Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PJC | |
Entity Registrant Name | Piper Jaffray Companies | |
Entity Central Index Key | 0001230245 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 14,227,928 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 18,245 | $ 50,364 |
Receivables from brokers, dealers and clearing organizations | 47,010 | 235,278 |
Financial instruments and other inventory positions owned | 305,295 | 479,795 |
Financial instruments and other inventory positions owned and pledged as collateral | 336,363 | 147,427 |
Total financial instruments and other inventory positions owned | 641,658 | 627,222 |
Fixed assets (net of accumulated depreciation and amortization of $63,011 and $60,555, respectively) | 31,680 | 32,619 |
Goodwill | 81,855 | 81,855 |
Intangible assets (net of accumulated amortization of $97,989 and $95,877, respectively) | 10,262 | 12,374 |
Investments | 152,024 | 151,963 |
Net deferred income tax assets | 88,002 | 101,857 |
Right-of-use lease asset | 41,935 | 0 |
Other assets | 56,982 | 51,737 |
Total assets | 1,169,653 | 1,345,269 |
Liabilities and Shareholders’ Equity | ||
Short-term financing | 49,956 | 49,953 |
Payables to brokers, dealers and clearing organizations | 6,272 | 8,657 |
Financial instruments and other inventory positions sold, but not yet purchased | 174,504 | 177,427 |
Accrued compensation | 143,430 | 333,522 |
Accrued lease liability | 56,243 | 0 |
Other liabilities and accrued expenses | 25,577 | 45,294 |
Total liabilities | 455,982 | 614,853 |
Shareholders’ equity: | ||
Common stock, $0.01 par value: Shares authorized: 100,000,000 at March 31, 2019 and December 31, 2018; Shares issued: 19,519,307 at March 31, 2019 and 19,518,044 at December 31, 2018; Shares outstanding: 13,468,235 at March 31, 2019 and 12,995,397 at December 31, 2018 | 195 | 195 |
Additional paid-in capital | 772,184 | 796,363 |
Retained earnings (1) | 182,027 | 182,552 |
Less common stock held in treasury, at cost: 6,051,072 shares at March 31, 2019 and 6,522,647 shares at December 31, 2018 | (291,903) | (300,268) |
Accumulated other comprehensive loss | (1,183) | (1,398) |
Total common shareholders’ equity | 661,320 | 677,444 |
Noncontrolling interests | 52,351 | 52,972 |
Total shareholders’ equity | 713,671 | 730,416 |
Total liabilities and shareholders’ equity | $ 1,169,653 | $ 1,345,269 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation and amortization on fixed assets | $ 63,011 | $ 60,555 |
Accumulated amortization on intangible assets | $ 97,989 | $ 95,877 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 19,519,307 | 19,518,044 |
Common stock, shares outstanding | 13,468,235 | 12,995,397 |
Common stock held in treasury, shares | 6,051,072 | 6,522,647 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Investment banking | $ 141,061 | $ 120,841 |
Institutional brokerage | 34,954 | 27,645 |
Asset management | 10,418 | 12,589 |
Interest | 7,567 | 10,413 |
Investment income | 475 | 2,912 |
Total revenues | 194,475 | 174,400 |
Interest expense | 2,643 | 5,338 |
Net revenues | 191,832 | 169,062 |
Non-interest expenses: | ||
Compensation and benefits | 122,636 | 115,170 |
Outside services | 9,142 | 8,939 |
Occupancy and equipment | 8,750 | 8,578 |
Communications | 8,630 | 8,626 |
Marketing and business development | 7,395 | 7,299 |
Deal-related expenses | 4,728 | 5,051 |
Trade execution and clearance | 1,806 | 2,163 |
Intangible asset amortization | 2,112 | 2,615 |
Other operating expenses | 3,703 | 2,583 |
Total non-interest expenses | 168,902 | 161,024 |
Income before income tax expense/(benefit) | 22,930 | 8,038 |
Income tax expense/(benefit) | 4,124 | (2,581) |
Net income | 18,806 | 10,619 |
Net income/(loss) applicable to noncontrolling interests | (616) | 16 |
Net income applicable to Piper Jaffray Companies | 19,422 | 10,603 |
Net income applicable to Piper Jaffray Companies' common shareholders | $ 17,835 | $ 6,435 |
Earnings per common share | ||
Basic | $ 1.35 | $ 0.47 |
Diluted | 1.32 | 0.47 |
Dividends declared per common share | $ 1.39 | $ 2 |
Weighted average number of common shares outstanding | ||
Basic | 13,204 | 13,096 |
Diluted | 13,530 | 13,382 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 18,806 | $ 10,619 |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustment | 215 | 529 |
Comprehensive income | 19,021 | 11,148 |
Comprehensive income/(loss) applicable to noncontrolling interests | (616) | 16 |
Comprehensive income applicable to Piper Jaffray Companies | $ 19,637 | $ 11,132 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Common Shareholders' Equity | Noncontrolling Interests |
Common Shares Outstanding at beginning of period at Dec. 31, 2017 | 12,911,149 | |||||||
Total Shareholders' Equity at beginning of period at Dec. 31, 2017 | $ 741,235 | $ 195 | $ 791,970 | $ 176,270 | $ (273,824) | $ (1,279) | $ 693,332 | $ 47,903 |
Net income/(loss) | 10,619 | 0 | 0 | 10,603 | 0 | 0 | 10,603 | 16 |
Dividends | (30,575) | 0 | 0 | (30,575) | 0 | 0 | (30,575) | |
Dividends | 0 | |||||||
Amortization/issuance of restricted stock | 34,416 | $ 0 | 34,416 | 0 | 0 | 0 | 34,416 | 0 |
Issuance of treasury shares for restricted stock vestings | 574,594 | |||||||
Issuance of treasury shares for restricted stock vestings | $ 0 | $ 0 | (23,901) | 0 | 23,901 | 0 | 0 | 0 |
Repurchase of common stock from employees | (187,860) | (187,860) | ||||||
Repurchase of common stock from employees | $ (16,797) | $ 0 | 0 | 0 | (16,797) | 0 | (16,797) | 0 |
Shares reserved/issued for director compensation | 942 | |||||||
Shares reserved/issued for director compensation | 81 | $ 0 | 81 | 0 | 0 | 0 | 81 | 0 |
Other comprehensive income | 529 | 0 | 0 | 0 | 0 | 529 | 529 | 0 |
Cumulative effect upon adoption of new accounting standard, net of tax | (3,597) | 0 | 0 | (3,597) | 0 | 0 | (3,597) | 0 |
Fund capital distributions, net | (904) | $ 0 | 0 | 0 | 0 | 0 | 0 | (904) |
Common Shares Outstanding at period end at Mar. 31, 2018 | 13,298,825 | |||||||
Total Shareholders' Equity at period end at Mar. 31, 2018 | 735,007 | $ 195 | 802,566 | 152,701 | (266,720) | (750) | 687,992 | 47,015 |
Common Shares Outstanding at beginning of period at Dec. 31, 2018 | 12,995,397 | |||||||
Total Shareholders' Equity at beginning of period at Dec. 31, 2018 | 730,416 | $ 195 | 796,363 | 182,552 | (300,268) | (1,398) | 677,444 | 52,972 |
Net income/(loss) | 18,806 | 0 | 0 | 19,422 | 0 | 0 | 19,422 | (616) |
Dividends | (19,947) | 0 | 0 | (19,947) | 0 | 0 | (19,947) | |
Dividends | 0 | |||||||
Amortization/issuance of restricted stock | 23,826 | $ 0 | 23,826 | 0 | 0 | 0 | 23,826 | 0 |
Repurchase of common stock through share repurchase program | (501) | |||||||
Repurchase of common stock through share repurchase program | (32) | $ 0 | 0 | 0 | (32) | 0 | (32) | 0 |
Issuance of treasury shares for restricted stock vestings | 1,035,360 | |||||||
Issuance of treasury shares for restricted stock vestings | $ 0 | $ 0 | (48,092) | 0 | 48,092 | 0 | 0 | 0 |
Repurchase of common stock from employees | (563,284) | (563,284) | ||||||
Repurchase of common stock from employees | $ (39,695) | $ 0 | 0 | 0 | (39,695) | 0 | (39,695) | 0 |
Shares reserved/issued for director compensation | 1,263 | |||||||
Shares reserved/issued for director compensation | 87 | $ 0 | 87 | 0 | 0 | 0 | 87 | 0 |
Other comprehensive income | 215 | 0 | 0 | 0 | 0 | 215 | 215 | 0 |
Fund capital distributions, net | (5) | $ 0 | 0 | 0 | 0 | 0 | 0 | (5) |
Common Shares Outstanding at period end at Mar. 31, 2019 | 13,468,235 | |||||||
Total Shareholders' Equity at period end at Mar. 31, 2019 | $ 713,671 | $ 195 | $ 772,184 | $ 182,027 | $ (291,903) | $ (1,183) | $ 661,320 | $ 52,351 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating Activities: | ||
Net income | $ 18,806 | $ 10,619 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of fixed assets | 2,392 | 2,003 |
Deferred income taxes | 13,855 | 5,610 |
Stock-based compensation | 4,350 | 8,970 |
Amortization of intangible assets | 2,112 | 2,615 |
Amortization of forgivable loans | 1,503 | 1,298 |
Decrease/(increase) in operating assets: | ||
Receivables from brokers, dealers and clearing organizations | 188,268 | 99,092 |
Net financial instruments and other inventory positions owned | (17,359) | 270,816 |
Investments | (61) | 6,473 |
Other assets | (6,768) | (23,256) |
Increase/(decrease) in operating liabilities: | ||
Payables to brokers, dealers and clearing organizations | (2,385) | 14,190 |
Accrued compensation | (170,611) | (247,363) |
Other liabilities and accrued expenses | (5,571) | (4,619) |
Net cash provided by operating activities | 28,531 | 146,448 |
Investing Activities: | ||
Purchases of fixed assets, net | (1,431) | (1,560) |
Net cash used in investing activities | (1,431) | (1,560) |
Financing Activities: | ||
Increase/(decrease) in short-term financing | 3 | (103,683) |
Payment of cash dividend | (19,947) | (30,375) |
Decrease in noncontrolling interests | (5) | (904) |
Repurchase of common stock | (39,727) | (16,797) |
Net cash used in financing activities | (59,676) | (151,759) |
Currency adjustment: | ||
Effect of exchange rate changes on cash | 457 | 720 |
Net decrease in cash and cash equivalents | (32,119) | (6,151) |
Cash and cash equivalents at beginning of period | 50,364 | 33,793 |
Cash and cash equivalents at end of period | 18,245 | 27,642 |
Supplemental disclosure of cash flow information – | ||
Interest | 2,809 | 5,615 |
Income taxes | $ 7,462 | $ 12,474 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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. 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, 2018 . 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 | 3 Months Ended |
Mar. 31, 2019 | |
