Stifel Financial Profile
Stifel Financial Corp. operates as a financial holding company.
The company’s principal subsidiary is Stifel, Nicolaus & Company, Incorporated (‘Stifel’), a full-service retail and institutional wealth management and investment banking firm.
The company’s other subsidiaries include Stifel Independent Advisors, LLC (‘SIA’), an independent contractor broker-dealer firm; Keefe, Bruyette & Woods, Inc. (‘KBW’), a broker-dealer firm; Stifel Nicolaus Europe Limited (‘SNEL’), the company’s European subsidiary; Stifel Nicolaus Canada Inc. (‘SNC’), the company’s Canadian subsidiary; Stifel Bank & Trust and Stifel Bank, retail and commercial banks, Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. (collectively, ‘Stifel Trust’), the company’s trust companies (collectively ‘Stifel Bancorp’); and 1919 Investment Counsel, LLC, an asset management firm.
The company has built a diversified business serving private clients, institutional investors, and investment banking clients located across the country. The company’s principal activities are:
Private client services, including securities transaction and financial planning services;
Institutional equity and fixed income sales, trading and research, and municipal finance;
Investment banking services, including mergers and acquisitions, public offerings, and private placements; and
Retail and commercial banking, including personal and commercial lending programs.
The company provides its private, institutional, and corporate clients quality, personalized service, with the theory that if the company places clients’ needs first, both is clients and the company will prosper.
Torreya Partners LLC – On March 1, 2023, the company acquired Torreya Partners LLC, a leading independent M&A and private capital advisory firm serving the global life sciences industry.
Sierra Pacific Securities, LLC – On August 1, 2023, the company acquired Sierra Pacific Securities, LLC, an algorithmic trading-focused, fixed income market-making firm.
Business Segments
The company operates in the following segments: Global Wealth Management, Institutional Group, and Other.
Through the company’s broker-dealer subsidiaries, the company provides securities-related financial services to customers from the United States, Europe, and Canada. The company’s customers include individuals, corporations, municipalities, and institutions. The company has customers throughout the United States, with a growing presence in the United Kingdom, Europe, and Canada.
Global Wealth Management segment
The company provides securities transaction, brokerage, and investment services to the company’s clients through the consolidated Stifel branch system. The company has made significant investments in personnel and technology to grow the Private Client Group.
Consolidated Stifel Branch System
As of December 31, 2023, the Private Client Group had a network of 2,278 financial advisors located in branch offices in 48 states and the District of Columbia. In addition, the company has 108 independent contractors.
The company’s financial advisors provide a broad range of investments and services to the company’s clients, including financial planning services. The company offers equity securities; taxable and tax-exempt fixed income securities, including municipal, corporate, and government agency securities; preferred stock; and unit investment trusts. The company also offers a broad range of externally managed fee-based products. In addition, the company offers insurance and annuity products and investment company shares through agreements with numerous third-party distributors. The company encourages its financial advisors to pursue the products and services that best fit their clients’ needs and that they feel most comfortable recommending. The company’s private clients may choose from a traditional, commission-based structure or fee-based money management programs.
The company’s independent contractors, who operate in its SIA business, provide the same types of financial products and services to its private clients as does Stifel. Under their contractual arrangements, these independent contractors may also provide accounting services, real estate brokerage, insurance, or other business activities for their own account. SIA is an introducing broker-dealer, and as such, clears its transactions through Stifel.
Customer Financing
The company makes a loan to the customer for the balance of the purchase price. Such loans are collateralized by the purchased securities. The amounts of the loans are subject to the margin requirements of Regulation T of the Board of Governors of the Federal Reserve System, Financial Industry Regulatory Authority, Inc. (‘FINRA’) margin requirements, and the company’s internal policies, which usually are more restrictive than Regulation T or FINRA requirements. In permitting customers to purchase securities on margin, the company is subject to the risk of a market decline, which could reduce the value of the company’s collateral below the amount of the customers’ indebtedness.
The company offers securities-based lending through Stifel Bancorp, which allows clients to borrow money against the value of qualifying securities for any suitable purpose other than purchasing, trading, or carrying marketable securities or refinancing margin debt. The loan requirements are subject to Regulation U of the Board of Governors of the Federal Reserve System (‘Regulation U’) and the company’s internal policies, which are typically more restrictive than Regulation U. The company establishes approved lines and advance rates against qualifying securities and monitor limits daily, and pursuant to such guidelines, require customers to deposit additional collateral or reduce debt positions, when necessary.
Asset Management
The company’s asset management business offers specialized investment management solutions for institutions, private clients, and investment advisers. Revenues for this segment are primarily generated by the investment advisory fees related to asset management services provided for individual and institutional investment portfolios, along with mutual funds. Investment advisory fees are earned on assets held in managed or non-discretionary asset-based programs. These fees are computed based on balances either at the beginning of the quarter, the end of the quarter, or average daily assets. Fees from private client investment portfolios and institutional fees are typically based on asset values at the end of the prior period. Asset balances are impacted by both the performance of the market and sales and redemptions of client accounts/funds.
Stifel Bancorp
The company offers retail and commercial banking services to private and corporate clients, including personal loan programs, such as fixed and variable mortgage loans, home equity lines of credit, personal loans, loans secured by CDs or savings, and securities-based loans, as well as commercial lending programs, such as small business loans, commercial real estate loans, lines of credit, credit cards, term loans, and inventory and receivables financing, in addition to other banking products. Stifel Bancorp not only helps the company serves its private clients more effectively by offering them a broader range of services, but also enables the company to better utilize its private client cash balances held which are swept to the company’s bank subsidiaries, which is their primary source of funding.
