MINNEAPOLIS--()--Piper Jaffray Companies (NYSE: PJC) today announced that for the quarter ended Sept. 30, 2012, net income from continuing operations was $13.5 million, or $0.72 per diluted common share. These results compared to $3.8 million, or $0.22 per diluted common share, in the year-ago period and $11.3 million, or $0.58 per diluted common share, in the second quarter of 2012. For the third quarter of 2012, net revenues from continuing operations were $133.0 million, compared to $95.9 million in the third quarter of 2011 and $104.5 million in the second quarter of 2012.
“Our performance reflects robust fixed income institutional brokerage revenues—particularly strategic trading, our decision to exit the Hong Kong capital markets business, additional cost reductions taking effect, and solid market share in public finance and public equity offerings.”
The firm announced on July 25th that it would exit the Hong Kong capital markets business and further disclosed on Aug. 24th that the exit would be effected through a shutdown of the business. The results from this business are reported as discontinued operations for all periods presented.
“In the third quarter, our continuing operations performed well and we are pleased with our results,” said Andrew S. Duff, chairman and chief executive officer. “Our performance reflects robust fixed income institutional brokerage revenues—particularly strategic trading, our decision to exit the Hong Kong capital markets business, additional cost reductions taking effect, and solid market share in public finance and public equity offerings.”
For the quarter ended Sept. 30, 2012, net income, including continuing and discontinued operations, was $19.7 million, or $1.11 per diluted common share, an improvement from a net loss of $3.6 million, or $0.23 per diluted common share, for the quarter ended Sept. 30, 2011, and up from $6.9 million, or $0.37 per diluted common share, in the second quarter of 2012.
For the first nine months of 2012, net income, including continuing and discontinued operations, was $29.4 million, or $1.60 per diluted common share, up from $14.3 million, or $0.74 per diluted common share, in the first nine months of last year.
Third Quarter Results from Continuing Operations
Consolidated
Expenses
For the third quarter of 2012, compensation and benefits expenses were $78.7 million, up 30% and 24% compared to the third quarter of 2011 and the second quarter of 2012, respectively, due to improved financial results.
For the third quarter of 2012, compensation and benefits expenses were 59.2% of net revenues, down from 63.1% and 60.6% for the third quarter of 2011 and second quarter of 2012, respectively. The improvement was mainly driven by the significant financial contribution from fixed income strategic trading in the current quarter.
Non-compensation expenses were $31.5 million, in line with the firm’s current quarterly goal, and compared to $30.2 million in the year-ago period and $35.7 million (including a $3.6 million restructuring charge) in the second quarter of 2012.
Business Segment Results
The firm has two reportable
business segments: Capital Markets and Asset Management. Consolidated
net revenues and expenses are fully allocated to these two segments. The
firm’s Hong Kong capital markets business is presented as discontinued
operations for all periods presented.
Capital Markets
For the quarter, Capital Markets generated
pre-tax operating income of $20.6 million, a significant increase
compared to $3.7 million in the year-ago period and $1.8 million in the
second quarter of 2012.
Net revenues were $115.2 million, up 42% and 32% compared to the year-ago period and the second quarter of 2012, respectively.
- Equity financing revenues of $18.8 million increased 186% and 43% compared to the third quarter of 2011 and the second quarter of 2012, respectively. Similar to the industry, the firm raised more capital during the quarter. Also, the firm’s average revenue per transaction was higher than prior periods.
- Fixed income financing revenues were $16.6 million, up 49% compared to the prior-year quarter, when activity was particularly low. Fixed income financing revenues decreased 26% compared to the strong sequential second quarter, due to fewer transactions completed offset in part by higher average revenue per transaction.
- Advisory services revenues were $16.3 million, down 40% compared to a very strong third quarter of 2011. Advisory services revenues rose 12% compared to the second quarter of 2012. Higher revenue per transaction more than offset fewer completed transactions.
- Equity institutional brokerage revenues were $17.9 million, down 19% compared to the third quarter of 2011 and up 8% compared to the second quarter of 2012. Revenues continue to be negatively impacted by both low client volumes and low volatility.
- Fixed income institutional brokerage revenues were $46.7 million, up significantly compared to the third quarter of 2011 and the second quarter of 2012. Revenues from client-related activity were higher. Results from the firm’s strategic trading business were very robust, particularly in the mortgage-backed securities strategy, and drove the majority of the improvement versus the comparable quarters.