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, 2018 for a full description of the Company's significant accounting policies. Changes to the Company's significant accounting policies are described below. Leases A lease is a contract, or part of a contract, that conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. In making this determination, the Company considers if it obtains substantially all of the economic benefits from the use of the underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company leases its corporate headquarters and other offices under various non-cancelable leases, all of which are operating leases. In addition to rent, the leases require payment of real estate taxes, insurance and common area maintenance. The original terms of the Company's lease agreements generally range up to twelve years. Some of the leases contain renewal and/or termination options, escalation clauses, rent-free holidays and operating cost adjustments. The Company recognizes a right-of-use ("ROU") lease asset and lease liability on the consolidated statements of financial position for all leases with a term greater than 12 months. The lease liability represents the Company’s obligation to make future lease payments and is recorded at an amount equal to the present value of the remaining lease payments due over the lease term. The ROU lease asset, which represents the right to use the underlying asset during the lease term, is measured based on the carrying value of the lease liability, adjusted for other items, such as lease incentives and uneven rent payments. The discount rate used to determine the present value of the remaining lease payments reflects the Company’s incremental borrowing rate, which is the rate the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. In calculating its discount rates, the Company took into consideration a current financing arrangement that is on a secured (i.e., collateralized) basis, as well as market interest rates and spreads, other reference points, and the respective tenors of the Company’s designated lease term ranges. The Company applied the portfolio approach in determining the discount rates for its leases. The weighted-average discount rate was 4.0 percent at March 31, 2019. For leases that contain escalation clauses or rent-free holidays, the Company recognizes the related rent expense on a straight-line basis from the date the Company takes possession of the property to the end of the initial lease term. The Company records any difference between the straight-line rent expense and amounts paid under the leases as part of the amortization of the ROU lease asset. Cash or lease incentives received upon entering into certain leases are recognized on a straight-line basis as a reduction of rent expense from the date the Company takes possession of the property or receives the cash to the end of the initial lease term. Lease incentives, which initially reduce the ROU lease asset, are a component of the amortization of the ROU lease asset. Rent expense for leases with a term of 12 months or less is recorded on a straight-line basis over the lease term in the consolidated statements of operations. Adoption of New Accounting Standards Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize a ROU lease asset and lease liability on the consolidated statements of financial position for all leases with a term longer than 12 months 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 previous U.S. GAAP. The Company adopted ASU 2016-02 as of January 1, 2019 using the modified retrospective approach and applied the package of practical expedients in transitioning to the new guidance. Electing the package of practical expedients allowed the Company to not reassess: (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Also, the Company has elected the practical expedient to not separate lease components from nonlease components. Upon adoption, the Company recognized a ROU lease asset of approximately $44.0 million and a lease liability of approximately $59.0 million . The difference between the ROU lease asset and the lease liability is due to lease incentives. There were no changes to the recognition of rent expense in the Company’s consolidated statements of operations upon adoption of ASU 2016-02. In addition, the new guidance has not impacted Piper Jaffray's net capital position. Future Adoption of New Applicable Accounting Standards 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. 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 | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, December 31, (Dollars in thousands) 2019 2018 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 12,908 $ 1,458 Convertible securities 116,008 92,485 Fixed income securities 33,819 31,906 Municipal securities: Taxable securities 40,072 38,711 Tax-exempt securities 246,130 268,804 Short-term securities 20,620 52,472 Mortgage-backed securities 14 15 U.S. government agency securities 152,743 123,384 U.S. government securities 2,569 954 Derivative contracts 16,775 17,033 Total financial instruments and other inventory positions owned $ 641,658 $ 627,222 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 79,279 $ 82,082 Fixed income securities 18,163 20,180 U.S. government agency securities 8,859 10,257 U.S. government securities 62,354 60,365 Derivative contracts 5,849 4,543 Total financial instruments and other inventory positions sold, but not yet purchased $ 174,504 $ 177,427 At March 31, 2019 and December 31, 2018 , financial instruments and other inventory positions owned in the amount of $336.4 million and $147.4 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 and U.S. treasury bond futures. Derivative Contract Financial Instruments The Company uses interest rate swaps, interest rate locks and U.S. treasury bond futures 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. 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: March 31, 2019 December 31, 2018 (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 $ 186,555 $ 175,755 $ 2,308,159 $ 181,199 $ 169,950 $ 2,532,966 Trading securities 10 4,222 239,225 408 4,202 262,275 $ 186,565 $ 179,977 $ 2,547,384 $ 181,607 $ 174,152 $ 2,795,241 (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 (Dollars in thousands) March 31, Derivative Category Operations Category 2019 2018 Interest rate derivative contract Investment banking $ (617 ) $ (795 ) Interest rate derivative contract Institutional brokerage (249 ) 5,062 $ (866 ) $ 4,267 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 March 31, 2019 , the Company had $16.9 million of uncollateralized credit exposure with these counterparties (notional contract amount of $176.5 million ), including $13.9 million of uncollateralized credit exposure with one counterparty. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
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 (e.g., 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 and U.S. treasury bond futures. These instruments derive their value from underlying assets, reference rates, indices or a combination of these factors. 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 and investments in registered mutual funds. 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 $2.6 million and $3.0 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 March 31, 2019 and December 31, 2018 , respectively. The realized and unrealized net impact from fair value changes included in earnings as a result of electing to apply the fair value option to certain financial assets were losses of $0.4 million and gains of $0.8 million for the three months ended March 31, 2019 and 2018 , 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 March 31, 2019 : Valuation Weighted Technique Unobservable Input Range Average (1) Assets: Investments at fair value: Equity securities in private companies Market approach Revenue multiple (2) 2 - 5 times 4.3 times EBITDA multiple (2) 13 - 16 times 14.5 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 basis points ("bps") (3) 2 - 24 bps 11.7 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 higher/(lower) fair value measurement. (3) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly lower/(higher) 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 March 31, 2019 : 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 $ 21 $ 12,887 $ — $ — $ 12,908 Convertible securities — 116,008 — — 116,008 Fixed income securities — 33,819 — — 33,819 Municipal securities: Taxable securities — 40,072 — — 40,072 Tax-exempt securities — 246,130 — — 246,130 Short-term securities — 20,620 — — 20,620 Mortgage-backed securities — — 14 — 14 U.S. government agency securities — 152,743 — — 152,743 U.S. government securities 2,569 — — — 2,569 Derivative contracts — 186,565 — (169,790 ) 16,775 Total financial instruments and other inventory positions owned 2,590 808,844 14 (169,790 ) 641,658 Cash equivalents 750 — — — 750 Investments at fair value 33,150 3,252 107,878 (2) — 144,280 Total assets $ 36,490 $ 812,096 $ 107,892 $ (169,790 ) $ 786,688 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 68,307 $ 10,972 $ — $ — $ 79,279 Fixed income securities — 18,163 — — 18,163 U.S. government agency securities — 8,859 — — 8,859 U.S. government securities 62,354 — — — 62,354 Derivative contracts — 175,755 4,222 (174,128 ) 5,849 Total financial instruments and other inventory positions sold, but not yet purchased $ 130,661 $ 213,749 $ 4,222 $ (174,128 ) $ 174,504 (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 $52.4 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, 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 $ 331 $ 1,127 $ — $ — $ 1,458 Convertible securities — 92,485 — — 92,485 Fixed income securities — 31,906 — — 31,906 Municipal securities: Taxable securities — 38,711 — — 38,711 Tax-exempt securities — 268,804 — — 268,804 Short-term securities — 52,472 — — 52,472 Mortgage-backed securities — — 15 — 15 U.S. government agency securities — 123,384 — — 123,384 U.S. government securities 954 — — — 954 Derivative contracts — 181,378 229 (164,574 ) 17,033 Total financial instruments and other inventory positions owned 1,285 790,267 244 (164,574 ) 627,222 Cash equivalents 20,581 — — — 20,581 Investments at fair value 33,587 2,649 107,792 (2) — 144,028 Total assets $ 55,453 $ 792,916 $ 108,036 $ (164,574 ) $ 791,831 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 81,575 $ 507 $ — $ — $ 82,082 Fixed income securities — 20,180 — — 20,180 U.S. government agency securities — 10,257 — — 10,257 U.S. government securities 60,365 — — — 60,365 Derivative contracts — 169,950 4,202 (169,609 ) 4,543 Total financial instruments and other inventory positions sold, but not yet purchased $ 141,940 $ 200,894 $ 4,202 $ (169,609 ) $ 177,427 (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 $53.0 million are attributable to third party ownership in consolidated merchant banking and senior living funds. The Company's Level III assets were $107.9 million and $108.0 million , or 13.7 percent and 13.6 percent of financial instruments measured at fair value at March 31, 2019 and December 31, 2018 , respectively. There were no significant transfers between levels for the three months ended March 31, 2019 . 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 December 31, Transfers Transfers gains/ gains/ March 31, March 31, (Dollars in thousands) 2018 Purchases Sales in out (losses) (losses) 2019 2019 Assets: Financial instruments and other inventory positions owned: Mortgage-backed securities $ 15 $ — $ (2 ) $ — $ — $ (27 ) $ 28 $ 14 $ — Derivative contracts 229 — (336 ) — — 336 (229 ) — — Total financial instruments and other inventory positions owned 244 — (338 ) — — 309 (201 ) 14 — Investments at fair value 107,792 — — — — — 86 107,878 86 Total assets $ 108,036 $ — $ (338 ) $ — $ — $ 309 $ (115 ) $ 107,892 $ 86 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,202 $ (5,603 ) $ — $ — $ — $ 5,603 $ 20 $ 4,222 $ 4,222 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,202 $ (5,603 ) $ — $ — $ — $ 5,603 $ 20 $ 4,222 $ 4,222 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ March 31, March 31, (Dollars in thousands) 2017 Purchases Sales in out (losses) (losses) 2018 2018 Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 700 $ — $ — $ — $ (700 ) $ — $ — $ — $ — Short-term securities 714 — — — — — 5 719 5 Mortgage-backed securities 481 — (5 ) — — — (192 ) 284 3 Derivative contracts 126 — (1,760 ) — — 1,760 2,018 2,144 2,144 Total financial instruments and other inventory positions owned 2,021 — (1,765 ) — (700 ) 1,760 1,831 3,147 2,152 Investments at fair value 126,060 601 (4,154 ) — — 3,402 (4,272 ) 121,637 (869 ) Total assets $ 128,081 $ 601 $ (5,919 ) $ — $ (700 ) $ 5,162 $ (2,441 ) $ 124,784 $ 1,283 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,433 $ (1,305 ) $ 3,226 $ — $ — $ (1,921 ) $ (3,044 ) $ 1,389 $ 1,389 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,433 $ (1,305 ) $ 3,226 $ — $ — $ (1,921 ) $ (3,044 ) $ 1,389 $ 1,389 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 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. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 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 March 31, 2019 . 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 $ 104,208 Other assets 511 Total assets $ 104,719 Liabilities: Other liabilities and accrued expenses $ 2,079 Total liabilities $ 2,079 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 $0.4 billion at March 31, 2019 and December 31, 2018 . The Company's exposure to loss from these VIEs is $6.1 million , which is the carrying value of its capital contributions recorded in investments on the consolidated statements of financial condition at March 31, 2019 . The Company had no liabilities related to these VIEs at March 31, 2019 and December 31, 2018 , 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 March 31, 2019 . |
