Cowen Announces Record Financial Results for Full Year 2020

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  • Reports Record 4Q20 US GAAP Net Income of $90.5 million, or $2.98 per diluted share

  • Economic Operating Income in 4Q20 of $138.7 million, or $4.58 per diluted share (Non-GAAP)

  • Record FY20 US GAAP Net Income attributable to Cowen Inc. stockholders of $209.6 million and record FY20 Economic Operating income of $335.9 million (Non-GAAP)

  • Record quarter and year for Investment Banking and Brokerage

  • Maintained quarterly cash dividend of $0.08 per common share

NEW YORK, Feb. 11, 2021 (GLOBE NEWSWIRE) -- Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced its operating results for the fourth quarter and full year ended December 31, 2020.

Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen, said, "I am proud of the dedication and hard work the Cowen team exhibited to achieve the strongest results in the firm's history. Because 2020 was a year of tremendous challenge, uncertainty and hardship for many, I am equally proud of our efforts to help our clients, our communities, and each other. We are grateful every day to be in a position to help our clients help others by solving their problems and enabling them to realize their visions. We are thankful that they put their trust in us. As we look ahead to 2021, we strive to live by our core values of vision, empathy, sustainability and tenacious teamwork."


Fourth Quarter 2020 Financial Summary

US GAAP

Economic Operating Income
(Non-GAAP)

Three Months Ended
December 31,

Three Months Ended
December 31,

($ in millions, except per share information)

2020

2019

Δ %

2020

2019

Δ %

Revenue/Economic Proceeds (Non-GAAP)

$

502.9

$

281.1

79

%

$

512.7

$

248.3

106

%

Net income (loss) attributable to common stockholders/Economic Operating Income (Non-GAAP)

$

90.5

$

3.5

2,486

%

$

138.7

$

16.3

751

%

Earnings (loss) per common share (diluted)

$

2.98

$

0.11

2,609

%

$

4.58

$

0.53

764

%

Note: Throughout this press release the Company presents non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). A reconciliation of these non-GAAP measures appears under the section, "Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures."


Fourth Quarter and Full Year 2020 Operating Financial Highlights

Record Investment Banking performance:

Record quarter and year for overall revenues, capital markets issuance and advisory and M&A revenues

Broad strength across products. Biotech, tools & diagnostics and sustainability all key earnings drivers

Record M&A proceeds driven by several high-fee engagements. Deal pipeline now at record high level

Record Brokerage performance with continuing share gains:

Markets Economic Proceeds (Non-GAAP) of $657.3 million ($2.60 million/trading day) in FY20, with a 4Q20 record high of $188.3 million ($2.94 million/day) (Non-GAAP).1

Strong growth in electronic trading, non-US execution, prime services, outsourced trading, securities finance, and special situations

Strong momentum in investment management:

Management fees at highest annual level since 2016, four investment strategies grew AUM year-over-year

Invested capital:

Full-year 2020 investment income economic proceeds (Non-GAAP) of $29.2 million from gains in balance sheet investments including Cowen Healthcare Investments and the Merchant Banking portfolio, including the sale of the Company's common shares of Nikola Corporation.

As of December 31, 2020, the Company had invested capital in Op Co totaling $722.8 million, down from $784.2 million as of September 30, 2020.

As of December 31, 2020, the Company had invested capital in Asset Co totaling $131.0 million, an increase of $2.3 million from the invested capital invested as of September 30, 2020.

The largest Asset Co investments were the investment in Italian wireless broadband provider Linkem S.p.A ($82.7 million), private equity funds Formation8/Eclipse ($39.2 million) and other private investments ($9.1 million).

Assets under Management

As of December 31, 2020, the Company had assets under management of $12.5 billion, up $0.7 billion from September 30, 2020 and an increase of $1.1 billion from December 31, 2019, respectively.


Capital Optimization Update

As of December 31, 2020, Cowen had book value of $32.34 per common share and tangible book value per common share of $25.95, up from book value of $30.48 and tangible book value of $24.32 at September 30, 2020, and up from book value of $24.77 and tangible book value of $18.72 at December 31, 2019.

