Evercore Partners Reports Record Fourth Quarter And Full Year 2012 Results

The Institutional Equities business contributed revenues of $7.1 million in the quarter and the Private Funds Group closed three capital raises during the quarter.

Expenses

Compensation costs were $110.2 million for the fourth quarter, an increase of 125% year-over-year and 43% sequentially. The trailing twelve-month compensation ratio was 59.7%, up from 59.3% a year ago and 59.5% compared to the previous quarter. Evercore’s Investment Banking compensation ratio was 57.5% for the fourth quarter, versus the compensation ratio reported for the three months ended December 31, 2011 and September 30, 2012 of 54.3% and 60.3%, respectively. Year-to-date compensation costs were $331.8 million, an increase of 33% from the prior year.

Non-compensation costs for the current quarter were $24.6 million, up 9% from the same period last year and 5% sequentially. The increase in costs reflects continued growth of the Investment Banking business. The ratio of non-compensation costs to net revenue for the current quarter was 12.8%, compared to 25.0% in the same quarter last year and 18.3% in the previous quarter. Year-to-date non-compensation costs were $96.9 million, up 27% from the prior year. The ratio of non-compensation costs to net revenue for the twelve months ended December 31, 2012 was 17.4%, compared to 18.1% last year.

Expenses in the Institutional Equities business were $9.2 million for the fourth quarter, an increase of 32% from the previous quarter, principally reflecting the addition of a team to cover the REIT sector.

Investment Management

For the fourth quarter, Investment Management reported net revenues and operating income of $20.4 million and $0.2 million, respectively. Investment Management reported a fourth quarter operating margin of 0.8% . For the twelve months ended December 31, 2012, Investment Management reported net revenue and operating income of $82.9 million and $4.5 million, respectively. The year-to-date operating margin was 5.4%, compared to 10.4% last year. As of December 31, 2012, Investment Management reported $12.1 billion of AUM, up 4% from the third quarter as the Mt. Eden acquisition added $0.6 billion at the end of the quarter and net outflows of $0.3 billion during the quarter offset market appreciation of $0.2 billion.

				Adjusted Pro Forma
				Three Months Ended																		Twelve Months Ended
				December 31, 2012						September 30, 2012						December 31, 2011						December 31, 2012						December 31, 2011
Net Revenues:				(dollars in thousands)
Investment Management Revenues				$	19,862					$	20,918					$	21,251					$	81,867					$	98,375
Other Revenue, net					554						94						72						1,007						558
Net Revenues					20,416						21,012						21,323						82,874						98,933
Expenses:
Employee Compensation and Benefits					12,787						11,994						13,022						49,715						58,235
Non-compensation Costs					7,458						7,027						7,446						28,644						30,430
Total Expenses					20,245						19,021						20,468						78,359						88,665
Operating Income				$	171					$	1,991					$	855					$	4,515					$	10,268
Compensation Ratio					62.6	%					57.1	%					61.1	%					60.0	%					58.9	%
Operating Margin					0.8	%					9.5	%					4.0	%					5.4	%					10.4	%
				U.S. GAAP
				Three Months Ended																		Twelve Months Ended
				December 31, 2012						September 30, 2012						December 31, 2011						December 31, 2012						December 31, 2011
Net Revenues:				(dollars in thousands)
Investment Management Revenues				$	19,556					$	20,434					$	21,007					$	79,790					$	99,161
Other Revenue, net					(362	)					(820	)					(829	)					(2,636	)					(3,021	)
Net Revenues					19,194						19,614						20,178						77,154						96,140
Expenses:
Employee Compensation and Benefits					13,441						12,590						13,576						52,065						63,610
Non-compensation Costs					7,704						7,240						7,610						29,489						31,365
Total Expenses					21,145						19,830						21,186						81,554						94,975
Operating Income (Loss)				$	(1,951	)				$	(216	)				$	(1,008	)				$	(4,400	)				$	1,165
Compensation Ratio					70.0	%					64.2	%					67.3	%					67.5	%					66.2	%
Operating Margin					(10.2	%)					(1.1	%)					(5.0	%)					(5.7	%)					1.2	%

Revenues

Investment Management Revenue Components
				Adjusted Pro Forma
				Three Months Ended																		Twelve Months Ended
				December 31, 2012						September 30, 2012					December 31, 2011							December 31, 2012						December 31, 2011
Investment Advisory and Management Fees				(dollars in thousands)
Wealth Management				$	5,123					$	5,269				$	4,137						$	19,823					$	15,296
Institutional Asset Management (1)					11,053						11,459					13,828							47,393						65,220
Private Equity					2,397						1,856					2,437							7,798						7,544
Total Investment Advisory and Management Fees					18,573						18,584					20,402							75,014						88,060
Realized and Unrealized Gains (Losses)
Institutional Asset Management					840						1,296					871							4,465						4,297
Private Equity					(21	)					423					(348	)						(206	)					6,200
Total Realized and Unrealized Gains					819						1,719					523							4,259						10,497
Equity in Earnings (Loss) of Affiliates (2)					470						615					326							2,594						(182	)
Investment Management Revenues				$	19,862					$	20,918				$	21,251						$	81,867					$	98,375

(1) Management fees from Institutional Asset Management were $11.2 million, $11.6 million and $13.9 million for the three months ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively, and $47.9 million and $65.8 million for the twelve months ended December 31, 2012 and 2011, respectively, on a U.S. GAAP basis, excluding the reduction of revenues for client-related expenses.

(2) Equity in G5, ABS and Pan 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 December 31, 2012 declined compared to the same period a year ago, as higher fees in Wealth Management were offset by declines in Institutional Asset Management. Fees earned in the current quarter were flat in comparison to the previous quarter.

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