{"id":520370,"date":"2021-07-29T16:18:32","date_gmt":"2021-07-29T20:18:32","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/jmp-group-reports-second-quarter-2021-financial-results\/"},"modified":"2021-07-29T16:18:32","modified_gmt":"2021-07-29T20:18:32","slug":"jmp-group-reports-second-quarter-2021-financial-results","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/jmp-group-reports-second-quarter-2021-financial-results\/","title":{"rendered":"JMP Group Reports Second Quarter 2021 Financial Results"},"content":{"rendered":"

<\/p>\n

JMP Group Reports Second Quarter 2021 Financial Results<\/b><\/p>\n

SAN FRANCISCO–(BUSINESS WIRE<\/a>)–
\nJMP Group LLC (NYSE: JMP<\/a>), an investment banking and alternative asset management firm, reported financial results today for the quarter ended June 30, 2021.\n<\/p>\n

\nA summary of JMP Group\u2019s operating results for the quarter and six months ended June 30, 2021, and for comparable prior periods, is set forth below.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n\nQuarter Ended<\/td>\n\nSix Months Ended<\/td>\n<\/tr>\n
(in thousands, except per share amounts)<\/i><\/td>\n\nJune 30, 2021<\/td>\n\nMar. 31, 2021<\/td>\n\nJune 30, 2020<\/td>\n\nJune 30, 2021<\/td>\n\nJune 30, 2020<\/td>\n<\/tr>\n
\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Total net revenues<\/td>\n\n\n

\n$48,492\n<\/p>\n<\/td>\n

\n\n

\n$38,493\n<\/p>\n<\/td>\n

\n\n

\n$29,993\n<\/p>\n<\/td>\n

\n\n

\n$86,985\n<\/p>\n<\/td>\n

\n\n

\n$35,260\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Net income\/(loss) attributable to JMP Group<\/td>\n\n\n

\n$3,628\n<\/p>\n<\/td>\n

\n\n

\n$1,089\n<\/p>\n<\/td>\n

\n\n

\n$1,124\n<\/p>\n<\/td>\n

\n\n

\n$4,717\n<\/p>\n<\/td>\n

\n\n

\n($10,624\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

Net income\/(loss) attributable to JMP Group per share<\/td>\n\n\n

\n$0.17\n<\/p>\n<\/td>\n

\n\n

\n$0.05\n<\/p>\n<\/td>\n

\n\n

\n$0.06\n<\/p>\n<\/td>\n

\n\n

\n$0.23\n<\/p>\n<\/td>\n

\n\n

\n($0.54\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Operating net income\/(loss)<\/td>\n\n\n

\n$6,129\n<\/p>\n<\/td>\n

\n\n

\n$3,784\n<\/p>\n<\/td>\n

\n\n

\n$2,591\n<\/p>\n<\/td>\n

\n\n

\n$9,913\n<\/p>\n<\/td>\n

\n\n

\n$2,054\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

Operating net income\/(loss) per share<\/td>\n\n\n

\n$0.29\n<\/p>\n<\/td>\n

\n\n

\n$0.18\n<\/p>\n<\/td>\n

\n\n

\n$0.13\n<\/p>\n<\/td>\n

\n\n

\n$0.47\n<\/p>\n<\/td>\n

\n\n

\n$0.10\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Book value per share<\/td>\n\n\n

\n$3.54\n<\/p>\n<\/td>\n

\n\n

\n$3.38\n<\/p>\n<\/td>\n

\n\n

\n$2.87\n<\/p>\n<\/td>\n

\n\n

\n$3.54\n<\/p>\n<\/td>\n

\n\n

\n$2.87\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

Adjusted book value per share<\/td>\n\n\n

\n$4.42\n<\/p>\n<\/td>\n

\n\n

\n$4.24\n<\/p>\n<\/td>\n

\n\n

\n$3.69\n<\/p>\n<\/td>\n

\n\n

\n$4.42\n<\/p>\n<\/td>\n

\n\n

\n$3.69\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nFor more information about operating net income, including a reconciliation to net income, and adjusted book value per share, including a reconciliation to book value per share, see the section below titled \u201cNon-GAAP Financial Measures.\u201d\n<\/p>\n

\u201cJMP Group\u2019s operating earnings of $0.29 per share for the June quarter mark the second-best quarter in our company\u2019s history, driven by strong advisory revenues at JMP Securities, record results in our asset management business, and investment income that well exceeded our corporate costs,\u201d said Joe Jolson, chairman and CEO of JMP Group. \u201cOn a trailing-four-quarters basis, our operating earnings were a record $1.00 per share, representing a 32.9% return on average equity. <\/span><\/p>\n

