JMP Group Inc. (NYSE: JMP), an investment banking and
alternative asset management firm, reported financial results today
for the quarter ended March 31, 2013.
- Operating net income was $3.6 million,
or $0.16 per diluted share, compared to $4.5 million, or $0.19 per
share, for the first quarter of 2012.
- The net loss attributable to JMP Group
under generally accepted accounting principles, or GAAP, was $1.7
million, or $0.08 per share, compared to net income of $0.4
million, or $0.02 per share, for the first quarter of 2012.
- Adjusted net revenues, which exclude
certain non-cash items and non-controlling interests, were $32.0
million, compared to $35.1 million for the first quarter of 2012.
For more information on adjusted net revenues, including a
reconciliation to net revenues, please see the section below titled
“Non-GAAP Financial Measures.”
- Total net revenues on a GAAP basis were
$23.2 million, compared to $31.7 million for the first quarter of
2012.
“JMP Group produced better-than-expected operating EPS of $0.16
for the first quarter, thanks to continued strong investment
performance at JMP Credit, Harvest Capital Credit and our hedge
funds—in particular, Harvest Small Cap Partners,” said Chairman and
Chief Executive Officer Joe Jolson. “During the quarter, we made
some key hires in JMP Securities’ institutional equities and
investment banking businesses and expect that 2013, and potentially
2014, will be a period of increased investment spending. Since
going public in May 2007, we have considered numerous acquisition
opportunities in our core businesses and have determined, instead,
to spend some potential earnings to accelerate the organic growth
of our three successful and scalable operating subsidiaries. In
January, we raised $46 million of 10-year 8.0% senior notes to
provide additional capital for our planned expansion; and, at the
end of April, we closed a $344 million CLO—our first since
2007—which included an investment of $17.3 million by JMP Group in
the subordinated notes. Last week, we also priced the IPO of
Harvest Capital Credit, our small business lending strategy, which
converted to a BDC structure and now trades under the symbol
‘HCAP.’ We look forward to reporting further progress in the
execution of our growth strategies over the next three to four
quarters.”
Segment Results of Operations
At JMP Securities, adjusted net revenues excluding net
investment income (which consists of principle transactions, net
dividend income and net interest income) were $17.4 million, a
decline of 21.8% from the first quarter of 2012 as a result of a
difficult comparison to strong investment banking results for that
period and an ongoing industry-wide decline in brokerage
commissions. JMP Securities’ operating margin on adjusted net
revenues was 9.7%, an improvement from 8.6% for the prior quarter
but well below the 15.4% recorded for the first quarter of
2012.
At Harvest Capital Strategies, adjusted net revenues of $8.0
million excluding net investment income grew 71.9% from the first
quarter of 2012, due to an increase in incentive fees generated by
the company’s hedge funds, primarily Harvest Small Cap Partners.
JMP Group’s return on the capital it had invested in its hedge
funds was 3.3% for the quarter, compared to 7.0% for the first
quarter of 2012.
At JMP Credit, a segment that includes Harvest Capital Credit,
adjusted net revenues totaled $4.7 million, a decrease of 17.1%
from $5.7 million for the first quarter of 2012. Included in the
$4.7 million of revenues for the first quarter of 2013 is a net
gain of $0.2 million due to the sale or payoff of loans acquired
with JMP Credit in April 2009 as well as a loan loss provision of
$0.9 million related to an impaired acquired loan. For the first
quarter of 2012, the net gain on acquired loans was $0.7
million.
A summary of JMP Group’s operating net income by segment for the
quarter ended March 31, 2013 and for comparable prior periods is
set forth below.
Quarter Ended ($ as shown) Mar. 31, 2013
Dec. 31, 2012 Mar. 31, 2012 JMP Securities $ 0.05 $
0.04 $ 0.09 Harvest Capital Strategies 0.04 0.06 0.04 JMP Credit
0.15 0.21 0.14 Corporate (0.08 ) (0.05 ) (0.08
) Operating EPS $ 0.16 $ 0.26 $ 0.19
For more information on segment reporting; adjusted net
revenues, including a reconciliation to net revenues; and operating
net income, including a reconciliation to net income, please see
the section below titled “Non-GAAP Financial Measures.”
Composition of Revenues
Investment Banking
Investment banking revenues were $12.1 million, a decrease of
27.3% from $16.7 million for the first quarter of 2012.
A summary of the company’s investment banking revenues and
transaction counts for the quarter ended March 31, 2013 and for
comparable prior periods is set forth below.
