-
Total net revenues were
$44.0 million for the quarter, compared to$46.1 million for the fourth quarter of 2009. For the year, total net revenues were$144.7 million , compared to$149.5 million for the year endedDecember 31, 2009 . Adjusting for the impact of non-cash items, adjusted net revenues were$47.0 million for the quarter and$153.8 million for the year endedDecember 31, 2010 . For more information on adjusted net revenues, including a reconciliation to net revenues, please see the section below titled "Non-GAAP Financial Measures." -
Net income attributable to
JMP Group was$3.5 million , or$0.16 per diluted share, for the quarter, compared to$3.5 million , or$0.16 per diluted share, for the fourth quarter of 2009. For the year, net income attributable toJMP Group was$8.7 million , or$0.40 per diluted share, compared to$10.8 million , or$0.49 per diluted share, for the year endedDecember 31, 2009 . -
Operating net income was
$8.5 million , or$0.38 per diluted share, for the quarter, an increase of 27.0% from$6 .7 million, or$0.30 per diluted share, for the fourth quarter of 2009. For the year, operating net income was$20.1 million , or$0.90 per diluted share, an increase of 47.3% from$13 .6 million, or$0.62 per diluted share, for the year endedDecember 31, 2009 . For more information on operating net income, including a reconciliation to net income, please see the section below titled "Non-GAAP Financial Measures."
"JMP produced its second consecutive record year of adjusted revenues
and operating earnings," said Joe Jolson, chairman and chief executive
officer of
Revenues
Investment Banking
Investment banking revenues were
The company executed 26 investment banking transactions during the
quarter, compared to 18 during the fourth quarter of 2009. Public equity
underwriting revenues amounted to
The company executed 74 investment banking transactions over the course
of the full year, compared to 56 during 2009. Public equity underwriting
revenues amounted to
Brokerage
Net brokerage revenues were
Asset Management
Asset management-related fee revenues were
Client assets under management at
Principal Transactions
Principal transactions generated net revenues of
For the year, direct investments and investments by
Gain on Sales and Payoffs of Loans and Loan Loss Provision
A loan loss provision of
At
Net Interest and Net Dividend Income
Net interest income equaled
Unscheduled principal prepayments enhanced the yield on loans at
Expenses
Compensation and Benefits
Compensation and benefits expense was
As a percentage of total net revenues, compensation and benefits expense was 68.8% for the quarter, compared to 74.5% for the fourth quarter of 2009, and was 66.1% for the year, compared to 70.4% for 2009. Excluding the cost of RSU grants, compensation and benefits expense was 58.5% of total net revenues for the quarter, compared to 61.8% for the fourth quarter of 2009, and was 60.9% for the year, compared to 63.8% for 2009.
Non-Compensation Expense
Non-compensation expense was
As a percentage of total net revenues, non-compensation expense was
13.9% for the quarter, unchanged from 13.9% for the fourth quarter of
2009, and 19.5% for the year, compared to 16.0% for 2009. Excluding the
one-time impairment charge of
Non-GAAP Financial Measures
In addition to the GAAP financial results presented in this press
release,
Adjusted Net Revenue
Adjusted net revenue is a non-GAAP financial measure that (i) excludes
the net amortization of discounts on loans held and asset-backed
securities issued by
-
the non-cash net amortization of liquidity discounts at JMP Credit,
due to scheduled contractual principal repayments, of
$4.5 million and$9.8 million for the quarter and year ended December 31, 2010, respectively; -
non-cash amortization—in the amount of
$0.1 million per quarter over a period ending in February 2013—of$1.0 million pledged as an indemnity, and deemed an intangible asset, in connection with the purchase byJMP Group inSeptember 2010 of a management contract for a collateralized loan obligation; -
unrealized mark-to-market gains or losses on (i) the company's
strategic investments in publicly traded
New York Mortgage Trust, Inc. and, in 2009,Hercules Technology Growth Capital, Inc. as well as (ii) certain warrant positions; and -
a non-cash bargain purchase gain of
$1.2 million resulting from the acquisition ofCratos Capital Partners by JMP Credit during the quarter endedJune 30, 2009 .
