alternative sales channels by other firms.
Third parties may also attempt to place individuals within our company or induce associates, clients, or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent.
Threat actors may also attempt to place individuals within our company or induce associates, clients, or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent.
Despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, spam attacks, unauthorized access, distributed denial of service attacks, computer viruses and other malicious code, and other events that could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our operations.
Despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software, and networks may be vulnerable to human error, equipment failure, natural disasters, power loss, unauthorized access, supply chain attacks, distributed denial of service attacks, zero-day vulnerabilities, computer viruses and other malicious code, and other events that could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our operations.
We are also subject to a number of obligations and standards arising from our asset management business and our authority over our assets under management. In addition, our financial advisors may act in a fiduciary capacity, providing financial planning, investment advice, and discretionary asset management.
We are also subject to a number of obligations and standards arising from our asset management business and our authority over our assets under management. In addition, our financial advisors are required to act in the best interests of our clients and may act in a fiduciary capacity, providing financial planning, investment advice, and discretionary asset management.
Deterioration in the actual or perceived credit quality of the underlying issuers of securities or loans, or the non-performance of issuers and counterparties to certain derivative contracts could result in losses. We borrow securities from, and lend securities to, other broker-dealers, and may also enter into agreements to repurchase and/or resell securities as part of investing and financing activities.
Deterioration in the actual or perceived credit quality of the underlying issuers of securities or loans, or the non-performance of counterparties to certain derivative contracts could result in losses. We borrow securities from, and lend securities to, other financial institutions, and may also enter into agreements to repurchase and/or resell securities as part of our financing activities.
Periods of reduced revenue and other losses could lead to reduced profitability because certain of our expenses, including, but not limited to, our interest expense on debt, rent, facilities, and salary expenses are fixed and our ability to reduce them over short time periods is limited.
Periods of reduced revenue and other losses could lead to reduced profitability because certain of our expenses, including our interest expense on debt, lease expenses, and salary expenses, are fixed, and our ability to reduce them over short time periods is limited.
Interest rate changes could affect the interest earned on assets differently than interest paid on liabilities. In our brokerage operations, a rising interest rate environment generally results in our earning a larger net interest spread and an increase in fees received on our multi-bank deposit sweep program.
Interest rate changes could affect the interest earned on assets differently than interest paid on liabilities. In our brokerage operations, a rising interest rate environment generally results in our earning a larger net interest spread and an increase in servicing fees received on our multi-bank deposit sweep program but also increases our costs of funds.
Over time, there has been substantial consolidation and convergence among companies in the financial services industry, which has significantly increased the capital base and geographic reach of our competitors. See the section titled “Competition” of Item 1 of this Form 10-K for additional information about our competitors.
Over time, there has been substantial consolidation and convergence among companies in the financial services industry, which has significantly increased the capital base and geographic reach of our competitors. See “Item 1 – Business - Competition” of this Form 10-K for additional information about our competitors.
Any violation of these laws or regulations could subject us to the following events, any of which could have a material adverse effect on our business, financial condition and prospects: civil and criminal liability; sanctions, which could include the revocation of our subsidiaries’ registrations as investment advisers or broker-dealers; the revocation of the licenses of our financial advisors; censures; fines; or a temporary suspension or permanent bar from conducting business.
Any violation of these laws or regulations could subject us to the following events, any of which could have a material adverse effect on our business, financial condition, reputation, and prospects: civil and criminal liability for us or our associates; sanctions, which could include the revocation of our subsidiaries’ registrations as investment advisers or broker-dealers; the revocation of the licenses of our financial advisors; censures; fines; conditions or limitations on our business activities, including higher capital requirements; or a temporary suspension or permanent bar from conducting business.
Litigation risks include potential liability under securities laws or other laws for alleged materially false or misleading statements made in connection with securities offerings and other transactions, issues related to the suitability of our investment advice based on our clients’ investment objectives (including auction rate securities), the inability to sell or redeem securities in a timely manner during adverse market conditions, contractual issues, employment claims, and potential liability for other advice we provide to participants in strategic transactions.
Litigation risks include potential liability under securities laws or other laws for alleged materially false or misleading statements made in connection with securities offerings and other transactions, issues related to our investment recommendations, including the suitability of such recommendations or potential concentration of investments, the inability to sell or redeem securities in a timely manner during adverse market conditions, contractual issues, employment claims, and potential liability for other advice we provide to participants in strategic transactions.
Further, in light of the high volume of transactions we process, the large number of our clients, partners and counterparties, and the increasing sophistication of malicious actors, a cyber attack could occur and persist for an extended period of time without detection.
Further, in light of the high volume of transactions we process, use of remote work, the large number of our clients, partners, and counterparties, and the increasing sophistication of malicious actors, a cyber attack could occur. Moreover, any such cyber attack may persist for an extended period of time without detection.
Our company and it bank subsidiaries are subject to various regulatory and capital requirements administered by various federal regulators in the U.S. and, accordingly, must meet specific capital guidelines that involve quantitative measures of our company’s and our bank subsidiaries’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory guidelines.
As discussed in “Item 1 – Business – Regulation” of this Form 10-K, our company and it bank subsidiaries are subject to capital requirements administered by various federal regulators in the U.S. and, accordingly, must meet specific capital guidelines that involve quantitative measures of our company’s and our bank subsidiaries’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory guidelines.
If any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or associate data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines, and/or criminal prosecution.
These laws and regulations are increasing in complexity and number. If any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or associate data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines, and/or criminal prosecution.
Our broker-dealers and bank subsidiaries are limited in their ability to lend or transact with affiliates and are subject to minimum regulatory capital and other requirements, as well as limitations on their ability to use funds deposited with them in brokerage or bank accounts to fund their businesses.
Our broker-dealers and bank subsidiaries are limited in their ability to lend or transact with affiliates, are subject to minimum regulatory capital and other requirements, and, in the case of our broker-dealer subsidiaries, have limitations on their ability to use funds deposited with them in brokerage accounts to fund their businesses.
We are, directly and indirectly, affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions.
Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions, which directly and indirectly affect us.
Such a change in our credit ratings could also adversely affect our liquidity and competitive position, increase our borrowing costs, limit our access to the capital markets, trigger obligations under certain financial agreements, or decrease the number of investors, clients and counterparties willing or permitted to do business with or lend to us, thereby curtailing our business operations and reducing profitability.
Such a change in our credit ratings could also adversely affect our liquidity and competitive position, increase our borrowing costs, limit our access to the capital and credit markets, trigger obligations under certain financial agreements, cause clients to withdraw bank deposits that exceed FDIC insurance limits from our bank subsidiaries, or decrease the number of investors, clients, and counterparties willing or permitted to do business with or lend to us, thereby curtailing our business operations and reducing profitability.
For a further discussion of some of our significant accounting estimates, policies, and standards, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Estimates” and Note 2 of the Notes to Consolidated Financial Statements in this Form 10-K.
For further discussion of our significant accounting estimates, policies, and standards, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” of this Form 10-K and Note 2 of the Notes to Consolidated Financial Statements of this Form 10-K.
Any violations of these laws, regulations, or standards could subject us to a range of potential regulatory events or outcomes that could have a material adverse effect on our business, financial condition, and prospects, including potential adverse impacts on continued operations in the relevant international jurisdiction.
Any violations of these laws, regulations, or standards could subject us to a range of potential regulatory events or outcomes that could have a material adverse effect on our business, financial condition, and prospects, including potential adverse impacts on continued operations in the relevant international jurisdiction. We are also required to comply with the Volcker Rule’s provisions.
Regulatory capital requirements applicable to some of our significant subsidiaries may impede access to funds our company needs to make payments on any such obligations. See Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulations and capital requirements.
Regulatory capital requirements applicable to some of our significant subsidiaries may impede access to funds that we may need to make payments on any of our obligations. See Note 19 of the Notes to Consolidated Financial Statements of this Form 10-K for further information on regulatory capital requirements.
The industry has experienced an extended period of significant change in laws and regulations governing the financial services industry, as well as increased scrutiny from various regulators, including the SEC, the Fed, the OCC, and the CFPB, in addition to stock exchanges, FINRA, and state attorneys general.
The financial services industry has experienced an extended period of significant change in laws and regulations, as well as a high degree of scrutiny from various regulators, including the SEC, the Fed, the FDIC, the OCC, and the CFPB, in addition to stock exchanges, FINRA, and governmental authorities, such as state attorneys general.
Growth of our business could increase costs and regulatory and integration risks. We continue to grow, including through acquisitions and through our recruiting efforts. Integrating acquired businesses, providing a platform for new businesses, and partnering with other firms involve risks and present financial, managerial, and operational challenges.
We continue to grow, including through acquisitions and through our recruiting efforts. Integrating acquired businesses, providing a platform for new businesses and partnering with other firms involve risks and present financial, managerial, and operational challenges.
A significant reduction in our domestic clients’ cash balances, a change in the allocation of that cash between our bank subsidiaries and third-party banks, or a transfer of cash away from our company, could significantly impact our ability to continue growing interest-earning assets and/or require us to use higher-cost deposit sources to grow interest-earning assets.
A significant reduction in our domestic clients’ cash balances, a change in the allocation of that cash between our bank subsidiaries and third-party banks, a movement of cash away from our company, or an inability to implement new or modified deposit offerings in order to retain or grow our client base, could significantly impact our ability to continue growing interest-earning assets and/or require us to use higher-cost deposit sources to grow interest-earning assets.