Quarter Ended Mar. 31, 2013 Dec. 31,
2012 Mar. 31, 2012 ($ in thousands) Count Revenues
Count Revenues Count Revenues Public equity 33 $
8,914 15 $ 3,905 23 $ 9,024 Debt and convertible securities 10
1,648 5 718 5 1,459 Private capital markets and other - 145 4 5,789
2 2,200 Strategic advisory 1 1,400 3 2,560 5
3,976 Total 44 $ 12,107 27 $ 12,972 35 $ 16,659
Brokerage
Net brokerage revenues were $5.2 million, a decrease of 5.4%
from $5.5 million for the first quarter of 2012.
Asset Management
Asset management fees and other related revenues were $7.9
million, an increase of 73.9% from $4.5 million for the first
quarter of 2012. For more information on asset management-related
fee revenues, please see the section below titled “Non-GAAP
Financial Measures.”
Client assets under management at March 31, 2013 totaled $1.2
billion, including $0.8 billion of funds managed by Harvest Capital
Strategies and $472.6 million par value of loans and cash
underlying the collateralized loan obligation managed by JMP Credit
Advisors. Client assets under management were also $1.2 billion at
December 31, 2012 and March 31, 2012. Including sponsored funds,
client assets under management totaled $1.4 billion at March 31,
2013, compared to $1.8 billion at December 31, 2012 and $2.1
billion at March 31, 2012.
At March 31, 2013, private capital, including corporate credit,
small business lending, venture capital and REIT advisory services,
represented 51.4% of client assets under management including
sponsored funds.
Principal Transactions
Principal transactions generated a net realized and unrealized
gain of $1.9 million, compared to $6.5 million for the first
quarter of 2012.
A summary of the company’s principal transaction revenues for
the quarter ended March 31, 2013 and for comparable prior
periods is set forth below.
Quarter Ended (in thousands) Mar. 31, 2013
Dec. 31, 2012 Mar. 31, 2012 Hedge fund investments $
1,898 $ 821 $ 2,744 Principal
investments: Investment in New York Mortgage Trust - - (209 ) Other
principal investments 85 17 (110
) Total principal investments 85 17
(319 ) Venture investments: Investment in Harvest
Growth Capital funds (19 ) (192 ) 197 Other venture investments and
warrants 553 1,140 502
Total venture investments 534 948
699
Principal transaction revenues net of
non-controlling interests in Harvest Growth Capital funds
2,517 1,786 3,124
Non-controlling interests in Harvest Growth Capital funds
(599 ) (3,558 ) 3,360 Total principal
transaction revenues $ 1,918 ($1,772 ) $ 6,484
Included in the net gain of $1.9 million for the quarter ended
March 31, 2013 was a loss of $0.6 million attributable to
non-controlling interests in net realized and unrealized losses at
Harvest Growth Capital and Harvest Growth Capital II, venture
capital funds managed by Harvest Capital Strategies that are
consolidated under GAAP. GAAP accounting requires that JMP Group
consolidate both funds due to Harvest Capital Strategies’ role as
the funds’ manager and managing member, despite the company’s
ownership of just 4.4% of Harvest Growth Capital and 2.4% of
Harvest Growth Capital II. The presentation of adjusted net
revenues elsewhere in this press release excludes JMP Group’s
non-controlling interests in these funds; and, accordingly, the
aforementioned loss of $0.6 million is not included in adjusted net
revenues. Net of its non-controlling interests, JMP Group had a net
realized and unrealized loss of $19,000 on its investments in
Harvest Growth Capital and Harvest Growth Capital II for the
quarter. For more information on adjusted net revenues, including a
reconciliation to net revenues, please see the section below titled
“Non-GAAP Financial Measures.”
Gain on Sale, Payoff and Mark-to-Market of Loans and Loan Loss
Provision
Together, JMP Credit Corporation and Harvest Capital Credit
generated a net realized and unrealized gain of $1.1 million from
the sale, payoff or mark-to-market of loans, in line with
$1.1 million for the first quarter of 2012.
JMP Credit Corporation realized a net gain of $0.9 million due
to the sale or payoff of 33 of the loans in its portfolio, compared
to a net gain of $1.0 million in connection with 20 loans for the
first quarter of 2012. For the quarter ended March 31, 2013, net
realized gains of $0.2 million were due to the sale or payoff
of loans acquired with JMP Credit in April 2009, compared to $0.7
million for the quarter ended March 31, 2012. At March 31,
2013, six loans with an aggregate par value of $21.3 million
and an associated liquidity discount of $3.5 million remained
from the portfolio acquired in April 2009.
