Gleacher & Company Reports Fourth Quarter and Year End 2012 Financial Results

  Gleacher & Company Reports Fourth Quarter and Year End 2012 Financial
  Results

                     Company Announces Sale of ClearPoint

                  Company Concludes Formal Strategic Review

Business Wire

NEW YORK -- February 15, 2013

Gleacher & Company, Inc. (Nasdaq: GLCH) today reported net revenues of $50.9
million, net loss from continuing operations of ($11.5) million, or ($10.8)
million on a non-GAAP basis, and diluted loss per share of ($0.10), or ($0.09)
on a non-GAAP basis for the quarter ended December 31, 2012. The Company also
announced that it has entered into an agreement with Homeward Residential,
Inc., a wholly owned subsidiary of Ocwen Financial Corporation (NYSE: OCN)
pursuant to which Homeward will purchase substantially all of the assets of
ClearPoint. Finally, having considered a range of opportunities during its
previously announced strategic review, including partnering with one or more
equity investors, strategic acquisitions and divestitures, and business
combinations, the Company determined that the available opportunities were not
in the best interests of Gleacher’s stockholders at this time.

Highlights

  *FY2012 dominated by restructuring the management team and compensation
    methodologies, and a review of strategic alternatives. The Company
    suffered a natural interruption in revenue generation as a result of those
    actions.
  *Q4 results benefitted by performance in Investment Banking and Credit
    Products; MBS & Rates suffered from weaker sales volumes.
  *ClearPoint entered into an agreement to sell substantially all of its
    assets to Homeward.
  *Company concludes formal strategic review.
  *The Board of Directors renewed the Company’s stock repurchase program,
    authorizing up to $10 million in stock repurchases.

Thomas Hughes, Chief Executive Officer, said, “We accomplished a great deal
during the course of 2012, and I believe we are better positioned to begin
sustained growth and profitability. We have assembled a management team and
producers who possess deep experience serving clients in the product efforts
that comprise our strategy. We have revamped our compensation methodologies in
an effort to achieve our stated goal of a 60% compensation to revenue ratio in
the coming years. And we have entered into an agreement to sell ClearPoint in
a transaction that we expect will close in the first quarter.”

Mr. Hughes continued, “While the revenue decline in MBS & Rates has been
natural in the face of all of our restructuring efforts in that business, we
are not satisfied with those results. However, we recruited outstanding talent
in this Business Unit, we believe our ability to serve customers in this
product segment is strong, and once we have fully integrated our Rangemark
capabilities with Sales & Trading, our customer interface will be even more
compelling. We are pleased with our performance in Investment Banking and
Credit Products. Our Real Estate Finance team now ranks #1 in M&A transactions
executed for REITs, and our Credit Products business grew its market share
throughout 2012.”

Mr. Hughes, commenting on the strategic review, said, “Assisted by our
financial advisor, we looked at a wide variety of strategic transactions,
including merger, acquisition, and business combinations. Although we did not
believe any proposal we received during the process adequately reflected
Gleacher’s value, we will, as before, be opportunistic in considering
value-building strategic initiatives that may accelerate our growth and
improve stockholder returns. That said, we made significant strategic progress
during the course of the year, we believe in our business strategy and in the
capabilities of our team, and we intend to continue our business expansion and
fortify our brand.”

                                                                     
                     Three Months Ended                                    Years Ended
                      December       September      December          December       December
                      31,               30,               31,               31,               31,
(In thousands,
except for per        2012             2012             2011             2012             2011      
share amounts)
                      (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
Net revenues          $ 50,876          $  43,330         $  61,240         $ 203,595         $ 261,172
Pre-tax loss
from continuing         (11,293 )          (5,024 )          (236   )         (53,353 )         (61,877 )
operations
Net
(loss)/income           (11,486 )          (2,801 )          1,765            (77,955 )         (64,084 )
from continuing
operations
Discontinued
operations, net         224                33                383              265               (18,040 )
of taxes
                                                                                                
Non-GAAP
pre-tax
(loss)/income           (10,590 )          (5,059 )          n/a              (28,939 )         20,267
from continuing
operations*
Non-GAAP net
(loss)/income           (10,783 )          (2,821 )          n/a              (24,397 )         12,132
from continuing
operations*
                                                                                                
(Loss)/earnings
per share:
Diluted -
continuing            $ (0.10   )       $  (0.02  )       $  0.01           $ (0.66   )       $ (0.52   )
operations
Diluted -
continuing              (0.09   )          (0.02  )          n/a              (0.21   )         0.09
operations
(Non-GAAP)*
                                                                                              

*Designates non-GAAP financial results. A reconciliation of the Company’s GAAP
results to non-GAAP financial results is set forth below under the caption
“Non-GAAP Financial Results.”

The Company has included in this press release “non-GAAP financial results.” A
non-GAAP financial result is a numerical measure of financial position or
results of operations that includes amounts that are excluded, or excludes
amounts that are included, in the most directly comparable result calculated
and presented in accordance with generally accepted accounting principles
(“GAAP”).

