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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Piper Jaffray Companies | NYSE:PJC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 79.62 | 0 | 01:00:00 |
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
30-0168701
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(IRS Employer Identification No.)
|
800 Nicollet Mall, Suite 1000
Minneapolis, Minnesota
|
|
55402
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
|
(612) 303-6000
|
|
(Registrant’s Telephone Number, Including Area Code)
|
|
PART I. FINANCIAL INFORMATION
|
|||
|
|
|
|
ITEM 1.
|
|
||
|
|
||
|
|
||
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||
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|
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ITEM 2.
|
|
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ITEM 3.
|
|
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ITEM 4.
|
|
||
|
|
|
|
PART II. OTHER INFORMATION
|
|||
|
|
|
|
ITEM 1.
|
|
||
ITEM 1A.
|
|
||
ITEM 2.
|
|
||
ITEM 6.
|
|
||
|
|
|
March 31,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
(Amounts in thousands, except share data)
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
34,835
|
|
|
$
|
123,683
|
|
Cash and cash equivalents segregated for regulatory purposes
|
44,141
|
|
|
43,012
|
|
||
Receivables:
|
|
|
|
||||
Customers
|
19,785
|
|
|
11,633
|
|
||
Brokers, dealers and clearing organizations
|
230,563
|
|
|
127,113
|
|
||
Securities purchased under agreements to resell
|
176,865
|
|
|
167,875
|
|
||
|
|
|
|
||||
Financial instruments and other inventory positions owned
|
417,171
|
|
|
406,513
|
|
||
Financial instruments and other inventory positions owned and pledged as collateral
|
908,217
|
|
|
957,515
|
|
||
Total financial instruments and other inventory positions owned
|
1,325,388
|
|
|
1,364,028
|
|
||
|
|
|
|
||||
Fixed assets (net of accumulated depreciation and amortization of $63,665 and $62,311, respectively)
|
15,310
|
|
|
16,114
|
|
||
Goodwill
|
210,634
|
|
|
210,634
|
|
||
Intangible assets (net of accumulated amortization of $34,187 and $31,869, respectively)
|
37,612
|
|
|
39,930
|
|
||
Investments
|
130,255
|
|
|
112,043
|
|
||
Other assets
|
91,864
|
|
|
102,092
|
|
||
Total assets
|
$
|
2,317,252
|
|
|
$
|
2,318,157
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Short-term financing
|
$
|
435,809
|
|
|
$
|
514,711
|
|
Variable rate senior notes
|
125,000
|
|
|
125,000
|
|
||
Payables:
|
|
|
|
||||
Customers
|
40,218
|
|
|
33,109
|
|
||
Brokers, dealers and clearing organizations
|
110,980
|
|
|
27,722
|
|
||
Securities sold under agreements to repurchase
|
52,046
|
|
|
4,397
|
|
||
Financial instruments and other inventory positions sold, but not yet purchased
|
512,693
|
|
|
512,833
|
|
||
Accrued compensation
|
78,684
|
|
|
159,928
|
|
||
Other liabilities and accrued expenses
|
44,743
|
|
|
58,385
|
|
||
Total liabilities
|
1,400,173
|
|
|
1,436,085
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value:
|
|
|
|
||||
Shares authorized: 100,000,000 at March 31, 2014 and December 31, 2013;
|
|
|
|
||||
Shares issued: 19,520,553 at March 31, 2014 and 19,537,127 at December 31, 2013;
|
|
|
|
||||
Shares outstanding: 14,915,556 at March 31, 2014 and 14,383,418 at December 31, 2013
|
195
|
|
|
195
|
|
||
Additional paid-in capital
|
738,391
|
|
|
740,321
|
|
||
Retained earnings
|
181,641
|
|
|
163,893
|
|
||
Less common stock held in treasury, at cost: 4,604,997 shares at March 31, 2014 and 5,153,709 shares at December 31, 2013
|
(153,720
|
)
|
|
(170,629
|
)
|
||
Accumulated other comprehensive income
|
947
|
|
|
896
|
|
||
Total common shareholders’ equity
|
767,454
|
|
|
734,676
|
|
||
|
|
|
|
||||
Noncontrolling interests
|
149,625
|
|
|
147,396
|
|
||
Total shareholders’ equity
|
917,079
|
|
|
882,072
|
|
||
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
2,317,252
|
|
|
$
|
2,318,157
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Amounts in thousands, except per share data)
|
2014
|
|
2013
|
||||
Revenues:
|
|
|
|
||||
Investment banking
|
$
|
88,474
|
|
|
$
|
40,821
|
|
Institutional brokerage
|
44,034
|
|
|
40,147
|
|
||
Asset management
|
20,959
|
|
|
18,456
|
|
||
Interest
|
13,659
|
|
|
10,823
|
|
||
Investment income
|
6,768
|
|
|
5,065
|
|
||
|
|
|
|
||||
Total revenues
|
173,894
|
|
|
115,312
|
|
||
|
|
|
|
||||
Interest expense
|
5,761
|
|
|
5,779
|
|
||
|
|
|
|
||||
Net revenues
|
168,133
|
|
|
109,533
|
|
||
|
|
|
|
||||
Non-interest expenses:
|
|
|
|
||||
Compensation and benefits
|
100,489
|
|
|
66,105
|
|
||
Occupancy and equipment
|
6,778
|
|
|
5,817
|
|
||
Communications
|
5,955
|
|
|
5,232
|
|
||
Floor brokerage and clearance
|
1,834
|
|
|
2,150
|
|
||
Marketing and business development
|
5,526
|
|
|
4,980
|
|
||
Outside services
|
9,493
|
|
|
7,214
|
|
||
Intangible asset amortization expense
|
2,318
|
|
|
1,661
|
|
||
Other operating expenses
|
3,027
|
|
|
(1,794
|
)
|
||
|
|
|
|
||||
Total non-interest expenses
|
135,420
|
|
|
91,365
|
|
||
|
|
|
|
||||
Income from continuing operations before income tax expense
|
32,713
|
|
|
18,168
|
|
||
|
|
|
|
||||
Income tax expense
|
9,827
|
|
|
5,600
|
|
||
|
|
|
|
||||
Income from continuing operations
|
22,886
|
|
|
12,568
|
|
||
|
|
|
|
||||
Discontinued operations:
|
|
|
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
|
(521
|
)
|
||
|
|
|
|
||||
Net income
|
22,886
|
|
|
12,047
|
|
||
|
|
|
|
||||
Net income applicable to noncontrolling interests
|
5,138
|
|
|
1,901
|
|
||
|
|
|
|
||||
Net income applicable to Piper Jaffray Companies
|
$
|
17,748
|
|
|
$
|
10,146
|
|
|
|
|
|
||||
Net income applicable to Piper Jaffray Companies’ common shareholders
|
$
|
16,089
|
|
|
$
|
8,966
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Amounts in thousands, except per share data)
|
2014
|
|
2013
|
||||
Amounts applicable to Piper Jaffray Companies
|
|
|
|
||||
Net income from continuing operations
|
$
|
17,748
|
|
|
$
|
10,667
|
|
Net loss from discontinued operations
|
—
|
|
|
(521
|
)
|
||
Net income applicable to Piper Jaffray Companies
|
$
|
17,748
|
|
|
$
|
10,146
|
|
|
|
|
|
||||
Earnings/(loss) per basic common share
|
|
|
|
||||
Income from continuing operations
|
$
|
1.10
|
|
|
$
|
0.60
|
|
Loss from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Earnings per basic common share
|
$
|
1.10
|
|
|
$
|
0.58
|
|
|
|
|
|
||||
Earnings/(loss) per diluted common share
|
|
|
|
||||
Income from continuing operations
|
$
|
1.10
|
|
|
$
|
0.60
|
|
Loss from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Earnings per basic common share
|
$
|
1.10
|
|
|
$
|
0.57
|
|
|
|
|
|
||||
Weighted average number of common shares outstanding
|
|
|
|
||||
Basic
|
14,612
|
|
|
15,582
|
|
||
Diluted
