The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") should be read together with the
unaudited consolidated financial statements and the related notes included
elsewhere in this report. For additional context with which to understand our
financial condition and results of operations, see the MD&A for the fiscal year
ended December 31, 2019 contained in our Form 10-K for the year ended December
31, 2019, filed with the Securities and Exchange Commission on March 30,
2020 (the "Annual Report"), as well as the consolidated financial statements and
notes contained therein.


Cautionary Statement Regarding Forward-Looking Statements





This MD&A and other sections of this Form 10-Q (the "Quarterly Report") contain
forward looking statements. The Company makes forward-looking statements, as
defined by the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, and in some cases you can identify these statements by
forward-looking words such as "if," "shall," "may," "might," "will likely
result," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"project," "intend," "goal," "objective," "predict," "potential" or "continue,"
the negative of these terms, and other comparable terminology. These
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 that the Company believes to be reasonable. There are or may be
important factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the historical or future
results, level of activity, performance or achievements 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 Annual Report. In
preparing this MD&A, the Company presumes that readers have access to and have
read the MD&A in our Annual Report, pursuant to Instruction 2 to paragraph
(b) of Item 303 of Regulation S-K. The Company undertakes no duty to update any
of these forward-looking statements after the date of filing of this Quarterly
Report to conform such forward-looking statements to actual results or revised
expectations, except as otherwise required by law.



Overview

JMP Group LLC, together with its subsidiaries (collectively, the "Company", "we", or "us"), is a diversified capital markets firm headquartered in San Francisco, California. We have a diversified business model with a focus on small and middle-market companies and provide:

• investment banking services, including corporate finance, mergers and

acquisitions and other strategic advisory services, to corporate clients;

• sales and trading and related securities brokerage services to institutional


    investors;




  • equity research coverage of three target industries;



• asset management products and services to institutional investors, high


    net-worth individuals and for our own account; and



• management of collateralized loan obligations (through March 19, 2019) and a


    specialty finance company.



Impact of the COVID-19 Pandemic



Prior to the spread of the COVID-19 pandemic, we experienced growth trends in
the first quarter of 2020, driven by investment banking momentum that continued
from the fourth quarter of 2019, until the U.S. equities market saw sharp
declines and extreme volatility in March 2020 in reaction to the COVID-19
pandemic.

Consequently, investment banking transactions expected to close in March were
pushed out into the future, postponing revenues that otherwise would have been
recognized in the first quarter. On the other hand, in the first quarter we
experienced a material increase in our institutional equities business, as
brokerage clients turned to us for insight into an extraordinarily challenging
market environment. In the second quarter of 2020, unprecedented fiscal and
monetary stimuli by the U.S. government spurred a sharp recovery in U.S. equity
prices, directly benefiting the Company's equity capital markets and brokerage
revenues. In addition, with our employees continuing to work remotely due to the
pandemic, our non-compensation expenses were unusually low for the quarter.
These factors combined resulted in significantly improved financial results for
the second quarter of 2020 compared to the first quarter of 2020.

Due to the dramatic market volatility as a result of the COVID-19 pandemic,
there was a significant decline in the fair value of our CLO debt securities and
we recognized a significant unrealized loss in the first quarter of 2020. In the
second quarter of 2020, the fair value of our CLO debt securities improved but
remain in an unrealized loss position. We expect that the valuation of our CLO
debt securities will remain volatile until the depth and duration of the current
recession is better understood. While not nearly as significant, we recognized
unrealized losses on other marketable securities, driven by lower market prices.

Many parts of California, in which our headquarters is located, remain locked
down. Fortunately, the nature of our business allows us to successfully conduct
investment banking, trading, and asset management activities, even though our
employees have been working remotely since mid-March. As with most market
dislocations, buyers and sellers need some time to adjust to the new
environment, which can especially delay strategic advisory transactions and
sometimes leads to reduced outcomes. Additionally, companies looking toward IPOs
or follow-on offerings will ordinarily postpone their plans until market
volatility normalizes. While we continue to be actively engaged with our clients
and customers in finding the best available opportunities and solutions, we
expect that delayed closings will weigh on investment banking revenues for the
third quarter and beyond.

