Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | PJC | |
Entity Registrant Name | Piper Jaffray Companies | |
Entity Central Index Key | 1,230,245 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 14,827,021 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | ||
Assets | ||||
Cash and cash equivalents | [1] | $ 68,774 | $ 33,793 | |
Receivables from brokers, dealers and clearing organizations | 174,065 | 145,394 | ||
Financial instruments and other inventory positions owned | 635,893 | 663,330 | ||
Financial instruments and other inventory positions owned and pledged as collateral | 162,227 | 720,047 | ||
Total financial instruments and other inventory positions owned | 798,120 | 1,383,377 | ||
Fixed assets (net of accumulated depreciation and amortization of $61,897 and $55,944, respectively) | 31,267 | 25,179 | ||
Goodwill | 81,855 | 81,855 | ||
Intangible assets (net of accumulated amortization of $93,262 and $85,417, respectively) | 14,989 | 22,834 | ||
Investments | 152,380 | 176,212 | ||
Net deferred income tax assets | 103,287 | 101,205 | ||
Other assets | 68,699 | 54,834 | ||
Total assets | 1,493,436 | 2,024,683 | ||
Liabilities and Shareholders’ Equity | ||||
Short-term financing | 49,957 | 289,937 | ||
Senior notes | 125,000 | 125,000 | ||
Payables to brokers, dealers and clearing organizations | 6,371 | 19,392 | ||
Financial instruments and other inventory positions sold, but not yet purchased | 254,585 | 399,227 | ||
Accrued compensation | 252,448 | 400,092 | ||
Other liabilities and accrued expenses | 57,660 | 49,800 | ||
Total liabilities | 746,021 | 1,283,448 | ||
Shareholders’ equity: | ||||
Common stock, $0.01 par value: Shares authorized: 100,000,000 at September 30, 2018 and December 31, 2017; Shares issued: 19,517,285 at September 30, 2018 and 19,512,914 at December 31, 2017; Shares outstanding: 13,366,703 at September 30, 2018 and 12,911,149 at December 31, 2017 | 195 | 195 | ||
Additional paid-in capital | 801,417 | 791,970 | ||
Retained earnings (1) | 169,894 | [2] | 176,270 | |
Less common stock held in treasury, at cost: 6,150,582 shares at September 30, 2018 and 6,601,765 shares at December 31, 2017 | (270,046) | (273,824) | ||
Accumulated other comprehensive loss | (1,249) | (1,279) | ||
Total common shareholders’ equity | 700,211 | 693,332 | ||
Noncontrolling interests | 47,204 | 47,903 | ||
Total shareholders’ equity | 747,415 | 741,235 | ||
Total liabilities and shareholders’ equity | $ 1,493,436 | $ 2,024,683 | ||
[1] | Upon adoption of ASU 2016-18, restricted cash includes cash and cash equivalents previously segregated for regulatory purposes. See Note 2 for further discussion. | |||
[2] | Includes the cumulative effect adjustment upon adoption of ASU 2014-09, as amended. See Note 2 for further discussion. |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation and amortization on fixed assets | $ 61,897 | $ 55,944 |
Accumulated amortization on intangible assets | $ 93,262 | $ 85,417 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 19,517,285 | 19,512,914 |
Common stock, shares outstanding | 13,366,703 | 12,911,149 |
Common stock held in treasury, shares | 6,150,582 | 6,601,765 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |||
Revenues: | ||||||
Investment banking | $ 166,458 | $ 190,482 | $ 411,203 | $ 461,260 | ||
Institutional brokerage | 31,738 | 34,873 | 92,415 | 111,083 | ||
Asset management | 13,377 | 12,818 | 38,706 | 44,011 | ||
Interest | 6,592 | 7,164 | 25,183 | 22,649 | ||
Investment income/(loss) | 3,068 | (422) | 6,706 | 15,406 | ||
Total revenues | 221,233 | 244,915 | 574,213 | 654,409 | ||
Interest expense | 3,705 | 4,348 | 14,142 | 15,568 | ||
Net revenues | 217,528 | 240,567 | 560,071 | 638,841 | ||
Non-interest expenses: | ||||||
Compensation and benefits | 139,151 | 169,469 | 369,895 | 438,161 | ||
Outside services | 9,521 | 7,495 | 29,024 | 27,612 | ||
Occupancy and equipment | 8,967 | 8,127 | 26,476 | 24,846 | ||
Communications | 7,561 | 7,136 | 24,112 | 22,025 | ||
Marketing and business development | 6,718 | 6,683 | 21,702 | 22,512 | ||
Deal-related expenses | 7,671 | 0 | 18,888 | 0 | ||
Trade execution and clearance | 2,049 | 2,125 | 6,240 | 5,864 | ||
Restructuring costs | 0 | 0 | 3,770 | 0 | ||
Goodwill impairment | 0 | 114,363 | 0 | 114,363 | ||
Intangible asset amortization | 2,615 | 3,822 | 7,845 | 11,466 | ||
Back office conversion costs | 0 | 1,293 | 0 | 3,027 | ||
Other operating expenses | 3,640 | 2,290 | 9,187 | 8,525 | ||
Total non-interest expenses | 187,893 | 322,803 | 517,139 | 678,401 | ||
Income/(loss) before income tax expense/(benefit) | 29,635 | (82,236) | 42,932 | (39,560) | ||
Income tax expense/(benefit) | 7,365 | (31,423) | 5,351 | (26,912) | ||
Net income/(loss) | 22,270 | (50,813) | 37,581 | (12,648) | ||
Net income/(loss) applicable to noncontrolling interests | 247 | (1,100) | (1,271) | 3,217 | ||
Net income/(loss) applicable to Piper Jaffray Companies | 22,023 | (49,713) | 38,852 | (15,865) | ||
Net income/(loss) applicable to Piper Jaffray Companies' common shareholders | $ 19,377 | $ (50,415) | [1] | $ 33,650 | $ (18,106) | [1] |
Earnings/(loss) per common share | ||||||
Basic | $ 1.45 | $ (3.91) | $ 2.54 | $ (1.42) | ||
Diluted | 1.43 | (3.91) | [2] | 2.50 | (1.42) | [2] |
Dividends declared per common share | $ 0.38 | $ 0.31 | $ 2.75 | $ 0.94 | ||
Weighted average number of common shares outstanding | ||||||
Basic | 13,343 | 12,898 | 13,248 | 12,774 | ||
Diluted | 13,508 | 12,975 | [2] | 13,444 | 12,945 | [2] |
[1] | No allocation of undistributed income was made due to loss position. See Note 14. | |||||
[2] | Earnings per diluted common share is calculated using the basic weighted average number of common shares outstanding for periods in which a loss is incurred. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income/(loss) | $ 22,270 | $ (50,813) | $ 37,581 | $ (12,648) |
Other comprehensive income/(loss), net of tax: | ||||
Foreign currency translation adjustment | (102) | 142 | 30 | 1,137 |
Comprehensive income/(loss) | 22,168 | (50,671) | 37,611 | (11,511) |
Comprehensive income/(loss) applicable to noncontrolling interests | 247 | (1,100) | (1,271) | 3,217 |
Comprehensive income/(loss) applicable to Piper Jaffray Companies | $ 21,921 | $ (49,571) | $ 38,882 | $ (14,728) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Operating Activities: | |||
Net income/(loss) | $ 37,581 | $ (12,648) | |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | |||
Depreciation and amortization of fixed assets | 6,199 | 5,343 | |
Deferred income taxes | (2,082) | (47,984) | |
Stock-based compensation | 32,046 | 26,459 | |
Goodwill impairment | 0 | 114,363 | |
Amortization of intangible assets | 7,845 | 11,466 | |
Amortization of forgivable loans | 3,789 | 5,207 | |
Receivables: | |||
Customers | 0 | 31,917 | |
Brokers, dealers and clearing organizations | (28,671) | 131,850 | |
Securities purchased under agreements to resell | 0 | 159,697 | |
Net financial instruments and other inventory positions owned | 440,615 | 18,021 | |
Investments | 23,832 | (11,470) | |
Other assets | (17,439) | 7,185 | |
Payables: | |||
Customers | 0 | (29,352) | |
Brokers, dealers and clearing organizations | (13,021) | 13,423 | |
Securities sold under agreements to repurchase | 0 | (15,046) | |
Accrued compensation | (134,470) | 4,666 | |
Other liabilities and accrued expenses | 4,178 | 7,864 | |
Net cash provided by operating activities | 360,402 | 420,961 | |
Investing Activities: | |||
Purchases of fixed assets, net | (12,329) | (4,310) | |
Net cash used in investing activities | (12,329) | (4,310) | |
Financing Activities: | |||
Decrease in short-term financing | (239,980) | (342,035) | |
Repayment of senior notes | 0 | 50,000 | |
Payment of cash dividend | (41,631) | (14,217) | |
Increase/(decrease) in noncontrolling interests | 572 | (11,714) | |
Repurchase of common stock | (31,664) | (25,065) | |
Proceeds from stock option exercises | 0 | 1,703 | |
Net cash used in financing activities | (312,703) | (441,328) | |
Currency adjustment: | |||
Effect of exchange rate changes on cash | (389) | 1,235 | |
Net increase/(decrease) in cash, cash equivalents and restricted cash (1) | [1] | 34,981 | (23,442) |
Cash, cash equivalents and restricted cash at beginning of period (1) | [1] | 33,793 | 70,374 |
Cash, cash equivalents and restricted cash at end of period (1) | [1] | 68,774 | 46,932 |
Supplemental disclosure of cash flow information – | |||
Interest | 14,586 | 15,397 | |
Income taxes | $ 16,638 | $ 7,781 | |
[1] | Upon adoption of ASU 2016-18, restricted cash includes cash and cash equivalents previously segregated for regulatory purposes. See Note 2 for further discussion. |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Organization Piper Jaffray Companies is the parent company of Piper Jaffray & Co. ("Piper Jaffray"), a securities broker dealer and investment banking firm; Piper Jaffray Ltd., a firm providing securities brokerage and mergers and acquisitions services in Europe; Piper Jaffray Finance LLC, which facilitates corporate debt underwriting in conjunction with affiliated credit vehicles; Advisory Research, Inc. ("ARI"), which provides asset management services to separately managed accounts, closed-end and open-end funds and partnerships; Piper Jaffray Investment Group Inc. and PJC Capital Management LLC, which consist of entities providing alternative asset management services; Piper Jaffray Financial Products Inc. and Piper Jaffray Financial Products II Inc., entities that facilitate derivative transactions; and other immaterial subsidiaries. Effective August 7, 2017, Piper Jaffray transitioned from a self clearing securities broker dealer to a fully disclosed clearing model. Pershing LLC ("Pershing") is Piper Jaffray's clearing broker dealer responsible for the clearance and settlement of firm and customer cash and security transactions. Piper Jaffray Companies and its subsidiaries (collectively, the "Company") operate in two reporting segments: Capital Markets and Asset Management. A summary of the activities of each of the Company's business segments is as follows: Capital Markets The Capital Markets segment provides investment banking services and institutional sales, trading and research services. Investment banking services include financial advisory services, management of and participation in underwritings and public finance activities. Revenues are generated through the receipt of advisory and financing fees. Institutional sales, trading and research services focus on the trading of equity and fixed income products with institutions, government and non-profit entities. Revenues are generated through commissions and sales credits earned on equity and fixed income institutional sales activities, net interest revenues on trading securities held in inventory, and profits and losses from trading these securities. Also, the Company generates revenue through strategic trading and investing activities, which focus on investments in municipal bonds, U.S. government agency securities, and merchant banking activities involving equity investments in late stage private companies. The Company has created alternative asset management funds in merchant banking, energy and senior living in order to invest firm capital and to manage capital from outside investors. The Company receives management and performance fees for managing these funds. Asset Management The Asset Management segment provides traditional asset management services with product offerings in master limited partnerships and equity securities to institutions and individuals. Revenues are generated in the form of management and performance fees. Revenues are also generated through investments in the partnerships and funds that the Company manages. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission ("SEC"). Pursuant to this guidance, certain information and disclosures have been omitted that are included within complete annual financial statements. Except as disclosed herein, there have been no material changes in the information reported in the financial statements and related disclosures in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 . The consolidated financial statements include the accounts of Piper Jaffray Companies, its wholly owned subsidiaries, and all other entities in which the Company has a controlling financial interest. Noncontrolling interests represent equity interests in consolidated entities that are not attributable, either directly or indirectly, to Piper Jaffray Companies. Noncontrolling interests include the minority equity holders' proportionate share of the equity in the Company's alternative asset management funds. All material intercompany balances have been eliminated. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates and assumptions are based on the best information available, actual results could differ from those estimates. |
Accounting Policies and Pronoun
Accounting Policies and Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Policies and Pronouncements | Accounting Policies and Pronouncements Summary of Significant Accounting Policies Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for a full description of the Company's significant accounting policies. Changes to the Company's significant accounting policies are described below. Revenue Recognition Investment Banking – Investment banking revenues, which include advisory and underwriting fees, are recorded when the performance obligation for the transaction is satisfied under the terms of each engagement. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. Investment banking revenues are presented gross of related client reimbursed deal expenses. Expenses for completed deals are reported separately in deal-related expenses on the consolidated statements of operations. Expenses related to investment banking deals not completed are recognized as non-interest expenses on the consolidated statements of operations. The Company's advisory fees generally consist of a nonrefundable up-front fee and a success fee. The nonrefundable fee is recorded as deferred revenue upon receipt and recognized at a point in time when the performance obligation is satisfied, or when the transaction is deemed by management to be terminated. Management's judgment is required in determining when a transaction is considered to be terminated. The substantial majority of the Company's advisory and underwriting fees (i.e., the success related advisory fee) are considered variable consideration and recognized when it is probable that the variable consideration will not be reversed in a future period. The variable consideration is considered to be constrained until satisfaction of the performance obligation. The Company's performance obligation is generally satisfied at a point in time upon the closing of a strategic transaction, completion of a financing or underwriting arrangement, or some other defined outcome (e.g., providing a fairness opinion). At this time, the Company has transferred control of the promised service and the customer obtains control. As these arrangements represent a single performance obligation, allocation of the transaction price is not necessary. The Company has elected to apply the following optional exemptions regarding disclosure of its remaining performance obligations: (i) the Company's performance obligation is part of a contract that has an original expected duration of one year or less and/or (ii) the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Institutional Brokerage – Institutional brokerage revenues include (i) commissions received from customers for the execution of brokerage transactions in listed and over-the-counter (OTC) equity, fixed income and convertible debt securities, which are recognized at a point in time on the trade date because the customer has obtained the rights to the underlying security provided by the trade execution service, (ii) trading gains and losses, recorded on changes in the fair value of long and short security positions in the reporting period and (iii) fees received by the Company for equity research, which are generally recognized in the period received. The Company permits institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. As the Company is not acting as a principal in satisfying the performance obligation for these arrangements, expenses relating to soft dollars are netted against commission revenues and included in other liabilities and accrued expenses on the consolidated statements of financial condition. Asset Management – Asset management fees include revenues the Company receives in connection with management and investment advisory services performed for separately managed accounts and various funds and partnerships. The performance obligation related to the transfer of these services is satisfied over time and the related fees are recognized under the output method, which reflects the fees that the Company has a right to invoice based on the services provided during the period. Fees are defined in client contracts as a percentage of portfolio assets under management. Amounts related to remaining performance obligations are not disclosed as the Company applies the output method. Asset management revenues may also include performance fees. Performance fees, if earned, are recognized when it is probable that such revenue will not be reversed in a future period. For the Company's alternative asset management funds, management will consider such factors as the remaining assets and residual life of the fund to conclude whether it is probable that a significant reversal of revenue will not occur in the future. For the Company's traditional asset management funds, performance fees are earned when the investment return on assets under management exceeds certain benchmark targets or other performance targets over a specified measurement period (e.g., monthly, quarterly or annually). These performance fees are typically annual performance hurdles and recognized in the fourth quarter of the applicable year, or upon client liquidation. See Note 15 for revenues from contracts with customers disaggregated by major business activity. Adoption of New Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), which supersedes previous revenue recognition guidance, including most industry-specific guidance. ASU 2014-09, as amended, requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services, and also requires enhanced disclosures. The Company adopted this guidance effective as of January 1, 2018 under the modified retrospective method, in which the cumulative effect of applying the standard was recognized at the date of initial application. The cumulative effect adjustment that the Company recognized upon adoption as of January 1, 2018 was a decrease to retained earnings of $3.6 million , net of tax. The Company applied the guidance only to those contracts that were not completed at the date of initial application. The previous broker dealer industry treatment of netting deal expenses with investment banking revenues was superseded under the new guidance. As a result of adopting ASU 2014-09, the Company now presents investment banking revenues gross of related client reimbursed deal expenses and deal-related expenses as non-interest expenses on the consolidated statements of operations, rather than the previous presentation of netting deal expenses incurred for completed investment banking deals within revenues. For the three and nine months ended September 30, 2018 , the Company reported higher investment banking revenues and higher non-compensation expenses of $7.7 million and $18.9 million , respectively. This change did not impact earnings. In addition, the Company now defers the recognition of performance fees on its merchant banking, energy and senior living alternative asset management funds until such fees are no longer subject to reversal, which will cause a delay in the recognition of these fees as revenue. For the nine months ended September 30, 2018 , the amount of asset management revenue from performance fees that the Company would have recognized if not for this change was not material. With the exception of the above, the Company's previous methods of recognizing investment banking revenues were not significantly impacted by the new guidance. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). The amendments in ASU 2016-01 address certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 became effective for the Company as of January 1, 2018. There was no material impact to the Company's results of operations, financial position or disclosures upon adoption as the Company's financial instruments are already recorded at fair value. Statement of Cash Flows In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The amendments in ASU 2016-15 became effective for the Company as of January 1, 2018, with retrospective application. There was no material impact to the Company's presentation of its consolidated statements of cash flows upon adoption of ASU 2016-15. In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). Under ASU 2016-18, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the consolidated statements of cash flows. ASU 2016-18 became effective for the Company as of January 1, 2018, with retrospective application. As a registered broker dealer, Piper Jaffray is subject to Rule 15c3-3 of the Securities Exchange Act of 1934, which requires broker dealers carrying customer accounts to maintain cash or qualified securities in a segregated reserve account for the exclusive benefit of its customers. These accounts were previously classified as cash and cash equivalents segregated for regulatory purposes on the consolidated statements of financial condition. Subsequent to transitioning to a fully disclosed clearing model in 2017, Piper Jaffray no longer carries customer accounts and is no longer subject to Rule 15c3-3. The following table provides a reconciliation of cash, cash equivalents and restricted cash for all periods presented on the consolidated statements of cash flows: December 31, September 30, December 31, (Dollars in thousands) 2017 2017 2016 Cash and cash equivalents $ 33,793 $ 40,916 $ 41,359 Cash and cash equivalents segregated for regulatory purposes — 6,016 29,015 Cash, cash equivalents and restricted cash $ 33,793 $ 46,932 $ 70,374 Future Adoption of New Applicable Accounting Standards Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize a right-of-use asset and lease liability on the consolidated statements of financial position and disclose key information about leasing arrangements. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current U.S. GAAP. ASU 2016-02 is effective for the Company as of January 1, 2019. As of September 30, 2018 , the Company had approximately 65 operating leases for office space with aggregate minimum lease commitments of $71.1 million . Upon adoption, lease commitments will be reflected on the statement of financial condition as a right-of-use asset and a lease commitment liability. The Company has identified its arrangements that are within the scope of the new guidance, and continues to evaluate their potential impact on the consolidated statements of financial condition and related disclosures. Upon adoption of ASU 2016-02, the Company does not expect material changes to the recognition of rent expense in its consolidated statements of operations. The new guidance is not expected to materially impact Piper Jaffray's net capital position. Financial Instruments – Credit Losses In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The new guidance requires an entity to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts as opposed to delaying recognition until the loss was probable of occurring. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company does not expect the adoption of ASU 2016-13 to have a material impact on its consolidated financial statements. |