|
14,657
|
|
|
15,610
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Amounts in thousands)
|
2014
|
|
2013
|
||||
Net income
|
$
|
22,886
|
|
|
$
|
12,047
|
|
|
|
|
|
||||
Other comprehensive income/(loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustment
|
51
|
|
|
(148
|
)
|
||
|
|
|
|
||||
Comprehensive income
|
22,937
|
|
|
11,899
|
|
||
|
|
|
|
||||
Comprehensive income applicable to noncontrolling interests
|
5,138
|
|
|
1,901
|
|
||
|
|
|
|
||||
Comprehensive income applicable to Piper Jaffray Companies
|
$
|
17,799
|
|
|
$
|
9,998
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Operating Activities:
|
|
|
|
||||
Net income
|
$
|
22,886
|
|
|
$
|
12,047
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of fixed assets
|
1,418
|
|
|
1,426
|
|
||
Deferred income taxes
|
8,142
|
|
|
12,070
|
|
||
Share-based and deferred compensation
|
5,375
|
|
|
795
|
|
||
Amortization of intangible assets
|
2,318
|
|
|
1,661
|
|
||
Amortization of forgivable loans
|
1,327
|
|
|
1,725
|
|
||
Decrease/(increase) in operating assets:
|
|
|
|
||||
Cash and cash equivalents segregated for regulatory purposes
|
(1,129
|
)
|
|
(14,005
|
)
|
||
Receivables:
|
|
|
|
||||
Customers
|
(8,152
|
)
|
|
(3,708
|
)
|
||
Brokers, dealers and clearing organizations
|
(103,450
|
)
|
|
(17,448
|
)
|
||
Securities purchased under agreements to resell
|
(8,990
|
)
|
|
(49,763
|
)
|
||
Net financial instruments and other inventory positions owned
|
38,500
|
|
|
(108,437
|
)
|
||
Investments
|
(18,212
|
)
|
|
(7,381
|
)
|
||
Other assets
|
792
|
|
|
(3,511
|
)
|
||
Increase/(decrease) in operating liabilities:
|
|
|
|
||||
Payables:
|
|
|
|
||||
Customers
|
7,109
|
|
|
33,332
|
|
||
Brokers, dealers and clearing organizations
|
83,258
|
|
|
44,114
|
|
||
Securities sold under agreements to repurchase
|
2,442
|
|
|
—
|
|
||
Accrued compensation
|
(64,516
|
)
|
|
(74,265
|
)
|
||
Other liabilities and accrued expenses
|
(13,646
|
)
|
|
(10,211
|
)
|
||
Decrease in assets held for sale
|
—
|
|
|
(1,283
|
)
|
||
Increase in liabilities held for sale
|
—
|
|
|
(685
|
)
|
||
|
|
|
|
||||
Net cash used in operating activities
|
(44,528
|
)
|
|
(183,527
|
)
|
||
|
|
|
|
||||
Investing Activities:
|
|
|
|
||||
Purchases of fixed assets, net
|
(607
|
)
|
|
(230
|
)
|
||
|
|
|
|
||||
Net cash used in investing activities
|
(607
|
)
|
|
(230
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Financing Activities:
|
|
|
|
||||
Decrease in short-term financing
|
$
|
(78,902
|
)
|
|
$
|
(67,996
|
)
|
Increase in securities sold under agreements to repurchase
|
45,207
|
|
|
132,297
|
|
||
Increase/(decrease) in noncontrolling interests
|
(2,909
|
)
|
|
50,562
|
|
||
Repurchase of common stock
|
(7,346
|
)
|
|
(13,929
|
)
|
||
Excess/(reduced) tax benefit from share-based compensation
|
(47
|
)
|
|
55
|
|
||
Proceeds from stock option transactions
|
273
|
|
|
—
|
|
||
|
|
|
|
||||
Net cash provided by/(used in) financing activities
|
(43,724
|
)
|
|
100,989
|
|
||
|
|
|
|
||||
Currency adjustment:
|
|
|
|
||||
Effect of exchange rate changes on cash
|
11
|
|
|
(88
|
)
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(88,848
|
)
|
|
(82,856
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
123,683
|
|
|
105,371
|
|
||
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
34,835
|
|
|
$
|
22,515
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information –
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
6,019
|
|
|
$
|
5,465
|
|
Income taxes
|
$
|
19,972
|
|
|
$
|
596
|
|
|
|
|
|
||||
Non-cash financing activities –
|
|
|
|
||||
Issuance of common stock for retirement plan obligations:
|
|
|
|
||||
103,598 shares and 96,049 shares for the three months ended March 31, 2014 and 2013, respectively
|
$
|
4,156
|
|
|
$
|
3,939
|
|
|
|
|
|
||||
Issuance of restricted common stock for annual equity award:
|
|
|
|
||||
402,074 shares and 431,582 shares for the three months ended March 31, 2014 and 2013, respectively
|
$
|
16,131
|
|
|
$
|
17,699
|
|
Note 1
|
|
||
Note 2
|
|
||
Note 3
|
|
||
Note 4
|
|
||
Note 5
|
|
||
Note 6
|
|
||
Note 7
|
|
||
Note 8
|
|
||
Note 9
|
|
||
Note 10
|
|
||
Note 11
|
|
||
Note 12
|
|
||
Note 13
|
|
||
Note 14
|
|
||
Note 15
|
|
||
Note 16
|
|
||
Note 17
|
|
||
Note 18
|
|
||
Note 19
|
|
||
Note 20
|
|
||
Note 21
|
|
||
Note 22
|
|
|
Three Months Ended
|
||
|
March 31,
|
||
(Dollars in thousands)
|
2013
|
||
Net revenues
|
$
|
113,540
|
|
Net income from continuing operations applicable to Piper Jaffray Companies
|
$
|
9,096
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Financial instruments and other inventory positions owned:
|
|
|
|
||||
Corporate securities:
|
|
|
|
||||
Equity securities
|
$
|
46,669
|
|
|
$
|
54,097
|
|
Convertible securities
|
79,969
|
|
|
80,784
|
|
||
Fixed income securities
|
16,120
|
|
|
10,102
|
|
||
Municipal securities:
|
|
|
|
||||
Taxable securities
|
233,045
|
|
|
232,379
|
|
||
Tax-exempt securities
|
438,457
|
|
|
460,865
|
|
||
Short-term securities
|
76,261
|
|
|
62,620
|
|
||
Asset-backed securities
|
112,079
|
|
|
119,811
|
|
||
U.S. government agency securities
|
278,965
|
|
|
304,737
|
|
||
U.S. government securities
|
3,090
|
|
|
—
|
|
||
Derivative contracts
|
40,733
|
|
|
38,633
|
|
||
Total financial instruments and other inventory positions owned
|
1,325,388
|
|
|
1,364,028
|
|
||
|
|
|
|
||||
Less noncontrolling interests (1)
|
(243,892
|
)
|
|
(291,513
|
)
|
||
|
$
|
1,081,496
|
|
|
$
|
1,072,515
|
|
|
|
|
|
||||
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
||||
Corporate securities:
|
|
|
|
||||
Equity securities
|
$
|
85,767
|
|
|
$
|
69,205
|
|
Fixed income securities
|
17,029
|
|
|
24,021
|
|
||
U.S. government agency securities
|
83,901
|
|
|
120,084
|
|
||
U.S. government securities
|
315,666
|
|
|
291,320
|
|
||
Derivative contracts
|
10,330
|
|
|
8,203
|
|
||
Total financial instruments and other inventory positions sold, but not yet purchased
|
512,693
|
|
|
512,833
|
|
||
|
|
|
|
||||
Less noncontrolling interests (2)
|
(62,420
|
)
|
|
(68,356
|
)
|
||
|
$
|
450,273
|
|
|
$
|
444,477
|
|
(1)
|
Noncontrolling interests attributable to third party ownership in a consolidated municipal bond fund consist of
$103.2 million
and
$101.8 million
of taxable municipal securities,
$135.8 million
and
$183.9 million
of tax-exempt municipal securities, and
$4.9 million
and
$5.8 million
of derivative contracts as of
March 31, 2014
and
December 31, 2013
, respectively.
|
(2)
|
Noncontrolling interests attributable to third party ownership in a consolidated municipal bond fund consist of
$61.4 million
and
$67.4 million
of U.S. government securities, and
$1.1 million
and
$1.0 million
of derivative contracts as of
March 31, 2014
and
December 31, 2013
, respectively.