Receivables from and Payables t
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | 3 Months Ended |
Mar. 31, 2019 | |
Brokers and Dealers [Abstract] | |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | Receivables from and Payables to Brokers, Dealers and Clearing Organizations March 31, December 31, (Dollars in thousands) 2019 2018 Receivable from clearing organizations $ 36,015 $ 223,987 Deposits with clearing organizations 3,606 230 Receivable from brokers and dealers 3,998 7,700 Other 3,391 3,361 Total receivables from brokers, dealers and clearing organizations $ 47,010 $ 235,278 March 31, December 31, (Dollars in thousands) 2019 2018 Payable to clearing organizations $ 5,128 $ 4,734 Payable to brokers and dealers 1,144 3,923 Total payables to brokers, dealers and clearing organizations $ 6,272 $ 8,657 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 | 3 Months Ended |
Mar. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Investments | Investments The Company's investments include investments in private companies and partnerships and registered mutual funds. March 31, December 31, (Dollars in thousands) 2019 2018 Investments at fair value $ 144,280 $ 144,028 Investments at cost 1,513 1,512 Investments accounted for under the equity method 6,231 6,423 Total investments 152,024 151,963 Less investments attributable to noncontrolling interests (1) (52,351 ) (52,972 ) $ 99,673 $ 98,991 (1) Noncontrolling interests are attributable to third party ownership in consolidated merchant banking and senior living funds. At March 31, 2019 , investments carried on a cost basis had an estimated fair market value of $1.5 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 | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets March 31, December 31, (Dollars in thousands) 2019 2018 Fee receivables $ 18,105 $ 23,120 Income tax receivables 12,661 — Accrued interest receivables 3,585 4,240 Forgivable loans, net 7,288 7,568 Prepaid expenses 8,042 9,477 Other 7,301 7,332 Total other assets $ 56,982 $ 51,737 |
Short-Term Financing
Short-Term Financing | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Short-Term Financing | Short-Term Financing 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 March 31, 2019 , the weighted average maturity of outstanding CP Notes was 9 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 CP Notes of $50.0 million outstanding at March 31, 2019 and December 31, 2018 with weighted average interest rates of 3.48% and 3.38% , respectively. 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 March 31, 2019 consisted of a one -year $175 million committed revolving credit facility with U.S. Bank, N.A., which was renewed in December 2018. 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 13, 2019 . The Company pays a nonrefundable commitment fee on the unused portion of the facility on a quarterly basis. At March 31, 2019 , the Company had no advances against this line of credit. The Company's uncommitted secured line at March 31, 2019 was $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 March 31, 2019 , the Company had no advances against this line of credit. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 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 on an undiscounted basis for the Company’s operating leases (including short-term leases) as of March 31, 2019 are as follows: (Dollars in thousands) Remainder of 2019 $ 10,670 2020 13,876 2021 9,461 2022 8,064 2023 7,187 Thereafter 15,771 Total $ 65,029 The weighted-average remaining lease term was 5.9 years at March 31, 2019 . For the three months ended March 31, 2019 , the Company’s operating lease cost was $3.0 million , of which $0.2 million related to all short-term leases. The Company recorded sublease income of $0.4 million for the three months ended March 31, 2019 . |
Legal Contingencies
Legal Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Contingencies | Legal Contingencies 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 March 31, 2019 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. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
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 three months ended March 31, 2019 , the Company repurchased 501 shares at an average price of $64.80 per share related to this authorization. The Company has $102.8 million remaining under this authorization. No repurchases were made in conjunction with this authorization during the three months ended March 31, 2018 . The Company also purchases shares of common stock from restricted stock award recipients upon the award vesting or as recipients sell shares to meet their employment tax obligations. The Company purchased 563,284 shares and 187,860 shares, or $39.7 million and $16.8 million of the Company's common stock for these purposes during the three months ended March 31, 2019 and 2018 , 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 three months ended March 31, 2019 and 2018 , the Company issued 1,035,360 shares and 574,594 shares, respectively, related to these obligations. Dividends The Company's dividend policy includes a quarterly and an annual special cash dividend, payable in the first quarter of each year, with the intention of returning a metric based on the Company's net income from the previous fiscal year. During the three months ended March 31, 2019 , the Company declared and paid both a quarterly and annual special cash dividend on its common stock of $0.375 and $1.01 per share, respectively, totaling $19.9 million . On April 26, 2019 , the board of directors declared a cash dividend of $0.375 per share to be paid on June 14, 2019 , to shareholders of record as of the close of business on May 24, 2019 . 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 $50.7 million and a senior living fund aggregating $1.7 million as of March 31, 2019 . As of December 31, 2018 , noncontrolling interests included the minority equity holders' proportionate share of the equity in merchant banking funds of $50.2 million and a senior living fund aggregating $2.8 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 three months ended March 31, 2019 and 2018 , respectively. |
Compensation Plans
Compensation Plans | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Plans | Compensation Plans Stock-Based Compensation Plans The Company maintains three stock-based compensation plans, the Piper Jaffray Companies Amended and Restated 2003 Annual and Long-Term Incentive Plan (the "Incentive Plan"), the 2016 Employment Inducement Award Plan (the "Simmons Inducement Plan") and the 2019 Employment Inducement Award Plan (the "Weeden & Co. 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 March 31, 2019 : Incentive Plan Restricted Stock Annual grants 482,660 Sign-on grants 55,885 538,545 Simmons Inducement Plan Restricted Stock 254,058 Total restricted stock outstanding 792,603 Incentive Plan Restricted Stock Units Leadership grants 218,022 Incentive Plan Stock Options 81,667 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 ( 0.7 million shares remained available for future issuance under the Incentive Plan as of March 31, 2019 ). 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 2018 for its February 2019 Annual Grant ("2019 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 three 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"). Leadership Grants Subsequent to 2016 Restricted stock units granted in each of the years subsequent to 2016 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 March 31, 2019 , the Company has determined that the probability of achieving the performance condition for each award is as follows: Probability of Achieving Grant Year Performance Condition 2019 68% 2018 50% 2017 75% 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 2019 2.50% 31.9% 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. 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 2018 for its February 2019 Leadership Grant. 2016 Leadership Grant Restricted stock units granted in 2016 contain market condition criteria and will vest and convert to shares of common stock at the end of the 36 -month performance period only if the Company's stock performance satisfies predetermined market conditions over the performance period. Under the terms of the award, the number of units that will vest and convert to shares will be based on the Company's stock performance achieving specified targets during the performance period. Compensation expense is recognized over the 36 -month performance period. Up to 50 percent of the award 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 award can be earned based on the Company's total shareholder return. The fair value of the award 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% 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 Plans The Company established the Simmons Inducement Plan in conjunction with the acquisition of Simmons & Company International ("Simmons"). The Company granted $11.6 million ( 286,776 shares) in restricted stock under the Simmons Inducement Plan on May 16, 2016 . These shares cliff vest on May 16, 2019. Simmons Inducement Plan awards are amortized as compensation expense on a straight-line basis over the vesting period. Employees forfeit unvested Simmons Inducement Plan shares upon termination of employment and a reversal of compensation expense is recorded. In the first quarter of 2019, the Company established the Weeden & Co. Inducement Plan in conjunction with the anticipated acquisition of Weeden & Co. L.P. The transaction is expected to close in the third quarter of 2019, subject to regulatory approvals and customary closing conditions. As of March 31, 2019 , no shares have been issued under the Weeden & Co. Inducement Plan. Stock-Based Compensation Activity The following table summarizes the Company's stock-based compensation expense: Three Months Ended March 31, (amounts in millions) 2019 2018 Stock-based compensation expense $ 4.3 $ 8.9 Forfeitures 0.9 — Tax benefit related to stock-based compensation expense 0.3 1.2 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, 2018 1,569,795 $ 53.80 Granted 261,253 74.40 Vested (1,035,360 ) 48.55 Canceled (3,085 ) 81.67 March 31, 2019 792,603 $ 67.34 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, 2018 194,251 $ 48.97 Granted 39,758 75.78 Vested — — Canceled (15,987 ) 45.79 March 31, 2019 218,022 $ 54.09 As of March 31, 2019 , there was $4.7 million of total unrecognized compensation cost related to restricted stock and restricted stock units expected to be recognized over a weighted average period of 2.1 years . 