In the fourth quarter of 2020, the Company repurchased $3.9 million of its common stock, or 165,040 shares, at an average price of $23.46 under the Company's existing share repurchase program. Outside the share repurchase program, in the fourth quarter of 2020 the Company acquired approximately $8.9 million of stock as a result of net share settlements relating to the vesting of equity awards, or 361,082 shares, at an average price of $24.51.

For full-year 2020, the Company repurchased 3,139,751 shares for $47.3 million, or an average price of $15.07 under the Company's existing share repurchase program. Outside the share repurchase program, in 2020 the Company acquired approximately $15.1 million of shares as a result of net share settlements relating to the vesting of equity awards, or 866,784 shares at an average price of $17.48.

Maintained Quarterly Cash Dividend

The Company maintained its quarterly cash dividend payable on its common stock. On February 10, 2021, the Board of Directors declared a cash dividend of $0.08 per common share. The dividend will be payable on March 15, 2021, to stockholders of record on March 1, 2021.


Select Balance Sheet Data

(Amounts in millions, except per share information)

December 31, 2020

December 31, 2019

Cowen Inc. stockholders' equity

$

969.5

$

809.9

Common equity (CE)

$

868.2

$

708.5

Tangible common equity (TCE)

$

696.7

$

535.6

Book value per share (CE/CSO)

$

32.34

$

24.77

Tangible book value per share (TCE/CSO)

$

25.95

$

18.72

Common shares outstanding (CSO)

26.8

28.6

Note: Common Equity (CE) is calculated as Cowen Inc, stockholders’ equity less our preferred stock issuance.
Tangible common equity (TCE) is calculated as common equity (CE) less goodwill and net intangible assets.



Cowen Inc.

US GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations

(Dollar and share amounts in thousands, except per share data)

Three Months Ended

Twelve Months Ended

December 31

December 31

2020

2019

2020

2019

Revenue

Investment banking

$

266,135

$

102,922

$

769,486

$

375,025

Brokerage

147,479

99,907

572,548

402,747

Management fees

12,304

11,128

47,515

32,608

Incentive income

465

823

592

1,547

Interest and dividends

59,912

45,067

187,459

174,913

Reimbursement from affiliates

271

246

1,048

1,026

Reinsurance premiums

11,204

17,267

30,147

46,335

Other

3,912

2,205

8,621

5,433

Consolidated Funds revenues

1,238

1,570

5,888

9,809

Total revenue

502,920

281,135

1,623,304

1,049,443

Interest and dividends expense

61,875

43,539

187,725

168,628

Total net revenue

441,045

237,596

1,435,579

880,815

Expenses

Employee compensation and benefits

277,394

147,161

860,531

535,772

Reinsurance claims, commissions and amortization of deferred acquisition costs

12,189

18,931

33,905

44,070

Operating, general, administrative and other expenses

104,890

84,584

369,840

335,499

Depreciation and amortization expense

5,353

5,470

22,677

20,460

Goodwill impairment

4,100

Consolidated Funds expenses

616

2,734

5,409

8,963

Total expenses

400,442

258,880

1,292,362

948,864

Other income (loss)

Net (losses) gains on securities, derivatives and other investments

92,139

18,969

175,877

80,409

Gain/(loss) on debt extinguishment

2,719

2,719

Consolidated Funds net (losses) gains

5,034

36,827

(24,376

)

58,363

Total other income (loss)

99,892

55,796

154,220

138,772

Income (loss) before income taxes

140,495

34,512

297,437

70,723

Income tax expense/(benefit)

37,784

5,238

90,373

14,853

Net income (loss)

102,711

29,274

207,064

55,870

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds

10,544

24,051

(9,299

)

31,239

Net income (loss) attributable to Cowen Inc.

