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Stifel Financial (SF) to Buy Finance 500 and CB Resource

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Stifel Financial Corp. (SF - Free Report) announced its plan to acquire Finance 500, Inc. and CB Resource, Inc., market leaders in the underwriting and issuance of certificates of deposits (CD). The terms of the deal remain undisclosed.

Shares of SF lost 1.9% following the announcement of the transaction. Bearish broader market sentiments dragged the stock down despite this favorable development.

The deal is expected to enhance and deepen SF’s CD funding offerings with market-leading CD underwriting, tech-enabled risk management and strategic planning capabilities. This aligns with the company’s efforts to expand its deposit base, which is the primary funding source, through expansion as well as its existing private client network.

As of Dec 31, 2023, total deposits were $27.3 billion, with CDs at $2,000. Given the low contribution to the total deposit base, the current deal will assist in improving SF’s CD deposit base.

Both Finance 500 and CB Resource are Irvine-based companies with 40 years of experience and operating as strategic partners under common ownership. They have collaborated with more than 1,200 depository institutions to raise over $200 billion to bolster near and long-term funding requirements. CB Resource’s advanced technology-driven platform will support in enhancing enterprise risk management, strategic planning, capital planning and interactive performance-based analytics for community banks across the country.

Brant McDuffie, the global co-head of Stifel Fixed Income Capital Markets, said, “The addition of Finance 500 and CBR provides Stifel a technology-driven platform that will ensure our existing brokered CD funding business, our institutional CD investment offerings, and our community bank balance sheet risk management practice, are scalable and sustainable for the future. We all share the same client-driven approach and expect the Finance 500 and CBR teams to seamlessly integrate into our platform.”

Over the past few years, Stifel Financial has been expanding inorganically through opportunistic expansions.

In 2023, it acquired Sierra Pacific Securities, LLC, to enhance its fixed-income sales and trading offerings. Management expects Sierra Pacific’s proprietary technology, combined with SF’s leading presence, to strengthen the competitiveness in fixed-income markets and boost the efficiency of traders. Previously, it acquired Torreya Partners LLC and ACXIT Capital Partners as well.

Over the past year, shares of Stifel Financial have gained 29.1% compared with the industry’s 18.6% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Currently, SF sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Acquisitions Done by Other Financial Services Firms

Last week, BlackRock Inc. (BLK - Free Report) announced the acquisition of the remaining 75% equity stake in SpiderRock Advisors, a leading provider of customized option overlay strategies in the U.S. wealth market.

The deal is an extension of BLK’s minority investment of 25% in the firm in 2021, reinforcing its commitment toward personalized, separately managed accounts. It is expected to close in the second quarter of 2024.

Similarly, Vinci Partners Investment Ltd. (VINP - Free Report) is set to acquire Compass Group LLC to enhance its presence in Latin America. The acquisition will strengthen its footprint in the region, with more than $50 billion in assets under management.

The move aligns with Brazil-based VINP’s long-term strategic growth plan to expand its footprint into Latin America, a region with a plethora of opportunities in the alternatives segment.

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