At March 31, 2013, discounts and reserves (including liquidity
discounts, allowances for loan losses and deferred loan fees)
equaled $11.4 million, or 2.7% of gross performing loans
outstanding at JMP Credit. With regard to impaired loans, discounts
and reserves (including credit discounts, liquidity discounts, and
allowances for loan losses) equaled $2.6 million—equivalent to
74.5% of gross impaired loans outstanding or 0.6% of gross loans
outstanding—compared to $9.5 million, or 2.2% of gross loans
outstanding, at March 31, 2012.
A net loan loss provision of $0.9 million for the quarter ended
March 31, 2013 was recorded at JMP Credit, which is consolidated
under GAAP, as a specific reserve in connection with an impaired
loan acquired in April 2009. At March 31, 2013, general loan loss
reserves equaled 0.5% of gross performing loans at JMP Credit,
compared to 0.6% at March 31, 2012.
Other Income
Other income was $0.3 million, compared to $0.7 million for the
first quarter of 2012.
Net Interest Income
Interest income was $8.2 million, and interest expense was $11.3
million, resulting in net interest expense of $3.1 million,
compared to net interest expense of $2.2 million for the first
quarter of 2012. Excluding net amortization expense related to
liquidity discounts, net interest income was $5.6 million,
compared to $5.0 million for the first quarter of 2012.
Expenses
Compensation and Benefits
Compensation and benefits expense was $19.6 million, compared to
$21.8 million for the first quarter of 2012. Non-cash compensation
expense attributable to stock-based awards such as stock options
and restricted stock units, or RSUs, was $1.0 million,
compared to $0.2 million for the first quarter of 2012. The
aforementioned compensation and benefits expense of $19.6 million
excludes $1.1 million of net deferred compensation, which is
composed of (a) amortization expense tied to deferred compensation
awarded at year-end 2012 though recognized as a GAAP expense in
2013 and 2014 less (b) one quarter of the compensation assumed to
be awarded at year-end 2013 and deferred into 2014 and 2015.
Excluding the cost of stock-based awards but accelerating and
recognizing the cost of net deferred compensation for the period,
compensation and benefits expense was 62.4% of adjusted net
revenues, compared to 61.4% for the first quarter of 2012.
Non-Compensation Expense
Non-compensation expense was $6.2 million, compared to $5.7
million for the first quarter of 2012. As a percentage of adjusted
net revenues, non-compensation expense was 19.3%, compared to 16.1%
for the first quarter of 2012.
Personnel
At March 31, 2013, the company had 218 full-time employees,
compared to 224 at the end of 2012 and 208 at March 31, 2012.
Non-GAAP Financial Measures
In addition to the GAAP financial results presented in this
press release, JMP Group presents the non-GAAP financial measures
discussed below. These non-GAAP measures are provided to enhance
investors’ overall understanding of the company’s current financial
performance. Moreover, company management believes that this
presentation enables meaningful comparison of JMP Group’s financial
performance in various periods. However, the non-GAAP financial
results presented should not be considered a substitute for results
that are presented in a manner consistent with GAAP. A limitation
of the non-GAAP financial measures presented is that the
adjustments concern gains, losses or expenses that JMP Group
generally expects to continue to recognize; the adjustment of these
items should not be construed as an inference that these gains or
expenses are unusual, infrequent or non-recurring. Therefore,
company management believes that both JMP Group’s GAAP measures of
its financial performance and the respective non-GAAP measures
should be considered together. The non-GAAP measures presented
herein may not be comparable to similarly titled measures presented
by other companies.