If management’s underlying assumptions and judgments prove to be inaccurate, the allowance for loan losses could be insufficient to cover actual losses. Our financial condition, including our liquidity and capital, and results of operations could be materially and adversely impacted.
For either of these estimates, if management’s underlying assumptions and judgments prove to be inaccurate, our loss provisions could be insufficient to cover actual losses and our financial condition, including our liquidity and capital, and results of operations could be materially and adversely impacted.
While it is not typical, from time to time and as part of our underwriting processes, we may carry significant positions in securities of a single issuer or issuers engaged in a specific industry. Sudden changes in the value of these positions could impact our financial results.
While it is not typical, from time to time and as part of our underwriting processes, we may carry significant positions in securities of a single issuer or issuers engaged in a specific industry.
Failure to meet minimum capital requirements can trigger certain mandatory (and potentially additional discretionary) actions by regulators that, if undertaken, could harm either our company or our bank subsidiaries’ operations and financial condition.
Failure to meet minimum capital requirements can trigger certain mandatory (and potentially discretionary) actions by regulators that, if undertaken, could harm either our company or our bank subsidiaries’ operations and financial condition, including precluding us from accepting or renewing brokered deposits.
We are engaged in various financial services businesses. As such, we are affected by domestic and international macroeconomic and political conditions, including economic output levels, interest and inflation rates, employment levels, prices of commodities, consumer confidence levels, international trade policy, and fiscal and monetary policy.
As such, we are affected by domestic and international macroeconomic and political conditions, as well as economic output levels, interest and inflation rates, employment levels, prices of commodities, consumer confidence levels, changes in consumer spending, international trade policy, and fiscal and monetary policy.
Failure to maintain appropriate service and quality standards, or a failure or perceived failure to treat clients fairly, can result in client dissatisfaction, litigation, and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs, and reputational harm. Negative publicity about us, whether or not true, may also harm our reputation.
Failure to maintain appropriate service and quality standards, or a failure or perceived failure to treat clients fairly, can result in client dissatisfaction, litigation, and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs, and reputational harm.
We compete on the basis of a number of factors, including the quality of our financial advisors and associates, our products and services, pricing (such as execution pricing and fee levels), location, and reputation in relevant markets.
We are engaged in intensely competitive businesses. We compete on the basis of a number of factors, including the quality of our associates, our products and services, pricing (such as execution pricing and fee levels), technology solutions, and location and reputation in relevant markets.
A significant decline in our domestic client cash balances could negatively impact our net revenues and/or our ability to fund Stifel Bancorp’s growth. We rely heavily on bank deposits as a low-cost source of funding for Stifel Bancorp to extend loans to clients and purchase investment securities.
Significant volatility in our domestic clients’ cash sweep and bank deposit balances could negatively affect our net revenues and/or our ability to fund our bank subsidiaries’ growth and may impact our regulatory capital ratios. We rely heavily on bank deposits as a low-cost source of funding for Stifel Bancorp to extend loans to clients and purchase investment securities.
We may incur significant expense in connection with expanding our existing businesses, recruiting financial advisors, or making strategic acquisitions or investments. Our overall profitability 19 would be negatively affected if investments and expenses associated with such growth are not matched or exceeded by the revenues derived from such investments or growth.
We may incur significant expense, including in the areas of technology and cybersecurity, in connection with expanding our existing businesses, recruiting financial advisors, or when acquiring and integrating businesses. Our overall profitability would be negatively affected if investments 19 and expenses associated with such growth are not matched or exceeded by the earnings derived from such investments or growth.
As competition for skilled professionals remains intense, we may have to devote significant resources to attract and retain qualified personnel, which could negatively impact earnings. The cost of recruiting and retaining skilled professionals in the financial services industry has escalated considerably. Financial industry employers are increasingly offering guaranteed contracts, upfront payments, and increased compensation.
As competition for skilled professionals remains intense, we may have to devote significant resources to attract and retain qualified personnel, which could negatively affect earnings. Specifically within the financial industry, employers are increasingly offering guaranteed contracts, upfront payments, and increased compensation.
For example, interest rate changes could adversely affect our net interest spread, the difference between the yield we earn on our assets and the interest rate we pay for deposits and other sources of funding, which in turn impacts our net interest income and earnings.
Interest rate changes could also adversely affect the value of our fixed income inventories, as well as our net interest spread, which is the difference between the yield we earn on our interest-earning assets and the interest rate we pay for deposits and other sources of funding, in turn impacting our net interest income and earnings.
A perceived or actual failure to address conflicts of interest adequately could affect our reputation, the willingness of clients to transact business with us or give rise to litigation or regulatory actions.
Management of potential conflicts of interest has become increasingly complex as we expand our business activities. A perceived or actual failure to address conflicts of interest adequately could affect our reputation, the willingness of clients to transact business with us or give rise to litigation or regulatory actions.
Failure of our technology systems, which could result from events beyond our control, including a systems malfunction or cyber attack, or an inability to effectively upgrade those systems or implement new technology-driven products or services, could result in financial losses, liability to clients, violations of applicable privacy and other applicable laws, and regulatory sanctions.
Failure of our technology systems to operate appropriately, which could result from events beyond our control, including a systems malfunction or cyber attack, failure by a third-party service provider, or an inability to effectively upgrade those systems or implement new technology-driven products or services, could result in financial losses, liability to clients for non-compliant data processing, and other violations of privacy and other laws and regulations, as well as regulatory sanctions.
The consideration of ESG factors in making investment and voting decisions is relatively new. Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, vary considerably among the investment community, and will likely continue to evolve over time.
Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, vary considerably among the investment community, and will likely continue to evolve over time.
For example, our banking business often requires that we deal with confidential matters of great significance to our clients. Our associates interact with clients, customers, and counterparties on an ongoing basis.
There is a risk that our associates could engage in misconduct that adversely affects our business. For example, our investment banking business often requires that we deal with confidential matters of great significance to our clients. Our associates interact with clients, customers, and counterparties on an ongoing basis.
The federal banking regulators, including the OCC, the Federal Reserve, and the FDIC, as well as the SEC (through FINRA) have the authority and under certain circumstances, the obligation, to limit or prohibit dividend payments and stock repurchases by the banking organizations they supervise, including our company and its bank subsidiaries.
These requirements and limitations may hinder our company’s ability to access funds from its subsidiaries. Federal regulators, including the Federal Reserve and the SEC (through FINRA), have the authority and, under certain circumstances, the obligation to limit or prohibit dividend payments and stock repurchases by the banking organizations they supervise, including our company and its bank subsidiaries.
Market conditions that change from time to time, thereby exposing us to market risk, include fluctuations in interest rates, equity prices, foreign exchange rates, and price deterioration or changes in value due to changes in market perception or actual credit quality of an issuer.
Market conditions that 12 change from time to time, thereby exposing us to market risk, include fluctuations in interest rates, equity prices, foreign exchange rates, and price deterioration or changes in value due to changes in market perception, actual credit quality of an issuer, or other factors such as any potential shutdown of the U.S. government or downgrade of the U.S. government’s credit rating.
If the broker-dealers from whom we recruit new financial advisors prevent, or significantly limit, the transfer of client data, our recruiting efforts may be adversely affected and we could continue to experience claims against us relating to our recruiting efforts. Our business depends on fees earned from the management of client accounts and asset management fees.
If the broker-dealers from whom we recruit new financial advisors prevent, or significantly limit, the transfer of client data and the solicitation of clients, our recruiting efforts may be adversely affected. Additionally, we could experience a larger number of claims against us relating to our recruiting efforts.
Our cost of capital and the availability of funding may be adversely affected by illiquid credit markets and wider credit spreads. Additionally, lenders may from time to time curtail, or even cease to provide, funding to borrowers as a result of future concerns over the strength of specific counterparties, as well as the stability of markets generally.
Additionally, lenders may from time to time curtail, or even cease to provide, funding to borrowers as a result of future concerns over the strength of specific counterparties, as well as the stability of markets generally.
In addition, we may need to raise capital or borrow funds in order to finance an acquisition, which could result in dilution or increased leverage. We may not be able to obtain financing on favorable terms or perhaps at all.
Finally, an event, change, or other circumstance could occur that gives rise to the termination of the transaction agreement. In addition, we may need to raise capital or borrow funds in order to finance an acquisition, which could result in dilution or increased leverage. We may not be able to obtain such financing on favorable terms or perhaps at all.
Macroeconomic conditions also may directly and indirectly impact a number of factors in the global financial markets that may be detrimental to our operating results, including trading levels, investing, and origination activity in the securities markets, security valuations, the absolute and relative level and volatility of interest and currency rates, real estate values, the actual and perceived quality of issuers and borrowers, and the supply of and demand for loans and deposits.
Macroeconomic conditions may also be negatively affected by domestic or international events, including natural disasters, political unrest, the indirect impact of wars, such as the wars in Ukraine and Israel, or public health epidemics and pandemics, as well as by a number of factors in the global financial markets that may be detrimental to our operating results, including trading levels, investing, and origination activity in the securities markets, security valuations, the absolute and relative level and volatility of interest and currency rates, real estate values, the actual and perceived quality of issuers and borrowers, and the supply of and demand for loans and deposits.
As a market-maker, we may own positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified. Despite risk mitigation policies, we may incur losses as a result of positions we hold in connection with our market-making.
Sudden changes in the value of these positions, despite our risk mitigation policies, could impact our financial results. 15 As a market-maker, we may take ownership of positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified.
The SEC’s Regulation Best Interest requires, among other things, a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities.
