Stifel Financial (SF) had a 53% drop in net income in the second quarter, despite a year-over-year improvements in total sales and wealth management revenues.
The financial services firm had profits of $9.8 million, or $0.13 per share, vs. $20.9 million, or $0.27 per share, a year ago – topping analysts’ estimates. Total revenues improved 9% year over year to $652.1 million.
“We are pleased with the results from the second quarter as we posted a second consecutive quarter of record revenue and increased adjusted EPS by 21% sequentially, despite a less than ideal market environment,” said Chairman & CEO Ronald J. Kruszewski, in a statement. “The diversity of our business model was again illustrated by a rebound in investment banking activity and growth in our bank, which more than offset the sequential decline in brokerage revenue from the first quarter’s record levels.”
Total brokerage revenues, defined as commissions plus principal transactions, were $308.5 million, up 15% from last year but down 3% from the prior period. Global wealth management brokerage sales were $172.2 million, an 8% increase from last year and a 0.5% drop from the first quarter of 2016.
However, total revenue in wealth management was $386 million, up 12% from a year ago and 2% from the prior quarter – accounting for nearly 60% of the firm’s overall sales. Operating profits for the wealth unit were $105.1 million, up 12% and 3%, respectively from Q2’15 and Q1’15.
As of June 30, Stifel had 2,838 financial advisors with $237.5 million in client assets. On July 1, though, it completed the sale of its Sterne Agee independent advisor business, which included 540 reps and $11.5 billion in client assets.
Thus, as of July 1, Stifel has 2,298 advisors and $226 billion in client assets – which represents an average of about $98.5 million in client assets per advisor. Of its total advisor force, roughly 2,170 are employee reps and 130 are independent advisors.
“In the past month, we have sold off the lower-margin legacy businesses from the Sterne Agee acquisition, raised preferred equity, and refinanced higher cost debt,” Kruszewski explained in a press release late Thursday. “These actions have further strengthened our already strong balance sheet and will facilitate our continued efforts to optimize our capital base and increase shareholder returns.”
(A year ago, Stifel began acquiring 180 U.S.-based advisors formerly with Barclays PLC who had some $56 billion in client assets. This deal took place several months after Stifel announced plans to buy Sterne Agee’s diverse operations.)
Ladenburg Thalmann (LTS), the parent company of Securities America, says its net loss widened considerably in the second quarter. It had a net loss of $25.2 million, or -$0.14 per share, vs. a net loss of $9.6 million, or -$0.05 per share, in the year-ago quarter. Total revenues for the financial services firm dropped 9% to $270 million from Q2’15. Commissions declined 11% to $127 million, while advisory fees weakened 6% to $112 million. Service-fee revenues also declined by 3% to $20.8 million.
“Ladenburg’s Independent Brokerage and Advisory Services Business (IBD) continued to perform well during the second quarter, growing advisory assets under management despite challenges that impacted revenues across the sector. We were also pleased to improve margins in our IBD business through continued focus on expense reduction and harvesting synergies,” said Dr. Phillip Frost, chairman, in a statement released Friday.
“The firm is preparing for the implementation of the upcoming Department of Labor fiduciary rule and will continue our track record of providing industry-leading support to our network of 4,000 independent financial advisors,” Frost said.
Across the company, client assets stand at $128 billion at June 30 on par with year-ago assets; cash balances are roughly $4.4 billion.
The financial group also says that in Q2’15, recurring revenue represented 75% of the independent brokerage and advisory services business.
Ladenburg’s operations include Securities America, Triad Advisors, Securities Service Network, Investacorp and KMS Financial Services, as well as Premier Trust, Ladenburg Thalmann Asset Management, insurance broker Highland Capital Brokerage and the investment bank Ladenburg Thalmann.
— Check out Securities America to Pay $1.5M for Fund Overcharges on ThinkAdvisor.