|
(Dollars in thousands)
|
|
|
|
March 31,
|
|
December 31,
|
||||
Transaction Type or Hedged Security
|
|
Derivative Category
|
|
2014
|
|
2013
|
||||
Customer matched-book
|
|
Interest rate derivative contract
|
|
$
|
5,287,583
|
|
|
$
|
5,310,929
|
|
Trading securities
|
|
Interest rate derivative contract
|
|
255,500
|
|
|
198,500
|
|
||
Trading securities
|
|
Credit default swap index contract
|
|
379,215
|
|
|
299,333
|
|
||
Trading securities
|
|
Equity option derivative contract
|
|
17,152
|
|
|
17,090
|
|
||
|
|
|
|
$
|
5,939,450
|
|
|
$
|
5,825,852
|
|
|
|
|
|
Three Months Ended
|
||||||
(Dollars in thousands)
|
|
|
|
March 31,
|
||||||
Derivative Category
|
|
Operations Category
|
|
2014
|
|
2013
|
||||
Interest rate derivative contract
|
|
Investment banking
|
|
$
|
(524
|
)
|
|
$
|
(538
|
)
|
Interest rate derivative contract
|
|
Institutional brokerage
|
|
532
|
|
|
5,935
|
|
||
Credit default swap index contract
|
|
Institutional brokerage
|
|
(1,254
|
)
|
|
(1,874
|
)
|
||
Equity option derivative contract
|
|
Institutional brokerage
|
|
948
|
|
|
—
|
|
||
|
|
|
|
$
|
(298
|
)
|
|
$
|
3,523
|
|
(Dollars in thousands)
|
|
|
|
Asset Value at
|
|
|
|
Liability Value at
|
||||
|
|
|
|
March 31,
|
|
|
|
March 31,
|
||||
Derivative Category
|
|
Financial Condition Location
|
|
2014
|
|
Financial Condition Location
|
|
2014
|
||||
Interest rate derivative contract
|
|
Financial instruments and other inventory positions owned
|
|
$
|
379,037
|
|
|
Financial instruments and other inventory positions sold, but not yet purchased
|
|
$
|
359,745
|
|
Credit default swap index contract
|
|
Financial instruments and other inventory positions owned
|
|
8,478
|
|
|
Financial instruments and other inventory positions sold, but not yet purchased
|
|
8,611
|
|
||
Equity option derivative contract
|
|
Financial instruments and other inventory positions owned
|
|
74
|
|
|
Financial instruments and other inventory positions sold, but not yet purchased
|
|
1,274
|
|
||
|
|
|
|
$
|
387,589
|
|
|
|
|
$
|
369,630
|
|
|
Valuation
|
|
|
|
|
|
Weighted
|
|
Technique
|
|
Unobservable Input
|
|
Range
|
|
Average
|
Assets:
|
|
|
|
|
|
|
|
Financial instruments and other inventory positions owned:
|
|
|
|
|
|
|
|
Municipal securities:
|
|
|
|
|
|
|
|
Tax-exempt securities
|
Discounted cash flow
|
|
Debt service coverage ratio (2)
|
|
5 - 69%
|
|
22.2%
|
Short-term securities
|
Discounted cash flow
|
|
Expected recovery rate (% of par) (2)
|
|
77 - 80%
|
|
79.6%
|
Asset-backed securities:
|
|
|
|
|
|
|
|
Collateralized by residential mortgages
|
Discounted cash flow
|
|
Credit default rates (3)
|
|
2 - 8%
|
|
5.2%
|
|
|
|
Prepayment rates (4)
|
|
2 - 22%
|
|
5.1%
|
|
|
|
Loss severity (3)
|
|
42 - 100%
|
|
68.1%
|
|
|
|
Valuation yields (3)
|
|
5 - 7%
|
|
5.9%
|
Derivative contracts:
|
|
|
|
|
|
|
|
Interest rate locks
|
Discounted cash flow
|
|
Premium over the MMD curve (1)
|
|
53 - 66 bps
|
|
63.0 bps
|
Investments at fair value:
|
|
|
|
|
|
|
|
Warrants in public and private companies
|
Black-Scholes option pricing model
|
|
Liquidity discount rates (1)
|
|
30 - 40%
|
|
34.3%
|
Warrants in private companies
|
Black-Scholes option pricing model
|
|
Stock volatility factors of comparable companies (2)
|
|
26 - 93%
|
|
62.6%
|
Equity securities in private companies
|
Market approach
|
|
Revenue multiple (2)
|
|
2 - 7 times
|
|
3.3 times
|
|
|
|
EBITDA multiple (2)
|
|
9 - 12 times
|
|
9.3 times
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
|
|
|
|
Derivative contracts:
|
|
|
|
|
|
|
|
Interest rate locks
|
Discounted cash flow
|
|
Premium over the MMD curve (1)
|
|
5 - 51 bps
|
|
19.8 bps
|
(1)
|
Significant increase/(decrease) in the unobservable input in isolation would result in a significantly lower/(higher) fair value measurement.
|
(2)
|
Significant increase/(decrease) in the unobservable input in isolation would result in a significantly higher/(lower) fair value measurement.
|
(3)
|
Significant changes in any of these inputs in isolation could result in a significantly different fair value. Generally, a change in the assumption used for credit default rates is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally inverse change in the assumption for valuation yields.
|
(4)
|
The potential impact of changes in prepayment rates on fair value is dependent on other security-specific factors, such as the par value and structure. Changes in the prepayment rates may result in directionally similar or directionally inverse changes in fair value depending on whether the security trades at a premium or discount to the par value.
|
|
|
|
|
|
|
|
Counterparty
|
|
|
||||||||||
|
|
|
|
|
|
|
and Cash
|
|
|
||||||||||
|
|
|
|
|
|
|
Collateral
|
|
|
||||||||||
(Dollars in thousands)
|
Level I
|
|
Level II
|
|
Level III
|
|
Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments and other inventory positions owned:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities
|
$
|
29,873
|
|
|
$
|
16,796
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,669
|
|
Convertible securities
|
—
|
|
|
79,969
|
|
|
—
|
|
|
—
|
|
|
79,969
|
|
|||||
Fixed income securities
|
—
|
|
|
16,020
|
|
|
100
|
|
|
—
|
|
|
16,120
|
|
|||||
Municipal securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxable securities
|
—
|
|
|
233,045
|
|
|
—
|
|
|
—
|
|
|
233,045
|
|
|||||
Tax-exempt securities
|
—
|
|
|
437,024
|
|
|
1,433
|
|
|
—
|
|
|
438,457
|
|
|||||
Short-term securities
|
—
|
|
|
75,605
|
|
|
656
|
|
|
—
|
|
|
76,261
|
|
|||||
Asset-backed securities
|
—
|
|
|
4,680
|
|
|
107,399
|
|
|
—
|
|
|
112,079
|
|
|||||
U.S. government agency securities
|
—
|
|
|
278,965
|
|
|
—
|
|
|
—
|
|
|
278,965
|
|
|||||
U.S. government securities
|
3,090
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,090
|
|
|||||
Derivative contracts
|
175
|
|
|
387,350
|
|
|
64
|
|
|
(346,856
|
)
|
|
40,733
|
|
|||||
Total financial instruments and other inventory positions owned:
|
33,138
|
|
|
1,529,454
|
|
|
109,652
|
|
|
(346,856
|
)
|
|
1,325,388
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents
|
1,579
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,579
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments at fair value
|
27,586
|
|
|
—
|
|
|
60,954
|
|
|
—
|
|
|
88,540
|
|
|||||
Total assets
|
$
|
62,303
|
|
|
$
|
1,529,454
|
|
|
$
|
170,606
|
|
|
$
|
(346,856
|
)
|
|
$
|
1,415,507
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities
|
$
|
84,568
|
|
|
$
|
1,199
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,767
|
|
Fixed income securities
|
—
|
|
|
17,029
|
|
|
—
|
|
|
—
|
|
|
17,029
|
|
|||||
U.S. government agency securities
|
—
|
|
|
83,901
|
|
|
—
|
|
|
—
|
|
|
83,901
|
|
|||||
U.S. government securities
|
315,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
315,666
|
|
|||||
Derivative contracts
|
1,274
|
|
|
362,877
|
|
|
5,479
|
|
|
(359,300
|
)
|
|
10,330
|
|
|||||
Total financial instruments and other inventory positions sold, but not yet purchased:
|
$
|
401,508
|
|
|
$
|
465,006
|
|
|
$
|
5,479
|
|
|
$
|
(359,300
|
)
|
|
$
|
512,693
|
|
(1)
|
Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties.