- Operating expenses for the third quarter were $94.7 million, up from the comparable quarter, mainly resulting from higher compensation expenses due to improved operating results, offset in part by lower non-compensation expenses.
- For the third quarter of 2012, the segment pre-tax operating margin improved to 17.9%, compared to 4.6% and 2.0% in the year-ago period and the second quarter of 2012, respectively. The increase was mainly driven by the contribution from fixed income institutional brokerage.
Asset Management
For the quarter ended Sept. 30, 2012, asset
management generated pre-tax operating income of $2.1 million, up 50%
compared to the third quarter of 2011 and down 43% compared to the
second quarter of 2012. Net revenues were $17.7 million, up 23% and 5%
compared to the third quarter of 2011 and the second quarter of 2012,
respectively. Increased revenues were primarily driven by higher
management fees and gains on firm investments.
- Operating expenses for the quarter were $15.6 million, up 20% and 18% compared to the third quarter of 2011 and the second quarter of 2012, respectively. The higher expenses were mainly driven by increased non-compensation expenses, specifically, higher legal fees and a legal reserve relating to a Fiduciary Asset Management (FAMCO) matter dating back several years. Segment pre-tax operating margin was 12.1%, compared to 9.8% in the year-ago period and 22.1% in the second quarter of 2012.
- Assets under management (AUM) were $13.8 billion compared to $11.2 billion in the year-ago period and $12.7 billion in the second quarter of 2012. Compared to the sequential second quarter the increase in AUM was driven by market appreciation and positive net cash flows.
Third Quarter Results from Discontinued Operations
Discontinued
operations include the operating results of the Hong Kong capital
markets business, which the firm has shut down.
For the quarter ended Sept. 30, 2012, net income from discontinued operations was $6.8 million, or $0.38 per diluted common share, compared to a net loss of $7.1 million in the third quarter of 2011, or $0.45 per diluted share, and a net loss of $3.9 million, or $0.21 per diluted share, in the second quarter of 2012.
The firm will realize net cash proceeds of approximately $19 million, net of restructuring charges, which is above the top end of the firm’s range disclosed in the second quarter. Substantially all items related to the shut down of the Hong Kong business have been recorded in the third quarter.
Additional Shareholder Information*
| For the Quarter Ended: | |||||||||
| Sept. 30, 2012 | June 30, 2012 | Sept. 30, 2011 | |||||||
| Number of employees | 911 | 902 | 939 | ||||||
| Equity financings | |||||||||
| # of transactions | 14 | 15 | 8 | ||||||
| Capital raised | $2.6 billion | $1.6 billion** | $0.9 billion | ||||||
| Tax-exempt issuance | |||||||||
| # of transactions | 113 | 164 | 133 | ||||||
| Par value | $2.3 billion | $2.6 billion | $1.8 billion | ||||||
|
Mergers & acquisitions |
|||||||||
|
# of transactions |
6 | 7 | 12 | ||||||
|
Aggregate deal value |
$0.7 billion | $2.1 billion | $1.9 billion | ||||||
|
Asset Management AUM |
$13.8 billion | $12.7 billion | $11.2 billion | ||||||
|
Common shareholders’ equity |
$724.6 million | $703.4 million | $839.1 million | ||||||
|
Annualized qtrly. return on avg. common shareholders’ equity(1) |
11.0% |
3.8% |
(1.9)% |
||||||
| Book value per share: | $47.58 | $46.27 | $52.73 | ||||||
|
Tangible book value per share(2): |
$31.30 | $29.84 | $29.10 | ||||||
*Number of employees and transaction data reflect continuing operations;
other numbers reflect continuing and discontinued results.
**Due to
size, Facebook IPO capital raised has been excluded
Conference Call
Andrew S. Duff, chairman and chief executive
officer, and Debbra L. Schoneman, chief financial officer, will hold a
conference call to review the financial results Wed., Oct. 17 at 9 a.m.
ET (8 a.m. CT). The earnings release will be available on or after Oct.
17 at the firm’s Web site at www.piperjaffray.com.
The call can be accessed via webcast or by dialing (888)810-0209 or
(706)902-1361 (international) and referencing reservation #96211043.
Callers should dial in at least 15 minutes prior to the call time. A
replay of the conference call will be available beginning at
approximately 11 a.m. ET Oct. 17 at the same Web address or by calling
(855)859-2056 and referencing reservation #96211043.