In the financial data included in this press release, the items for which the
Company adjusted its GAAP results consist of the following:

  *legal, consulting and advisory costs incurred in connection with our
    strategic review process during the second, third and fourth quarter of
    2012,
  *impairment of goodwill and intangibles recorded during the second quarter
    of 2012 and the third quarter of 2011, as well as other non-compensation
    expenses incurred in connection with the Investment Banking realignment in
    the third quarter of 2011,
  *the change in the valuation allowance on the deferred tax assets,
    initially established in the second quarter of 2012,
  *severance expense recorded during the first quarter of 2012 (partially
    reversed in the third quarter of 2012) and third quarter of 2011,
  *compensation expense related to the resignation of the former interim CEO
    in the second quarter of 2011, and
  *the bargain purchase gain related to the ClearPoint acquisition in the
    first quarter of 2011.

For detailed information on the adjustments made, and a reconciliation of the
non-GAAP financial results included in this press release to the most directly
comparable GAAP financial metrics, refer to “Non-GAAP Financial Results”
below. While the Company believes that the non-GAAP financial results included
herein are instructive, they should only be considered together with their
corresponding GAAP financial metrics.


Business Segment Results (including Non-GAAP results)
                                                                            
                    Three Months Ended                                    Years Ended
                    December          September         December          December          December,
                    31,               30,               31,               31,               31
(In thousands       2012             2012             2011             2012             2011      
of dollars)
                    (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
                                                                                              
Net revenues:
Investment          $ 12,680          $  1,499          $  2,936          $ 27,442          $ 26,611
Banking
MBS & Rates           6,081              8,943             14,668           40,637            103,857
Credit                16,039             18,804            20,019           74,432            71,056
Products
ClearPoint           13,615           12,899          20,815         53,375          46,924  
Net revenues
- operating           48,415             42,145            58,438           195,886           248,448
segments
Other                2,461            1,185           2,802          7,709           10,394*
Total               $ 50,876         $  43,330        $  61,240        $ 203,595        $ 258,842*
                                                                                              
Pre-tax
(loss)/income
from
continuing
operations:
Investment          $ 2,061           $  (257   )       $  (1,249 )       $ 4,576           $ 4,584*
Banking
MBS & Rates           (5,434  )          1,814             3,465            127               33,120
Credit                (795    )          2,619*            3,400            4,070*            9,738
Products
ClearPoint           (13     )         (524   )         (779   )        (5,891  )        (3,686  )
Pre-tax
(loss)/income         (4,181  )          3,652*            4,837            2,882             43,756*
- operating
segments
Other                (6,409)*          (8,711)*         (5,073 )        (31,821)*        (23,489)*
Total               $ (10,590)*       $  (5,059)*       $  (236   )       $ (28,939)*       $ 20,267*
                                                                                              

*Designates non-GAAP financial results. A reconciliation of the Company’s GAAP
results to its non-GAAP financial results is set forth below under the caption
“Non-GAAP Financial Results.”

                              Investment Banking

Net revenues were $12.7 million for the quarter ended December 31, 2012, an
improvement of $11.2 million compared to the third quarter of 2012 and $9.7
million compared to the fourth quarter of 2011. Net revenues also slightly
improved year-over-year and were $27.4 million for the year ended December 31,
2012, compared to the prior year of $26.6 million.

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

                                                                
                 Three Months Ended                                    Years Ended
                 December       September      December          December       December
                 31,               30,               31,               31,               31,
(In              2012              2012              2011              2012              2011
thousands)
                 (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
                                                                                             
Advisory         $   12,636        $   914           $   2,936         $   24,332        $   20,954
Capital             44               585              -                3,110            5,657
Markets
Total:           $   12,680        $   1,499         $   2,936         $   27,442        $   26,611
                                                                                             

                                 MBS & Rates

Net revenues were $6.1 million for the quarter ended December 31, 2012, a
decline of $2.9 million and $8.6 million compared to the third quarter of 2012
and fourth quarter of 2011, respectively. The market environment proved
challenging for the division, which experienced reduced sales and trading
revenues on lower spreads and market volatility. These declines were partially
offset by higher net interest income due to higher average inventory levels
when compared to the third quarter of 2012, as net interest income was $7.5
million in the fourth quarter of 2012 compared to $4.0 million in the third
quarter of 2012 (net interest income was $13.3 million in the fourth quarter
of 2011). Revenues for the third quarter of 2012 also included approximately
$0.7 million of other revenue, related to the clawback of certain stock-based
compensation grants of former employees which were subject to non-competition
and/or other forfeiture provisions.

Net revenues of $40.6 million for the year ended December 31, 2012, declined
by $63.2 million compared to the prior year. This was largely attributable to
the previously reported leadership transition and accompanying turnover
experienced during the second and third quarter of 2012, resulting in a
repositioning and rebuilding of the division which is substantially complete.
In addition, the division recognized lower net interest income year-over-year
on lower average inventory levels and the prior year also includes non-agency
asset-backed securities gains of approximately $26.5 million.

                               Credit Products

Net revenues were $16.0 million for the quarter ended December 31, 2012, a
decline of $2.8 million compared to the third quarter of 2012 and $4.0 million
compared to the fourth quarter of 2011. The declines were primarily due to
lower commissions and principal transaction revenues due to spreads
tightening, which was partially offset by higher volumes.

Net revenues of $74.4 million for the year ended December 31, 2012 improved by
$3.4 million compared to the prior year, due to higher volumes and an expanded
product profile, partially offset by spread compression.