A reconciliation of JMP Group's net revenues to the company's adjusted
net revenues for the quarter and year ended
Three Months Ended | Year Ended | ||||||||||||||
(in thousands, except per share amounts) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2010 | Dec. 31, 2009 | |||||||||||
Revenues: | |||||||||||||||
Non-interest revenues | $ | 43,452 | $ | 43,335 | $ | 133,180 | $ | 140,038 | |||||||
Net interest income | 505 | 2,758 | 11,522 | 9,446 | |||||||||||
Total net revenues | 43,957 | 46,093 | 144,702 | 149,484 | |||||||||||
Add back/(subtract): | |||||||||||||||
Net amortization of liquidity discounts on loans | 4,452 | 789 | 9,783 | 2,130 | |||||||||||
Amortization of intangible asset | 100 | - | 100 | - | |||||||||||
(Gain)/loss on strategic equity investments and warrant positions |
(1,544 | ) | 191 | (757 | ) | (5,682 | ) | ||||||||
Gain on bargain purchase | - | - | - | (1,179 | ) | ||||||||||
Adjusted net revenues | $ | 46,965 | $ | 47,073 | $ | 153,828 | $ | 144,753 | |||||||
Company management has utilized adjusted net revenue, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group's financial results for the periods presented. Management believes that adjusted net revenues provide useful information by excluding non-cash additions to and deductions from total net revenues that may otherwise obscure the company's cash operating revenues and complicate an assessment of the company's core business outlook. Management also believes that adjusted net revenue is a useful measure because it allows for a better evaluation of the performance of JMP Group's ongoing business and facilitates a meaningful comparison of the company's results in a given period to those in prior and future periods.
Operating Net Income
Operating net income is a non-GAAP financial measure that (i) reverses
stock-based compensation expense related to equity awards granted both
at the time of JMP Group's
-
the grant of 1,931,060 restricted stock units, or RSUs, at the time of
the company's IPO, which resulted in non-cash compensation expense of
$0 .3 million and$2.6 million for the quarter and year endedDecember 31, 2010 , respectively; -
the grant of RSUs subsequent to the company's IPO, which resulted in
non-cash compensation expense of
$4 .2 million and$5 .0 million (including$3.8 million from the vesting of performance-linked RSUs in the fourth quarter due to the company's record results) for the quarter and year ended December 31, 2010, respectively; -
the non-cash net amortization of liquidity discounts at JMP Credit,
due to scheduled contractual principal repayments, of
$4.5 million and$9.8 million for the quarter and year ended December 31, 2010, respectively; -
non-cash amortization—in the amount of
$0.1 million per quarter over a period ending in February 2013—of$1.0 million pledged as an indemnity, and deemed an intangible asset, in connection with the purchase byJMP Group inSeptember 2010 of a management contract for a collateralized loan obligation; -
unrealized mark-to-market gains or losses on (i) the company's
strategic investments in publicly traded
New York Mortgage Trust, Inc. and, in 2009,Hercules Technology Growth Capital, Inc. as well as (ii) certain warrant positions; -
a non-cash bargain purchase gain of
$1.2 million resulting from the acquisition ofCratos Capital Partners by JMP Credit during the quarter endedJune 30, 2009 ; and - a combined federal, state and local income tax rate of 42%.