About Piper Jaffray
Piper Jaffray is an investment bank and
asset management firm serving clients in the U.S. and internationally.
Proven advisory teams combine deep industry, product and sector
expertise with ready access to capital. Founded in 1895, the firm is
headquartered in Minneapolis and has offices across the United States
and in London and Zurich. www.piperjaffray.com
Cautionary Note Regarding Forward-Looking Statements
This
press release and the conference call to discuss the contents of this
press release contain forward-looking statements. Statements that are
not historical or current facts, including statements about beliefs and
expectations, are forward-looking statements and are subject to
significant risks and uncertainties that are difficult to predict. These
forward-looking statements cover, among other things, statements made
about general economic and market conditions, the environment and
prospects for capital markets transactions (including corporate advisory
transactions), anticipated financial results from strategic trading
activities within fixed income institutional brokerage (including
results from non-agency mortgaged-backed securities), the closure of our
Hong Kong capital markets business, anticipated financial results
generally (including expectations regarding our compensation ratio,
revenue levels, operating margins, earnings per share, and return on
equity), current deal pipelines (or backlogs), our strategic priorities
(including growth in public finance, asset management, and corporate
advisory), or other similar matters. These statements involve inherent
risks and uncertainties, both known and unknown, and important factors
could cause actual results to differ materially from those anticipated
or discussed in the forward-looking statements, including (1) market and
economic conditions or developments may be unfavorable, including in
specific sectors in which we operate, and these conditions or
developments, such as market fluctuations or volatility, may adversely
affect our business, revenue levels and profitability, (2) the volume of
anticipated investment banking transactions as reflected in our deal
pipelines (and the net revenues we earn from such transactions) may
differ from expected results if any transactions are delayed or not
completed at all or if the terms of any transactions are modified, (3)
revenue from strategic trading activities comprise a meaningful portion
of our fixed income institutional brokerage revenue, and results from
these activities may be volatile and vary significantly on a quarterly
and annual basis, (4) our ability to manage expenses may be limited by
the fixed nature of certain expenses as well as the impact from
unanticipated expenses, (5) the closure of our Hong Kong capital markets
business could cause us to incur unforeseen expenses and have disruptive
effects on our business, (6) we may not be able to compete successfully
with other companies in the financial services industry, which may
impact our ability to achieve our growth priorities and objectives, (7)
our stock price may fluctuate as a result of several factors, including
but not limited to, changes in our revenues and operating results, and
(8) the other factors described under “Risk Factors” in Part I, Item 1A
of our Annual Report on Form 10-K for the year ended December 31, 2011
and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in Part II, Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2011, and updated in our subsequent
reports filed with the SEC (available at our Web site at www.piperjaffray.com
and at the SEC Web site at www.sec.gov).
Forward-looking statements speak only as of the date they are made, and
