Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-31720 | |
Entity Registrant Name | PIPER SANDLER COMPANIES | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 30-0168701 | |
Entity Address, Address Line One | 800 Nicollet Mall, Suite 900 | |
Entity Address, City or Town | Minneapolis | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55402 | |
City Area Code | (612) | |
Local Phone Number | 303-6000 | |
Title of Each Class | Common Stock, par value $0.01 per share | |
Trading Symbol | PIPR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,929,341 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001230245 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 235,887 | $ 250,018 |
Receivables from brokers, dealers and clearing organizations | 193,303 | 283,108 |
Financial instruments and other inventory positions owned | 269,428 | 434,088 |
Financial instruments and other inventory positions owned and pledged as collateral | 174,866 | 205,674 |
Total financial instruments and other inventory positions owned | 444,294 | 639,762 |
Fixed assets (net of accumulated depreciation and amortization of $71,062 and $65,991, respectively) | 38,134 | 29,850 |
Goodwill | 215,309 | 87,649 |
Intangible assets (net of accumulated amortization of $62,379 and $40,864, respectively) | 167,771 | 16,686 |
Investments | 144,076 | 158,141 |
Net deferred income tax assets | 79,735 | 68,035 |
Right-of-use lease asset | 91,929 | 40,030 |
Other assets | 100,470 | 55,440 |
Total assets | 1,710,908 | 1,628,719 |
Liabilities and Shareholders' Equity | ||
Short-term financing | 99,990 | 49,978 |
Long-term financing | 195,000 | 175,000 |
Payables to brokers, dealers and clearing organizations | 34,905 | 7,514 |
Financial instruments and other inventory positions sold, but not yet purchased | 141,424 | 185,425 |
Accrued compensation | 248,409 | 300,527 |
Accrued lease liability | 107,988 | 57,169 |
Other liabilities and accrued expenses | 69,480 | 46,578 |
Total liabilities | 897,196 | 822,191 |
Shareholders’ equity: | ||
Common stock, $0.01 par value: Shares authorized: 100,000,000 at June 30, 2020 and December 31, 2019; Shares issued: 19,532,136 at June 30, 2020 and 19,526,533 at December 31, 2019; Shares outstanding: 13,803,925 at June 30, 2020 and 13,717,315 at December 31, 2019 | 195 | 195 |
Additional paid-in capital | 807,541 | 757,669 |
Retained earnings | 226,577 | 258,669 |
Less common stock held in treasury, at cost: 5,728,211 shares at June 30, 2020 and 5,809,218 shares at December 31, 2019 | (286,745) | (284,378) |
Accumulated other comprehensive loss | (1,612) | (872) |
Total common shareholders' equity | 745,956 | 731,283 |
Noncontrolling interests | 67,756 | 75,245 |
Total shareholders' equity | 813,712 | 806,528 |
Total liabilities and shareholders' equity | $ 1,710,908 | $ 1,628,719 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation and amortization on fixed assets | $ 71,062 | $ 65,991 |
Accumulated amortization on intangible assets | $ 62,379 | $ 40,864 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 19,532,136 | 19,526,533 |
Common stock, shares outstanding (in shares) | 13,803,925 | 13,717,315 |
Common stock held in treasury, shares (in shares) | 5,728,211 | 5,809,218 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Investment banking | $ 199,827 | $ 118,739 | $ 358,825 | $ 259,800 |
Institutional brokerage | 89,339 | 32,204 | 178,482 | 67,169 |
Interest income | 3,065 | 6,863 | 9,130 | 14,430 |
Investment income/(loss) | 3,733 | 17,605 | (10,093) | 19,197 |
Total revenues | 295,964 | 175,411 | 536,344 | 360,596 |
Interest expense | 3,526 | 2,993 | 7,738 | 5,636 |
Net revenues | 292,438 | 172,418 | 528,606 | 354,960 |
Non-interest expenses: | ||||
Compensation and benefits | 213,560 | 102,476 | 401,684 | 219,603 |
Outside services | 9,899 | 8,451 | 18,338 | 17,022 |
Occupancy and equipment | 13,269 | 8,425 | 25,507 | 16,774 |
Communications | 11,096 | 6,849 | 22,730 | 14,714 |
Marketing and business development | 2,588 | 8,089 | 12,627 | 14,827 |
Deal-related expenses | 11,204 | 6,725 | 16,144 | 11,453 |
Trade execution and clearance | 4,312 | 1,017 | 11,463 | 2,823 |
Restructuring and integration costs | 3,724 | 6,395 | 5,626 | 6,395 |
Intangible asset amortization | 11,637 | 753 | 21,515 | 1,506 |
Other operating expenses | 3,752 | 2,313 | 19,604 | 5,781 |
Total non-interest expenses | 285,041 | 151,493 | 555,238 | 310,898 |
Income/(loss) from continuing operations before income tax expense/(benefit) | 7,397 | 20,925 | (26,632) | 44,062 |
Income tax expense/(benefit) | 4,700 | (180) | (7,074) | 4,012 |
Income/(loss) from continuing operations | 2,697 | 21,105 | (19,558) | 40,050 |
Loss from discontinued operations, net of tax | 0 | (2,166) | 0 | (2,305) |