Changes in requirements relating to the standard of care for broker-dealers have increased, and may continue to increase, our costs. The SEC’s Regulation Best Interest requires, among other things, a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities.
We expect that any investigation of a cyber attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information.
We endeavor to design and implement policies and procedures to identify such cyber attacks as quickly as possible; however, we expect that any investigation of a cyber attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information.

… 185 more changes not shown on this page.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+1 added−2 removed3 unchanged
Biggest changeThe following table and graph assume that $100.00 was invested on December 31, 2017, in our common stock, the Peer Group Index, the S&P 500 Index, and the NYSE ARCA Securities Broker Dealer Index, with reinvestment of dividends. 2018 2019 2020 2021 2022 Stifel Financial Corp. $ 70 $ 104 $ 131 $ 185 $ 158 Peer Group $ 71 $ 86 $ 96 $ 136 $ 115 S&P 500 Index $ 96 $ 126 $ 149 $ 192 $ 157 NYSE ARCA Securities Broker-Dealer Index $ 89 $ 109 $ 142 $ 184 $ 169 Previous Peer Group $ 70 $ 89 $ 112 $ 163 $ 147 *Compound Annual Growth Rate 26 The Peer Group, which includes the following companies, is the peer group used in benchmarking fiscal year 2022 executive compensation as will be described in our 2023 definitive proxy statement.
Biggest changeThe following table and graph assume that $100.00 was invested on December 31, 2018, in our common stock, the Peer Group Index, the S&P 500 Index, and the NYSE ARCA Securities Broker Dealer Index, with reinvestment of dividends. 2019 2020 2021 2022 2023 Stifel Financial Corp. $ 148 $ 187 $ 264 $ 225 $ 270 Peer Group $ 121 $ 134 $ 190 $ 162 $ 179 S&P 500 Index $ 131 $ 156 $ 200 $ 164 $ 207 NYSE ARCA Securities Broker-Dealer Index $ 122 $ 159 $ 205 $ 189 $ 235 *Compound Annual Growth Rate 28 The Peer Group Index consists of the following companies that serve the same markets as us and which compete with us in one or more markets: Affiliated Managers Group Inc.
The following table sets forth information with respect to purchases made by or on behalf of Stifel Financial Corp. or any “affiliated purchaser” (as defined in Rule 10b-10(a)(3) under the Securities Exchange Act of 1934, as amended), of our common stock during the quarter ended December 31, 2022.
The following table sets forth information with respect to purchases made by or on behalf of Stifel Financial Corp. or any “affiliated purchaser” (as defined in Rule 10b-10(a)(3) under the Securities Exchange Act of 1934, as amended), of our common stock during the quarter ended December 31, 2023.
Fiscal Year 2022 Fiscal Year 2021 First quarter $ 0.30 $ 0.15 Second quarter $ 0.30 $ 0.15 Third quarter $ 0.30 $ 0.15 Fourth quarter $ 0.30 $ 0.15 The payment of dividends on our common stock is subject to several factors, including operating results, financial requirements of our company, and the availability of funds from our subsidiaries.
Fiscal Year 2023 Fiscal Year 2022 First quarter $ 0.36 $ 0.30 Second quarter $ 0.36 $ 0.30 Third quarter $ 0.36 $ 0.30 Fourth quarter $ 0.36 $ 0.30 The payment of dividends on our common stock is subject to several factors, including operating results, financial requirements of our company, and the availability of funds from our subsidiaries.
At December 31, 2022, the maximum number of shares that may yet be purchased under this plan was 9.0 million. 25 Stock Performance Graph Five-Year Shareholder Return Comparison The graph below compares the cumulative stockholder return on our common stock with the cumulative total return of a Peer Group Index, the Standard & Poor’s 500 Index (“S&P 500”), and the NYSE ARCA Securities Broker Dealer Index for the five-year period ended December 31, 2022.
At December 31, 2023, the maximum number of shares that may yet be purchased under this plan was 11.8 million. 27 Stock Performance Graph Five-Year Shareholder Return Comparison The graph below compares the cumulative stockholder return on our common stock with the cumulative total return of a Peer Group Index, the Standard & Poor’s 500 Index (“S&P 500”), and the NYSE ARCA Securities Broker Dealer Index for the five-year period ended December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange and Chicago Stock Exchange under the symbol “SF.” The closing sale price of our common stock as reported on the New York Stock Exchange on February 10, 2023, was $66.38.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange and Chicago Stock Exchange under the symbol “SF.” The closing sale price of our common stock as reported on the New York Stock Exchange on February 1, 2024, was $72.86.
As of that date, our common stock was held by approximately 74,400 shareholders.
As of that date, our common stock was held by approximately 92,500 shareholders.
Affiliated Managers Group Inc. Houlihan Lokey, Inc. Moelis & Company Ameriprise Financial, Inc. Invesco Ltd. Northern Trust Corp. Cowen Inc. Jefferies Financial Group Inc. Piper Sandler Companies Evercore Inc. Lazard Ltd. Raymond James Financial, Inc. Franklin Resources, Inc. LPL Financial Holdings Inc. T. Rowe Price Group, Inc.
Houlihan Lokey, Inc. Moelis & Company Ameriprise Financial, Inc. Invesco Ltd. Northern Trust Corp. Cowen Inc. (1) Jefferies Financial Group Inc. Piper Sandler Companies Evercore Inc. Lazard Ltd. Raymond James Financial, Inc. Franklin Resources, Inc. LPL Financial Holdings Inc. T. Rowe Price Group, Inc. (1) Cowen Inc. was acquired by TD Bank Group on March 1, 2023. ITEM 6 .
The following table sets forth for the periods indicated the high and low trades for our common stock. 2022 2021 High Low High Low First quarter $ 83.28 $ 60.35 $ 68.94 $ 47.72 Second quarter $ 70.26 $ 54.74 $ 72.20 $ 60.41 Third quarter $ 65.39 $ 51.73 $ 71.16 $ 60.80 Fourth quarter $ 66.96 $ 49.31 $ 78.60 $ 64.79 Cash dividends per share of common stock paid during the year are reflected below.
The following table sets forth for the periods indicated the high and low trades for our common stock. 2023 2022 High Low High Low First quarter $ 68.77 $ 53.48 $ 83.28 $ 60.35 Second quarter $ 62.35 $ 54.84 $ 70.26 $ 54.74 Third quarter $ 66.61 $ 58.08 $ 65.39 $ 51.73 Fourth quarter $ 70.07 $ 54.81 $ 66.96 $ 49.31 Cash dividends per share of common stock paid during the year are reflected below.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publically Announced Plans Maximum Number of Shares That May Yet be Purchased Under the Plan or Program October 1 - 31, 2022 166,527 58.77 166,527 10,096,906 November 1 - 30, 2022 547,318 62.31 547,318 9,549,588 December 1 - 31, 2022 537,707 58.16 537,707 9,011,881 1,251,552 60.06 1,251,552 We have an ongoing authorization from the Board of Directors to repurchase our common stock in the open market or in negotiated transactions.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publically Announced Plans Maximum Number of Shares That May Yet be Purchased Under the Plan or Program October 1 - 31, 2023 816,702 58.28 816,702 13,365,258 November 1 - 30, 2023 1,028,445 59.12 1,028,445 12,336,813 December 1 - 31, 2023 500,000 65.48 500,000 11,836,813 2,345,147 60.18 2,345,147 We have an ongoing authorization from the Board of Directors to repurchase our common stock in the open market or in negotiated transactions.
Securities Authorized for Issuance Under Equity Compensation Plans Information about securities authorized for issuance under our equity compensation plans is contained in Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Issuer Purchases of Equity Securities There were no unregistered sales of equity securities during the quarter ended December 31, 2022.
Securities Authorized for Issuance Under Equity Compensation Plans Information about securities authorized for issuance under our equity compensation plans is contained in “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Form 10-K.
The NYSE ARCA Securities Broker Dealer Index consists of eighteen firms in the brokerage sector. The Broker-Dealer Index includes our company. We previously used a self-selected peer group based on companies with similar market capitalization or public companies in the financial services industry.
The NYSE ARCA Securities Broker Dealer Index consists of eighteen firms in the brokerage sector. The Broker-Dealer Index includes our company. The stock price information shown on the graph below is not necessarily indicative of future price performance.
Removed
Beginning in fiscal year 2022, we are using the compensation peer group disclosed in our annual meeting proxy statement as the selected peer group in order to provide consistency in peers across disclosures. The stock price information shown on the graph below is not necessarily indicative of future price performance.
Added
Issuer Purchases of Equity Securities There were no unregistered sales of equity securities during the quarter ended December 31, 2023.
Removed
The Previous Peer Group (included in the graph for comparison purposes) includes the following companies: Stifel Financial Corp. Raymond James Financial, Inc. Oppenheimer Holdings, Inc. Goldman Sachs Group, Inc. Piper Sandler Companies Morgan Stanley ITEM 6 . Reserved 27

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

192 edited+49 added−39 removed181 unchanged
Biggest changeRESULTS OF OPERATIONS The following table presents consolidated financial information for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change As a Percentage of Net Revenues for the Year Ended December 31, 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Revenues: Commissions $ 710,589 $ 809,500 $ 760,627 (12.2 )% 6.4 % 16.2 % 17.1 % 20.3 % Principal transactions 529,033 581,164 588,303 (9.0 ) (1.2 ) 12.0 12.3 15.7 Investment banking 971,485 1,565,381 952,308 (37.9 ) 64.4 22.1 33.0 25.4 Asset management 1,262,919 1,206,516 917,424 4.7 31.5 28.8 25.5 24.5 Interest 1,099,115 548,400 523,832 100.4 4.7 25.0 11.6 14.0 Other income 19,685 72,125 75,345 (72.7 ) (4.3 ) 0.5 1.5 1.9 Total revenues 4,592,826 4,783,086 3,817,839 (4.0 ) 25.3 104.6 101.0 101.8 Interest expense 201,387 45,998 65,778 337.8 (30.1 ) 4.6 1.0 1.8 Net revenues 4,391,439 4,737,088 3,752,061 (7.3 ) 26.3 100.0 100.0 100.0 Non-interest expenses: Compensation and benefits 2,586,232 2,820,301 2,279,335 (8.3 ) 23.7 58.9 59.5 60.7 Occupancy and equipment rental 313,247 290,243 274,664 7.9 5.7 7.1 6.1 7.3 Communication and office supplies 175,135 165,490 164,736 5.8 0.5 4.0 3.5 4.4 Commissions and floor brokerage 57,752 59,681 55,960 (3.2 ) 6.6 1.3 1.3 1.5 Provision for credit losses 33,506 (11,502 ) 33,925 391.3 (133.9 ) 0.8 (0.2 ) 0.9 Other operating expenses 340,451 345,794 292,281 (1.5 ) 18.3 7.7 7.3 7.8 Total non-interest expenses 3,506,323 3,670,007 3,100,901 (4.5 ) 18.4 79.8 77.5 82.6 Income before income taxes 885,116 1,067,081 651,160 (17.1 ) 63.9 20.2 22.5 17.4 Provision for income taxes 222,961 242,223 147,688 (8.0 ) 64.0 5.1 5.1 4.0 Net income 662,155 824,858 503,472 (19.7 ) 63.8 15.1 17.4 13.4 Preferred dividends 37,281 35,587 27,261 4.8 30.5 0.9 0.7 0.7 Net income available to common shareholders $ 624,874 $ 789,271 $ 476,211 (20.8 )% 65.7 % 14.2 % 16.7 % 12.7 % 29 NET REVENUES The following table presents consolidated net revenues for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenues: Commissions $ 710,589 $ 809,500 $ 760,627 (12.2 )% 6.4 % Principal transactions 529,033 581,164 588,303 (9.0 ) (1.2 ) Transactional revenues 1,239,622 1,390,664 1,348,930 (10.9 ) 3.1 Capital raising 256,862 709,236 524,161 (63.8 ) 35.3 Advisory 714,623 856,145 428,147 (16.5 ) 100.0 Investment banking 971,485 1,565,381 952,308 (37.9 ) 64.4 Asset management 1,262,919 1,206,516 917,424 4.7 31.5 Net interest 897,728 502,402 458,054 78.7 9.7 Other income 19,685 72,125 75,345 (72.7 ) (4.3 ) Total net revenues $ 4,391,439 $ 4,737,088 $ 3,752,061 (7.3 )% 26.3 % Year Ended December 31, 2022, Compared With Year Ended December 31, 2021 For the year ended December 31, 2022, net revenues decreased 7.3% to $4.4 billion from $4.7 billion in 2021.
Biggest changeThe stability and expected reduction in the Federal funds rate should positively impact our fixed income transactional business. 31 RESULTS OF OPERATIONS The following table presents consolidated financial information for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change As a Percentage of Net Revenues for the Year Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Revenues: Commissions $ 673,597 $ 710,589 $ 809,500 (5.2 )% (12.2 )% 15.5 % 16.2 % 17.1 % Principal transactions 490,440 529,033 581,164 (7.3 ) (9.0 ) 11.3 12.0 12.3 Investment banking 731,255 971,485 1,565,381 (24.7 ) (37.9 ) 16.8 22.1 33.0 Asset management 1,299,496 1,262,919 1,206,516 2.9 4.7 29.9 28.8 25.5 Interest 1,955,745 1,099,115 548,400 77.9 100.4 45.0 25.0 11.6 Other income 8,747 19,685 72,125 (55.6 ) (72.7 ) 0.1 0.5 1.5 Total revenues 5,159,280 4,592,826 4,783,086 12.3 (4.0 ) 118.6 104.6 101.0 Interest expense 810,336 201,387 45,998 302.4 337.8 18.6 4.6 1.0 Net revenues 4,348,944 4,391,439 4,737,088 (1.0 ) (7.3 ) 100.0 100.0 100.0 Non-interest expenses: Compensation and benefits 2,554,581 2,586,232 2,820,301 (1.2 ) (8.3 ) 58.7 58.9 59.5 Occupancy and equipment rental 339,322 313,247 290,243 8.3 7.9 7.8 7.1 6.1 Communication and office supplies 184,652 175,135 165,490 5.4 5.8 4.3 4.0 3.5 Commissions and floor brokerage 58,344 57,752 59,681 1.0 (3.2 ) 1.3 1.3 1.3 Provision for credit losses 24,999 33,506 (11,502 ) (25.4 ) 391.3 0.6 0.8 (0.2 ) Other operating expenses 480,354 340,451 345,794 41.1 (1.5 ) 11.1 7.7 7.3 Total non-interest expenses 3,642,252 3,506,323 3,670,007 3.9 (4.5 ) 83.8 79.8 77.5 Income before income taxes 706,692 885,116 1,067,081 (20.2 ) (17.1 ) 16.2 20.2 22.5 Provision for income taxes 184,156 222,961 242,223 (17.4 ) (8.0 ) 4.2 5.1 5.1 Net income 522,536 662,155 824,858 (21.1 ) (19.7 ) 12.0 15.1 17.4 Preferred dividends 37,281 37,281 35,587 — 4.8 0.8 0.9 0.7 Net income available to common shareholders $ 485,255 $ 624,874 $ 789,271 (22.3 )% (20.8 )% 11.2 % 14.2 % 16.7 % NET REVENUES The following table presents consolidated net revenues for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues: Commissions $ 673,597 $ 710,589 $ 809,500 (5.2 )% (12.2 )% Principal transactions 490,440 529,033 581,164 (7.3 ) (9.0 ) Transactional revenues 1,164,037 1,239,622 1,390,664 (6.1 ) (10.9 ) Capital raising 265,667 256,862 709,236 3.4 (63.8 ) Advisory 465,588 714,623 856,145 (34.8 ) (16.5 ) Investment banking 731,255 971,485 1,565,381 (24.7 ) (37.9 ) Asset management 1,299,496 1,262,919 1,206,516 2.9 4.7 Net interest 1,145,409 897,728 502,402 27.6 78.7 Other income 8,747 19,685 72,125 (55.6 ) (72.7 ) Total net revenues $ 4,348,944 $ 4,391,439 $ 4,737,088 (1.0 )% (7.3 )% Year Ended December 31, 2023, Compared With Year Ended December 31, 2022 For the year ended December 31, 2023, net revenues decreased 1.0% to $4.3 billion from $4.4 billion in 2022.
The decrease was primarily attributable to lower capital-raising, advisory, and transactional revenues, partially offset by higher net interest income and asset management revenues. Commissions – Commission revenues are primarily generated from agency transactions in OTC and listed equity securities, insurance products, and options. In addition, commission revenues also include distribution fees for promoting and distributing mutual funds.
The decrease was primarily attributable to lower advisory and transactional revenues, partially offset by higher net interest income, asset management, and capital-raising revenues. Commissions – Commission revenues are primarily generated from agency transactions in OTC and listed equity securities, insurance products, and options. In addition, commission revenues also include distribution fees for promoting and distributing mutual funds.
For the year ended December 31, 2022, compensation and benefits expense decreased 8.3% to $2.6 billion from $2.8 billion in 2021. The decrease in compensation and benefits expenses is primarily attributable to lower variable compensation expense.
Compensation and benefits – For the year ended December 31, 2022, compensation and benefits expense decreased 8.3% to $2.6 billion from $2.8 billion in 2021. The decrease in compensation and benefits expenses is primarily attributable to lower variable compensation expense.
We have identified Level 3 financial instruments to include certain asset-backed 56 securities, consisting of collateral loan obligation securities, that have experienced low volumes of executed transactions, certain corporate bonds and equity securities where there was less frequent or nominal market activity, investments in private equity funds, and auction rate securities for which the market has been dislocated and largely ceased to function.
We have identified Level 3 financial instruments to include certain asset-backed securities, consisting of collateral loan obligation securities, that have experienced low volumes of executed transactions, certain corporate bonds and equity securities where there was less frequent or nominal market activity, investments in private equity funds, and auction rate securities for which the market has been dislocated and largely ceased to function.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our company's and Stifel Bancorp's financial statements. 62 Effects of Inflation Our assets are primarily monetary, consisting of cash, securities inventory, and receivables from customers and brokers and dealers.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our company's and Stifel Bancorp's financial statements. Effects of Inflation Our assets are primarily monetary, consisting of cash, securities inventory, and receivables from customers and brokers and dealers.
Please refer to the Distribution of Assets, Liabilities, and Shareholders’ Equity; Interest Rates and Interest Differential table below for additional information on Stifel Bancorp’s average balances and interest income and expense. NON-INTEREST EXPENSES For the year ended December 31, 2022, Global Wealth Management non-interest expenses increased 4.4% to $1.8 billion from $1.7 billion in 2021.
Please refer to the Distribution of Assets, Liabilities, and Shareholders’ Equity; Interest Rates and Interest Differential table below for additional information on Stifel Bancorp’s average balances and interest income and expense. NON-INTEREST EXPENSES 40 For the year ended December 31, 2022, Global Wealth Management non-interest expenses increased 4.4% to $1.8 billion from $1.7 billion in 2021.