                                  ClearPoint

Net revenues were $13.6 million for the quarter ended December 31, 2012, an
increase of $0.7 million compared to the third quarter of 2012 due to improved
pricing margins, and a decline of $7.2 million compared to the fourth quarter
of 2011 on lower volumes. Net revenues during the fourth and third quarter of
2012 reflect limits placed on ClearPoint’s daily average loan commitments to a
level aligned with its distribution capabilities.

Net revenues for the year ended December 31, 2012 were $53.4 million, an
improvement of $6.5 million compared to the prior year. This increase was due
to higher daily loan commitments primarily arising in the first quarter of
2012, prior to the implementation of the previously mentioned limits, coupled
with lower daily average loan commitments in the prior year, as the division’s
operations had commenced on January 3, 2011.

Subsequent to the liquidity constraints experienced during the first half of
2012, the division has been managed to operate at or near break-even levels.
On February 14, 2013, the Company entered into an agreement to sell
substantially all of ClearPoint’s assets to Homeward Residential, Inc., and we
expect the transaction to close in the first quarter of 2013. The Company
estimates it will recognize a loss of approximately $5.0 million in connection
with this disposition.

ClearPoint will be reclassified as a discontinued operation in the first
quarter of 2013.

                                    Other

Net revenues were $2.5 million for the quarter ended December 31, 2012, an
improvement of $1.3 million compared to the third quarter of 2012 and a
decline of $0.3 million compared to the fourth quarter of 2011. Changes in net
revenues are primarily related to changes in value of the Company’s FATV
investment.

 Consolidated Compensation and Benefits Expenses (including Non-GAAP results)

Compensation and benefits expense was $41.6 million for the fourth quarter of
2012, an increase of $16.0 million ($14.7 million on a non-GAAP basis)
compared to compensation and benefits expense in the third quarter of 2012,
and $8.1 million compared to compensation and benefits expense in the fourth
quarter of 2011.

Our compensation ratio from continuing operations was 81.7% for the fourth
quarter of 2012, compared to 58.9% for the third quarter of 2012 (62.0% on a
non-GAAP basis) and 54.7% for the fourth quarter of 2011. The Company’s
compensation as a percentage of net revenue when compared to the third quarter
of 2012 was significantly influenced by the Company’s decision to pay year-end
bonus compensation primarily in the form of cash. In making this
determination, the Company considered a variety of factors including the
significant discount to which the Company’s stock trades in relation to its
book value. Compensation expense for the fourth quarter of 2012 was also
impacted by approximately $0.9 million of retention payments made to certain
key employees as a result of general uncertainties stemming from the strategic
review process and $1.2 million of compensation guarantees principally
incurred in the MBS & Rates division in connection with the division’s
rebuild.

The Company’s compensation and benefits as a percentage of net revenues was
70.4% (70.3% on a non-GAAP basis) for the year ended December 31, 2012,
compared to 62.2% (61.4% on a non-GAAP basis) for the prior year. The
disparity between the ratios year-over-year is directly related to the lower
net revenues, as well as the Company’s election to pay primarily cash
compensation in the current year, compared to a mix of cash and stock in the
prior year.

     Consolidated Non-Compensation Expenses (including Non-GAAP results)

Non-compensation expenses were $20.6 million for the fourth quarter of 2012
($19.9 million on a non-GAAP basis), compared to $22.8 million for the third
quarter of 2012 ($21.5 million on a non-GAAP basis) and $28.0 million for the
fourth quarter of 2011. Included within non-compensation expenses are
ClearPoint broker fees and loan processing fees of $9.3 million, $9.4 million
and $16.0 million for the fourth quarter of 2012, third quarter of 2012 and
fourth quarter of 2011, respectively, driven by the level of ClearPoint loan
commitment volumes in each respective period.

Non-GAAP non-compensation expenses excludes legal, consulting and advisory
fees incurred in connection with our strategic alternatives process of $0.7
million, $1.3 million and $3.0 million for the fourth quarter and third
quarter of 2012 and year ended December 31, 2012, respectively.

                          Provision for Income Taxes

Fourth Quarter 2012

The Company’s effective income tax rate from continuing operations for the
three months ended December 31, 2012 was negative 1.7%, resulting in income
tax expense of approximately $0.2 million. The income tax expense is primarily
attributable to an increase in the deferred tax asset valuation allowance and
provision to return tax adjustments.

Year Ended 2012

The Company’s effective income tax rate from continuing operations for the
year ended December 31, 2012 wasnegative 46.1%, resulting in income tax
expense of approximately $24.6 million. The abnormal tax rate differs from the
federal statutory tax rate of 35% primarily due to the establishment of a
valuation allowance against substantially all of the Company’s deferred tax
assets (negative 61%) in the second quarter of 2012, as well as the
non-deductible discrete item attributable to the write-off of goodwill
(negative 14%) and tax expense associated with stock-based compensation
shortfalls (negative 6%).

