Stifel's first-quarter profit hit by merger-related charges

Thu May 9, 2013 5:41pm EDT

(Reuters) - Stifel Financial Corp (SF.N) said on Thursday its profit during the first quarter was hit by merger-related charges from its acquisition of smaller rival KBW Inc, but pointed to the strong performance of its wealth management division.

The St. Louis-based regional investment bank and brokerage reported a quarterly net income of $14.6 million, or 21 cents a share, down from $34.8 million, or 55 cents a share, a year earlier.

Excluding merger-related expenses and non-cash charges resulting from its acquisition of KBW, Stifel earned 58 cents a share, above analysts' expectations of 57 cents, based on Thomson Reuters I/B/E/S estimates.

Stifel in February completed its purchase of KBW Inc, a smaller investment bank that specializes in raising capital and arranging mergers for small financial companies, for about $575 million in cash and stock.

Chief Executive Ron Kruszewski said profitability during the quarter was "clouded" by merger-related charges.

Quarterly net revenue rose 10.4 percent to $441.8 million from a year earlier, against expectations of $450.3 million.

Revenue from Stifel's wealth management division was up 7.8 percent to $267 million, in part from an increase in commission revenues and growth in asset management and service fees.

The company's financial adviser ranks grew by 22 from the end of December, bringing its total to 2,063 advisers, while client assets rose 12.7 percent to $147.1 billion.

Stifel, which has bought four investment banks and trading firms in fewer than three years, has continued to make investments and build its profile with the public even as larger investment banks shrink.

Kruszewski said the company is "on track" this quarter to finish acquiring Knight Capital Group's U.S. institutional fixed income sales and trading team, as well as its European team.

Revenue from trading and banking in the institutional group rose 18.2 percent to $176.4 million, boosted by increased advisory fees and gains from the company's investment in Knight Capital Group.

(Reporting by Ashley Lau in New York. Editing by Andre Grenon)

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