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, 2018 81,667 $ 99.00 9.1 $ — Granted — — Exercised — — Canceled — — March 31, 2019 81,667 $ 99.00 8.9 $ — As of March 31, 2019 , there was $1.6 million of unrecognized compensation cost related to stock options expected to be recognized over a weighted average period of 3.9 years . There were no options exercised during the three months ended March 31, 2019 . Acquisition-related Compensation Arrangements The Company entered into acquisition-related compensation arrangements with certain employees for retention and incentive purposes. Additional cash compensation was available to certain employees subject to exceeding an investment banking revenue threshold during the three year Simmons post-acquisition period, which ended on February 26, 2019. As of March 31, 2019 , the Company had accrued $39.1 million related to this performance award plan, which is expected to be paid in August 2019. Amounts payable related to this performance award plan were recorded as compensation expense on the consolidated statements of operations over the requisite performance period of three years . The Company recorded $0.6 million as a reduction of compensation expense and $4.3 million was recorded as compensation expense for the three months ended March 31, 2019 and 2018 , respectively. Deferred Compensation Plans The Company maintains various deferred compensation arrangements for employees. The Piper Jaffray Companies Mutual Fund Restricted Share Investment Plan is a fully funded deferred compensation plan which allows eligible employees to receive a portion of their incentive compensation 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. The nonqualified deferred compensation plan is an unfunded plan which allows certain highly compensated employees, at their election, to defer a portion of their compensation. In 2017, this plan was closed to future deferral elections by participants for performance periods beginning after December 31, 2017. 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 $30.6 million and $31.2 million as of March 31, 2019 and December 31, 2018 , respectively, and are included in investments on the consolidated statements of financial condition. The compensation deferred by the employees was expensed in the period earned. The deferred compensation liability was $31.0 million and $31.4 million as of March 31, 2019 and December 31, 2018 , 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. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
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. Prior to the 2019 Annual Grant, 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 unvested restricted stock units, as well as the 2019 Annual Grant, 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, restricted stock units and non-participating restricted shares. The computation of earnings per share is as follows: Three Months Ended March 31, (Amounts in thousands, except per share data) 2019 2018 Net income applicable to Piper Jaffray Companies $ 19,422 $ 10,603 Earnings allocated to participating securities (1) (1,587 ) (4,168 ) Net income applicable to Piper Jaffray Companies' common shareholders (2) $ 17,835 $ 6,435 Shares for basic and diluted calculations: Average shares used in basic computation 13,204 13,096 Restricted stock units 205 286 Non-participating restricted shares 121 — Average shares used in diluted computation (3) 13,530 13,382 Earnings per common share: Basic $ 1.35 $ 0.47 Diluted (3) $ 1.32 $ 0.47 (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 the Company's unvested restricted shares issued prior to the 2019 Annual Grant. The weighted average participating shares outstanding were 1,130,844 and 2,089,155 for the three months ended March 31, 2019 and 2018 , 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, restricted stock units and non-participating restricted shares 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 533,207 and 1,926,530 were excluded from diluted EPS at March 31, 2019 and 2018 , respectively, as the Company had undistributed losses for these periods. The anti-dilutive effects from stock options, restricted stock units and non-participating restricted shares were immaterial for the three months ended March 31, 2019 and 2018 , respectively. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, (Dollars in thousands) 2019 2018 Capital Markets Investment banking Advisory services $ 114,879 $ 75,329 Financing Equities 13,527 37,642 Debt 13,082 7,686 Total investment banking 141,488 120,657 Institutional sales and trading Equities 15,714 18,006 Fixed income 23,669 16,334 Total institutional sales and trading 39,383 34,340 Management and performance fees 1,129 1,388 Investment income 629 3,298 Long-term financing expenses (238 ) (1,787 ) Net revenues 182,391 157,896 Operating expenses (1) 158,453 148,860 Segment pre-tax operating income $ 23,938 $ 9,036 Segment pre-tax operating margin 13.1 % 5.7 % Continued on next page Three Months Ended March 31, (Dollars in thousands) 2019 2018 Asset Management Management and performance fees Management fees $ 9,288 $ 11,193 Performance fees 1 8 Total management and performance fees 9,289 11,201 Investment income/(loss) 152 (35 ) Net revenues 9,441 11,166 Operating expenses (1) 10,449 12,164 Segment pre-tax operating loss $ (1,008 ) $ (998 ) Segment pre-tax operating margin (10.7 )% (8.9 )% Total Net revenues $ 191,832 $ 169,062 Operating expenses (1) 168,902 161,024 Pre-tax operating income $ 22,930 $ 8,038 Pre-tax operating margin 12.0 % 4.8 % (1) Operating expenses include intangible asset amortization as set forth in the table below: Three Months Ended March 31, (Dollars in thousands) 2019 2018 Capital Markets $ 753 $ 1,214 Asset Management 1,359 1,401 Total intangible asset amortization $ 2,112 $ 2,615 Reportable segment assets are as follows: March 31, December 31, (Dollars in thousands) 2019 2018 Capital Markets $ 1,105,143 $ 1,273,147 Asset Management 64,510 72,122 Total assets $ 1,169,653 $ 1,345,269 |
Net Capital Requirements and Ot
Net Capital Requirements and Other Regulatory Matters | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 , net capital calculated under the SEC rule was $214.6 million , and exceeded the minimum net capital required under the SEC rule by $213.6 million . The Company's committed short-term credit facility includes a covenant 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 March 31, 2019 , 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 March 31, 2019 , 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 | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax expense of $4.1 million for the three months ended March 31, 2019 . Income tax expense was reduced by a tax benefit of $1.7 million for the three months ended March 31, 2019 , related to stock-based compensation awards vesting at values greater than the grant price. The Company recorded an income tax benefit of $2.6 million for the three months ended March 31, 2018 . Income tax expense was reduced by a tax benefit of $5.0 million for the three months ended March 31, 2018 , related to stock-based compensation awards vesting at values greater than the grant price. |
Accounting Policies and Prono_2
Accounting Policies and Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Leases | Leases A lease is a contract, or part of a contract, that conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. In making this determination, the Company considers if it obtains substantially all of the economic benefits from the use of the underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company leases its corporate headquarters and other offices under various non-cancelable leases, all of which are operating leases. In addition to rent, the leases require payment of real estate taxes, insurance and common area maintenance. The original terms of the Company's lease agreements generally range up to twelve years. Some of the leases contain renewal and/or termination options, escalation clauses, rent-free holidays and operating cost adjustments. The Company recognizes a right-of-use ("ROU") lease asset and lease liability on the consolidated statements of financial position for all leases with a term greater than 12 months. The lease liability represents the Company’s obligation to make future lease payments and is recorded at an amount equal to the present value of the remaining lease payments due over the lease term. The ROU lease asset, which represents the right to use the underlying asset during the lease term, is measured based on the carrying value of the lease liability, adjusted for other items, such as lease incentives and uneven rent payments. The discount rate used to determine the present value of the remaining lease payments reflects the Company’s incremental borrowing rate, which is the rate the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. In calculating its discount rates, the Company took into consideration a current financing arrangement that is on a secured (i.e., collateralized) basis, as well as market interest rates and spreads, other reference points, and the respective tenors of the Company’s designated lease term ranges. The Company applied the portfolio approach in determining the discount rates for its leases. The weighted-average discount rate was 4.0 percent at March 31, 2019. For leases that contain escalation clauses or rent-free holidays, the Company recognizes the related rent expense on a straight-line basis from the date the Company takes possession of the property to the end of the initial lease term. The Company records any difference between the straight-line rent expense and amounts paid under the leases as part of the amortization of the ROU lease asset. Cash or lease incentives received upon entering into certain leases are recognized on a straight-line basis as a reduction of rent expense from the date the Company takes possession of the property or receives the cash to the end of the initial lease term. Lease incentives, which initially reduce the ROU lease asset, are a component of the amortization of the ROU lease asset. Rent expense for leases with a term of 12 months or less is recorded on a straight-line basis over the lease term in the consolidated statements of operations. |
