increased its2016 estimate on integration expenses related to a deal with Barclays Plc and is now expecting to realize the bulk ofthe cost in the second quarter.
In allof 2016, Stifel expects to record $86.5 million in pretax charges related to thedeal for Barclays'U.S. wealth and investment management business, and the company estimates that itwill realize $65.5 million of those charges in the second quarter, according toa May 9 investor presentation. In a Marchinvestor presentation, Stifel estimated that the 2016 Barclays deal-related chargeswould total $77.9 million, and the company estimated it would realize $57.4 millionof those charges during the first quarter.
In February,Stifel Co-Chairman and CEO Ronald Kruszewski said the 2016 expense estimate related to the Barclays dealcould fluctuate, and he reiterated that point during a May 9 earnings conferencecall.
"Thetotal dollar amount of stock comp expense for Barclays was a bit of a moving targetdue to some of the accounting requirements related to the stock grant," Kruszewskisaid during the May 9call. "Those have since been finalized, and that charge will now hit in thesecond quarter of 2016."
In theinvestor presentation, Stifel said the Barclays transaction led to first-quarterpretax deal-related charges of $8.0 million. However, charges from other acquisitionsdrove up the total of Stifel's first-quarter pretax deal-related costs to $26.7million, according to the investor presentation. More than half of the expense camefrom a $14.0 million charge related to the Sterne Agee Group Inc. .
Expensesprimarily related to acquisitions reduced Stifel's first-quarter per share by 21 cents, to 36 centsper share. Kruszewski said that barring further acquisitions, he expects deal-relatedcharges to drop significantly during the second half of 2016.
He addedthat the company would not rule out another deal if it felt the economics were compellingand the acquisition represented the best use of shareholder capital. "But weare highly focused on integrating our current acquisitions," he said.