Net revenues of $25.6 million for the six months ended June 30, 2012, declined by $49.9 million compared to the prior-year period. This was largely attributable to non-agency asset-backed securities gains of approximately $40.4 million in the prior-year period.
Credit Products (formerly referred to as “Corporate Credit”)
Net revenues were $17.9 million for the quarter ended June 30, 2012, a decline of $3.8 million compared to the first quarter of 2012. This decrease was due to the recognition of investment banking revenues of $1.9 million in the first quarter of 2012, coupled with lower trading volumes, partially offset by higher spreads. Revenues improved by $3.0 million compared to the second quarter of 2011 due to an expanded product profile.
Net revenues of $39.6 million for the six months ended June 30, 2012 improved by $4.3 million compared to the prior-year period, due to an expanded product profile.ClearPoint Net revenues were $11.3 million for the quarter ended June 30, 2012, a decline of $4.2 million compared to the first quarter of 2012 and an improvement of $4.3 million compared to the second quarter of 2011. Net revenues declined compared to the first quarter of 2012 as a result of limiting ClearPoint’s daily average loan commitments to a level aligned with its distribution capabilities. Revenues resulting from prior loan commitment levels were not commercially sustainable and resulted in previously reported liquidity constraints. Net revenues for the six months ended June 30, 2012 were $26.9 million, an improvement of $13.5 million compared to the prior-year period. This increase was due to lower daily average loan commitments in the prior-year period as the division’s operations had commenced on January 3, 2011, offset in part by the loan commitment limits implemented in the second quarter of 2012. The division reported a pre-tax loss of $2.5 million and $5.4 million, respectively, for the quarter and six months ended June 30, 2012. The pre-tax losses were primarily due to the limits placed on loan origination activities as a result of the liquidity constraints experienced in the first quarter of 2012. In late May 2012, the division implemented a rightsizing plan in order to better align compensation with distribution capabilities. In connection with this plan, the division incurred approximately $0.4 million of severance expense during the second quarter of 2012.
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