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) | 3 Months Ended |
Mar. 31, 2019 | |
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 | March 31, December 31, (Dollars in thousands) 2019 2018 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 12,908 $ 1,458 Convertible securities 116,008 92,485 Fixed income securities 33,819 31,906 Municipal securities: Taxable securities 40,072 38,711 Tax-exempt securities 246,130 268,804 Short-term securities 20,620 52,472 Mortgage-backed securities 14 15 U.S. government agency securities 152,743 123,384 U.S. government securities 2,569 954 Derivative contracts 16,775 17,033 Total financial instruments and other inventory positions owned $ 641,658 $ 627,222 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 79,279 $ 82,082 Fixed income securities 18,163 20,180 U.S. government agency securities 8,859 10,257 U.S. government securities 62,354 60,365 Derivative contracts 5,849 4,543 Total financial instruments and other inventory positions sold, but not yet purchased $ 174,504 $ 177,427 |
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: March 31, 2019 December 31, 2018 (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 $ 186,555 $ 175,755 $ 2,308,159 $ 181,199 $ 169,950 $ 2,532,966 Trading securities 10 4,222 239,225 408 4,202 262,275 $ 186,565 $ 179,977 $ 2,547,384 $ 181,607 $ 174,152 $ 2,795,241 (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 (Dollars in thousands) March 31, Derivative Category Operations Category 2019 2018 Interest rate derivative contract Investment banking $ (617 ) $ (795 ) Interest rate derivative contract Institutional brokerage (249 ) 5,062 $ (866 ) $ 4,267 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 : Valuation Weighted Technique Unobservable Input Range Average (1) Assets: Investments at fair value: Equity securities in private companies Market approach Revenue multiple (2) 2 - 5 times 4.3 times EBITDA multiple (2) 13 - 16 times 14.5 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 basis points ("bps") (3) 2 - 24 bps 11.7 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 higher/(lower) fair value measurement. (3) Significant increase/(decrease) in the unobservable input in isolation would have resulted in a significantly lower/(higher) 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 March 31, 2019 : 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 $ 21 $ 12,887 $ — $ — $ 12,908 Convertible securities — 116,008 — — 116,008 Fixed income securities — 33,819 — — 33,819 Municipal securities: Taxable securities — 40,072 — — 40,072 Tax-exempt securities — 246,130 — — 246,130 Short-term securities — 20,620 — — 20,620 Mortgage-backed securities — — 14 — 14 U.S. government agency securities — 152,743 — — 152,743 U.S. government securities 2,569 — — — 2,569 Derivative contracts — 186,565 — (169,790 ) 16,775 Total financial instruments and other inventory positions owned 2,590 808,844 14 (169,790 ) 641,658 Cash equivalents 750 — — — 750 Investments at fair value 33,150 3,252 107,878 (2) — 144,280 Total assets $ 36,490 $ 812,096 $ 107,892 $ (169,790 ) $ 786,688 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 68,307 $ 10,972 $ — $ — $ 79,279 Fixed income securities — 18,163 — — 18,163 U.S. government agency securities — 8,859 — — 8,859 U.S. government securities 62,354 — — — 62,354 Derivative contracts — 175,755 4,222 (174,128 ) 5,849 Total financial instruments and other inventory positions sold, but not yet purchased $ 130,661 $ 213,749 $ 4,222 $ (174,128 ) $ 174,504 (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 $52.4 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, 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 $ 331 $ 1,127 $ — $ — $ 1,458 Convertible securities — 92,485 — — 92,485 Fixed income securities — 31,906 — — 31,906 Municipal securities: Taxable securities — 38,711 — — 38,711 Tax-exempt securities — 268,804 — — 268,804 Short-term securities — 52,472 — — 52,472 Mortgage-backed securities — — 15 — 15 U.S. government agency securities — 123,384 — — 123,384 U.S. government securities 954 — — — 954 Derivative contracts — 181,378 229 (164,574 ) 17,033 Total financial instruments and other inventory positions owned 1,285 790,267 244 (164,574 ) 627,222 Cash equivalents 20,581 — — — 20,581 Investments at fair value 33,587 2,649 107,792 (2) — 144,028 Total assets $ 55,453 $ 792,916 $ 108,036 $ (164,574 ) $ 791,831 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 81,575 $ 507 $ — $ — $ 82,082 Fixed income securities — 20,180 — — 20,180 U.S. government agency securities — 10,257 — — 10,257 U.S. government securities 60,365 — — — 60,365 Derivative contracts — 169,950 4,202 (169,609 ) 4,543 Total financial instruments and other inventory positions sold, but not yet purchased $ 141,940 $ 200,894 $ 4,202 $ (169,609 ) $ 177,427 (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 $53.0 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 December 31, Transfers Transfers gains/ gains/ March 31, March 31, (Dollars in thousands) 2018 Purchases Sales in out (losses) (losses) 2019 2019 Assets: Financial instruments and other inventory positions owned: Mortgage-backed securities $ 15 $ — $ (2 ) $ — $ — $ (27 ) $ 28 $ 14 $ — Derivative contracts 229 — (336 ) — — 336 (229 ) — — Total financial instruments and other inventory positions owned 244 — (338 ) — — 309 (201 ) 14 — Investments at fair value 107,792 — — — — — 86 107,878 86 Total assets $ 108,036 $ — $ (338 ) $ — $ — $ 309 $ (115 ) $ 107,892 $ 86 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,202 $ (5,603 ) $ — $ — $ — $ 5,603 $ 20 $ 4,222 $ 4,222 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,202 $ (5,603 ) $ — $ — $ — $ 5,603 $ 20 $ 4,222 $ 4,222 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers Transfers gains/ gains/ March 31, March 31, (Dollars in thousands) 2017 Purchases Sales in out (losses) (losses) 2018 2018 Assets: Financial instruments and other inventory positions owned: Municipal securities: Tax-exempt securities $ 700 $ — $ — $ — $ (700 ) $ — $ — $ — $ — Short-term securities 714 — — — — — 5 719 5 Mortgage-backed securities 481 — (5 ) — — — (192 ) 284 3 Derivative contracts 126 — (1,760 ) — — 1,760 2,018 2,144 2,144 Total financial instruments and other inventory positions owned 2,021 — (1,765 ) — (700 ) 1,760 1,831 3,147 2,152 Investments at fair value 126,060 601 (4,154 ) — — 3,402 (4,272 ) 121,637 (869 ) Total assets $ 128,081 $ 601 $ (5,919 ) $ — $ (700 ) $ 5,162 $ (2,441 ) $ 124,784 $ 1,283 Liabilities: Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,433 $ (1,305 ) $ 3,226 $ — $ — $ (1,921 ) $ (3,044 ) $ 1,389 $ 1,389 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,433 $ (1,305 ) $ 3,226 $ — $ — $ (1,921 ) $ (3,044 ) $ 1,389 $ 1,389 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 . 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 $ 104,208 Other assets 511 Total assets $ 104,719 Liabilities: Other liabilities and accrued expenses $ 2,079 Total liabilities $ 2,079 |
Receivables from and Payables_2
Receivables from and Payables to Brokers, Dealers and Clearing Organizations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Brokers and Dealers [Abstract] | |
Schedule of Receivables from and Payables to Brokers, Dealers and Clearing Organizations | March 31, December 31, (Dollars in thousands) 2019 2018 Receivable from clearing organizations $ 36,015 $ 223,987 Deposits with clearing organizations 3,606 230 Receivable from brokers and dealers 3,998 7,700 Other 3,391 3,361 Total receivables from brokers, dealers and clearing organizations $ 47,010 $ 235,278 March 31, December 31, (Dollars in thousands) 2019 2018 Payable to clearing organizations $ 5,128 $ 4,734 Payable to brokers and dealers 1,144 3,923 Total payables to brokers, dealers and clearing organizations $ 6,272 $ 8,657 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of Investments | The Company's investments include investments in private companies and partnerships and registered mutual funds. March 31, December 31, (Dollars in thousands) 2019 2018 Investments at fair value $ 144,280 $ 144,028 Investments at cost 1,513 1,512 Investments accounted for under the equity method 6,231 6,423 Total investments 152,024 151,963 Less investments attributable to noncontrolling interests (1) (52,351 ) (52,972 ) $ 99,673 $ 98,991 (1) Noncontrolling interests are attributable to third party ownership in consolidated merchant banking and senior living funds. |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | March 31, December 31, (Dollars in thousands) 2019 2018 Fee receivables $ 18,105 $ 23,120 Income tax receivables 12,661 — Accrued interest receivables 3,585 4,240 Forgivable loans, net 7,288 7,568 Prepaid expenses 8,042 9,477 Other 7,301 7,332 Total other assets $ 56,982 $ 51,737 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Aggregate Minimum Lease Commitments for Operating Leases | Aggregate minimum lease commitments on an undiscounted basis for the Company’s operating leases (including short-term leases) as of March 31, 2019 are as follows: (Dollars in thousands) Remainder of 2019 $ 10,670 2020 13,876 2021 9,461 2022 8,064 2023 7,187 Thereafter 15,771 Total $ 65,029 |
Compensation Plans (Tables)
Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 : Incentive Plan Restricted Stock Annual grants 482,660 Sign-on grants 55,885 538,545 Simmons Inducement Plan Restricted Stock 254,058 Total restricted stock outstanding 792,603 Incentive Plan Restricted Stock Units Leadership grants 218,022 Incentive Plan Stock Options 81,667 |
Schedule of RSU Performance Condition Probability | As of March 31, 2019 , the Company has determined that the probability of achieving the performance condition for each award is as follows: Probability of Achieving Grant Year Performance Condition 2019 68% 2018 50% 2017 75% |
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 2019 2.50% 31.9% 2018 2.40% 34.8% 2017 1.62% 35.9% The fair value of the award 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% |
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 March 31, (amounts in millions) 2019 2018 Stock-based compensation expense $ 4.3 $ 8.9 Forfeitures 0.9 — Tax benefit related to stock-based compensation expense 0.3 1.2 |
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, 2018 1,569,795 $ 53.80 Granted 261,253 74.40 Vested (1,035,360 ) 48.55 Canceled (3,085 ) 81.67 March 31, 2019 792,603 $ 67.34 |
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, 2018 194,251 $ 48.97 Granted 39,758 75.78 Vested — — Canceled (15,987 ) 45.79 March 31, 2019 218,022 $ 54.09 |
