JMP LLC : Group Reports Third Quarter 2020 Financial Results

JMP GROUP REPORTS THIRD QUARTER 2020 FINANCIAL RESULTS

SAN FRANCISCO, Oct. 28, 2020 - JMP Group LLC (NYSE: JMP), an investment banking and alternative asset management firm, reported financial results today for the quarter ended September 30, 2020.

A summary of JMP Group's operating results for the quarter and nine months ended September 30, 2020, and for comparable prior periods, is set forth below.

		Quarter Ended			Nine Months Ended
(in thousands, except per share amounts)	Sept. 30, 2020		June 30, 2020		Sept. 30, 2019		Sept. 30, 2020 Sept. 30, 2019
Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$26,624		$29,993		$21,024		$61,884		$76,259
Net income/(loss) attributable to JMP Group . . . . . . . . . . . . .	($3,082)	$1,124		($4,061)	($13,706)	($104)
Net income/(loss) attributable to JMP Group per share . . .	($0.16)	$0.06		($0.21)	($0.70)	($0.01)
Operating net income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$2,076	$2,591		($1,963)	$4,130	($991)
Operating net income/(loss) per share . . . . . . . . . . . . . . . . . . .	$0.10	$0.13		($0.10)	$0.21	($0.05)
Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$2.74	$2.87		$3.72	$2.74	$3.72
Adjusted book value per share . . . . . . . . . . . . . . . . . . . . . . . . . .	$3.58	$3.69		$4.51	$3.58	$4.51

For more information about operating net income, including a reconciliation to net income, and adjusted book value per share, including a reconciliation to book value per share, see the section below titled "Non-GAAP Financial Measures."

"JMP Group produced another solid quarter, with operating earnings of $0.10 per share driven by capital markets revenues and asset management incentive fees," said Joe Jolson, chairman and CEO of JMP Group. "Additionally, after a careful review of our expense base, we made structural changes during the quarter that should improve both our short-term and our long-term profitability. Looking ahead, the fourth quarter is off to a great start. We are optimistic that the equity market could remain active through year end, and we anticipate strong advisory revenues as we close a number of M&A deals that are currently in their latter stages."

"We're proud of the success we've had so far this year in a wide range of areas," said Mark Lehmann, CEO of JMP Securities. "In the third quarter alone, JMP Securities underwrote seven IPOs raising a total of $6.1 billion-five in the tech sector, one in life sciences, and one in financial services-and also acted as financial advisor in a high-profile direct listing. Even so, from a quality standpoint, our ECM backlog today is as impressive as it was entering 2020. Our revenue mix is more diverse than ever before, with recent momentum behind SPAC offerings and private capital raises in particular, while our efforts to bolster our strategic advisory capabilities over the past few years have resulted in a strong M&A pipeline, giving us confidence about the remainder of 2020 as well as our prospects for 2021."

© 2020 JMP Group LLC

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Segment Results of Operations

A summary of JMP Group's operating net income per share by segment for the quarter and nine months ended September 30, 2020, and for comparable prior periods, is set forth below.

		Quarter Ended			Nine Months Ended
($ as shown)
Sept. 30, 2020			June 30, 2020		Sept. 30, 2019	Sept. 30, 2020		Sept. 30, 2019
Broker-dealer . . . . . . . . . . . . . . . . . . . . .	$0.12	$0.14		($0.06)	$0.25	($0.14)
Asset management:
Asset management fee income . . .	0.01	(0.01)		(0.01)	(0.02)	(0.05)
Investment income . . . . . . . . . . . . . .	0.06	0.08		0.05	0.20	0.37 (1)
. . . . . . .Total asset management	0.07		0.07		0.03		0.19		0.32
Corporate costs . . . . . . . . . . . . . . . . . . .	(0.09)		(0.08)		(0.08)		(0.23)		(0.22)
Operating EPS (diluted) . . . . . . .	$0.10	$0.13		($0.10)	$0.21	($0.05)

1. Includes a gain of $0.08 per share on the sale of a controlling interest in JMP Credit Advisors LLC to Medalist Partners LP.

Note: Due to rounding, numbers in columns above may not sum to totals presented.

For more information about operating net income, including a reconciliation to net income, see the section below titled "Non-GAAP Financial Measures."

Composition of Revenues

Investment Banking

Investment banking revenues were $20.9 million, an increase of 37.1% from $15.2 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, investment banking revenues were $57.1 million, an increase of 27.3% from $44.8 million for the nine months ended September 30, 2019.

A summary of the company's investment banking revenues and transaction counts for the quarter and nine months ended September 30, 2020, and for comparable prior periods, is set forth below.