readers are cautioned not to place undue reliance on them. We undertake
no obligation to update them in light of new information or future
events.
© 2012 Piper Jaffray Companies, 800 Nicollet Mall, Minneapolis, Minnesota 55402-7020
| Piper Jaffray Companies | |||||||||||||||||||||||||||||||||
| Preliminary Unaudited Results of Operations | |||||||||||||||||||||||||||||||||
| Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | |||||||||||||||||||||||||||||||
| Sept. 30, | Jun. 30, | Sept. 30, | 3Q '12 | 3Q '12 | Sept. 30, | Sept. 30, | Percent | ||||||||||||||||||||||||||
|
(Amounts in thousands, except per share data) |
2012 | 2012 | 2011 | vs. 2Q '12 | vs. 3Q '11 | 2012 | 2011 | Inc/(Dec) | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||
| Investment banking | $ | 51,083 | $ | 49,368 | $ | 44,031 | 3.5 | % | 16.0 | % | $ | 148,536 | $ | 151,834 | (2.2 | ) | % | ||||||||||||||||
| Institutional brokerage | 58,719 | 31,207 | 28,689 | 88.2 | 104.7 | 134,006 | 111,732 | 19.9 | |||||||||||||||||||||||||
| Asset management | 17,588 | 17,434 | 15,205 | 0.9 | 15.7 | 52,927 | 52,774 | 0.3 | |||||||||||||||||||||||||
| Interest | 12,457 | 12,139 | 15,116 | 2.6 | (17.6 | ) | 35,742 | 42,407 | (15.7 | ) | |||||||||||||||||||||||
| Other income | 235 | 979 | 1,710 | (76.0 | ) | (86.3 | ) | 1,242 | 10,018 | (87.6 | ) | ||||||||||||||||||||||
| Total revenues | 140,082 | 111,127 | 104,751 | 26.1 | 33.7 | 372,453 | 368,765 | 1.0 | |||||||||||||||||||||||||
| Interest expense | 7,125 | 6,625 | 8,894 | 7.5 | (19.9 | ) | 20,184 | 24,748 | (18.4 | ) | |||||||||||||||||||||||
| Net revenues | 132,957 | 104,502 | 95,857 | 27.2 | 38.7 | 352,269 | 344,017 | 2.4 | |||||||||||||||||||||||||
| Non-interest expenses: | |||||||||||||||||||||||||||||||||
| Compensation and benefits | 78,738 | 63,297 | 60,505 | 24.4 | 30.1 | 211,564 | 207,591 | 1.9 | |||||||||||||||||||||||||
| Occupancy and equipment | 6,232 | 6,865 | 6,638 | (9.2 | ) | (6.1 | ) | 20,171 | 22,427 | (10.1 | ) | ||||||||||||||||||||||
| Communications | 5,374 | 5,053 | 5,595 | 6.4 | (3.9 | ) | 16,421 | 17,611 | (6.8 | ) | |||||||||||||||||||||||
| Floor brokerage and clearance | 1,827 | 2,004 | 2,143 | (8.8 | ) | (14.7 | ) | 5,939 | 6,684 | (11.1 | ) | ||||||||||||||||||||||
| Marketing and business development | 4,285 | 5,895 | 5,059 | (27.3 | ) | (15.3 | ) | 15,097 | 16,868 | (10.5 | ) | ||||||||||||||||||||||
| Outside services | 7,557 | 7,577 | 6,263 | (0.3 | ) | 20.7 | 21,027 | 20,632 | 1.9 | ||||||||||||||||||||||||
| Restructuring-related expense | - | 3,642 | - | N/M | N/M | 3,642 | - | N/M | |||||||||||||||||||||||||
| Intangible asset amortization expense | 1,917 | 1,917 | 2,069 | - | (7.3 | ) | 5,751 | 6,207 | (7.3 | ) | |||||||||||||||||||||||
| Other operating expenses | 4,313 | 2,728 | 2,457 | 58.1 | 75.5 | 9,164 | 8,468 | 8.2 | |||||||||||||||||||||||||
| Total non-interest expenses | 110,243 | 98,978 | 90,729 | 11.4 | 21.5 | 308,776 | 306,488 | 0.7 | |||||||||||||||||||||||||
|
Income from continuing operations before income tax expense/(benefit) |
22,714 | 5,524 | 5,128 | 311.2 | 342.9 | 43,493 | 37,529 | 15.9 | |||||||||||||||||||||||||
| Income tax expense/(benefit) | 9,188 | (5,791 | ) | 1,361 | N/M | 575.1 | 11,365 | 11,892 | (4.4 | ) | |||||||||||||||||||||||
| Income from continuing operations | 13,526 | 11,315 | 3,767 | 19.5 | 259.1 | 32,128 | 25,637 | 25.3 | |||||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||||||||||
| Income/(loss) from discontinued operations, net of tax | 6,803 | (3,895 | ) | (7,143 | ) | N/M | N/M | (13 | ) | (10,447 | ) | (99.9 | ) | ||||||||||||||||||||
| Net income/(loss) | 20,329 | 7,420 | (3,376 | ) | 174.0 | N/M | 32,115 | 15,190 | 111.4 | ||||||||||||||||||||||||