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, 2018 81,667 $ 99.00 9.1 $ — Granted — — Exercised — — Canceled — — March 31, 2019 81,667 $ 99.00 8.9 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Computation of Earnings per Share | The computation of earnings per share is as follows: Three Months Ended March 31, (Amounts in thousands, except per share data) 2019 2018 Net income applicable to Piper Jaffray Companies $ 19,422 $ 10,603 Earnings allocated to participating securities (1) (1,587 ) (4,168 ) Net income applicable to Piper Jaffray Companies' common shareholders (2) $ 17,835 $ 6,435 Shares for basic and diluted calculations: Average shares used in basic computation 13,204 13,096 Restricted stock units 205 286 Non-participating restricted shares 121 — Average shares used in diluted computation (3) 13,530 13,382 Earnings per common share: Basic $ 1.35 $ 0.47 Diluted (3) $ 1.32 $ 0.47 (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 the Company's unvested restricted shares issued prior to the 2019 Annual Grant. The weighted average participating shares outstanding were 1,130,844 and 2,089,155 for the three months ended March 31, 2019 and 2018 , 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, restricted stock units and non-participating restricted shares 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 533,207 and 1,926,530 were excluded from diluted EPS at March 31, 2019 and 2018 , respectively, as the Company had undistributed losses for these periods. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Reportable Segment Financial Results | Reportable segment financial results are as follows: Three Months Ended March 31, (Dollars in thousands) 2019 2018 Capital Markets Investment banking Advisory services $ 114,879 $ 75,329 Financing Equities 13,527 37,642 Debt 13,082 7,686 Total investment banking 141,488 120,657 Institutional sales and trading Equities 15,714 18,006 Fixed income 23,669 16,334 Total institutional sales and trading 39,383 34,340 Management and performance fees 1,129 1,388 Investment income 629 3,298 Long-term financing expenses (238 ) (1,787 ) Net revenues 182,391 157,896 Operating expenses (1) 158,453 148,860 Segment pre-tax operating income $ 23,938 $ 9,036 Segment pre-tax operating margin 13.1 % 5.7 % Continued on next page Three Months Ended March 31, (Dollars in thousands) 2019 2018 Asset Management Management and performance fees Management fees $ 9,288 $ 11,193 Performance fees 1 8 Total management and performance fees 9,289 11,201 Investment income/(loss) 152 (35 ) Net revenues 9,441 11,166 Operating expenses (1) 10,449 12,164 Segment pre-tax operating loss $ (1,008 ) $ (998 ) Segment pre-tax operating margin (10.7 )% (8.9 )% Total Net revenues $ 191,832 $ 169,062 Operating expenses (1) 168,902 161,024 Pre-tax operating income $ 22,930 $ 8,038 Pre-tax operating margin 12.0 % 4.8 % (1) Operating expenses include intangible asset amortization as set forth in the table below: Three Months Ended March 31, (Dollars in thousands) 2019 2018 Capital Markets $ 753 $ 1,214 Asset Management 1,359 1,401 Total intangible asset amortization $ 2,112 $ 2,615 |
Reportable Segment Assets | Reportable segment assets are as follows: March 31, December 31, (Dollars in thousands) 2019 2018 Capital Markets $ 1,105,143 $ 1,273,147 Asset Management 64,510 72,122 Total assets $ 1,169,653 $ 1,345,269 |
Organization and Basis of Pre_2
Organization and Basis of Presentation - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Accounting Policies and Prono_3
Accounting Policies and Pronouncements - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
ROU lease asset | $ 41,935 | $ 44,000 | $ 0 |
Lease liability | $ 56,243 | $ 59,000 | $ 0 |
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Original terms of lease agreements | 12 years | ||
Weighted Average | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Weighted-average discount rate | 4.00% |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Financial instruments and other inventory positions owned: | ||
Equity securities | $ 12,908 | $ 1,458 |
Convertible securities | 116,008 | 92,485 |
Fixed income securities | 33,819 | 31,906 |
Taxable securities | 40,072 | 38,711 |
Tax-exempt securities | 246,130 | 268,804 |
Short-term securities | 20,620 | 52,472 |
Mortgage-backed securities | 14 | 15 |
U.S. government agency securities | 152,743 | 123,384 |
U.S. government securities | 2,569 | 954 |
Derivative contracts | 16,775 | 17,033 |
Total financial instruments and other inventory positions owned | 641,658 | 627,222 |
Financial instruments and other inventory positions sold, but not yet purchased: | ||
Equity securities | 79,279 | 82,082 |
Fixed income securities | 18,163 | 20,180 |
U.S. government agency securities | 8,859 | 10,257 |
U.S. government securities | 62,354 | 60,365 |
Derivative contracts | 5,849 | 4,543 |
Total financial instruments and other inventory positions sold, but not yet purchased | 174,504 | 177,427 |
Financial instruments and other inventory positions owned and pledged as collateral | $ 336,363 | $ 147,427 |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Derivative [Line Items] | ||
Notional Amount | $ 2,547,384 | $ 2,795,241 |
Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 186,565 | 181,607 |
Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 179,977 | 174,152 |
Customer matched-book | Interest rate | ||
Derivative [Line Items] | ||
Notional Amount | 2,308,159 | 2,532,966 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 186,555 | 181,199 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 175,755 | 169,950 |
Trading securities | Interest rate | ||
Derivative [Line Items] | ||
Notional Amount | 239,225 | 262,275 |
Trading securities | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 10 | 408 |
Trading securities | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | $ 4,222 | $ 4,202 |
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 | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gains/(losses) on derivative instruments | $ (866) | $ 4,267 |
Interest rate derivative contract | Investment banking | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gains/(losses) on derivative instruments | (617) | (795) |
Interest rate derivative contract | Institutional brokerage | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gains/(losses) on derivative instruments | $ (249) | $ 5,062 |
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 | Mar. 31, 2019USD ($) |
Counterparties not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 16.9 |
Notional contract amount | 176.5 |
One unnamed financial institutional not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 13.9 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Fair Value Option (Details) - Merchant Banking Investments - Level III - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Investments at fair value | $ 2.6 | $ 3 | |
Gains from changes in fair value | $ (0.4) | $ 0.8 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Information about Significant Unobservable Inputs used in Fair Value Measurement (Details) - Level III | Mar. 31, 2019basis_points |
Revenue multiple | Equity investment in private company | Investments | Minimum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 2 |
Revenue multiple | Equity investment in private company | Investments | Maximum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 5 |
Revenue multiple | Equity investment in private company | Investments | Weighted Average | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 4.3 |
EBITDA multiple | Equity investment in private company | Investments | Minimum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 13 |
EBITDA multiple | Equity investment in private company | Investments | Maximum | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 16 |
EBITDA multiple | Equity investment in private company | Investments | Weighted Average | Market approach | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Investments at fair value | 14.5 |
Premium over the MMD curve | 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] | |
Derivative contracts | 2 |
Premium over the MMD curve | 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] | |
Derivative contracts | 24 |
Premium over the MMD curve | 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] | |
Derivative contracts | 11.7 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Additional Information (Details) - Level III - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets | $ 107,892 | $ 108,036 |
Percentage of Level III assets to financial instruments measured at fair value | 13.70% | 13.60% |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Valuation of Financial Instruments by Pricing Observability Levels (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Assets: | ||
Equity securities | $ 12,908 | $ 1,458 |
Convertible securities | 116,008 | 92,485 |
Fixed income securities | 33,819 | 31,906 |
Taxable securities | 40,072 | 38,711 |
Tax-exempt securities | 246,130 | 268,804 |
Short-term securities | 20,620 | 52,472 |
Mortgage-backed securities | 14 | 15 |
U.S. government agency securities | 152,743 | 123,384 |
U.S. government securities | 2,569 | 954 |
Derivative contracts | 16,775 | 17,033 |
Derivative contracts | (169,790) | (164,574) |
Total financial instruments and other inventory positions owned | 641,658 | 627,222 |
Liabilities | ||
Equity securities | 79,279 | 82,082 |
Fixed income securities | 18,163 | 20,180 |
U.S. government agency securities | 8,859 | 10,257 |
U.S. government securities | 62,354 | 60,365 |
Derivative contracts | 5,849 | 4,543 |
Derivative contracts | (174,128) | (169,609) |
Total financial instruments and other inventory positions sold, but not yet purchased | 174,504 | 177,427 |
Securities posted as collateral | 0 | 0 |
Investments at fair value | 144,280 | 144,028 |
Transfers between fair value levels | 0 | |
Investments attributable to noncontrolling interests | ||
Liabilities | ||
Investments at fair value | 52,351 | 52,972 |
Level I | ||
Assets: | ||
Equity securities | 21 | 331 |
U.S. government securities | 2,569 | 954 |
Total financial instruments and other inventory positions owned | 2,590 | 1,285 |
Cash equivalents | 750 | 20,581 |
Investments at fair value | 33,150 | 33,587 |
Total assets | 36,490 | 55,453 |
Liabilities | ||
Equity securities | 68,307 | 81,575 |
U.S. government securities | 62,354 | 60,365 |
Total financial instruments and other inventory positions sold, but not yet purchased | 130,661 | 141,940 |
Level II | ||
Assets: | ||
Equity securities | 12,887 | 1,127 |
Convertible securities | 116,008 | 92,485 |
Fixed income securities | 33,819 | 31,906 |
Taxable securities | 40,072 | 38,711 |
Tax-exempt securities | 246,130 | 268,804 |
Short-term securities | 20,620 | 52,472 |
U.S. government agency securities | 152,743 | 123,384 |
Derivative contracts | 186,565 | 181,378 |
Total financial instruments and other inventory positions owned | 808,844 | 790,267 |
Investments at fair value | 3,252 | 2,649 |
Total assets | 812,096 | 792,916 |
Liabilities | ||
Equity securities | 10,972 | 507 |
Fixed income securities | 18,163 | 20,180 |
U.S. government agency securities | 8,859 | 10,257 |