                           Discontinued Operations

The Company has classified the results of its Equities segment as discontinued
operations due to the Company’s decision to exit the business on August 22,
2011. Results of these discontinued operations are presented in the following
table:

                                                                       
                        Three Months Ended                                    Years Ended
                        December       September      December          December       December
                        31,               30,               31,               31,               31,
(In thousands)          2012             2012             2011             2012              2011      
                        (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
Net revenues            $  -              $   11            $  269            $  54             $ 13,064
Total expenses
(excluding                (224  )           (22   )         7               (349  )         38,808*
interest)
Income/(loss)
from discontinued          224                33               262               403              (25,744 )
operations before
income taxes
Income tax                -                -              (121  )          138            (7,704  )
(benefit)/expense
Income/(loss)
from discontinued       $  224           $   33           $  383           $  265           $ (18,040 )
operations, net
of taxes
                                                                                                  

*Included within the table above for the year ended December 31, 2011 is a
goodwill and intangible impairment charge of approximately $14.3 million and a
restructuring charge of $7.1 million.

                          Non-GAAP Financial Results

The Company has included in this press release certain financial metrics that
were not prepared in accordance with accounting principles generally accepted
in the United States. These non-GAAP financial results, which include
presentations of net revenues, compensation and benefits, non-compensation
expenses, income before income taxes from continuing operations, provision for
income taxes, net income from continuing operations, compensation expense
ratios, pre-tax margin, return on average tangible equity and diluted earnings
per share, are presented as an additional aid in understanding and analyzing
the Company’s financial results for the quarters ended December 31, 2012,
September 30, 2012, and December 31, 2011 and the years ended December 31,
2012 and 2011. Specifically, the Company believes that the non-GAAP results
provide useful information by excluding certain items that may not be
indicative of the Company’s core operating results or business outlook and
also to emphasize information that the Company believes is important in
understanding the Company’s performance. These non-GAAP amounts exclude items
reflected as adjustments within the “Reconciliation of GAAP to Non-GAAP Income
from Continuing Operations” table below. The Company believes these non-GAAP
results will allow for a better evaluation of the operating performance of the
Company’s business and facilitate a meaningful comparison of the Company’s
results in the current period to those in prior periods and future periods.
References to these non-GAAP results should not be considered a substitute for
results that are presented in a manner consistent with GAAP.

A limitation of utilizing these non-GAAP financial results is that the GAAP
accounting effects of these excluded items do in fact reflect the underlying
financial results of the Company’s business, and these effects should not be
ignored in evaluating and analyzing its financial results. Therefore, the
Company believes that non-GAAP results should always be considered together
with their corresponding GAAP results.

                                                                            
Reconciliation of GAAP to Non-GAAP (Loss)/Income from Continuing Operations
                                                                                                    
                       Three Months Ended December 31, 2012                     Three Months Ended December 31, 2011
(Dollars in
thousands,             (Unaudited)                                              (Unaudited)
except per share
amounts)
                       GAAP               Adjustments       Non-GAAP            GAAP              Adjustments       Non-GAAP
                                                                                                                      
Net revenues:          $ 50,876          $  -             $ 50,876           $ 61,240         $     -           $ 61,240 
                                                                                                                      
Expenses
(excluding
interest):
Compensation and         41,554              -                41,554              33,478                -             33,478
benefits
Non-compensation        20,615            (703 )^1        19,912            27,998              -            27,998 
expenses
Total expenses
(excluding              62,169            (703 )          61,466            61,476              -            61,476 
interest)
                                                                                                                      
(Loss)/income
from continuing
operations               (11,293 )           703              (10,590 )           (236   )              -             (236   )
before income
taxes
Provision for           193               -    ^2         193               (2,001 )             -            (2,001 )
income taxes
Net
(loss)/income          $ (11,486 )        $  703           $ (10,783 )         $ 1,765          $     -           $ 1,765  
from continuing
operations
                                                                                                                      
(Loss)/earnings
per share:
Diluted -
continuing             $ (0.10   )                          $ (0.09   )^3       $ 0.01                              $ 0.01
operations
As a percentage
of net revenues:
Compensation and         81.7    %                            81.7    %           54.7   %                            54.7   %
benefits
(Loss)/income
from continuing
operations               (22.2   %)                           (20.8   %)          (0.0   %)                           (0.0   %)
before income
taxes


^1  Represents legal, consulting and advisory fees incurred in connection
     with our strategic review process.
     
     No tax provision has been reflected as the Company has provided for a
^2   valuation allowance on its deferred tax assets and has fully utilized its
     available net operating loss carry-back capacity.
     
^3   Non-GAAP net loss from continuing operations divided by 119.0 million
     dilutive shares for the three months ended December 31, 2012.
     

                                                                                                              
Reconciliation of GAAP to Non-GAAP (Loss)/Income from Continuing Operations (Continued)
                                                                                                       
                       Three Months Ended December 31, 2012                        Three Months Ended September 30, 2012
(Dollars in
thousands,             (Unaudited)                                                 (Unaudited)
except per share
amounts)
                       GAAP               Adjustments       Non-GAAP               GAAP              Adjustments          Non-GAAP
                                                                                                                            
Net revenues:          $ 50,876          $  -             $ 50,876              $ 43,330         $ -                 $ 43,330 
                                                                                                                            
Expenses
(excluding
interest):
Compensation and         41,554              -                41,554                 25,534            1,320  ^1           26,854
benefits
Non-compensation        20,615            (703 )^2        19,912               22,820          (1,285 )^2         21,535 
expenses
Total expenses
(excluding              62,169            (703 )          61,466               48,354          35                 48,389 
interest)
                                                                                                                            
(Loss)/income
from continuing
operations               (11,293 )           703              (10,590 )              (5,024 )          (35    )             (5,059 )
before income
taxes
Provision for           193               -    ^3         193                  (2,223 )         (15    )^4         (2,238 )
income taxes
Net
(loss)/income          $ (11,486 )        $  703           $ (10,783 )           $ (2,801 )        $ (20    )          $ (2,821 )
from continuing
operations
                                                                                                                            
Loss per share:
Diluted -
continuing             $ (0.10   )                          $ (0.09      )^5       $ (0.02  )                             $ (0.02  )
operations
As a percentage
of net revenues:
Compensation and         81.7    %                            81.7    %              58.9   %                               62.0   %
benefits
Loss from
continuing
operations               (22.2   %)                           (20.8   %)             (11.6  %)                              (11.7  %)
before income
taxes


^1  Represents the reversal of previously accrued severance expense (of which
     $1.0 million is non-cash stock-based compensation).
     
^2   Represents legal, consulting and advisory fees incurred in connection
     with our strategic review process.
     
     No tax provision has been reflected as the Company has provided for a
^3   valuation allowance on its deferred tax assets and has fully utilized its
     available net operating loss carry-back capacity.
     
^4   The statutory income tax rate of 43.6% differs from the federal statutory
     rate of 35% due to state and local taxes.
     
^5   Non-GAAP net loss from continuing operations divided by 119.0 million
     dilutive shares for the three months ended December 31, 2012.
     


Reconciliation of GAAP to Non-GAAP (Loss)/Income from Continuing Operations (Continued)
                                                                             
                       Year Ended December 31, 2012                                  Year Ended December 31, 2011
(Dollars in
thousands,             (Unaudited)                                                   (Unaudited)
except per share
amounts)
                       GAAP            Adjustments      Non-GAAP             GAAP            Adjustments      Non-GAAP
                                                                                                                            
Net revenues:          $ 203,595         $ -                $ 203,595           $ 261,172         $ (2,330  )^1       $ 258,842 
                                                                                                                            
Expenses
(excluding
interest):
Compensation and         143,414            (330    )^2         143,084              162,537            (3,632  )^3         158,905
benefits
Non-compensation        113,534          (24,084 )^4        89,450             160,512          (80,842 )^5        79,670  
expenses
Total expenses
(excluding              256,948          (24,414 )          232,534            323,049          (84,474 )          238,575 
interest)
                                                                                                                            
(Loss)/income
from continuing
operations               (53,353 )          24,414              (28,939 )            (61,877 )          82,144              20,267
before income
taxes
Provision for           24,602           (29,144 )^6        (4,542  )           2,207            5,928   ^7         8,135   
income taxes
Net
(loss)/income          $ (77,955 )        $ 53,558           $ (24,397 )          $ (64,084 )        $ 76,216           $ 12,132  
from continuing
operations
                                                                                                                            
Earnings per
share:
Diluted -
continuing             $ (0.66   )                            $ (0.21   )^8        $ (0.52   )                            $ 0.09    ^8
operations
As a percentage
of net revenues:
Compensation and         70.4    %                              70.3    %            62.2    %                              61.4    %
benefits
(Loss)/income
from continuing
operations               (26.2   %)                             (14.2   %)           (23.7   %)                             7.8     %
before income
taxes


^1  Represents the bargain purchase gain related to the ClearPoint
     acquisition on January 3, 2011.
     
^2   Represents severance expense recognized during the first quarter of 2012.
     
     Includes (i) severance and stock-based compensation expense of $1.9
     million related to the investment banking realignment, which resulted in
^3   the termination of 32 investment banking employees and certain
     administrative positions, and (ii) $1.7 million due to the resignation of
     the former interim CEO in the second quarter of 2011.
     
     Represents the goodwill impairment charge recognized during the second
^4   quarter of 2012 of $21.1 million, as well as $3.0 million of legal,
     consulting and advisory fees incurred in connection with our strategic
     review process.
     
     Includes goodwill and intangible impairment charges of $80.2 million and
^5   other non-compensation expenses of $0.6 million as a result of the
     investment banking realignment.
     
^6   Represents the change in the valuation allowance on the Company’s
     deferred tax assets.
     
     The effective income tax rate of 7.2% differs from the federal statutory
^7   rate of 35% primarily due to non-tax deductible goodwill, the non-taxable
     bargain purchase gain and state and local taxes.
     
     Non-GAAP net (loss)/income from continuing operations divided by 119.0
^8   million and 129.5 million dilutive shares for the year ended December 31,
     2012 and 2011, respectively.
     

                                       
Reconciliation of GAAP to Non-GAAP Pre-Tax (Loss)/Income from Continuing
Operations – by Segment
                                           
Three Months Ended December 31, 2012
                                                            
Other
                      
(In thousands)
                                                                    
Revenues - GAAP         $ 2,461           
                                                                    
Expenses - GAAP           9,573
                                                                    
Adjustments              (703   )^1
                                                                    
Expenses - non GAAP      8,870  
                                           
Pre-tax loss from
continuing operations   $ (6,409 )
- non GAAP
                                                                    
Three Months Ended September 30, 2012
                                                             
Credit Products                            Other
                                                                    
(In thousands)                             (in thousands)
                                                                    
Revenues - GAAP         $ 18,804          Revenues – GAAP        $ 1,185  
                                                                    
Expenses - GAAP           14,865           Expenses – GAAP          11,181
                                                                    
Adjustments              1,320  ^2        Adjustments             (1,285 )^1
                                                                    
Expenses - non GAAP      16,185          Expenses – non GAAP     9,896  
                                                                    
Pre-tax income from                        Pre-tax loss from
continuing operations   $ 2,619           continuing             $ (8,711 )
- non GAAP                                 operations – non
                                           GAAP


^1  Represents legal, consulting and advisory fees incurred in connection
     with our strategic review process.
     