92,167

5,223

216,363

24,631

Less: Preferred stock dividends

1,698

1,698

6,792

6,792

Net income (loss) attributable to Cowen Inc. common stockholders

$

90,469

$

3,525

$

209,571

$

17,839

Earnings (loss) per share:

Basic

$

3.36

$

0.12

$

7.54

$

0.60

Diluted

$

2.98

$

0.11

$

7.10

$

0.57

Weighted average shares used in per share data:

Basic

26,934

29,046

27,790

29,525

Diluted

30,316

30,722

29,519

31,286



U.S. GAAP Financial Measures

Fourth quarter 2020 revenue was $502.9 million versus $281.1 million in the fourth quarter of 2019. Full year 2020 revenue was $1.6 billion compared to $1.0 billion in the prior year. The year-over-year increase was due primarily to increased investment banking and brokerage activity.

Fourth quarter 2020 investment banking revenues increased $163.2 million to $266.1 million. Full year 2020 investment banking revenue increased $394.5 million to $769.5 million. During full-year 2020 the Company completed 165 underwriting transactions, 74 strategic advisory transactions and 12 debt capital markets transactions.

Fourth quarter 2020 brokerage revenues increased $47.6 million to $147.5 million. Full year 2020 brokerage revenues increased $169.8 million to $572.5 million. The revenue growth was attributable to an increase in institutional brokerage, including special situations trading and electronic trading commissions, as well as an increase in institutional services, primarily prime brokerage.

Fourth quarter 2020 employee compensation and benefits expenses was $277.4 million, an increase of $130.2 million from the prior-year period. Full year 2020 employee compensation and benefits expenses was $860.5 million compared to $535.8 million in the prior year. The year-over-year increase was due primarily to higher total revenues resulting in a higher compensation and benefits accrual.

Fourth quarter 2020 income tax expense was $37.8 million compared to $5.2 million in the prior-year quarter. Full year 2020 income tax expense was $90.4 million compared to $14.9 million in the prior year. The year-over-year change was primarily attributable to the increase in the Company's income before income taxes.

Fourth quarter 2020 total expenses totaled $400.4 million, an increase of $141.6 million from the prior-year period. Full year 2020 total expenses totaled $1.3 billion, compared to $948.9 million in the prior year. The year-over-year increase was due to higher compensation expenses and higher non-compensation expenses associated with increased investment banking and brokerage activity, partially offset by a reduction in marketing and business development expenses.

Fourth quarter 2020 net income attributable to common stockholders was $90.5 million compared to $3.5 million in the fourth quarter of 2019. Full-year 2020 net income attributable to common stockholders was $209.6 million compared to net income of $17.8 million in the prior year.

Non-GAAP Financial Measures

Throughout this press release, the Company presents supplemental financial measures that are not prepared in accordance with U.S. GAAP. These non-GAAP financial measures include (i) Economic Income (Loss), (ii) Economic Operating Income (Loss), (iii) Economic Proceeds and related components, (iv) Net Economic Proceeds and related components (v) Economic Expenses and related components and (vi) related per share measures. The Company believes that these non-GAAP financial measures, viewed in addition to, and not in lieu of, the Company’s reported US GAAP results, provide useful information to investors and analysts regarding its performance and overall results of operations as it presents investors and analysts with a supplemental operating view of the Company’s financials to help better inform their analysis of the Company’s performance.

These Non-GAAP financial measures are an integral part of the Company’s internal reporting to measure the performance of its business segments, allocate capital and other strategic decisions as well as assess the overall effectiveness of senior management. The Company believes that presenting these non-GAAP measures may provide expanded transparency into the Company’s business operations, growth opportunities and expense allocation decisions.

The Company’s primary non-GAAP financial measures of profit or loss are Economic Income (Loss) and Economic Operating Income (Loss). Economic Income (Loss) is a pre-tax measure that (i) includes management reclassifications which the Company believes provides additional insight on the performance of the Company’s core businesses and divisions (ii) eliminates the impact of consolidation for Consolidated Funds and excludes (iii) goodwill and intangible impairment (iv) certain other transaction-related adjustments and/or reorganization expenses and (v) certain costs associated with debt. Economic Operating Income (Loss) is a similar measure but before depreciation and amortization expenses. The Company believes that these non-GAAP financial measures provide analysts and investors transparency into the measures of profit and loss management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. Additionally, the measures provide investors and analysts with additional insight into the activities of the Company’s core businesses, taking into account, among other things, the impact of minority investment stakes, securities borrowing and lending activities and expenses from investment banking activities on US GAAP reported results.