\u201cDuring the quarter, we successfully monetized certain principal investments, enabling us to call $25.0 million of our fixed-rate debt and reducing our long-term borrowings to less than $50.0 million as of July.\u201d<\/span><\/p>\n

\u201cFor the six months ended in June, JMP Securities\u2019 investment banking revenues were up 80% year over year,\u201c said Mark Lehmann, president of JMP Group and CEO of JMP Securities. \u201cThrough June of this year, we underwrote 19 IPOs, compared to 20 last year on the whole, and bookran nine transactions, versus nine throughout 2020. <\/span><\/p>\n

\u201cIn our advisory business, we reached the $50 million mark for total fee revenues over the latest 12 months and are thrilled that our investment in people continues to pay off. We built on our momentum in July and feel confident about the third quarter, given a strong backlog and active dialogs with an ever-growing number of corporate clients.\u201d <\/span><\/p>\n

\n

Segment Results of Operations<\/b><\/p>\n

\nA summary of JMP Group\u2019s operating net income per share by segment for the quarter and six months ended June 30, 2021, and for comparable prior periods, is set forth below.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n\nQuarter Ended<\/td>\n\nSix Months Ended<\/td>\n<\/tr>\n
($ as shown)<\/i><\/td>\n\nJune 30, 2021<\/td>\n\nMar. 31, 2021<\/td>\n\nJune 30, 2020<\/td>\n\nJune 30, 2021<\/td>\n\nJune 30, 2020<\/td>\n<\/tr>\n
\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Broker-dealer<\/td>\n\n\n

\n$0.15\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.21\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.14\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.36\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.13\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Asset management:<\/td>\n\n\n\n\n\n\n\n\n\n<\/tr>\n
Asset management fee income<\/td>\n\n\n

\n0.09\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.00\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n(0.01\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n0.09\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n(0.02\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

Investment income<\/td>\n\n\n

\n0.13\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.06\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.08\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.19\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.14\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

Total asset management<\/td>\n\n\n

\n0.23\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.06\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.07\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.29\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n0.12\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Corporate costs<\/td>\n\n\n

\n(0.09\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(0.08\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(0.08\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(0.17\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(0.15\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
Operating EPS (diluted)<\/td>\n\n\n

\n$0.29\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.18\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.13\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.47\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n$0.10\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0<\/td>\n<\/tr>\n
\n

Note<\/span>: <\/i>Due to rounding, numbers in columns above may not sum to totals presented.\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nFor more information about operating net income, including a reconciliation to net income, see the section below titled \u201cNon-GAAP Financial Measures.\u201d\n<\/p>\n

Composition of Revenues<\/b><\/p>\n

Investment Banking<\/i><\/p>\n

\nInvestment banking revenues were $32.7 million for the quarter, an increase of 51.5% from $21.6 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, investment banking revenues were $65.3 million, an increase of 80.2% from $36.2 million for six months ended June 30, 2020.\n<\/p>\n

\nA summary of the company\u2019s investment banking revenues and transaction counts for the quarter and six months ended June 30, 2021, and for comparable prior periods, is set forth below.\n<\/p>\n\n\n\n\n\n\n\n
\n\nQuarter Ended<\/td>\n\nSix Months Ended<\/td>\n<\/tr>\n
\n\nJune 30, 2021<\/td>\n\nMar. 31, 2021<\/td>\n\nJune 30, 2020<\/td>\n\nJune 30, 2021<\/td>\n\nJune 30, 2020<\/td>\n<\/tr>\n
($ in thousands)<\/i><\/td>\n\nCount<\/td>\n\nRevenues<\/td>\n\nCount<\/td>\n\nRevenues<\/td>\n\nCount<\/td>\n\nRevenues<\/td>\n\nCount<\/td>\n\nRevenues<\/td>\n\nCount<\/td>\n\nRevenues<\/td>\n<\/tr>\n
Equity and debt origination<\/td>\n\n\n

\n34\n<\/p>\n<\/td>\n

\n\n

\n$16,946\n<\/p>\n<\/td>\n

\n\n

\n41\n<\/p>\n<\/td>\n

\n\n

\n$25,670\n<\/p>\n<\/td>\n

\n\n

\n22\n<\/p>\n<\/td>\n

\n\n

\n$14,569\n<\/p>\n<\/td>\n

\n\n

\n75\n<\/p>\n<\/td>\n

\n\n

\n$42,616\n<\/p>\n<\/td>\n

\n\n

\n39\n<\/p>\n<\/td>\n

\n\n

\n$23,125\n<\/p>\n<\/td>\n<\/tr>\n

Strategic advisory and private placements<\/td>\n\n\n

\n11\n<\/p>\n<\/td>\n

\n\n

\n15,767\n<\/p>\n<\/td>\n

\n\n

\n6\n<\/p>\n<\/td>\n

\n\n

\n6,899\n<\/p>\n<\/td>\n

\n\n

\n5\n<\/p>\n<\/td>\n

\n\n

\n7,026\n<\/p>\n<\/td>\n

\n\n

\n17\n<\/p>\n<\/td>\n

\n\n

\n22,666\n<\/p>\n<\/td>\n

\n\n

\n9\n<\/p>\n<\/td>\n

\n\n

\n13,095\n<\/p>\n<\/td>\n<\/tr>\n

Total<\/td>\n\n\n

\n45\n<\/p>\n<\/td>\n

\n\n

\n$32,713\n<\/p>\n<\/td>\n

\n\n

\n47\n<\/p>\n<\/td>\n

\n\n

\n$32,569\n<\/p>\n<\/td>\n

\n\n

\n27\n<\/p>\n<\/td>\n

\n\n

\n$21,595\n<\/p>\n<\/td>\n

\n\n

\n92\n<\/p>\n<\/td>\n

\n\n

\n$65,282\n<\/p>\n<\/td>\n

\n\n

\n48\n<\/p>\n<\/td>\n

\n\n

\n$36,220\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\n

Brokerage<\/i><\/p>\n

\nNet brokerage revenues were $3.4 million for the quarter, a decrease of 39.9% from $5.6 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net brokerage revenues were $9.3 million, a decrease of 5.5% from $9.8 million for the six months ended June 30, 2020.\n<\/p>\n

\nTotal capital markets revenues, which consist of net brokerage revenues produced by the institutional equities division in addition to equity and debt origination revenues generated by the investment banking division, were $20.3 million and $51.9 million for the quarter and six months ended June 30, 2021, respectively, compared to $20.2 million and $33.0 million for the quarter and six months ended June 30, 2020, respectively.\n<\/p>\n

Asset Management<\/i><\/p>\n

\nAsset management fees were $11.1 million for the quarter, compared to $1.7 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, asset management fees were $13.3 million, compared to $3.4 million for the six months ended June 30, 2020. The year-over-year differences are primarily due to aggregate incentive fees of $9.8 million recorded in connection certain fund strategies for the quarter ended June 30, 2021.\n<\/p>\n

\nOn June 9, 2021, Portman Ridge Finance Corporation closed its acquisition of Harvest Capital Credit Corporation, which had been externally managed by JMP Group subsidiary HCAP Advisors, and the investments transferred in the transaction are no longer considered among JMP Group\u2019s client assets under management. Additionally, on June 30, 2021, JMP Group sold its minority interest in Medalist Partners Corporate Finance, a manager of collateralized loan obligations, to Medalist Partners. Consequently, CLO assets managed by Medalist are no longer considered among assets under management by sponsored funds.\n<\/p>\n

\nA summary of the company\u2019s client assets under management for the quarter ended June 30, 2021, and for comparable prior periods, is set forth below.\n<\/p>\n\n\n\n\n\n
(in millions)<\/i><\/td>\n\nJune 30, 2021<\/td>\n\nMar. 31, 2021<\/td>\n\nJune 30, 2020<\/td>\n<\/tr>\n
Client assets under management (1)<\/sup><\/td>\n\n\n

\n$630\n<\/p>\n<\/td>\n

\n\n

\n$694\n<\/p>\n<\/td>\n

\n\n

\n$590\n<\/p>\n<\/td>\n<\/tr>\n

Assets under management by sponsored funds (2)<\/sup><\/td>\n\n\n

\n3,403\n<\/p>\n<\/td>\n

\n\n

\n4,825\n<\/p>\n<\/td>\n

\n\n

\n5,102\n<\/p>\n<\/td>\n<\/tr>\n

Client assets under management, including sponsored funds<\/td>\n\n\n

\n$4,033\n<\/p>\n<\/td>\n

\n\n

\n$5,519\n<\/p>\n<\/td>\n

\n\n

\n$5,692\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\n\n
\n

(1)<\/sup><\/p>\n<\/td>\n

\n\n

\nIncludes assets managed by Harvest Capital Strategies and JMP Asset Management on behalf of third parties. Through March 31, 2021, includes assets managed by HCAP Advisors.\n<\/p>\n<\/td>\n<\/tr>\n