Net income/(loss) | 2,697 | 18,939 | (19,558) | 37,745 |
Net income/(loss) applicable to noncontrolling interests | 1,243 | 8,550 | (6,285) | 7,934 |
Net income/(loss) applicable to Piper Sandler Companies | 1,454 | 10,389 | (13,273) | 29,811 |
Net income/(loss) applicable to Piper Sandler Companies' common shareholders | 1,454 | 10,151 | (13,273) | 27,887 |
Amounts applicable to Piper Sandler Companies | ||||
Net income/(loss) from continuing operations | 1,454 | 12,555 | (13,273) | 32,116 |
Net loss from discontinued operations | 0 | (2,166) | 0 | (2,305) |
Net income/(loss) applicable to Piper Sandler Companies | $ 1,454 | $ 10,389 | $ (13,273) | $ 29,811 |
Earnings/(loss) per basic common share | ||||
Income/(loss) from continuing operations (in dollars per share) | $ 0.11 | $ 0.90 | $ (0.96) | $ 2.24 |
Loss from discontinued operations (in dollars per share) | 0 | (0.15) | 0 | (0.16) |
Earnings/(loss) per basic common share (in dollars per share) | 0.11 | 0.75 | (0.96) | 2.08 |
Earnings/(loss) per diluted common share | ||||
Income/(loss) from continuing operations (in dollars per share) | 0.10 | 0.87 | (0.96) | 2.18 |
Loss from discontinued operations (in dollars per share) | 0 | (0.15) | 0 | (0.16) |
Earnings/(loss) per diluted common share (in dollars per share) | 0.10 | 0.72 | (0.96) | 2.02 |
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.38 | $ 1.33 | $ 1.76 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 13,794 | 13,588 | 13,795 | 13,397 |
Diluted (in shares) | 14,476 | 14,024 | 14,444 | 13,778 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income/(loss) | $ 2,697 | $ 18,939 | $ (19,558) | $ 37,745 |
Other comprehensive income/(loss), net of tax: | ||||
Foreign currency translation adjustment | (68) | (101) | (740) | 114 |
Comprehensive income/(loss) | 2,629 | 18,838 | (20,298) | 37,859 |
Comprehensive income/(loss) applicable to noncontrolling interests | 1,243 | 8,550 | (6,285) | 7,934 |
Comprehensive income/(loss) applicable to Piper Sandler Companies | $ 1,386 | $ 10,288 | $ (14,013) | $ 29,925 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Common Shareholders' Equity | Noncontrolling Interests | |
Beginning Balance (in shares) at Dec. 31, 2018 | 12,995,397 | ||||||||
Beginning Balance at Dec. 31, 2018 | $ 730,416 | $ 195 | $ 796,363 | $ 182,552 | $ (300,268) | $ (1,398) | $ 677,444 | $ 52,972 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | 18,806 | 19,422 | 19,422 | (616) | |||||
Dividends | (19,947) | (19,947) | (19,947) | ||||||
Amortization/issuance of restricted stock | 23,826 | 23,826 | 23,826 | ||||||
Repurchase of common stock through share repurchase program (in shares) | (501) | ||||||||
Repurchase of common stock through share repurchase program | (32) | (32) | (32) | ||||||
Issuance of treasury shares for restricted stock vestings (in shares) | 1,035,360 | ||||||||
Issuance of treasury shares for restricted stock vestings | 0 | (48,092) | 48,092 | 0 | |||||
Repurchase of common stock from employees (in shares) | (563,284) | ||||||||
Repurchase of common stock from employees | (39,695) | (39,695) | (39,695) | ||||||
Shares reserved/issued for director compensation (in shares) | 1,263 | ||||||||
Shares reserved/issued for director compensation | 87 | 87 | 87 | ||||||
Other comprehensive income/(loss) | 215 | 215 | 215 | ||||||
Fund capital contributions/(distributions), net | (5) | 0 | (5) | ||||||
Ending Balance (in shares) at Mar. 31, 2019 | 13,468,235 | ||||||||
Ending Balance at Mar. 31, 2019 | 713,671 | $ 195 | 772,184 | 182,027 | (291,903) | (1,183) | 661,320 | 52,351 | |
Beginning Balance (in shares) at Dec. 31, 2018 | 12,995,397 | ||||||||
Beginning Balance at Dec. 31, 2018 | 730,416 | $ 195 | 796,363 | 182,552 | (300,268) | (1,398) | 677,444 | 52,972 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | $ 37,745 | ||||||||
Repurchase of common stock from employees (in shares) | (696,411) | ||||||||
Ending Balance (in shares) at Jun. 30, 2019 | 13,705,315 | ||||||||
Ending Balance at Jun. 30, 2019 | $ 725,785 | $ 195 | 756,263 | 187,182 | (284,699) | (1,284) | 657,657 | 68,128 | |
Beginning Balance (in shares) at Mar. 31, 2019 | 13,468,235 | ||||||||
Beginning Balance at Mar. 31, 2019 | 713,671 | $ 195 | 772,184 | 182,027 | (291,903) | (1,183) | 661,320 | 52,351 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | 18,939 | 10,389 | 10,389 | 8,550 | |||||
Dividends | (5,234) | (5,234) | (5,234) | ||||||
Amortization/issuance of restricted stock | 1,448 | 1,448 | 1,448 | ||||||
Issuance of treasury shares for restricted stock vestings (in shares) | 365,908 | ||||||||
Issuance of treasury shares for restricted stock vestings | 0 | (17,703) | 17,703 | 0 | |||||