Adjusted Net Revenue
Adjusted net revenue is a non-GAAP financial measure that (i)
includes asset management fees, net interest income or expense, and
other revenues eliminated upon the consolidation of Harvest Growth
Capital, Harvest Growth Capital II and Harvest Capital Credit, (ii)
excludes the net amortization of liquidity discounts on loans held
and asset-backed securities issued by JMP Credit Corporation, (iii)
reverses unrealized mark-to-market gains and losses recorded at
Harvest Capital Credit, (iv) reverses net unrealized gains and
losses on strategic equity investments and warrants and (v)
excludes the non-controlling interest in net unrealized gains and
losses on Harvest Growth Capital and Harvest Growth Capital II. In
particular, adjusted net revenue adjusts for:
- base management and incentive fees
earned by Harvest Capital Strategies as manager of Harvest Growth
Capital and Harvest Growth Capital II, both venture capital funds,
and Harvest Capital Credit, a small business lending strategy;
Harvest Capital Strategies is managing member of Harvest Growth
Capital and Harvest Growth Capital II and is the external manager
of Harvest Capital Credit, and, as a result of its ownership of
each, JMP Group consolidates the three entities in accordance with
GAAP accounting standards and eliminates the fees in consolidation;
presenting these fees as though Harvest Growth Capital, Harvest
Growth Capital II and Harvest Capital Credit were deconsolidated
presents the entities’ results in a manner similar to those of the
other investment funds managed by Harvest Capital Strategies;
- the non-cash net amortization of
liquidity discounts at JMP Credit, due to a scheduled contractual
principal repayment, of $8.7 million for the quarter ended
March 31, 2013;
- unrealized mark-to-market gains or
losses on the investment portfolio at Harvest Capital Credit;
- unrealized mark-to-market gains or
losses on the company’s strategic equity investments as well as
certain warrant positions; and
- non-controlling interests in net
unrealized gains and losses generated by Harvest Growth Capital and
Harvest Growth Capital II, of which Harvest Capital Strategies is
manager and managing member; under GAAP, JMP Group consolidates the
two funds; however, as presented, unrealized gains and losses that
do not accrue to the company are reversed.
A reconciliation of JMP Group’s net revenues to its adjusted net
revenues for the quarter ended March 31, 2013 and for comparable
prior periods is set forth below.
Quarter Ended (in thousands) Mar. 31, 2013
Dec. 31, 2012 Mar. 31, 2012 Revenues: Non-interest revenues
$ 27,338 $ 26,409 $ 33,877 Net interest expense (3,141 ) (1,573 )
(2,150 ) Loan loss provision (949 ) (1,071 )
(93 ) Total net revenues 23,248 23,765 31,634
Asset management fees earned on Harvest
Growth Capital funds and Harvest Capital Credit (1)
858 1,060 332 Dividend distribution from Harvest Capital Credit (1)
257 - 77
Less: Net interest income and other
revenues from Harvest Capital Credit (1)
(1,327 ) (1,202 ) (339 )
Total net revenues including fee revenues
from consolidated entities
23,036 23,623 31,704
Add back/(subtract):
Net amortization of liquidity discounts on
loans and asset-backed securities issued
8,740 7,577 7,175 Unrealized mark-to-market (gain) – Harvest
Capital Credit (516 ) (1,608 ) (57 )
Net unrealized loss/(gain) on strategic
equity investments and warrants
157 294 (321 )
Non-controlling interests in net
unrealized losses/(gains) on Harvest Growth Capital funds
599 3,559 (3,360 ) Adjusted net
revenues $ 32,016 $ 33,445 $ 35,141
(1)
Adjustments to reflect economic contributions from two Harvest
Growth Capital funds and Harvest Capital Credit as though
deconsolidated for purposes of financial reporting; upon
deconsolidation, fee revenues and dividend payments would be
recognized, while net interest income and other revenues generated
by these entities would not be recorded by JMP Group.
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 adjusting net revenue
in these ways is useful in that 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.
Asset Management-Related Fee Revenues
Asset management-related fee revenue is a non-GAAP financial
measure that sums asset management fees with certain fee revenues
(in particular, asset management fundraising fees generated by JMP
Securities, loan fees, and revenues from fee-sharing arrangements
with other asset managers) that are reported in JMP Group’s
financial statements as other income. In addition, asset
management-related fee revenues incorporate base management and
incentive fees earned by Harvest Capital Strategies as manager of
Harvest Growth Capital, Harvest Growth Capital II and Harvest
Capital Credit. JMP Group consolidates the two Harvest Growth
Capital funds and Harvest Capital Credit in accordance with GAAP
accounting standards; however, asset management fees generated by
these entities are included in asset management-related fee
revenues as though deconsolidated.
A statement of JMP Group’s asset management-related fee revenues
for the quarter ended March 31, 2013 and for comparable prior
periods is set forth below.