|
|
|
|
|
|
|
|
Counterparty
|
|
|
||||||||||
|
|
|
|
|
|
|
and Cash
|
|
|
||||||||||
|
|
|
|
|
|
|
Collateral
|
|
|
||||||||||
(Dollars in thousands)
|
Level I
|
|
Level II
|
|
Level III
|
|
Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments and other inventory positions owned:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities
|
$
|
39,711
|
|
|
$
|
14,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54,097
|
|
Convertible securities
|
—
|
|
|
80,784
|
|
|
—
|
|
|
—
|
|
|
80,784
|
|
|||||
Fixed income securities
|
—
|
|
|
10,002
|
|
|
100
|
|
|
—
|
|
|
10,102
|
|
|||||
Municipal securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxable securities
|
—
|
|
|
232,379
|
|
|
—
|
|
|
—
|
|
|
232,379
|
|
|||||
Tax-exempt securities
|
—
|
|
|
459,432
|
|
|
1,433
|
|
|
—
|
|
|
460,865
|
|
|||||
Short-term securities
|
—
|
|
|
61,964
|
|
|
656
|
|
|
—
|
|
|
62,620
|
|
|||||
Asset-backed securities
|
—
|
|
|
12
|
|
|
119,799
|
|
|
—
|
|
|
119,811
|
|
|||||
U.S. government agency securities
|
—
|
|
|
304,737
|
|
|
—
|
|
|
—
|
|
|
304,737
|
|
|||||
Derivative contracts
|
19
|
|
|
351,589
|
|
|
691
|
|
|
(313,666
|
)
|
|
38,633
|
|
|||||
Total financial instruments and other inventory positions owned:
|
39,730
|
|
|
1,515,285
|
|
|
122,679
|
|
|
(313,666
|
)
|
|
1,364,028
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents
|
101,629
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,629
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments at fair value
|
20,690
|
|
|
—
|
|
|
49,240
|
|
|
—
|
|
|
69,930
|
|
|||||
Total assets
|
$
|
162,049
|
|
|
$
|
1,515,285
|
|
|
$
|
171,919
|
|
|
$
|
(313,666
|
)
|
|
$
|
1,535,587
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities
|
$
|
69,205
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,205
|
|
Fixed income securities
|
—
|
|
|
24,021
|
|
|
—
|
|
|
—
|
|
|
24,021
|
|
|||||
U.S. government agency securities
|
—
|
|
|
120,084
|
|
|
—
|
|
|
—
|
|
|
120,084
|
|
|||||
U.S. government securities
|
291,320
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
291,320
|
|
|||||
Derivative contracts
|
1,889
|
|
|
324,065
|
|
|
6,643
|
|
|
(324,394
|
)
|
|
8,203
|
|
|||||
Total financial instruments and other inventory positions sold, but not yet purchased:
|
$
|
362,414
|
|
|
$
|
468,170
|
|
|
$
|
6,643
|
|
|
$
|
(324,394
|
)
|
|
$
|
512,833
|
|
(1)
|
Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties.
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
Realized
|
|
Unrealized
|
|
Balance at
|
||||||||||||||||
|
December 31,
|
|
|
|
|
|
Transfers
|
|
Transfers
|
|
gains/
|
|
gains/
|
|
March 31,
|
||||||||||||||||
(Dollars in thousands)
|
2013
|
|
Purchases
|
|
Sales
|
|
in
|
|
out
|
|
(losses)
(1)
|
|
(losses)
(1)
|
|
2014
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial instruments and other inventory positions owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed income securities
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100
|
|
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tax-exempt securities
|
1,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,433
|
|
||||||||
Short-term securities
|
656
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
656
|
|
||||||||
Asset-backed securities
|
119,799
|
|
|
96,725
|
|
|
(114,506
|
)
|
|
—
|
|
|
—
|
|
|
6,270
|
|
|
(889
|
)
|
|
107,399
|
|
||||||||
Derivative contracts
|
691
|
|
|
2,614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,614
|
)
|
|
(627
|
)
|
|
64
|
|
||||||||
Total financial instruments and other inventory positions owned:
|
122,679
|
|
|
99,339
|
|
|
(114,506
|
)
|
|
—
|
|
|
—
|
|
|
3,656
|
|
|
(1,516
|
)
|
|
109,652
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments at fair value
|
49,240
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,714
|
|
|
60,954
|
|
||||||||
Total assets
|
$
|
171,919
|
|
|
$
|
109,339
|
|
|
$
|
(114,506
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,656
|
|
|
$
|
198
|
|
|
$
|
170,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative contracts
|
$
|
6,643
|
|
|
$
|
(16,751
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,751
|
|
|
$
|
(1,164
|
)
|
|
$
|
5,479
|
|
Total financial instruments and other inventory positions sold, but not yet purchased:
|
$
|
6,643
|
|
|
$
|
(16,751
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,751
|
|
|
$
|
(1,164
|
)
|
|
$
|
5,479
|
|
(1)
|
Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income on the consolidated statements of operations.
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
Realized
|
|
Unrealized
|
|
Balance at
|
||||||||||||||||
|
December 31,
|
|
|
|
|
|
Transfers
|
|
Transfers
|
|
gains/
|
|
gains/
|
|
March 31,
|
||||||||||||||||
(Dollars in thousands)
|
2012
|
|
Purchases
|
|
Sales
|
|
in
|
|
out
|
|
(losses)
(1)
|
|
(losses)
(1)
|
|
2013
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial instruments and other inventory positions owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tax-exempt securities
|
$
|
1,429
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1,431
|
|
Short-term securities
|
656
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
656
|
|
||||||||
Asset-backed securities
|
116,171
|
|
|
124,450
|
|
|
(142,404
|
)
|
|
—
|
|
|
—
|
|
|
15,272
|
|
|
(5,835
|
)
|
|
107,654
|
|
||||||||
Derivative contracts
|
827
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,558
|
|
|
2,372
|
|
||||||||
Total financial instruments and other inventory positions owned:
|
119,083
|
|
|
124,451
|
|
|
(142,417
|
)
|
|
—
|
|
|
—
|
|
|
15,272
|
|
|
(4,276
|
)
|
|
112,113
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments at fair value
|
33,245
|
|
|
5,362
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
3,042
|
|
|
41,653
|
|
||||||||
Total assets
|
$
|
152,328
|
|
|
$
|
129,813
|
|
|
$
|
(142,417
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,276
|
|
|
$
|
(1,234
|
)
|
|
$
|
153,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial instruments and other inventory positions sold, but not yet purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative contracts
|
$
|
5,218
|
|
|
$
|
(5,650
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,637
|
|
|
$
|
(4,806
|
)
|
|
$
|
399
|
|
Total financial instruments and other inventory positions sold, but not yet purchased:
|
$
|
5,218
|
|
|
$
|
(5,650
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,637
|
|
|
$
|
(4,806
|
)
|
|
$
|
399
|
|
(1)
|
Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income on the consolidated statements of operations.
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Receivable arising from unsettled securities transactions
|
$
|
107,228
|
|
|
$
|
59,657
|
|
Deposits paid for securities borrowed
|
40,888
|
|
|
36,278
|
|
||
Receivable from clearing organizations
|
9,862
|
|
|
966
|
|
||
Deposits with clearing organizations
|
56,412
|
|
|
20,995
|
|
||
Securities failed to deliver
|
2,345
|
|
|
593
|
|
||
Other
|
13,828
|
|
|
8,624
|
|
||
|
$
|
230,563
|
|
|
$
|
127,113
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Payable arising from unsettled securities transactions
|
$
|
94,274
|
|
|
$
|
5,643
|
|
Payable to clearing organizations
|
788
|
|
|
9,462
|
|
||
Securities failed to receive
|
5,789
|
|
|
744
|
|
||
Other
|
10,129
|
|
|
11,873
|
|
||
|
$
|
110,980
|
|
|
$
|
27,722
|
|
|
Repurchase
|
|
Fair Market
|
|
|
||||
(Dollars in thousands)
|
Liabilities
|
|
Value
|
|
Interest Rate
|
||||
Term up to 30 day maturities:
|
|
|
|
|
|
||||
Asset-backed securities
|
$
|
6,839
|
|
|
$
|
9,194
|
|
|
1.65%
|
On demand maturities:
|
|
|
|
|
|
||||
U.S. government securities
|
45,207
|
|
|
49,064
|
|
|
0.30 - 0.60%
|
||
|
$
|
52,046
|
|
|
$
|
58,258
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Investments at fair value
|
$
|
88,540
|
|
|
$
|
69,930
|
|
Investments at cost
|
19,831
|
|
|
20,709
|
|
||
Investments accounted for under the equity method
|
21,884
|
|
|
21,404
|
|
||
Total investments
|
130,255
|
|
|
112,043
|
|
||
|
|
|
|
||||
Less investments attributable to noncontrolling interests (1)
|
(27,300
|
)
|
|
(21,137
|
)
|
||
|
$
|
102,955
|
|
|
$
|
90,906
|
|
(1)
|
Noncontrolling interests are attributable to third party ownership in a consolidated merchant banking fund and private equity investment vehicles.