Financial Instruments and Other
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments Owned and Sold, Not yet Purchased [Abstract] | |
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased | Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased September 30, December 31, (Dollars in thousands) 2018 2017 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 21,473 $ 51,896 Convertible securities 126,641 74,456 Fixed income securities 42,976 30,145 Municipal securities: Taxable securities 41,766 67,699 Tax-exempt securities 226,702 744,241 Short-term securities 150,090 62,251 Mortgage-backed securities 16 481 U.S. government agency securities 173,477 317,318 U.S. government securities 1,561 9,317 Derivative contracts 13,418 25,573 Total financial instruments and other inventory positions owned $ 798,120 $ 1,383,377 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 116,712 $ 101,517 Fixed income securities 31,187 30,292 U.S. government agency securities 37,245 49,077 U.S. government securities 65,205 213,312 Derivative contracts 4,236 5,029 Total financial instruments and other inventory positions sold, but not yet purchased $ 254,585 $ 399,227 At September 30, 2018 and December 31, 2017 , financial instruments and other inventory positions owned in the amount of $162.2 million and $720.0 million , respectively, had been pledged as collateral for short-term financings. Financial instruments and other inventory positions sold, but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price, thereby creating a liability to purchase the security in the market at prevailing prices. The Company is obligated to acquire the securities sold short at prevailing market prices, which may exceed the amount reflected on the consolidated statements of financial condition. The Company economically hedges changes in the market value of its financial instruments and other inventory positions owned using inventory positions sold, but not yet purchased, interest rate derivatives, credit default swap index contracts, U.S. treasury bond futures and exchange traded options. Derivative Contract Financial Instruments The Company uses interest rate swaps, interest rate locks, credit default swap index contracts, U.S. treasury bond futures and equity option contracts as a means to manage risk in certain inventory positions. The Company also enters into interest rate swaps to facilitate customer transactions. The following describes the Company's derivatives by the type of transaction or security the instruments are economically hedging. Customer matched-book derivatives: The Company enters into interest rate derivative contracts in a principal capacity as a dealer to satisfy the financial needs of its customers. The Company simultaneously enters into an interest rate derivative contract with a third party for the same notional amount to hedge the interest rate and credit risk of the initial client interest rate derivative contract. In certain limited instances, the Company has only hedged interest rate risk with a third party, and retains uncollateralized credit risk as described below. The instruments use interest rates based upon either the London Interbank Offer Rate ("LIBOR") index or the Securities Industry and Financial Markets Association ("SIFMA") index. Trading securities derivatives: The Company enters into interest rate derivative contracts and uses U.S. treasury bond futures to hedge interest rate and market value risks associated with its fixed income securities. These instruments use interest rates based upon the Municipal Market Data ("MMD") index, LIBOR or the SIFMA index. The Company also enters into credit default swap index contracts to hedge credit risk associated with its taxable fixed income securities and option contracts to hedge market value risk associated with its convertible securities. Derivatives are reported on a net basis by counterparty (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) when a legal right of offset exists and on a net basis by cross product when applicable provisions are stated in master netting agreements. Cash collateral received or paid is netted on a counterparty basis, provided a legal right of offset exists. The total absolute notional contract amount, representing the absolute value of the sum of gross long and short derivative contracts, provides an indication of the volume of the Company's derivative activity and does not represent gains and losses. The following table presents the gross fair market value and the total absolute notional contract amount of the Company's outstanding derivative instruments, prior to counterparty netting, by asset or liability position: September 30, 2018 December 31, 2017 (Dollars in thousands) Derivative Derivative Notional Derivative Derivative Notional Derivative Category Assets (1) Liabilities (2) Amount Assets (1) Liabilities (2) Amount Interest rate Customer matched-book $ 159,244 $ 147,944 $ 2,602,498 $ 239,224 $ 225,890 $ 2,819,006 Trading securities 1,714 368 243,175 126 4,459 399,450 Equity options Trading securities — — — 6 — 9,635 $ 160,958 $ 148,312 $ 2,845,673 $ 239,356 $ 230,349 $ 3,228,091 (1) Derivative assets are included within financial instruments and other inventory positions owned on the consolidated statements of financial condition. (2) Derivative liabilities are included within financial instruments and other inventory positions sold, but not yet purchased on the consolidated statements of financial condition. The Company's derivative contracts do not qualify for hedge accounting, therefore, unrealized gains and losses are recorded on the consolidated statements of operations. The gains and losses on the related economically hedged inventory positions are not disclosed below as they are not in qualifying hedging relationships. The following table presents the Company's unrealized gains/(losses) on derivative instruments: Three Months Ended Nine Months Ended (Dollars in thousands) September 30, September 30, Derivative Category Operations Category 2018 2017 2018 2017 Interest rate derivative contract Investment banking $ (301 ) $ (300 ) $ (1,567 ) $ (1,076 ) Interest rate derivative contract Institutional brokerage 980 1,627 5,212 (16,028 ) Credit default swap index contract Institutional brokerage — 4,304 — 4,482 $ 679 $ 5,631 $ 3,645 $ (12,622 ) Credit risk associated with the Company's derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. Credit exposure associated with the Company's derivatives is driven by uncollateralized market movements in the fair value of the contracts with counterparties and is monitored regularly by the Company's financial risk committee. The Company considers counterparty credit risk in determining derivative contract fair value. The majority of the Company's derivative contracts are substantially collateralized by its counterparties, who are major financial institutions. The Company has a limited number of counterparties who are not required to post collateral. Based on market movements, the uncollateralized amounts representing the fair value of the derivative contract can become material, exposing the Company to the credit risk of these counterparties. As of September 30, 2018 , the Company had $13.5 million of uncollateralized credit exposure with these counterparties (notional contract amount of $178.6 million ), including $10.8 million of uncollateralized credit exposure with one counterparty. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Based on the nature of the Company's business and its role as a "dealer" in the securities industry or as a manager of alternative asset management funds, the fair values of its financial instruments are determined internally. The Company's processes are designed to ensure that the fair values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, unobservable inputs are developed based on an evaluation of all relevant empirical market data, including prices evidenced by market transactions, interest rates, credit spreads, volatilities and correlations and other security-specific information. Valuation adjustments related to illiquidity or counterparty credit risk are also considered. In estimating fair value, the Company may utilize information provided by third party pricing vendors to corroborate internally-developed fair value estimates. The Company employs specific control processes to determine the reasonableness of the fair value of its financial instruments. The Company's processes are designed to ensure that the internally-estimated fair values are accurately recorded and that the data inputs and the valuation techniques used are appropriate, consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. Individuals outside of the trading departments perform independent pricing verification reviews as of each reporting date. The Company has established parameters which set forth when the fair value of securities are independently verified. The selection parameters are generally based upon the type of security, the level of estimation risk of a security, the materiality of the security to the Company's financial statements, changes in fair value from period to period, and other specific facts and circumstances of the Company's securities portfolio. In evaluating the initial internally-estimated fair values made by the Company's traders, the nature and complexity of securities involved (e.g., term, coupon, collateral, and other key drivers of value), level of market activity for securities, and availability of market data are considered. The independent price verification procedures include, but are not limited to, analysis of trade data (both internal and external where available), corroboration to the valuation of positions with similar characteristics, risks and components, or comparison to an alternative pricing source, such as a discounted cash flow model. The Company's valuation committee, comprised of members of senior management and risk management, provides oversight and overall responsibility for the internal control processes and procedures related to fair value measurements. The following is a description of the valuation techniques used to measure fair value. Cash Equivalents Cash equivalents include highly liquid investments with original maturities of 90 days or less. Actively traded money market funds are measured at their net asset value and classified as Level I. Financial Instruments and Other Inventory Positions Owned The Company records financial instruments and other inventory positions owned and financial instruments and other inventory positions sold, but not yet purchased at fair value on the consolidated statements of financial condition with unrealized gains and losses reflected on the consolidated statements of operations. Equity securities – Exchange traded equity securities are valued based on quoted prices from the exchange for identical assets or liabilities as of the period-end date. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level I. Non-exchange traded equity securities (principally hybrid preferred securities) are measured primarily using broker quotations, prices observed for recently executed market transactions and internally-developed fair value estimates based on observable inputs and are categorized within Level II of the fair value hierarchy. Convertible securities – Convertible securities are valued based on observable trades, when available. Accordingly, these convertible securities are categorized as Level II. Corporate fixed income securities – Fixed income securities include corporate bonds which are valued based on recently executed market transactions of comparable size, internally-developed fair value estimates based on observable inputs, or broker quotations. Accordingly, these corporate bonds are categorized as Level II. Taxable municipal securities – Taxable municipal securities are valued using recently executed observable trades or market price quotations and therefore are generally categorized as Level II. Tax-exempt municipal securities – Tax-exempt municipal securities are valued using recently executed observable trades or market price quotations and therefore are generally categorized as Level II. Certain illiquid tax-exempt municipal securities are valued using market data for comparable securities (maturity and sector) and management judgment to infer an appropriate current yield or other model-based valuation techniques deemed appropriate by management based on the specific nature of the individual security and are therefore categorized as Level III. Short-term municipal securities – Short-term municipal securities include auction rate securities, variable rate demand notes, and other short-term municipal securities. Variable rate demand notes and other short-term municipal securities are valued using recently executed observable trades or market price quotations and therefore are generally categorized as Level II. Auction rate securities with limited liquidity are categorized as Level III and are valued using discounted cash flow models with unobservable inputs such as the Company's expected recovery rate on the securities. Mortgage-backed securities – Mortgage-backed securities are valued using observable trades, when available. Certain mortgage-backed securities are valued using models where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data. To the extent we hold, these mortgage-backed securities are categorized as Level II. Certain mortgage-backed securities collateralized by residential mortgages are valued using cash flow models that utilize unobservable inputs including credit default rates, prepayment rates, loss severity and valuation yields. As judgment is used to determine the range of these inputs, these mortgage-backed securities are categorized as Level III. U.S. government agency securities – U.S. government agency securities include agency debt bonds and mortgage bonds. Agency debt bonds are valued by using either direct price quotes or price quotes for comparable bond securities and are categorized as Level II. Mortgage bonds include bonds secured by mortgages, mortgage pass-through securities, agency collateralized mortgage-obligation ("CMO") securities and agency interest-only securities. Mortgage pass-through securities, CMO securities and interest-only securities are valued using recently executed observable trades or other observable inputs, such as prepayment speeds and therefore are generally categorized as Level II. Mortgage bonds are valued using observable market inputs, such as market yields on spreads over U.S. treasury securities, or models based upon prepayment expectations. These securities are categorized as Level II. U.S. government securities – U.S. government securities include highly liquid U.S. treasury securities which are generally valued using quoted market prices and therefore categorized as Level I. The Company does not transact in securities of countries other than the U.S. government. Derivatives – Derivative contracts include interest rate swaps, interest rate locks, credit default swap index contracts, U.S. treasury bond futures and equity option contracts. These instruments derive their value from underlying assets, reference rates, indices or a combination of these factors. The Company's equity option derivative contracts are valued based on quoted prices from the exchange for identical assets or liabilities as of the period-end date. To the extent these contracts are actively traded and valuation adjustments are not applied, they are categorized as Level I. The Company's credit default swap index contracts are valued using market price quotations and are classified as Level II. The majority of the Company's interest rate derivative contracts, including both interest rate swaps and interest rate locks, are valued using market standard pricing models based on the net present value of estimated future cash flows. The valuation models used do not involve material subjectivity as the methodologies do not entail significant judgment and the pricing inputs are market observable, including contractual terms, yield curves and measures of volatility. These instruments are classified as Level II within the fair value hierarchy. Certain interest rate locks transact in less active markets and were valued using valuation models that included the previously mentioned observable inputs and certain unobservable inputs that required significant judgment, such as the premium over the MMD curve. These instruments are classified as Level III. Investments The Company's investments valued at fair value include equity investments in private companies and partnerships, investments in registered mutual funds and private company debt. Investments in registered mutual funds are valued based on quoted prices on active markets and classified as Level I. Investments in private companies are valued based on an assessment of each underlying security, considering rounds of financing, third party transactions and market-based information, including comparable company transactions, trading multiples (e.g., multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA")) and changes in market outlook, among other factors. These securities are generally categorized as Level III. Fair Value Option – The fair value option permits the irrevocable fair value option election on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The fair value option was elected for certain merchant banking and other investments at inception to reflect economic events in earnings on a timely basis. Merchant banking and other equity investments of $3.3 million and $14.1 million , included within investments on the consolidated statements of financial condition, are accounted for at fair value and are classified as Level III assets at September 30, 2018 and December 31, 2017 , respectively. The realized and unrealized net gains from fair value changes included in earnings as a result of electing to apply the fair value option to certain financial assets were $0.9 million and $1.4 million for the nine months ended September 30, 2018 and 2017 , respectively. The following table summarizes quantitative information about the significant unobservable inputs used in the fair value measurement of the Company's Level III financial instruments as of September 30, 2018 : Valuation Weighted Technique Unobservable Input Range Average (1) Assets: Financial instruments and other inventory positions owned: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in basis points ("bps") (2) 1 - 11 bps 8.7 bps Investments at fair value: Equity securities in private companies Market approach Revenue multiple (3) 2 - 6 times 4.8 times EBITDA multiple (3) 13 - 16 times 14.4 times Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in bps (2) 7 - 16 bps 8.9 bps Uncertainty of fair value measurements: (1) Unobservable inputs were weighted by the relative fair value of the financial instruments. (2) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly lower/(higher) fair value measurement. (3) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly higher/(lower) fair value measurement. The following table summarizes the valuation of the Company's financial instruments by pricing observability levels defined in FASB Accounting Standards Codification Topic 820, "Fair Value Measurement" ("ASC 820") as of September 30, 2018 : Counterparty and Cash Collateral (Dollars in thousands) Level I Level II Level III Netting (1) Total Assets: Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 266 $ 21,207 $ — $ — $ 21,473 Convertible securities — 126,641 — — 126,641 Fixed income securities — 42,976 — — 42,976 Municipal securities: Taxable securities — 41,766 — — 41,766 Tax-exempt securities — 226,702 — — 226,702 Short-term securities — 150,045 45 — 150,090 Mortgage-backed securities — — 16 — 16 U.S. government agency securities — 173,477 — — 173,477 U.S. government securities 1,561 — — — 1,561 Derivative contracts — 159,685 1,273 (147,540 ) 13,418 Total financial instruments and other inventory positions owned 1,827 942,499 1,334 (147,540 ) 798,120 Cash equivalents 40,793 — — — 40,793 Investments at fair value 39,501 — 104,285 (2) — 143,786 Total assets $ 82,121 $ 942,499 $ 105,619 $ (147,540 ) $ 982,699 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 112,642 $ 4,070 $ — $ — $ 116,712 Fixed income securities — 31,187 — — 31,187 U.S. government agency securities — 37,245 — — 37,245 U.S. government securities 65,205 — — — 65,205 Derivative contracts — 147,944 368 (144,076 ) 4,236 Total financial instruments and other inventory positions sold, but not yet purchased $ 177,847 $ 220,446 $ 368 $ (144,076 ) $ 254,585 (1) Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. (2) Noncontrolling interests of $47.2 million are attributable to third party ownership in consolidated merchant banking and senior living funds. The following table summarizes the valuation of the Company's financial instruments by pricing observability levels defined in ASC 820 as of December 31, 2017 : Counterparty and Cash Collateral (Dollars in thousands) Level I Level II Level III Netting (1) Total Assets: Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 1,863 $ 50,033 $ — $ — $ 51,896 Convertible securities — 74,456 — — 74,456 Fixed income securities — 30,145 — — 30,145 Municipal securities: Taxable securities — 67,699 — — 67,699 Tax-exempt securities — 743,541 700 — 744,241 Short-term securities — 61,537 714 — 62,251 Mortgage-backed securities — — 481 — 481 U.S. government agency securities — 317,318 — — 317,318 U.S. government securities 9,317 — — — 9,317 Derivative contracts 6 239,224 126 (213,783 ) 25,573 Total financial instruments and other inventory positions owned 11,186 1,583,953 2,021 (213,783 ) 1,383,377 Cash equivalents 3,782 — — — 3,782 Investments at fair value 39,504 — 126,060 (2) — 165,564 Total assets $ 54,472 $ 1,583,953 $ 128,081 $ (213,783 ) $ 1,552,723 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 91,934 $ 9,583 $ — $ — $ 101,517 Fixed income securities — 30,292 — — 30,292 U.S. government agency securities — 49,077 — — 49,077 U.S. government securities 213,312 — — — 213,312 Derivative contracts — 225,916 4,433 (225,320 ) 5,029 Total financial instruments and other inventory positions sold, but not yet purchased $ 305,246 $ 314,868 $ 4,433 $ (225,320 ) $ 399,227 (1) Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. (2) Noncontrolling interests of $44.4 million are attributable to third party ownership in consolidated merchant banking and senior living funds. The Company's Level III assets were $105.6 million and $128.1 million , or 10.7 percent and 8.2 percent of financial instruments measured at fair value at September 30, 2018 and December 31, 2017 , respectively. There were no significant transfers between levels for the nine months ended September 30, 2018 . The following tables summarize the changes in fair value associated with Level III financial instruments held at the beginning or end of the periods presented: Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at June 30, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2018 Purchases Sales in out (losses) (1) (losses) (1) 2018 2018 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Short-term securities $ 45 $ — $ — $ — $ — $ — $ — $ 45 $ — Mortgage-backed securities 18 — — — — — (2 ) 16 (2 ) Derivative contracts 930 — (90 ) — — 90 343 1,273 441 Total financial instruments and other inventory positions owned 993 — (90 ) — — 90 341 1,334 439 Investments at fair value 108,121 10,000 (14,199 ) — (357 ) 4,949 (4,229 ) 104,285 (4,229 ) Total assets $ 109,114 $ 10,000 $ (14,289 ) $ — $ (357 ) $ 5,039 $ (3,888 ) $ 105,619 $ (3,790 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,005 $ (210 ) $ 40 $ — $ — $ 169 $ (636 ) $ 368 $ (464 ) Total financial instruments and other inventory positions sold, but not yet purchased $ 1,005 $ (210 ) $ 40 $ — $ — $ 169 $ (636 ) $ 368 $ (464 ) (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at June 30, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2017 Purchases Sales in out (losses) (1) (losses) (1) 2017 2017 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 1,117 $ — $ (267 ) $ — $ — $ — $ (100 ) $ 750 $ (100 ) Short-term securities 721 — — — — — (16 ) 705 (16 ) Mortgage-backed securities 4,251 — — — — — 70 4,321 70 Derivative contracts 383 105 — — — (105 ) 303 686 686 Total financial instruments and other inventory positions owned 6,472 105 (267 ) — — (105 ) 257 6,462 640 Investments at fair value 113,885 18,250 — — — — (1,975 ) 130,160 (1,975 ) Total assets $ 120,357 $ 18,355 $ (267 ) $ — $ — $ (105 ) $ (1,718 ) $ 136,622 $ (1,335 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 5,573 $ — $ 3,461 $ — $ — $ (3,461 ) $ (1,323 ) $ 4,250 $ 1,430 Total financial instruments and other inventory positions sold, but not yet purchased $ 5,573 $ — $ 3,461 $ — $ — $ (3,461 ) $ (1,323 ) $ 4,250 $ 1,430 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2017 Purchases Sales in out (losses) (1) (losses) (1) 2018 2018 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 700 $ — $ — $ — $ (700 ) $ — $ — $ — $ — Short-term securities 714 — (725 ) — — 51 5 45 — Mortgage-backed securities 481 — (5 ) — — — (460 ) 16 (93 ) Derivative contracts 126 4 (2,965 ) — — 2,961 1,147 1,273 1,273 Total financial instruments and other inventory positions owned 2,021 4 (3,695 ) — (700 ) 3,012 692 1,334 1,180 Investments at fair value 126,060 11,708 (29,139 ) — (502 ) 14,015 (17,857 ) 104,285 (8,307 ) Total assets $ 128,081 $ 11,712 $ (32,834 ) $ — $ (1,202 ) $ 17,027 $ (17,165 ) $ 105,619 $ (7,127 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,433 $ (1,600 ) $ 3,266 $ — $ — $ (1,666 ) $ (4,065 ) $ 368 $ 368 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,433 $ (1,600 ) $ 3,266 $ — $ — $ (1,666 ) $ (4,065 ) $ 368 $ 368 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2016 Purchases Sales in out (losses) (1) (losses) (1) 2017 2017 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Taxable securities $ 2,686 $ — $ (2,703 ) $ — $ — $ 716 $ (699 ) $ — $ — Tax-exempt securities 1,077 — (267 ) — — — (60 ) 750 (60 ) Short-term securities 744 — (25 ) — — 2 (16 ) 705 (16 ) Mortgage-backed securities 5,365 997 (1,854 ) — — 296 (483 ) 4,321 (90 ) Derivative contracts 13,952 350 (11,978 ) — — 11,628 (13,266 ) 686 686 Total financial instruments and other inventory positions owned 23,824 1,347 (16,827 ) — — 12,642 (14,524 ) 6,462 520 Investments at fair value 123,319 25,444 (25,211 ) — (601 ) 9,399 (2,190 ) 130,160 7,704 Total assets $ 147,143 $ 26,791 $ (42,038 ) $ — $ (601 ) $ 22,041 $ (16,714 ) $ 136,622 $ 8,224 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,487 $ (719 ) $ 11,219 $ — $ — $ (10,500 ) $ 2,763 $ 4,250 $ 4,125 Total financial instruments and other inventory positions sold, but not yet purchased $ 1,487 $ (719 ) $ 11,219 $ — $ — $ (10,500 ) $ 2,763 $ 4,250 $ 4,125 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. The carrying values of the Company's cash, receivables and payables either from or to brokers, dealers and clearing organizations and short-term financings approximate fair value due to their liquid or short-term nature. Non-Recurring Fair Value Measurement During the third quarter of 2017, the Company recorded a non-cash goodwill impairment charge of $114.4 million representing the full value of goodwill attributable to the asset management reporting unit. The fair value measurement used in the analysis was calculated using the income approach (discounted cash flow method) and market approach (earnings multiples of public company comparables). The discounted cash flow model was calculated using unobservable inputs, such as revenue and EBITDA forecasts, which are classified as Level III within the fair value hierarchy. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Variable Interest Entities | Variable Interest Entities ("VIEs") The Company has investments in and/or acts as the managing partner of various partnerships, limited liability companies, and registered mutual funds. These entities were established for the purpose of investing in securities of public or private companies, or municipal debt obligations, or providing financing to senior living facilities, and were initially financed through the capital commitments or seed investments of the members. VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities. The determination as to whether an entity is a VIE is based on the structure and nature of each entity. The Company also considers other characteristics such as the power through voting rights or similar rights to direct the activities of an entity that most significantly impact the entity's economic performance and how the entity is financed. The Company is required to consolidate all VIEs for which it is considered to be the primary beneficiary. The determination as to whether the Company is considered to be the primary beneficiary is based on whether the Company has both the power to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Consolidated VIEs The Company's consolidated VIEs at September 30, 2018 included certain alternative asset management funds in which the Company has an investment and, as the managing partner, is deemed to have both the power to direct the most significant activities of the funds and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these funds. The following table presents information about the carrying value of the assets and liabilities of the VIEs which are consolidated by the Company and included on the consolidated statements of financial condition at September 30, 2018 . The assets can only be used to settle the liabilities of the respective VIE, and the creditors of the VIEs do not have recourse to the general credit of the Company. One of these VIEs has $25.0 million of bank line financing available with an interest rate based on prime plus an applicable margin. The assets and liabilities are presented prior to consolidation, and thus a portion of these assets and liabilities are eliminated in consolidation. Alternative Asset (Dollars in thousands) Management Funds Assets: Investments $ 100,905 Other assets 6,761 Total assets $ 107,666 Liabilities: Other liabilities and accrued expenses $ 10,740 Total liabilities $ 10,740 The Company has investments in a grantor trust which was established as part of a nonqualified deferred compensation plan. The Company is the primary beneficiary of the grantor trust. Accordingly, the assets and liabilities of the grantor trust are consolidated by the Company on the consolidated statements of financial condition. See Note 13 for additional information on the nonqualified deferred compensation plan. Nonconsolidated VIEs The Company determined it is not the primary beneficiary of certain VIEs and accordingly does not consolidate them. These VIEs had net assets approximating $0.5 billion and $0.6 billion at September 30, 2018 and December 31, 2017 , respectively. The Company's exposure to loss from these VIEs is $6.9 million , which is the carrying value of its capital contributions recorded in investments on the consolidated statements of financial condition at September 30, 2018 . The Company had no liabilities related to these VIEs at September 30, 2018 and December 31, 2017 , respectively. Furthermore, the Company has not provided financial or other support to these VIEs that it was not previously contractually required to provide as of September 30, 2018 . |
Receivables from and Payables t
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | 9 Months Ended |
Sep. 30, 2018 | |
Brokers and Dealers [Abstract] | |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | Receivables from and Payables to Brokers, Dealers and Clearing Organizations September 30, December 31, (Dollars in thousands) 2018 2017 Receivable from clearing organizations $ 153,527 $ 109,270 Deposits with clearing organizations 2,551 11,019 Receivable from brokers and dealers 15,058 12,041 Receivable arising from unsettled securities transactions — 9,218 Other 2,929 3,846 Total receivables from brokers, dealers and clearing organizations $ 174,065 $ 145,394 September 30, December 31, (Dollars in thousands) 2018 2017 Payable to brokers and dealers $ 6,371 $ 18,584 Payable arising from unsettled securities transactions — 808 Total payables to brokers, dealers and clearing organizations $ 6,371 $ 19,392 As discussed in Note 1, Piper Jaffray transitioned from a self clearing securities broker dealer to a fully disclosed clearing model in 2017. Under the Company's fully disclosed clearing agreement, the majority of its securities inventories and all of its customer activities are held by or cleared through Pershing. The Company has also established an arrangement to obtain financing from Pershing related to the majority of its trading activities. Financing under this arrangement is secured primarily by securities, and collateral limitations could reduce the amount of funding available under this arrangement. The funding is at the discretion of Pershing and could be denied. The Company's clearing arrangement activities are recorded net from trading activity. The Company's fully disclosed clearing agreement includes a covenant requiring Piper Jaffray to maintain excess net capital of $120 million . |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Investments | Investments The Company's investments include investments in private companies and partnerships, registered mutual funds and private company debt. September 30, December 31, (Dollars in thousands) 2018 2017 Investments at fair value $ 143,786 $ 165,564 Investments at cost 1,614 2,416 Investments accounted for under the equity method 6,980 8,232 Total investments 152,380 176,212 Less investments attributable to noncontrolling interests (1) (47,204 ) (44,397 ) $ 105,176 $ 131,815 (1) Noncontrolling interests are attributable to third party ownership in consolidated merchant banking and senior living funds. At September 30, 2018 , investments carried on a cost basis had an estimated fair market value of $1.6 million . Because valuation estimates were based upon management's judgment, investments carried at cost would be categorized as Level III assets in the fair value hierarchy, if they were carried at fair value. Investments accounted for under the equity method include general and limited partnership interests. The carrying value of these investments is based on the investment vehicle's net asset value. The net assets of investment partnerships consist of investments in both marketable and non-marketable securities. The underlying investments held by such partnerships are valued based on the estimated fair value determined by management in the Company's capacity as general partner or investor and, in the case of investments in unaffiliated investment partnerships, are based on financial statements prepared by the unaffiliated general partners. |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets September 30, December 31, (Dollars in thousands) 2018 2017 Fee receivables $ 26,170 $ 20,884 Income tax receivables 7,311 — Accrued interest receivables 8,485 6,981 Forgivable loans, net 8,377 7,452 Prepaid expenses 8,016 6,769 Other 10,340 12,748 Total other assets $ 68,699 $ 54,834 |
Short-Term Financing
Short-Term Financing | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Financing | Short-Term Financing Outstanding Balance Weighted Average Interest Rate September 30, December 31, September 30, December 31, (Dollars in thousands) 2018 2017 2018 2017 Commercial paper (secured) $ 49,957 $ 49,974 3.12 % 2.32 % Prime broker arrangement — 239,963 N/A 2.23 % Total short-term financing $ 49,957 $ 289,937 The Company issues secured commercial paper to fund a portion of its securities inventory. The commercial paper notes ("CP Notes") can be issued with maturities of 27 days to 270 days from the date of issuance. The CP Notes are currently issued under two separate programs, CP Series A and CP Series II A, and are secured by different inventory classes. As of September 30, 2018 , the weighted average maturity of outstanding CP Notes was 10 days . The CP Notes are interest bearing or sold at a discount to par with an interest rate based on LIBOR plus an applicable margin. CP Series II A includes a covenant that requires the Company's U.S. broker dealer subsidiary to maintain excess net capital of $100 million . The Company had established an arrangement to obtain financing with a prime broker related to its municipal bond fund. Financing under this arrangement was primarily secured by municipal securities and collateral limitations could reduce the amount of funding available. Prime broker financing activities were recorded net of receivables from trading activity. The funding was at the discretion of the prime broker subject to a notice period. In the third quarter of 2018, the Company completed the liquidation of its municipal bond fund, and closed this prime broker arrangement. The Company has both committed and uncommitted short-term bank line financing available on a secured basis. The Company uses these credit facilities in the ordinary course of business to fund a portion of its daily operations and the amount borrowed under these credit facilities varies daily based on the Company's funding needs. The Company's committed short-term bank line financing at September 30, 2018 consisted of a one -year $200 million committed revolving credit facility with U.S. Bank, N.A., which was renewed in December 2017. Advances under this facility are secured by certain marketable securities. The facility includes a covenant that requires the Company's U.S. broker dealer subsidiary to maintain minimum net capital of $120 million , and the unpaid principal amount of all advances under this facility will be due on December 14, 2018 . The Company pays a nonrefundable commitment fee on the unused portion of the facility on a quarterly basis. At September 30, 2018 , the Company had no advances against this line of credit. The Company's uncommitted secured line at September 30, 2018 totaled $85 million and is dependent on having appropriate collateral, as determined by the bank agreement, to secure an advance under the line. The availability of the Company's uncommitted line is subject to approval by the bank each time an advance is requested and may be denied. At September 30, 2018 , the Company had no advances against this line of credit. |
Contingencies, Commitments and
Contingencies, Commitments and Guarantees | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies, Commitments and Guarantees | Contingencies, Commitments and Guarantees The Company has been named as a defendant in various legal actions, including complaints and litigation and arbitration claims, arising from its business activities. Such actions include claims related to securities brokerage and investment banking activities, and certain class actions that primarily allege violations of securities laws and seek unspecified damages, which could be substantial. Also, the Company is involved from time to time in investigations and proceedings by governmental agencies and self-regulatory organizations ("SROs") which could result in adverse judgments, settlement, penalties, fines or other relief. The Company has established reserves for potential losses that are probable and reasonably estimable that may result from pending and potential legal actions, investigations and regulatory proceedings. Reasonably possible losses in excess of amounts accrued at September 30, 2018 are not material. In many cases, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount or range of any potential loss, particularly where proceedings may be in relatively early stages or where plaintiffs are seeking substantial or indeterminate damages. Matters frequently need to be more developed before a loss or range of loss can reasonably be estimated. Given uncertainties regarding the timing, scope, volume and outcome of pending and potential legal actions, investigations and regulatory proceedings and other factors, the amounts of reserves and ranges of reasonably possible losses are difficult to determine and of necessity subject to future revision. Subject to the foregoing, management of the Company believes, based on currently available information, after consultation with outside legal counsel and taking into account its established reserves, that pending legal actions, investigations and regulatory proceedings will be resolved with no material adverse effect on the consolidated statements of financial condition, results of operations or cash flows of the Company. However, if during any period a potential adverse contingency should become probable or resolved for an amount in excess of the established reserves, the results of operations and cash flows in that period and the financial condition as of the end of that period could be materially adversely affected. In addition, there can be no assurance that material losses will not be incurred from claims that have not yet been brought to the Company's attention or are not yet determined to be reasonably possible. Operating Lease Commitments The Company leases office space throughout the United States and in a limited number of foreign countries where the Company's international operations reside. Aggregate minimum lease commitments under operating leases as of September 30, 2018 are as follows: (Dollars in thousands) Remainder of 2018 $ 3,557 2019 13,601 2020 13,686 2021 9,329 2022 7,985 Thereafter 22,900 Total $ 71,058 Investment Commitments As of September 30, 2018 , the Company had commitments to invest approximately $80.6 million in limited partnerships or limited liability companies that make direct or indirect equity or debt investments in companies. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring The Company incurred the following pre-tax restructuring costs principally related to headcount reductions in both the Capital Markets and Asset Management segments. Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2018 September 30, 2018 Severance, benefits and outplacement costs $ — $ 3,455 Contract termination costs — 185 Vacated leased office space — 130 Total pre-tax restructuring costs $ — $ 3,770 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Share Repurchases Effective September 30, 2017, the Company's board of directors authorized the repurchase of up to $150.0 million in common shares through September 30, 2019 . During the nine months ended September 30, 2018 , the Company repurchased 124,606 shares at an average price of $72.26 per share for an aggregate purchase price of $9.0 million related to this authorization. The Company has $141.0 million remaining under this authorization. Effective August 14, 2015, the Company's board of directors authorized the repurchase of up to $150.0 million in common shares through September 30, 2017 . During the nine months ended September 30, 2017 , the Company repurchased 36,936 shares at an average price of $67.62 per share for an aggregate purchase price of $2.5 million related to this authorization. The Company also purchases shares of common stock from restricted stock award recipients upon the award vesting as recipients sell shares to meet their employment tax obligations. The Company purchased 264,254 shares and 308,801 shares, or $22.7 million and $22.6 million of the Company's common stock for this purpose during the nine months ended September 30, 2018 and 2017 , respectively. Issuance of Shares The Company issues common shares out of treasury stock as a result of employee restricted share vesting and exercise transactions as discussed in Note 13 . During the nine months ended September 30, 2018 and 2017 , the Company issued 840,043 shares and 850,925 shares, respectively, related to these obligations. Dividends Beginning in 2017, the Company initiated the payment of a quarterly cash dividend to holders of its common stock, which includes unvested restricted shares. In addition, the Company's board of directors approved a dividend policy with the intention of returning a metric based on net income from the previous fiscal year. This includes an annual special cash dividend, payable in the first quarter of each year, beginning in 2018. During the nine months ended September 30, 2018 , the Company declared and paid quarterly cash dividends on its common stock, aggregating $1.125 per share, and an annual special cash dividend on its common stock of $1.62 per share, totaling $41.6 million . On October 26, 2018 , the board of directors declared a cash dividend of $0.375 per share to be paid on December 14, 2018 , to shareholders of record as of the close of business on November 28, 2018 . Noncontrolling Interests The consolidated financial statements include the accounts of Piper Jaffray Companies, its wholly owned subsidiaries and other entities in which the Company has a controlling financial interest. Noncontrolling interests represent equity interests in consolidated entities that are not attributable, either directly or indirectly, to Piper Jaffray Companies. Noncontrolling interests include the minority equity holders' proportionate share of the equity in merchant banking funds of $42.0 million and a senior living fund aggregating $5.2 million as of September 30, 2018 . As of December 31, 2017 , noncontrolling interests included the minority equity holders' proportionate share of the equity in merchant banking funds of $42.7 million and a senior living fund aggregating $5.2 million . Ownership interests in entities held by parties other than the Company's common shareholders are presented as noncontrolling interests within shareholders' equity, separate from the Company's own equity. Revenues, expenses and net income or loss are reported on the consolidated statements of operations on a consolidated basis, which includes amounts attributable to both the Company's common shareholders and noncontrolling interests. Net income or loss is then allocated between the Company and noncontrolling interests based upon their relative ownership interests. Net income applicable to noncontrolling interests is deducted from consolidated net income to determine net income applicable to the Company. There was no other comprehensive income or loss attributed to noncontrolling interests for the nine months ended September 30, 2018 and 2017 , respectively. The following table presents the changes in shareholders' equity for the nine months ended September 30, 2018 : Common Common Total Shares Shareholders' Noncontrolling Shareholders' (Amounts in thousands, except share amounts) Outstanding Equity Interests Equity Balance at December 31, 2017 12,911,149 $ 693,332 $ 47,903 $ 741,235 Net income/(loss) — 38,852 (1,271 ) 37,581 Dividends — (41,631 ) — (41,631 ) Amortization/issuance of restricted stock — 44,541 — 44,541 Issuance of treasury shares for restricted stock vestings 840,043 — — — Repurchase of common stock through share repurchase program (124,606 ) (9,004 ) — (9,004 ) Repurchase of common stock for employee tax withholding (264,254 ) (22,660 ) — (22,660 ) Shares reserved/issued for director compensation 4,371 348 — 348 Other comprehensive income — 30 — 30 Cumulative effect upon adoption of new accounting standard, net of tax (1) — (3,597 ) — (3,597 ) Fund capital contributions, net — — 572 572 Balance at September 30, 2018 13,366,703 $ 700,211 $ 47,204 $ 747,415 (1) Cumulative effect adjustment upon adoption of ASU 2014-09, as amended. See Note 2 for further discussion. |
Compensation Plans
Compensation Plans | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Plans | Compensation Plans Stock-Based Compensation Plans The Company maintains two stock-based compensation plans, the Piper Jaffray Companies Amended and Restated 2003 Annual and Long-Term Incentive Plan (the "Incentive Plan") and the 2016 Employment Inducement Award Plan (the "Inducement Plan"). The Company's equity awards are recognized on the consolidated statements of operations at grant date fair value over the service period of the award, less forfeitures. The following table provides a summary of the Company's outstanding equity awards (in shares or units) as of September 30, 2018 : Incentive Plan Restricted Stock Annual grants 657,185 Sign-on grants 70,627 727,812 Inducement Plan Restricted Stock 254,058 Total restricted stock related to compensation 981,870 Simmons Deal Consideration (1) 772,764 Total restricted stock outstanding 1,754,634 Incentive Plan Restricted Stock Units Leadership grants 194,251 Incentive Plan Stock Options 81,667 (1) The Company issued restricted stock with service conditions as part of deal consideration for the acquisition of Simmons & Company International ("Simmons") on February 26, 2016. Incentive Plan The Incentive Plan permits the grant of equity awards, including restricted stock, restricted stock units and non-qualified stock options, to the Company's employees and directors for up to 8.2 million shares of common stock ( 0.8 million shares remained available for future issuance under the Incentive Plan as of September 30, 2018 ). The Company believes that such awards help align the interests of employees and directors with those of shareholders and serve as an employee retention tool. The Incentive Plan provides for accelerated vesting of awards if there is a severance event, a change in control of the Company (as defined in the Incentive Plan), in the event of a participant's death, and at the discretion of the compensation committee of the Company's board of directors. Restricted Stock Awards Restricted stock grants are valued at the market price of the Company's common stock on the date of grant and are amortized over the requisite service period. The Company grants shares of restricted stock to employees as part of year-end compensation ("Annual Grants") and upon initial hiring or as a retention award ("Sign-on Grants"). The Company's Annual Grants are made each year in February. Annual Grants vest ratably over three years in equal installments. The Annual Grants provide for continued vesting after termination of employment, so long as the employee does not violate certain post-termination restrictions set forth in the award agreement or any agreements entered into upon termination. The Company determined the service inception date precedes the grant date for the Annual Grants, and that the post-termination restrictions do not meet the criteria for an in-substance service condition, as defined by FASB Accounting Standards Codification Topic 718, "Compensation — Stock Compensation." Accordingly, restricted stock granted as part of the Annual Grants is expensed in the one -year period in which those awards are deemed to be earned, which is generally the calendar year preceding the February grant date. For example, the Company recognized compensation expense during fiscal 2017 for its February 2018 Annual Grant. If an equity award related to the Annual Grants is forfeited as a result of violating the post-termination restrictions, the lower of the fair value of the award at grant date or the fair value of the award at the date of forfeiture is recorded within the consolidated statements of operations as a reversal of compensation expense. Sign-on Grants are used as a recruiting tool for new employees and are issued to current employees as a retention tool. These awards have both cliff and ratable vesting terms, and the employees must fulfill service requirements in exchange for rights to the awards. Compensation expense is amortized on a straight-line basis from the grant date over the requisite service period, generally one to five years. Employees forfeit unvested shares upon termination of employment and a reversal of compensation expense is recorded. Annually, the Company grants stock to its non-employee directors. The stock-based compensation paid to non-employee directors is fully expensed on the grant date and included within outside services expense on the consolidated statements of operations. Restricted Stock Units The Company grants restricted stock units to its leadership team ("Leadership Grants"). 2018 and 2017 Leadership Grants Restricted stock units granted in 2018 and 2017 will vest and convert to shares of common stock at the end of each 36 -month performance period only if the Company satisfies predetermined performance and/or market conditions over the performance period. Under the terms of these awards, the number of units that will actually vest and convert to shares will be based on the extent to which the Company achieves specified targets during each performance period. The maximum payout leverage under these grants is 150 percent . Up to 75 percent of the award can be earned based on the Company achieving certain average adjusted return on equity targets, as defined in the terms of the award agreements. The fair value of this portion of the award was based on the closing price of the Company's common stock on the grant date. If the Company determines that it is probable that the performance condition will be achieved, compensation expense is amortized on a straight-line basis over the 36 -month performance period. The probability that the performance condition will be achieved is reevaluated each reporting period with changes in estimated outcomes accounted for using a cumulative effect adjustment to compensation expense. Compensation expense will be recognized only if the performance condition is met. Employees forfeit unvested restricted stock units upon termination of employment with a corresponding reversal of compensation expense. As of September 30, 2018 , the Company has determined that the performance condition is probable of achieving 50 percent of the 2018 award and 75 percent of the 2017 award. Up to 75 percent of the award can be earned based on the Company's total shareholder return relative to members of a predetermined peer group. The market condition must be met for the awards to vest and compensation cost will be recognized regardless if the market condition is satisfied. Compensation expense is amortized on a straight-line basis over the 36 -month requisite service period. Employees forfeit unvested restricted stock units upon termination of employment with a corresponding reversal of compensation expense. For this portion of the awards, the fair value on the grant date was determined using a Monte Carlo simulation with the following assumptions: Risk-free Expected Stock Grant Year Interest Rate Price Volatility 2018 2.40% 34.8% 2017 1.62% 35.9% Because the market condition portion of the awards vesting depend on the Company's total shareholder return relative to a peer group, the valuation modeled the performance of the peer group as well as the correlation between the Company and the peer group. The expected stock price volatility assumptions were determined using historical volatility, as correlation coefficients can only be developed through historical volatility. The risk-free interest rates were determined based on three -year U.S. Treasury bond yields. In the fourth quarter of 2017, the compensation committee of the Company's board of directors included defined retirement provisions in its Leadership Grants, beginning with the February 2018 grant. Certain grantees meeting defined age and service requirements will be fully vested in the awards as long as performance and post-termination obligations are met throughout the performance period. These retirement-eligible grants are expensed in the period in which those awards are deemed to be earned, which is the calendar year preceding the February grant date. For example, the Company recognized compensation expense for retirement-eligible grantees in fiscal 2017 for its February 2018 Leadership Grant. Leadership Grants Prior to 2017 Restricted stock units granted prior to 2017 contain market condition criteria and will vest and convert to shares of common stock at the end of each 36 -month performance period only if the Company's stock performance satisfies predetermined market conditions over the performance period. Under the terms of the grants, the number of units that will vest and convert to shares will be based on the Company's stock performance achieving specified targets during each performance period. Compensation expense is recognized over each 36 -month performance period. Up to 50 percent of these awards can be earned based on the Company's total shareholder return relative to members of a predetermined peer group and up to 50 percent of the awards can be earned based on the Company's total shareholder return. The fair value of the awards on the grant date was determined using a Monte Carlo simulation with the following assumptions pursuant to the methodology above: Risk-free Expected Stock Grant Year Interest Rate Price Volatility 2016 0.98% 34.9% 2015 0.90% 29.8% Stock Options On February 15, 2018, the Company granted options to certain executive officers. These options are expensed on a straight-line basis over the required service period of five years , based on the estimated fair value of the award on the date of grant. The exercise price per share is equal to the closing price on the date of grant plus ten percent . These options are subject to graded vesting, beginning on the third anniversary of the grant date, so long as the employee remains continuously employed by the Company. The maximum term of these stock options is ten years. The fair value of this stock option award was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Risk-free interest rate 2.82% Dividend yield 3.22% Expected stock price volatility 37.20% Expected life of options (in years) 7.0 Fair value of options granted (per share) $24.49 The risk-free interest rate assumption was based on the U.S. Treasury bond yield with a maturity equal to the expected life of the options. The dividend yield assumption was based on the assumed dividend payout over the expected life of the options. The expected stock price volatility assumption was determined using historical volatility, as correlation coefficients can only be developed through historical volatility. Inducement Plan The Company established the Inducement Plan in conjunction with the acquisition of Simmons. The Company granted $11.6 million ( 286,776 shares) in restricted stock under the Inducement Plan on May 16, 2016 . These shares cliff vest on May 16, 2019. Inducement Plan awards are amortized as compensation expense on a straight-line basis over the vesting period. Employees forfeit unvested Inducement Plan shares upon termination of employment and a reversal of compensation expense is recorded. Stock-Based Compensation Activity The following table summarizes the Company's stock-based compensation expense: Three Months Ended Nine Months Ended September 30, September 30, (amounts in millions) 2018 2017 2018 2017 Stock-based compensation expense $ 12.7 $ 13.5 $ 31.1 $ 25.8 Forfeitures 0.2 0.7 0.7 3.0 Tax benefit related to stock-based compensation expense 2.3 4.2 5.2 7.1 The following table summarizes the changes in the Company's unvested restricted stock: Unvested Weighted Average Restricted Stock Grant Date (in Shares) Fair Value December 31, 2017 2,225,617 $ 46.40 Granted 291,597 89.31 Vested (745,578 ) 49.03 Canceled (17,002 ) 51.18 September 30, 2018 1,754,634 $ 52.36 The following table summarizes the changes in the Company's unvested restricted stock units: Unvested Weighted Average Restricted Grant Date Stock Units Fair Value December 31, 2017 244,772 $ 27.89 Granted 53,796 92.93 Vested (86,511 ) 21.83 Canceled (17,806 ) 23.91 September 30, 2018 194,251 $ 48.97 As of September 30, 2018 , there was $9.1 million of total unrecognized compensation cost related to restricted stock and restricted stock units expected to be recognized over a weighted average period of 1.0 year . The following table summarizes the changes in the Company's outstanding stock options: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price (in Years) Intrinsic Value December 31, 2017 — $ — 0.0 $ — Granted 81,667 99.00 Exercised — — Canceled — — September 30, 2018 81,667 $ 99.00 9.4 $ — As of September 30, 2018 , there was $1.8 million of unrecognized compensation cost related to stock options expected to be recognized over a weighted average period of 4.4 years . There were no options exercised during the nine months ended September 30, 2018 . Acquisition-related Compensation Arrangements The Company entered into acquisition-related compensation arrangements with certain employees for retention purposes. Additional cash compensation may be available to certain investment banking employees subject to exceeding an investment banking revenue threshold during the three year Simmons post-acquisition period to the extent they are employed by the Company at the time of payment. Amounts estimated to be payable related to this performance award plan will be recorded as compensation expense on the consolidated statements of operations over the requisite performance period of three years . As of September 30, 2018 , the Company had accrued $38.0 million related to this performance award plan. The Company recorded compensation expense of $0.6 million and $7.4 million for the three months ended September 30, 2018 and 2017 , respectively, and $7.2 million and $10.1 million for the nine months ended September 30, 2018 and 2017 , respectively, related to this performance award plan. Deferred Compensation Plans The Company maintains various deferred compensation arrangements for employees. The nonqualified deferred compensation plan is an unfunded plan which allows certain highly compensated employees, at their election, to defer a percentage of their base salary, commissions and/or cash bonuses. The deferrals vest immediately and are non-forfeitable. The amounts deferred under this plan are held in a grantor trust. The Company invests, as a principal, in investments to economically hedge its obligation under the nonqualified deferred compensation plan. Investments in the grantor trust, consisting of mutual funds, totaled $33.0 million and $31.5 million as of September 30, 2018 and December 31, 2017 , respectively, and are included in investments on the consolidated statements of financial condition. The compensation deferred by the employees is expensed in the period earned. The deferred compensation liability was $33.1 million and $31.6 million as of September 30, 2018 and December 31, 2017 , respectively. Changes in the fair value of the investments made by the Company are reported in investment income and changes in the corresponding deferred compensation liability are reflected as compensation and benefits expense on the consolidated statements of operations. On August 9, 2017, the Company's board of directors approved the discontinuance of future deferral elections by participants for performance periods beginning after December 31, 2017. The Piper Jaffray Companies Mutual Fund Restricted Share Investment Plan is a fully funded deferred compensation plan which allows eligible employees to elect to receive a portion of the incentive compensation they would otherwise receive in the form of restricted stock, instead in restricted mutual fund shares ("MFRS Awards") of investment funds. MFRS Awards are awarded to qualifying employees in February of each year, and represent a portion of their compensation for performance in the preceding year similar to the Company's Annual Grants. MFRS Awards vest ratably over three years in equal installments and provide for continued vesting after termination of employment so long as the employee does not violate certain post-termination restrictions set forth in the award agreement or any agreement entered into upon termination. Forfeitures are recorded as a reduction of compensation and benefits expense within the consolidated statements of operations. MFRS Awards are owned by employee recipients (subject to aforementioned vesting restrictions) and as such are not included on the consolidated statements of financial condition. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share ("EPS") The Company calculates earnings per share using the two-class method. Basic earnings per common share is computed by dividing net income applicable to Piper Jaffray Companies' common shareholders by the weighted average number of common shares outstanding for the period. Net income applicable to Piper Jaffray Companies' common shareholders represents net income applicable to Piper Jaffray Companies reduced by the allocation of earnings to participating securities. No allocation of undistributed earnings is made for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Distributed earnings (e.g., dividends) are allocated to participating securities. All of the Company's unvested restricted shares are deemed to be participating securities as they are eligible to share in the profits (e.g., receive dividends) of the Company. The Company's restricted stock units are not participating securities as they are not eligible to receive dividends, or the dividends are forfeitable until vested. Diluted earnings per common share is calculated by adjusting the weighted average outstanding shares to assume conversion of all potentially dilutive stock options and restricted stock units. The computation of earnings per share is as follows: Three Months Ended Nine Months Ended September 30, September 30, (Amounts in thousands, except per share data) 2018 2017 2018 2017 Net income/(loss) applicable to Piper Jaffray Companies $ 22,023 $ (49,713 ) $ 38,852 $ (15,865 ) Earnings allocated to participating securities (1) (2,646 ) (702 ) (5,202 ) (2,241 ) Net income/(loss) applicable to Piper Jaffray Companies' common shareholders (2) $ 19,377 $ (50,415 ) $ 33,650 $ (18,106 ) Shares for basic and diluted calculations: Average shares used in basic computation 13,343 12,898 13,248 12,774 Restricted stock units 165 77 196 171 Average shares used in diluted computation 13,508 12,975 (3) 13,444 (3) 12,945 (3) Earnings/(loss) per common share: Basic $ 1.45 $ (3.91 ) $ 2.54 $ (1.42 ) Diluted $ 1.43 $ (3.91 ) (3) $ 2.50 (3) $ (1.42 ) (3) (1) Represents the allocation of distributed and undistributed earnings to participating securities. No allocation of undistributed earnings is made for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Distributed earnings (e.g., dividends) are allocated to participating securities. Participating securities include all of the Company's unvested restricted shares. The weighted average participating shares outstanding were 1,842,036 and 2,246,663 for the three months ended September 30, 2018 and 2017 , respectively, and 1,944,946 and 2,389,755 for the nine months ended September 30, 2018 and 2017 , respectively. (2) Net income applicable to Piper Jaffray Companies' common shareholders for diluted and basic EPS may differ under the two-class method as a result of adding the effect of the assumed exercise of stock options and restricted stock units to dilutive shares outstanding, which alters the ratio used to allocate earnings to Piper Jaffray Companies' common shareholders and participating securities for purposes of calculating diluted and basic EPS. (3) Earnings per diluted common share is calculated using the basic weighted average number of common shares outstanding for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Common shares of 1,754,634 and 2,235,060 were excluded from diluted EPS at September 30, 2018 and 2017 , respectively, as the Company had undistributed losses for these periods. The anti-dilutive effects from stock options and restricted stock units were immaterial for the nine months ended September 30, 2018 and 2017 , respectively. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Basis for Presentation The Company structures its segments primarily based upon the nature of the financial products and services provided to customers and the Company's management organization. The Company evaluates performance and allocates resources based on segment pre-tax operating income or loss and segment pre-tax operating margin. Revenues and expenses directly associated with each respective segment are included in determining their operating results. Other revenues and expenses that are not directly attributable to a particular segment are allocated based upon the Company's allocation methodologies, including each segment's respective net revenues, use of shared resources, headcount or other relevant measures. Segment assets are based on those directly associated with each segment, and include an allocation of certain assets based on the most relevant measures applicable, including headcount and other factors. The substantial majority of the Company's net revenues and long-lived assets are located in the U.S. Reportable segment financial results are as follows: Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Capital Markets Investment banking Advisory services $ 113,540 $ 146,816 $ 266,083 $ 332,205 Financing Equities 32,188 22,117 99,868 70,229 Debt 20,936 21,687 45,473 60,066 Total investment banking 166,664 190,620 411,424 462,500 Institutional sales and trading Equities 17,804 18,410 54,951 59,085 Fixed income 18,162 20,676 52,932 63,137 Total institutional sales and trading 35,966 39,086 107,883 122,222 Management and performance fees 1,806 678 4,824 4,172 Investment income/(loss) 3,166 (660 ) 7,607 15,155 Long-term financing expenses (1,732 ) (1,736 ) (5,351 ) (6,003 ) Net revenues 205,870 227,988 526,387 598,046 Operating expenses (1) 176,783 196,409 482,024 524,702 Segment pre-tax operating income $ 29,087 $ 31,579 $ 44,363 $ 73,344 Segment pre-tax operating margin 14.1 % 13.9 % 8.4 % 12.3 % Continued on next page Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Asset Management Management and performance fees Management fees $ 11,571 $ 12,140 $ 33,874 $ 39,839 Performance fees — — 8 — Total management and performance fees 11,571 12,140 33,882 39,839 Investment income/(loss) 87 439 (198 ) 956 Net revenues 11,658 12,579 33,684 40,795 Operating expenses (1) 11,110 126,394 35,115 153,699 Segment pre-tax operating income/(loss) $ 548 $ (113,815 ) $ (1,431 ) $ (112,904 ) Segment pre-tax operating margin 4.7 % (904.8 )% (4.2 )% (276.8 )% Total Net revenues $ 217,528 $ 240,567 $ 560,071 $ 638,841 Operating expenses 187,893 322,803 517,139 678,401 Pre-tax operating income/(loss) $ 29,635 $ (82,236 ) $ 42,932 $ (39,560 ) Pre-tax operating margin 13.6 % (34.2 )% 7.7 % (6.2 )% (1) Operating expenses include a $114.4 million goodwill impairment charge for the Asset Management segment for the three and nine months ended September 30, 2017 , as well as intangible asset amortization as set forth in the table below: Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Capital Markets $ 1,214 $ 2,544 $ 3,643 $ 7,633 Asset Management 1,401 1,278 4,202 3,833 Total intangible asset amortization $ 2,615 $ 3,822 $ 7,845 $ 11,466 Reportable segment assets are as follows: September 30, December 31, (Dollars in thousands) 2018 2017 Capital Markets $ 1,411,590 $ 1,933,050 Asset Management 81,846 91,633 Total assets $ 1,493,436 $ 2,024,683 |
Net Capital Requirements and Ot
Net Capital Requirements and Other Regulatory Matters | 9 Months Ended |
Sep. 30, 2018 | |
Regulatory Capital Requirements [Abstract] | |
Net Capital Requirements and Other Regulatory Matters | Net Capital Requirements and Other Regulatory Matters Piper Jaffray is registered as a securities broker dealer with the SEC and is a member of various SROs and securities exchanges. The Financial Industry Regulatory Authority, Inc. ("FINRA") serves as Piper Jaffray's primary SRO. Piper Jaffray is subject to the uniform net capital rule of the SEC and the net capital rule of FINRA. Piper Jaffray has elected to use the alternative method permitted by the SEC rule which requires that it maintain minimum net capital of $1.0 million . Advances to affiliates, repayment of subordinated debt, dividend payments and other equity withdrawals by Piper Jaffray are subject to certain approvals, notifications and other provisions of SEC and FINRA rules. At September 30, 2018 , net capital calculated under the SEC rule was $199.1 million , and exceeded the minimum net capital required under the SEC rule by $198.1 million . The Company's committed short-term credit facility and its senior notes include covenants requiring Piper Jaffray to maintain minimum net capital of $120 million . CP Notes issued under CP Series II A include a covenant that requires Piper Jaffray to maintain excess net capital of $100 million . The Company's fully disclosed clearing agreement with Pershing also includes a covenant requiring Piper Jaffray to maintain excess net capital of $120 million . Piper Jaffray Ltd., a broker dealer subsidiary registered in the United Kingdom, is subject to the capital requirements of the Prudential Regulation Authority and the Financial Conduct Authority. As of September 30, 2018 , Piper Jaffray Ltd. was in compliance with the capital requirements of the Prudential Regulation Authority and the Financial Conduct Authority. Piper Jaffray Hong Kong Limited is licensed by the Hong Kong Securities and Futures Commission, which is subject to the liquid capital requirements of the Securities and Futures (Financial Resources) Rule promulgated under the Securities and Futures Ordinance. At September 30, 2018 , Piper Jaffray Hong Kong Limited was in compliance with the liquid capital requirements of the Hong Kong Securities and Futures Commission. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax expense of $7.4 million and $5.4 million for the three and nine months ended September 30, 2018 , respectively. Income tax expense was reduced by a tax benefit of $0.4 million and $6.8 million for the three and nine months ended September 30, 2018 , respectively, related to stock-based compensation awards vesting at values greater than the grant price. The Company recorded an income tax benefit of $31.4 million and $26.9 million for the three and nine months ended September 30, 2017 , respectively, as a result of pre-tax losses related to the $114.4 million non-cash goodwill impairment charge for the asset management reporting unit. The tax benefit related to stock-based compensation awards vesting at values greater than the grant price was $0.3 million and $9.1 million for the three and nine months ended September 30, 2017 , respectively. SEC Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" ("SAB 118") permitted companies to report a provisional amount in the 2017 financial statements if the accounting for income tax effects of the Tax Cuts and Jobs Act was incomplete as of December 31, 2017. This provisional amount would be subject to adjustment during a defined measurement period. Pursuant to SAB 118, the Company recorded an additional $1.0 million of income tax expense for the nine months ended September 30, 2018 . |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event The Company has entered into fixed rate senior notes with certain entities advised by Pacific Investment Management Company ("PIMCO"). The outstanding balance of the fixed rate Class C Notes was $125.0 million at September 30, 2018 and December 31, 2017 . The fixed rate Class C Notes were repaid by the Company upon maturity on October 9, 2018 . |
Accounting Policies and Prono_2
Accounting Policies and Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Revenue Recognition | Revenue Recognition Investment Banking – Investment banking revenues, which include advisory and underwriting fees, are recorded when the performance obligation for the transaction is satisfied under the terms of each engagement. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. Investment banking revenues are presented gross of related client reimbursed deal expenses. Expenses for completed deals are reported separately in deal-related expenses on the consolidated statements of operations. Expenses related to investment banking deals not completed are recognized as non-interest expenses on the consolidated statements of operations. The Company's advisory fees generally consist of a nonrefundable up-front fee and a success fee. The nonrefundable fee is recorded as deferred revenue upon receipt and recognized at a point in time when the performance obligation is satisfied, or when the transaction is deemed by management to be terminated. Management's judgment is required in determining when a transaction is considered to be terminated. The substantial majority of the Company's advisory and underwriting fees (i.e., the success related advisory fee) are considered variable consideration and recognized when it is probable that the variable consideration will not be reversed in a future period. The variable consideration is considered to be constrained until satisfaction of the performance obligation. The Company's performance obligation is generally satisfied at a point in time upon the closing of a strategic transaction, completion of a financing or underwriting arrangement, or some other defined outcome (e.g., providing a fairness opinion). At this time, the Company has transferred control of the promised service and the customer obtains control. As these arrangements represent a single performance obligation, allocation of the transaction price is not necessary. The Company has elected to apply the following optional exemptions regarding disclosure of its remaining performance obligations: (i) the Company's performance obligation is part of a contract that has an original expected duration of one year or less and/or (ii) the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Institutional Brokerage – Institutional brokerage revenues include (i) commissions received from customers for the execution of brokerage transactions in listed and over-the-counter (OTC) equity, fixed income and convertible debt securities, which are recognized at a point in time on the trade date because the customer has obtained the rights to the underlying security provided by the trade execution service, (ii) trading gains and losses, recorded on changes in the fair value of long and short security positions in the reporting period and (iii) fees received by the Company for equity research, which are generally recognized in the period received. The Company permits institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. As the Company is not acting as a principal in satisfying the performance obligation for these arrangements, expenses relating to soft dollars are netted against commission revenues and included in other liabilities and accrued expenses on the consolidated statements of financial condition. Asset Management – Asset management fees include revenues the Company receives in connection with management and investment advisory services performed for separately managed accounts and various funds and partnerships. The performance obligation related to the transfer of these services is satisfied over time and the related fees are recognized under the output method, which reflects the fees that the Company has a right to invoice based on the services provided during the period. Fees are defined in client contracts as a percentage of portfolio assets under management. Amounts related to remaining performance obligations are not disclosed as the Company applies the output method. Asset management revenues may also include performance fees. Performance fees, if earned, are recognized when it is probable that such revenue will not be reversed in a future period. For the Company's alternative asset management funds, management will consider such factors as the remaining assets and residual life of the fund to conclude whether it is probable that a significant reversal of revenue will not occur in the future. For the Company's traditional asset management funds, performance fees are earned when the investment return on assets under management exceeds certain benchmark targets or other performance targets over a specified measurement period (e.g., monthly, quarterly or annually). These performance fees are typically annual performance hurdles and recognized in the fourth quarter of the applicable year, or upon client liquidation. See Note 15 for revenues from contracts with customers disaggregated by major business activity. |
Accounting Policies and Prono_3
Accounting Policies and Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash for all periods presented on the consolidated statements of cash flows: December 31, September 30, December 31, (Dollars in thousands) 2017 2017 2016 Cash and cash equivalents $ 33,793 $ 40,916 $ 41,359 Cash and cash equivalents segregated for regulatory purposes — 6,016 29,015 Cash, cash equivalents and restricted cash $ 33,793 $ 46,932 $ 70,374 |
Financial Instruments and Oth_2
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments Owned and Sold, Not yet Purchased [Abstract] | |
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased by Type | September 30, December 31, (Dollars in thousands) 2018 2017 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 21,473 $ 51,896 Convertible securities 126,641 74,456 Fixed income securities 42,976 30,145 Municipal securities: Taxable securities 41,766 67,699 Tax-exempt securities 226,702 744,241 Short-term securities 150,090 62,251 Mortgage-backed securities 16 481 U.S. government agency securities 173,477 317,318 U.S. government securities 1,561 9,317 Derivative contracts 13,418 25,573 Total financial instruments and other inventory positions owned $ 798,120 $ 1,383,377 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 116,712 $ 101,517 Fixed income securities 31,187 30,292 U.S. government agency securities 37,245 49,077 U.S. government securities 65,205 213,312 Derivative contracts 4,236 5,029 Total financial instruments and other inventory positions sold, but not yet purchased $ 254,585 $ 399,227 |
Schedule of Gross Fair Market Value and Total Absolute Notional Contract Amount | The following table presents the gross fair market value and the total absolute notional contract amount of the Company's outstanding derivative instruments, prior to counterparty netting, by asset or liability position: September 30, 2018 December 31, 2017 (Dollars in thousands) Derivative Derivative Notional Derivative Derivative Notional Derivative Category Assets (1) Liabilities (2) Amount Assets (1) Liabilities (2) Amount Interest rate Customer matched-book $ 159,244 $ 147,944 $ 2,602,498 $ 239,224 $ 225,890 $ 2,819,006 Trading securities 1,714 368 243,175 126 4,459 399,450 Equity options Trading securities — — — 6 — 9,635 $ 160,958 $ 148,312 $ 2,845,673 $ 239,356 $ 230,349 $ 3,228,091 (1) Derivative assets are included within financial instruments and other inventory positions owned on the consolidated statements of financial condition. (2) Derivative liabilities are included within financial instruments and other inventory positions sold, but not yet purchased on the consolidated statements of financial condition. |
Unrealized Gains/(Losses) on Derivative Instruments | The following table presents the Company's unrealized gains/(losses) on derivative instruments: Three Months Ended Nine Months Ended (Dollars in thousands) September 30, September 30, Derivative Category Operations Category 2018 2017 2018 2017 Interest rate derivative contract Investment banking $ (301 ) $ (300 ) $ (1,567 ) $ (1,076 ) Interest rate derivative contract Institutional brokerage 980 1,627 5,212 (16,028 ) Credit default swap index contract Institutional brokerage — 4,304 — 4,482 $ 679 $ 5,631 $ 3,645 $ (12,622 ) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Information about Significant Unobservable Inputs used in Fair Value Measurement | The following table summarizes quantitative information about the significant unobservable inputs used in the fair value measurement of the Company's Level III financial instruments as of September 30, 2018 : Valuation Weighted Technique Unobservable Input Range Average (1) Assets: Financial instruments and other inventory positions owned: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in basis points ("bps") (2) 1 - 11 bps 8.7 bps Investments at fair value: Equity securities in private companies Market approach Revenue multiple (3) 2 - 6 times 4.8 times EBITDA multiple (3) 13 - 16 times 14.4 times Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in bps (2) 7 - 16 bps 8.9 bps Uncertainty of fair value measurements: (1) Unobservable inputs were weighted by the relative fair value of the financial instruments. (2) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly lower/(higher) fair value measurement. (3) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly higher/(lower) fair value measurement. |