Quarter Ended (in thousands) Mar. 31, 2013
Dec. 31, 2012 Mar. 31, 2012 Base management fees:
Fees reported as asset management fees $ 2,365 $ 2,339 $ 2,438 Fees
reported as other income 262 263 708
Fees earned at Harvest Growth Capital,
Harvest Growth Capital II and Harvest Capital Credit
508 435 201 Total base management fees
3,135 3,037 3,347 Incentive fees: Fees
reported as asset management fees 4,387 2,715 1,036
Fees earned at Harvest Growth Capital,
Harvest Growth Capital II and Harvest Capital Credit
350 624 131 Total incentive fees 4,737
3,339 1,167 Other fee income: Fundraising fees
26 30 27
Total other fee income
26 30 27 Asset management-related fee
revenues: All fees reported as asset management fees 6,752 5,054
3,474 All fees reported as other income 288 293 735
All fees earned at Harvest Growth Capital,
Harvest Growth Capital II and Harvest Capital Credit
858 1,059 332
Total asset management-related fee
revenues
$ 7,898 $ 6,406 $ 4,541
Company management has utilized asset management-related fee
revenue as a means of assessing the performance of JMP Group’s
combined asset management activities, including its fundraising and
other services for third parties. Management believes that asset
management-related fee revenues, as presented above, provide useful
information by indicating the relative contributions of base
management fees and performance-related incentive fees, thus
facilitating a comparison of those fees in a given period to those
in prior and future periods. Management also believes that asset
management-related fee revenue is a more meaningful measure than
standalone asset management fees as reported, because asset
management-related fee revenues represent the combined impact of
JMP Group’s various asset management activities on the company’s
total net revenues.
Operating Net Income
Operating net income is a non-GAAP financial measure that (i)
reverses compensation expense related to stock-based awards and
deferred compensation, (ii) excludes the net amortization of
liquidity discounts on loans held and asset-backed securities
issued by JMP Credit Corporation, (iii) reverses unrealized
mark-to-market gains and losses recorded at Harvest Capital Credit,
(iv) reverses net unrealized gains and losses on strategic equity
investments and warrants, and (v) assumes an effective tax rate. In
particular, operating net income adjusts for:
- the grant of RSUs and stock options
subsequent to the company’s IPO, which together resulted in
non-cash compensation expense of $0.8 million for the quarter ended
March 31, 2013;
- net deferred compensation, which, in
order to state non-GAAP earnings as conservatively as possible,
consists of (a) deferred compensation awarded at year-end 2012 and
reflected in operating net income for 2012 though recognized as a
GAAP expense in 2013 and 2014 less (b) compensation assumed to be
awarded at year-end 2013 and deferred into 2014 and 2015;
- the non-cash net amortization of
liquidity discounts at JMP Credit, due to scheduled contractual
principal repayments, of $8.7 million for the quarter ended
March 31, 2013;
- unrealized mark-to-market gains or
losses on the investment portfolio at Harvest Capital Credit;
- unrealized mark-to-market gains or
losses on the company’s strategic equity investments as well as
certain warrant positions; and
- a combined federal, state and local
income tax rate of 38% for the quarter ended March 31, 2013 and all
future periods, though an assumed rate of 42% was applied for all
prior periods; the company’s effective tax rate has proved lower
than anticipated as a result of geographic changes in the company’s
revenue mix, with revenues generated in California (at the highest
marginal rate) comprising less of the total in recent years than in
the past.
A reconciliation of JMP Group’s net income to its operating net
income for the quarter ended March 31, 2013 and for comparable
prior periods is set forth below.
Quarter Ended (in thousands, except per share amounts) Mar.