^2   Represents the reversal of previously accrued severance expense (of which
     $1.0 million is non-cash stock-based compensation).
     

                                   
Reconciliation of GAAP to Non-GAAP Pre-Tax (Loss)/Income from Continuing
Operations – by Segment (Continued)
                                                    
Year Ended December 31, 2012
                                                     
Credit Products                           Other
                                                             
(In thousands)                            (In thousands)
                                                                   
Revenues - GAAP        $ 74,432          Revenues - GAAP        $ 7,709   
                                                                   
Expenses - GAAP          70,692           Expenses - GAAP          63,614
                                                                   
Adjustments             (330   )^1       Adjustments             (24,084 )^2
                                                                   
Expenses - non          70,362          Expenses - non          39,530  
GAAP                                      GAAP
                                                                   
Pre-tax income                            Pre-tax loss
from continuing        $ 4,070           from continuing        $ (31,821 )
operations - non                          operations - non
GAAP                                      GAAP
                                                                   
                                                                   
Year Ended December 31, 2011
                                                        
Investment Banking                        Other
                                                                   
(In thousands)                            (In thousands)
                                                                   
Revenues - GAAP        $ 26,611          Revenues – GAAP        $ 12,724  
                                                                   
Adjustments             -               Adjustments             (2,330  )^3
                                                                   
Revenues - non          26,611          Revenues – non          10,394  
GAAP                                      GAAP
                                                                   
Expenses - GAAP          24,321           Expenses – GAAP          116,063
                                                                   
Adjustments             (2,294 )^4       Adjustments             (82,180 )^5
                                                                   
Expenses - non          22,027          Expenses – non          (33,883 )
GAAP                                      GAAP
                                                                   
Pre-tax loss                              Pre-tax loss
from continuing        $ 4,584           from continuing        $ (23,489 )
operations - non                          operations – non
GAAP                                      GAAP


^1  Represents severance expense recognized during the first quarter of 2012.
     
     Represents the goodwill impairment charge recognized during the three
^2   months ended June 30, 2012 of $21.1 million, as well as $3.0 million of
     legal, consulting and advisory fees incurred in connection with our
     strategic review process.
     
^3   Represents the bargain purchase gain related to the ClearPoint
     acquisition on January 3, 2011.
     
     Represents (i) severance and stock-based compensation expense of $1.9
     million related to the investment banking realignment, which resulted in
^4   the termination of 32 investment banking employees and certain
     administrative positions, and also includes (ii) other non-compensation
     expenses of $0.4 million as a result of the investment banking
     realignment.
     
     Includes (i) goodwill and intangible impairment charges of $80.2 million
     related to the investment banking realignment, (ii) $1.7 million due to
^5   the resignation of the former interim CEO in the second quarter of 2011
     and (iii) other non-compensation expenses of $0.2 million in connection
     with the company-wide strategic review conducted in the third quarter of
     2011.
     

              Return on Tangible Equity – Annualized (Non-GAAP)

Presented below is information on the Company’s annualized return on average
tangible stockholders’ equity (Non-GAAP):

                                                                       
                    Three Months Ended                                        Years Ended
                    December 31,     September 30,    December          December 31,     December 31,
                                                            31,
(Dollars in         2012               2012               2011             2012               2011      
thousands)
                    (Unaudited)         (Unaudited)         (Unaudited)       (Unaudited)         (Unaudited)
                                                                                                    
Net
(loss)/income
from                $ (10,783 )^1       $ (2,821  )^1       $ 1,765           $ (24,397 )^1       $ 12,132  ^1
continuing
operations
Plus:
Amortization
of                   96                71                70              278               1,540   
intangibles,
net of tax
Net
(loss)/income
from
continuing            (10,687 )           (2,750  )           1,835             (24,119 )           13,672
operations,
adjusted
(non-GAAP)
Net
(loss)/income
from
continuing          $ (42,748 )         $ (11,000 )         $ 7,340          $ (24,119 )         $ 13,672  
operations,
adjusted
(non-GAAP) -
annualized
                                                                                                    
Average total
stockholders’       $ 184,679           $ 190,333           $ 262,135         $ 215,356           $ 314,313
equity (GAAP)
Less: Average
intangible           (5,228  )          (4,002  )          (25,469 )        (13,042 )          (79,938 )
assets
Average
tangible
stockholders’       $ 179,451          $ 186,331          $ 236,666        $ 202,314          $ 234,375 
equity
(non-GAAP)
Annualized
return on
tangible             (23.8   %)         (5.9    %)         3.1     %        (11.9   %)         5.8     %
equity
(non-GAAP)
                                                                                                            

          Return on Average Stockholders’ Equity - Annualized (GAAP)

Presented below is information on the Company’s annualized return on average
stockholders’ equity, which is the most directly comparable GAAP metric to the
Non-GAAP metric above:

                                                                     
                    Three Months Ended                                      Years Ended
                    December 31,    September       December          December       December
                                       30,                31,               31,               31,
(Dollars in         2012              2012              2011             2012             2011      
thousands)
                    (Unaudited)        (Unaudited)        (Unaudited)       (Unaudited)       (Unaudited)
                                                                                                
Net
(loss)/income
from                $ (11,486 )        $ (2,801  )        $ 1,765          $ (77,955 )       $ (64,084 )
continuing
operations
Net
(loss)/income
from                $ (45,944 )        $ (11,204 )        $ 7,060          $ NM^2            $ NM^2
continuing
operations -
annualized
                                                                                                
Average total
stockholders'       $ 184,679         $ 190,333         $ 262,135        $ 215,356        $ 314,313 
equity
Annualized
return on            (24.9   %)        (5.9    %)        2.7     %        NM^2             NM^2
stockholders’
equity


     Designates non-GAAP financial results. A reconciliation of the Company’s
^1  GAAP results to non-GAAP financial results is set forth above under the
     caption “Reconciliation of GAAP to Non-GAAP Income from Continuing
     Operations.”
     
^2   Not meaningful
     

                                                                      
Summary Results of Operations
                                                                              
                        Three Months Ended                                    Years Ended
(In thousands,          December          September         December          December          December
except for per          31,            30,            31,               31,            31,
share amounts)
                        2012              2012              2011              2012              2011
Revenues:               (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
   Principal            $  7,908          $  15,652         $  17,515         $  52,771         $  89,108
   transactions
   Commissions             18,240            17,830            20,581            71,418            71,347
   Investment              12,765            1,996             3,345             30,553            33,069
   banking
   Investment              1,077             163               457               1,233             2,996
   gains, net
   Interest                11,165            6,879             19,993            48,796            66,194
   income
   Gain from
   bargain
   purchase -              -                 -                 -                 -                 2,330
   ClearPoint
   Funding, Inc.
   acquisition
   Fees and other         2,288            2,959            2,965            11,651           8,041
Total revenues             53,443            45,479            64,856            216,422           273,085
   Interest               2,567            2,149            3,616            12,827           11,913
   expense
Net revenues              50,876           43,330           61,240           203,595          261,172
Non-interest
expenses
   Compensation            41,554            25,534            33,478            143,414           162,537
   and benefits
   Impairment of
   goodwill and            -                 -                 -                 21,096            80,244
   intangible
   assets
   Clearing,
   settlement and          9,128             9,461             16,185            40,281            35,203
   brokerage
   Communications
   and data                3,107             3,224             3,363             12,806            13,471
   processing
   Professional            2,676             4,282             1,906             15,504            8,135
   fees
   Occupancy,
   depreciation            2,272             2,277             2,344             8,919             8,455
   and
   amortization
   Business                897               823               1,137             3,719             4,620
   development
   Other                  2,535            2,753            3,063            11,209           10,384
Total
non-interest              62,169           48,354           61,476           256,948          323,049
expenses
Loss from
continuing
operations before          (11,293)          (5,024)           (236)             (53,353)          (61,877)
income taxes and
discontinued
operations
Income tax                193              (2,223)          (2,001)          24,602           2,207
expense/(benefit)
(Loss)/income
from continuing            (11,486)          (2,801)           1,765             (77,955)          (64,084)
operations
Income/(loss)
from discontinued         224              33               383              265              (18,040)
operations, net
of taxes
Net (loss)/income       $  (11,262)       $  (2,768)        $  2,148          $  (77,690)       $  (82,124)
                                                                                                   
Earnings per
share:
   Basic
   (loss)/income
   per share
   Continuing           $  (0.10)         $  (0.02)         $  0.01           $  (0.66)         $  (0.52)
   operations
   Discontinued           -                -                -                -                (0.15)
   operations
   Net
   (loss)/income        $  (0.10)         $  (0.02)         $  0.02           $  (0.65)         $  (0.67)
   per share
                                                                                                   
   Diluted
   (loss)/income
   per share
   Continuing           $  (0.10)         $  (0.02)         $  0.01           $  (0.66)         $  (0.52)
   operations
   Discontinued           -                -                -                -                (0.15)
   operations
   Net
   (loss)/income        $  (0.10)         $  (0.02)         $  0.02           $  (0.65)         $  (0.67)
   per share
                                                                                                   
Weighted average
number of shares
of common stock:
   Basic                   119,046           118,699           122,647           118,977           123,439
   Diluted                 119,046           118,699           127,696           118,977           123,439
                                                                                                   

                                                      
Consolidated Statements of Financial Condition (Unaudited)
                                                                
