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Gleacher & Company Reports First Quarter 2012 Financial Results

Corporate Credit (including Non-GAAP results)

First Quarter 2012 vs. 2011

Net revenues increased by $1.2 million to $21.7 million for the first quarter of 2012 compared to $20.5 million in the first quarter of 2011. The increase in net revenues was primarily attributable to higher commissions and principal transaction revenues of $2.0 million, due to higher volumes, partially offset by lower spreads. This was partially offset by lower investment banking revenues of $0.6 million (all capital markets related), as this division recognized $1.9 million of investment banking revenues in the first quarter of 2012, compared to $2.5 million in the first quarter of 2011. Non-GAAP pre-tax income of $1.0 million for the quarter ended March 31, 2012 decreased by $1.2 million, compared to pre-tax income of $2.2 million for the first quarter of 2011. This decrease is a result of higher variable cash compensation accruals recorded in the first quarter of 2012.

Investment Banking

First Quarter 2012 vs. 2011

Net revenues declined by $3.1 million to $4.5 million for the first quarter of 2012, compared to $7.6 million in the first quarter of 2011. Advisory revenues decreased $1.1 million to $2.5 million, compared to $3.6 million for the prior-year quarter. Capital markets revenues decreased $2.0 million to $2.0 million for the first quarter of 2012, compared to $4.0 million for the prior-year quarter. Pre-tax income of $0.6 million for the quarter ended March 31, 2012 decreased by $0.7 million, compared to pre-tax income of $1.3 million in the prior-year quarter. This reduction is a direct result of the lower revenues, partially offset by lower variable compensation expense (as a result of the lower revenues) and lower non-compensation expenses as a result of the realignment which took place in the third quarter of 2011.

ClearPoint

First Quarter 2012 vs. 2011

Net revenues increased by $9.1 million to $15.5 million for the first quarter of 2012 compared to $6.4 million in the first quarter of 2011. The increase in net revenues was primarily attributable to higher loan commitment volumes given the expansion of the business since its acquisition on January 3, 2011. As of March 31, 2012, ClearPoint conducted business in 45 states, compared to 20 states at March 31, 2011. ClearPoint’s pre-tax results were impacted by fees paid to brokers and loan processing fees of $12.5 million in the first quarter of 2012, compared to $4.3 million in the first quarter of 2011. Despite the higher revenues (net of broker expenses and loan processing fees), pre-tax losses increased by $1.8 million, to $2.9 million for the quarter ended March 31, 2012, compared to a pre-tax loss of $1.1 million for the first quarter of 2011. This was primarily a result of higher compensation expense resulting from the expansion of the workforce since the acquisition, coupled with the effects of implementing limits on ClearPoint’s daily average loan commitments to a level that is aligned with its current distribution opportunities given the previously disclosed liquidity constraints experienced during the first quarter of 2012.

Stock quotes in this article: GLCH 

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