Derivative contracts | 175,755 | 169,950 |
Total financial instruments and other inventory positions sold, but not yet purchased | 213,749 | 200,894 |
Level III | ||
Assets: | ||
Mortgage-backed securities | 14 | 15 |
Derivative contracts | 229 | |
Total financial instruments and other inventory positions owned | 14 | 244 |
Investments at fair value | 107,878 | 107,792 |
Total assets | 107,892 | 108,036 |
Liabilities | ||
Derivative contracts | 4,222 | 4,202 |
Total financial instruments and other inventory positions sold, but not yet purchased | 4,222 | 4,202 |
Measured on a recurring basis | ||
Assets: | ||
Equity securities | 12,908 | 1,458 |
Convertible securities | 116,008 | 92,485 |
Fixed income securities | 33,819 | 31,906 |
Taxable securities | 40,072 | 38,711 |
Tax-exempt securities | 246,130 | 268,804 |
Short-term securities | 20,620 | 52,472 |
Mortgage-backed securities | 14 | 15 |
U.S. government agency securities | 152,743 | 123,384 |
U.S. government securities | 2,569 | 954 |
Derivative contracts | 16,775 | 17,033 |
Total financial instruments and other inventory positions owned | 641,658 | 627,222 |
Cash equivalents | 750 | 20,581 |
Investments at fair value | 144,280 | 144,028 |
Total assets | 786,688 | 791,831 |
Liabilities | ||
Equity securities | 79,279 | 82,082 |
Fixed income securities | 18,163 | 20,180 |
U.S. government agency securities | 8,859 | 10,257 |
U.S. government securities | 62,354 | 60,365 |
Derivative contracts | 5,849 | 4,543 |
Total financial instruments and other inventory positions sold, but not yet purchased | $ 174,504 | $ 177,427 |
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 | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 108,036 | $ 128,081 |
Purchases | (601) | |
Sales | (338) | (5,919) |
Transfers in | 0 | 0 |
Transfers out | 0 | 700 |
Realized gains/(losses) | 309 | 5,162 |
Unrealized gains/(losses) | (115) | (2,441) |
Ending balance | 107,892 | 124,784 |
Unrealized gains/ (losses) for assets held at period end | 86 | 1,283 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 4,202 | 4,433 |
Purchases | (5,603) | (1,305) |
Sales | 0 | 3,226 |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Realized gains/(losses) | 5,603 | (1,921) |
Unrealized gains/(losses) | 20 | (3,044) |
Ending balance | 4,222 | 1,389 |
Unrealized gains/(losses) for liabilities held at period end | 4,222 | 1,389 |
Financial instruments and other inventory positions owned | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 244 | 2,021 |
Purchases | 0 | |
Sales | (338) | (1,765) |
Transfers in | 0 | 0 |
Transfers out | 0 | 700 |
Realized gains/(losses) | 309 | 1,760 |
Unrealized gains/(losses) | (201) | 1,831 |
Ending balance | 14 | 3,147 |
Unrealized gains/ (losses) for assets held at period end | 0 | 2,152 |
Investments | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 107,792 | 126,060 |
Purchases | (601) | |
Sales | 0 | (4,154) |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Realized gains/(losses) | 0 | 3,402 |
Unrealized gains/(losses) | 86 | (4,272) |
Ending balance | 107,878 | 121,637 |
Unrealized gains/ (losses) for assets held at period end | 86 | (869) |
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 | 700 | |
Purchases | 0 | |
Sales | 0 | |
Transfers in | 0 | |
Transfers out | 700 | |
Realized gains/(losses) | 0 | |
Unrealized gains/(losses) | 0 | |
Unrealized gains/ (losses) for assets held at period end | 0 | |
Short-term securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Transfers out | 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 | 714 | |
Purchases | 0 | |
Sales | 0 | |
Transfers in | 0 | |
Realized gains/(losses) | 0 | |
Unrealized gains/(losses) | 5 | |
Ending balance | 719 | |
Unrealized gains/ (losses) for assets held at period end | 5 | |
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 | 15 | 481 |
Purchases | 0 | 0 |
Sales | (2) | (5) |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Realized gains/(losses) | (27) | 0 |
Unrealized gains/(losses) | 28 | (192) |
Ending balance | 14 | 284 |
Unrealized gains/ (losses) for assets held at period end | 0 | 3 |
Derivative contracts | Financial instruments and other inventory positions owned | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 229 | 126 |
Purchases | 0 | |
Sales | (336) | (1,760) |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Realized gains/(losses) | 336 | 1,760 |
Unrealized gains/(losses) | (229) | 2,018 |
Ending balance | 2,144 | |
Unrealized gains/ (losses) for assets held at period end | 0 | 2,144 |
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 | 4,202 | 4,433 |
Purchases | (5,603) | (1,305) |
Sales | 0 | 3,226 |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Realized gains/(losses) | 5,603 | (1,921) |
Unrealized gains/(losses) | 20 | (3,044) |
Ending balance | 4,222 | 1,389 |
Unrealized gains/(losses) for liabilities held at period end | $ 4,222 | $ 1,389 |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Consolidated Variable Interest Entities (Details) - Variable Interest Entity, Primary Beneficiary $ in Thousands | Mar. 31, 2019USD ($) |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | $ 104,719 |
Consolidated VIE liabilities | 2,079 |
Investments | |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | 104,208 |
Other assets | |
Variable Interest Entity [Line Items] | |
Consolidated VIE assets | 511 |
Other liabilities and accrued expenses | |
Variable Interest Entity [Line Items] | |
Consolidated VIE liabilities | $ 2,079 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
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 | 400,000,000 | $ 400,000,000 |
Variable interest entities, exposure to loss | 6,100,000 | |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Receivables from Brokers-Dealers and Clearing Organizations [Abstract] | ||
Receivable from clearing organizations | $ 36,015 | $ 223,987 |
Deposits with clearing organizations | 3,606 | 230 |
Receivable from brokers and dealers | 3,998 | 7,700 |
Other | 3,391 | 3,361 |
Total receivables from brokers, dealers and clearing organizations | 47,010 | 235,278 |
Payables to Broker-Dealers and Clearing Organizations [Abstract] | ||
Payable to clearing organizations | 5,128 | 4,734 |
Payable to brokers and dealers | 1,144 | 3,923 |
Total payables to brokers, dealers and clearing organizations | $ 6,272 | $ 8,657 |
Receivables from and Payables_4
Receivables from and Payables to Brokers, Dealers and Clearing Organizations - Additional Information (Details) | Mar. 31, 2019USD ($) |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Investments [Line Items] | ||
Investments at fair value | $ 144,280 | $ 144,028 |
Investments at cost | 1,513 | 1,512 |
Investments accounted for under the equity method | 6,231 | 6,423 |
Total investments | 152,024 | 151,963 |
Investments attributable to noncontrolling interests | ||
Schedule of Investments [Line Items] | ||
Investments at fair value | 52,351 | 52,972 |
Investments attributable to parent | ||
Schedule of Investments [Line Items] | ||
Total investments | $ 99,673 | $ 98,991 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Millions | Mar. 31, 2019USD ($) |
Investments, All Other Investments [Abstract] | |
Estimated fair market value of investments carried at cost | $ 1.5 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fee receivables | $ 18,105 | $ 23,120 |
Income tax receivables | 12,661 | 0 |
Accrued interest receivables | 3,585 | 4,240 |
Forgivable loans, net | 7,288 | 7,568 |
Prepaid expenses | 8,042 | 9,477 |
Other | 7,301 | 7,332 |
Total other assets | $ 56,982 | $ 51,737 |
Short-Term Financing - Addition
Short-Term Financing - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($)program | Dec. 31, 2018USD ($) | |
Short-term Debt [Line Items] | ||
Short-term financing | $ 49,956,000 | $ 49,953,000 |
Commercial paper (secured) | ||
Short-term Debt [Line Items] | ||
Number of commercial paper programs | program | 2 | |
Short-term financing | $ 49,956,000 | |
Weighted average interest rate | 3.48% | 3.38% |
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) | Weighted Average | ||
Short-term Debt [Line Items] | ||
Debt term | 9 days | |
Commercial paper (secured) | CP Series II A | ||
Short-term Debt [Line Items] | ||
Excess net capital required | $ 100,000,000 | |
Bank lines (secured) | Committed credit facility | ||
Short-term Debt [Line Items] | ||
Debt term | 1 year | |
Short-term financing | $ 0 | |
Line of credity, maximum borrowing capacity | 175,000,000 | |
Minimum net capital required | 120,000,000 | |
Bank lines (secured) | Uncommitted credit facility | ||
Short-term Debt [Line Items] | ||
Short-term financing | 0 | |
Line of credity, maximum borrowing capacity | $ 85,000,000 |
Leases - Schedule of Aggregate
Leases - Schedule of Aggregate Minimum Lease Commitments for Operating Leases (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 10,670 |
2020 | 13,876 |
2021 | 9,461 |
2022 | 8,064 |
2023 | 7,187 |
Thereafter | 15,771 |
Total | $ 65,029 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Weighted average remaining lease term | 5 years 11 months |
Operating lease cost | $ 3 |
Cost related to short-term leases | 0.2 |
Sublease Income | $ 0.4 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | 3 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Sep. 30, 2017 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Shares of common stock purchased from restricted stock award related to recipients' employment tax obligations | 563,284 | 187,860 | |||
Repurchase of common stock for employee tax withholding | $ 39,700,000 | $ 16,800,000 | |||
Reissuance of treasury shares as a result of employee vesting | 1,035,360 | 574,594 | |||
Cash dividends paid | $ 19,900,000 | ||||
Cash dividends declared | $ 1.39 | $ 2 | |||
Noncontrolling interests proportionate share of equity | $ 52,351,000 | $ 52,972,000 | |||
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 | 50,700,000 | 50,200,000 | |||
Senior living fund | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Noncontrolling interests proportionate share of equity | $ 1,700,000 | $ 2,800,000 | |||
Quarterly dividend | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Cash dividends paid | $ 0.375 | ||||
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 | $ 1.01 | ||||
Share repurchase program, authorized 2017 | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Repurchase of common stock, authorized amount | $ 150,000,000 | ||||
Shares repurchased | 501 | 0 | |||
Average price of repurchases | $ 64.80 | ||||
Remaining under share repurchase program | $ 102,800,000 |
Compensation Plans - Summary of
Compensation Plans - Summary of Outstanding Equity Awards (Details) - shares | Mar. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options | 81,667 | 81,667 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 792,603 | 1,569,795 |
Leadership grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 218,022 | 194,251 |
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 | 218,022 | |
Total restricted stock outstanding | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 792,603 | |