In addition to Economic Income (Loss) and Economic Operating Income (Loss), the Company also presents Economic Proceeds, Net Economic Proceeds, Economic Expenses, as well as their related components. These measures include management reclassifications and the elimination of the impact of the consolidation for Consolidated funds as described for Economic Income (Loss) and Economic Operating Income (Loss) described above. These adjustments are meant to provide comparability to our peers as well as to provide investors and analysts with transparency into how the Company manages its operating businesses and how analysts and investors review and analyze the Company’s and its peers’ similar lines of businesses. For example, among others, within the Company’s Op Co business segment, investors and analysts typically review and analyze the performance of investment banking revenues net of underwriting expenses and excluding the impact of reimbursable expenses. Additionally, the performance of the Company’s Markets business is typically analyzed as a unit incorporating commissions, interest from securities financing transactions and gains and losses from proprietary and facilitation trading. The Company’s investment management business performance is analyzed and reviewed by investors and analysts through investment income, incentive income and management fees. The presentation of Economic Proceeds, Net Economic Proceeds, Economic Expenses as well as their related components align with these and other examples of how the Company’s business activities and performance are reviewed by analysts and investors in addition to providing simplification related to legacy businesses and investments for which the Company maintains long-term monetization strategies . Additionally, the Company manages its operating businesses to an Economic Compensation-to-Proceeds ratio. Presentation of Economic Compensation Expense and Economic Proceeds provides transparency in addition to the Company’s US GAAP Compensation Expense.

Reconciliations to comparable US GAAP measures are presented along with the Company’s Non-GAAP financial measures. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other public companies and are not identical to corresponding measures used in our various agreements or public filings.

These Non-GAAP measures should not be considered in isolation or as a substitute for revenue, expenses, net income, operating cash flows, investing and financing activities, or other income or cash flow statement data prepared in accordance with US GAAP. As a result of the adjustments made to arrive at Economic Income (Loss) described below, Economic Income (Loss) has limitations in that it does not take into account certain items included or excluded under US GAAP, including its consolidated funds.


Economic Proceeds

Three Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

(Dollar amounts in thousands)

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Economic Proceeds

Investment banking

$

254,402

$

$

254,402

$

96,711

$

$

96,711

$

729,180

$

$

729,180

$

351,085

$

$

351,085

Brokerage

185,824

185,824

113,047

113,047

652,647

652,647

459,143

459,143

Management fees

16,430

312

16,742

10,305

187

10,492

58,154

946

59,100

40,321

1,976

42,297

Incentive income

42,606

1,769

44,375

10,603

370

10,973

83,435

1,927

85,362

44,600

1,132

45,732

Investment income (loss)

5,220

5,108

10,328

18,788

(2,178

)

16,610

37,786

(8,564

)

29,222

32,614

3,111

35,725

Other economic proceeds

1,073

1

1,074

490

1

491

775

5

780

5,785

58

5,843

Total: Economic Proceeds

505,555

7,190

512,745

249,944

(1,620

)

248,324

1,561,977

(5,686

)

1,556,291

933,548

6,277

939,825

Economic Interest Expense

6,048

1,109

7,157

6,205

1,402

7,607

24,519

5,123

29,642

22,576

5,449

28,025

Net Economic Proceeds

$

499,507

$

6,081

$

505,588

$

243,739

$

(3,022

)

$

240,717

$

1,537,458

$

(10,809

)

$

1,526,649

$

910,972

$

828

$

911,800


Economic Proceeds were $512.7 million versus $248.3 million in the fourth quarter of 2019, an increase of 106%. Full-year 2020 economic proceeds rose 67%.