A reconciliation of JMP Group's net income to the company's operating
net income for the quarter and year ended
Three Months Ended | |||||||
(in thousands, except per share amounts) | Dec. 31, 2010 | Dec. 31, 2009 | |||||
Net income attributable to JMP Group Inc. | $ | 3,527 | $ | 3,521 | |||
Add back: | |||||||
Income tax expense | 3,575 | 1,171 | |||||
Income before taxes | 7,102 | 4,692 | |||||
Add back/(subtract): | |||||||
Compensation expense — IPO-related RSUs | 339 | 691 | |||||
Compensation expense — post-IPO RSUs | 4,189 | 5,164 | |||||
Net amortization of liquidity discounts on loans | 4,452 | 789 | |||||
Amortization of intangible asset | 100 | - | |||||
Unrealized (gain)/loss on strategic equity investments and warrants | (1,544 | ) | 191 | ||||
Operating income before taxes | 14,638 | 11,527 | |||||
Income tax expense (assumed tax rate of 42%) | 6,148 | 4,841 | |||||
Operating net income | $ | 8,490 | $ | 6,686 | |||
Operating net income per share: | |||||||
Basic | $ | 0.39 | $ | 0.31 | |||
Diluted | $ | 0.38 | $ | 0.30 | |||
Weighted average shares outstanding: | |||||||
Basic | 21,734 | 21,258 | |||||
Diluted | 22,537 | 22,228 | |||||
Year Ended | ||||||||
(in thousands, except per share amounts) | Dec. 31, 2010 | Dec. 31, 2009 | ||||||
Net income attributable to JMP Group Inc. | $ | 8,861 | $ | 10,810 | ||||
Add back: | ||||||||
Income tax expense | 9,039 | 7,663 | ||||||
Income before taxes | 17,900 | 18,473 | ||||||
Add back/(subtract): | ||||||||
Compensation expense — IPO-related RSUs | 2,576 | 3,161 | ||||||
Compensation expense — post-IPO RSUs | 4,998 | 6,582 | ||||||
Net amortization of liquidity discounts on loans | 9,783 | 2,130 | ||||||
Amortization of intangible asset | 100 | - | ||||||
Unrealized (gain)/loss on strategic equity investments and warrants | (757 | ) | (5,682 | ) | ||||
Gain on bargain purchase | - | (1,179 | ) | |||||
Operating income before taxes | 34,600 | 23,485 | ||||||
Income tax expense (assumed tax rate of 42%) | 14,532 | 9,864 | ||||||
Operating net income | $ | 20,068 | $ | 13,621 | ||||
Operating net income per share: | ||||||||
Basic | $ | 0.93 | $ | 0.66 | ||||
Diluted | $ | 0.90 | $ | 0.62 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 21,646 | 20,791 | ||||||
Diluted | 22,396 | 22,137 | ||||||
Company management has utilized operating net income on a total and per share basis, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group's financial results for the periods presented. Management believes that operating net income provides useful information by excluding or including certain items that may not be representative of the company's core operating results or business outlook. Management also believes that operating net income is a useful measure because it allows for a better evaluation of the performance of JMP Group's ongoing business and facilitates a meaningful comparison of the company's results in a given period to those in prior and future periods.