31, 2013 Dec. 31, 2012 Mar. 31, 2012 Net
(loss)/income attributable to JMP Group Inc. ($1,719 ) $ 5,327 $
374 Add back/(subtract): Income tax (benefit)/expense
(812 ) 3,004 381 (Loss)/income before
taxes (2,531 ) 8,331 755 Add back/(subtract): Compensation
expense – stock options 137 - - Compensation expense – post-IPO
RSUs 616 1,910 180 Accounting adjustment – deferred compensation
(1,124 ) (6,985 ) -
Net amortization of liquidity discounts on
loans and asset-backed securities issued
8,740 7,577 7,175 IPO-related expense – Harvest Capital Credit -
(450 ) -
Unrealized mark-to-market (gain)/loss –
Harvest Capital Credit
(162 ) (380 ) 12
Unrealized loss/(gain) on strategic equity
investments and warrants
157 294 (321 ) Operating income
before taxes 5,833 10,297 7,801 Income tax expense (assumed
rate of 38% for 2013) 2,217 4,325
3,275 Operating net income $ 3,616 $ 5,972
$ 4,526 Operating net income per share: Basic
$ 0.16 $ 0.26 $ 0.20 Diluted $ 0.16 $ 0.26 $ 0.19 Weighted
average shares outstanding: Basic 22,607 22,637 22,180 Diluted
22,905 22,722 23,273
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
certain items that may not be representative of the company’s core
operating results or core business activities. 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 Operating Net Income
Historically, company management presented adjusted operating
net income, which excluded from operating net income the financial
impact of gains or losses recognized by JMP Credit Corporation due
to the sale or payoff of loans originally included in the portfolio
acquired by JMP Group in April 2009. Management believed this
metric to be instructive to investors who wished to assess the
company’s core earnings over time without regard to a relatively
volatile revenue stream. However, profits derived from sales or
payoffs of acquired loans, while once substantial, are no longer
material, because the portfolio of acquired loans has been almost
entirely liquidated as of March 31, 2012. As a result, management
no longer views adjusted operating net income as an instructive
metric, since it would no longer provide additional clarity as to
the earnings power of the company's ongoing business
operations.
Segment Reporting
In order to demonstrate the contribution to the company’s
results of each of its primary businesses on a standalone basis,
JMP Group presents the operating net income generated by each
segment in the table that follows. Management believes that this
presentation enables investors to better understand the separate
but interrelated financial operations of the company’s various
business lines and to more accurately assess the contribution of
each to JMP Group’s aggregate results.
Total net revenues have been adjusted, in part, as detailed
above in the section titled “Adjusted Net Revenue,” and the
resulting adjusted net revenues (i) include asset management fees,
net interest income or expense, and other revenues eliminated upon
the consolidation of Harvest Growth Capital, Harvest Growth Capital
II and Harvest Capital Credit, (ii) exclude the net amortization of
liquidity discounts on loans held and asset-backed securities
issued by JMP Credit Corporation, (iii) reverse unrealized
mark-to-market gains and losses recorded at Harvest Capital Credit;
(iv) reverse net unrealized gains and losses on strategic equity
investments and warrants and (v) exclude non-controlling interests
in net unrealized gains and losses on Harvest Growth Capital,
Harvest Growth Capital II and Harvest Growth Capital. Total
non-interest expenses have been adjusted, in part, as detailed
above in the section titled “Operating Net Income,” and the
resulting adjusted non-interest expense reverses compensation
expense related to stock-based awards granted subsequent to JMP
Group’s initial public offering. For the purposes of calculating
operating net income, an effective tax rate of 38% is assumed.
A statement of JMP Group’s operating net income on a segment
basis for the quarter ended March 31, 2013 is set forth below.
Quarter Ended March 31, 2013 (in thousands, except per share
amounts)
JMPSecurities
HarvestCapitalStrategies
JMPCreditCorp.
Corporate
Elimin-ations
OperatingJMPGroup
HGCConsoli-dation
HCCConsoli-dation
Consoli-dated JMPGroup
Revenues:
Investment banking
$ 12,178 - - - ($70 ) $ 12,108 - - $ 12,108 Brokerage 5,194 - -
-
- 5,194 - - 5,194 Asset management-related fees (1) - $ 8,032 $ 50
-
(184
) 7,898 ($411 ) ($447 ) 7,040 Principal transactions (2) 271 624 -
$ 1,329 6 2,230 (619 ) 37 1,648 Gain on sale and payoff of loans
(3) - - 999 - - 999 - - 999 Net dividend income (8 ) 257 - - - 249
- (257 ) (8 ) Net interest income (4) (17 ) 1 4,633 (329 ) - 4,288
- 1,310 5,598 Provision for loan losses - -
(949 ) - - (949 ) - -
(949 ) Adjusted net revenues 17,618 8,913 4,733 1,000
(248 ) 32,016 (1,030 ) 643 31,629 Expenses: Non-interest
expenses (5) 15,915 7,539 (1,258 ) 3,989 (178 ) 26,007 37 97 26,141
Less: Non-controlling interest (6) - -
176 - - 176 (1,067
) 546 (345 ) Operating income/(loss) before taxes
1,703 1,374 5,815 (2,989 ) (70 ) 5,833 - - 5,833
Income tax expense/(benefit)
(assumed rate of 38%) 647 522 2,210
(1,136 ) (27 ) 2,216 - -
2,216 Operating net income/(loss) $ 1,056 $
852 $ 3,605 ($1,853 ) ($43 ) $ 3,617 -
- $ 3,617 Operating net income/(loss) per
share: Basic $ 0.05 $ 0.04 $ 0.15 ($0.08 ) ($0.00 ) $ 0.16 - - $
0.16 Diluted $ 0.05 $ 0.04 $ 0.15 ($0.08 ) ($0.00 ) $ 0.16 - - $
0.16
(1)
Reflects revenues detailed in section above titled “Asset
Management-Related Fee Revenues;” management fees totaling $0.9
million are eliminated upon consolidation of two Harvest Growth
Capital funds and Harvest Capital Credit.