Repurchase of common stock from employees (in shares) | (133,127) | ||||||||
Repurchase of common stock from employees | (10,499) | (10,499) | (10,499) | ||||||
Shares reserved/issued for director compensation (in shares) | 4,299 | ||||||||
Shares reserved/issued for director compensation | 334 | 334 | 334 | ||||||
Other comprehensive income/(loss) | (101) | (101) | (101) | ||||||
Fund capital contributions/(distributions), net | 7,227 | 0 | 7,227 | ||||||
Ending Balance (in shares) at Jun. 30, 2019 | 13,705,315 | ||||||||
Ending Balance at Jun. 30, 2019 | 725,785 | $ 195 | 756,263 | 187,182 | (284,699) | (1,284) | 657,657 | 68,128 | |
Beginning Balance (in shares) at Dec. 31, 2019 | 13,717,315 | ||||||||
Beginning Balance at Dec. 31, 2019 | 806,528 | $ 195 | 757,669 | 258,669 | (284,378) | (872) | 731,283 | 75,245 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | (22,255) | (14,727) | (14,727) | (7,528) | |||||
Dividends | (16,066) | (16,066) | (16,066) | ||||||
Amortization/issuance of restricted stock | [1] | 44,195 | 44,195 | 44,195 | |||||
Repurchase of common stock through share repurchase program (in shares) | (128,865) | ||||||||
Repurchase of common stock through share repurchase program | (9,225) | (9,225) | (9,225) | ||||||
Issuance of treasury shares for restricted stock vestings (in shares) | 254,111 | ||||||||
Issuance of treasury shares for restricted stock vestings | 0 | (12,551) | 12,551 | 0 | |||||
Issuance of treasury shares for deal consideration (in shares) | 34,205 | ||||||||
Issuance of treasury shares for deal consideration | 2,723 | 1,049 | 1,674 | 2,723 | |||||
Repurchase of common stock from employees (in shares) | (94,615) | ||||||||
Repurchase of common stock from employees | (8,068) | (8,068) | (8,068) | ||||||
Shares reserved/issued for director compensation (in shares) | 1,779 | ||||||||
Shares reserved/issued for director compensation | 116 | 116 | 116 | ||||||
Other comprehensive income/(loss) | (672) | (672) | (672) | ||||||
Fund capital contributions/(distributions), net | (1,201) | 0 | (1,201) | ||||||
Ending Balance (in shares) at Mar. 31, 2020 | 13,783,930 | ||||||||
Ending Balance at Mar. 31, 2020 | 796,075 | $ 195 | 790,478 | 227,876 | (287,446) | (1,544) | 729,559 | 66,516 | |
Beginning Balance (in shares) at Dec. 31, 2019 | 13,717,315 | ||||||||
Beginning Balance at Dec. 31, 2019 | 806,528 | $ 195 | 757,669 | 258,669 | (284,378) | (872) | 731,283 | 75,245 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | $ (19,558) | ||||||||
Issuance of treasury shares for deal consideration (in shares) | 34,205 | ||||||||
Repurchase of common stock from employees (in shares) | (98,136) | ||||||||
Ending Balance (in shares) at Jun. 30, 2020 | 13,803,925 | ||||||||
Ending Balance at Jun. 30, 2020 | $ 813,712 | $ 195 | 807,541 | 226,577 | (286,745) | (1,612) | 745,956 | 67,756 | |
Beginning Balance (in shares) at Mar. 31, 2020 | 13,783,930 | ||||||||
Beginning Balance at Mar. 31, 2020 | 796,075 | $ 195 | 790,478 | 227,876 | (287,446) | (1,544) | 729,559 | 66,516 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income/(loss) | 2,697 | 1,454 | 1,454 | 1,243 | |||||
Dividends | (2,753) | (2,753) | (2,753) | ||||||
Amortization/issuance of restricted stock | [1] | 17,654 | 17,654 | 17,654 | |||||
Issuance of treasury shares for restricted stock vestings (in shares) | 17,778 | ||||||||
Issuance of treasury shares for restricted stock vestings | 0 | (890) | 890 | 0 | |||||
Repurchase of common stock from employees (in shares) | (3,521) | ||||||||
Repurchase of common stock from employees | (189) | (189) | (189) | ||||||
Shares reserved/issued for director compensation (in shares) | 5,738 | ||||||||
Shares reserved/issued for director compensation | 299 | 299 | 299 | ||||||
Other comprehensive income/(loss) | (68) | (68) | (68) | ||||||
Fund capital contributions/(distributions), net | (3) | 0 | (3) | ||||||
Ending Balance (in shares) at Jun. 30, 2020 | 13,803,925 | ||||||||
Ending Balance at Jun. 30, 2020 | $ 813,712 | $ 195 | $ 807,541 | $ 226,577 | $ (286,745) | $ (1,612) | $ 745,956 | $ 67,756 | |
[1] | Includes amortization of restricted stock issued as part of deal consideration. See Note 3 for further discussion. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Activities: | ||
Net income/(loss) | $ (19,558) | $ 37,745 |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||
Depreciation and amortization of fixed assets | 5,324 | 4,686 |
Deferred income taxes | (11,700) | 15,055 |
Stock-based compensation | 50,351 | 10,912 |
Amortization of intangible assets | 21,515 | 6,971 |
Amortization of forgivable loans | 1,821 | 1,607 |
Decrease/(increase) in operating assets: | ||
Receivables from brokers, dealers and clearing organizations | 282,480 | 136,679 |