Adjusted Book Value per Share
At
(in thousands, except per share amounts) | Dec. 31, 2010 | Sept. 30, 2010 | Dec. 31, 2009 | |||||||||
Total JMP Group stockholders' equity | $ | 129,854 | $ | 122,124 | $ | 120,636 | ||||||
Goodwill and intangible assets | 900 | 1,000 | - | |||||||||
Tangible stockholders' equity | 128,954 | 121,124 | 120,636 | |||||||||
Liquidity discount on loans | 35,594 | 51,603 | 91,544 | |||||||||
Liquidity discount on asset-backed securities issued | (79,681 | ) | (86,836 | ) | (107,846 | ) | ||||||
Net liquidity discount | (44,087 | ) | (35,233 | ) | (16,302 | ) | ||||||
Income tax benefit (assumed tax rate of 42%) | 18,517 | 14,798 | 6,847 | |||||||||
Net after-tax liquidity discount | (25,570 | ) | (20,435 | ) | (9,455 | ) | ||||||
Adjusted tangible stockholders' equity | $ | 103,384 | $ | 100,689 | $ | 111,181 | ||||||
Adjusted tangible book value per share | $ | 4.76 | $ | 4.63 | $ | 5.16 | ||||||
Basic shares outstanding | 21,737 | 21,733 | 21,534 | |||||||||
Quarterly operating ROATE* |
32.4 | % | 14.3 | % | 23.2 | % | ||||||
Annual operating ROATE* | 18.2 | % | N/A | 12.0 | % | |||||||
* Return on adjusted tangible equity = annualized operating net income / average adjusted tangible stockholders' equity. | ||||||||||||
Share Repurchase Activity
During 2010,
Cautionary Note Regarding Quarterly Financial Results
Due to the nature of its business, JMP Group's quarterly revenues and net income may fluctuate materially depending on: the size and number of investment banking transactions on which it advises; the timing of the completion of those transactions; the size and number of securities trades which it executes for brokerage customers; the performance of its asset management funds and inflows and outflows of assets under management; gains stemming from sales of or prepayments on, or losses stemming from defaults on, loans underlying the company's collateralized loan obligation; and the effect of the overall condition of the securities markets and economy as a whole. Accordingly, revenues and net income in any particular quarter may not be indicative of future results. Furthermore, JMP Group's compensation expense is generally based upon revenues and can fluctuate materially in any particular quarter depending upon the amount and sorts of revenue recognized as well as other factors. The amount of compensation and benefits expense recognized in any particular quarter may not be indicative of such expense in a future period. As a result, the company suggests that annual results may be the most meaningful gauge for investors in evaluating the performance of its business.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements provide JMP Group's current expectations or
forecasts about future events, including beliefs, plans, objectives,
intentions, assumptions and other statements that are not historical
facts, such as the likelihood of market share gains, the potential for
future loan portfolio gains and the company's ability to generate future
returns on adjusted tangible equity. Forward-looking statements are
subject to known and unknown risks and uncertainties that could cause
actual results to differ materially from those expected or implied by
the forward-looking statements. The company's actual results could
differ materially from those anticipated in forward-looking statements
for many reasons, including the factors described in the sections
entitled "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the company's Form
10-K for the year ended
Conference Call
The conference call will also be broadcast live over the Internet and will be accessible via a link in the investor relations section of the company's website, www.jmpg.com. The Internet broadcast will be archived and will remain available on the website for future replay.
About
JMP GROUP INC. Consolidated Statements of Financial Condition (Unaudited) |
||||||
(in thousands) | Dec. 31, 2010 | Dec. 31, 2009 | ||||
Assets | ||||||
Cash and cash equivalents | $ | 71,114 | $ | 75,680 | ||
Restricted cash and deposits | 47,718 | 36,629 | ||||