Investment Banking Economic Proceeds were $254.4 million, up 163% versus the prior-year period, driven by stronger equity capital markets activity as well as higher-fee M&A transactions. Full-year 2020 banking proceeds rose 108%.

Brokerage Economic Proceeds of $185.8 million were up 64% versus the prior-year period, driven by strength in non-US trading, electronic trading, prime services and securities finance. Full-year 2020 brokerage proceeds rose 42%.

Management Fees Economic Proceeds rose 60% year-over-year to $16.7 million in the fourth quarter, driven by higher AUM in the sustainability strategy, private healthcare strategy and the healthcare royalties strategy. Full-year 2020 management fees rose 40%.

Incentive Income Economic Proceeds were $44.4 million in the fourth quarter of 2020, up from income of $11.0 million in the prior-year period. Fourth quarter 2020 incentive income reflects higher performance fees in the private healthcare strategy and the activist strategy. Full-year 2020 incentive income rose 87%.

Investment Income Economic Proceeds posted income of $10.3 million, versus income of $16.6 million in the prior-year period. Fourth quarter 2020 proceeds include increases in the value of investments in the private healthcare strategy, activist strategy and merchant banking portfolio, partially offset by a negative-mark-to market adjustment on Cowen's Nikola holdings, which were substantially reduced during the quarter. Full-year 2020 investment income economic proceeds declined 18%.


Economic Expenses

Three Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

(Dollar amounts in thousands)

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Economic Expenses

Compensation & Benefits

$

278,273

$

1,674

$

279,947

$

145,875

$

687

$

146,562

$

860,753

$

3,767

$

864,520

$

532,468

$

5,070

$

537,538

Non-Compensation Expenses

83,976

(46

)

83,930

72,997

1,311

74,308

312,173

350

312,523

294,614

3,924

298,538

Depreciation & Amortization

5,900

5

5,905

5,447

6

5,453

22,655

22

20,403

36

20,439

Non-Controlling Interest

1,308

1,308

1,852

1,852

6,892

6,892

4,796

4,796

Total: Economic Expenses

$

369,457

$

1,633

$

371,090

$

226,171

$

2,004

$

228,175

$

1,202,473

$

4,139

$

1,206,612

$

852,281

$

9,030

$

861,311


Economic Compensation Expenses expense was $279.9 million compared to $146.6 million in the fourth quarter of 2019. The increase was due to higher revenues offset only partially by a lower economic compensation-to-proceeds ratio. The fourth quarter 2020 economic compensation-to-proceeds ratio was 54.6%, down from 56.1% in 3Q20 and down from 59.0% in 4Q19. Full-year 2020 compensation-to-proceeds ratio was 55.6%, down from 57.2% in full-year 2019.

Economic Non-compensation Expenses Fourth quarter 2020 fixed non-compensation expenses increased $3.5 million from the prior-year period to $39.8 million. The increase was due in part to higher service fees offset only partially by reduced office service expenses. Variable non-compensation expenses were $44.1 million, up from $38.0 million in the fourth quarter of 2019. The increase is related in part to higher brokerage and trade execution costs due to increased volumes, partially offset by lower travel, entertainment and business development expenses. Full-year 2020 non-compensation-to-proceeds ratio was 20.1%, down from 31.8% in full-year 2019.


Economic Income and Economic Operating Income

Three Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

(Dollar amounts in thousands)

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Op Co

Asset Co

Total

Economic Income (loss) *

$

128,607

$

4,193

$

132,800

$

16,193

$

(5,349

)

$

10,844

$

329,381

$

(16,136

)

$

313,245

$

53,257

$

(9,560

)

$

43,697

Add: Depreciation & amortization

5,900

5

5,905

5,447

6

5,453

22,655

22

22,677

20,403

36

20,439

Economic Operating Income (Loss)

$

134,507

$

4,198

$

138,705

$

21,640

$

(5,343

)

$

16,297

$

352,036

$

(16,114

)