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Net deferred income tax assets
|
$
|
28,110
|
|
|
$
|
36,252
|
|
Fee receivables
|
24,738
|
|
|
34,415
|
|
||
Accrued interest receivables
|
10,402
|
|
|
9,793
|
|
||
Forgivable loans, net
|
10,333
|
|
|
7,879
|
|
||
Income tax receivables
|
3,513
|
|
|
—
|
|
||
Prepaid expenses
|
4,934
|
|
|
5,237
|
|
||
Other
|
9,834
|
|
|
8,516
|
|
||
Total other assets
|
$
|
91,864
|
|
|
$
|
102,092
|
|
|
Capital
|
|
Asset
|
|
|
||||||
(Dollars in thousands)
|
Markets
|
|
Management
|
|
Total
|
||||||
Goodwill
|
|
|
|
|
|
||||||
Balance at December 31, 2013
|
$
|
13,790
|
|
|
$
|
196,844
|
|
|
$
|
210,634
|
|
Goodwill acquired
|
—
|
|
|
—
|
|
|
—
|
|
|||
Impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at March 31, 2014
|
$
|
13,790
|
|
|
$
|
196,844
|
|
|
$
|
210,634
|
|
|
|
|
|
|
|
||||||
Intangible assets
|
|
|
|
|
|
||||||
Balance at December 31, 2013
|
$
|
5,316
|
|
|
$
|
34,614
|
|
|
$
|
39,930
|
|
Amortization of intangible assets
|
(743
|
)
|
|
(1,575
|
)
|
|
(2,318
|
)
|
|||
Balance at March 31, 2014
|
$
|
4,573
|
|
|
$
|
33,039
|
|
|
$
|
37,612
|
|
|
Outstanding Balance
|
|
Weighted Average Interest Rate
|
||||||||||
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||
Commercial paper (secured)
|
$
|
274,753
|
|
|
$
|
280,294
|
|
|
1.56
|
%
|
|
1.59
|
%
|
Prime broker arrangement
|
161,056
|
|
|
234,417
|
|
|
0.82
|
%
|
|
0.90
|
%
|
||
Total short-term financing
|
$
|
435,809
|
|
|
$
|
514,711
|
|
|
|
|
|
(Dollars in thousands)
|
|
||
Remainder of 2014
|
$
|
8,422
|
|
2015
|
11,186
|
|
|
2016
|
11,385
|
|
|
2017
|
9,680
|
|
|
2018
|
9,380
|
|
|
Thereafter
|
34,907
|
|
|
|
$
|
84,960
|
|
|
|
|
|
|
|
||||||
|
Common
|
|
|
|
Total
|
||||||
|
Shareholders’
|
|
Noncontrolling
|
|
Shareholders’
|
||||||
(Dollars in thousands)
|
Equity
|
|
Interests
|
|
Equity
|
||||||
Balance at December 31, 2013
|
$
|
734,676
|
|
|
$
|
147,396
|
|
|
$
|
882,072
|
|
Net income
|
17,748
|
|
|
5,138
|
|
|
22,886
|
|
|||
Amortization/issuance of restricted stock
|
17,776
|
|
|
—
|
|
|
17,776
|
|
|||
Issuance of treasury shares for options exercised
|
273
|
|
|
—
|
|
|
273
|
|
|||
Repurchase of common stock for employee tax withholding
|
(7,346
|
)
|
|
—
|
|
|
(7,346
|
)
|
|||
Issuance of treasury shares for 401k match
|
4,156
|
|
|
—
|
|
|
4,156
|
|
|||
Shares reserved/issued for director compensation
|
120
|
|
|
—
|
|
|
120
|
|
|||
Other comprehensive income
|
51
|
|
|
—
|
|
|
51
|
|
|||
Fund capital withdrawals, net
|
—
|
|
|
(2,909
|
)
|
|
(2,909
|
)
|
|||
Balance at March 31, 2014
|
$
|
767,454
|
|
|
$
|
149,625
|
|
|
$
|
917,079
|
|
(1)
|
The Company issued restricted stock as part of deal consideration in conjunction with the acquisition of ARI.
|
|
|
Risk-free
|
|
Expected Stock
|
Grant Year
|
|
Interest Rate
|
|
Price Volatility
|
2013
|
|
0.40%
|
|
44.0%
|
2012
|
|
0.38%
|
|
47.6%
|
|
Unvested
|
|
Weighted Average
|
|||
|
Restricted Stock
|
|
Grant Date
|
|||
|
(in Shares)
|
|
Fair Value
|
|||
December 31, 2013
|
1,582,062
|
|
|
$
|
35.25
|
|
Granted
|
402,074
|
|
|
40.12
|
|
|
Vested
|
(599,611
|
)
|
|
37.58
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
March 31, 2014
|
1,384,525
|
|
|
$
|
35.66
|
|
|
Unvested
|
|
Weighted Average
|
|||
|
Restricted
|
|
Grant Date
|
|||
|
Stock Units
|
|
Fair Value
|
|||
December 31, 2013
|
290,536
|
|
|
$
|
15.83
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
March 31, 2014
|
290,536
|
|
|
$
|
15.83
|
|
|
|
|
|
|
Weighted Average
|
|
|
|||||
|
|
|
Weighted
|
|
Remaining
|
|
|
|||||
|
Options
|
|
Average
|
|
Contractual Term
|
|
Aggregate
|
|||||
|
Outstanding
|
|
Exercise Price
|
|
(in Years)
|
|
Intrinsic Value
|
|||||
December 31, 2013
|
469,289
|
|
|
$
|
44.83
|
|
|
2.0
|
|
$
|
288,318
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(8,573
|
)
|
|
31.88
|
|
|
|
|
|
|||
Canceled
|
(55
|
)
|
|
39.62
|
|
|
|
|
|
|||
Expired
|
(101,589
|
)
|
|
47.48
|
|
|
|
|
|
|||
March 31, 2014
|
359,072
|
|
|
$
|
44.39
|
|
|
2.2
|
|
$
|
1,757,075
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at March 31, 2014
|
359,072
|
|
|
$
|
44.39
|
|
|
2.2
|
|
$
|
1,757,075
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Amounts in thousands, except per share data)
|
2014
|
|
2013
|
||||
Net income from continuing operations applicable to Piper Jaffray Companies
|
$
|
17,748
|
|
|
$
|
10,667
|
|
Net loss from discontinued operations
|
—
|
|
|
(521
|
)
|
||
Net income applicable to Piper Jaffray Companies
|
17,748
|
|
|
10,146
|
|
||
Earnings allocated to participating securities
(1)
|
(1,659
|
)
|
|
(1,180
|
)
|
||
Net income applicable to Piper Jaffray Companies’ common shareholders
(2)
|
$
|
16,089
|
|
|
$
|
8,966
|
|
|
|
|
|
||||
Shares for basic and diluted calculations:
|
|
|
|
||||
Average shares used in basic computation
|
14,612
|
|
|
15,582
|
|
||
Stock options
|
45
|
|
|
28
|
|
||
Average shares used in diluted computation
|
14,657
|
|
|
15,610
|
|
||
|
|
|
|
||||
Earnings/(loss) per basic common share:
|
|
|
|
||||
Income from continuing operations
|
$
|
1.10
|
|
|
$
|
0.60
|
|
Loss from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Earnings per basic common share
|
$
|
1.10
|
|
|
$
|
0.58
|
|
|
|
|
|
||||
Earnings/(loss) per diluted common share:
|
|
|
|
||||
Income from continuing operations
|
$
|
1.10
|
|
|
$
|
0.60
|
|
Loss from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Earnings per diluted common share
|
$
|
1.10
|
|
|
$
|
0.57
|
|
(1)
|
Represents the allocation of earnings to participating securities. Losses are not allocated to participating securities. Participating securities include all of the Company’s unvested restricted shares. The weighted average participating shares outstanding were
1,510,839
and
2,055,679
for the
three months
ended
March 31, 2014
and
2013
, respectively.