Net financial instruments and other inventory positions owned | 151,467 | 11,294 |
Investments | 14,750 | (23,586) |
Other assets | (42,412) | (24,695) |
Increase/(decrease) in operating liabilities: | ||
Payables to brokers, dealers and clearing organizations | 27,391 | (7,063) |
Accrued compensation | (111,350) | (120,728) |
Other liabilities and accrued expenses | 4,233 | 1,763 |
Increase in assets held for sale | 0 | (674) |
Decrease in liabilities held for sale | 0 | (5,732) |
Net cash provided by operating activities | 374,312 | 44,234 |
Investing Activities: | ||
Business acquisitions, net of cash acquired | (393,522) | 0 |
Purchases of fixed assets, net | (6,619) | (3,126) |
Net cash used in investing activities | (400,141) | (3,126) |
Financing Activities: | ||
Increase in short-term financing | 50,012 | 9 |
Payment of cash dividend | (18,819) | (25,181) |
Increase/(decrease) in noncontrolling interests | (1,204) | 7,222 |
Repurchase of common stock | (17,482) | (50,226) |
Net cash provided by/(used in) financing activities | 12,507 | (68,176) |
Currency adjustment: | ||
Effect of exchange rate changes on cash | (809) | 140 |
Net decrease in cash and cash equivalents | (14,131) | (26,928) |
Cash and cash equivalents at beginning of period | 250,018 | 50,364 |
Cash and cash equivalents at end of period | 235,887 | 23,436 |
Supplemental disclosure of cash flow information: | ||
Interest | 7,511 | 5,727 |
Income taxes | $ 554 | $ 7,969 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Organization Piper Sandler Companies is the parent company of Piper Sandler & Co. ("Piper Sandler"), a securities broker dealer and investment banking firm; Piper Sandler Ltd., a firm providing securities brokerage and mergers and acquisitions services in Europe; Piper Sandler Finance LLC, which facilitates corporate debt underwriting in conjunction with affiliated credit vehicles; Piper Sandler Investment Group Inc. and PSC Capital Management LLC, which consist of entities providing alternative asset management services; Piper Sandler Financial Products Inc. and Piper Sandler Financial Products II Inc., entities that facilitate derivative transactions; and other immaterial subsidiaries. Piper Sandler Companies and its subsidiaries (collectively, the "Company") operate in one reporting segment providing investment banking services and institutional sales, trading and research services. Investment banking services include financial advisory services, management of and participation in underwritings and municipal financing 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 and merchant banking activities involving equity investments in late stage private companies. The Company has created alternative asset management funds in merchant banking and energy in order to invest firm capital and to manage capital from outside investors. The Company receives management and performance fees for managing these funds. 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 the 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, 2019. The consolidated financial statements include the accounts of Piper Sandler 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 Sandler 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 | 6 Months Ended |
Jun. 30, 2020 | |
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, 2019 for a full description of the Company's significant accounting policies. Adoption of New Accounting Standards Financial Instruments – Credit Losses In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 became effective for the Company as of January 1, 2020. There was no material impact to the Company's consolidated financial statements upon adoption of ASU 2016-13. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Acquisitions The following acquisitions were accounted for pursuant to FASB Accounting Standards Codification Topic 805, "Business Combinations." Accordingly, the purchase price of each acquisition was allocated to the acquired assets and liabilities assumed based on their estimated fair values as of the respective acquisition dates. The excess of the purchase price over the net assets acquired was allocated between goodwill and intangible assets. The Valence Group ("Valence") On April 3, 2020, the Company completed the acquisition of Valence, an investment bank offering mergers and acquisitions advisory services to companies and financial sponsors with a focus on the chemicals, materials and related sectors. The transaction was completed pursuant to the share purchase agreement dated February 20, 2020, as amended. The acquisition adds a new industry sector and expands the Company's presence in Europe. The net assets acquired by the Company are described