Valuation of Financial Instruments by Pricing Observability Levels | The following table summarizes the valuation of the Company's financial instruments by pricing observability levels defined in FASB Accounting Standards Codification Topic 820, "Fair Value Measurement" ("ASC 820") as of September 30, 2018 : Counterparty and Cash Collateral (Dollars in thousands) Level I Level II Level III Netting (1) Total Assets: Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 266 $ 21,207 $ — $ — $ 21,473 Convertible securities — 126,641 — — 126,641 Fixed income securities — 42,976 — — 42,976 Municipal securities: Taxable securities — 41,766 — — 41,766 Tax-exempt securities — 226,702 — — 226,702 Short-term securities — 150,045 45 — 150,090 Mortgage-backed securities — — 16 — 16 U.S. government agency securities — 173,477 — — 173,477 U.S. government securities 1,561 — — — 1,561 Derivative contracts — 159,685 1,273 (147,540 ) 13,418 Total financial instruments and other inventory positions owned 1,827 942,499 1,334 (147,540 ) 798,120 Cash equivalents 40,793 — — — 40,793 Investments at fair value 39,501 — 104,285 (2) — 143,786 Total assets $ 82,121 $ 942,499 $ 105,619 $ (147,540 ) $ 982,699 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 112,642 $ 4,070 $ — $ — $ 116,712 Fixed income securities — 31,187 — — 31,187 U.S. government agency securities — 37,245 — — 37,245 U.S. government securities 65,205 — — — 65,205 Derivative contracts — 147,944 368 (144,076 ) 4,236 Total financial instruments and other inventory positions sold, but not yet purchased $ 177,847 $ 220,446 $ 368 $ (144,076 ) $ 254,585 (1) Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. (2) Noncontrolling interests of $47.2 million are attributable to third party ownership in consolidated merchant banking and senior living funds. The following table summarizes the valuation of the Company's financial instruments by pricing observability levels defined in ASC 820 as of December 31, 2017 : Counterparty and Cash Collateral (Dollars in thousands) Level I Level II Level III Netting (1) Total Assets: Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 1,863 $ 50,033 $ — $ — $ 51,896 Convertible securities — 74,456 — — 74,456 Fixed income securities — 30,145 — — 30,145 Municipal securities: Taxable securities — 67,699 — — 67,699 Tax-exempt securities — 743,541 700 — 744,241 Short-term securities — 61,537 714 — 62,251 Mortgage-backed securities — — 481 — 481 U.S. government agency securities — 317,318 — — 317,318 U.S. government securities 9,317 — — — 9,317 Derivative contracts 6 239,224 126 (213,783 ) 25,573 Total financial instruments and other inventory positions owned 11,186 1,583,953 2,021 (213,783 ) 1,383,377 Cash equivalents 3,782 — — — 3,782 Investments at fair value 39,504 — 126,060 (2) — 165,564 Total assets $ 54,472 $ 1,583,953 $ 128,081 $ (213,783 ) $ 1,552,723 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 91,934 $ 9,583 $ — $ — $ 101,517 Fixed income securities — 30,292 — — 30,292 U.S. government agency securities — 49,077 — — 49,077 U.S. government securities 213,312 — — — 213,312 Derivative contracts — 225,916 4,433 (225,320 ) 5,029 Total financial instruments and other inventory positions sold, but not yet purchased $ 305,246 $ 314,868 $ 4,433 $ (225,320 ) $ 399,227 (1) Represents cash collateral and the impact of netting on a counterparty basis. The Company had no securities posted as collateral to its counterparties. (2) Noncontrolling interests of $44.4 million are attributable to third party ownership in consolidated merchant banking and senior living funds. |
Changes in Fair Value Associated with Level III Financial Instruments | The following tables summarize the changes in fair value associated with Level III financial instruments held at the beginning or end of the periods presented: Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at June 30, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2018 Purchases Sales in out (losses) (1) (losses) (1) 2018 2018 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Short-term securities $ 45 $ — $ — $ — $ — $ — $ — $ 45 $ — Mortgage-backed securities 18 — — — — — (2 ) 16 (2 ) Derivative contracts 930 — (90 ) — — 90 343 1,273 441 Total financial instruments and other inventory positions owned 993 — (90 ) — — 90 341 1,334 439 Investments at fair value 108,121 10,000 (14,199 ) — (357 ) 4,949 (4,229 ) 104,285 (4,229 ) Total assets $ 109,114 $ 10,000 $ (14,289 ) $ — $ (357 ) $ 5,039 $ (3,888 ) $ 105,619 $ (3,790 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,005 $ (210 ) $ 40 $ — $ — $ 169 $ (636 ) $ 368 $ (464 ) Total financial instruments and other inventory positions sold, but not yet purchased $ 1,005 $ (210 ) $ 40 $ — $ — $ 169 $ (636 ) $ 368 $ (464 ) (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at June 30, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2017 Purchases Sales in out (losses) (1) (losses) (1) 2017 2017 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 1,117 $ — $ (267 ) $ — $ — $ — $ (100 ) $ 750 $ (100 ) Short-term securities 721 — — — — — (16 ) 705 (16 ) Mortgage-backed securities 4,251 — — — — — 70 4,321 70 Derivative contracts 383 105 — — — (105 ) 303 686 686 Total financial instruments and other inventory positions owned 6,472 105 (267 ) — — (105 ) 257 6,462 640 Investments at fair value 113,885 18,250 — — — — (1,975 ) 130,160 (1,975 ) Total assets $ 120,357 $ 18,355 $ (267 ) $ — $ — $ (105 ) $ (1,718 ) $ 136,622 $ (1,335 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 5,573 $ — $ 3,461 $ — $ — $ (3,461 ) $ (1,323 ) $ 4,250 $ 1,430 Total financial instruments and other inventory positions sold, but not yet purchased $ 5,573 $ — $ 3,461 $ — $ — $ (3,461 ) $ (1,323 ) $ 4,250 $ 1,430 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2017 Purchases Sales in out (losses) (1) (losses) (1) 2018 2018 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 700 $ — $ — $ — $ (700 ) $ — $ — $ — $ — Short-term securities 714 — (725 ) — — 51 5 45 — Mortgage-backed securities 481 — (5 ) — — — (460 ) 16 (93 ) Derivative contracts 126 4 (2,965 ) — — 2,961 1,147 1,273 1,273 Total financial instruments and other inventory positions owned 2,021 4 (3,695 ) — (700 ) 3,012 692 1,334 1,180 Investments at fair value 126,060 11,708 (29,139 ) — (502 ) 14,015 (17,857 ) 104,285 (8,307 ) Total assets $ 128,081 $ 11,712 $ (32,834 ) $ — $ (1,202 ) $ 17,027 $ (17,165 ) $ 105,619 $ (7,127 ) Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,433 $ (1,600 ) $ 3,266 $ — $ — $ (1,666 ) $ (4,065 ) $ 368 $ 368 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,433 $ (1,600 ) $ 3,266 $ — $ — $ (1,666 ) $ (4,065 ) $ 368 $ 368 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ September 30, September 30, (Dollars in thousands) 2016 Purchases Sales in out (losses) (1) (losses) (1) 2017 2017 (1) Assets: Financial instruments and other inventory positions owned: Municipal securities: Taxable securities $ 2,686 $ — $ (2,703 ) $ — $ — $ 716 $ (699 ) $ — $ — Tax-exempt securities 1,077 — (267 ) — — — (60 ) 750 (60 ) Short-term securities 744 — (25 ) — — 2 (16 ) 705 (16 ) Mortgage-backed securities 5,365 997 (1,854 ) — — 296 (483 ) 4,321 (90 ) Derivative contracts 13,952 350 (11,978 ) — — 11,628 (13,266 ) 686 686 Total financial instruments and other inventory positions owned 23,824 1,347 (16,827 ) — — 12,642 (14,524 ) 6,462 520 Investments at fair value 123,319 25,444 (25,211 ) — (601 ) 9,399 (2,190 ) 130,160 7,704 Total assets $ 147,143 $ 26,791 $ (42,038 ) $ — $ (601 ) $ 22,041 $ (16,714 ) $ 136,622 $ 8,224 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,487 $ (719 ) $ 11,219 $ — $ — $ (10,500 ) $ 2,763 $ 4,250 $ 4,125 Total financial instruments and other inventory positions sold, but not yet purchased $ 1,487 $ (719 ) $ 11,219 $ — $ — $ (10,500 ) $ 2,763 $ 4,250 $ 4,125 (1) Realized and unrealized gains/(losses) related to financial instruments, with the exception of customer matched-book derivatives, are reported in institutional brokerage on the consolidated statements of operations. Realized and unrealized gains/(losses) related to customer matched-book derivatives are reported in investment banking. Realized and unrealized gains/(losses) related to investments are reported in investment banking revenues or investment income/(loss) on the consolidated statements of operations. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Schedule of Consolidated Variable Interest Entities | The following table presents information about the carrying value of the assets and liabilities of the VIEs which are consolidated by the Company and included on the consolidated statements of financial condition at September 30, 2018 . The assets can only be used to settle the liabilities of the respective VIE, and the creditors of the VIEs do not have recourse to the general credit of the Company. One of these VIEs has $25.0 million of bank line financing available with an interest rate based on prime plus an applicable margin. The assets and liabilities are presented prior to consolidation, and thus a portion of these assets and liabilities are eliminated in consolidation. Alternative Asset (Dollars in thousands) Management Funds Assets: Investments $ 100,905 Other assets 6,761 Total assets $ 107,666 Liabilities: Other liabilities and accrued expenses $ 10,740 Total liabilities $ 10,740 |
Receivables from and Payables_2
Receivables from and Payables to Brokers, Dealers and Clearing Organizations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Brokers and Dealers [Abstract] | |
Schedule of Receivables from and Payables to Brokers, Dealers and Clearing Organizations | September 30, December 31, (Dollars in thousands) 2018 2017 Receivable from clearing organizations $ 153,527 $ 109,270 Deposits with clearing organizations 2,551 11,019 Receivable from brokers and dealers 15,058 12,041 Receivable arising from unsettled securities transactions — 9,218 Other 2,929 3,846 Total receivables from brokers, dealers and clearing organizations $ 174,065 $ 145,394 September 30, December 31, (Dollars in thousands) 2018 2017 Payable to brokers and dealers $ 6,371 $ 18,584 Payable arising from unsettled securities transactions — 808 Total payables to brokers, dealers and clearing organizations $ 6,371 $ 19,392 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Schedule of Investments | The Company's investments include investments in private companies and partnerships, registered mutual funds and private company debt. September 30, December 31, (Dollars in thousands) 2018 2017 Investments at fair value $ 143,786 $ 165,564 Investments at cost 1,614 2,416 Investments accounted for under the equity method 6,980 8,232 Total investments 152,380 176,212 Less investments attributable to noncontrolling interests (1) (47,204 ) (44,397 ) $ 105,176 $ 131,815 (1) Noncontrolling interests are attributable to third party ownership in consolidated merchant banking and senior living funds. |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | September 30, December 31, (Dollars in thousands) 2018 2017 Fee receivables $ 26,170 $ 20,884 Income tax receivables 7,311 — Accrued interest receivables 8,485 6,981 Forgivable loans, net 8,377 7,452 Prepaid expenses 8,016 6,769 Other 10,340 12,748 Total other assets $ 68,699 $ 54,834 |
Short-Term Financing (Tables)
Short-Term Financing (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Short-Term Financing and Weighted Average Interest Rate on Borrowings | Outstanding Balance Weighted Average Interest Rate September 30, December 31, September 30, December 31, (Dollars in thousands) 2018 2017 2018 2017 Commercial paper (secured) $ 49,957 $ 49,974 3.12 % 2.32 % Prime broker arrangement — 239,963 N/A 2.23 % Total short-term financing $ 49,957 $ 289,937 |
Contingencies, Commitments an_2
Contingencies, Commitments and Guarantees (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Aggregate Minimum Lease Commitments Under Operating Leases | The Company leases office space throughout the United States and in a limited number of foreign countries where the Company's international operations reside. Aggregate minimum lease commitments under operating leases as of September 30, 2018 are as follows: (Dollars in thousands) Remainder of 2018 $ 3,557 2019 13,601 2020 13,686 2021 9,329 2022 7,985 Thereafter 22,900 Total $ 71,058 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Pre-tax Restructuring Costs | The Company incurred the following pre-tax restructuring costs principally related to headcount reductions in both the Capital Markets and Asset Management segments. Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2018 September 30, 2018 Severance, benefits and outplacement costs $ — $ 3,455 Contract termination costs — 185 Vacated leased office space — 130 Total pre-tax restructuring costs $ — $ 3,770 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Changes in Shareholders' Equity | Ownership interests in entities held by parties other than the Company's common shareholders are presented as noncontrolling interests within shareholders' equity, separate from the Company's own equity. Revenues, expenses and net income or loss are reported on the consolidated statements of operations on a consolidated basis, which includes amounts attributable to both the Company's common shareholders and noncontrolling interests. Net income or loss is then allocated between the Company and noncontrolling interests based upon their relative ownership interests. Net income applicable to noncontrolling interests is deducted from consolidated net income to determine net income applicable to the Company. There was no other comprehensive income or loss attributed to noncontrolling interests for the nine months ended September 30, 2018 and 2017 , respectively. The following table presents the changes in shareholders' equity for the nine months ended September 30, 2018 : Common Common Total Shares Shareholders' Noncontrolling Shareholders' (Amounts in thousands, except share amounts) Outstanding Equity Interests Equity Balance at December 31, 2017 12,911,149 $ 693,332 $ 47,903 $ 741,235 Net income/(loss) — 38,852 (1,271 ) 37,581 Dividends — (41,631 ) — (41,631 ) Amortization/issuance of restricted stock — 44,541 — 44,541 Issuance of treasury shares for restricted stock vestings 840,043 — — — Repurchase of common stock through share repurchase program (124,606 ) (9,004 ) — (9,004 ) Repurchase of common stock for employee tax withholding (264,254 ) (22,660 ) — (22,660 ) Shares reserved/issued for director compensation 4,371 348 — 348 Other comprehensive income — 30 — 30 Cumulative effect upon adoption of new accounting standard, net of tax (1) — (3,597 ) — (3,597 ) Fund capital contributions, net — — 572 572 Balance at September 30, 2018 13,366,703 $ 700,211 $ 47,204 $ 747,415 (1) Cumulative effect adjustment upon adoption of ASU 2014-09, as amended. See Note 2 for further discussion. |
Compensation Plans (Tables)
Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Outstanding Equity Awards | The following table provides a summary of the Company's outstanding equity awards (in shares or units) as of September 30, 2018 : Incentive Plan Restricted Stock Annual grants 657,185 Sign-on grants 70,627 727,812 Inducement Plan Restricted Stock 254,058 Total restricted stock related to compensation 981,870 Simmons Deal Consideration (1) 772,764 Total restricted stock outstanding 1,754,634 Incentive Plan Restricted Stock Units Leadership grants 194,251 Incentive Plan Stock Options 81,667 (1) The Company issued restricted stock with service conditions as part of deal consideration for the acquisition of Simmons & Company International ("Simmons") on February 26, 2016. |
Schedule of RSU Valuation Assumptions | For this portion of the awards, the fair value on the grant date was determined using a Monte Carlo simulation with the following assumptions: Risk-free Expected Stock Grant Year Interest Rate Price Volatility 2018 2.40% 34.8% 2017 1.62% 35.9% The fair value of the awards on the grant date was determined using a Monte Carlo simulation with the following assumptions pursuant to the methodology above: Risk-free Expected Stock Grant Year Interest Rate Price Volatility 2016 0.98% 34.9% 2015 0.90% 29.8% |
Schedule of Stock Options Valuation Assumptions | The fair value of this stock option award was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Risk-free interest rate 2.82% Dividend yield 3.22% Expected stock price volatility 37.20% Expected life of options (in years) 7.0 Fair value of options granted (per share) $24.49 |
Schedule of Stock-Based Compensation Expense | The following table summarizes the Company's stock-based compensation expense: Three Months Ended Nine Months Ended September 30, September 30, (amounts in millions) 2018 2017 2018 2017 Stock-based compensation expense $ 12.7 $ 13.5 $ 31.1 $ 25.8 Forfeitures 0.2 0.7 0.7 3.0 Tax benefit related to stock-based compensation expense 2.3 4.2 5.2 7.1 |
Changes in Unvested Restricted Stock | The following table summarizes the changes in the Company's unvested restricted stock: Unvested Weighted Average Restricted Stock Grant Date (in Shares) Fair Value December 31, 2017 2,225,617 $ 46.40 Granted 291,597 89.31 Vested (745,578 ) 49.03 Canceled (17,002 ) 51.18 September 30, 2018 1,754,634 $ 52.36 |
Changes in Unvested Restricted Stock Units | The following table summarizes the changes in the Company's unvested restricted stock units: Unvested Weighted Average Restricted Grant Date Stock Units Fair Value December 31, 2017 244,772 $ 27.89 Granted 53,796 92.93 Vested (86,511 ) 21.83 Canceled (17,806 ) 23.91 September 30, 2018 194,251 $ 48.97 |
Changes in Outstanding Stock Options | The following table summarizes the changes in the Company's outstanding stock options: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price (in Years) Intrinsic Value December 31, 2017 — $ — 0.0 $ — Granted 81,667 99.00 Exercised — — Canceled — — September 30, 2018 81,667 $ 99.00 9.4 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Earnings per Share | The computation of earnings per share is as follows: Three Months Ended Nine Months Ended September 30, September 30, (Amounts in thousands, except per share data) 2018 2017 2018 2017 Net income/(loss) applicable to Piper Jaffray Companies $ 22,023 $ (49,713 ) $ 38,852 $ (15,865 ) Earnings allocated to participating securities (1) (2,646 ) (702 ) (5,202 ) (2,241 ) Net income/(loss) applicable to Piper Jaffray Companies' common shareholders (2) $ 19,377 $ (50,415 ) $ 33,650 $ (18,106 ) Shares for basic and diluted calculations: Average shares used in basic computation 13,343 12,898 13,248 12,774 Restricted stock units 165 77 196 171 Average shares used in diluted computation 13,508 12,975 (3) 13,444 (3) 12,945 (3) Earnings/(loss) per common share: Basic $ 1.45 $ (3.91 ) $ 2.54 $ (1.42 ) Diluted $ 1.43 $ (3.91 ) (3) $ 2.50 (3) $ (1.42 ) (3) (1) Represents the allocation of distributed and undistributed earnings to participating securities. No allocation of undistributed earnings is made for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Distributed earnings (e.g., dividends) are allocated to participating securities. Participating securities include all of the Company's unvested restricted shares. The weighted average participating shares outstanding were 1,842,036 and 2,246,663 for the three months ended September 30, 2018 and 2017 , respectively, and 1,944,946 and 2,389,755 for the nine months ended September 30, 2018 and 2017 , respectively. (2) Net income applicable to Piper Jaffray Companies' common shareholders for diluted and basic EPS may differ under the two-class method as a result of adding the effect of the assumed exercise of stock options and restricted stock units to dilutive shares outstanding, which alters the ratio used to allocate earnings to Piper Jaffray Companies' common shareholders and participating securities for purposes of calculating diluted and basic EPS. (3) Earnings per diluted common share is calculated using the basic weighted average number of common shares outstanding for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Common shares of 1,754,634 and 2,235,060 were excluded from diluted EPS at September 30, 2018 and 2017 , respectively, as the Company had undistributed losses for these periods. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Financial Results | Reportable segment financial results are as follows: Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Capital Markets Investment banking Advisory services $ 113,540 $ 146,816 $ 266,083 $ 332,205 Financing Equities 32,188 22,117 99,868 70,229 Debt 20,936 21,687 45,473 60,066 Total investment banking 166,664 190,620 411,424 462,500 Institutional sales and trading Equities 17,804 18,410 54,951 59,085 Fixed income 18,162 20,676 52,932 63,137 Total institutional sales and trading 35,966 39,086 107,883 122,222 Management and performance fees 1,806 678 4,824 4,172 Investment income/(loss) 3,166 (660 ) 7,607 15,155 Long-term financing expenses (1,732 ) (1,736 ) (5,351 ) (6,003 ) Net revenues 205,870 227,988 526,387 598,046 Operating expenses (1) 176,783 196,409 482,024 524,702 Segment pre-tax operating income $ 29,087 $ 31,579 $ 44,363 $ 73,344 Segment pre-tax operating margin 14.1 % 13.9 % 8.4 % 12.3 % Continued on next page Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Asset Management Management and performance fees Management fees $ 11,571 $ 12,140 $ 33,874 $ 39,839 Performance fees — — 8 — Total management and performance fees 11,571 12,140 33,882 39,839 Investment income/(loss) 87 439 (198 ) 956 Net revenues 11,658 12,579 33,684 40,795 Operating expenses (1) 11,110 126,394 35,115 153,699 Segment pre-tax operating income/(loss) $ 548 $ (113,815 ) $ (1,431 ) $ (112,904 ) Segment pre-tax operating margin 4.7 % (904.8 )% (4.2 )% (276.8 )% Total Net revenues $ 217,528 $ 240,567 $ 560,071 $ 638,841 Operating expenses 187,893 322,803 517,139 678,401 Pre-tax operating income/(loss) $ 29,635 $ (82,236 ) $ 42,932 $ (39,560 ) Pre-tax operating margin 13.6 % (34.2 )% 7.7 % (6.2 )% (1) Operating expenses include a $114.4 million goodwill impairment charge for the Asset Management segment for the three and nine months ended September 30, 2017 , as well as intangible asset amortization as set forth in the table below: Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2018 2017 2018 2017 Capital Markets $ 1,214 $ 2,544 $ 3,643 $ 7,633 Asset Management 1,401 1,278 4,202 3,833 Total intangible asset amortization $ 2,615 $ 3,822 $ 7,845 $ 11,466 |
Reportable Segment Assets | Reportable segment assets are as follows: September 30, December 31, (Dollars in thousands) 2018 2017 Capital Markets $ 1,411,590 $ 1,933,050 Asset Management 81,846 91,633 Total assets $ 1,493,436 $ 2,024,683 |
Organization and Basis of Pre_2
Organization and Basis of Presentation - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Accounting Policies and Prono_4
Accounting Policies and Pronouncements - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deal-related expenses | $ 7,671 | $ 0 | $ 18,888 | $ 0 | |||