| Net income applicable to noncontrolling interests | 665 | 569 | 207 | 16.9 | 221.3 | % | 2,671 | 846 | 215.7 | ||||||||||||||||||||||||
| Net income/(loss) applicable to Piper Jaffray Companies (1) | $ | 19,664 | $ | 6,851 | $ | (3,583 | ) | 187.0 | % | N/M | $ | 29,444 | $ | 14,344 | 105.3 | % | |||||||||||||||||
|
Net income/(loss) applicable to Piper Jaffray Companies' common shareholders (1) |
$ | 16,840 | $ | 5,890 | $ | (3,583 | ) | 185.9 | % | (570.0 | ) | % | $ | 25,151 | $ | 11,648 | 115.9 | % | |||||||||||||||
| Amounts applicable to Piper Jaffray Companies | |||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 12,861 | $ | 10,746 | $ | 3,560 | 19.7 | % | 261.3 | % | $ | 29,457 | $ | 24,791 | 18.8 | % | |||||||||||||||||
| Income/(loss) from discontinued operations, net of tax | 6,803 | (3,895 | ) | (7,143 | ) | N/M | N/M | (13 | ) | (10,447 | ) | (99.9 | ) | ||||||||||||||||||||
| Net income/(loss) applicable to Piper Jaffray Companies | $ | 19,664 | $ | 6,851 | $ | (3,583 | ) | 187.0 | % | N/M | $ | 29,444 | $ | 14,344 | 105.3 | % | |||||||||||||||||
| Earnings/(loss) per basic common share | |||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 0.72 | $ | 0.58 | $ | 0.22 | 24.1 | % | 227.3 | % | $ | 1.60 | $ | 1.29 | 24.0 | % | |||||||||||||||||
| Income/(loss) from discontinued operations | 0.38 | (0.21 | ) | (0.45 | ) | N/M | N/M | - | (0.54 | ) | N/M | ||||||||||||||||||||||
| Earnings/(loss) per basic common share | $ | 1.11 | $ | 0.37 | $ | (0.23 | ) | 200.0 | % | N/M | $ | 1.60 | $ | 0.74 | 116.2 | % | |||||||||||||||||
| Earnings/(loss) per diluted common share | |||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 0.72 | $ | 0.58 | $ | 0.22 | 24.1 | % | 227.3 | % | $ | 1.60 | $ | 1.29 | 24.0 | % | |||||||||||||||||
| Income/(loss) from discontinued operations | 0.38 | (0.21 | ) | (0.45 | ) | N/M | N/M | - | (0.54 | ) | N/M | ||||||||||||||||||||||
| Earnings/(loss) per diluted common share | $ | 1.11 | $ | 0.37 | $ | (0.23 | ) | (2 | ) | 200.0 | % | N/M | $ | 1.60 | $ | 0.74 | 116.2 | % | |||||||||||||||
| Weighted average number of common shares outstanding | |||||||||||||||||||||||||||||||||
| Basic | 15,210 | 15,932 | 15,889 | (4.5 | ) | % | (4.3 | ) | % | 15,736 | 15,638 | 0.6 | % | ||||||||||||||||||||
| Diluted | 15,210 | 15,932 | 15,889 | (2 | ) | (4.5 | ) | % | (4.3 | ) | % | 15,736 | 15,655 | 0.5 | % | ||||||||||||||||||
| (1) Net income applicable to Piper Jaffray Companies is the total net income earned by the Company. Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested restricted stock with dividend rights. | |||||||||||||||||||||||||||||||||
| (2) Earnings per diluted common share is calculated using the basic weighted average number of common shares outstanding for periods in which a loss is incurred. | |||||||||||||||||||||||||||||||||
| N/M - Not meaningful | |||||||||||||||||||||||||||||||||
| Piper Jaffray Companies | ||||||||||||||||||||||||||||||||
| Preliminary Unaudited Segment Data from Continuing Operations | ||||||||||||||||||||||||||||||||
| Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||||||
| Sept. 30, | Jun. 30, | Sept. 30, | 3Q '12 | 3Q '12 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||||||
| (Dollars in thousands) | 2012 | 2012 | 2011 | vs. 2Q '12 | vs. 3Q '11 | 2012 | 2011 | Inc/(Dec) | ||||||||||||||||||||||||
| Capital Markets | ||||||||||||||||||||||||||||||||
| Investment banking | ||||||||||||||||||||||||||||||||
| Financing | ||||||||||||||||||||||||||||||||
| Equities | $ | 18,781 | $ | 13,132 | $ | 6,569 | 43.0 | % | 185.9 | % | $ | 55,141 | $ | 58,682 | (6.0 | ) | % | |||||||||||||||