Receivable from clearing broker | 1,331 | 1,609 | ||||
Marketable securities owned, at fair value | 23,748 | 5,899 | ||||
Other investments | 38,702 | 59,190 | ||||
Loans held for investment, net of allowance for loan losses | 813 | 1,592 | ||||
Loans collateralizing asset-backed securities issued, net of purchase discounts and allowance for loan losses |
400,763 | 327,967 | ||||
Deferred tax assets | 32,542 | 51,499 | ||||
Other assets | 21,121 | 14,656 | ||||
Total assets | $ | 637,852 | $ | 574,721 | ||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Accrued compensation | $ | 37,424 | $ | 43,026 | ||
Asset-backed securities issued, net of purchase discounts |
351,322 | 326,632 | ||||
Note payable | 26,209 | 9,045 | ||||
Deferred tax liability | 36,176 | 48,220 | ||||
Other liabilities | 45,411 | 22,146 | ||||
Total liabilities | 496,542 | 449,069 | ||||
Stockholders' Equity: | ||||||
Total JMP Group Inc. stockholders' equity | 129,854 | 120,636 | ||||
Noncontrolling interest | 11,456 | 5,016 | ||||
Total equity | 141,310 | 125,652 | ||||
Total liabilities and equity | $ | 637,852 | $ | 574,721 | ||
JMP GROUP INC. Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
(in thousands, except per share amounts) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2010 | Dec. 31, 2009 | ||||||||||||
Revenues: | ||||||||||||||||
Investment banking | $ | 17,083 | $ | 14,820 | $ | 45,519 | $ | 39,924 | ||||||||
Brokerage | 7,004 | 8,168 | 28,259 | 34,004 | ||||||||||||
Asset management fees | 2,915 | 4,382 | 12,231 | 20,148 | ||||||||||||
Principal transactions | 534 | 3,114 | 3,421 | 18,517 | ||||||||||||
Gain on sale and payoff of loans | 13,132 | 10,697 | 39,363 | 22,268 | ||||||||||||
Gain on repurchase of asset-backed securities issued | - | 500 | - | 4,705 | ||||||||||||
Gain on bargain purchase | - | - | - | 1,179 | ||||||||||||
Net dividend income | 776 | 671 | 2,248 | 2,521 | ||||||||||||
Other income | 2,371 | 1,439 | 3,466 | 2,593 | ||||||||||||
Non-interest revenues | 43,815 | 43,791 | 134,507 | 145,859 | ||||||||||||
Interest income | 9,103 | 11,198 | 45,209 | 35,370 | ||||||||||||
Interest expense | (8,598 | ) | (8,440 | ) | (33,687 | ) | (25,924 | ) | ||||||||
Net interest income | 505 | 2,758 | 11,522 | 9,446 | ||||||||||||
Provision for loan losses | (363 | ) | (456 | ) | (1,327 | ) | (5,821 | ) | ||||||||
Total net revenues | 43,957 | 46,093 | 144,702 | 149,484 | ||||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation and benefits | 30,234 | 34,330 | 95,708 | 105,179 | ||||||||||||
Administration | 1,443 | 1,509 | 5,767 | 5,050 | ||||||||||||
Brokerage, clearing and exchange fees | 1,358 | 1,228 | 5,110 | 5,284 | ||||||||||||
Travel and business development | 769 | 810 | 3,401 | 2,396 | ||||||||||||
Communications and technology | 833 | 1,085 | 3,969 | 3,892 | ||||||||||||
Occupancy | 672 | 660 | 2,666 | 2,448 | ||||||||||||
Professional fees | 774 | 806 | 3,380 | 3,589 | ||||||||||||
Depreciation | 140 | 153 | 635 | 746 | ||||||||||||
Impairment loss on intangible asset | - | - | 2,750 | - | ||||||||||||
Other | 132 | 176 | 611 | 555 | ||||||||||||
Total non-interest expenses | 36,355 | 40,757 | 123,997 | 129,139 | ||||||||||||
Income before income tax expense | 7,602 | 5,336 | 20,705 | 20,345 | ||||||||||||
Income tax expense | 3,575 | 1,171 | 9,039 | 7,663 | ||||||||||||
Net income | 4,027 | 4,165 | 11,666 | 12,682 | ||||||||||||
Less: Net income attributable to noncontrolling interest | 500 | 644 | 2,805 | 1,872 | ||||||||||||
Net income attributable to JMP Group Inc. | $ | 3,527 | $ | 3,521 | $ | 8,861 | $ | 10,810 | ||||||||
Net income attributable to JMP Group Inc. per share: | ||||||||||||||||
Basic | $ | 0.16 | $ | 0.17 | $ | 0.41 | $ | 0.52 | ||||||||
Diluted | $ | 0.16 | $ | 0.16 | $ | 0.40 | $ | 0.49 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 21,734 | 21,258 | 21,646 | 20,791 | ||||||||||||
Diluted | 22,537 | 22,228 | 22,396 | 22,137 |
Investor Relations & Media Contact:
apalmer@jmpg.com
Source:
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