below. As part of the purchase price, the Company entered into unsecured promissory notes with the former owners totaling $20.0 million (the "Valence Notes"), as discussed in Note 13. The Company also granted 647,268 restricted shares valued at $31.2 million as equity consideration on the acquisition date. The fair value of the restricted stock was determined using the market price of the Company's common stock on the date of acquisition. In addition, the Company entered into acquisition-related compensation arrangements with certain employees of $5.5 million in restricted stock for retention purposes. Both the equity consideration and retention-related restricted shares are subject to graded vesting, beginning on the third anniversary of the acquisition date, so long as the applicable employee remains continuously employed by the Company for such period. Compensation expense will be amortized on a straight-line basis over the requisite service period of five years. Additional cash may be earned by certain employees if a revenue threshold is exceeded during the three-year post-acquisition period to the extent they are employed by the Company at the time of payment. Amounts estimated to be payable, if any, will be recorded as compensation expense on the consolidated statements of operations over the requisite performance period. If earned, the amount will be paid by July 3, 2023. The Company recorded $33.3 million of goodwill on the consolidated statements of financial condition, none of which is expected to be deductible for income tax purposes. The final goodwill recorded on the Company's consolidated statements of financial condition may differ from that reflected herein as a result of measurement period adjustments. In management's opinion, the goodwill represents the reputation and operating expertise of Valence. Identifiable intangible assets purchased by the Company consisted of customer relationships with an acquisition-date fair value of $14.8 million. Transaction costs of $0.7 million and $2.0 million were incurred for the three and six months ended June 30, 2020, respectively, and are included in restructuring and integration costs on the consolidated statements of operations. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition: (Amounts in thousands) Assets Cash and cash equivalents $ 8,181 Fixed assets 256 Goodwill 33,300 Intangible assets 14,800 Right-of-use lease asset 3,279 Other assets 4,190 Total assets acquired 64,006 Liabilities Accrued lease liability 3,279 Other liabilities and accrued expenses 10,393 Total liabilities assumed 13,672 Net assets acquired $ 50,334 SOP Holdings, LLC On January 3, 2020, the Company completed the acquisition of SOP Holdings, LLC and its subsidiaries, including Sandler O'Neill & Partners, L.P. (collectively, "Sandler O'Neill"), a full-service investment banking firm and broker dealer focused on the financial services industry. The transaction was completed pursuant to the Agreement and Plans of Merger dated July 9, 2019. The purchase price was $485.0 million, for which the Company was entitled to receive $100.0 million of tangible book value, subject to a final adjustment as of the closing date. The acquisition of Sandler O'Neill is accretive to the Company's advisory services revenues, diversifies and enhances scale in corporate financings, adds a differentiated fixed income business, and increases scale in the equity brokerage business. The net assets acquired by the Company are described below. As part of the purchase price, the Company granted 1,568,670 restricted shares valued at $124.9 million as equity consideration on the acquisition date. These restricted shares are generally subject to ratable vesting over three years and employees must fulfill service requirements in exchange for the rights to the restricted shares. Compensation expense will be amortized on a straight-line basis over the requisite service period of three years. The fair value of the restricted stock was determined using the market price of the Company's common stock on the date of acquisition. The Company also entered into acquisition-related compensation arrangements with certain employees of $113.9 million which consisted of restricted stock ($96.9 million) and restricted cash ($17.0 million) for retention purposes. The retention-related awards are also subject to vesting restrictions and employees must remain continuously employed by the Company for the respective vesting period. Compensation expense related to these arrangements will be amortized on a straight-line basis over the requisite service period of 18 months, three years or five years (a weighted average service period of 3.7 years). The Company recorded $94.4 million