Stifel Financial’s Global Wealth Management division fared well for the third quarter driven by a rise in assets under management, improved transaction revenue and better market performance.

Revenue jumped 15% to $252 million from a year earlier. Profits were also up to $66 million, counting for almost a quarter, a 23%, improvement year-over-year and an 11% improvement from the previous quarter, when the firm announced that it had encountered a “challenging operating environment.”

The firm had turned many of those numbers around since the second quarter. In addition to rising revenue and net income, commission revenues reached $89.4 million from $88.4 million last quarter and principal transaction revenue rose nearly 6% from last quarter from $55.6 million to $58.8 million.

Complimenting that growth, the firm added six new locations and fourteen advisors in the last quarter bringing its total headcount to 2,042, up from 1,961 on year ago. Total client assets were up 3.8% to $136 billion.  

“Our results highlight the soundness of our balanced business model, particularly against a challenging economic backdrop. In the quarter, both the Global Wealth Management and Institutional Group segments performed well,” Stifel’s president and CEO, Ronald J. Kruszewski, said. “We continue to invest in businesses that expand our client services, and which we believe will return shareholder value.”

To that end, Stifel also announced that it had reached a deal to acquire KBW (Keefe, Bruyette & Woods), a banking and trading outlet focused on the financial services industry, for $575 million in cash and stock.

“This transaction is expected to be accretive to shareholder value. This merger with KBW, a premier, specialized financial services firm, provides Stifel with an exciting opportunity to grow and become a market leader in the financial services sector,” Kruszewski said in a statement. “Our shared culture and platforms are highly complementary, and this combination expands our capabilities at a time when we believe the financial services sector is poised to benefit from improving fundamentals. I am confident our clients will benefit from our expanded services and expertise.”

KBW has its own broker-dealer arm as well, which will continue to function as an independent subsidiary and provide investment banking, trading and research on the financial services sector, Stifel said.

Thomas Michaud will remain CEO of KBW and will join Stifel’s board and management team upon completion of the merger.

Based on results through September 30, 2012, the companies have a combined annual revenue of approximately $1.8 billion total.

Stifel’s net revenue for the entire firm was $240 million in the third quarter and $1.19 billon so far this fiscal year. Part of that revenue was due to the boost it received from the investment it made in Knight Capital earlier this year after Knight announced a trading glitch had cost the firm $440 million.

“Opportunities drive our growth,” Kruszewski said. “Today’s announcement of our merger with KBW furthers our goal of creating the premier middle-market investment bank with a specialized focus on the financial services industry.”

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