Total restricted stock outstanding | 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 | 538,545 | |
Total restricted stock outstanding | 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 | 482,660 | |
Total restricted stock outstanding | 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 | 55,885 | |
Total restricted stock outstanding | 2016 Employment Inducement Award Plan | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding | 254,058 |
Compensation Plans - Schedule o
Compensation Plans - Schedule of RSU Performance Condition Probability (Details) - Average adjusted return on equity targets - Probability of achieving performance condition | 3 Months Ended |
Mar. 31, 2019 | |
2019 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 68.00% |
2018 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 50.00% |
2017 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 75.00% |
Compensation Plans - Schedule_2
Compensation Plans - Schedule of RSU Valuation Assumptions (Details) - Restricted stock units | 3 Months Ended |
Mar. 31, 2019 | |
2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 2.50% |
Expected Stock Price Volatility | 31.90% |
2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 2.40% |
Expected Stock Price Volatility | 34.80% |
2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 1.62% |
Expected Stock Price Volatility | 35.90% |
2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 0.98% |
Expected Stock Price Volatility | 34.90% |
Compensation Plans - Schedule_3
Compensation Plans - Schedule of Stock Options Valuation Assumptions (Details) - Stock options | 3 Months Ended |
Mar. 31, 2019$ / 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_4
Compensation Plans - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation expense | $ 4.3 | $ 8.9 |
Forfeitures | 0.9 | 0 |
Tax benefit related to stock-based compensation expense | $ 0.3 | $ 1.2 |
Compensation Plans - Changes in
Compensation Plans - Changes in Unvested Restricted Stock (Details) - Restricted Stock | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance | shares | 1,569,795 |
Granted | shares | 261,253 |
Vested | shares | (1,035,360) |
Canceled | shares | (3,085) |
Ending Balance | shares | 792,603 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance | $ / shares | $ 53.80 |
Granted | $ / shares | 74.40 |
Vested | $ / shares | 48.55 |
Canceled | $ / shares | 81.67 |
Ending Balance | $ / shares | $ 67.34 |
Compensation Plans - Changes _2
Compensation Plans - Changes in Unvested Restricted Stock Units (Details) - Restricted stock units | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance | shares | 194,251 |
Granted | shares | 39,758 |
Vested | shares | 0 |
Canceled | shares | (15,987) |
Ending Balance | shares | 218,022 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance | $ / shares | $ 48.97 |
Granted | $ / shares | 75.78 |
Vested | $ / shares | 0 |
Canceled | $ / shares | 45.79 |
Ending Balance | $ / shares | $ 54.09 |
Compensation Plans - Changes _3
Compensation Plans - Changes in Outstanding Stock Options (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Options Outstanding | |||
Beginning Balance | 81,667 | ||
Granted | 0 | ||
Exercised | 0 | ||
Cancelled | 0 | ||
Ending Balance | 81,667 | ||
Weighted Average Exercise Price (in dollars per share) | |||
Beginning Balance | $ 99 | ||
Granted | 0 | ||
Exercised | 0 | ||
Cancelled | 0 | ||
Ending Balance | $ 99 | ||
Weighted Average Remaining Contractual Term (in Years) | |||
Weighted Average Remaining Contractual Term (in Years) | 8 years 11 months | 9 years 1 month 13 days | |
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value | $ 0 | $ 0 |
Compensation Plans - Additional
Compensation Plans - Additional Information (Details) | May 16, 2016USD ($)shares | Mar. 31, 2019USD ($)planshares | Mar. 31, 2018USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of stock-based compensation plans | plan | 3 | ||
Compensation expense related to employee restricted stock awards | $ | $ 4,300,000 | $ 8,900,000 | |
Forfeitures recorded as a result of violating the post-termination restrictions | $ | 900,000 | 0 | |
Tax benefit related to compensation costs for stock-based compensation arrangements | $ | $ 300,000 | $ 1,200,000 | |
Exercises during the period | 0 | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares granted | 261,253 | ||
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 | 3 years | ||
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 | 39,758 | ||
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 | $ | $ 4,700,000 | ||
Weighted average period over which restricted stock expense expected to be recognized | 2 years 1 month 15 days | ||
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 | $ | $ 1,600,000 | ||
Weighted average period over which restricted stock expense expected to be recognized | 3 years 10 months 15 days | ||
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 | 8,200,000 | ||
Shares available for future issuance | 700,000 | ||
Leadership Grants Subsequent to 2016 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting percentage | 150.00% | ||
Average adjusted return on equity targets | Leadership Grants Subsequent to 2016 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting percentage | 75.00% | ||
Average adjusted return on equity targets | 2016 Leadership Grant | 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 | Leadership Grants Subsequent to 2016 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting percentage | 75.00% | ||
Total shareholder return | 2016 Leadership Grant | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting percentage | 50.00% | ||
Simmons & Company International | 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 | 286,776 | ||
Weeden & Co. | 2019 Employment Inducement Award Plan | Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares granted | 0 |
Compensation Plans - Acquisitio
Compensation Plans - Acquisition-related Compensation Arrangements (Details) - Performance award plan - Simmons - Cash - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2016 | |
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 | $ 39.1 | ||
Compensation expense related to this performance award plan | $ 0.6 | $ 4.3 |
Compensation Plans - Deferred C
Compensation Plans - Deferred Compensation Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Mutual Fund Restricted Shares | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Award Vesting Period | 3 years | |
Nonqualified Deferred Compensation Plan | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Plan Assets | $ 30.6 | $ 31.2 |
Plan Liabilities | $ 31 | $ 31.4 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Net income applicable to Piper Jaffray Companies | $ 19,422 | $ 10,603 |
Earnings allocated to participating securities | (1,587) | (4,168) |
Net income applicable to Piper Jaffray Companies' common shareholders | $ 17,835 | $ 6,435 |
Shares for basic and diluted calculations | ||
Average shares used in basic computation | 13,204,000 | 13,096,000 |
Average shares used in diluted computation | 13,530,000 | 13,382,000 |
Earnings per common share | ||
Basic | $ 1.35 | $ 0.47 |
Diluted | $ 1.32 | $ 0.47 |
Weighted average participating shares outstanding | 1,130,844 | 2,089,155 |
Common shares excluded from diluted EPS | 533,207 | 1,926,530 |
Restricted stock units | ||
Shares for basic and diluted calculations | ||
Dilutive impact of securities | (205,000) | (286,000) |
Non-participating restricted shares | ||
Shares for basic and diluted calculations | ||
Dilutive impact of securities | (121,000) | 0 |
Segment Reporting - Reportable
Segment Reporting - Reportable Segment Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Investment banking | $ 141,061 | $ 120,841 |
Institutional sales and trading | 34,954 | 27,645 |
Total management and performance fees | 10,418 | 12,589 |
Investment income/(loss) | 475 | 2,912 |
Net revenues | 191,832 | 169,062 |
Operating expenses | 168,902 | 161,024 |
Segment pre-tax operating income/(loss) | $ 22,930 | $ 8,038 |
Segment pre-tax operating margin | 12.00% | 4.80% |
Intangible asset amortization | $ 2,112 | $ 2,615 |
Capital Markets | ||
Segment Reporting Information [Line Items] | ||
Investment banking | 141,488 | 120,657 |
Institutional sales and trading | 39,383 | 34,340 |
Total management and performance fees | 1,129 | 1,388 |
Investment income/(loss) | 629 | 3,298 |
Long-term financing expenses | (238) | (1,787) |
Net revenues | 182,391 | 157,896 |
Operating expenses | 158,453 | 148,860 |
Segment pre-tax operating income/(loss) | $ 23,938 | $ 9,036 |
Segment pre-tax operating margin | 13.10% | 5.70% |
Intangible asset amortization | $ 753 | $ 1,214 |
Capital Markets | Advisory services | ||
Segment Reporting Information [Line Items] | ||
Investment banking | 114,879 | 75,329 |
Capital Markets | Equities financing | ||
Segment Reporting Information [Line Items] | ||
Investment banking | 13,527 | 37,642 |
Capital Markets | Debt financing | ||
Segment Reporting Information [Line Items] | ||
Investment banking | 13,082 | 7,686 |
Capital Markets | Equities | ||
Segment Reporting Information [Line Items] | ||
Institutional sales and trading | 15,714 | 18,006 |
Capital Markets | Fixed income | ||
Segment Reporting Information [Line Items] | ||
Institutional sales and trading | 23,669 | 16,334 |
Asset Management | ||
Segment Reporting Information [Line Items] | ||
Total management and performance fees | 9,289 | 11,201 |
Investment income/(loss) | 152 | (35) |
Net revenues | 9,441 | 11,166 |
Operating expenses | 10,449 | 12,164 |
Segment pre-tax operating income/(loss) | $ (1,008) | $ (998) |
Segment pre-tax operating margin | (10.70%) | (8.90%) |
Intangible asset amortization | $ 1,359 | $ 1,401 |
Asset Management | Management fees | ||
Segment Reporting Information [Line Items] | ||
Total management and performance fees | 9,288 | 11,193 |
Asset Management | Performance fees | ||
Segment Reporting Information [Line Items] | ||
Total management and performance fees | $ 1 | $ 8 |
Segment Reporting - Reportabl_2
Segment Reporting - Reportable Segment Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | $ 1,169,653 | $ 1,345,269 |
Capital Markets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | 1,105,143 | 1,273,147 |
Asset Management | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Reportable segment assets | $ 64,510 | $ 72,122 |
Net Capital Requirements and _2
Net Capital Requirements and Other Regulatory Matters - Additional Information (Details) | Mar. 31, 2019USD ($) |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Minimum net capital requirement | $ 1,000,000 |
Net capital | 214,600,000 |
Excess net capital | 213,600,000 |
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 | |
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 | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense/(benefit) | $ 4,124 | $ (2,581) |
Tax benefit for stock-based compensation awards vesting during the period | $ 1,700 | $ 5,000 |