					Quarter Ended											Nine Months Ended
	Sept. 30, 2020		June 30, 2020			Sept. 30, 2019			Sept. 30, 2020			Sept. 30, 2019
($ in thousands)
Count		Revenues	Count Revenues	Count Revenues	Count Revenues	Count		Revenues
Equity and
debt origination . . . . . .	29	$16,152	22	$14,569	17	$8,561	68	$39,277	59	$27,678
Strategic advisory and
private placements . . .	4		4,722		5		7,026		6		6,667		13		17,817		15		17,165
Total . . . . . . . . . . . . . . . . .	33	$20,874	27	$21,595	23	$15,228	81	$57,094	74	$44,843

© 2020 JMP Group LLC

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Brokerage

Net brokerage revenues were $4.2 million, an increase of 5.2% from $4.0 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, net brokerage revenues were $14.0 million, an increase of 6.4% from $13.2 million for the nine months ended September 30, 2019.

Total capital markets revenues, which consist of net brokerage revenues produced by the institutional equities division in addition to equity and debt origination revenues generated by the investment banking division, were $20.3 million and $53.3 million for the quarter and nine months ended September 30, 2020, respectively, compared to $12.5 million and $40.8 million for the quarter and nine months ended September 30, 2019, respectively.

Asset Management

Asset management fees were $2.9 million, an increase of 78.8% from $1.6 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, asset management fees were $6.3 million, an increase of 11.5% from $5.7 million for the nine months ended September 30, 2019.

A summary of the company's client assets under management for the quarter ended September 30, 2020, and for comparable prior periods, is set forth below.

(in millions)	Sept. 30, 2020		June 30, 2020		Sept. 30, 2019
Client assets under management (1) . . . . . . . . . . . . . . . . .
$600	$590	$554
Assets under management by sponsored funds (2) . . .	5,005	5,102	5,241
Client assets under management,
including sponsored funds . . . . . . . . . . . . . . . . . . . . .	$5,605	$5,692	$5,795

1. Includes assets managed by Harvest Capital Strategies, JMP Asset Management, and HCAP Advisors on behalf of third parties.
2. Sponsored funds are asset management strategies in which JMP Group owns an economic interest. Includes assets managed by Medalist Partners Corporate Finance, the former JMP Credit Advisors.

Principal Transactions

Principal transactions generated a net realized and unrealized loss of $2.7 million, compared to a net realized and unrealized loss of $0.3 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, principal transactions generated a net realized and unrealized loss of

$20.3 million, compared to a net realized and unrealized gain of $6.4 million for the nine months ended September 30, 2019.

The year-over-year differences are largely due to the recent impairment of CLO equity owned by JMP Group. A reduction in the net present value of forecasted cash flows through the end of the expected life of the collateralized loan obligations required impairment charges in the amount of $2.7 million for the quarter ended September 30, 2020, and $17.3 million for the nine months ended September 30, 2020.

Net Interest Income

Net interest income was $0.6 million, an increase of 39.4% from $0.4 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, net interest income was $1.2 million, a decrease of 75.7% from $4.7 million for the nine months ended September 30, 2019. The difference in nine-month results is primarily due to a change in the recognition of income from investments in collateralized loan obligations following the sale of a majority interest in JMP Credit Advisors to Medalist Partners in March 2019.

© 2020 JMP Group LLC

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Expenses

Compensation and Benefits

Compensation and benefits expense was $23.5 million, compared to $17.5 million for the quarter ended September 30, 2019. As a percentage of net revenues, compensation and benefits expense was 88.3%, compared to 83.3% for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, compensation and benefits expense was $62.1 million, compared to $54.7 million for the nine months ended September 30, 2019. As a percentage of net revenues, compensation and benefits expense was 100.4%, compared to 71.7% for the nine months ended September 30, 2019.

The year-over-year increases in compensation expense and compensation ratios are inclusive of a severance cost of $2.1 million related to corporate restructuring that occurred during the quarter ended September 30, 2020.

Non-Compensation Expense

Non-compensation expense was $6.4 million and $20.9 million for the quarter and nine months ended September 30, 2020, respectively, compared to $8.9 million and $27.6 million for the quarter and nine months ended September 30, 2019, respectively.

Share Repurchase Activity

JMP Group did not repurchase any outstanding common shares during the quarter ended September 30, 2020.

Personnel

At September 30, 2020, the company had 183 full-time employees, compared to 191 at June 30, 2020, and 208 at September 30, 2019.

Non-GAAP Financial Measures

In addition to the GAAP financial results presented in this press release, JMP Group presents the non- GAAP financial measures discussed below. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance. Furthermore, company management believes that this presentation enables a more meaningful comparison of JMP Group's financial performance across various periods. However, the non-GAAP financial results presented should not be considered a substitute for results that are presented in a manner consistent with GAAP. A limitation of the non-GAAP financial measures presented is that the adjustments concern gains, losses or expenses that JMP Group generally expects to continue to recognize. The adjustment of these non-GAAP items should not be construed as an inference that these gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP measures of JMP Group's financial performance and the respective non-GAAP measures should be considered together. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies.

© 2020 JMP Group LLC

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