Institutional Group segment
The Institutional Group segment includes research, equity and fixed income institutional sales and trading, investment banking, public finance, and syndicate.
Research
The company’s research department publishes research across multiple industry groups and provides the company’s clients with timely, insightful, and actionable research, aimed at improving investment performance.
Institutional Sales and Trading
The company’s equity sales and trading team distributes its proprietary equity research products and communicates the company’s investment recommendations to its client base of institutional investors, executes equity trades, sells the securities of companies for which the company acts as an underwriter, and makes a market in securities. In the company’s various sales and trading activities, the company takes a focused approach to serving its clients by maintaining inventory to facilitate order flow and support the investment strategies of the company’s institutional fixed income clients, as opposed to seeking trading profits through proprietary trading.
The fixed income institutional sales and trading group is consisted of taxable and tax-exempt sales departments. The company’s institutional sales and trading group executes trades with diversification across municipal, corporate, government agency, and mortgage-backed securities.
Investment Banking
The company’s investment banking activities include the provision of financial advisory services principally with respect to mergers and acquisitions and the execution of public offerings and private placements of debt and equity securities. The investment banking group focuses on middle-market companies, as well as on larger companies in targeted industries where the company has particular expertise, which include real estate, financial services, healthcare, aerospace/defense and government services, telecommunications, transportation, energy, business services, consumer services, industrial, technology, and education.
The company’s syndicate department coordinates marketing, distribution, pricing, and stabilization of the company’s managed equity and debt offerings. In addition, the department coordinates the company’s underwriting participations and selling group opportunities managed by other investment banking firms.
Public Finance
The company’s public finance group acts as an underwriter and dealer in bonds issued by states, cities, and other political subdivisions; and acts as manager or participant in offerings managed by other firms.
Other segment
The Other segment includes interest income from stock borrow activities, unallocated interest expense, interest income and gains and losses from investments held, amortization of stock-based awards for certain administrative associates, and all unallocated overhead costs associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; and general administration and acquisition charges.
Growth Strategy
The company’s strategies are to further expand its private client footprint in the U.S.; grow the company’s investment banking business; further expand the company’s institutional business both domestically and internationally; focus on asset generation within Stifel Bancorp by offering banking services to the company’s clients; and identify, effect, and integrate attractive acquisition opportunities.
Regulation
The company is a bank holding company under the Bank Holding Company Act of 1956, as amended (‘BHCA’), that has made an election to be a financial holding company. Consequently, the company and its business activities are subject to the supervision, examination, and regulation of the Federal Reserve Board (the ‘Fed’).
Stifel Bank & Trust and Stifel Bank (collectively ‘bank subsidiaries’) are state-chartered banks regulated, supervised, and examined by the Fed and the Consumer Financial Protection Bureau (‘CFPB’). Stifel Trust, is regulated, supervised and examined by the Office of the Comptroller of the Currency (‘OCC’).
Collectively, the rules and regulations of the Fed, the OCC, the FDIC, and the CFPB result in extensive regulation and supervision covering all aspects of the company’s banking and trust businesses, including for example, lending practices, the receipt of deposits, capital structure, transactions with affiliates, conduct and qualifications of personnel, and as discussed further in the following sections, capital requirements.
The company, as a bank and financial holding company, and the company’s bank subsidiaries are subject to regulation, including capital requirements, by the Federal Reserve. The company’s bank subsidiaries are subject to various regulatory capital requirements administered by the Fed and the Missouri Division of Finance.
The company’s bank subsidiaries are subject to the Federal Deposit Insurance Act because they provide deposits covered by FDIC insurance, generally up to $250,000 per account ownership type.
The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (‘FDICIA’) requires the U.S. federal bank regulatory agencies to take ‘prompt corrective action’ with respect to depository institutions that do not meet specified capital requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as the company’s bank subsidiaries: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
The company is subject to the Volcker Rule, which generally prohibits bank holding companies and their subsidiaries and affiliates from engaging in proprietary trading, but permits underwriting, market making, and risk-mitigating hedging activities.
The SEC is the federal agency charged with administration of the federal securities laws in the U.S. The company’s U.S. broker-dealer subsidiaries are subject to SEC regulations relating to their business operations, including sales and trading practices, securities offerings and other investment banking activity, publication of research reports, use and safekeeping of client funds and securities, capital structure, record-keeping, privacy requirements, and the conduct of directors, officers and employees.
Outside of the U.S., the company has additional offices primarily in Canada, the U.K., and Europe; and are subject to regulations in those areas. Much of the regulation of broker-dealers in the U.S. and Canada, however, has been delegated to self-regulatory organizations (‘SROs’), such as FINRA in the U.S., the Canadian Investment Regulatory Organization (‘CIRO’) in Canada, and securities exchanges.
The company’s U.S. broker-dealer subsidiaries are subject to the Securities Investor Protection Act (‘SIPA’) and are required by federal law to be members of the Securities Investors Protection Corporation (‘SIPC’).
The company’s investment advisory operations, including the mutual funds that the company sponsors, are also subject to extensive regulation in the U.S. The company’s U.S. asset managers are registered as investment advisers with the SEC under the Investment Advisers Act of 1940 as amended, and are also required to make notice filings in certain states. Virtually all aspects of the company’s asset management business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to benefit the asset management clients.
Certain of the company’s subsidiaries are registered in, and operate from, the U.K., which has a highly developed and comprehensive regulatory regime. These subsidiaries are authorized and regulated by the U.K. conduct regulator, the Financial Conduct Authority (‘FCA’), and have permission to carry out business in certain European Union (‘E.U.’) countries to the extent permitted under domestic law and regulation in those countries.
History
Stifel Financial Corp. was founded in 1890. The company was incorporated in 1981.