| Debt | 16,573 | 22,256 | 11,105 | (25.5 | ) | 49.2 | 53,598 | 39,354 | 36.2 | |||||||||||||||||||||||
| Advisory services | 16,317 | 14,631 | 26,951 | 11.5 | (39.5 | ) | 41,670 | 55,763 | (25.3 | ) | ||||||||||||||||||||||
| Total investment banking | 51,671 | 50,019 | 44,625 | 3.3 | 15.8 | 150,409 | 153,799 | (2.2 | ) | |||||||||||||||||||||||
| Institutional sales and trading | ||||||||||||||||||||||||||||||||
| Equities | 17,927 | 16,682 | 22,020 | 7.5 | (18.6 | ) | 55,589 | 66,028 | (15.8 | ) | ||||||||||||||||||||||
| Fixed income | 46,690 | 20,620 | 13,681 | 126.4 | 241.3 | 95,773 | 65,920 | 45.3 | ||||||||||||||||||||||||
| Total institutional sales and trading | 64,617 | 37,302 | 35,701 | 73.2 | 81.0 | 151,362 | 131,948 | 14.7 | ||||||||||||||||||||||||
| Other income/(loss) | (1,039 | ) | 265 | 1,072 | N/M | N/M | (2,141 | ) | 5,953 | N/M | ||||||||||||||||||||||
| Net revenues | 115,249 | 87,586 | 81,398 | 31.6 | 41.6 | 299,630 | 291,700 | 2.7 | ||||||||||||||||||||||||
| Operating expenses | 94,671 | 85,803 | 77,694 | 10.3 | % | 21.9 | 266,529 | 264,599 | 0.7 | |||||||||||||||||||||||
| Segment pre-tax operating income | $ | 20,578 | $ | 1,783 | $ | 3,704 | N/M | 455.6 | % | $ | 33,101 | $ | 27,101 | 22.1 | % | |||||||||||||||||
| Segment pre-tax operating margin | 17.9 | % | 2.0 | % | 4.6 | % | 11.0 | % | 9.3 | % | ||||||||||||||||||||||
| Asset Management | ||||||||||||||||||||||||||||||||
| Management and performance fees | ||||||||||||||||||||||||||||||||
| Management fees | $ | 17,252 | $ | 16,968 | $ | 15,149 | 1.7 | % | 13.9 | % | $ | 51,441 | $ | 50,946 | 1.0 | % | ||||||||||||||||
| Performance fees | 22 | 218 | - | (89.9 | ) | N/M | 664 | 1,746 | (62.0 | ) | ||||||||||||||||||||||
| Total management and performance fees | 17,274 | 17,186 | 15,149 | 0.5 | 14.0 | 52,105 | 52,692 | (1.1 | ) | |||||||||||||||||||||||
| Other income/(loss) | 434 | (270 | ) | (690 | ) | N/M | N/M | 534 | (375 | ) | N/M | |||||||||||||||||||||
| Net revenues | 17,708 | 16,916 | 14,459 | 4.7 | 22.5 | 52,639 | 52,317 | 0.6 | ||||||||||||||||||||||||
| Operating expenses | 15,572 | 13,175 | 13,035 | 18.2 | 19.5 | 42,247 | 41,889 | 0.9 | ||||||||||||||||||||||||
| Segment pre-tax operating income | $ | 2,136 | $ | 3,741 | $ | 1,424 | (42.9 | ) | % | 50.0 | % | $ | 10,392 | $ | 10,428 | (0.3 | ) | % | ||||||||||||||
| Segment pre-tax operating margin | 12.1 | % | 22.1 | % | 9.8 | % | 19.7 | % | 19.9 | % | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
| Net revenues | $ | 132,957 | $ | 104,502 | $ | 95,857 | 27.2 | % | 38.7 | % | $ | 352,269 | $ | 344,017 | 2.4 | % | ||||||||||||||||
| Operating expenses | 110,243 | 98,978 | 90,729 | 11.4 | 21.5 | 308,776 | 306,488 | 0.7 | ||||||||||||||||||||||||
| Total segment pre-tax operating income | $ | 22,714 | $ | 5,524 | $ | 5,128 | 311.2 | % | 342.9 | % | $ | 43,493 | $ | 37,529 | 15.9 | % | ||||||||||||||||
| Pre-tax operating margin | 17.1 | % | 5.3 | % | 5.3 | % | 12.3 | % | 10.9 | % | ||||||||||||||||||||||
| N/M - Not meaningful | ||||||||||||||||||||||||||||||||
| Segment pre-tax operating income and segment pre-tax operating margin exclude the results of discontinued operations. | ||||||||||||||||||||||||||||||||
| Piper Jaffray Companies | ||||||||||||||||||||||||||||||||
| Preliminary Data from Discontinued Operations | ||||||||||||||||||||||||||||||||
| Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||||||
| Sept. 30, | Jun. 30, | Sept. 30, | 3Q '12 | 3Q '12 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||||||
| (Dollars in thousands) | 2012 | 2012 | 2011 | vs. 2Q '12 | vs. 3Q '11 | 2012 | 2011 | Inc/(Dec) | ||||||||||||||||||||||||
| Discontinued Operations | ||||||||||||||||||||||||||||||||