Cash, cash equivalents and restricted cash | [1] | 68,774 | 46,932 | 68,774 | 46,932 | $ 33,793 | $ 70,374 |
Aggregate minimum lease commitments | $ 71,058 | $ 71,058 | |||||
ASU 2016-18 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cash and cash equivalents | 40,916 | 40,916 | 33,793 | 41,359 | |||
Cash and cash equivalents segregated for regulatory purposes | 6,016 | 6,016 | 0 | 29,015 | |||
Cash, cash equivalents and restricted cash | $ 46,932 | $ 46,932 | $ 33,793 | $ 70,374 | |||
ASU 2016-02 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Number of operating leases | 65 | 65 | |||||
Aggregate minimum lease commitments | $ 71,058 | $ 71,058 | |||||
Retained earnings | ASU 2014-09 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Decrease to retained earnings | $ (3,597) | $ (3,597) | |||||
[1] | Upon adoption of ASU 2016-18, restricted cash includes cash and cash equivalents previously segregated for regulatory purposes. See Note 2 for further discussion. |
Financial Instruments and Oth_3
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased - Schedule of Financial Instruments Owned and Financial Instruments Sold, but Not Yet Purchased by Type (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financial instruments and other inventory positions owned: | ||
Equity securities | $ 21,473 | $ 51,896 |
Convertible securities | 126,641 | 74,456 |
Fixed income securities | 42,976 | 30,145 |
Taxable securities | 41,766 | 67,699 |
Tax-exempt securities | 226,702 | 744,241 |
Short-term securities | 150,090 | 62,251 |
Mortgage-backed securities | 16 | 481 |
U.S. government agency securities | 173,477 | 317,318 |
U.S. government securities | 1,561 | 9,317 |
Derivative contracts | 13,418 | 25,573 |
Total financial instruments and other inventory positions owned | 798,120 | 1,383,377 |
Financial instruments and other inventory positions sold, but not yet purchased: | ||
Equity securities | 116,712 | 101,517 |
Fixed income securities | 31,187 | 30,292 |
U.S. government agency securities | 37,245 | 49,077 |
U.S. government securities | 65,205 | 213,312 |
Derivative contracts | 4,236 | 5,029 |
Total financial instruments and other inventory positions sold, but not yet purchased | 254,585 | 399,227 |
Financial instruments and other inventory positions owned and pledged as collateral | $ 162,227 | $ 720,047 |
Financial Instruments and Oth_4
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased - Schedule of Gross Fair Market Value and Total Absolute Notional Contract Amount (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Derivative Assets | $ 160,958 | $ 239,356 |
Derivative Liabilities | 148,312 | 230,349 |
Notional Amount | 2,845,673 | 3,228,091 |
Customer matched-book | Interest rate | ||
Derivative [Line Items] | ||
Notional Amount | 2,602,498 | 2,819,006 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 159,244 | 239,224 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 147,944 | 225,890 |
Trading securities | Interest rate | ||
Derivative [Line Items] | ||
Notional Amount | 243,175 | 399,450 |
Trading securities | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 1,714 | 126 |
Trading securities | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 368 | 4,459 |
Trading securities | Equity options | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 9,635 |
Trading securities | Equity options | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 0 | 6 |
Trading securities | Equity options | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | $ 0 | $ 0 |
Financial Instruments and Oth_5
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased - Unrealized Gains/(Losses) on Derivative Instruments (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | $ 679 | $ 5,631 | $ 3,645 | $ (12,622) |
Interest rate derivative contract | Investment banking | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | (301) | (300) | (1,567) | (1,076) |
Interest rate derivative contract | Institutional brokerage | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | 980 | 1,627 | 5,212 | (16,028) |
Credit default swap index contract | Institutional brokerage | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | $ 0 | $ 4,304 | $ 0 | $ 4,482 |
Financial Instruments and Oth_6
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased - Additional Information (Details) - Maximum risk of loss $ in Millions | Sep. 30, 2018USD ($) |
Counterparties not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 13.5 |
Notional contract amount | 178.6 |
One unnamed financial institutional not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 10.8 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Fair Value Option (Details) - Merchant Banking Investments - Level III - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Investments at fair value | $ 3.3 | $ 14.1 | |
Gains from changes in fair value | $ 0.9 | $ 1.4 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Information about Significant Unobservable Inputs used in Fair Value Measurement (Details) - Level III | 9 Months Ended |
Sep. 30, 2018basis_points | |
Interest rate locks | Financial instruments and other inventory positions owned | Minimum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 1 |
Interest rate locks | Financial instruments and other inventory positions owned | Maximum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 11 |
Interest rate locks | Financial instruments and other inventory positions owned | Weighted Average | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 8.7 |
Equity investment in private company | Investments | Minimum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Revenue multiple | 2 |
EBITDA multiple | 13 |
Equity investment in private company | Investments | Maximum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Revenue multiple | 6 |
EBITDA multiple | 16 |
Equity investment in private company | Investments | Weighted Average | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Revenue multiple | 4.8 |
EBITDA multiple | 14.4 |
Interest rate locks | Financial instruments and other inventory positions sold, but not yet purchased | Minimum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 7 |
Interest rate locks | Financial instruments and other inventory positions sold, but not yet purchased | Maximum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 16 |
Interest rate locks | Financial instruments and other inventory positions sold, but not yet purchased | Weighted Average | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Premium over the MMD curve in basis points | 8.9 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Additional Information (Details) - Level III - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets | $ 105,619 | $ 128,081 |
Percentage of Level III assets to financial instruments measured at fair value | 10.70% | 8.20% |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Valuation of Financial Instruments by Pricing Observability Levels (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Assets: | ||
Equity securities | $ 21,473 | $ 51,896 |
Convertible securities | 126,641 | 74,456 |
Fixed income securities | 42,976 | 30,145 |
Taxable securities | 41,766 | 67,699 |
Tax-exempt securities | 226,702 | 744,241 |
Short-term securities | 150,090 | 62,251 |
Mortgage-backed securities | 16 | 481 |
U.S. government agency securities | 173,477 | 317,318 |
U.S. government securities | 1,561 | 9,317 |
Derivative contracts | 13,418 | 25,573 |
Derivative contracts | (147,540) | (213,783) |
Total financial instruments and other inventory positions owned | 798,120 | 1,383,377 |
Liabilities | ||
Equity securities | 116,712 | 101,517 |
Fixed income securities | 31,187 | 30,292 |
U.S. government agency securities | 37,245 | 49,077 |
U.S. government securities | 65,205 | 213,312 |
Derivative contracts | 4,236 | 5,029 |
Derivative contracts | (144,076) | (225,320) |
Total financial instruments and other inventory positions sold, but not yet purchased | 254,585 | 399,227 |
Securities posted as collateral to its counterparties | 0 | 0 |
Investments at fair value | 143,786 | 165,564 |
Transfers between fair value levels | 0 | |
Investments attributable to noncontrolling interests | ||
Liabilities | ||
Investments at fair value | 47,204 | 44,397 |
Level I | ||
Assets: | ||
Equity securities | 266 | 1,863 |
U.S. government securities | 1,561 | 9,317 |
Derivative contracts | 6 | |
Total financial instruments and other inventory positions owned | 1,827 | 11,186 |
Cash equivalents | 40,793 | 3,782 |
Investments at fair value | 39,501 | 39,504 |
Total assets | 82,121 | 54,472 |
Liabilities | ||
Equity securities | 112,642 | 91,934 |
U.S. government securities | 65,205 | 213,312 |
Total financial instruments and other inventory positions sold, but not yet purchased | 177,847 | 305,246 |
Level II | ||
Assets: | ||
Equity securities | 21,207 | 50,033 |
Convertible securities | 126,641 | 74,456 |
Fixed income securities | 42,976 | 30,145 |
Taxable securities | 41,766 | 67,699 |
Tax-exempt securities | 226,702 | 743,541 |
Short-term securities | 150,045 | 61,537 |
U.S. government agency securities | 173,477 | 317,318 |
Derivative contracts | 159,685 | 239,224 |
Total financial instruments and other inventory positions owned | 942,499 | 1,583,953 |
Total assets | 942,499 | 1,583,953 |
Liabilities | ||
Equity securities | 4,070 | 9,583 |
Fixed income securities | 31,187 | 30,292 |
U.S. government agency securities | 37,245 | 49,077 |
Derivative contracts | 147,944 | 225,916 |
Total financial instruments and other inventory positions sold, but not yet purchased | 220,446 | 314,868 |
Level III | ||
Assets: | ||
Tax-exempt securities | 700 | |
Short-term securities | 45 | 714 |
Mortgage-backed securities | 16 | 481 |
Derivative contracts | 1,273 | 126 |
Total financial instruments and other inventory positions owned | 1,334 | 2,021 |
Investments at fair value | 104,285 | 126,060 |
Total assets | 105,619 | 128,081 |
Liabilities | ||
Derivative contracts | 368 | 4,433 |
Total financial instruments and other inventory positions sold, but not yet purchased | 368 | 4,433 |
Measured on a recurring basis | ||
Assets: | ||
Equity securities | 21,473 | 51,896 |
Convertible securities | 126,641 | 74,456 |
Fixed income securities | 42,976 | 30,145 |
Taxable securities | 41,766 | 67,699 |
Tax-exempt securities | 226,702 | 744,241 |
Short-term securities | 150,090 | 62,251 |
Mortgage-backed securities | 16 | 481 |
U.S. government agency securities | 173,477 | 317,318 |
U.S. government securities | 1,561 | 9,317 |
Derivative contracts | 13,418 | 25,573 |
Total financial instruments and other inventory positions owned | 798,120 | 1,383,377 |
Cash equivalents | 40,793 | 3,782 |
Investments at fair value | 143,786 | 165,564 |
Total assets | 982,699 | 1,552,723 |
Liabilities | ||
Equity securities | 116,712 | 101,517 |
Fixed income securities | 31,187 | 30,292 |
U.S. government agency securities | 37,245 | 49,077 |
U.S. government securities | 65,205 | 213,312 |
Derivative contracts | 4,236 | 5,029 |
Total financial instruments and other inventory positions sold, but not yet purchased | $ 254,585 | $ 399,227 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Changes in Fair Value Associated with Level III Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 109,114 | $ 120,357 | $ 128,081 | $ 147,143 |
Purchases | (10,000) | (18,355) | (11,712) | (26,791) |
Sales | (14,289) | (267) | (32,834) | (42,038) |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 357 | 0 | 1,202 | 601 |
Realized gains/(losses) | 5,039 | (105) | 17,027 | 22,041 |
Unrealized gains/(losses) | (3,888) | (1,718) | (17,165) | (16,714) |
Ending balance | 105,619 | 136,622 | 105,619 | 136,622 |
Unrealized gains/ (losses) for assets held at period end | (3,790) | (1,335) | (7,127) | 8,224 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,005 | 5,573 | 4,433 | 1,487 |
Purchases | (210) | 0 | (1,600) | (719) |
Sales | 40 | 3,461 | 3,266 | 11,219 |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 169 | (3,461) | (1,666) | (10,500) |
Unrealized gains/(losses) | (636) | (1,323) | (4,065) | 2,763 |
Ending balance | 368 | 4,250 | 368 | 4,250 |
Unrealized gains/(losses) for liabilities held at period end | (464) | 1,430 | 368 | 4,125 |
Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 993 | 6,472 | 2,021 | 23,824 |
Purchases | 0 | (105) | (4) | (1,347) |
Sales | (90) | (267) | (3,695) | (16,827) |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 0 | 0 | 700 | 0 |
Realized gains/(losses) | 90 | (105) | 3,012 | 12,642 |
Unrealized gains/(losses) | 341 | 257 | 692 | (14,524) |
Ending balance | 1,334 | 6,462 | 1,334 | 6,462 |
Unrealized gains/ (losses) for assets held at period end | 439 | 640 | 1,180 | 520 |
Investments | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 108,121 | 113,885 | 126,060 | 123,319 |
Purchases | (10,000) | (18,250) | (11,708) | (25,444) |
Sales | (14,199) | 0 | (29,139) | (25,211) |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 357 | 0 | 502 | 601 |
Realized gains/(losses) | 4,949 | 0 | 14,015 | 9,399 |
Unrealized gains/(losses) | (4,229) | (1,975) | (17,857) | (2,190) |
Ending balance | 104,285 | 130,160 | 104,285 | 130,160 |
Unrealized gains/ (losses) for assets held at period end | (4,229) | (1,975) | (8,307) | 7,704 |
Taxable securities | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 2,686 | |||
Purchases | 0 | |||
Sales | (2,703) | |||
Transfers in | 0 | |||
Transfers out | 0 | |||
Realized gains/(losses) | 716 | |||
Unrealized gains/(losses) | (699) | |||
Ending balance | 0 | 0 | ||
Unrealized gains/ (losses) for assets held at period end | 0 | |||
Tax-exempt securities | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,117 | 700 | 1,077 | |
Purchases | 0 | 0 | 0 | |
Sales | (267) | 0 | (267) | |
Transfers in | 0 | 0 | 0 | |
Transfers out | 0 | 700 | 0 | |
Realized gains/(losses) | 0 | 0 | 0 | |
Unrealized gains/(losses) | (100) | 0 | (60) | |
Ending balance | 0 | 750 | 0 | 750 |
Unrealized gains/ (losses) for assets held at period end | (100) | 0 | (60) | |
Short-term securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Transfers out | 0 | 0 | 0 | 0 |
Short-term securities | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 45 | 721 | 714 | 744 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | (725) | (25) |
Transfers in | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 0 | 0 | 51 | 2 |
Unrealized gains/(losses) | 0 | (16) | 5 | (16) |
Ending balance | 45 | 705 | 45 | 705 |
Unrealized gains/ (losses) for assets held at period end | 0 | (16) | 0 | (16) |
Mortgage-backed securities | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 18 | 4,251 | 481 | 5,365 |
Purchases | 0 | 0 | 0 | (997) |
Sales | 0 | 0 | (5) | (1,854) |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 0 | 0 | 0 | 296 |
Unrealized gains/(losses) | (2) | 70 | (460) | (483) |
Ending balance | 16 | 4,321 | 16 | 4,321 |
Unrealized gains/ (losses) for assets held at period end | (2) | 70 | (93) | (90) |
Derivative contracts | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 930 | 383 | 126 | 13,952 |
Purchases | 0 | 105 | 4 | 350 |
Sales | (90) | 0 | (2,965) | (11,978) |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 90 | (105) | 2,961 | 11,628 |
Unrealized gains/(losses) | 343 | 303 | 1,147 | (13,266) |
Ending balance | 1,273 | 686 | 1,273 | 686 |
Unrealized gains/ (losses) for assets held at period end | 441 | 686 | 1,273 | 686 |
Derivative contracts | Financial instruments and other inventory positions sold, but not yet purchased | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,005 | 5,573 | 4,433 | 1,487 |
Purchases | (210) | 0 | (1,600) | (719) |
Sales | 40 | 3,461 | 3,266 | 11,219 |
Transfers in | 0 | 0 | 0 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 169 | (3,461) | (1,666) | (10,500) |
Unrealized gains/(losses) | (636) | (1,323) | (4,065) | 2,763 |
Ending balance | 368 | 4,250 | 368 | 4,250 |
Unrealized gains/(losses) for liabilities held at period end | $ (464) | $ 1,430 | $ 368 | $ 4,125 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments - Non-Recurring Fair Value Measurement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill impairment charge | $ 0 | $ 114,363 | $ 0 | $ 114,363 |
Non-recurring fair value measurement | Level III | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill impairment charge | $ 114,363 |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Consolidated Variable Interest Entities (Details) - Variable Interest Entity, Primary Beneficiary $ in Thousands | Sep. 30, 2018USD ($) |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | $ 107,666 |
Consolidated VIE liabilities | 10,740 |
Investments | |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | 100,905 |
Other assets | |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | 6,761 |
Other liabilities and accrued expenses | |
Variable Interest Entity [Line Items] | |
Consolidated VIE liabilities | $ 10,740 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Available bank line financing | $ 25,000,000 | |
Variable Interest Entity, Not Primary Beneficiary, Aggregated Disclosure | ||
Variable Interest Entity [Line Items] | ||
Variable interest entities, nonconsolidated net assets | 500,000,000 | $ 600,000,000 |
Variable interest entities, exposure to loss | 6,900,000 | |
Variable interest entity, nonconsolidated liabilities | $ 0 | $ 0 |
Receivables from and Payables_3
Receivables from and Payables to Brokers, Dealers and Clearing Organizations - Schedule of Receivables from and Payables to Brokers, Dealers and Clearing Organizations (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Receivables from Brokers-Dealers and Clearing Organizations [Abstract] | ||
Receivable from clearing organizations | $ 153,527 | $ 109,270 |
Deposits with clearing organizations | 2,551 | 11,019 |
Receivable from brokers and dealers | 15,058 | 12,041 |
Receivable arising from unsettled securities transactions | 0 | 9,218 |
Other | 2,929 | 3,846 |
Total receivables from brokers, dealers and clearing organizations | 174,065 | 145,394 |
Payables to Broker-Dealers and Clearing Organizations [Abstract] | ||
Due to brokers and dealers | 6,371 | 18,584 |
Payable arising from unsettled securities transactions | 0 | 808 |
Total payables to brokers, dealers and clearing organizations | $ 6,371 | $ 19,392 |
Receivables from and Payables_4
Receivables from and Payables to Brokers, Dealers and Clearing Organizations - Additional Information (Details) | Sep. 30, 2018USD ($) |
Pershing clearing arrangement | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Excess net capital required | $ 120,000,000 |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule of Investments [Line Items] | ||
Investments at fair value | $ 143,786 | $ 165,564 |
Investments at cost | 1,614 | 2,416 |
Investments accounted for under the equity method | 6,980 | 8,232 |
Total investments | 152,380 | 176,212 |
Investments attributable to noncontrolling interests | ||
Schedule of Investments [Line Items] | ||
Investments at fair value | 47,204 | 44,397 |
Investments attributable to parent | ||
Schedule of Investments [Line Items] | ||
Total investments | $ 105,176 | $ 131,815 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Millions | Sep. 30, 2018USD ($) |
Investments, All Other Investments [Abstract] | |
Estimated fair market value of investments carried at cost | $ 1.6 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fee receivables | $ 26,170 | $ 20,884 |
Income tax receivables | 7,311 | 0 |
Accrued interest receivables | 8,485 | 6,981 |
Forgivable loans, net | 8,377 | 7,452 |
Prepaid expenses | 8,016 | 6,769 |
Other | 10,340 | 12,748 |
Total other assets | $ 68,699 | $ 54,834 |
Short-Term Financing - Summary
Short-Term Financing - Summary of Short Term Financing and Weighted Average Interest Rate on Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Oustanding Balance | $ 49,957 | $ 289,937 |
Commercial paper (secured) | ||
Short-term Debt [Line Items] | ||
Oustanding Balance | $ 49,957 | $ 49,974 |
Weighted Average Interest Rate | 3.12% | 2.32% |
Prime broker arrangement | ||
Short-term Debt [Line Items] | ||
Oustanding Balance | $ 0 | $ 239,963 |
Weighted Average Interest Rate | 2.23% |
Short-Term Financing - Addition
Short-Term Financing - Additional Information (Details) | 9 Months Ended | |
Sep. 30, 2018USD ($)program | Dec. 31, 2017USD ($) | |
Short-term Debt [Line Items] | ||
Short-term financing | $ 49,957,000 | $ 289,937,000 |
Commercial paper (secured) | ||
Short-term Debt [Line Items] | ||
Number of commercial paper programs | program | 2 | |
Short-term financing | $ 49,957,000 | $ 49,974,000 |
Commercial paper (secured) | Minimum | ||
Short-term Debt [Line Items] | ||
Debt term | 27 days | |
Commercial paper (secured) | Maximum | ||
Short-term Debt [Line Items] | ||
Debt term | 270 days | |
Commercial paper (secured) | CP Series II A | ||
Short-term Debt [Line Items] | ||
Excess net capital required | $ 100,000,000 | |
Commercial paper (secured) | CP Series II A | Weighted Average | ||
Short-term Debt [Line Items] | ||
Debt term | 10 days | |
Bank lines (secured) | Committed Credit Facility | ||
Short-term Debt [Line Items] | ||
Debt term | 1 year | |
Line of credity, maximum borrowing capacity | $ 200,000,000 | |
Minimum net capital required | 120,000,000 | |
Short-term financing | 0 | |
Bank lines (secured) | Uncommitted Credit Facility | ||
Short-term Debt [Line Items] | ||
Line of credity, maximum borrowing capacity | 85,000,000 | |
Short-term financing | $ 0 |
Contingencies, Commitments an_3
Contingencies, Commitments and Guarantees - Schedule of Aggregate Minimum Lease Commitments Under Operating Leases (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 3,557 |
2,019 | 13,601 |
2,020 | 13,686 |
2,021 | 9,329 |
2,022 | 7,985 |
Thereafter | 22,900 |
Total | $ 71,058 |
Contingencies, Commitments an_4
Contingencies, Commitments and Guarantees - Additional Information (Details) $ in Millions | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments to investment vehicles | $ 80.6 |