|
(2)
|
Net income/(loss) applicable to Piper Jaffray Companies’ common shareholders for diluted and basic EPS may differ under the two-class method as a result of adding the effect of the assumed exercise of stock options to dilutive shares outstanding, which alters the ratio used to allocate earnings to Piper Jaffray Companies’ common shareholders and participating securities for purposes of calculating diluted and basic EPS.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Capital Markets
|
|
|
|
||||
Investment banking
|
|
|
|
||||
Financing
|
|
|
|
||||
Equities
|
$
|
35,301
|
|
|
$
|
14,303
|
|
Debt
|
13,539
|
|
|
17,032
|
|
||
Advisory services
|
39,728
|
|
|
9,556
|
|
||
Total investment banking
|
88,568
|
|
|
40,891
|
|
||
|
|
|
|
||||
Institutional sales and trading
|
|
|
|
||||
Equities
|
24,260
|
|
|
20,735
|
|
||
Fixed income
|
25,238
|
|
|
24,388
|
|
||
Total institutional sales and trading
|
49,498
|
|
|
45,123
|
|
||
|
|
|
|
||||
Management and performance fees
|
1,737
|
|
|
1,019
|
|
||
|
|
|
|
||||
Investment income
|
10,378
|
|
|
6,137
|
|
||
|
|
|
|
||||
Long-term financing expenses
|
(1,740
|
)
|
|
(1,949
|
)
|
||
|
|
|
|
||||
Net revenues
|
148,441
|
|
|
91,221
|
|
||
|
|
|
|
||||
Operating expenses (1)
|
120,930
|
|
|
78,458
|
|
||
|
|
|
|
||||
Segment pre-tax operating income
|
$
|
27,511
|
|
|
$
|
12,763
|
|
|
|
|
|
||||
Segment pre-tax operating margin
|
18.5
|
%
|
|
14.0
|
%
|
||
|
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Asset Management
|
|
|
|
||||
Management and performance fees
|
|
|
|
||||
Management fees
|
$
|
19,136
|
|
|
$
|
17,086
|
|
Performance fees
|
86
|
|
|
351
|
|
||
Total management and performance fees
|
19,222
|
|
|
17,437
|
|
||
|
|
|
|
||||
Investment income
|
470
|
|
|
875
|
|
||
|
|
|
|
||||
Net revenues
|
19,692
|
|
|
18,312
|
|
||
|
|
|
|
||||
Operating expenses (1)
|
14,490
|
|
|
12,907
|
|
||
|
|
|
|
||||
Segment pre-tax operating income
|
$
|
5,202
|
|
|
$
|
5,405
|
|
|
|
|
|
||||
Segment pre-tax operating margin
|
26.4
|
%
|
|
29.5
|
%
|
||
|
|
|
|
||||
|
|
|
|
||||
Total
|
|
|
|
||||
Net revenues
|
$
|
168,133
|
|
|
$
|
109,533
|
|
|
|
|
|
||||
Operating expenses (1)
|
135,420
|
|
|
91,365
|
|
||
|
|
|
|
||||
Pre-tax operating income
|
$
|
32,713
|
|
|
$
|
18,168
|
|
|
|
|
|
||||
Pre-tax operating margin
|
19.5
|
%
|
|
16.6
|
%
|
(1)
|
Operating expenses include intangible asset amortization expense as set forth in the table below:
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Capital Markets
|
$
|
743
|
|
|
$
|
—
|
|
Asset Management
|
1,575
|
|
|
1,661
|
|
||
Total intangible asset amortization expense
|
$
|
2,318
|
|
|
$
|
1,661
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Net revenues:
|
|
|
|
||||
United States
|
$
|
165,325
|
|
|
$
|
105,726
|
|
Europe
|
2,808
|
|
|
3,807
|
|
||
Consolidated
|
$
|
168,133
|
|
|
$
|
109,533
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Long-lived assets:
|
|
|
|
||||
United States
|
$
|
285,320
|
|
|
$
|
296,516
|
|
Europe
|
6,346
|
|
|
6,414
|
|
||
Consolidated
|
$
|
291,666
|
|
|
$
|
302,930
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
(1)
|
Reconciliation of U.S. GAAP to adjusted non-GAAP financial information
|
|
Three Months Ended March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Net revenues:
|
|
|
|
||||
Net revenues – U.S. GAAP basis
|
$
|
168,133
|
|
|
$
|
109,533
|
|
Adjustments:
|
|
|
|
||||
Revenue related to noncontrolling interests
|
(6,636
|
)
|
|
(2,810
|
)
|
||
Adjusted net revenues
|
$
|
161,497
|
|
|
$
|
106,723
|
|
|
|
|
|
||||
Non-compensation expenses:
|
|
|
|
||||
Non-compensation expenses – U.S. GAAP basis
|
$
|
34,931
|
|
|
$
|
25,260
|
|
Adjustments:
|
|
|
|
||||
Non-compensation expenses related to noncontrolling interests
|
(1,498
|
)
|
|
(909
|
)
|
||
Amortization of intangible assets related to acquisitions
|
(2,318
|
)
|
|
(1,661
|
)
|
||
Adjusted non-compensation expenses
|
$
|
31,115
|
|
|
$
|
22,690
|
|
|
|
|
|
||||
Net income from continuing operations applicable to Piper Jaffray Companies:
|
|
|
|
||||
Net income from continuing operations applicable to Piper Jaffray Companies - U.S. GAAP basis
|
$
|
17,748
|
|
|
$
|
10,667
|
|
Adjustments:
|
|
|
|
||||
Compensation from acquisition-related agreements
|
788
|
|
|
196
|
|
||
Amortization of intangible assets related to acquisitions
|
1,499
|
|
|
1,015
|
|
||
Adjusted net income from continuing operations applicable to Piper Jaffray Companies
|
$
|
20,035
|
|
|
$
|
11,878
|
|
|
|
|
|
||||
Earnings per diluted common share from continuing operations:
|
|
|
|
||||
U.S. GAAP basis
|
$
|
1.10
|
|
|
$
|
0.60
|
|
Adjustments:
|
|
|
|
||||
Compensation from acquisition-related agreements
|
0.05
|
|
|
0.01
|
|
||
Amortization of intangible assets related to acquisitions
|
0.09
|
|
|
0.06
|
|
||
Non-U.S. GAAP basis, as adjusted
|
$
|
1.24
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
As a Percentage of
|
|||||||||
|
|
|
|
|
|
|
Net Revenues for the
|
|||||||||
|
Three Months Ended
|
|
Three Months Ended
|
|||||||||||||
|
March 31,
|
|
March 31,
|
|||||||||||||
|
|
|
|
|
2014
|
|
|
|
|
|||||||
(Dollars in thousands)
|
2014
|
|
2013
|
|
v2013
|
|
2014
|
|
2013
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
88,474
|
|
|
$
|
40,821
|
|
|
116.7
|
%
|
|
52.6
|
%
|
|
37.3
|
%
|
Institutional brokerage
|
44,034
|
|
|
40,147
|
|
|
9.7
|
|
|
26.2
|
|
|
36.7
|
|
||
Asset management
|
20,959
|
|
|
18,456
|
|
|
13.6
|
|
|
12.5
|
|
|
16.8
|
|
||
Interest
|
13,659
|
|
|
10,823
|
|
|
26.2
|
|
|
8.1
|
|
|
9.9
|
|
||
Investment income
|
6,768
|
|
|
5,065
|
|
|
33.6
|
|
|
4.0
|
|
|
4.6
|
|
||
Total revenues
|
173,894
|
|
|
115,312
|
|
|
50.8
|
|
|
103.4
|
|
|
105.3
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
5,761
|
|
|
5,779
|
|
|
(0.3
|
)
|
|
3.4
|
|
|
5.3
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Net revenues
|
168,133
|
|
|
109,533
|
|
|
53.5
|
|
|
100.0
|
|
|
100.0
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits
|
100,489
|
|
|
66,105
|
|
|
52.0
|
|
|
59.8
|
|
|
60.4
|
|
||
Occupancy and equipment
|
6,778
|
|
|
5,817
|
|
|
16.5
|
|
|
4.0
|
|
|
5.3
|
|
||
Communications
|
5,955
|
|
|
5,232
|
|
|
13.8
|
|
|
3.5
|
|
|
4.8
|
|
||
Floor brokerage and clearance
|
1,834
|
|
|
2,150
|
|
|
(14.7
|
)
|
|
1.1
|
|
|
2.0
|
|
||
Marketing and business development
|
5,526
|
|
|
4,980
|
|
|
11.0
|
|
|
3.3
|
|
|
4.5
|
|
||
Outside services
|
9,493
|
|
|
7,214
|
|
|
31.6
|
|
|
5.6
|
|
|
6.6
|
|
||
Intangible asset amortization expense
|
2,318
|
|
|
1,661
|
|
|
39.6
|
|
|
1.4
|
|
|
1.5
|
|
||
Other operating expenses
|
3,027
|
|
|
(1,794
|
)
|
|
N/M
|
|
|
1.8
|
|
|
(1.6
|
)
|
||
Total non-interest expenses
|
135,420
|
|
|
91,365
|
|
|
48.2
|
|
|
80.5
|
|
|
83.4
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Income from continuing operations before income tax expense
|
32,713
|
|
|
18,168
|
|
|
80.1
|
|
|
19.5
|
|
|
16.6
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Income tax expense
|
9,827
|
|
|
5,600
|
|
|
75.5
|
|
|
5.8
|
|
|
5.1
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Income from continuing operations
|
22,886
|
|
|
12,568
|
|
|
82.1
|
|
|
13.6
|
|
|
11.5
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|||||||
Loss from discontinued operations, net of tax
|
—
|
|
|
(521
|
)
|
|
N/M
|
|
|
—
|
|
|
(0.5
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
22,886
|
|
|
12,047
|
|
|
90.0
|
|
|
13.6
|
|
|
11.0
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Net income applicable to noncontrolling interests
|
5,138
|
|
|
1,901
|
|
|
170.3
|
|
|
3.1
|
|
|
1.7
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Net income applicable to Piper Jaffray Companies
|
$
|
17,748
|
|
|
$
|
10,146
|
|
|
74.9
|
%
|
|
10.6
|
%
|
|
9.3
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||||||||||||
|
|
|
Adjustments
(1)
|
|
|
|
|
|
Adjustments
(1)
|
|
|
||||||||||||||||||||
|
Total
|
|
Noncontrolling
|
|
Other
|
|
U.S.