$

335,922

$

73,660

$

(9,524

)

$

64,136

Economic Income per common share

$

4.24

$

0.14

$

4.38

$

0.53

$

(0.17

)

$

0.35

$

11.16

$

(0.55

)

$

10.60

$

1.69

$

(0.31

)

$

1.40

Economic Operating Income per common share

$

4.44

$

0.14

$

4.58

$

0.70

$

(0.17

)

$

0.53

$

11.93

$

(0.55

)

$

11.38

$

2.35

$

(0.30

)

$

2.06

* Economic Income (loss) is net of preferred dividends


The following tables reconciles total US GAAP Revenues and Other Income (Loss) to total Economic Proceeds for the three and twelve months ended December 31, 2020 and 2019:

For the three months ended December 31, 2020
(Dollar amounts in thousands)

Investment
Banking

Brokerage

Management
Fees

Incentive
Income

Investment
Income

Interest and
Dividends

Reimbursement
from Affiliates

Reinsurance
premiums

Other
revenues

Consolidated
Funds
Revenues

Other
Income
(Loss)

Total

Total US GAAP Revenues and Other Income (Loss)

$

266,135

$

147,479

$

12,304

$

465

$

$

59,912

$

271

$

11,204

$

3,912

$

1,238

$

99,892

$

602,812

Management Presentation Reclassifications:

Underwriting expenses

a

(6,041

)

(6,041

)

Reimbursable client expenses

b

(5,692

)

(271

)

(5,963

)

Securities financing interest expense

c

958

(46,911

)

(45,953

)

Fund start-up costs and distribution fees

d

(293

)

(540

)

(467

)

(1,773

)

(3,073

)

Certain equity method investments

e

3,439

6,879

(7,362

)

2,956

Carried interest

f

37,498

(37,498

)

Proprietary trading gains and losses

g

29,944

(4,786

)

(64

)

(39,125

)

(14,031

)

Insurance related activities expenses

h

(11,204

)

(987

)

(12,191

)

Facilitation trading gains and losses

i

37,680

(19,616

)

(8,215

)

(11,809

)

(1,960

)

Total Management Presentation Reclassifications:

(11,733

)

38,345

2,899

43,910

10,328

(59,912

)

(271

)

(11,204

)

(2,824

)

(95,794

)

(86,256

)

Fund Consolidated Reclassifications

l

1,539

(14

)

(1,238

)

(1,379

)

(1,092

)

Income Statement Adjustments

Debt extinguishment

q

(2,719

)

(2,719

)

Total Economic Proceeds

$

254,402

$

185,824

$

16,742

$

44,375

$

10,328

$

$

$

$

1,074

$

$

$

512,745



For the three months ended December 31, 2019
(Dollar amounts in thousands)

Investment
Banking

Brokerage

Management
Fees

Incentive
Income

Investment
Income

Interest and
Dividends

Reimbursement
from Affiliates

Reinsurance
premiums

Other
revenues

Consolidated
Funds
Revenues

Other
Income
(Loss)

Total

Total US GAAP Revenues and Other Income (Loss)

$

102,922

$

99,907

$

11,128

$

823

$

$

45,067

$

246

$

17,267

$

2,205

$

1,570

$

55,796

$

336,931

Management Presentation Reclassifications:

Underwriting expenses

a

(2,684

)

(2,684

)

Reimbursable client expenses

b

(10,139

)

(274

)

(10,413

)

Securities financing interest expense

c

6,791

(34,984

)

(28,193

)

Fund start-up costs and distribution fees

d

(4,314

)

(1,120

)

(5,434

)

Certain equity method investments

e

3,049

4,240

(5,169

)

2,120

Carried interest

f

5,867

(5,867

)

Proprietary trading gains and losses

g

20,934

(4,667

)

(728

)

(12,076

)

3,463

Insurance related activities expenses

h

(17,267

)

134

(17,133

)

Facilitation trading gains and losses

i

6,612

6,349

(4,324

)

(5,416

)

(5,090

)

(1,869

)