(2)
Reverses net unrealized gains and losses on strategic equity
investments and warrants and excludes non-controlling interests in
net realized and unrealized gains and losses related to two Harvest
Growth Capital funds as well as other principal transaction
revenues related to Harvest Capital Credit; net realized and
unrealized losses totaling $0.6 million are recognized upon
consolidation of the entities.
(3)
Excludes unrealized mark-to-market gains of $0.1 million on the
loan portfolio at Harvest Capital Credit.
(4)
Excludes expense related to the non-cash net amortization of
liquidity discounts at JMP Credit Corporation.
(5)
Reverses stock-based compensation expense and excludes fund-related
expenses totaling $0.1 million that are recognized upon
consolidation of two Harvest Growth Capital funds and Harvest
Capital Credit.
(6)
Excludes non-controlling interests totaling $0.5 million in the net
realized and unrealized losses of two Harvest Growth Capital funds
and Harvest Capital Credit that are recognized upon consolidation
of the entities.
Adjusted Tangible Book Value per Share
At March 31, 2013, JMP Group’s tangible book value per share was
$5.54, compared to $5.62 at December 31, 2012 and $5.52 at
March 31, 2012. Adjusting book value to reflect the net liquidity
discount on JMP Credit Corporation’s loan portfolio and
asset-backed securities issued and to accelerate the recognition of
deferred compensation expense, JMP Group’s adjusted tangible book
value per share at March 31, 2013 would have been $5.24, as
indicated by the table below.
(in thousands, except per share amounts) Mar. 31, 2013
Dec. 31, 2012 Mar. 31, 2012 Total JMP Group
stockholders' equity $ 125,238 $ 126,871 $ 125,948 Less: Goodwill
and intangible assets - - -
Tangible stockholders' equity 125,238 126,871 125,948
Liquidity discount on loans 3,511 4,331 13,894 Liquidity discount
on asset-backed securities issued (6,304 ) (15,548 )
(41,392 ) Net liquidity discount (2,793 ) (11,217 ) (27,498
) Accounting adjustment – deferred compensation (8,109 )
(6,985 ) - Pre-tax adjustments to equity
(10,902 ) (18,202 ) (27,498 ) Income tax benefit (assumed rate of
38% for 2013) 4,143 7,645 11,549
After-tax adjustments to equity (6,759 )
(10,557 ) (15,949 ) Adjusted tangible stockholders'
equity $ 118,479 $ 116,314 $ 109,999
Adjusted tangible book value per share $ 5.24 $ 5.15
$ 4.82 Basic shares outstanding 22,609 22,592 22,812
Quarterly operating ROATE (1) 12.3 % 21.0 % 16.7 % LTM
operating ROATE (1) 13.8 % 15.0 % 14.2 %
(1)
Return on adjusted tangible equity (ROATE) equals annualized
operating net income divided by average adjusted tangible
stockholders’ equity.
Share Repurchase Activity
During the quarter ended March 31, 2013, JMP Group repurchased a
negligible number of shares of its common stock. At quarter-end,
approximately 2.0 million shares remained eligible for repurchase
under the company’s existing repurchase authorization.
Dividend Declaration
The company’s board of directors declared a cash dividend of
$0.035 per share for the first quarter of 2013 to be paid on
Friday, May 31, 2013 to common stockholders of record as of Friday,
May 17, 2013.
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 or
losses stemming from sales of or prepayments on, or losses stemming
from defaults on, loans underlying the company’s collateralized
loan obligation or in its small business lending portfolio; 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 quarter,
depending upon the amount and sorts of revenue recognized as well
as other factors. The amount of compensation and benefits expense
recognized in a particular quarter may not be indicative of such
expense in any future period. As a result, the company suggests
that its 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 may contain 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 potential for continued
spending on strategic initiatives and hiring efforts and the future
growth of the company’s operating businesses. 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 December 31, 2012, as filed with the Securities and
Exchange Commission on March 8, 2013, as well as in the similarly
captioned sections of other periodic reports filed by the company
under the Exchange Act. The Form 10-K for the year ended December
31, 2013 and all other periodic reports are available on JMP
Group’s website at www.jmpg.com and on the Securities and Exchange
Commission’s website at www.sec.gov. Unless required by law, JMP
Group undertakes no obligation to publicly update or revise any
forward-looking statement to reflect circumstances or events after
the date of this press release.