|
|
Total
|
|
Noncontrolling
|
|
Other
|
|
U.S.
|
||||||||||||||||
(Dollars in thousands)
|
Adjusted
|
|
Interests
|
|
Adjustments
|
|
GAAP
|
|
Adjusted
|
|
Interests
|
|
Adjustments
|
|
GAAP
|
||||||||||||||||
Investment banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equities
|
$
|
35,301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,301
|
|
|
$
|
14,303
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,303
|
|
Debt
|
13,539
|
|
|
—
|
|
|
—
|
|
|
13,539
|
|
|
17,032
|
|
|
—
|
|
|
—
|
|
|
17,032
|
|
||||||||
Advisory services
|
39,728
|
|
|
—
|
|
|
—
|
|
|
39,728
|
|
|
9,556
|
|
|
—
|
|
|
—
|
|
|
9,556
|
|
||||||||
Total investment banking
|
88,568
|
|
|
—
|
|
|
—
|
|
|
88,568
|
|
|
40,891
|
|
|
—
|
|
|
—
|
|
|
40,891
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Institutional sales and trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equities
|
24,260
|
|
|
—
|
|
|
—
|
|
|
24,260
|
|
|
20,735
|
|
|
—
|
|
|
—
|
|
|
20,735
|
|
||||||||
Fixed income
|
25,238
|
|
|
—
|
|
|
—
|
|
|
25,238
|
|
|
24,388
|
|
|
—
|
|
|
—
|
|
|
24,388
|
|
||||||||
Total institutional sales and trading
|
49,498
|
|
|
—
|
|
|
—
|
|
|
49,498
|
|
|
45,123
|
|
|
—
|
|
|
—
|
|
|
45,123
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Management and performance fees
|
1,737
|
|
|
—
|
|
|
—
|
|
|
1,737
|
|
|
1,019
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
3,742
|
|
|
6,636
|
|
|
—
|
|
|
10,378
|
|
|
3,327
|
|
|
2,810
|
|
|
—
|
|
|
6,137
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term financing expenses
|
(1,740
|
)
|
|
—
|
|
|
—
|
|
|
(1,740
|
)
|
|
(1,949
|
)
|
|
—
|
|
|
—
|
|
|
(1,949
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net revenues
|
141,805
|
|
|
6,636
|
|
|
—
|
|
|
148,441
|
|
|
88,411
|
|
|
2,810
|
|
|
—
|
|
|
91,221
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating expenses
|
117,721
|
|
|
1,498
|
|
|
1,711
|
|
|
120,930
|
|
|
77,549
|
|
|
909
|
|
|
—
|
|
|
78,458
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Segment pre-tax operating income
|
$
|
24,084
|
|
|
$
|
5,138
|
|
|
$
|
(1,711
|
)
|
|
$
|
27,511
|
|
|
$
|
10,862
|
|
|
$
|
1,901
|
|
|
$
|
—
|
|
|
$
|
12,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Segment pre-tax operating margin
|
17.0
|
%
|
|
|
|
|
|
18.5
|
%
|
|
12.3
|
%
|
|
|
|
|
|
14.0
|
%
|
(1)
|
The following is a summary of the adjustments needed to reconcile our consolidated U.S. GAAP pre-tax operating income and pre-tax operating margin to the adjusted segment pre-tax operating income and adjusted segment pre-tax operating margin:
|
|
Three Months Ended March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Compensation from acquisition-related agreements
|
$
|
968
|
|
|
$
|
—
|
|
Amortization of intangible assets related to acquisitions
|
743
|
|
|
—
|
|
||
|
$
|
1,711
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||||||||||||
|
|
|
Adjustments
(1)
|
|
|
|
|
|
Adjustments
(1)
|
|
|
||||||||||||||||||||
|
Total
|
|
Noncontrolling
|
|
Other
|
|
U.S.
|
|
Total
|
|
Noncontrolling
|
|
Other
|
|
U.S.
|
||||||||||||||||
(Dollars in thousands)
|
Adjusted
|
|
Interests
|
|
Adjustments
|
|
GAAP
|
|
Adjusted
|
|
Interests
|
|
Adjustments
|
|
GAAP
|
||||||||||||||||
Management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Value equity
|
$
|
12,884
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,884
|
|
|
$
|
12,416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,416
|
|
MLP
|
6,252
|
|
|
—
|
|
|
—
|
|
|
6,252
|
|
|
4,670
|
|
|
—
|
|
|
—
|
|
|
4,670
|
|
||||||||
Total management fees
|
19,136
|
|
|
—
|
|
|
—
|
|
|
19,136
|
|
|
17,086
|
|
|
—
|
|
|
—
|
|
|
17,086
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Performance fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Value equity
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
152
|
|
|
—
|
|
|
—
|
|
|
152
|
|
||||||||
MLP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
199
|
|
||||||||
Total performance fees
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
351
|
|
|
—
|
|
|
—
|
|
|
351
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total management and performance fees
|
19,222
|
|
|
—
|
|
|
—
|
|
|
19,222
|
|
|
17,437
|
|
|
—
|
|
|
—
|
|
|
17,437
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
470
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|
875
|
|
|
—
|
|
|
—
|
|
|
875
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total net revenues
|
19,692
|
|
|
—
|
|
|
—
|
|
|
19,692
|
|
|
18,312
|
|
|
—
|
|
|
—
|
|
|
18,312
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating expenses
|
12,594
|
|
|
—
|
|
|
1,896
|
|
|
14,490
|
|
|
10,925
|
|
|
—
|
|
|
1,982
|
|
|
12,907
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Segment pre-tax operating income
|
$
|
7,098
|
|
|
$
|
—
|
|
|
$
|
(1,896
|
)
|
|
$
|
5,202
|
|
|
$
|
7,387
|
|
|
$
|
—
|
|
|
$
|
(1,982
|
)
|
|
$
|
5,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Segment pre-tax operating margin
|
36.0
|
%
|
|
|
|
|
|
26.4
|
%
|
|
40.3
|
%
|
|
|
|
|
|
29.5
|
%
|
(1)
|
Other Adjustments – The following table sets forth the items not included in adjusted segment pre-tax operating income and adjusted segment pre-tax operating margin for the periods presented:
|
|
Three Months Ended March 31,
|
||||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Compensation from acquisition-related agreements
|
$
|
321
|
|
|
$
|
321
|
|
Amortization of intangible assets related to acquisitions
|
1,575
|
|
|
1,661
|
|
||
|
$
|
1,896
|
|
|
$
|
1,982
|
|
|
|
|
|
|
Twelve
|
||||||
|
Three Months Ended
|
|
Months Ended
|
||||||||
|
March 31,
|
|
March 31,
|
||||||||
(Dollars in millions)
|
2014
|
|
2013
|
|
2014
|
||||||
Value Equity
|
|
|
|
|
|
||||||
Beginning of period
|
$
|
6,683
|
|
|
$
|
5,865
|
|
|
$
|
6,222
|
|
Net outflows
|
(301
|
)
|
|
(225
|
)
|
|
(832
|
)
|
|||
Net market appreciation
|
49
|
|
|
582
|
|
|
1,041
|
|
|||
End of period
|
$
|
6,431
|
|
|
$
|
6,222
|
|
|
$
|
6,431
|
|
|
|
|
|
|
|
||||||
MLP
|
|
|
|
|
|
||||||
Beginning of period
|
$
|
4,549
|
|
|
$
|
3,186
|
|
|
$
|
3,929
|
|
Net inflows
|
335
|
|
|
172
|
|
|
661
|
|
|||
Net market appreciation
|
184
|
|
|
571
|
|
|
478
|
|
|||
End of period
|
$
|
5,068
|
|
|
$
|
3,929
|
|
|
$
|
5,068
|
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
||||||
Beginning of period
|
$
|
11,232
|
|
|
$
|
9,051
|
|
|
$
|
10,151
|
|
Net inflows/(outflows)
|
34
|
|
|
(53
|
)
|
|
(171
|
)
|
|||
Net market appreciation
|
233
|
|
|
1,153
|
|
|
1,519
|
|
|||
End of period
|
$
|
11,499
|
|
|
$
|
10,151
|
|
|
$
|
11,499
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Total assets
|
$
|
2,317,252
|
|
|
$
|
2,318,157
|
|
Deduct: Goodwill and intangible assets
|
(248,246
|
)
|
|
(250,564
|
)
|
||
Deduct: Assets from noncontrolling interests
|
(319,725
|
)
|
|
(317,558
|
)
|
||
Adjusted assets
|
$
|
1,749,281
|
|
|
$
|
1,750,035
|
|
|
|
|
|
||||
Total shareholders' equity
|
$
|
917,079
|
|
|
$
|
882,072
|
|
Deduct: Goodwill and intangible assets
|
(248,246
|
)
|
|
(250,564
|
)
|
||
Deduct: Noncontrolling interests
|
(149,625
|
)
|
|
(147,396
|
)
|
||
Tangible common shareholders' equity
|
$
|
519,208
|
|
|
$
|
484,112
|
|
|
|
|
|
||||
Leverage ratio (1)
|
2.5
|
|
|
2.6
|
|
||
|
|
|
|
||||
Adjusted leverage ratio (2)
|
3.4
|
|
|
3.6
|
|
(1)
|
Leverage ratio equals total assets divided by total shareholders’ equity.