Restructuring - Schedule of Pre
Restructuring - Schedule of Pre-tax Restructuring Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Pre-tax restructuring charges | $ 0 | $ 0 | $ 3,770 | $ 0 |
Severance, benefits and outplacement costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Pre-tax restructuring charges | 0 | 3,455 | ||
Contract termination costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Pre-tax restructuring charges | 0 | 185 | ||
Vacated leased office space | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Pre-tax restructuring charges | $ 0 | $ 130 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Aug. 14, 2015 | |
Equity, Class of Treasury Stock [Line Items] | |||||||
Aggregate purchase price | $ 31,664,000 | $ 25,065,000 | |||||
Shares of common stock purchased from restricted stock award related to recipients' employment tax obligations | 264,254 | 308,801 | |||||
Repurchase of common stock for employee tax withholding | $ 22,700,000 | $ 22,600,000 | |||||
Reissuance of treasury shares as a result of employee vesting | 840,043 | 850,925 | |||||
Cash dividends paid | $ 41,600,000 | ||||||
Cash dividends declared | $ 0.38 | $ 0.31 | $ 2.75 | $ 0.94 | |||
Noncontrolling interests proportionate share of equity | $ 47,204,000 | $ 47,204,000 | $ 47,903,000 | ||||
Other comprehensive income or loss attributed to noncontrolling interests | 0 | $ 0 | |||||
Merchant banking funds | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Noncontrolling interests proportionate share of equity | 42,000,000 | 42,000,000 | 42,700,000 | ||||
Senior living fund | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Noncontrolling interests proportionate share of equity | 5,200,000 | $ 5,200,000 | $ 5,200,000 | ||||
Quarterly dividend | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash dividends paid | $ 1.125 | ||||||
Quarterly dividend | Cash dividends declared | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash dividends declared | $ 0.375 | ||||||
Annual special cash dividend | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash dividends paid | $ 1.62 | ||||||
Share repurchase program, authorized 2017 | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock, authorized amount | $ 150,000,000 | $ 150,000,000 | |||||
Shares repurchased | 124,606 | ||||||
Average share price | $ 72.26 | ||||||
Aggregate purchase price | $ 9,000,000 | ||||||
Remaining under share repurchase program | $ 141,000,000 | $ 141,000,000 | |||||
Share repurchase program, authorized 2015 | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock, authorized amount | $ 150,000,000 | ||||||
Shares repurchased | 36,936 | ||||||
Average share price | $ 67.62 | ||||||
Aggregate purchase price | $ 2,500,000 |
Shareholders' Equity - Rollforw
Shareholders' Equity - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common Shareholders' Equity at beginning of period | $ 693,332 | |||
Noncontrolling interests at beginning of period | 47,903 | |||
Total Shareholders' Equity at beginning of period | 741,235 | |||
Common Shareholders' Equity, Net income | $ 22,023 | $ (49,713) | 38,852 | $ (15,865) |
Noncontrolling Interests, Net income | 247 | (1,100) | (1,271) | 3,217 |
Total Shareholders' Equity, Net income | 22,270 | $ (50,813) | 37,581 | $ (12,648) |
Dividends | (41,631) | |||
Amortization/issuance of restricted stock | 44,541 | |||
Repurchase of common stock through share repurchase program | $ 9,004 | |||
Repurchase of common stock for employee tax withholding | (264,254) | (308,801) | ||
Repurchase of common stock for employee tax withholding | $ (22,660) | |||
Shares reserved/issued for director compensation | 348 | |||
Other comprehensive income | (30) | |||
Cumulative effect upon adoption of new accounting standard, net of tax (1) | (3,597) | |||
Fund capital contributions, net | 572 | |||
Common Shareholders' Equity at period end | 700,211 | 700,211 | ||
Noncontrolling Interest at period end | 47,204 | 47,204 | ||
Total Shareholders' Equity at period end | $ 747,415 | $ 747,415 | ||
Common Shares Outstanding | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common Shares Outstanding at beginning of period | 12,911,149 | |||
Issuance of treasury shares for restricted stock vestings | 840,043 | |||
Repurchase of common stock through share repurchase program | 124,606 | |||
Repurchase of common stock for employee tax withholding | (264,254) | |||
Shares reserved/issued for director compensation | 4,371 | |||
Common Shares Outstanding at period end | 13,366,703 | 13,366,703 | ||
Common Shareholders' Equity | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common Shareholders' Equity at beginning of period | $ 693,332 | |||
Dividends | (41,631) | |||
Amortization/issuance of restricted stock | 44,541 | |||
Repurchase of common stock through share repurchase program | 9,004 | |||
Repurchase of common stock for employee tax withholding | (22,660) | |||
Shares reserved/issued for director compensation | 348 | |||
Other comprehensive income | (30) | |||
Cumulative effect upon adoption of new accounting standard, net of tax (1) | (3,597) | |||
Fund capital contributions, net | 0 | |||
Common Shareholders' Equity at period end | $ 700,211 | 700,211 | ||
Noncontrolling Interests | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Noncontrolling interests at beginning of period | 47,903 | |||
Dividends | 0 | |||
Amortization/issuance of restricted stock | 0 | |||
Repurchase of common stock through share repurchase program | 0 | |||
Repurchase of common stock for employee tax withholding | 0 | |||
Shares reserved/issued for director compensation | 0 | |||
Other comprehensive income | 0 | |||
Cumulative effect upon adoption of new accounting standard, net of tax (1) | 0 | |||
Fund capital contributions, net | 572 | |||
Noncontrolling Interest at period end | $ 47,204 | $ 47,204 |
Compensation Plans - Summary of
Compensation Plans - Summary of Outstanding Equity Awards (Details) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options | 81,667 | 0 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 1,754,634 | 2,225,617 |
Leadership grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 194,251 | 244,772 |
Amended And Restated 2003 Annual And Long-Term Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options | 81,667 | |
Amended And Restated 2003 Annual And Long-Term Incentive Plan | Leadership grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 194,251 | |
Total restricted stock related to compensation | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 981,870 | |
Total restricted stock related to compensation | Amended And Restated 2003 Annual And Long-Term Incentive Plan | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 727,812 | |
Total restricted stock related to compensation | Amended And Restated 2003 Annual And Long-Term Incentive Plan | Annual grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 657,185 | |
Total restricted stock related to compensation | Amended And Restated 2003 Annual And Long-Term Incentive Plan | Sign-on grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 70,627 | |
Total restricted stock related to compensation | 2016 Employment Inducement Award Plan | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 254,058 | |
Simmons Deal Consideration (1) | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 772,764 |
Compensation Plans - Schedule o
Compensation Plans - Schedule of RSU Valuation Assumptions (Details) - Restricted stock units | 9 Months Ended |
Sep. 30, 2018 | |
2,018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 2.40% |
Expected Stock Price Volatility | 34.80% |
2,017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 1.62% |
Expected Stock Price Volatility | 35.90% |
2,016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 0.98% |
Expected Stock Price Volatility | 34.90% |
2,015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 0.90% |
Expected Stock Price Volatility | 29.80% |
Compensation Plans - Schedule_2
Compensation Plans - Schedule of Stock Options Valuation Assumptions (Details) - Stock options | 9 Months Ended |
Sep. 30, 2018$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.82% |
Dividend yield | 3.22% |
Expected stock price volatility | 37.20% |
Expected life of options (in years) | 7 years |
Fair value of options granted (per share) | $ 24.49 |
Compensation Plans - Schedule_3
Compensation Plans - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $ 12.7 | $ 13.5 | $ 31.1 | $ 25.8 |
Forfeitures | 0.2 | 0.7 | 0.7 | 3 |
Tax benefit related to stock-based compensation expense | $ 2.3 | $ 4.2 | $ 5.2 | $ 7.1 |
Compensation Plans - Changes in
Compensation Plans - Changes in Unvested Restricted Stock (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance | shares | 2,225,617 |
Granted | shares | 291,597 |
Vested | shares | (745,578) |
Canceled | shares | (17,002) |
Ending Balance | shares | 1,754,634 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance | $ / shares | $ 46.40 |
Granted | $ / shares | 89.31 |
Vested | $ / shares | 49.03 |
Canceled | $ / shares | 51.18 |
Ending Balance | $ / shares | $ 52.36 |
Compensation Plans - Changes _2
Compensation Plans - Changes in Unvested Restricted Stock Units (Details) - Restricted stock units | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance | shares | 244,772 |
Granted | shares | 53,796 |
Vested | shares | (86,511) |
Canceled | shares | (17,806) |
Ending Balance | shares | 194,251 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance | $ / shares | $ 27.89 |
Granted | $ / shares | 92.93 |
Vested | $ / shares | 21.83 |
Canceled | $ / shares | 23.91 |
Ending Balance | $ / shares | $ 48.97 |
Compensation Plans - Changes _3
Compensation Plans - Changes in Outstanding Stock Options (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Options Outstanding | ||
Beginning Balance | 0 | |
Granted | 81,667 | |
Exercised | 0 | |
Cancelled | 0 | |
Ending Balance | 81,667 | 0 |
Weighted Average Exercise Price (in dollars per share) | ||
Beginning Balance | $ 0 | |
Granted | 99 | |
Exercised | 0 | |
Cancelled | 0 | |
Ending Balance | $ 99 | $ 0 |
Weighted Average Remaining Contractual Term (in Years) | ||
Weighted Average Remaining Contractual Term (in Years) | 9 years 4 months 15 days | 0 days |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ 0 | $ 0 |
Compensation Plans - Additional
Compensation Plans - Additional Information (Details) | May 16, 2016USD ($)shares | Sep. 30, 2018USD ($)planshares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)planshares | Sep. 30, 2017USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock-based compensation plans | plan | 2 | 2 | |||
Compensation expense related to employee restricted stock awards | $ | $ 12,700,000 | $ 13,500,000 | $ 31,100,000 | $ 25,800,000 | |
Forfeitures recorded as a result of violating the post-termination restrictions | $ | 200,000 | 700,000 | 700,000 | 3,000,000 | |
Tax benefit related to compensation costs for stock-based compensation arrangements | $ | 2,300,000 | $ 4,200,000 | $ 5,200,000 | $ 7,100,000 | |
Remaining weighted average contractual term of stock options | 4 years 4 months 15 days | ||||
Exercises during the period | shares | 0 | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 291,597 | ||||
Annual grants | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 3 years | ||||
Annual grant expense period | 1 year | ||||
Sign-on grants | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant requisite service period | 1 year | ||||
Sign-on grants | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant requisite service period | 5 years | ||||
Restricted stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance period for restricted stock units | 36 months | ||||
Number of years risk free interest rate | 3 years | ||||
Number of shares granted | shares | 53,796 | ||||
Restricted stock and restricted stock units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to restricted stock | $ | 9,100,000 | $ 9,100,000 | |||
Weighted average period over which restricted stock expense expected to be recognized | 1 year | ||||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant requisite service period | 5 years | ||||
Share based compensation option exercise price | 10.00% | ||||
Unrecognized compensation cost related to restricted stock | $ | $ 1,800,000 | $ 1,800,000 | |||
Stock options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of stock options | 10 years | ||||
Amended And Restated 2003 Annual And Long-Term Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity award grants authorized | shares | 8,200,000 | 8,200,000 | |||
Shares available for future issuance | shares | 800,000 | 800,000 | |||
2016 Employment Inducement Award Plan | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of restricted stock granted | $ | $ 11,600,000 | ||||
Number of shares granted | shares | 286,776 | ||||
2017 and 2018 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 150.00% | ||||
Average adjusted return on equity targets | 2017 and 2018 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 75.00% | ||||
Average adjusted return on equity targets | Prior to 2017 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 50.00% | ||||
Total shareholder return relative to members of a predetermined peer group | 2017 and 2018 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 75.00% | ||||
Total shareholder return | Prior to 2017 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 50.00% | ||||
Probable | Average adjusted return on equity targets | 2018 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 50.00% | ||||
Probable | Average adjusted return on equity targets | 2017 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 75.00% |
Compensation Plans - Acquisitio
Compensation Plans - Acquisition-related Compensation Arrangements (Details) - Performance award plan - Simmons - Cash - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Requisite service period for performance award plan | 3 years | |||
Performance award plan accrual | $ 38 | $ 38 | ||
Compensation expense related to this performance award plan | $ 0.6 | $ 7.4 | $ 7.2 | $ 10.1 |
Compensation Plans - Deferred C
Compensation Plans - Deferred Compensation Plans (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Nonqualified Deferred Compensation Plan | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Plan Assets | $ 33 | $ 31.5 |
Plan Liabilities | $ 33.1 | $ 31.6 |
Mutual Fund Restricted Shares | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Award Vesting Period | 3 years |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Net income/(loss) applicable to Piper Jaffray Companies | $ 22,023 | $ (49,713) | $ 38,852 | $ (15,865) | ||
Earnings allocated to participating securities | (2,646) | (702) | (5,202) | (2,241) | ||
Net income/(loss) applicable to Piper Jaffray Companies' common shareholders | $ 19,377 | $ (50,415) | [1] | $ 33,650 | $ (18,106) | [1] |
Shares for basic and diluted calculations | ||||||
Average shares used in basic computation | 13,343,000 | 12,898,000 | 13,248,000 | 12,774,000 | ||
Average shares used in diluted computation | 13,508,000 | 12,975,000 | [2] | 13,444,000 | 12,945,000 | [2] |
Earnings/(loss) per common share | ||||||
Basic | $ 1.45 | $ (3.91) | $ 2.54 | $ (1.42) | ||
Diluted | $ 1.43 | $ (3.91) | [2] | $ 2.50 | $ (1.42) | [2] |
Weighted average participating shares outstanding | 1,842,036 | 2,246,663 | 1,944,946 | 2,389,755 | ||
Common shares excluded from diluted EPS | 1,754,634 | 2,235,060 | ||||
Restricted stock units | ||||||
Shares for basic and diluted calculations | ||||||
Dilutive impact of securities | (165,000) | (77,000) | (196,000) | (171,000) | ||
[1] | No allocation of undistributed income was made due to loss position. See Note 14. | |||||
[2] | Earnings per diluted common share is calculated using the basic weighted average number of common shares outstanding for periods in which a loss is incurred. |
Segment Reporting - Reportable
Segment Reporting - Reportable Segment Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Capital Markets [Abstract] | ||||
Investment banking | $ 166,458 | $ 190,482 | $ 411,203 | $ 461,260 |
Institutional sales and trading | 31,738 | 34,873 | 92,415 | 111,083 |
Management and performance fees | 13,377 | 12,818 | 38,706 | 44,011 |
Investment income/(loss) | 3,068 | (422) | 6,706 | 15,406 |
Net revenues | 217,528 | 240,567 | 560,071 | 638,841 |
Operating expenses | 187,893 | 322,803 | 517,139 | 678,401 |
Segment pre-tax operating income/(loss) | $ 29,635 | $ (82,236) | $ 42,932 | $ (39,560) |
Segment pre-tax operating margin | 13.60% | (34.20%) | 7.70% | (6.20%) |
Asset Management [Abstract] | ||||
Total management and performance fees | $ 13,377 | $ 12,818 | $ 38,706 | $ 44,011 |
Investment income/(loss) | 3,068 | (422) | 6,706 | 15,406 |
Net revenues | 217,528 | 240,567 | 560,071 | 638,841 |
Operating expenses | 187,893 | 322,803 | 517,139 | 678,401 |
Segment pre-tax operating income/(loss) | $ 29,635 | $ (82,236) | $ 42,932 | $ (39,560) |
Segment pre-tax operating margin | 13.60% | (34.20%) | 7.70% | (6.20%) |
Goodwill impairment charge | $ 0 | $ 114,363 | $ 0 | $ 114,363 |
Intangible asset amortization | 2,615 | 3,822 | 7,845 | 11,466 |
Capital Markets | ||||
Capital Markets [Abstract] | ||||
Investment banking | 166,664 | 190,620 | 411,424 | 462,500 |
Institutional sales and trading | 35,966 | 39,086 | 107,883 | 122,222 |
Management and performance fees | 1,806 | 678 | 4,824 | 4,172 |
Investment income/(loss) | 3,166 | (660) | 7,607 | 15,155 |
Long-term financing expenses | (1,732) | (1,736) | (5,351) | (6,003) |
Net revenues | 205,870 | 227,988 | 526,387 | 598,046 |
Operating expenses | 176,783 | 196,409 | 482,024 | 524,702 |
Segment pre-tax operating income/(loss) | $ 29,087 | $ 31,579 | $ 44,363 | $ 73,344 |
Segment pre-tax operating margin | 14.10% | 13.90% | 8.40% | 12.30% |
Asset Management [Abstract] | ||||
Total management and performance fees | $ 1,806 | $ 678 | $ 4,824 | $ 4,172 |
Investment income/(loss) | 3,166 | (660) | 7,607 | 15,155 |
Net revenues | 205,870 | 227,988 | 526,387 | 598,046 |
Operating expenses | 176,783 | 196,409 | 482,024 | 524,702 |
Segment pre-tax operating income/(loss) | $ 29,087 | $ 31,579 | $ 44,363 | $ 73,344 |
Segment pre-tax operating margin | 14.10% | 13.90% | 8.40% | 12.30% |
Intangible asset amortization | $ 1,214 | $ 2,544 | $ 3,643 | $ 7,633 |
Capital Markets | Advisory services | ||||
Capital Markets [Abstract] | ||||
Investment banking | 113,540 | 146,816 | 266,083 | 332,205 |
Capital Markets | Equities financing | ||||
Capital Markets [Abstract] | ||||
Investment banking | 32,188 | 22,117 | 99,868 | 70,229 |
Capital Markets | Debt financing | ||||
Capital Markets [Abstract] | ||||
Investment banking | 20,936 | 21,687 | 45,473 | 60,066 |
Capital Markets | Equities | ||||
Capital Markets [Abstract] | ||||
Institutional sales and trading | 17,804 | 18,410 | 54,951 | 59,085 |
Capital Markets | Fixed income | ||||
Capital Markets [Abstract] | ||||
Institutional sales and trading | 18,162 | 20,676 | 52,932 | 63,137 |
Asset Management | ||||
Capital Markets [Abstract] | ||||
Management and performance fees | 11,571 | 12,140 | 33,882 | 39,839 |
Investment income/(loss) | 87 | 439 | (198) | 956 |
Net revenues | 11,658 | 12,579 | 33,684 | 40,795 |
Operating expenses | 11,110 | 126,394 | 35,115 | 153,699 |
Segment pre-tax operating income/(loss) | $ 548 | $ (113,815) | $ (1,431) | $ (112,904) |
Segment pre-tax operating margin | 4.70% | (904.80%) | (4.20%) | (276.80%) |
Asset Management [Abstract] | ||||
Management fees | $ 11,571 | $ 12,140 | $ 33,874 | $ 39,839 |
Performance fees | 0 | 0 | 8 | 0 |
Total management and performance fees | 11,571 | 12,140 | 33,882 | 39,839 |
Investment income/(loss) | 87 | 439 | (198) | 956 |
Net revenues | 11,658 | 12,579 | 33,684 | 40,795 |
Operating expenses | 11,110 | 126,394 | 35,115 | 153,699 |
Segment pre-tax operating income/(loss) | $ 548 | $ (113,815) | $ (1,431) | $ (112,904) |
Segment pre-tax operating margin | 4.70% | (904.80%) | (4.20%) | (276.80%) |
Goodwill impairment charge | $ 114,363 | $ 114,363 | ||
Intangible asset amortization | $ 1,401 | $ 1,278 | $ 4,202 | $ 3,833 |
Segment Reporting - Reportabl_2
Segment Reporting - Reportable Segment Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | $ 1,493,436 | $ 2,024,683 |
Capital Markets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | 1,411,590 | 1,933,050 |
Asset Management | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | $ 81,846 | $ 91,633 |
Net Capital Requirements and _2
Net Capital Requirements and Other Regulatory Matters - Additional Information (Details) | Sep. 30, 2018USD ($) |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Minimum net capital requirement | $ 1,000,000 |
Net capital | 199,100,000 |
Excess net capital | 198,100,000 |
Pershing clearing arrangement | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Excess net capital required | 120,000,000 |
Committed credit facility | Senior Notes | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Minimum net capital required | 120,000,000 |
Commercial paper | CP Series II A | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Excess net capital required | $ 100,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill impairment charge | $ 0 | $ 114,363 | $ 0 | $ 114,363 |
Income tax expense/(benefit) | 7,365 | (31,423) | 5,351 | (26,912) |
Tax benefit for stock-based compensation awards vesting during the period | $ 400 | 300 | 6,800 | 9,100 |
Additional income tax expense for remeasurement of deferred tax assets | $ 1,000 | |||
Asset Management | ||||
Goodwill impairment charge | $ 114,363 | $ 114,363 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | ||
Senior Notes | $ 125,000 | $ 125,000 |
Senior Notes | Fixed rate Class C Notes | ||
Subsequent Event [Line Items] | ||
Senior Notes | $ 125,000 | $ 125,000 |