Conference Call
JMP Group will hold a conference call to discuss the results
detailed herein at 10:00 a.m. EDT on Monday, May 6, 2013. To
participate in the call, dial (888) 566-6060. The conference
identification number is 64165826.
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, at
investor.jmpg.com/events.cfm. The Internet broadcast will be
archived and will remain available on the website for future
replay.
About JMP Group
JMP Group Inc. is a full-service investment banking and asset
management firm that provides investment banking, sales and
trading, and equity research services to corporate and
institutional clients and alternative asset management products to
institutional and high-net-worth investors. JMP Group operates
through three subsidiaries: JMP Securities, Harvest Capital
Strategies and JMP Credit Advisors. For more information, visit
www.jmpg.com.
JMP GROUP INC.
Consolidated Statements of Financial
Condition
(Unaudited)
(in thousands) Mar. 31, 2013 Dec. 31, 2012
Assets Cash and cash equivalents $ 41,451 $ 67,075
Restricted cash and deposits 69,125 69,813 Marketable securities
owned, at fair value 17,829 14,347 Other investments 119,858 81,161
Loans held for sale 2,528 3,134
Loans collateralizing asset-backed
securities issued, net of allowance for loan losses
404,319 401,003 Small business loans, net of allowance for loan
losses 40,375 38,934 Deferred tax assets 12,200 13,087 Other assets
42,268 21,308 Total assets $ 749,953 $ 709,862
Liabilities and Stockholders' Equity Liabilities: Marketable
securities sold, but not yet purchased, at fair value $ 12,289 $
11,567 Accrued compensation 9,234 20,256 Asset-backed securities
issued 424,699 415,456 Line of credit 22,227 28,227 Note payable
6,552 10,486 Bond payable 46,000 - Deferred tax liability 5,289
9,775 Other liabilities 31,710 26,791 Total
liabilities 558,000 522,558 Redeemable
non-controlling interest 161 161 Stockholders'
Equity: Total JMP Group Inc. stockholders' equity 125,238 126,871
Non-redeemable non-controlling interest 66,554 60,272
Total equity 191,792 187,143 Total liabilities and
stockholders' equity $ 749,953 $ 709,862
JMP GROUP INC.
Consolidated Statements of Operations
(Unaudited)
Quarter Ended (in thousands, except per share
amounts) Mar. 31, 2013 Mar. 31, 2012 Revenues: Investment
banking $ 12,107 $ 16,659 Brokerage 5,194 5,492 Asset management
fees 6,751 3,474 Principal transactions 1,917 6,484 Gain on sale,
payoff and mark-to-market of loans 1,089 1,047 Net dividend
(expense) (8 ) (14 ) Other income 288 736
Non-interest revenues 27,338 33,878
Interest income 8,158 7,458 Interest expense
(11,299 ) (9,608 ) Net interest (expense) (3,141 )
(2,150 ) Provision for loan losses (949 )
(93 ) Total net revenues 23,248 31,635
Non-interest expenses: Compensation and benefits
19,605 21,771 Administration 1,331 1,250 Brokerage, clearing and
exchange fees 887 896 Travel and business development 958 702
Communications and technology 853 908 Occupancy 804 817
Professional fees 1,024 639 Depreciation 226 198 Other 83
265 Total non-interest expense 25,771
27,446 (Loss)/income before income tax
expense (2,523 ) 4,189 Income tax (benefit)/expense (812 )
381 Net (loss)/income (1,711 ) 3,808 Less: Net income
attributable to noncontrolling interest 8
3,432 Net (loss)/income attributable to JMP Group Inc.
($1,719 ) $ 376 Net (loss)/income attributable
to JMP Group Inc. per share: Basic ($0.08 ) $ 0.02 Diluted ($0.08 )
$ 0.02 Weighted average common shares outstanding: Basic
22,607 22,180 Diluted
22,607
23,273
JMP (NYSE:JMP)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
JMP (NYSE:JMP)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