|
(2)
|
Adjusted leverage ratio equals adjusted assets divided by tangible common shareholders’ equity.
|
(Dollars in millions)
|
|
CP Series A
|
|
CP Series II A
|
|
CP Series III A
|
||||||
Maximum amount that may be issued
|
|
$
|
300.0
|
|
|
$
|
150.0
|
|
|
$
|
100.0
|
|
Amount outstanding
|
|
141.0
|
|
|
61.2
|
|
|
72.6
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average maturity, in days
|
|
151
|
|
|
97
|
|
|
33
|
|
|
Average Balance for the Three Months Ended
|
||||||||||||||||||
(Dollars in millions)
|
Mar. 31, 2014
|
|
Dec. 31, 2013
|
|
Sept. 30, 2013
|
|
June 30, 2013
|
|
Mar. 31, 2013
|
||||||||||
Funding source:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repurchase agreements
|
$
|
38.3
|
|
|
$
|
17.2
|
|
|
$
|
11.2
|
|
|
$
|
130.3
|
|
|
$
|
66.2
|
|
Commercial paper
|
280.5
|
|
|
313.6
|
|
|
351.6
|
|
|
334.0
|
|
|
308.9
|
|
|||||
Prime broker arrangement
|
216.1
|
|
|
238.7
|
|
|
145.6
|
|
|
93.5
|
|
|
105.2
|
|
|||||
Short-term bank loans
|
28.9
|
|
|
1.3
|
|
|
1.8
|
|
|
11.8
|
|
|
5.1
|
|
|||||
Total
|
$
|
563.8
|
|
|
$
|
570.8
|
|
|
$
|
510.2
|
|
|
$
|
569.6
|
|
|
$
|
485.4
|
|
|
For the Three Months Ended
|
||||||||||||||||||
(Dollars in millions)
|
Mar. 31, 2014
|
|
Dec. 31, 2013
|
|
Sept. 30, 2013
|
|
June 30, 2013
|
|
Mar. 31, 2013
|
||||||||||
Maximum amount of daily funding
|
$
|
897.2
|
|
|
$
|
735.2
|
|
|
$
|
799.0
|
|
|
$
|
779.3
|
|
|
$
|
677.1
|
|
|
Expiration Per Period at March 31, 2014
|
|
Total Contractual Amount
|
||||||||||||||||||||||||||||
|
Remainder
|
|
|
|
|
|
2017
|
|
2019
|
|
|
|
March 31,
|
|
December 31,
|
||||||||||||||||
(Dollars in thousands)
|
of 2014
|
|
2015
|
|
2016
|
|
- 2018
|
|
- 2020
|
|
Later
|
|
2014
|
|
2013
|
||||||||||||||||
Customer matched-book derivative contracts
(1) (2)
|
$
|
30,000
|
|
|
$
|
68,688
|
|
|
$
|
64,953
|
|
|
$
|
40,950
|
|
|
$
|
122,084
|
|
|
$
|
4,960,908
|
|
|
$
|
5,287,583
|
|
|
$
|
5,310,929
|
|
Trading securities derivative contracts
(2)
|
255,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
255,500
|
|
|
198,500
|
|
||||||||
Credit default swap index contracts
(2)
|
—
|
|
|
96,000
|
|
|
—
|
|
|
255,000
|
|
|
—
|
|
|
28,215
|
|
|
379,215
|
|
|
299,333
|
|
||||||||
Equity derivative contracts
(2)
|
15,249
|
|
|
1,467
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,152
|
|
|
17,090
|
|
||||||||
Private equity investment commitments
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,872
|
|
|
47,576
|
|
(1)
|
Consists of interest rate swaps. We have minimal market risk related to these matched-book derivative contracts; however, we do have counterparty risk with two major financial institutions, which is mitigated by collateral deposits. In addition, we have a limited number of counterparties (contractual amount of
$200.2 million
at
March 31, 2014
) who are not required to post collateral. The uncollateralized amounts, representing the fair value of the derivative contracts, expose us to the credit risk of these counterparties. At
March 31, 2014
, we had
$23.0 million
of credit exposure with these counterparties, including
$11.4 million
of credit exposure with one counterparty.
|
(2)
|
We believe the fair value of these derivative contracts is a more relevant measure of the obligations because we believe the notional or contract amount overstates the expected payout. At
March 31, 2014
and
December 31, 2013
, the net fair value of these derivative contracts approximated
$30.4 million
for both periods, respectively.
|
(3)
|
The investment commitments have no specified call dates; however, the investment period for these funds is through 2018. The timing of capital calls is based on market conditions and investment opportunities.
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in thousands)
|
2014
|
|
2013
|
||||
Interest Rate Risk
|
$
|
1,044
|
|
|
$
|
1,793
|
|
Equity Price Risk
|
302
|
|
|
788
|
|
||
Diversification Effect (1)
|
(309
|
)
|
|
(765
|
)
|
||
Total Value-at-Risk
|
$
|
1,037
|
|
|
$
|
1,816
|
|
(1)
|
Equals the difference between total VaR and the sum of the VaRs for the two risk categories. This effect arises because the two market risk categories are not perfectly correlated.
|
(Dollars in thousands)
|
High
|
|
Low
|
|
Average
|
||||||
For the Three Months Ended March 31, 2014
|
|
|
|
|
|
||||||
Interest Rate Risk
|
$
|
1,344
|
|
|
$
|
597
|
|
|
$
|
946
|
|
Equity Price Risk
|
920
|
|
|
153
|
|
|
411
|
|
|||
Diversification Effect (1)
|
|
|
|
|
(371
|
)
|
|||||
Total Value-at-Risk
|
$
|
1,342
|
|
|
$
|
740
|
|
|
$
|
986
|
|
(Dollars in thousands)
|
High
|
|
Low
|
|
Average
|
||||||
For the Year Ended December 31, 2013
|
|
|
|
|
|
||||||
Interest Rate Risk
|
$
|
2,840
|
|
|
$
|
578
|
|
|
$
|
1,756
|
|
Equity Price Risk
|
2,434
|
|
|
64
|
|
|
1,056
|
|
|||
Diversification Effect (1)
|
|
|
|
|
(944
|
)
|
|||||
Total Value-at-Risk
|
$
|
2,792
|
|
|
$
|
865
|
|
|
$
|
1,868
|
|
(1)
|
Equals the difference between total VaR and the sum of the VaRs for the two risk categories. This effect arises because the two market risk categories are not perfectly correlated. Because high and low VaR numbers for these risk categories may have occurred on different days, high and low numbers for diversification benefit would not be meaningful.
|
(1)
|
On August 24, 2012, we announced that our board of directors had authorized the repurchase of up to
$100.0 million
of common stock through September 30, 2014. This share repurchase authorization became effective on October 1, 2012.
|
Exhibit
|
|
|
|
Method
|
Number
|
|
Description
|
|
of Filing
|
|
|
|
|
|
10.1
|
|
Form of director indemnification agreement. †
|
|
(1)
|
10.2
|
|
Consulting agreement, dated March 9, 2014, by and between Advisory Research, Inc. and Brien M. O'Brien. †
|
|
(2)
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chairman and Chief Executive Officer.
|
|
Filed herewith
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
|
Filed herewith
|
32.1
|
|
Section 1350 Certifications.
|
|
Filed herewith
|
101
|
|
Interactive data files pursuant to Rule 405 Registration S-T: (i) the Consolidated Statements of Financial Condition as of March 31, 2014 and December 31, 2013, (ii) the Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013, (iii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013, (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 and (v) the notes to the Consolidated Financial Statements.
|
|
Filed herewith
|
†
|
Denotes management contract or compensatory plan required to be filed as an exhibit to this report.
|
(1)
|
Filed as an exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on March 17, 2014 and incorporated by reference herein.
|
(2)
|
Filed as an exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on March 19, 2014 and incorporated by reference herein.
|
PIPER JAFFRAY COMPANIES
|
||
|
|
|
By
|
|
/s/ Andrew S. Duff
|
Its
|
|
Chairman and Chief Executive Officer
|
|
|
|
By
|
|
/s/ Debbra L. Schoneman
|
Its
|
|
Chief Financial Officer
|
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