An economic recession could have a material adverse effect on our business,
financial condition, results of operations, or cash flows.  We are closely
monitoring the status of the COVID-19 pandemic and its impact on our business
and the economy and capital markets globally.  The unprecedented amount of
Federal stimulus spending targeted at employees of small businesses,
strategically important industries, and healthcare, may help stabilize the U.S.
economy and capital markets. However, we cannot reliably estimate the extent to
which the COVID-19 pandemic will impact our business in the third quarter and
beyond.

Deconsolidation

During the first three months of 2019, multiple events and transactions took
place which resulted in the Company deconsolidating variable interest entities
("VIEs"): JMPCA, JMP Credit Advisors CLO III(R) Ltd. ("CLO III"), JMP Credit
Advisors CLO IV Ltd ("CLO IV"), JMP Credit Advisors CLO V Ltd ("CLO V"), and JMP
Credit Advisors Long-Term Warehouse Ltd ("CLO VI") (CLO III, CLO IV, CLO V and
CLO VI are collectively the "CLOs"). These events and transactions are hereafter
referred to as the "Deconsolidation". The Company continues to hold
approximately 47% of the subordinated notes of CLO III and 100% of the junior
subordinated notes of CLO IV and CLO V and accounts for its ownership of these
subordinated notes as an investment in a debt security and classifies them as
available-for-sale securities. Refer to the Annual Report for more information
on the Deconsolidation.

                                       29
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Components of Revenues



We derive revenues primarily from: fees from our investment banking business,
net commissions from our sales and trading business, management fees and
incentive fees from our asset management business, and interest income earned on
collateralized loan obligations we manage (through March 19, 2019). We also
generate revenues from principal transactions, interest, dividends and other
income.

Investment Banking

We earn investment banking revenues from underwriting securities offerings, arranging private capital markets transactions and providing advisory services in mergers and acquisitions and other strategic transactions.

Underwriting Revenues



We earn revenues from securities offerings in which we act as an underwriter,
such as initial public offerings and follow-on equity offerings. Underwriting
revenues include management fees, underwriting fees, selling concessions, and
realized and unrealized net gains and losses on equity positions held in
inventory for a period of time to facilitate the completion of certain
underwritten offerings. We record underwriting revenues, gross of related
syndicate expenses, on the trade date which is typically the date of pricing an
offering (or the following day). The Company has determined that its performance
obligations are completed and the related income is reasonably determinable on
the trade date. In syndicated transactions, management estimates our share of
transaction-related expenses incurred by the syndicate, and we recognize
revenues gross of such expense. On final settlement by the lead manager,
typically 90 days from the trade date of the transaction, we adjust these
amounts to reflect the actual transaction-related expenses and our resulting
underwriting fee. We receive a higher proportion of total fees in underwritten
transactions in which we act as a lead manager.

Strategic Advisory Revenues



Our strategic advisory revenues primarily consist of success fees received upon
the closing of mergers and acquisitions but also include retainer fees received
when we are first engaged to provide advisory services. We also earn fees for
related advisory work and other services, such as fairness opinions, valuation
analyses, due diligence, and pre-transaction structuring advice. These revenues
may be earned for providing services to either the buyer or the seller involved
in a transaction. Depending on the nature of the engagement letter and the
agreed upon services, customers may simultaneously receive and consume the
benefits of services or services may culminate in the delivery of the advisory
services at a point in time. The Company evaluates each contract individually
and the performance obligations identified to determine if revenue should be
recognized ratably over the term of the agreement or at a specific point in
time. Any retainer fees received in connection with these agreements are
individually evaluated and any unearned fees are deferred for revenue
recognition.

Private Capital Markets and Other Revenues



We earn fees for private capital markets and other services in connection with
transactions that are not underwritten, such as private placements of equity
securities, private investments in public equity ("PIPE") transactions and Rule
144A offerings. We record private placement revenues on the closing date of
these transactions. Client reimbursements for costs associated for private
placement fees are recorded gross within Investment banking and various expense
captions, excluding compensation.

Since our investment banking revenues are generally recognized at the time of
completion of a transaction or the services to be performed, these revenues
typically vary between periods and may be affected considerably by the timing of
the closing of significant transactions.

Brokerage Revenues



Our brokerage revenues include trading commissions paid by customers for
purchases or sales of exchange-listed and over-the-counter equity securities.
Commissions resulting from equity securities transactions executed on behalf of
customers are recorded on a trade date basis. The Company believes that the
performance obligation is satisfied on the trade date because that is when the
underlying financial instrument or purchaser is identified, the pricing is
agreed upon, and the risks and rewards of ownership have been transferred
to/from the customer.  Brokerage revenues also include net trading gains and
losses that result from market-making activities and from our commitment of
capital to facilitate customer transactions. Our brokerage revenues may vary
between periods, in part depending on commission rates, trading volumes and our
ability to deliver equity research and other value-added services to our
clients. The ability to execute trades electronically, through the internet and
through other alternative trading systems, has increased pressure on trading
commissions and spreads across our industry. We expect this trend toward
alternative trading systems and the related pricing pressure in the brokerage
business to continue. We are, to some extent, compensated through brokerage
commissions for the equity research and other value-added services we deliver to
our clients. These "soft dollar" practices have been the subject of discussion
among regulators, the investment banking community and our sales and trading
clients. In particular, commission sharing arrangements have been adopted by
some large institutional investors. In these arrangements, an institutional
investor concentrates its trading with fewer "execution" brokers and pays a
fixed amount for execution, with a designated amount set aside for payments to
other firms for research or other brokerage services. Accordingly, trading
volume directed to us by investors that enter into such arrangements may be
reduced, or eliminated, but we may be compensated for our research and sales
efforts through allocations of the designated amounts. Depending on the extent
to which we agree to this practice and depending on our ability to enter into
arrangements on terms acceptable to us, this trend would likely impair the
revenues and profitability of our brokerage business by negatively affecting
both volumes and trading commissions.

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Asset Management Fees

We earn asset management fees for managing a family of investment partnerships,
including hedge funds, hedge funds of funds, private equity funds, real estate
funds, a capital debt fund, as well as a publicly traded specialty finance
company, Harvest Capital Credit Corporation ("HCC"). These fees include base
management fees and incentive fees. Base management fees are generally
determined by the fair value of the assets under management ("AUM"), invested
capital or the aggregate capital commitment and the fee schedule for each fund
or account. Incentive fees are based upon the investment performance of the
funds or accounts. For most of our funds, incentive fees equate to a percentage
of the excess investment return above a specified high-water mark or hurdle rate
over a defined period of time. For private equity funds, incentive fees equate
to a percentage of the realized gain from the disposition of each portfolio
investment in which each investor participates, which we earn after returning
contributions by an investor for a portfolio investment. Some of these incentive
fees are subject to contingent repayments to investors or clawback and cannot be
recognized until it is probable that there will not be a significant reversal of
revenue. Any such fees earned are deferred for revenue recognition until the
contingency is removed or the Company determines that it is not probable that a
significant reversal of revenue will occur.

The following table presents a summary of the Company' s client assets under
management with respect to the assets managed by HCS, JMP Asset Management LLC
("JMPAM"), HCAP Advisors LLC ("HCAP Advisors") and assets managed by sponsored
funds:



(In thousands)                                                   Client Assets Under Management at
                                                                 June 30,              December 31,
                                                                   2020                    2019

Client Assets Managed by HCS, JMPAM, and HCAP Advisors (1) $ 589,253 $ 594,678 Client Assets Under Management by Sponsored Funds (2)

                5,101,652               5,381,432

JMP Group LLC total client assets under management           $       5,690,905       $       5,976,110

(1) For HCS, JMPAM, and HCAP Advisors, client assets under management represent

the net assets of such funds or the commitment amount. (2) Sponsored funds are third-party asset managers in which the Company owns an


    economic interest.




Principal Transactions



Principal transaction revenues include net realized and unrealized gains and
losses resulting from our principal investments in equity and other securities
for our own account as well as equity-linked warrants received from certain
investment banking clients and limited partner investments in private funds
managed by third parties. Principal transaction revenues also include earnings,
or losses, attributable to interests in investment partnerships managed by our
asset management subsidiaries, HCS and JMPAM, which are recorded using the fair
value option and the net asset value practical expedient, or are accounted for
using the equity method of accounting. Revenues also included unrealized gains
and losses on investments that elect the fair option and unrealized gains and
losses on the deconsolidation of businesses and investments. In addition, our
principal transaction revenues include unrealized gains or losses on an
investment in an entity that acquires buildings and land for the purpose of
holding, managing and selling the properties and also include unrealized gains
or losses on the investments in other private companies.



                                       31
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Gain (Loss) on Sale, Payoff, and Mark-to-Market of Loans





Gain (loss) on sale, payoff, and mark-to-market of loans consists of gains and
losses from the sale and payoff of loans collateralizing asset-backed securities
("ABS") recognized prior to the deconsolidation of the CLOs in the first quarter
of 2019. Gains are recorded when the proceeds exceed the carrying value of the
loan.



Net Dividend Income


Net dividend income includes dividends from our investments offset by dividend expense resulting from short positions in our principal investment portfolio.





Other Income



Other income includes revenues from equity method investments, revenues from
fee-sharing arrangements with our funds, contingent revenue from a sale of a
general partnership, subordinated management fees earned on CLO investments, and
fees earned to raise capital for third-party investment partnerships.



Interest Income



Interest income primarily consists of interest income earned on loans
collateralizing ABS issued (through March 19, 2019), investments in CLO equity
tranches, and loans held for investment. Interest income on loans is comprised
of the stated coupon as a percentage of the face amount receivable as well as
accretion of purchase discounts and deferred fees. Interest income is recorded
on an accrual basis, in accordance with the terms of the respective loans,
unless such loans are placed on non-accrual status. Interest on CLO debt
securities are recognized in interest income using the effective yield method.



On January 17, 2019, the non-call period for CLO III expired and the Company
lost the ability to direct the most significant activities of CLO III. As a
result, the Company deconsolidated CLO III as of January 17, 2019 and ceased
recognizing interest income on loans collateralizing asset-backed securities for
CLO III as of the date of sale.



On March 19, 2019, the Company sold a total of 55.0% of the equity interest in
JMPCA. Due to the sale of the majority of the equity interest and the loss of
control over the CLO IV, CLO V, and CLO VI warehouse, the Company deconsolidated
these entities and ceased recognizing interest income on loans collateralizing
asset-backed securities and loans held for investment underlying the CLO VI
warehouse portfolio as of the deconsolidation date. After deconsolidation of the
CLOs, the Company accounts for its ownership of the subordinated notes of the
CLOs as beneficial interests in debt securities and recorded interest income on
those instruments using the effective-yield method.



Interest Expense



Interest expense primarily consists of interest expense related to ABS issued
and CLO warehouse credit facilities (through March 19, 2019), Senior Notes,
lines of credit, and notes payable, as well as the amortization of bond issuance
costs. Interest expense on asset-backed securities is the stated coupon payable
as a percentage of the principal amount. Interest expense is recorded on an
accrual basis, in accordance with the terms of the respective debt instruments.
Due to deconsolidation of the CLOs and the CLO VI warehouse in the first quarter
of 2019, the Company ceased recording interest expense on asset-backed
securities issued as of January 17, 2019 for CLO III and on March 19, 2019, for
CLO IV, CLO V, and CLO VI warehouse.



Gain (loss) on Repurchase, Reissuance, or Early Retirement of Debt





Gain (loss) on repurchase, reissuance, or early retirement of debt primarily
consists of gains recognized on repurchase of Senior Notes and losses incurred
in the write-off of debt issuance costs related to Senior Notes that has been
repurchased or retired sooner than the life of the instrument.



                                       32
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Components of Expenses

We classify our expenses as compensation and benefits; administration;
brokerage, clearing and exchange fees; travel and business development; managed
deal expenses, communications and technology; occupancy; professional fees,
depreciation, and other. A significant portion of our expense base is variable,
including compensation and benefits; brokerage, clearing and exchange fees;
travel and business development; and communication and technology expenses.

Compensation and Benefits



Compensation and benefits is the largest component of our expenses and includes
employees' base pay, performance bonuses, sales commissions, related payroll
taxes, equity-based compensation, and medical and benefits expenses, as well as
expenses for contractors and temporary employees. Our employees receive a
substantial portion of their compensation in the form of an individual,
performance-based bonus. As is the widespread practice in our industry, we pay
bonuses on an annual basis, and for senior professionals these bonuses typically
make up a large portion of their total compensation. A portion of the
performance-based bonuses paid to certain senior professionals is paid in the
form of deferred compensation. Bonus payments may have a greater impact on our
cash position and liquidity in the periods in which they are paid than would
otherwise be reflected in our Consolidated Statements of Operations. We accrue
for the estimated amount of these bonus payments ratably over the applicable
service period.

Compensation is accrued with specific ratios of total compensation and benefits
to total revenues applied to specific revenue categories, with adjustments made
if, in management's opinion, such adjustments are necessary and appropriate to
maintain competitive compensation levels.

Administration

Administration expense primarily includes the cost of hosted conferences, non-capitalized systems and software expenditures, insurance, business tax (non-income), office supplies, recruiting, and regulatory fees.

Brokerage, Clearing and Exchange Fees



Brokerage, clearing and exchange fees include the cost of floor and electronic
brokerage and execution, securities clearance, and exchange fees. Changes in
brokerage, clearing and exchange fees fluctuate largely in line with the volume
of our sales and trading activity.

Travel and Business Development



Travel and business development expense primarily consists of costs incurred
traveling to client locations for the purposes of executing transactions or
meeting potential new clients, travel for administrative functions, and other
costs incurred in developing new business. Travel costs related to existing
clients for mergers and acquisitions and underwriting deals are sometimes
reimbursed by clients. Under the new revenue standard ASC 606, reimbursed costs
are presented as revenue on the Consolidated Statements of Operations.

Managed Deal Expenses

Managed deal expenses primarily relate to costs incurred and/or allocated in the execution of investment banking transactions, including reimbursable costs. Under the new revenue standard ASC 606, reimbursed costs are presented as revenue on the Consolidated Statements of Operations.

Communications and Technology

Communications and technology expense primarily relates to the cost of communication and connectivity, information processing, and subscriptions to certain market data feeds and services.

Occupancy Expenses

Occupancy costs primarily include payments made under operating leases that are recognized on a straight-line basis over the period of the lease and the accretion of any lease incentives.

Professional Fees

Professional fees primarily relate to legal and accounting professional services.



Depreciation

Depreciation expenses include the straight-line amortization of purchases of
certain furniture and fixtures, computer and office equipment, certain software
costs, and leasehold improvements to allocate their depreciation amounts over
their estimated useful life.

Other Expenses

Other operating expenses primarily include occupancy, depreciation, and administration expense.

Income Taxes



Since January 2015, JMP Group LLC has been a publicly traded partnership and, as
such, has been taxed as a partnership, and not as a corporation, for U.S.
federal income tax purposes, so long as 90% or more of its gross income for each
taxable year constitutes "qualifying income." On January 31, 2019, the Company
filed an election with the U.S. Internal Revenue Service to be treated as a C
corporation for tax purposes, rather than a partnership, going forward. The
election was approved and became retroactively effective as of January 1, 2019.

                                       33
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The Company recognizes deferred tax assets and liabilities in accordance with
ASC 740, Income Taxes, which are determined based upon the temporary differences
between the financial reporting and tax basis of the Company's assets and
liabilities using the tax rates and laws in effect when the differences are
expected to reverse. Valuation allowances are established when necessary to
reduce the deferred tax assets when it is more likely than not that a portion or
all of the deferred tax assets will not be realized. The Company does not have a
valuation allowance as of June 30, 2020.

The Company records uncertain tax positions using a two-step process: (i) the
Company determines whether it is more likely than not that each tax position
will be sustained on the basis of the technical merits of the position; and (ii)
for those tax positions that meet the more-likely-than not recognition
threshold, the Company recognizes the largest amount of tax benefit that is more
than fifty percent likely to be realized upon ultimate settlement with the
related tax authority.

The Company's policy for recording interest and penalties associated with the
tax audits or unrecognized tax benefits, if any, is to record such items as a
component of income tax.

Non-controlling Interest

 Non-controlling interest for the three and six months ended June 30, 2020
includes the interest of third parties in HCS Strategic Investments LLC ("HCS
SI") and HCAP Advisors. Non-controlling interest for the three and six months
ended June 30, 2019 includes the interest of third parties in CLO III (through
January 17, 2019), HCS SI, and HCAP Advisors.

Results of Operations





The following table sets forth our results of operations for the three and six
months ended June 30, 2020 and 2019, and is not necessarily indicative of the
results to be expected for any future period.



                                                                                                       Three Month Change From 2019      Six Month Change From 2019
(In thousands)                  Three Months Ended June 30,           Six Months Ended June 30,                   to 2020                         to 2020
                                 2020                 2019              2020               2019            $                  %              $                %
Revenues
Investment banking          $       21,595       $       17,736     $      36,220       $   29,615     $    3,859               21.8 %   $    6,605            22.3 %
Brokerage                            5,645                4,657             9,832            9,192            988               21.2 %          640             7.0 %
Asset management fees                1,712                2,354             3,428            4,057           (642 )            -27.3 %         (629 )         -15.5 %
Principal transactions                 (48 )              1,423           (17,600 )          6,711         (1,471 )           -103.4 %      (24,311 )        -362.3 %
Loss on sale, payoff and
mark-to-market of loans                  -                  (21 )               0              (38 )           21             -100.0 %           38          -100.0 %
Net dividend income                     10                  293               237              589           (283 )            -96.6 %         (352 )         -59.8 %
Other income                           912                  793             1,847              758            119               15.0 %        1,089           143.7 %
Non-interest revenues               29,826               27,235            33,964           50,884          2,591                9.5 %      (16,920 )  

-33.3 %



Interest income                      1,890                2,772             4,104           17,063           (882 )            -31.8 %      (12,959 )         -75.9 %
Interest expense                    (1,723 )             (1,939 )          (3,505 )        (12,712 )          216              -11.1 %        9,207           -72.4 %
Net interest income                    167                  833               599            4,351           (666 )            -80.0 %       (3,752 )   

-86.2 %



Gain on repurchase,
reissuance, or early
retirement of debt                       -                    -               697                0              -                N/A            697             0.0 %
Total net revenues                  29,993               28,068            35,260           55,235          1,925                6.9 %      (19,975 )  

-36.2 %



Non-interest expenses
Compensation and benefits           22,386               19,945            38,599           37,167          2,441               12.2 %        1,432             3.9 %
Administration                       1,067                2,748             3,289            4,677         (1,681 )            -61.2 %       (1,388 )         -29.7 %
Brokerage, clearing and
exchange fees                          647                  733             1,281            1,434            (86 )            -11.7 %         (153 )         -10.7 %
Travel and business
development                             54                1,347               976            2,368         (1,293 )            -96.0 %       (1,392 )         -58.8 %
Managed deal expenses                  950                1,334             1,538            1,867           (384 )            -28.8 %         (329 )         -17.6 %
Communications and
technology                           1,085                1,127             2,214            2,180            (42 )             -3.7 %           34             1.6 %
Occupancy                            1,194                1,409             2,393            2,832           (215 )            -15.3 %         (439 )         -15.5 %
Professional fees                      731                  821             1,621            2,277            (90 )            -11.0 %         (656 )         -28.8 %
Depreciation                           397                  311               945              608             86               27.7 %          337            55.4 %
Other                                  208                    5               208              500            203             4060.0 %         (292 )         -58.4 %
Total non-interest
expenses                            28,719               29,780            53,064           55,910         (1,061 )             -3.6 %       (2,846 )          -5.1 %
Net income (loss) before
income taxes                         1,274               (1,712 )         (17,804 )           (675 )        2,986             -174.4 %      (17,129 )        2537.6 %
Income tax expense
(benefit)                              176                 (517 )          (7,063 )         (4,619 )          693             -134.0 %       (2,444 )          52.9 %
Net income (loss)                    1,098               (1,195 )         (10,741 )          3,944          2,293             -191.9 %      (14,685 )        -372.3 %
Less: Net income (loss)
attributable to
non-controlling interest               (26 )                (83 )            (117 )            (13 )           57              -68.7 %         (104 )         800.0 %
Net income (loss)
attributable to JMP Group
LLC                         $        1,124       $       (1,112 )   $     (10,624 )     $    3,957     $    2,236             -201.1 %   $  (14,581 )        -368.5 %




                                       34

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Operating Net Income (Non-GAAP Financial Measure)





Management uses Operating Net Income as a key, non-GAAP metric when evaluating
the performance of JMP Group LLC's core business strategy and ongoing
operations, as management believes that this metric appropriately illustrates
the operating results of JMP Group LLC's core operations and business
activities. Operating Net Income is derived from our segment reported results
and is the measure of segment profitability on an after-tax basis used by
management to evaluate our performance. This non-GAAP measure is presented to
enhance investors' overall understanding of the Company's current financial
performance. Additionally, management believes that Operating Net Income is a
useful measure because it allows for a better evaluation of the performance of
JMP Group LLC's ongoing business and facilitates a meaningful comparison of the
Company's results in a given period to those in prior and future periods.



However, Operating Net Income 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, unless otherwise indicated, the
adjustments concern gains, losses or expenses that JMP Group LLC generally
expects to continue to recognize, and the adjustment of these items should not
always be construed as an inference that these gains or expenses are unusual,
infrequent or non-recurring. Therefore, management believes that both JMP Group
LLC's GAAP measures of its financial performance and the respective non-GAAP
measures should be considered together. Operating Net Income may not be
comparable to a similarly titled measure presented by other companies.



Operating Net Income is a non-GAAP financial measure that adjusts the Company's GAAP net income as follows:





  (i)    reverses compensation expense recognized under GAAP related to equity
         awards;

  (ii)   recognizes 100% of the cost of deferred compensation in the period for
         which such compensation was awarded, instead of recognizing such cost
         over the vesting period as required under GAAP, in order to match

compensation expense with the actual period upon which the compensation

was based;

(iii) reverses amortization expense related to an intangible asset resulting


         from the repurchase of a portion of the equity of CLO III prior to March
         31, 2019;

  (iv)   unrealized gains or losses on commercial real estate investments,
         adjusted for non-cash expenditures, including depreciation and
         amortization;

(v) reverses net unrealized gains and losses on strategic equity investments


         and warrant positions;

  (vi)   reverses impairment of CLO debt securities recognized in principal
         transaction revenues, as the Company believes that the forecasted
         reduction in future cash flows will be mitigated by a change in the
         interest rate environment and that distributions will be larger than
         currently projected;

(vii) reverses the one-time transaction costs related to the refinancing or


         repurchase of the debt;

  (viii) a combined federal, state and local income tax rate of 26% at the
         consolidated taxable parent company, JMP Group LLC.

  (ix)   presents revenues and expenses on a basis that deconsolidates the CLOs
         (through March 19, 2019) and removes any non-controlling interest in
         consolidated but less than wholly owned subsidiaries.




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Discussed below is our Operating Net Income by segment. This information is reflected in a manner utilized by management to assess the financial operations of the Company's various business lines.





                                                                                        Three Months Ended June 30, 2020
(In thousands)                         Broker-Dealer                        Asset Management                        Corporate Costs      Eliminations      Total Segments
                                                               Asset
                                                          Management Fee       Investment        Total Asset
                                                              Income             Income           Management
Revenues
Investment banking                    $        21,595     $             -     $           -     $            -     $               -     $           -     $        21,595
Brokerage                                       5,645                   -                 -                  -                     -                 -               5,645
Asset management related fees                       7               1,941               379              2,320                     -               (42 )             2,285
Principal transactions                            458                   -             1,809              1,809                     -                 -               2,267
Net dividend income                                 -                   -                49                 49                     -                 -                  49
Net interest income                                 -                   -               192                192                     -                 -                 192
Total net revenues                             27,705               1,941             2,429              4,370                     -               (42 )            32,033

Non-interest expenses
Non-interest expenses                          24,045               2,144               303              2,447                 2,082               (42 )            28,532

Operating pre-tax net income (loss)             3,660                (203 )           2,126              1,923                (2,082 )               -               3,501

Income tax expense (benefit)                      951                 (53 )             553                500                  (541 )               -                 910

Operating net income (loss)           $         2,709     $          (150 )
$       1,573     $        1,423     $          (1,541 )   $           -     $         2,591






                                                                                    Three Months Ended June 30, 2019

(In thousands)                     Broker-Dealer                        Asset Management                        Corporate Costs      Eliminations      Total Segments
                                                           Asset
                                                      Management Fee       Investment        Total Asset
                                                          Income             Income           Management
Revenues
Investment banking                $        17,736     $             -     $           -     $            -     $               -     $           -     $        17,736
Brokerage                                   4,657                   -                 -                  -                     -                 -               4,657
Asset management related fees                   6               2,536               323              2,859                     -               (34 )             2,831
Principal transactions                          -                   -             1,492              1,492                     -                 -               1,492
Loss on sale, payoff, and
mark-to-market of loans                         -                   -               (21 )              (21 )                   -                 -                 (21 )
Net dividend income                             -                   -               331                331                     -                 -                 331
Net interest income                             -                   -               816                816                     -                 -                 816

Total net revenues                         22,399               2,536             2,941              5,477                     -               (34 )            27,842

Non-interest expenses
Non-interest expenses                      23,458               2,883               495              3,378                 1,982               (34 )            28,784

Operating pre-tax net income
(loss)                                     (1,059 )              (347 )           2,446              2,099                (1,982 )               -     

(942 )



Income tax expense (benefit)                 (275 )               (90 )             635                545                  (515 )               -      

(245 )

Operating net income (loss) $ (784 ) $ (257 ) $


      1,811     $        1,554     $          (1,467 )   $           -     $          (697 )




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                                                                                    Six Months Ended June 30, 2020

(In thousands)                    Broker-Dealer                        Asset Management                        Corporate Costs      Eliminations      Total Segments
                                                          Asset
                                                     Management Fee       Investment        Total Asset
                                                         Income             Income           Management
Revenues
Investment banking               $        36,220     $             -     $           -     $            -     $               -     $           -     $        36,220
Brokerage                                  9,832                   -                 -                  -                     -                 -               9,832
Asset management related fees                159               3,844               712              4,556                     -               (87 )             4,628
Principal transactions                       487                   -             1,861              1,861                     -                 -               2,348
Net dividend income                            -                   -               305                305                     -                 -                 305
Net interest income                            -                   -               650                650                     -                 -                 650
Gain on repurchase, reissuance
or early retirement of debt                    -                   -               786                786                     -                 -       

786


Adjusted net revenues                     46,698               3,844             4,314              8,158                     -               (87 )    

54,769



Non-interest expenses
Non-interest expenses                     43,246               4,506               454              4,960                 3,874               (87 )     

51,993



Operating pre-tax net income
(loss)                                     3,452                (662 )           3,860              3,198                (3,874 )               -      

2,776



Income tax expense (benefit)                 889                (173 )           1,012                839                (1,007 )               -      

722

Operating net income (loss) $ 2,563 $ (489 ) $


     2,848     $        2,359     $          (2,868 )   $           -     $         2,055




                                                                                     Six Months Ended June 30, 2019

(In thousands)                     Broker-Dealer                       Asset Management                        Corporate Costs       Eliminations      Total Segments
                                                          Asset
                                                      Management Fee      Investment        Total Asset
                                                          Income            Income           Management
Revenues
Investment banking                $        29,615     $            -     $           -     $            -     $               -     $            -     $        29,615
Brokerage                                   9,192                  -                 -                  -                     -                  -               9,192
Asset management related fees                  12              4,897               369              5,266                     -             (1,048 )             4,230
Principal transactions                          -                  -             6,879              6,879                     -                  -               6,879
Loss on sale, payoff, and
mark-to-market of loans                         -                  -               (39 )              (39 )                   -                  -                 (39 )
Net dividend income                             -                  -               666                666                     -                  -                 666
Net interest income                             -                  -             4,139              4,139                     -                  -               4,139
Adjusted net revenues                      38,819              4,897            12,014             16,911                     -             (1,048 )   

54,682



Non-interest expenses
Non-interest expenses                      41,358              5,973             3,044              9,017                 4,042             (1,048 )   

53,369



Operating pre-tax net income
(loss)                                     (2,539 )           (1,076 )           8,970              7,894                (4,042 )                0     

1,313



Income tax expense (benefit)                 (660 )             (281 )           2,332              2,051                (1,050 )                -                 341

Operating net income (loss) $ (1,879 ) $ (795 ) $


     6,638     $        5,843     $          (2,992 )   $            -     $           972




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The following table reconciles operating net income (loss) to Total Segments
operating pre-tax net income, and also to consolidated pre-tax net income (loss)
attributable to JMP Group LLC and to consolidated net income (loss) attributable
to JMP Group LLC for the three and six months ended June 30, 2020 and 2019.

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