Total Management Presentation Reclassifications:

(6,211

)

13,140

(1,265

)

10,107

16,610

(45,067

)

(274

)

(17,267

)

(1,714

)

(28,202

)

(60,143

)

Fund Consolidated Reclassifications

l

629

43

28

(1,570

)

(27,594

)

(28,464

)

Total Economic Proceeds

$

96,711

$

113,047

$

10,492

$

10,973

$

16,610

$

$

$

$

491

$

$

$

248,324



For the twelve months ended December 31, 2020
(Dollar amounts in thousands)

Investment
Banking

Brokerage

Management
Fees

Incentive
Income

Investment
Income

Interest and
Dividends

Reimbursement
from Affiliates

Reinsurance
premiums

Other
revenues

Consolidated
Funds
Revenues

Other
Income
(Loss)

Total

Total US GAAP Revenues and Other Income (Loss)

$

769,486

$

572,548

$

47,515

$

592

$

$

187,459

$

1,048

$

30,147

$

8,621

$

5,888

$

154,220

$

1,777,524

Management Presentation Reclassifications:

Underwriting expenses

a

(22,565

)

(22,565

)

Reimbursable client expenses

b

(17,741

)

(1,098

)

(18,839

)

Securities financing interest expense

c

14,499

(142,998

)

(128,499

)

Fund start-up costs and distribution fees

d

(293

)

(3,970

)

(719

)

(2,529

)

(7,511

)

Certain equity method investments

e

12,540

24,121

(28,346

)

8,315

Carried interest

f

61,335

(61,335

)

Proprietary trading gains and losses

g

42,564

(17,442

)

(1,518

)

(56,351

)

(32,747

)

Insurance related activities expenses

h

(30,147

)

(3,759

)

(33,906

)

Facilitation trading gains and losses

i

65,893

(13,342

)

(27,019

)

(31,768

)

(6,236

)

Total Management Presentation Reclassifications:

(40,306

)

80,099

8,570

84,737

29,222

(187,459

)

(1,098

)

(30,147

)

(7,806

)

(177,800

)

(241,988

)

Fund Consolidated Reclassifications

l

3,015

33

50

(35

)

(5,888

)

26,299

23,474

Income Statement Adjustments

Debt extinguishment

q

(2,719

)

(2,719

)

Total Economic Proceeds

$

729,180

$

652,647

$

59,100

$

85,362

$

29,222

$

$

$

$

780

$

$

$

1,556,291



For the twelve months ended December 31, 2019
(Dollar amounts in thousands)

Investment
Banking

Brokerage

Management
Fees

Incentive
Income

Investment
Income

Interest and
Dividends

Reimbursement
from Affiliates

Reinsurance
premiums

Other
revenues

Consolidated
Funds
Revenues

Other
Income
(Loss)

Total

Total US GAAP Revenues and Other Income (Loss)

$

375,025

$

402,747

$

32,608

$

1,547

$

$

174,913

$

1,026

$

46,335

$

5,433

$

9,809

$

138,772

$

1,188,215

Management Presentation Reclassifications:

Underwriting expenses

a

(15,067

)

(15,067

)

Reimbursable client expenses

b

(15,485

)

(1,148

)

(16,633

)

Securities financing interest expense

c

22,198

(132,000

)

(109,802

)

Fund start-up costs and distribution fees

d

(5,500

)

(1,123

)

(6,623

)

Certain equity method investments

e

12,919

19,975

(25,204

)

7,690

Carried interest

f

23,610

(23,610

)

Proprietary trading gains and losses

g

54,455

(24,067

)

(725

)

(44,631

)

(14,968

)

Insurance related activities expenses

h

(46,335

)

2,243

(44,092

)

Facilitation trading gains and losses

i

6,612

34,198

(18,730

)

(18,846

)

(8,662

)

(5,428

)

Total Management Presentation Reclassifications:

(23,940

)

56,396

7,419

43,585

35,725

(174,913

)

(1,148

)

(46,335

)

395

(102,107

)