of goodwill on the consolidated statements of financial condition, of which $93.4 million is expected to be deductible for income tax purposes. The final goodwill recorded on the Company's consolidated statements of financial condition may differ from that reflected herein as a result of measurement period adjustments. In management's opinion, the goodwill represents the reputation and operating expertise of Sandler O'Neill. Identifiable intangible assets purchased by the Company consisted of customer relationships and the Sandler trade name with acquisition-date fair values of $72.4 million and $85.4 million, respectively. Transaction costs of $0.2 million and $1.1 million were incurred for the three and six months ended June 30, 2020, respectively, and are included in restructuring and integration costs on the consolidated statements of operations. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition, including measurement period adjustments: (Amounts in thousands) Assets Cash and cash equivalents $ 27,420 Receivables from brokers, dealers and clearing organizations 192,675 Fixed assets 6,789 Goodwill 94,360 Intangible assets 157,800 Investments 685 Right-of-use lease asset 39,607 Other assets 9,628 Total assets acquired 528,964 Liabilities Accrued compensation 71,398 Accrued lease liability 39,613 Other liabilities and accrued expenses 16,441 Due to Sandler O'Neill (1) 40,673 Total liabilities assumed 168,125 Net assets acquired $ 360,839 (1) Represents the amount of excess tangible book value received by the Company on the date of acquisition. Weeden & Co. L.P. ("Weeden & Co.") On August 2, 2019, the Company completed the acquisition of Weeden & Co., a broker dealer specializing in equity security sales and trading. The economic value of the acquisition was approximately $42.0 million and was completed pursuant to a securities purchase agreement dated February 24, 2019, as amended. The transaction added enhanced trade execution capabilities and scale to the Company's equities institutional sales and trading business. The net assets acquired by the Company are described below. As part of the purchase price, the Company granted $10.1 million in restricted cash as consideration on the acquisition date. The Company also entered into acquisition-related compensation arrangements with certain employees of $7.3 million in restricted stock for retention purposes. Both the restricted cash and restricted stock are subject to graded vesting, beginning on the third anniversary of the acquisition date, so long as the applicable employee remains continuously employed by the Company for such period. Compensation expense will be amortized on a straight-line basis over the requisite service period of four years. Additional cash of up to $31.5 million may be earned if a net revenue target is achieved during the period from January 1, 2020 to June 30, 2021 ("Weeden Earnout"). Weeden & Co.'s equity owners, a portion of whom are now employees of the Company, are eligible to receive the additional payment. Employees must fulfill service requirements in exchange for the rights to the additional payment. Amounts estimated to be payable to employees will be recorded as compensation expense on the consolidated statements of operations over the requisite performance period. The Company recorded a liability as of the acquisition date for the fair value related to non-employee equity owners, and is required to adjust this liability through the statement of operations for any changes after the acquisition date. If earned, the Weeden Earnout will be paid by September 30, 2021. As of June 30, 2020, the Company expects the maximum Weeden Earnout will be earned and has accrued a total of $20.7 million related to this additional cash payment. The Company recorded $2.2 million and $19.8 million in non-interest expenses related to the Weeden Earnout for the three and six months ended June 30, 2020, respectively. The Company recorded $5.8 million of goodwill on the consolidated statements of financial condition, all of which is expected to be deductible for income tax purposes. The final goodwill recorded on the Company's consolidated statements of financial condition may differ from that reflected herein as a result of measurement period adjustments. In management's opinion, the goodwill represents the reputation and operating expertise of Weeden & Co. Identifiable intangible assets purchased by the Company consisted of customer relationships and internally developed software with acquisition-date fair values of $12.0 million and $4.7 million, respectively. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition, including measurement period adjustments: (Amounts in thousands) Assets Cash and cash equivalents $ 4,351 Receivables from brokers, dealers and clearing organizations 1,623 Fixed assets 289 Goodwill 5,794 Intangible assets 16,700 Right-of-use lease asset 6,811 Other assets 10,888 Total assets acquired 46,456 Liabilities Accrued compensation 2,156 Accrued lease liability 6,811 Other liabilities and accrued expenses 13,464 Total liabilities assumed 22,431 Net assets acquired $ 24,025 Pro Forma Financial Information The results of operations of Valence, Sandler O'Neill and Weeden & Co. have been included in the Company's consolidated financial statements prospectively beginning on the respective acquisition dates. The acquisitions have been fully integrated with the Company's existing operations. Accordingly, post-acquisition revenues and net income are not discernible. The following unaudited pro forma financial data is presented on a combined basis and includes Valence, Sandler O’Neill and Weeden & Co. Based on the respective acquisition dates, the unaudited pro forma financial data assumes that both the Valence and Sandler O’Neill acquisitions had occurred on January 1, 2019, the beginning of the comparable prior period presented, and that the Weeden & Co. acquisition had occurred on January 1, 2018, the beginning of the prior annual period in which the acquisition occurred. Pro forma results have been prepared by adjusting the Company's historical results to include the results of operations of Valence, Sandler O'Neill and Weeden & Co. adjusted for the following significant changes: interest expense was adjusted to reflect the debt incurred by the Company to fund portions of the Sandler O’Neill and Valence purchase price; amortization expense was adjusted to account for the acquisition-date fair value of intangible assets; compensation and benefits expenses were adjusted to reflect the restricted cash or restricted stock issued as part of the respective purchase price, the restricted stock issued for retention purposes, and the cost that would have been incurred had Sandler O’Neill partners and Valence employees been included in the Company’s employee compensation arrangements; and the income tax effect of applying the Company's statutory tax rates to the results of operations of Valence, Sandler O'Neill and Weeden & Co. The Company's consolidated unaudited pro forma information presented does not necessarily reflect the results of operations that would have resulted had the acquisitions been completed at the beginning of the applicable periods presented, does not contemplate client account overlap and anticipated operational efficiencies of the combined entities, nor does it indicate the results of operations in future periods. Six Months Ended Three Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2019 Net revenues $ 542,934 $ 579,414 $ 287,888 Net income/(loss) from continuing operations applicable to Piper Sandler Companies (14,966) 11,028 3,734 |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations In the third quarter of 2019, the Company completed the sale of its traditional asset management business, which was conducted through its wholly-owned subsidiary Advisory Research, Inc. ("ARI"). On September 20, 2019, the Company completed the sale of the master limited partnerships ("MLP") and energy infrastructure strategies business to Tortoise Capital Advisors. Additionally, on September 27, 2019, the Company completed the sale of its remaining equity strategies business to its former management team. The transactions generated cash proceeds of $52.9 million and include the potential for the Company to receive additional cash consideration payments based on prospective revenues. The Company is eligible to receive an additional payment contingent upon contractually defined MLP revenue exceeding a revenue threshold in the one-year period following the close of the transaction. The Company will record a gain upon receipt of the earnout payment, if any. In addition, the Company was eligible to receive additional payments based on the revenues of the equity strategies business during each of the four annual periods from January 1, 2020 to December 31, 2023. The Company estimated the fair value of this earnout to be $2.2 million upon the close of the transaction. The Company received a final buyout payment of $1.0 million related to this earnout in the second quarter of 2020. ARI's results have been presented as discontinued operations for all prior periods presented. The components of discontinued operations were as follows: Three Months Ended Six Months Ended (Amounts in thousands) June 30, 2019 June 30, 2019 Net revenues $ 9,317 $ 18,607 Operating expenses 7,382 15,521 Intangible asset amortization (1) 4,106 5,465 Restructuring costs 696 696 Total non-interest expenses 12,184 21,682 Loss from discontinued operations before income tax benefit (2,867) (3,075) Income tax benefit (701) (770) Loss from discontinued operations, net of tax $ (2,166) $ (2,305) (1) Includes $2.9 million of intangible asset impairment related to the ARI trade name for the three and six months ended June 30, 2019. |
