This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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

Stock quotes in this article: EVR

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.

4 of 10

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASDAQ 4,493.39 -12.4620 -0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs