Piper Jaffray Companies Announces 2012 Fourth Quarter and Year-end Results

  Piper Jaffray Companies Announces 2012 Fourth Quarter and Year-end Results

Business Wire

MINNEAPOLIS -- January 30, 2013

Piper Jaffray Companies (NYSE: PJC) today announced that for the quarter ended
Dec. 31, 2012, net income from continuing operations was $15.6 million, or
$0.88 per diluted common share. These results compared to non-GAAP net income
from continuing operations of $2.4 million ^(1) or $0.13 ^(1) per diluted
common share, in the year-ago period. The references to non-GAAP figures in
the year-ago period exclude the effects of a $118.4 million after tax goodwill
impairment charge. On a GAAP basis, net loss from continuing operations in the
year-ago period was $116.0 million, or $7.35 per diluted common share. In the
third quarter of 2012, net income from continuing operations was $14.5
million, or $0.82 per diluted common share.

For the fourth quarter of 2012, net revenues from continuing operations were
$140.9 million, compared to $93.1 million in the fourth quarter of 2011, and
$131.5 million in the third quarter of 2012.

For the quarter ended Dec. 31, 2012, net income, including continuing and
discontinued operations, was $11.8 million, or $0.67 per diluted common share,
compared to non-GAAP net income of $2.1 million^(2), or $0.11 ^(2) per diluted
common share, in the year-ago period, and $19.7 million, or $1.11 per diluted
common share in the third quarter of 2012. On a GAAP basis, net loss from
continuing and discontinued operations in the year-ago period was $116.4
million, or $7.38 per diluted common share. Discontinued operations includes
the operating results of the Hong Kong capital markets business, which we have
shut down, and FAMCO, a division of the asset management segment. The firm is
actively pursuing a sale of the FAMCO business.

For the year ended Dec. 31, 2012, net income from continuing operations was
$47.1 million, or $2.58 per diluted common share, compared to non-GAAP net
income of $27.7 million^(1), or $1.44 ^(1) per diluted common share in the
prior year (and a net loss of $90.8 million, or $5.79 per diluted common share
in the prior year on a GAAP basis). For 2012, net revenues from continuing
operations were $489.0 million up 13% compared to 2011, due to higher revenues
across our fixed income and advisory services businesses.

“We produced solid results for the quarter and the year despite adverse market
conditions facing several of our businesses,” said Andrew S. Duff, chairman
and chief executive officer. “Compared to the prior quarter, strong
performance in M&A and public finance, and improved results in equities, more
than offset weaker results in our fixed income trading businesses, while our
equity capital raising and asset management businesses were flat
sequentially.”

Duff continued, “Our strategy served us well as we focused our resources on
our businesses where we are strongest, working to generate higher margins and
improving our return on equity. Key execution steps in 2012 included adding
resources in public finance, fixed income and M&A, creating more flexibility
with our lenders, reducing costs, and exiting businesses that lacked
sustainability or did not contribute meaningfully to our results. These
efforts contributed to an improvement in ROE to 5.7%^(6) in 2012 compared to
2.3%^(6) in 2011.”

Fourth Quarter Results from Continuing Operations

Consolidated Expenses
For the fourth quarter of 2012, compensation and benefits expenses were $87.4
million, up 44% and 12% compared to the fourth quarter of 2011 and the third
quarter of 2012, respectively, due to improved financial results.

For the fourth quarter of 2012, compensation and benefits expenses were 62.0%
of net revenues, compared to 65.2% for the fourth quarter of 2011 and 59.4%
for the third quarter of 2012. The compensation ratio decreased compared to
the fourth quarter of 2011 due to higher revenues, and increased compared to
the third quarter of 2012 primarily due to changes in our mix of revenues.

For the fourth quarter of 2012, non-compensation expenses were $30.7 million,
compared to non-GAAP non-compensation expenses of $30.5 million^(3) in the
year-ago period, and $28.1 million in the third quarter of 2012. In the year
ago period, non-compensation expenses on a GAAP basis were $150.8 million.

Business Segment Results
The firm has two reportable business segments: Capital Markets and Asset
Management. Consolidated net revenues and expenses are fully allocated to
these two segments. The operating results of the Hong Kong capital markets
business, and FAMCO, a division of the asset management segment, are presented
as discontinued operations for all periods presented.

Capital Markets
For the quarter, Capital Markets generated pre-tax operating income of $19.4
million, compared to a non-GAAP pre-tax operating loss of $2.1 million^(4) in
the year-ago period and pre-tax operating income of $20.6 million in the third
quarter of 2012. On a GAAP basis, with the goodwill impairment charge, this
segment generated a pre-tax operating loss of $122.4 million in the year-ago
period.

Net revenues were $124.5 million, up 61% and 8% compared to the year-ago
period and the third quarter of 2012, respectively.

  *Equity financing revenues of $18.0 million increased 17% compared to the
    fourth quarter of 2011 and were similar to the third quarter of 2012.
    Revenues were higher compared to the year-ago period due to more completed
    transactions.
  *Fixed income financing revenues of $20.5 million increased 35% and 24%
    compared to the fourth quarter of 2011 and the third quarter of 2012,
    respectively. Revenues were favorable compared to the year-ago period due
    to higher revenue per transaction, and favorable compared to the third
    quarter of 2012 due to more completed transactions. We continue to gain
    market share and expand our national footprint in the public finance
    space.
  *Advisory services revenues were a record $44.5 million, up 139% and 173%
    compared to the fourth quarter of 2011 and the third quarter of 2012,
    respectively. Advisory services revenues were extremely strong in the
    current quarter as sellers were motivated to complete deals prior to
    year-end. In addition to favorable market conditions, recent additions to
    our M&A team also contributed to our results.
  *Equity institutional brokerage revenues of $20.1 million were in line with
    the fourth quarter of 2011 and up 12% compared to the third quarter of
    2012.
  *Fixed income institutional brokerage revenues were $23.5 million up 112%
    compared to the fourth quarter of 2011 and down 50% compared to the third
    quarter of 2012. Revenues were favorable compared to the year-ago period
    due to more favorable market conditions in the current quarter. Revenues
    were lower compared to the third quarter of 2012 due to lower results in
    our strategic trading activities, following an exceptionally strong third
    quarter.
  *Operating expenses were $105.1 million for the fourth quarter of 2012,
    compared to non-GAAP operating expenses of $79.4 million^(5) in the prior
    year quarter ($199.7 million on a GAAP basis in the prior year quarter),
    and $94.7 million in the third quarter of 2012. Operating expenses
    increased relative to the comparable quarters due to higher compensation
    expense resulting from improved operating results.
  *For the fourth quarter of 2012, the segment pre-tax operating margin was
    15.6%, compared to a negative 2.7%^(4) on a non-GAAP basis in the year-ago
    period, and a 17.9% operating margin in the third quarter of 2012. Pre-tax
    operating margin in the current quarter was significantly higher compared
    to the year-ago period due to higher revenues, and lower than the third
    quarter of 2012 due to higher compensation expense driven by the business
    mix for the quarter.

Asset Management
For the quarter ended Dec. 31, 2012, asset management generated pre-tax
operating income of $3.4 million, down 16% and 29%, compared to the fourth
quarter of 2011 and the third quarter of 2012, respectively.

  *Net revenues were $16.4 million, up 4% and 1%, compared to the fourth
    quarter of 2011 and the third quarter of 2012, respectively.
  *Operating expenses for the current quarter were $13.0 million, up 11% and
    14%, compared to the year-ago period, and the third quarter of 2012,
    respectively. Segment pre-tax operating margin was 20.6%, compared to
    25.6% in the year-ago period, and 29.4% in the third quarter of 2012.
    Segment pre-tax margin was lower relative to the comparable quarters due
    to higher compensation expense within our asset management division.
  *Assets under management (AUM) were $9.1 billion in the fourth quarter of
    2012, compared to $8.6 billion in the year-ago period, and $9.2 billion in
    the third quarter of 2012.

Other Matters
In the fourth quarter of 2012, the firm repurchased $4.7 million, or 158,332
shares, of its common stock at an average price of $29.37 per share. The firm
has $95.4 million remaining on its share repurchase authorization, which
expires on Sept. 30, 2014.

Fourth Quarter Results from Discontinued Operations

Discontinued operations includes the operating results of the Hong Kong
capital markets business, which we have shut down, and FAMCO, a division of
the asset management segment. The firm is actively pursuing a sale of the
FAMCO business.

For the quarter ended Dec. 31, 2012, net loss from discontinued operations was
$3.7 million, or $0.21 per diluted common share, compared to a net loss of
$0.4 million in the fourth quarter of 2011, or $0.02 per diluted share, and
net income of $5.2 million, or $0.29 per diluted share, in the third quarter
of 2012. Included in the current quarter is a $3.4 million after-tax, non-cash
goodwill impairment charge related to FAMCO.

Full-Year 2012 Results from Continuing Operations

Consolidated Expenses
For 2012, compensation and benefits expenses were $296.9 million, up 12%
compared to 2011, due to improved financial performance. Compensation and
benefits expenses were 60.7% of net revenues, down from 61.3% in 2011.

For 2012, non-compensation expenses were $123.1 million compared to $127.0
million^(3) in 2011 on a non-GAAP basis (and $247.3 million on a GAAP basis).

Business Segment Results
The firm’s Hong Kong capital markets and FAMCO businesses are presented as
discontinued operations for all periods presented.

Capital Markets
For 2012, Capital Markets generated pre-tax operating income of $52.5 million,
compared to non-GAAP pre-tax operating income of $25.0 million^(4) in 2011
(and pre-tax operating loss of $95.3 million on a GAAP basis). Net revenues
were $424.1 million, up 15% compared to 2011 due to higher revenues in our
fixed income and advisory businesses.

For 2012, operating expenses were $371.6 million, up 8% compared to non-GAAP
operating expenses for 2011 of $344.0 million ^(5) (and $464.3 million on a
GAAP basis). Segment pre-tax operating margin improved to 12.4%, compared to a
non-GAAP pre-tax operating margin of 6.8%^(4) in 2011. Pre-tax operating
margin increased significantly in 2012 due to operating leverage related to
increased revenues.

Asset Management
For 2012, asset management generated pre-tax operating income of $16.5
million, up 9% compared to 2011. Net revenues were $64.8 million, up 3%
compared to 2011.

Operating expenses for the year were $48.3 million, up 1% compared to 2011.
Segment pre-tax operating margin was 25.5%, up slightly from 2011.

Other Matters
For the full year 2012, the firm repurchased $47.2 million, or 2.0 million
shares, of its common stock, at an average price of $23.22.

Additional Shareholder Information*

                           
                           For the Quarter Ended:
                           As of Dec. 31,    As of Sept.    As of Dec. 31,
                             2012               30, 2012        2011
Number of employees         907               901            919
Equity financings                                           
# of transactions            16                 14              10
Capital raised              $1.5 billion      $2.5 billion   $2.7 billion
Tax-exempt issuance
# of transactions            154                113             144
Par value                   $2.1 billion      $2.3 billion   $2.2 billion
Mergers & acquisitions
# of transactions            22                 6               11
Aggregate deal value        $6.8 billion      $0.7 billion   $1.3 billion
Asset Management AUM        $9.1 billion      $9.2 billion   $8.6 billion
Common shareholders’        $733.3 million    $724.6         $718.4 million
equity                                          million
Annualized qtrly. return
on avg. common              6.5%              11.0%          1.1%^(7)
shareholders’ equity **
Book value per share:       $48.20            $47.58         $45.61
Tangible book value per     $32.39            $31.30         $29.51
share^(8):
                                                                
                           
                           For the Year Ended:
                           As of Dec. 31,    As of Dec.
                             2012               31, 2011
Equity financings
# of transactions            67                 60
Capital raised              $9.1 billion***   $12.9 billion
Tax-exempt issuance
# of transactions            568                520
Par value                   $9.3 billion      $6.9 billion
Mergers & acquisitions
# of transactions            40                 38
Aggregate deal value        $10.2 billion     $5.2 billion
Asset Management AUM        $9.1 billion      $8.6 billion
Return on avg. common       5.7%              2.3%
shareholders’ equity^(6)
                                                                

*Number of employees, transaction data, and AUM reflect continuing operations;
other numbers reflect continuing and discontinued results.

**Annualized return on average common shareholders’ equity is computed by
dividing annualized net income by average monthly common shareholders’ equity.

***Due to size, Facebook IPO capital raised has been excluded.

Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman,
chief financial officer, will hold a conference call to review the financial
results Wed., Jan. 30 at 9 a.m. ET (8 a.m. CT). The earnings release will be
available on or after Jan. 30 at the firm’s Web site at www.piperjaffray.com.
The call can be accessed via webcast or by dialing (888)810- 0209 or
(706)902-1361 (international) and referencing reservation #85504834. Callers
should dial in at least 15 minutes prior to the call time. A replay of the
conference call will be available beginning at approximately 12 p.m. ET Jan.
30 at the same Web address or by calling (855)859-2056 and referencing
reservation #85504834 .

About Piper Jaffray

Piper Jaffray is an investment bank and asset management firm serving clients
in the U.S. and internationally. Proven advisory teams combine deep industry,
product and sector expertise with ready access to capital. Founded in 1895,
the firm is headquartered in Minneapolis and has offices across the United
States and in London and Zurich. www.piperjaffray.com

Cautionary Note Regarding Forward-Looking Statements

This press release and the conference call to discuss the contents of this
press release contain forward-looking statements. Statements that are not
historical or current facts, including statements about beliefs and
expectations, are forward-looking statements and are subject to significant
risks and uncertainties that are difficult to predict. These forward-looking
statements cover, among other things, statements made about general economic
and market conditions, the environment and prospects for capital markets
transactions (including corporate advisory transactions), anticipated
financial results from strategic trading activities within fixed income
institutional brokerage, the sale of the FAMCO division of our asset
management business, anticipated financial results generally (including
expectations regarding our compensation ratio, revenue levels, operating
margins, earnings per share, and return on equity), current deal pipelines (or
backlogs), our strategic priorities (including growth in public finance, asset
management, and corporate advisory), or other similar matters. These
statements involve inherent risks and uncertainties, both known and unknown,
and important factors could cause actual results to differ materially from
those anticipated or discussed in the forward-looking statements, including
(1)market and economic conditions or developments may be unfavorable,
including in specific sectors in which we operate, and these conditions or
developments, such as market fluctuations or volatility, may adversely affect
our business, revenue levels and profitability, (2)the volume of anticipated
investment banking transactions as reflected in our deal pipelines (and the
net revenues we earn from such transactions) may differ from expected results
if any transactions are delayed or not completed at all or if the terms of any
transactions are modified, (3)strategic trading activities comprise a
meaningful portion of our fixed income institutional brokerage revenue, and
results from these activities may be volatile and vary significantly,
including the possibility of incurring losses, on a quarterly and annual
basis, (4)our ability to manage expenses may be limited by the fixed nature
of certain expenses as well as the impact from unanticipated expenses, (5)the
sale of the FAMCO business could cause us to incur unforeseen expenses and
have disruptive effects on our business, (6)we may not be able to compete
successfully with other companies in the financial services industry, which
may impact our ability to achieve our growth priorities and objectives,
(7)our stock price may fluctuate as a result of several factors, including
but not limited to, changes in our revenues and operating results, and (8)the
other factors described under “Risk Factors” in PartI, Item1A of our Annual
Report on Form 10-K for the year ended December31, 2011 and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
PartII, Item7 of our Annual Report on Form 10-K for the year ended
December31, 2011, and updated in our subsequent reports filed with the SEC
(available at our Web site at www.piperjaffray.com and at the SEC Web site at
www.sec.gov). Forward-looking statements speak only as of the date they are
made, and readers are cautioned not to place undue reliance on them. We
undertake no obligation to update them in light of new information or future
events.

© 2013 Piper Jaffray Companies, 800 Nicollet Mall, Suite 800, Minneapolis,
Minnesota 55402-7020

Piper Jaffray                                                                                                                       
Companies
Preliminary Unaudited
Results of Operations
                                                                                                                                                  
                                                                                                                                                  
                        Three Months Ended                             Percent Inc/(Dec)           Twelve Months Ended
                        Dec. 31,      Sept. 30,   Dec. 31,             4Q '12        4Q '12        Dec. 31,      Dec. 31,             Percent
(Amounts in                                                            vs. 3Q        vs. 4Q
thousands, except per   2012          2012        2011                 '12           '11           2012          2011                 Inc/(Dec)
share data)
Revenues:
Investment banking      $ 82,393      $ 51,083    $ 48,665             61.3      %   69.3      %   $ 230,929     $ 200,500            15.2        %
Institutional             38,017        58,719      24,364             (35.3 )       56.0            172,023       136,096            26.4
brokerage
Asset management          16,516        16,136      15,519             2.4           6.4             65,215        63,307             3.0
Interest                  13,102        12,457      13,034             5.2           0.5             48,844        55,440             (11.9  )
Other income/(loss)      (11     )    235        (1,705   )         N/M          (99.4 )        1,231       8,313             (85.2  )
Total revenues            150,017       138,630     99,877             8.2           50.2            518,242       463,656            11.8
                                                                                                                                                  
Interest expense         9,106       7,125      6,824             27.8         33.4          29,290      31,573            (7.2   )
                                                                                                                                                  
Net revenues             140,911     131,505    93,053            7.2          51.4          488,952     432,083           13.2   
                                                                                                                                                  
Non-interest
expenses:
Compensation and          87,415        78,070      60,632             12.0          44.2            296,882       265,015            12.0
benefits
Occupancy and             6,783         6,057       6,579              12.0          3.1             26,454        28,430             (7.0   )
equipment
Communications            4,431         5,276       5,181              (16.0 )       (14.5 )         20,543        22,121             (7.1   )
Floor brokerage and       2,120         1,825       2,249              16.2          (5.7  )         8,054         8,925              (9.8   )
clearance
Marketing and             4,926         4,259       5,917              15.7          (16.7 )         19,908        22,640             (12.1  )
business development
Outside services          8,188         6,747       7,098              21.4          15.4            27,998        27,570             1.6
Restructuring-related     -             -           -                  N/M           N/M             3,642         -                  N/M
expense
Goodwill impairment       -             -           120,298            N/M           N/M             -             120,298            N/M
Intangible asset          1,736         1,736       1,814              -             (4.3  )         6,944         7,256              (4.3   )
amortization expense
Other operating          2,530       2,183      1,661             15.9         52.3          9,516       10,017            (5.0   )
expenses
Total non-interest       118,129     106,153    211,429           11.3         (44.1 )   %    419,941     512,272           (18.0  )
expenses
                                                                                                                                                  
Income/(loss) from
continuing operations     22,782        25,352      (118,376 )         (10.1 )       N/M             69,011        (80,189  )         N/M
before income tax
expense/(benefit)
                                                                                                                                                  
Income tax               7,422       10,194     (2,989   )         (27.2 )       N/M           19,470      9,120             113.5  
expense/(benefit)
                                                                                                                                                  
Income/(loss) from       15,360      15,158     (115,387 )         1.3          N/M           49,541      (89,309  )         N/M    
continuing operations
                                                                                                                                                  
Discontinued
operations:
Income/(loss) from
discontinued             (3,741  )    5,171      (360     )         N/M          N/M           (5,807  )    (11,248  )         (48.4  )
operations, net of
tax
                                                                                                                                                  
Net income/(loss)         11,619        20,329      (115,747 )         (42.8 )       N/M             43,734        (100,557 )         N/M
                                                                                                                                                  
Net income/(loss)
applicable to            (205    )    665        617               N/M          N/M           2,466       1,463             68.6       %
noncontrolling
interests
                                                                                                                                                  
Net income/(loss)
applicable to Piper     $ 11,824     $ 19,664    $ (116,364 )         (39.9 )   %   N/M          $ 41,268     $ (102,020 )         N/M    
Jaffray Companies 
(1)
                                                                                                                                                  
Net income/(loss)
applicable to Piper
Jaffray Companies'      $ 10,198     $ 16,840    $ (116,364 )         (39.4 )   %   N/M          $ 35,335     $ (102,020 )         N/M    
common shareholders 
(1)
                                                                                                                                                  
Amounts applicable to
Piper Jaffray
Companies
Income/(loss) from      $ 15,565      $ 14,493    $ (116,004 )         7.4       %   N/M           $ 47,075      $ (90,772  )         N/M
continuing operations
Income/(loss) from
discontinued             (3,741  )    5,171      (360     )         N/M          N/M           (5,807  )    (11,248  )         (48.4  )    %
operations, net of
tax
Net income/(loss)
applicable to Piper     $ 11,824      $ 19,664    $ (116,364 )         (39.9 )   %   N/M           $ 41,268      $ (102,020 )         N/M
Jaffray Companies
                                                                                                                                                  
Earnings/(loss) per
basic common share
Income/(loss) from      $ 0.88        $ 0.82      $ (7.35    )         7.3       %   N/M           $ 2.58        $ (5.79    )         N/M
continuing operations
Income/(loss) from
discontinued             (0.21   )    0.29       (0.02    )         N/M          N/M           (0.32   )    (0.72    )         (55.4  )    %
operations
Earnings/(loss) per     $ 0.67        $ 1.11      $ (7.38    )         (39.6 )   %   N/M           $ 2.26        $ (6.51    )         N/M
basic common share
                                                                                                                                                  
Earnings/(loss) per
diluted common share
Income/(loss) from      $ 0.88        $ 0.82      $ (7.35    )         7.3       %   N/M           $ 2.58        $ (5.79    )         N/M
continuing operations
Income/(loss) from
discontinued             (0.21   )    0.29       (0.02    )         N/M          N/M           (0.32   )    (0.72    )         (55.4  )    %
operations
Earnings/(loss) per     $ 0.67        $ 1.11      $ (7.38    )   (2)   (39.6 )   %   N/M           $ 2.26        $ (6.51    )   (2)   N/M
diluted common share
                                                                                                                                                  
Weighted average
number of common
shares outstanding
Basic                     15,253        15,210      15,773             0.3       %   (3.3  )   %     15,615        15,672             (0.4   )    %
Diluted                   15,256        15,210      15,773       (2)   0.3       %   (3.3  )   %     15,616        15,672       (2)   (0.4   )    %


(1) Net income applicable to Piper Jaffray Companies is the total net income
earned by the Company. Piper Jaffray Companies calculates earnings per common
share using the two-class method, which requires the allocation of
consolidated net income between common shareholders and participating security
holders, which in the case of Piper Jaffray Companies, represents unvested
restricted stock with dividend rights.

(2) Earnings per diluted common share is calculated using the basic weighted
average number of common shares outstanding for periods in which a loss is
incurred.

N/M - Not meaningful

Piper Jaffray Companies
Preliminary Unaudited Segment Data from Continuing Operations
                                                                                                                   
                                                                                                                               
                Three Months Ended                         Percent Inc/(Dec)           Twelve Months Ended
                Dec. 31,      Sept. 30,     Dec. 31,       4Q '12        4Q '12        Dec. 31,      Dec. 31,      Percent
(Dollars in     2012          2012          2011           vs. 3Q        vs. 4Q        2012          2011          Inc/(Dec)
thousands)                                                 '12           '11
Capital
Markets
                                                                                                                               
Investment
banking
Financing
Equities        $ 18,039      $ 18,781      $ 15,479       (4.0  )   %   16.5      %   $ 73,180      $ 74,161      (1.3   )    %
Debt              20,504        16,573        15,210       23.7          34.8            74,102        54,565      35.8
Advisory         44,495      16,317      18,610      172.7        139.1         86,165      74,373     15.9   
services
Total
investment        83,038        51,671        49,299       60.7          68.4            233,447       203,099     14.9
banking
                                                                                                                               
Institutional
sales and
trading
Equities          20,134        17,927        20,147       12.3          (0.1  )         75,723        86,175      (12.1  )
Fixed income     23,480      46,690      11,097      (49.7 )       111.6         119,253     77,017     54.8   
Total
institutional     43,614        64,617        31,244       (32.5 )       39.6            194,976       163,192     19.5
sales and
trading
                                                                                                                               
Other            (2,144  )    (1,039  )    (3,206   )   106.4        (33.1 )        (4,285  )    2,746      N/M    
income/(loss)
                                                                                                                               
Net revenues      124,508       115,249       77,337       8.0           61.0            424,138       369,037     14.9
                                                                                                                               
Non-interest
expenses
Goodwill          -             -             120,298      N/M           N/M             -             120,298     N/M
impairment
Operating        105,099     94,671      79,436      11.0         32.3          371,628     344,036    8.0    
expenses
Total
non-interest      105,099       94,671        199,734      11.0          (47.4 )   %     371,628       464,334     (20.0  )    %
expenses
                                                                                                                               
Segment
pre-tax         $ 19,409     $ 20,578     $ (122,397 )   (5.7  )   %   N/M          $ 52,510     $ (95,297 )   N/M    
operating
income/(loss)
                                                                                                                               
Segment
pre-tax           15.6%        17.9%        (158.3)%                                  12.4%        (25.8)% 
operating
margin
                                                                                                                               
                                                                                                                               
Asset
Management
                                                                                                                               
Management
and
performance
fees
Management      $ 16,083      $ 15,800      $ 14,914       1.8       %   7.8       %   $ 63,296      $ 60,873      4.0         %
fees
Performance      121         22          499         450.0        (75.8 )        785         2,245      (65.0  )
fees
Total
management
and               16,204        15,822        15,413       2.4           5.1             64,081        63,118      1.5
performance
fees
                                                                                                                               
Other            199         434         303         (54.1 )       (34.3 )        733         (72     )   N/M    
income/(loss)
                                                                                                                               
Net revenues      16,403        16,256        15,716       0.9           4.4             64,814        63,046      2.8
                                                                                                                               
Operating        13,030      11,482      11,695      13.5         11.4          48,313      47,938     0.8    
expenses
                                                                                                                               
Segment
pre-tax         $ 3,373      $ 4,774      $ 4,021       (29.3 )   %   (16.1 )   %   $ 16,501     $ 15,108     9.2        %
operating
income
                                                                                                                               
Segment
pre-tax           20.6%        29.4%        25.6%                                     25.5%        24.0%   
operating
margin
                                                                                                                               
                                                                                                                               
Total
                                                                                                                               
Net revenues    $ 140,911     $ 131,505     $ 93,053       7.2       %   51.4      %   $ 488,952     $ 432,083     13.2        %
                                                                                                                               
Non-interest
expenses
Goodwill          -             -             120,298      N/M           N/M             -             120,298     N/M
impairment
Operating        118,129     106,153     91,131      11.3         29.6          419,941     391,974    7.1    
expenses
Total
non-interest      118,129       106,153       211,429      11.3          (44.1 )   %     419,941       512,272     (18.0  )    %
expenses
                                                                                                                               
Total segment
pre-tax         $ 22,782     $ 25,352     $ (118,376 )   (10.1 )   %   N/M          $ 69,011     $ (80,189 )   N/M    
operating
income/(loss)
                                                                                                                               
Pre-tax
operating         16.2%        19.3%        (127.2)%                                  14.1%        (18.6)% 
margin
                                                                                                                               
N/M - Not
meaningful
                                                                                                                               
Segment pre-tax operating income and segment pre-tax operating margin exclude the results of discontinued operations.


Piper Jaffray                                                                                                          
Companies
Preliminary Data from
Discontinued
Operations
                                                                                                                                   
                                                                                                                                   
                        Three Months Ended                     Percent Inc/(Dec)           Twelve Months Ended
                        Dec. 31,     Sept. 30,     Dec. 31,    4Q '12        4Q '12        Dec. 31,      Dec. 31,      Percent
(Dollars in             2012         2012          2011        vs. 3Q        vs. 4Q        2012          2011          Inc/(Dec)
thousands)                                                     '12           '11
Piper Jaffray Asia
                                                                                                                                   
Net revenues            $ 10         $ 2,674       $ 4,479     (99.6 )   %   (99.8 )   %   $ 6,635       $ 15,996      (58.5  )    %
                                                                                                                                   
Non-interest expenses
Restructuring-related     478          11,057        -         (95.7 )       N/M             11,535        -           N/M
expenses
Operating expenses       -          5,843       4,905    N/M          N/M           16,550      24,983     (33.8  )
Total non-interest       478        16,900      4,905    (97.2 )       (90.3 )        28,085      24,983     12.4   
expenses
                                                                                                                                   
Loss before income        (468   )     (14,226 )     (426  )   (96.7 )       9.9             (21,450 )     (8,987  )   138.7
tax expense/(benefit)
                                                                                                                                   
Income tax               (100   )    (21,029 )    41       (99.5 )   %   N/M           (21,069 )    1,927      N/M    
expense/(benefit)
                                                                                                                                   
Net income/(loss)       $ (368   )   $ 6,803      $ (467  )   N/M          (21.2 )   %   $ (381    )   $ (10,914 )   (96.5  )    %
                                                                                                                                   
                                                                                                                                   
FAMCO
                                                                                                                                   
Net revenues            $ 1,490      $ 1,453       $ 1,596     2.5       %   (6.6  )   %   $ 5,718       $ 6,584       (13.2  )    %
                                                                                                                                   
Non-interest expenses
Goodwill impairment       5,508        -             -         N/M           N/M             5,508         -           N/M
Operating expenses       1,400      4,090       1,443    (65.8 )       (3.0  )        8,362       7,089      18.0   
Total non-interest       6,908      4,090       1,443    68.9         378.7    %    13,870      7,089      95.7       %
expenses
                                                                                                                                   
Income/(loss) before
income tax                (5,418 )     (2,637  )     153       105.5         N/M             (8,152  )     (505    )   N/M
expense/(benefit)
                                                                                                                                   
Income tax               (2,045 )    (1,005  )    46       103.5        N/M           (2,726  )    (171    )   N/M    
expense/(benefit)
                                                                                                                                   