| Net revenues | $ | 2,674 | $ | 1,896 | $ | 2,124 | 41.0 | % | 25.9 | % | $ | 6,625 | $ | 11,517 | (42.5 | ) | % | |||||||||||||||
| Restructuring expenses | 11,057 | - | - | N/M | N/M | 11,057 | - | N/M | ||||||||||||||||||||||||
| Operating expenses | 5,843 | 5,767 | 6,952 | 1.3 | (16.0 | ) | 16,550 | 20,078 | (17.6 | ) | ||||||||||||||||||||||
| Total non-interest expenses | 16,900 | 5,767 | 6,952 | 193.0 | % | 143.1 | 27,607 | 20,078 | 37.5 | |||||||||||||||||||||||
|
Loss before income tax expense/(benefit) |
(14,226 | ) | (3,871 | ) | (4,828 | ) | N/M | 194.7 | % | (20,982 | ) | (8,561 | ) | 145.1 | % | |||||||||||||||||
| Income tax expense/(benefit) | (21,029 | ) | 24 | 2,315 | N/M | N/M | (20,969 | ) | 1,886 | N/M | ||||||||||||||||||||||
| Net income/(loss) | $ | 6,803 | $ | (3,895 | ) | $ | (7,143 | ) | N/M | N/M | $ | (13 | ) | $ | (10,447 | ) | N/M | |||||||||||||||
| FOOTNOTES | |||||||||||||||
| (1) | Annualized quarterly return on average adjusted common shareholders' equity | ||||||||||||||
| Adjusted common shareholders’ equity equals total common shareholders’ equity, including goodwill associated with acquisitions, less goodwill resulting from the 1998 acquisition of our predecessor company, Piper Jaffray Companies Inc., by U.S. Bancorp. Annualized return on average adjusted common shareholders’ equity is computed by dividing annualized net income by average monthly adjusted common shareholders’ equity. Management believes that annualized return on adjusted common shareholders’ equity is a meaningful measure of performance because it reflects equity deployed in our businesses after our spin off from U.S. Bancorp on December 31, 2003. The following table sets forth a reconciliation of common shareholders’ equity to adjusted common shareholders’ equity. Common shareholders’ equity is the most directly comparable GAAP financial measure to adjusted common shareholders’ equity. | |||||||||||||||
| Average for the | Average for the | Average for the | |||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||
| (Amounts in thousands) | Sept. 30, 2012 | Jun. 30, 2012 | Sept. 30, 2011 | ||||||||||||
| Common shareholders' equity | $ | 711,856 | $ | 716,851 | $ | 842,515 | |||||||||
| Deduct: goodwill attributable to PJC Inc. acquisition by USB | - | - | 105,522 | ||||||||||||
| Adjusted common shareholders' equity | $ | 711,856 | $ | 716,851 | $ | 736,993 | |||||||||
| Annualized net income/(loss) applicable to Piper Jaffray Companies | $ | 78,657 | $ | 27,406 | $ | (14,333 | ) | ||||||||
| Annualized quarterly return on average adjusted common shareholders' equity | 11.0 | % | 3.8 | % | (1.9 | ) | % | ||||||||
| (2) | Tangible common shareholders' equity | ||||||||||||||
| Tangible shareholders’ equity equals total shareholders’ equity less all goodwill and identifiable intangible assets. Tangible book value per share is computed by dividing tangible shareholders’ equity by common shares outstanding. Management believes that tangible book value per share is a more meaningful measure of our book value per share. Shareholders’ equity is the most directly comparable GAAP financial measure to tangible shareholders’ equity. The following is a reconciliation of shareholders’ equity to tangible shareholders’ equity: | |||||||||||||||
| As of | As of | As of | |||||||||||||
| (Amounts in thousands) | Sept. 30, 2012 | Jun. 30, 2012 | Sept. 30, 2011 | ||||||||||||
| Common shareholders' equity | $ | 724,616 | $ | 703,385 | $ | 839,139 | |||||||||
| Deduct: goodwill and identifiable intangible assets | 247,905 | 249,822 | 376,022 | ||||||||||||
| Tangible common shareholders' equity | $ | 476,711 | $ | 453,563 | $ | 463,117 | |||||||||
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