(204,923

)

Fund Consolidated Reclassifications

l

2,270

600

122

15

(9,809

)

(36,665

)

(43,467

)

Total Economic Proceeds

$

351,085

$

459,143

$

42,297

$

45,732

$

35,725

$

$

$

$

5,843

$

$

$

939,825



The following table reconciles total US GAAP interest and dividends expense to total Economic Interest Expense for the three and twelve months ended December 31, 2020 and 2019:

Three Months Ended December 31,

Twelve Months Ended December 31,

(Dollar amounts in thousands)

2020

2019

2020

2019

Total US GAAP Interest & Dividend Expense

$

61,875

$

43,539

$

187,725

$

168,628

Management Presentation Reclassifications:

Securities financing interest expense

c

(45,953

)

(28,193

)

(128,499

)

(109,802

)

Proprietary trading gains and losses

g

(5,700

)

(4,781

)

(18,849

)

(21,076

)

Facilitation trading gains and losses

i

(1,960

)

(1,869

)

(6,236

)

(5,428

)

Total Management Presentation Reclassifications:

(53,613

)

(34,843

)

(153,584

)

(136,306

)

Income Statement Adjustments:

Amortization of discount/(premium) on debt

m

(1,105

)

(1,089

)

(4,499

)

(4,297

)

Total Economic Interest Expense

$

7,157

$

7,607

$

29,642

$

28,025



The following tables reconcile total US GAAP Expenses and non-controlling interests to total Economic Expenses for the three and twelve months ended December 31, 2020 and 2019:

Three Months Ended December 31, 2020

Three Months Ended December 31, 2019

(Dollar amounts in thousands)

Employee Compensation and Benefits

Non-compensation US GAAP Expenses (including Depreciation and Amortization)

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds

Total

Employee Compensation and Benefits

Non-compensation US GAAP Expenses (including Depreciation and Amortization)

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds

Total

Total US GAAP

$

277,394

$

123,048

$

10,544

$

410,986

$

147,161

$

111,719

$

24,051

$

282,931

Management Presentation Reclassifications:

Underwriting expenses

a

(6,041

)

(6,041

)

(2,684

)

(2,684

)

Reimbursable client expenses

b

(5,963

)

(5,963

)

(10,413

)

(10,413

)

Fund start-up costs and distribution fees

d

(3,073

)

(3,073

)

(5,434

)

(5,434

)

Certain equity method investments

e

2,956

2,956

2,120

2,120

Proprietary trading gains and losses

g

1,737

(10,068

)

(8,331

)

6,565

1,679

8,244

Insurance related activities expenses

h

(12,191

)

(12,191

)

(17,133

)

(17,133

)

Associated partner/banker compensation

j

2,908

(2,908

)

1,054

(1,054

)

Management company non-Controlling interest

k

(355

)

(953

)

1,308

(1,653

)

(199

)

1,852

Total Management Presentation Reclassifications:

2,553

(26,436

)

(8,760

)

(32,643

)

(599

)

(28,232

)

3,531

(25,300

)

Fund Consolidated Reclassifications

l

(616

)

(476

)

(1,092

)

(2,734

)

(25,730

)

(28,464

)

Income Statement Adjustments:

Acquisition adjustments

n

(4,282

)

(4,282

)

(992

)

(992

)

Goodwill and/or other impairment

o

(1,879

)

(1,879

)

Total Income Statement Adjustments:

(6,161

)

(6,161

)

(992

)

(992

)

Total Economic Expenses

$

279,947

$

89,835

$

1,308

$

371,090

$

146,562

$

79,761

$

1,852

$

228,175



Twelve Months Ended December 31, 2020

Twelve Months Ended December 31, 2019

(Dollar amounts in thousands)

Employee Compensation and Benefits

Non-compensation US GAAP Expenses (including Depreciation and Amortization)

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds

Total

Employee Compensation and Benefits

Non-compensation US GAAP Expenses (including Depreciation and Amortization)

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds

Total

Total US GAAP

$

860,531