Net income/(loss)       $ (3,373 )   $ (1,632  )   $ 107      106.7    %   N/M          $ (5,426  )   $ (334    )   N/M    
                                                                                                                                   
                                                                                                                                   
Total Discontinued
Operations
                                                                                                                                   
Net revenues            $ 1,500      $ 4,127       $ 6,075     (63.7 )   %   (75.3 )   %   $ 12,353      $ 22,580      (45.3  )    %
                                                                                                                                   
Non-interest expenses
Restructuring-related     478          11,057        -         (95.7 )       N/M             11,535        -           N/M
expenses
Goodwill impairment       5,508        -             -         N/M           N/M             5,508         -           N/M
Operating expenses       1,400      9,933       6,348    (85.9 )       (77.9 )        24,912      32,072     (22.3  )
Total non-interest       7,386      20,990      6,348    (64.8 )       16.4     %    41,955      32,072     30.8   
expenses
                                                                                                                                   
Loss before income        (5,886 )     (16,863 )     (273  )   (65.1 )       N/M             (29,602 )     (9,492  )   211.9
tax expense/(benefit)
                                                                                                                                   
Income tax               (2,145 )    (22,034 )    87       (90.3 )   %   N/M           (23,795 )    1,756      N/M    
expense/(benefit)
                                                                                                                                   
Net income/(loss)       $ (3,741 )   $ 5,171      $ (360  )   N/M          N/M          $ (5,807  )   $ (11,248 )   (48.4  )    %
                                                                                                                                   
                                                                                                                                   
N/M - Not meaningful
                                                                                                                                   

FOOTNOTES
                                                                       
This press release includes the use of non-GAAP financial measures that are
not prepared in accordance with U.S. generally accepted accounting principles.
These non-GAAP financial measures should not be considered a substitute for
measures of financial performance prepared in accordance with GAAP. These
non-GAAP financial measures have been used in this press release because
management believes they are useful to investors by providing greater
transparency to Piper Jaffray’s operating performance.
                                                                             
The non-GAAP financial measures used in footnotes 1 through 5 exclude the
effects of a goodwill impairment charge recognized in the fourth quarter of
2011.
                                                                             
                                                                             
      Income/(loss) from continuing
(1)   operations and earnings per
      share
                                       Three Months           Twelve
                                       Ended                  Months Ended
      (Amounts in thousands, except    Dec. 31, 2011          Dec. 31,
      per share data)                                         2011
      Loss from continuing             $  (116,004  )         $ (90,772  )
      operations
      Adjustment to exclude the
      goodwill impairment charge,        118,448             118,448  
      net of income tax
                                                                             
      Net income from continuing
      operations, excluding the        $  2,444              $ 27,676   
      goodwill impairment charge
                                                                             
      Net income applicable to
      Piper Jaffray Companies
      common shareholders,             $  2,027              $ 22,593   
      excluding the goodwill
      impairment charge
                                                                             
                                                                             
      Diluted earnings per common
      share, excluding the goodwill    $  0.13                $ 1.44
      impairment charge
                                                                             
      Weighted average number of
      common shares outstanding -         15,773                15,685
      diluted
                                                                             
                                                                             
      Net income/(loss) applicable
(2)   to Piper Jaffray Companies
      and earnings per share
                                       Three Months           Twelve
                                       Ended                  Months Ended
      (Amounts in thousands, except    Dec. 31, 2011          Dec. 31,
      per share data)                                         2011
      Net loss applicable to Piper     $  (116,364  )         $ (102,020 )
      Jaffray Companies
      Adjustment to exclude the
      goodwill impairment charge,        118,448             118,448  
      net of income tax
                                                                             
      Net income applicable to
      Piper Jaffray Companies,         $  2,084              $ 16,428   
      excluding the goodwill
      impairment charge
                                                                             
      Net income applicable to
      Piper Jaffray Companies
      common shareholders,             $  1,729              $ 13,411   
      excluding the goodwill
      impairment charge
                                                                             
                                                                             
      Diluted earnings per common
      share, excluding the goodwill    $  0.11                $ 0.86
      impairment charge
                                                                             
      Weighted average number of
      common shares outstanding -         15,773                15,685
      diluted
                                                                             
                                                                             
      Consolidated non-compensation
(3)   expenses from continuing
      operations
                                       Three Months           Twelve
                                       Ended                  Months Ended
      (Amounts in thousands)           Dec. 31, 2011          Dec. 31,
                                                              2011
      Non-compensation expenses        $  150,797             $ 247,257
      Adjustment to exclude the          (120,298  )          (120,298 )
      goodwill impairment charge
                                                                             
      Non-compensation expenses,
      excluding the goodwill           $  30,499             $ 126,959  
      impairment charge
                                                                             
                                                                             
      Capital Markets pre-tax
(4)   operating income and pre-tax
      margin from continuing
      operations
                                       Three Months           Twelve
                                       Ended                  Months Ended
      (Amounts in thousands)           Dec. 31, 2011          Dec. 31,
                                                              2011
      Capital Markets pre-tax          $  (122,397  )         $ (95,297  )
      operating loss
      Adjustment to exclude the          120,298             120,298  
      goodwill impairment charge
                                                                             