(In
thousands,
except for          December 31,          September 30,         December 31,
share and per
share
amounts)
                    2012                 2012                 2011          
Assets:
Cash and cash       $ 44,868              $ 28,482              $ 36,672
equivalents
Cash and
securities
segregated
for                   13,000                4,000                 9,612
regulatory
and other
purposes
Securities
purchased
under                 -                     132,608               1,523,227
agreements to
resell
Receivables
from
Brokers,
dealers and           12,824                125,008               58,776
clearing
organizations
Related               1,474                 1,372                 1,337
parties
Others                12,563                10,029                16,161
Financial
instruments           1,096,181             1,100,731             1,554,660
owned, at
fair value
Investments           20,478                19,253                18,310
Office
equipment and
leasehold             5,311                 5,726                 6,735
improvements,
net
Goodwill              1,212                 -                     21,096
Intangible            5,303                 3,940                 4,311
assets
Income taxes          7,394                 4,807                 12,102
receivable
Deferred tax          -                     2,654                 30,766
assets, net
Other assets         9,030               9,106               9,791       
Total Assets        $ 1,229,638          $ 1,447,716          $ 3,303,556   
Liabilities
and
Stockholders'
Equity
Liabilities
Payables to:
Brokers,
dealers and         $ 638,009             $ 791,172             $ 1,108,664
clearing
organizations
Related               2,944                 594                   4,939
parties
Others                2,251                 2,804                 3,243
Securities
sold under            159,386               103,562               1,478,081
agreements to
repurchase
Securities
sold, but not
yet                   132,730               262,274               184,996
purchased, at
fair value
Secured               64,908                66,575                213,611
borrowings
Accrued               34,199                17,203                26,274
compensation
Accounts
payable and           9,866                 10,750                18,223
accrued
expenses
Income taxes          3,755                 3,804                 3,979
payable
Deferred tax          -                     -                     1,622
liabilities
Subordinated         595                 595                 801         
debt
Total                1,048,643           1,259,333           3,044,433   
Liabilities
Stockholders'
Equity
Common stock
($.01 par
value;                1,337                 1,337                 1,337
authorized
200,000,000
shares)
Additional
paid-in               453,938               451,850               463,497
capital
Deferred              124                   124                   161
compensation
Accumulated           (263,577    )         (254,172    )         (185,887    )
deficit
Treasury
stock, at            (10,827     )        (10,756     )        (19,985     )
cost
Total
Stockholders'        180,995             188,383             259,123     
Equity
Total
Liabilities
and                 $ 1,229,638          $ 1,447,716          $ 3,303,556   
Stockholders'
Equity
                                                                  
Common stock
(in shares)
Shares                133,769,219          133,769,219          133,714,786 
issued:
Shares                124,440,655          124,570,033          120,883,601 
outstanding:
                                                                  
Treasury
stock (in             9,328,564            9,199,186            12,831,185  
shares):
                                                                  

                         Conference Call Information

The Company will hold a conference call today, February 15, 2013, at 8:30 A.M.
(EST). This event can be accessed on the Investor Relations portion of the
Gleacher & Company website at www.gleacher.com, as well as through the Thomson
StreetEvents Network. Individual investors can listen to the call at
www.earnings.com, Thomson’s individual investor portal, powered by
StreetEvents. Institutional investors can access the call via Thomson
StreetEvents (www.streetevents.com), a password protected event management
site. To participate on the call, please dial 888.680.0869 (domestic) or
617.213.4854 (international), participant passcode 28016360, or request the
Gleacher & Company earnings call.

Pre-registration is available at any time prior to and during the call, which
provides immediate entry into the call. Pre-registration can be accessed at
the following website:

www.theconferencingservice.com/prereg/key.process?key=PARRDNEUV

For those who cannot listen to the live broadcast, a recording of the call
will be available for seven days following the call by dialing 888.286.8010
(domestic) or 617.801.6888 (international), participant passcode 55469646.

                           About Gleacher & Company

Gleacher & Company, Inc. (Nasdaq: GLCH) is an independent investment bank that
provides corporate and institutional clients with strategic and financial
advisory services, including merger and acquisition, restructuring,
recapitalization, and strategic alternative analysis, as well as capital
raising, research based investment analysis, and securities brokerage
services, and, through a subsidiary, engages in residential mortgage lending.
For more information, please visit www.gleacher.com.

                          Forward Looking Statements

This press release contains “forward-looking statements.” These statements are
not historical facts but instead represent the Company’s belief or plans
regarding future events, many of which are inherently uncertain and outside of
the Company's control. The Company often, but not always, identifies
forward-looking statements by using words or phrases such as “anticipate,”
“estimate,” “plan,” “project,” “target,” “expect,” “continuing,” “ongoing,”
“believe” and “intend.” The Company’s forward-looking statements are based on
facts as the Company understands them at the time the Company makes any such
statement as well as estimates and judgments based on these facts. The
Company’s forward-looking statements may turn out to be inaccurate for a
variety of reasons, many of which are outside of its control. Factors that
could render the Company’s forward-looking statements subsequently inaccurate
include the conditions of the securities markets, generally, and demand for
the Company’s services within those markets, the risk of further credit rating
downgrades of the U.S. government by major credit rating agencies, the impact
of international and domestic sovereign debt uncertainties, the possibilities
of localized or global economic recession and other risks and factors
identified from time to time in the Company’s filings with the Securities and
Exchange Commission. Moreover, the Company’s previously disclosed strategic
plan, which is designed to improve its operating results, is still being
implemented. This plan may not be successful. You are cautioned not to place
undue reliance on these forward-looking statements. The Company does not
undertake to update any of its forward-looking statements.

Contact:

Investors
Gleacher & Company, Inc.
Thomas J. Hughes, 212-273-7100
Chief Executive Officer
or
Media
Joele Frank, Wilkinson Brimmer Katcher
Andrew Siegel / Nick Lamplough, 212-355-4449
 
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