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JMP’s net revenues up 74 per cent in Q2

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JMP Group’s total net revenues increased 74.2 per cent to a record USD37.5m for the second quarter of 2009 from USD21.5m for the second quarter of 2008.

JMP Group’s total net revenues increased 74.2 per cent to a record USD37.5m for the second quarter of 2009 from USD21.5m for the second quarter of 2008.

For the six months ended 30 June 2009, total net revenues increased 50.2 per cent to a record USD61.7m from USD41.0m for the six months ended 30 June 2008.

Net income was USD4.3m, or USD0.20 per diluted share, for the second quarter of 2009 compared to USD0.2m, or USD0.01 per diluted share, for the second quarter of 2008. For the six months ended 30 June 2009, net income attributable to JMP Group was also USD4.3m, or USD0.20 per diluted share compared to USD0.9m, or USD0.04 per diluted share, for the six months ended 30 June 2008.

Operating net income was USD4.3m, or USD0.20 per diluted share, for the second quarter of 2009, compared to USD1.2m, or USD0.06 per diluted share, for the second quarter of 2008. For the six months ended 30 June 2009, operating net income was USD4.9m, or USD0.23 per diluted share, compared to USD2.1m, or USD0.10 per diluted share, for the six months ended 30 June 2008.

On 7 April 2009 a newly formed subsidiary of JMP Group, JMP Credit Corporation, acquired Cratos Capital Partners and certain asset-backed securities issued by Cratos CLO I, a collateralized loan obligation managed by Cratos. The CLO holds a diversified portfolio of first lien corporate loans, which had a par value of USD467m at the time of acquisition. In the second quarter of 2009, JMP Credit contributed USD5.7m in net revenues and USD0.06 per diluted share to JMP Group’s operating net income.

‘We were very pleased with our record results for the second quarter, particularly in light of the challenging capital markets environment of the past few years and our expectation that 2009 would be a year of investing potential earnings into opportunistic growth,’ says Joe Jolson, JMP Group’s chairman and chief executive officer. ‘The quarter benefited from the solid performance of our institutional brokerage business and from a sharp recovery in investment banking revenues, thanks to an improvement in the US equities market and our decision to maintain our calling efforts during the downturn. We continue to add senior producers at JMP Securities-most recently a convertible sales and trading team that should have a positive impact on our brokerage and investment banking businesses.

‘Our asset management business posted another record quarter, buoyed by a net return on invested capital of more than 14 per cent for the period. Contributing to the favourable results were our hedge funds, which had another excellent quarter, producing net returns of 7.6 per cent on average; our investment in JMP Credit, which returned nearly 100 per cent for the quarter; and a recovery in our investments in New York Mortgage Trust and Hercules Technology Growth Capital, collectively up almost 40 per cent in the period. We are cautiously optimistic that the US economy has bottomed. Although we would not extrapolate the recent sharp recovery in the US equities market, we are increasingly confident that JMP’s decision to invest in incremental senior producers and new businesses during the downturn could yield continued strong results for our shareholders.’

Investment banking revenues were USD10.6m for the quarter, compared to USD10.8m for the second quarter of 2008. For the six months ended 30 June 2009, investment banking revenues were USD14.7m, compared to USD18.9m for the six months ended 30 June 2008. Investment banking revenues equaled 28.3 per cent of total net revenues in the second quarter, versus 50.4 per cent in the second quarter of 2008.

Net brokerage revenues were USD9.4m for the quarter, compared to USD8.7m for the second quarter of 2008. For the six months ended 30 June  2009, net brokerage revenues were USD17.9m, compared to USD16.9m for the six months ended 30 June 2008. Net brokerage revenues equalled 25.0 per cent of total net revenues in the second quarter, versus 40.5 per cent in the second quarter of 2008.

Asset management fees were USD4.0m for the quarter, compared to USD1.3m for the second quarter of 2008. For the six months ended 30 June 2009, asset management fees were USD12.5m, compared to USD4.1m for the six months ended 30 June 2008. Asset management fees equalled 10.8 per cent of total net revenues in the second quarter, versus 6.2 per cent in the second quarter of 2008.

Asset management-related fee revenues were USD4.7m for the quarter, compared to USD1.5m for the second quarter of 2008. Asset management-related fee revenues include asset management fees as well as certain fee revenues reported in the company’s financial statements as other income. Fee revenues (in particular, asset management fundraising fees generated by JMP Securities, loan fees, and revenues from fee-sharing arrangements with other asset managers) classified as other income were USD0.7m and USD0.2m for the second quarters of 2009 and 2008, respectively.

Client assets under management at 30 June 2009 totalled USD1.0bn, including USD528.3m of investments in hedge funds managed by Harvest Capital Strategies and USD497.9m par value of loans and cash collateralizing Cratos CLO I managed by JMP Credit. Client assets under management totalled USD397.6m at 30 June 2008 and USD501.9m at 31 March 2009.

On 4 August 2009, the company’s board of directors declared a dividend of USD0.01 per share for the second quarter of 2009, to be paid on 4 September 2009 to common stockholders of record as of 21 August 2009.

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