Evercore Partners Reports Third Quarter 2012 Results; Increases Quarterly Dividend To $0.22 Per Share

The Institutional Equities business contributed revenues of $5.2 million and the Private Funds Group closed one capital raise during the quarter.

Expenses

Compensation costs were $77.3 million for the third quarter, a decrease of 10% year-over-year and 14% sequentially. The trailing twelve-month compensation ratio was 60%, down from 61% a year ago and flat when compared to the previous quarter. Evercore’s Investment Banking compensation ratio was 60% for the third quarter, versus the compensation ratio reported for the three months ended September 30, 2011 and June 30, 2012 of 62% and 59%, respectively. Year-to-date compensation costs were $221.6 million, an increase of 10% from the prior year.

Non-compensation costs for the current quarter were $23.5 million, up 10% from the same period last year but down 9% sequentially. The year-over-year increase in costs reflects the Lexicon acquisition and continued growth of the Investment Banking business. The sequential quarter-over-quarter decrease was driven by completion of real estate consolidation and cost control initiatives implemented in the quarter. The ratio of non-compensation costs to revenue for the current quarter was 18%, compared to 15% in the same quarter last year and 17% in the previous quarter. Year-to-date non-compensation costs were $72.4 million, up 35% from the prior year. The ratio of non-compensation costs to revenue for the first nine months was 20%, compared to 16% last year.

Expenses in the Institutional Equities business were $6.9 million for the third quarter, an increase of 5% from the previous quarter, reflecting the addition of a team to cover the REIT sector.

Investment Management

For the third quarter, Investment Management reported net revenues and operating income of $21.0 million and $2.0 million, respectively. Investment Management reported third quarter operating margin of 9% . For the nine months ended September 30, 2012, Investment Management reported net revenue and operating income of $62.5 million and $4.3 million, respectively. The year-to-date operating margin was 7%, compared to 12% last year. As of September 30, 2012, Investment Management reported $11.6 billion of AUM, down 2% from the second quarter as net outflows of $0.7 billion offset market appreciation of $0.5 billion.

	Adjusted Pro Forma
	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
		2012				2012				2011				2012				2011
Net Revenues:	(dollars in thousands)
Investment Management Revenues	$	20,918			$	20,699			$	24,557			$	62,005			$	77,124
Other Revenue, net		94				206				186				453				486
Net Revenues		21,012				20,905				24,743				62,458				77,610
Expenses:
Employee Compensation and Benefits		11,994				12,962				14,834				36,928				45,213
Non-compensation Costs		7,027				7,014				7,631				21,186				22,984
Total Expenses		19,021				19,976				22,465				58,114				68,197
Operating Income	$	1,991			$	929			$	2,278			$	4,344			$	9,413
Compensation Ratio		57	%			62	%			60	%			59	%			58	%
Operating Margin		9	%			4	%			9	%			7	%			12	%
	U.S. GAAP
	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
		2012				2012				2011				2012				2011
Net Revenues:	(dollars in thousands)
Investment Management Revenues	$	20,434			$	20,036			$	24,723			$	60,234			$	78,154
Other Revenue, net		(820	)			(703	)			(708	)			(2,274	)			(2,192	)
Net Revenues		19,614				19,333				24,015				57,960				75,962
Expenses:
Employee Compensation and Benefits		12,590				13,536				15,575				38,624				50,034
Non-compensation Costs		7,240				7,185				7,819				21,785				23,755
Total Expenses		19,830				20,721				23,394				60,409				73,789
Operating Income (Loss)	$	(216	)		$	(1,388	)		$	621			$	(2,449	)		$	2,173
Compensation Ratio		64	%			70	%			65	%			67	%			66	%
Operating Margin		(1	%)			(7	%)			3	%			(4	%)			3	%

Revenues
Investment Management Revenue Components
		Adjusted Pro Forma
		Three Months Ended											Nine Months Ended
		September 30,			June 30,				September 30,				September 30,				September 30,
		2012				2012				2011				2012				2011
Investment Advisory and Management Fees		(dollars in thousands)
Wealth Management		$	5,269		$	4,906			$	3,927			$	14,700			$	11,159
Institutional Asset Management (1)			11,459			12,415				16,016				36,340				51,392
Private Equity			1,856			1,810				1,678				5,401				5,107
Total Investment Advisory and Management Fees			18,584			19,131				21,621				56,441				67,658
Realized and Unrealized Gains (Losses)
Institutional Asset Management			1,296			1,117				1,269				3,625				3,426
Private Equity			423			(301	)			1,728				(185	)			6,548
Total Realized and Unrealized Gains			1,719			816				2,997				3,440				9,974
Equity in Earnings (Loss) of Affiliates (2)			615			752				(61	)			2,124				(508	)
Investment Management Revenues		$	20,918		$	20,699			$	24,557			$	62,005			$	77,124

(1) Management fees from Institutional Asset Management were $11.6 million, $12.5 million and $36.7 million for the three months ended September 30, 2012, June 30, 2012 and nine months ended September 30, 2012, respectively, on a U.S. GAAP basis, excluding the reduction of revenues for client-related expenses.

(2) Equity in Pan, G5 and ABS on a U.S. GAAP basis are reclassified from Investment Management Revenue to Income from Equity Method Investments.

Investment Advisory and Management Fees of $18.6 million for the quarter ended September 30, 2012 declined compared to the same period a year ago, as higher fees in Wealth Management and Private Equity were offset by declines in Institutional Asset Management. Fees earned in the current quarter decreased in comparison to the previous quarter due to a lower contribution from Institutional Asset Management.

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