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KBW, Inc. Announces 2012 Third Quarter Results And Declares Quarterly Cash Dividend

Key points for the nine months include:

  • Investment banking revenue was $73.6 million compared with $84.9 million for the first nine months of 2011, a decrease of $11.3 million, or 13.3%, primarily due to lower capital markets revenue partially offset by higher M&A and advisory revenue.
  • Commissions revenue was $74.9 million compared with $101.7 million for the first nine months of 2011, a decrease of $26.9 million, or 26.4%, on lower traded volume.
  • Principal transactions revenue increased $8.2 million, or 87.9% to $17.6 million compared with $9.4 million for the first nine months of 2011. Trading revenue, including investments, was $4.4 million compared with negative $9.0 million for the first nine months of 2011.
  • Non-GAAP operating total expenses (excludes restructuring charges) decreased $47.9 million, or 20.7%, for the first nine months of 2012 compared with the same period in 2011, primarily due to a decrease in non-compensation expenses excluding restructuring charges of 28.5%. Compensation and benefits expense as a percentage of revenue was 67.0%.

Restructuring and Additional Information

Commencing in the third quarter of 2011, the Company undertook significant steps to reduce our workforce and certain other costs to better align our resources to the current business environment. These efforts continued through the third quarter of 2012 with further headcount reductions (see “Non-GAAP Financial Measures” below).

The following table sets forth certain statistical and financial information reflecting our efforts at reducing operating expenses and our strong equity capital position.

      (Dollars in thousands)
As of and for the Three Months Ended

September 30, 2012

June 30, 2012

September 30, 2011

Number of employees 448 458 593
Common stockholders' equity $381,176 $380,381 $399,134
Non-compensation expenses $21,103 * $22,306 * $30,562 *
*excludes restructuring charges

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