Institutional Financial Markets, Inc. (NYSE AMEX: IFMI), an investment firm specializing in credit-related fixed income investments, today reported financial results for the quarter and year ended December 31, 2011.
Adjusted operating income was $0.3 million, or $0.02 per diluted share, for the three months ended December 31, 2011, as compared to adjusted operating loss of $4.0 million, or $0.25 per diluted share, for the three months ended September 30, 2011, and adjusted operating income of $4.7 million, or $0.30 per diluted share, for the three months ended December 31, 2010. Adjusted operating income was $3.5 million, or $0.22 per diluted share, for the year ended December 31, 2011, as compared to $25.4 million, or $1.62 per diluted share, for the year ended December 31, 2010. Adjusted operating income (loss) is not a measure recognized under generally accepted accounting principles (“GAAP”). See Note 1 on page 2.
“We’re proud of the progress IFMI has made on its strategic growth initiatives in 2011, including the acquisition and successful integration of our PrinceRidge and JVB subsidiaries, especially considering the difficult market conditions that persisted throughout the year,” said Daniel G. Cohen, Chairman and Chief Executive Officer of IFMI. “While difficult decisions to significantly reduce our fixed expenses and overhead had to be made, we believe these actions have enhanced our competitive position and will enable us to take advantage of eventual market improvement. As we look ahead to 2012, we continue to believe we are well capitalized and staffed to advance our growth strategies and deliver enhanced value to our stockholders.”
The Company noted that, given IFMI’s financial results of the past year, Mr. Cohen and John Costas, Chairman of PrinceRidge, will not receive incentive-based compensation for 2011.
The current-year periods include revenue from the PrinceRidge Holdings LP and JVB Financial Holdings, LLC consolidated subsidiaries, which were acquired in 2011; however, continued weakness in the current capital markets significantly reduced the positive impact of these acquisitions. Revenue was $23.7 million for the three months ended December 31, 2011, compared to revenue of $20.9 million for the three months ended September 30, 2011, and revenue of $24.9 million for the three months ended December 31, 2010. The increase in revenue in the fourth quarter of 2011 as compared to the third quarter of 2011 was primarily due to modestly higher net trading and advisory revenue in the PrinceRidge and European capital markets operations. The fourth quarter year-over-year decrease in revenue was the result of a reduction in gains on principal transactions of $1.5 million and a reduction in asset management revenue of $1.1 million. In the fourth quarter of 2010, IFMI recognized gains on its investment in Star Asia of $2.4 million, compared to losses of $0.1 million in the fourth quarter of 2011. The year-over-year decline in quarterly asset management revenue was due to the sale of management contracts related to the Deep Value funds in mid-2011, as well as continued deterioration in assets under management in the Company’s managed collateralized debt obligations.