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Gleacher & Company Reports Third Quarter 2012 Financial Results

Stocks in this article: GLCH

Investment Banking

Net revenues were $1.5 million for the quarter ended September 30, 2012, a decline of $7.2 million compared to the second quarter of 2012 and $5.6 million compared to the third quarter of 2011. Net revenues were $14.8 million for the nine months ended September 30, 2012, a decline of $8.9 million compared to the prior-year period. Investment banking revenues for the three months ended June 30, 2012 and nine months ended September 30, 2012 benefitted from advisory fees of $7.5 million relating to an engagement on a transaction that closed during the second quarter.

The composition of the division’s investment banking revenues was as follows:

  Three Months Ended     Nine Months Ended
September   June   September September   September
(In thousands) 2012 2012 2011 2012 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Advisory $ 915 $ 8,251 $ 6,165 $ 11,696 $ 17,999
Capital Markets   585   479   910   3,066   5,675
Total: $ 1,499 $ 8,730 $ 7,075 $ 14,762 $ 23,674

MBS & Rates

Net revenues were $8.9 million for the quarter ended September 30, 2012, an improvement of $3.7 million compared to the second quarter of 2012 and a decline of $4.8 million compared to the third quarter of 2011. The quarter-over-quarter improvement in net revenue was primarily attributable to the continued stabilization of the division post the significant turnover experienced in the second quarter of 2012. The division experienced approximately 60 personnel departures since April 2012 (including 25 in the current quarter), which were replaced by the hiring of approximately 40 professionals during this timeframe. Headcount stood at approximately 60 professionals at September 30, 2012, and the division is now substantially rebuilt. Revenues for the current quarter (and to a greater extent, the second quarter of 2012) were adversely affected as a result of the turnover as it generally takes time for new hires to ramp up to full productivity. The revenue improvement compared to the second quarter of 2012 is a reflection of this trend. Net interest income declined approximately $2.5 million compared to the second quarter of 2012 and $7.6 million compared to the third quarter of 2011, due primarily to lower average inventory levels. Revenues for the quarter ended September 30, 2012 and the second quarter of 2012 included approximately $0.7 million and $1.5 million of other revenue, related to the clawback of certain stock-based compensation grants of former employees which were subject to non-competition and/or other forfeiture provisions.

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