Stifel Bancorp is eligible to participate in the Federal Reserve’s discount window program; however, Stifel Bancorp does not view borrowings from the Federal Reserve as a primary means of funding. The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the Federal Reserve, and is secured by securities.
Stifel Bancorp is eligible to participate in the Federal Reserve’s discount window program; however, Stifel Bancorp does not view 55 borrowings from the Federal Reserve as a primary means of funding. The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the Federal Reserve, and is secured by securities.
For the year ended December 31, 2022, fixed income capital markets capital-raising revenues decreased 41.0% to $133.9 million from $226.9 million in 2021. The decrease is primarily attributable to lower municipal bond and loan issuances as a result of the microeconomic conditions that existed during 2022.
For the year ended December 31, 2022, fixed income capital-raising revenues decreased 41.0% to $133.9 million from $226.9 million in 2021. The decrease is primarily attributable to lower municipal bond and loan issuances as a result of the microeconomic conditions that existed during 2022.
The assumptions utilized in the Company’s liquidity stress tests include, but are not limited to, the following: • No government support • No access to equity and unsecured debt markets within the stress horizon • Higher haircuts and significantly lower availability of secured funding • Additional collateral that would be required by trading counter-parties, certain exchanges, and clearing organizations related to credit rating downgrades • Client cash withdrawals and inability to accept new deposits • Increased demand from customers on the funding of loans and lines of credit At December 31, 2022, the Company maintained sufficient liquidity to meet current and contingent funding obligations as modeled in its liquidity stress test model.
The assumptions utilized in the Company’s liquidity stress tests include, but are not limited to, the following: • No government support • No access to equity and unsecured debt markets within the stress horizon • Higher haircuts and significantly lower availability of secured funding • Additional collateral that would be required by trading counter-parties, certain exchanges, and clearing organizations related to credit rating downgrades • Client cash withdrawals and inability to accept new deposits • Increased demand from customers on the funding of loans and lines of credit At December 31, 2023, the Company maintained sufficient liquidity to meet current and contingent funding obligations as modeled in its liquidity stress test model.
Changes in value of our financial instruments may result from fluctuations in interest rates, credit ratings, equity prices, and the correlation among these factors, along with the level of volatility. 59 We manage our trading businesses by product and have established trading departments that have responsibility for each product.
Changes in value of our financial instruments may result from fluctuations in interest rates, credit ratings, equity prices, and the correlation among these factors, along with the level of volatility. We manage our trading businesses by product and have established trading departments that have responsibility for each product.
For debt securities, we also consider any intent to sell the security and the likelihood we will be required to sell the security before its anticipated recovery. We continually monitor the ratings of our security holdings and conduct regular reviews of our credit-sensitive assets. 52 Deposits – Deposits have become our largest funding source.
For debt securities, we also consider any intent to sell the security and the likelihood we will be required to sell the security before its anticipated recovery. We continually monitor the ratings of our security holdings and conduct regular reviews of our credit-sensitive assets. Deposits – Deposits have become our largest funding source.
Commissions and floor brokerage – For the year ended December 31, 2022, commissions and floor brokerage decreased 5.7% to $31.8 million from $33.7 million in 2021. The decrease was primarily attributable to lower clearing expenses and ECN trading costs, partially offset by higher processing expenses.
Commissions and floor brokerage – For the year ended December 31, 2022, commissions and floor brokerage expense decreased 5.7% to $31.8 million from $33.7 million in 2021. The decrease was primarily attributable to lower clearing expenses and ECN trading costs, partially offset by higher processing expenses.
The trading inventories are managed with a view toward facilitating client transactions, considering the risk and profitability of each inventory position. Position limits in trading inventory accounts are established by our Enterprise Risk Management department and monitored on a daily basis within the business units.
The trading inventories are managed with a view toward facilitating client transactions, considering the risk and profitability of each 61 inventory position. Position limits in trading inventory accounts are established by our Enterprise Risk Management department and monitored on a daily basis within the business units.
For the year ended December 31, 2022, fixed income transactional revenues increased 2.5% to $370.2 million from $361.0 million in 2021. The increase in fixed income institutional transactional revenues is primarily attributable to revenues from the Vining Sparks acquisition, partially offset by lower trading gains.
For the year ended December 31, 2022, fixed income transactional revenues increased 2.5% to $370.2 million from $361.0 million in 2021. The increase in fixed income transactional revenues is primarily attributable to revenues from the Vining Sparks acquisition, partially offset by lower trading gains.
Identifiable intangible assets, which are amortized over their estimated useful lives, are tested for potential impairment whenever events or changes in circumstances suggest that the carrying value of an asset or asset group may not be fully recoverable. 58 Recent Accounting Pronouncements See Note 2 of the Notes to Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our consolidated financial statements.
Identifiable intangible assets, which are amortized over their estimated useful lives, are tested for potential impairment whenever events or changes in circumstances suggest that the carrying value of an asset or asset group may not be fully recoverable. 60 Recent Accounting Pronouncements See Note 2 of the Notes to Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our consolidated financial statements.
Principal transactions – For the year ended December 31, 2022, principal transactions revenues decreased 10.7% to $333.8 million from $373.7 million in 2021. Transactional revenues – For the year ended December 31, 2022, institutional transactional revenues decreased 7.3% to $570.7 million from $615.7 million in 2021.
Principal transactions – For the year ended December 31, 2022, principal transactions revenues decreased 10.7% to $333.8 million from $373.7 million in 2021. Transactional revenues – For the year ended December 31, 2022, transactional revenues decreased 7.3% to $570.7 million from $615.7 million in 2021.
At December 31, 2022, Stifel’s excess net capital exceeded the minimum requirement, as defined. There are also limitations on the amount of dividends that may be declared by a broker-dealer without FINRA approval. See Note 19 of the Notes to Consolidated Financial Statements for more information on the capital restrictions placed on our broker-dealer subsidiaries.
At December 31, 2023, Stifel’s excess net capital exceeded the minimum requirement, as defined. There are also limitations on the amount of dividends that may be declared by a broker-dealer without FINRA approval. See Note 19 of the Notes to Consolidated Financial Statements for more information on the capital restrictions placed on our broker-dealer subsidiaries.
The objectives of these policies are to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity. 51 Liquidity stress testing (Firmwide) – A liquidity stress test model is maintained by the Company that measures liquidity outflows across multiple scenarios at the major operating subsidiaries and details the corresponding impact to our holding company and the overall consolidated firm.
The objectives of these policies are to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity. 53 Liquidity stress testing (Firmwide) – A liquidity stress test model is maintained by the Company that measures liquidity outflows across multiple scenarios at the major operating subsidiaries and details the corresponding impact to our holding company and the overall consolidated firm.
For the year ended December 31, 2022, capital-raising revenues decreased 64.1% to $237.3 million from $661.1 million in 2021. 46 For the year ended December 31, 2022, equity capital markets capital-raising revenues decreased 76.2% to $103.4 million from $434.2 million in 2021. The decrease is a result of lower issuances in line with market volumes in an uncertain market environment.
For the year ended December 31, 2022, capital-raising revenues decreased 64.1% to $237.3 million from $661.1 million in 2021. For the year ended December 31, 2022, equity capital-raising revenues decreased 76.2% to $103.4 million from $434.2 million in 2021. The decrease is a result of lower issuances in line with market volumes in an uncertain market environment.
Asset management – For the year ended December 31, 2022, asset management revenues increased 4.7% to a record $1.3 billion from $1.2 billion in 2021. The increase is primarily attributable to strong fee-based asset flows. Fee-based account revenues are primarily billed based on asset values at the end of the prior quarter.
Asset management – For the year ended December 31, 2022, asset management revenues increased 4.7% to $1.3 billion from $1.2 billion in 2021. The increase is primarily attributable to strong fee-based asset flows. Fee-based account revenues are primarily billed based on asset values at the end of the prior quarter.
Receivables from and payables to clients and 61 stock borrow and lending activities, both with a large number of clients and counterparties, and any potential concentration are carefully monitored. Stock borrow and lending activities are executed under master netting agreements, which gives our company right of offset in the event of counterparty default.
Receivables from and payables to clients and 63 stock borrow and lending activities, both with a large number of clients and counterparties, and any potential concentration are carefully monitored. Stock borrow and lending activities are executed under master netting agreements, which gives our company right of offset in the event of counterparty default.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of our company should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of our company should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2023.
For the year ended December 31, 2022, equity transactional revenues decreased 21.3% to $200.5 million from $254.7 million in 2021. The decline in equity institutional transactional revenues is primarily attributable to trading losses and declines in activity. Investment banking – For the year ended December 31, 2022, investment banking revenues decreased 37.3% to $952.0 million from $1.5 billion in 2021.
For the year ended December 31, 2022, equity transactional revenues decreased 21.3% to $200.5 million from $254.7 million in 2021. The decline in equity transactional revenues is primarily attributable to trading losses and declines in activity. 49 Investment banking – For the year ended December 31, 2022, investment banking revenues decreased 37.3% to $952.0 million from $1.5 billion in 2021.
We have adopted policies and procedures concerning Enterprise Risk Management. The Risk Management/Corporate Governance Committee of the Board of Directors, in exercising its oversight of management’s activities, conducts periodic reviews and discussions with management regarding the guidelines and policies governing the processes by which risk assessment and risk management are handled.
