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

Capital Management

The Company also announced today that its board of directors, in light of the Company’s continuing strong capital position, has declared a cash dividend with respect to the third quarter in an amount equal to $0.05 per share of its outstanding common stock. The dividend is payable on December 14, 2012 to shareholders of record on December 5, 2012. During the quarter, the Company did not purchase any shares under the stock repurchase program and has $48.7 million available for future purchases.

KBW expects to file its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission on or about November 9, 2012.

About KBW

KBW, Inc. operates in the U.S., Europe and Asia through its broker dealer subsidiaries, Keefe, Bruyette & Woods, Inc., Keefe, Bruyette & Woods Limited and Keefe, Bruyette & Woods Asia Limited. Celebrating its 50th anniversary, KBW has established itself as a leading independent authority in the banking, insurance, brokerage, asset management, mortgage banking, real estate and specialty finance sectors. Founded in 1962, the firm maintains industry-leading positions in the areas of research, corporate finance, mergers and acquisitions as well as sales and trading in equities and debt securities of financial services companies.

Statements in this press release that are not statements of historical or current fact constitute forward-looking statements. In some cases, you can identify these statements by words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, or “continue”, the negative of these terms and other comparable terminology. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events, and there are or may be important factors that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, those discussed under the caption “Risk Factors” in our most recently filed annual report on Form 10-K, which is available at the Securities and Exchange Commission website at www.sec.gov. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.

 
 
 
KBW, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Dollars in thousands, except per share information) (unaudited)
               
Three Months Ended Nine Months Ended

September 30, 2012

June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Revenues:
Investment banking $ 21,320 $ 25,275 $ 32,071 $ 73,624 $ 84,923
Commissions 20,996 24,645 35,107 74,860 101,726
Principal transactions, net 3,627 3,480 (19,917 ) 17,613 9,375
Interest and dividend income 3,758 1,721 2,028 7,264 8,383
Other   859     307     1,102     1,868     5,199  
 
Total revenues   50,560     55,428     50,391     175,229     209,606  
 
Expenses:
Compensation and benefits 33,836 40,639 43,249 117,404 138,778
Occupancy and equipment 4,826 4,806 5,793 14,332 17,081
Communications and data processing 7,249 7,318 8,893 22,303 26,676
Brokerage and clearance 2,127 2,390 5,380 7,879 14,876
Business development 3,628 3,309 5,144 10,128 14,405
Professional services 1,836 2,184 2,594 5,862 10,932
Interest 104 197 184 493 849
Restructuring charges 2,841 1,200 1,783 6,285 1,783
Other   1,333     2,102     2,574     5,778     8,519  
Total expenses   57,780     64,145     75,594     190,464     233,899  
Loss before income taxes (7,220 ) (8,717 ) (25,203 ) (15,235 ) (24,293 )
Income tax benefit   (2,035 )   (3,294 )   (9,474 )   (5,093 )   (8,957 )
Net loss $ (5,185 ) $ (5,423 ) $ (15,729 ) $ (10,142 ) $ (15,336 )
 
` `
Earnings per share:
Basic $ (0.18 ) $ (0.19 ) $ (0.51 ) $ (0.36 ) $ (0.49 )
Diluted $ (0.18 ) $ (0.19 ) $ (0.51 ) $ (0.36 ) $ (0.49 )
 
Dividends declared per share $ 0.05 $ 0.05 $ 0.05 $ 0.15 $ 0.15
 

Weighted average number of common shares outstanding:

Basic 30,416,628 30,389,057 31,254,011 30,339,400 32,311,669
Diluted 30,416,628 30,389,057 31,254,011 30,339,400 32,311,669
 
 

Non-GAAP Financial Measures

We have reported in this press release our total expenses, net loss and diluted earnings per share on a non-GAAP basis (“Non-GAAP Financial Measures”). The Non-GAAP Financial Measures for the three and nine months ended September 30, 2012 and 2011 and three months ended June 30, 2012 excluded restructuring charges related to the workforce reduction program and an additional lease obligation accrual.

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