\n

(2)<\/sup><\/p>\n<\/td>\n

\n\n

\nSponsored funds are asset management strategies in which JMP Group owns an economic interest. Through March 31, 2021, includes assets managed by Medalist Partners Corporate Finance.\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

Principal Transactions<\/i><\/p>\n

\nPrincipal transactions generated a net realized and unrealized loss of $49,000 for the quarter, compared to a net realized and unrealized loss of $48,000 for the quarter ended June 30, 2020. For the six months ended June 30, 2021, principal transactions generated a net realized and unrealized loss of $3.3 million, compared to a net realized and unrealized loss of $17.6 million for the six months ended June 30, 2020. The year-over-year difference for the six-month periods is in part due to the impairment of CLO equity owned by JMP Group. A reduction in the net present value of forecasted cash flows through the end of the expected life of the collateralized loan obligations required an impairment charge of $8.3 million for the six months ended June 30, 2021, and $14.5 million for the six months ended June 30, 2020. For the six months ended June 30, 2021, the impairment charge of $8.3 million was partially offset by net realized and unrealized gains on the aforementioned sales of Harvest Capital Credit Corporation and a minority interest in Medalist Partners Corporate Finance and on venture capital and real estate investments.\n<\/p>\n

\n

Net Interest Income<\/i><\/p>\n

\nNet interest income was $0.3 million for the quarter, compared to $0.2 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net interest income was $0.8 million, compared to $0.6 million for the six months ended June 30, 2020.\n<\/p>\n

Early Retirement of Debt<\/i><\/p>\n

\nOn June 25, 2021, JMP Group redeemed $10.0 million of outstanding 7.25% senior notes due 2027. The early redemption of the notes accelerated the amortization of remaining capitalized issuance costs, resulting in an expense of $0.3 million for the quarter ended June 30, 2021. For the quarter ended June 30, 2020, there was no such expense. For the six months ended June 30, 2021, redemption of senior notes resulted in an expense of $0.6 million, while there was no such expense for the six months ended June 30, 2020.\n<\/p>\n

Expenses<\/b><\/p>\n

Compensation and Benefits<\/i><\/p>\n

\nCompensation and benefits expense was $35.1 million for the quarter, compared to $22.4 million for the quarter ended June 30, 2020. As a percentage of net revenues, compensation and benefits expense was 72.5% for the quarter, compared to 74.6% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, compensation and benefits expense was $65.1 million, compared to $38.6 million for the six months ended June 30, 2020. As a percentage of net revenues, compensation and benefits expense was 74.8% for the six months ended June 30, 2021, compared to 109.5% for the six months ended June 30, 2020.\n<\/p>\n

Non-Compensation Expense<\/i><\/p>\n

\nNon-compensation expense was $8.4 million for the quarter, compared to $6.3 million for the quarter ended June 30, 2020. As a percentage of net revenues, non-compensation expense was 17.3% for the quarter, compared to 21.1% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, non-compensation expense was $15.4 million, compared to $14.5 million for the six months ended June 30, 2020. As a percentage of net revenues, non-compensation expense was 17.7% for the six months ended June 30, 2021, compared to 41.0% for the six months ended June 30, 2020.\n<\/p>\n

Share Repurchase Activity<\/b><\/p>\n

\nJMP Group did not repurchase any outstanding common shares during the quarter ended June 30, 2021.\n<\/p>\n

Personnel<\/b><\/p>\n

\nAt June 30, 2021, the company had 174 full-time employees, compared to 179 at March 31, 2021, and 191 at June 30, 2020.\n<\/p>\n

\n

Non-GAAP Financial Measures<\/b><\/p>\n

\nIn 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\u2019 overall understanding of the company\u2019s current financial performance. Furthermore, company management believes that this presentation enables a more meaningful comparison of JMP Group\u2019s financial performance across 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 non-GAAP items should not be construed as an inference that these gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP measures of JMP Group\u2019s 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.\n<\/p>\n

Operating Net Income<\/i><\/p>\n

\nOperating net income is a non-GAAP financial measure that (i) excludes compensation expense related to share-based awards and deferred compensation, (ii) reverses impairment charges related to CLO equity, (iii) excludes costs resulting from the early retirement of debt, (iv) reverses unrealized gains or losses on real estate investments, (v) reverses net unrealized gains and losses on strategic equity investments and warrants, and (vi) assumes an effective tax rate. In particular, operating net income adjusts for:\n<\/p>\n