We have adopted policies and procedures concerning Enterprise Risk Management. The Risk Management Committee of the Board of Directors, in exercising its oversight of management’s activities, conducts periodic reviews and discussions with management regarding the guidelines and policies governing the processes by which risk assessment and risk management are handled.
The restricted stock units or restricted stock awards generally vest over the next one to ten years after issuance and are distributed at predetermined future payable dates once vesting occurs. Restricted stock awards are restricted as to sale or disposition. These restrictions lapse over the next one to four years.
The restricted stock units generally vest over the next one to ten years after issuance and are distributed at predetermined future payable dates once vesting occurs. Restricted stock awards are restricted as to sale or disposition. These restrictions lapse over the next one to two years.
Transactional revenues – For the year ended December 31, 2022, transactional revenues decreased 13.7% to $668.9 million from $775.0 million in 2021 as a result of a decrease in client activity from significantly elevated levels a year ago.
Transactional revenues – For the year ended December 31, 2022, transactional revenues decreased 13.7% to $668.9 million from $775.0 million in the comparable period in 2021 as a result of a decrease in client activity from significantly elevated levels a year ago.
The restricted stock units vest on an annual basis over the next one to ten years and are distributable, if vested, at future specified dates. Restricted stock awards are restricted as to sale or disposition. These restrictions lapse over the next one to five years.
The restricted stock units vest on an annual basis over the next one to ten years and are distributable, if vested, at future specified dates. Restricted stock awards are restricted as to sale or disposition. These restrictions lapse over the next one to two years.
Our revenue decline for the year ended December 31, 2022, was primarily attributable to lower capital-raising, advisory, and transactional revenues, partially offset by higher net interest income and asset management revenues.
Our revenue decline for the year ended December 31, 2023, was primarily attributable to lower advisory and transactional revenues, partially offset by higher net interest income, asset management, and capital-raising revenues.
At December 31, 2022, all of our broker-dealer subsidiaries’ net capital exceeded the minimum net capital required under the SEC rule. At December 31, 2022, SNEL’s capital and reserves were in excess of the financial resources requirement under the rules of the FCA.
At December 31, 2023, all of our broker-dealer subsidiaries’ net capital exceeded the minimum net capital required under the SEC rule. At December 31, 2023, SNEL’s capital and reserves were in excess of the financial resources requirement under the rules of the FCA.
The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average yield/cost. Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous year’s volume. Changes applicable to both volume and rate have been allocated proportionately. 42 II.
The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average yield/cost. Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous year’s volume. Changes applicable to both volume and rate have been allocated proportionately. 44 II.
Further, to the extent inflation results in rising interest rates and has other adverse effects upon the securities markets, it may adversely affect our financial position and results of operations. 63
Further, to the extent inflation results in rising interest rates and has other adverse effects upon the securities markets, it may adversely affect our financial position and results of operations. 64
The improved profit margin is a result of strong revenue growth and our continued expense discipline, as well as a change in the composition of revenue (higher net interest income). 39 I.
The improved profit margin is a result of strong revenue growth and our continued expense discipline, as well as a change in the composition of revenue (higher net interest income). 41 I.
At December 31, 2022, we had no advances on the Credit Facility and were in compliance with all covenants and currently do not expect any covenant violations.
At December 31, 2023, we had no advances on the Credit Facility and were in compliance with all covenants and currently do not expect any covenant violations.
Our uncommitted secured lines of credit at December 31, 2022, totaled $880.0 billion with four banks and are dependent on having appropriate collateral, as determined by the bank agreements, to secure an advance under the line. The availability of our uncommitted lines is subject to approval by the individual banks each time an advance is requested and may be denied.
Our uncommitted secured lines of credit at December 31, 2023, totaled $880.0 million with four banks and are dependent on having appropriate collateral, as determined by the bank agreements, to secure an advance under the line. The availability of our uncommitted lines is subject to approval by the individual banks each time an advance is requested and may be denied.
Year Ended December 31, 2022, Compared With Year Ended December 31, 2021 Net interest income – Net interest income is the difference between interest earned on interest-earning assets and interest paid on funding sources.
Year Ended December 31, 2023, Compared With Year Ended December 31, 2022 Net interest income – Net interest income is the difference between interest earned on interest-earning assets and interest paid on funding sources.
If the fair value is less than the carrying amount, a further test is required to measure the amount of the impairment. We test goodwill for impairment on an annual basis and on an interim basis when certain events or circumstances exist.
If the fair value is less than the carrying amount, a further test is required to measure the amount of the impairment. We test goodwill for impairment on an annual basis as of October 1 and on an interim basis when certain events or circumstances exist.
At December 31, 2022, available cash and highly liquid investments comprised approximately 16% of Stifel Bancorp’s assets, which was well in excess of its internal target. In addition to these stress tests, management performs a daily liquidity review. The daily analysis provides management with all major fluctuations in liquidity.
At December 31, 2023, available cash and highly liquid investments comprised approximately 20% of Stifel Bancorp’s assets, which was well in excess of its internal target. In addition to these stress tests, management performs a daily liquidity review. The daily analysis provides management with all major fluctuations in liquidity.
Federal Home Loan Bank Advances and other secured financing – Stifel Bancorp has borrowing capacity with the Federal Home Loan Bank of $5.8 billion at December 31, 2022, and $64.5 million in federal funds agreements for the purpose of purchasing short-term funds should additional liquidity be needed. At December 31, 2022, there were no outstanding Federal Home Loan Bank advances.
Federal Home Loan Bank Advances and other secured financing – Stifel Bancorp has borrowing capacity with the Federal Home Loan Bank of $5.7 billion at December 31, 2023, and $64.5 million in federal funds agreements for the purpose of purchasing short-term funds should additional liquidity be needed. At December 31, 2023, there were no outstanding Federal Home Loan Bank advances.
Our peak daily borrowing on our uncommitted secured lines was $120.0 million during the year ended December 31, 2022. There are no compensating balance requirements under these arrangements. Any borrowings on secured lines of credit are day-to-day and are generally utilized to finance certain fixed income securities.
Our peak daily borrowing on our uncommitted secured lines was $240.0 million during the year ended December 31, 2023. There are no compensating balance requirements under these arrangements. Any borrowings on secured lines of credit are day-to-day and are generally utilized to finance certain fixed income securities.
Stifel Bancorp has borrowing capacity of $1.3 billion with the Federal Reserve’s discount window at December 31, 2022. Stifel Bancorp receives overnight funds from excess cash held in Stifel brokerage accounts, which are deposited into a money market account. These balances totaled $25.3 billion at December 31, 2022.
Stifel Bancorp has borrowing capacity of $1.3 billion with the Federal Reserve’s discount window at December 31, 2023. Stifel Bancorp receives overnight funds from excess cash held in Stifel brokerage accounts, which are deposited into a money market account. These balances totaled $24.1 billion at December 31, 2023.
Unless otherwise indicated, the terms “we,” “us,” “our,” or “our company” in this report refer to Stifel Financial Corp. and its wholly owned subsidiaries. Executive Summary We operate as a financial services and bank holding company. We have built a diversified business serving private clients, institutional investors, and investment banking clients located across the country.
Unless otherwise indicated, the terms “we,” “us,” “our,” or “our company” in this report refer to Stifel Financial Corp. and its wholly owned subsidiaries. Executive Summary We operate as a financial services and bank holding company. We have built a diversified business serving private clients, institutional investors, and investment banking clients located across the U.S., Europe, and Canada.
In addition, Stifel, our broker-dealer subsidiary, is required to maintain compliance with a minimum regulatory excess net capital percentage covenant, as defined, and our bank subsidiaries are required to maintain their status as well-capitalized, as defined.
In addition, Stifel is required to maintain compliance with a minimum regulatory excess net capital percentage covenant, as defined, and our bank subsidiaries are required to maintain their status as well-capitalized, as defined.
We remain well-positioned entering fiscal 2023, with nearly $390 billion of client assets under administration, strong activity levels for financial advisory recruiting, a significant interest-rate sensitive asset base at our bank subsidiaries, and a strong investment banking pipeline.
We remain well-positioned entering fiscal 2024, with nearly $445 billion of client assets under administration, strong activity levels for financial advisory recruiting, a significant interest rate-sensitive asset base at our bank subsidiaries, and a strong investment banking pipeline.
This model assumes that historical changes in market conditions are representative of future changes, and trading losses on any given day could exceed the reported VaR by significant amounts in unusually volatile markets. Further, the model involves a number of assumptions and inputs.
We estimate VaR using a model that assumes historical changes in market conditions are representative of future changes, and trading losses on any given day could exceed the reported VaR by significant amounts in unusually volatile markets. Further, the model involves a number of assumptions and inputs.
The determination of these reserve amounts requires us to use significant judgment, and our final liabilities may ultimately be materially different. This determination is inherently subjective, as it requires estimates that are subject to potentially significant revision as more information becomes available and due to subsequent events.
The determination of the amount to accrue requires us to use significant judgment, and our final liabilities may ultimately be materially different. This determination is inherently subjective, as it requires estimates that are subject to potentially significant revision as more information becomes available and due to subsequent events.
At December 31, 2022, we had no outstanding balances on our uncommitted secured lines of credit. Federal Home Loan advances are floating-rate advances. The weighted average interest rates during the year ended December 31, 2022, on these advances was 1.72%. The advances are secured by Stifel Bancorp’s residential mortgage loan portfolio and investment portfolio.
At December 31, 2023, we had no outstanding balances on our uncommitted secured lines of credit. Federal Home Loan advances are floating-rate advances. The weighted average interest rates during the year ended December 31, 2023, on these advances was 4.99%. The advances are secured by Stifel Bancorp’s residential mortgage loan portfolio and investment portfolio.
At December 31, 2022, the maximum number of shares that may yet be purchased under this plan was 9.0 million. We utilize the share repurchase program to manage our equity capital relative to the growth of our business and help to meet obligations under our employee benefit plans.
At December 31, 2023, the maximum number of shares that may yet be purchased under this plan was 11.8 million. We utilize the share repurchase program to manage our equity capital relative to the growth of our business and help to meet obligations under our employee benefit plans.
At December 31, 2022, the fair value of securities accepted as collateral where we are permitted to sell or repledge the securities was $1.8 billion and the fair value of the collateral that had been sold or repledged was $212.0 million. By using derivative instruments, we are exposed to credit and market risk on those derivative positions.
At December 31, 2023, the fair value of securities accepted as collateral where we are permitted to sell or repledge the securities was $1.6 billion and the fair value of the collateral that had been sold or repledged was $417.6 million. By using derivative instruments, we are exposed to credit and market risk on those derivative positions.
Investment advisory fees are charged based on the value of assets in fee-based accounts. Asset management revenues are affected by changes in the balances of client assets due to market fluctuations and levels of net new client assets. For the year ended December 31, 2022, asset management revenues increased 4.7% to a record $1.3 billion from $1.2 billion in 2021.
Investment advisory fees are charged based on the value of assets in fee-based accounts. Asset management revenues are affected by changes in the balances of client assets due to market fluctuations and levels of net new client assets. For the year ended December 31, 2023, asset management revenues increased 2.9% to a record $1.30 billion from $1.26 billion in 2022.
Analysis of Financial Condition Our company’s consolidated statements of financial condition consist primarily of cash and cash equivalents, receivables, financial instruments owned, bank loans, investments, goodwill, loans and advances to financial advisors, bank deposits, and payables. Total assets of $37.2 billion at December 31, 2022, were up 9.2% over December 31, 2021.
Analysis of Financial Condition Our company’s consolidated statements of financial condition consist primarily of cash and cash equivalents, receivables, financial instruments owned, bank loans, investments, goodwill, loans and advances to financial advisors, bank deposits, and payables. Total assets of $37.7 billion at December 31, 2023, were up 1.4% over December 31, 2022.
We have recorded cash tax savings for the year ending December 31, 2022, of $10.0 million and anticipate cumulative future cash savings of $88.7 million as of result of the tax amortization of goodwill. In accordance with ASC Topic 350, “Intangibles – Goodwill and Other,” indefinite-life intangible assets and goodwill are not amortized.
We have recorded cash tax savings for the year ending December 31, 2023, of $10.8 million and anticipate cumulative future cash savings of $93.1 million as of result of the tax amortization of goodwill. In accordance with ASC Topic 350, “Intangibles – Goodwill and Other,” indefinite-life intangible assets and goodwill are not amortized.
Off-Balance Sheet Arrangements Information concerning our off-balance sheet arrangements is included in Note 24 of the Notes to Consolidated Financial Statements. Such information is hereby incorporated by reference. Dilution As of December 31, 2022, there were 17,354,801 outstanding restricted stock units, PRSUs, and restricted stock awards.
Off-Balance Sheet Arrangements Information concerning our off-balance sheet arrangements is included in Note 24 of the Notes to Consolidated Financial Statements. Such information is hereby incorporated by reference. Dilution As of December 31, 2023, there were 15,527,544 outstanding restricted stock units, PRSUs, and restricted stock awards.
Communications and office supplies – Communications expense includes costs for telecommunication and data transmission, primarily for obtaining third-party market data information. For the year ended December 31, 2022, communications and office supplies expense increased 5.8% to $175.1 million from $165.5 million in 2021.
Communications and office supplies – Communications expense includes costs for telecommunication and data transmission, primarily for obtaining third-party market data information. For the year ended December 31, 2023, communications and office supplies expense increased 5.4% to $184.7 million from $175.1 million in 2022.
Interest revenue – For the year ended December 31, 2022, interest revenue increased 97.2% to $1.1 billion from $538.9 million in 2021. The increase is primarily attributable to higher interest-earning assets and higher interest rates.
Interest revenue – For the year ended December 31, 2023, interest revenue increased 75.2% to $1.9 billion from $1.1 billion in 2022. The increase is primarily attributable to higher interest-earning assets and higher interest rates.
Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. For the year ended December 31, 2022, interest revenue for Stifel Bancorp of $1.0 billion was generated from weighted-average interest-earning assets of $27.8 billion at a weighted-average interest rate of 3.66%.
Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. For the year ended December 31, 2023, interest revenue for Stifel Bancorp of $1.8 billion was generated from weighted-average interest-earning assets of $29.9 billion at a weighted-average interest rate of 6.01%.
At December 31, 2022, the total number of restricted stock units, Performance-based Restricted Stock Units (“PRSUs”), and restricted stock awards outstanding was 17.4 million, of which 14.8 million were unvested. At December 31, 2022, there was approximately $672.5 million of unrecognized compensation cost for all deferred awards, which is expected to be recognized over a weighted-average period of 2.6 years.
At December 31, 2023, the total number of restricted stock units, Performance-based Restricted Stock Units (“PRSUs”), and restricted stock awards outstanding was 15.5 million, of which 13.5 million were unvested. At December 31, 2023, there was approximately $708.8 million of unrecognized compensation cost for all deferred awards, which is expected to be recognized over a weighted-average period of 2.5 years.
The following table sets forth the high, low, and daily average VaR for our trading portfolios during the year ended December 31, 2022, and the daily VaR at December 31, 2022 and 2021 (in thousands) : December 31, 2022 VaR Calculation at December 31, High Low Daily Average 2022 2021 Daily VaR $ 13,709 $ 4,448 $ 7,700 $ 6,293 $ 6,044 Stifel Bancorp’s interest rate risk is principally associated with changes in market interest rates related to residential, consumer, and commercial lending activities, as well as FDIC-insured deposit accounts to customers of our broker-dealer subsidiaries and to the general public.
The following table sets forth the high, low, and daily average VaR for our trading portfolios during the year ended December 31, 2023, and the daily VaR at December 31, 2023 and 2022 (in thousands) : December 31, 2023 VaR Calculation at December 31, High Low Daily Average 2023 2022 Daily VaR $ 11,953 $ 3,612 $ 7,572 $ 6,464 $ 6,293 Stifel Bancorp’s interest rate risk is principally associated with changes in market interest rates related to residential, consumer, and commercial lending activities, as well as FDIC-insured deposit accounts to customers of our broker-dealer subsidiaries and to the general public.
Advisory revenues decreased 16.5% to $714.6 million for the year ended December 31, 2022, from $856.1 million in 2021. The decrease is primarily attributable to lower levels of completed advisory transactions during 2022. Asset management – Asset management revenues include fees for asset-based financial services provided to individuals and institutional clients.
Advisory revenues decreased 34.8% to $465.6 million for the year ended December 31, 2023, from $714.6 million in 2022. The decrease is primarily attributable to lower levels of completed advisory transactions during 2023. Asset management – Asset management revenues include fees for asset-based financial services provided to individuals and institutional clients.
Year Ended December 31, 2021, Compared With Year Ended December 31, 2020 NET REVENUES For the year ended December 31, 2021, Global Wealth Management net revenues increased 18.6% to $2.6 billion from $2.2 billion in 2020.
Year Ended December 31, 2022, Compared With Year Ended December 31, 2021 NET REVENUES For the year ended December 31, 2022, Global Wealth Management net revenues increased 8.7% to $2.8 billion from $2.6 billion in 2021.
Investment banking – Investment banking, which represents sales credits for investment banking underwritings, decreased 59.5% to $19.5 million for the year ended December 31, 2022, from $48.2 million in 2021. Please refer to “Investment banking” in the Institutional Group segment discussion for information on the changes in investment banking revenues.
Investment banking – Investment banking, which represents sales credits for investment banking underwritings, decreased 14.5% to $16.7 million for the year ended December 31, 2023, from $19.5 million in 2022. Please refer to “Investment banking” in the Institutional Group segment discussion for information on the changes in investment banking revenues.
As of December 31, 2022, our liabilities were comprised primarily of deposits of $27.1 billion at Stifel Bancorp, accounts payable and accrued expenses of $1.3 billion, senior notes, net of debt issuance costs, of $1.1 billion, payables to customers of $770.3 million at our broker-dealer subsidiaries, and accrued employee compensation of $677.4 million.
As of December 31, 2023, our liabilities were comprised primarily of deposits of $27.3 billion at Stifel Bancorp, accounts payable and accrued expenses of $1.3 billion, senior notes, net of debt issuance costs, of $1.1 billion, payables to customers of $734.8 million at our broker-dealer subsidiaries, and accrued employee compensation of $585.6 million.
For the year ended December 31, 2020, interest expense for Stifel Bancorp of $18.3 million was incurred from weighted-average interest-bearing liabilities of $16.5 billion at a weighted-average interest rate of 0.11%. Interest expense represents interest on customer money market accounts, time deposits, Federal Home Loan Bank advances, and other borrowings.
For the year ended December 31, 2021, interest expense for Stifel Bancorp of $4.8 million was incurred from weighted-average interest-bearing liabilities of $19.3 billion at a weighted-average interest rate of 0.02%. Interest expense represents interest on customer money market accounts, time deposits, Federal Home Loan Bank advances, and other borrowings.
Results for the year ended December 31, 2022 For the year ended December 31, 2022, net revenues decreased 7.3% to $4.4 billion compared to $4.7 billion during the comparable period in 2021.
Results for the Year Ended December 31, 2023 For the year ended December 31, 2023, net revenues decreased 1.0% to $4.3 billion compared to $4.4 billion during the comparable period in 2022.
See Note 19 of the Notes to Consolidated Financial Statements for details of our regulatory capital requirements. 55 Critical Accounting Policies and Estimates In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the SEC, we make assumptions, judgments, and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities.
Critical Accounting Policies and Estimates In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the SEC, we make assumptions, judgments, and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities.
At December 31, 2022, there was $27.5 billion in client money market and FDIC-insured product balances. 53 Public Offering of Senior Notes – On July 15, 2014, we sold in a registered underwritten public offering, $300.0 million in aggregate principal amount of 4.25% senior notes due July 2024 (the “2014 Notes”).
At December 31, 2023, there was $26.5 billion in client money market and FDIC-insured product balances. Public Offering of Senior Notes – On July 15, 2014, we sold in a registered underwritten public offering, $300.0 million in aggregate principal amount of 4.25% senior notes due July 2024 (the “2014 Notes”). Interest on the 2014 Notes is payable semi-annually in arrears.
Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. For the year ended December 31, 2022, net interest income increased 78.7% to $897.7 million from $502.4 million in 2021.
Net interest income is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. For the year ended December 31, 2023, net interest income increased 27.6% to $1.1 billion from $897.7 million in 2022.
Brokerage client deposits totaled $25.3 billion and $21.7 billion at December 31, 2022 and 2021, respectively, which includes $8.7 billion and $0.4 billion, respectively, of client cash in our Smart Rate program. The increase in money market deposits in 2022 was primarily driven by elevated client interest in the Smart Rate program.
Brokerage client deposits totaled $24.1 billion and $25.3 billion at December 31, 2023 and 2022, respectively, which includes $14.5 billion and $8.7 billion, respectively, of client cash in our Smart Rate program. The increase in money market deposits in 2023 was primarily driven by elevated client interest in the Smart Rate program.
Occupancy and equipment rental – For the year ended December 31, 2021, occupancy and equipment rental expense increased 12.8% to $138.6 million from $122.9 million in 2020. The increase is primarily attributable to higher data processing costs associated with an increase in business activity and higher occupancy costs as a result of an increase in locations.
Occupancy and equipment rental – For the year ended December 31, 2022, occupancy and equipment rental expense increased 10.4% to $153.1 million from $138.6 million in 2021. The increase is primarily attributable to higher data processing costs associated with an increase in business activity and higher occupancy costs as a result of an increase in locations.
The increase is primarily attributable to higher communication and quote equipment expenses associated with the continued investments made in our business. Commissions and floor brokerage – For the year ended December 31, 2022, commissions and floor brokerage expense decreased 3.2% to $57.8 million from $59.7 million in 2021.
The increase is primarily attributable to higher communication and quote equipment expenses associated with the continued investments made in our business. Commissions and floor brokerage – For the year ended December 31, 2023, commissions and floor brokerage expense increased 1.0% to $58.3 million from $57.8 million in 2022.
Investing activities used cash of $4.3 billion due to the growth of the loan portfolio, investment securities purchases, fixed asset purchases, and cash used to fund acquisitions, partially offset by proceeds from the sale and maturity of securities in our investment portfolio.
Investing activities provided cash of $1.0 billion due to a decline in our loan portfolio and proceeds from the sale and maturity of securities in our investment portfolio, partially offset by cash used to fund acquisitions, fixed asset purchases, and investment securities purchases.
Please refer to the Distribution of Assets, Liabilities, and Shareholders’ Equity; Interest Rates and Interest Differential table below for additional information on Stifel Bancorp’s average balances and interest income and expense. Investment banking – Investment banking increased 33.8% to $48.2 million for the year ended December 31, 2021, from $36.0 million in 2020.
Please refer to the Distribution of Assets, Liabilities, and Shareholders’ Equity; Interest Rates and Interest Differential table below for additional information on Stifel Bancorp’s average balances and interest income and expense. Investment banking – Investment banking decreased 59.5% to $19.5 million for the year ended December 31, 2022, from $48.2 million in 2021.
Operational Risk Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes including cyber security incidents (see Item 1A, Risk Factors in this report for a discussion of certain cyber security risks).
Operational Risk Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes including cyber security incidents.
Our revolving credit facility contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, and judgment defaults.
The Credit Agreement contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, change of control, and judgment defaults.
Communications and office supplies – For the year ended December 31, 2021, communications and office supplies expense increased 0.5% to $165.5 million from $164.7 million in 2020. The increase is primarily attributable to higher communication and quote equipment expenses associated with the continued growth of our business.
Communications and office supplies – For the year ended December 31, 2022, communications and office supplies expense increased 7.8% to $60.8 million from $56.4 million in 2021. The increase is primarily attributable to higher communication and quote equipment expenses associated with the continued growth of our business.
Net income available to common shareholders for the year ended December 31, 2022, decreased 20.8% to $624.9 million, or $5.32 per diluted common share, compared to $789.3 million, or $6.66 per diluted common share, in 2021. For the year ended December 31, 2022, our Global Wealth Management segment posted record net revenues and pre-tax income.
Net income available to common shareholders for the year ended December 31, 2023, decreased 22.3% to $485.3 million, or $4.28 per diluted common share, compared to $624.9 million, or $5.32 per diluted common share, in 2022. For the year ended December 31, 2023, our Global Wealth Management segment posted record net revenues and pre-tax income.
Interest expense – For the year ended December 31, 2022, interest expense increased 571.4% to $182.9 million from $27.2 million in 2021. The increase in interest expense is primarily attributable to higher interest rates and higher interest-bearing liabilities.
The decrease is primarily attributable to lower investment gains and a decrease in mortgage loan origination fees. Interest expense – For the year ended December 31, 2022, interest expense increased 571.4% to $182.9 million from $27.2 million in 2021. The increase in interest expense is primarily attributable to higher interest rates and higher interest-bearing liabilities.
The increase is primarily attributable to strong fee-based asset flows. Please refer to “Asset management” in the Global Wealth Management segment discussion for information on the changes in asset management revenues. Other income – For the year ended December 31, 2022, other income decreased 72.7% to $19.7 million from $72.1 million during 2021.
Please refer to “Asset management” in the Global Wealth Management segment discussion for information on the changes in asset management revenues. 33 Other income – For the year ended December 31, 2022, other income decreased 72.7% to $19.7 million from $72.1 million in 2021.
Level 3 financial instruments have little to no pricing observability as of the report date. These financial instruments do not have active two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
These financial instruments do not have active two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
Other operating expenses – Other operating expenses primarily include license and registration fees, litigation-related expenses, which consist of amounts we reserve and/or payout for legal and regulatory matters, travel and entertainment, promotional, investment banking deal costs, and professional service expenses. For the year ended December 31, 2022, other operating expenses decreased 1.5% to $340.5 million from $345.8 million in 2021.
Other operating expenses – Other operating expenses primarily include license and registration fees, litigation-related expenses, which consist of amounts we accrue and/or pay out for legal and regulatory matters, travel and entertainment, promotional, investment banking deal costs, and professional service expenses. 35 For the year ended December 31, 2023, other operating expenses increased 41.1% to $480.4 million from $340.5 million in 2022.
NON-INTEREST EXPENSES The following table presents consolidated non-interest expenses for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Non-interest expenses: Compensation and benefits $ 2,586,232 $ 2,820,301 $ 2,279,335 (8.3 )% 23.7 % Occupancy and equipment rental 313,247 290,243 274,664 7.9 5.7 Communications and office supplies 175,135 165,490 164,736 5.8 0.5 Commissions and floor brokerage 57,752 59,681 55,960 (3.2 ) 6.6 Provision for credit losses 33,506 (11,502 ) 33,925 391.3 (133.9 ) Other operating expenses 340,451 345,794 292,281 (1.5 ) 18.3 Total non-interest expenses $ 3,506,323 $ 3,670,007 $ 3,100,901 (4.5 )% 18.4 % Year Ended December 31, 2022, Compared With Year Ended December 31, 2021 Compensation and benefits – Compensation and benefits expenses, which are the largest component of our expenses, include salaries, bonuses, transition pay, benefits, amortization of stock-based compensation, employment taxes, and other associate-related costs.
NON-INTEREST EXPENSES The following table presents consolidated non-interest expenses for the periods indicated (in thousands, except percentages) : For the Year Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Non-interest expenses: Compensation and benefits $ 2,554,581 $ 2,586,232 $ 2,820,301 (1.2 )% (8.3 )% Occupancy and equipment rental 339,322 313,247 290,243 8.3 7.9 Communications and office supplies 184,652 175,135 165,490 5.4 5.8 Commissions and floor brokerage 58,344 57,752 59,681 1.0 (3.2 ) Provision for credit losses 24,999 33,506 (11,502 ) (25.4 ) 391.3 Other operating expenses 480,354 340,451 345,794 41.1 (1.5 ) Total non-interest expenses $ 3,642,252 $ 3,506,323 $ 3,670,007 3.9 % (4.5 )% Year Ended December 31, 2023, Compared With Year Ended December 31, 2022 Compensation and benefits – Compensation and benefits expenses, which are the largest component of our expenses, include salaries, bonuses, transition pay, benefits, amortization of stock-based compensation, employment taxes, and other associate-related costs.

… 200 more changes not shown on this page.

Other SFB 10-K year-over-year comparisons