      Capital Markets pre-tax
      operating income/(loss),         $  (2,099    )         $ 25,001   
      excluding the goodwill
      impairment charge
                                                                             
      Capital Markets pre-tax             (158.3    )     %     (25.8    )   %
      operating margin
      Capital Markets pre-tax
      operating margin, excluding         (2.7      )     %     6.8          %
      the goodwill impairment
      charge
                                                                             
                                                                             
      Capital Markets operating
(5)   expenses from continuing
      operations
                                       Three Months           Twelve
                                       Ended                  Months Ended
      (Amounts in thousands)           Dec. 31, 2011          Dec. 31,
                                                              2011
      Capital Markets operating        $  199,734             $ 464,334
      expenses
      Adjustment to exclude the          (120,298  )          (120,298 )
      goodwill impairment charge
                                                                             
      Capital Markets operating
      expenses, excluding the          $  79,436             $ 344,036  
      goodwill impairment charge
                                                                             
                                                                             
(6)   Return on average adjusted common shareholders' equity
                                                                             
      Adjusted common shareholders’ equity equals total common shareholders’
      equity, including goodwill associated with acquisitions, less goodwill
      resulting from the 1998 acquisition of our predecessor company, Piper
      Jaffray Companies Inc., by U.S. Bancorp. Return on average adjusted
      common shareholders’ equity is computed by dividing net income by
      average monthly adjusted common shareholders’ equity. Management
      believes that return on adjusted common shareholders’ equity is a
      meaningful measure of performance because it reflects equity deployed in
      our businesses after our spin off from U.S. Bancorp on December 31,
      2003. The following table sets forth a reconciliation of common
      shareholders’ equity to adjusted common shareholders’ equity. Common
      shareholders’ equity is the most directly comparable GAAP financial
      measure to adjusted common shareholders’ equity.
                                                                             
                                       Average for the        Average for
                                                              the
                                       Year Ended             Year Ended
                        Average for    Dec. 31, 2011,         Dec. 31,
                        the                                   2011,
                        Year Ended     Including the          Excluding
                                       Goodwill               the Goodwill
      (Amounts in       Dec. 31,       Impairment             Impairment
      thousands)        2012           Charge                 Charge
      Common
      shareholders'     $  728,433     $  825,483             $ 834,594
      equity
      Deduct:
      goodwill
      attributable        -             97,405              105,522  
      to PJC Inc.
      acquisition by
      USB
                                                                             
      Adjusted
      common            $  728,433     $  728,078            $ 729,072  
      shareholders'
      equity
                                                                             
      Annualized net
      income
      applicable to     $  41,268         N/M                 $ 16,428
      Piper Jaffray
      Companies
                                                                             
      Annualized
      quarterly
      return on
      average              5.7      %     N/M                   2.3          %
      adjusted
      common
      shareholders'
      equity
                                                                             
                                                                             
(7)   Annualized quarterly return on average adjusted common shareholders'
      equity
                                                                             
      Management believes that the annualized quarterly return on average
      adjusted common shareholders' equity excluding the impact of the
      goodwill impairment charge is a meaningful measure and aids comparison
      to the other quarters presented.
                                                                             
                                       Average for the        Average for
                                                              the
                                       Three Months           Three Months
                                       Ended                  Ended
                                       Dec. 31, 2011,         Dec. 31,
                                                              2011,
                                       Including the          Excluding
                                       Goodwill               the Goodwill
      (Amounts in thousands)           Impairment             Impairment
                                       Charge                 Charge
      Common shareholders' equity      $  808,079             $ 837,691
      Deduct: goodwill attributable
      to PJC Inc. acquisition by         79,141              105,522  
      USB
                                                                             
      Adjusted common shareholders'    $  728,938             $ 732,169
      equity
                                                                             
      Annualized net income
      applicable to Piper Jaffray         N/M                 $ 8,337
      Companies
                                                                             
      Annualized quarterly return
      on average adjusted common          N/M                   1.1          %
      shareholders' equity
                                                                             
      N/M - Not meaningful
                                                                             
                                                                             
(8)   Tangible common shareholders' equity
                                                                             
      Tangible shareholders’ equity equals total shareholders’ equity less all
      goodwill and identifiable intangible assets. Tangible book value per
      share is computed by dividing tangible shareholders’ equity by common
      shares outstanding. Management believes that tangible book value per
      share is a more meaningful measure of our book value per share.
      Shareholders’ equity is the most directly comparable GAAP financial
      measure to tangible shareholders’ equity. The following is a
      reconciliation of shareholders’ equity to tangible shareholders’ equity:
                                                                             
                        As of          As of                  As of
      (Amounts in       Dec. 31,       Sept. 30, 2012         Dec. 31,
      thousands)        2012                                  2011
      Common
      shareholders'     $  733,292     $  724,616             $ 718,391
      equity
      Deduct:
      goodwill and
      identifiable        240,480       247,905             253,656  
      intangible
      assets
                                                                             
      Tangible
      common            $  492,812     $  476,711            $ 464,735  
      shareholders'
      equity
                                                                             

Contact:

Piper Jaffray Companies
Tom Smith, 612-303-6336
Investor Relations