Financial Instruments and Other
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, December 31, (Amounts in thousands) 2020 2019 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 4,593 $ 3,046 Convertible securities 144,732 146,406 Fixed income securities 14,706 28,176 Municipal securities: Taxable securities 12,807 22,570 Tax-exempt securities 120,496 222,192 Short-term securities 70,793 67,901 Mortgage-backed securities 13 13 U.S. government agency securities 48,833 51,773 U.S. government securities — 77,303 Derivative contracts 27,321 20,382 Total financial instruments and other inventory positions owned $ 444,294 $ 639,762 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 45,854 $ 94,036 Fixed income securities 15,829 10,311 U.S. government agency securities 4,025 9,935 U.S. government securities 68,586 67,090 Derivative contracts 7,130 4,053 Total financial instruments and other inventory positions sold, but not yet purchased $ 141,424 $ 185,425 At June 30, 2020 and December 31, 2019, financial instruments and other inventory positions owned in the amount of $174.9 million and $205.7 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 and options. Derivative Contract Financial Instruments The Company uses interest rate swaps, interest rate locks, U.S. treasury bond futures and options, and equity option contracts as a means to manage risk in certain inventory positions. The Company also enters into interest rate swaps to facilitate customer transactions. The following describes the Company's derivatives by the type of transaction or security the instruments are economically hedging. Customer matched-book derivatives: The Company enters into interest rate derivative contracts in a principal capacity as a dealer to satisfy the financial needs of its customers. The Company simultaneously enters into an interest rate derivative contract with a third party for the same notional amount to hedge the interest rate and credit risk of the initial client interest rate derivative contract. In certain limited instances, the Company has only hedged interest rate risk with a third party, and retains uncollateralized credit risk as described below. The instruments use interest rates based upon the London Interbank Offered Rate ("LIBOR") index, the Municipal Market Data ("MMD") 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 and options to hedge interest rate and market value risks associated with its fixed income securities. These instruments use interest rates based upon the MMD index, LIBOR or the SIFMA index. The Company also enters into equity option contracts to hedge market value risk associated with its convertible securities. Derivatives are reported on a net basis by counterparty (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) when a legal right of offset exists and on a net basis by cross product when applicable provisions are stated in master netting agreements. Cash collateral received or paid is netted on a counterparty basis, provided a legal right of offset exists. The total absolute notional contract amount, representing the absolute value of the sum of gross long and short derivative contracts, provides an indication of the volume of the Company's derivative activity and does not represent gains and losses. The following table presents the gross fair market value and the total absolute notional contract amount of the Company's outstanding derivative instruments, prior to counterparty netting, by asset or liability position: June 30, 2020 December 31, 2019 (Amounts 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 $ 264,000 $ 253,438 $ 2,008,953 $ 209,119 $ 198,315 $ 2,197,340 Trading securities 64 4,190 126,775 8 1,852 110,875 Equity options Trading securities — 678 10,093 — — — $ 264,064 $ 258,306 $ 2,145,821 $ 209,127 $ 200,167 $ 2,308,215 (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 Six Months Ended (Amounts in thousands) June 30, June 30, Derivative Category Operations Category 2020 2019 2020 2019 Interest rate derivative contract Investment banking $ (200) $ 186 $ (932) $ (431) Interest rate derivative contract Institutional brokerage 434 (196) (1,593) (445) Equity option derivative contracts Institutional brokerage 822 — — — $ 1,056 $ (10) $ (2,525) $ (876) 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 a derivative contract can become material, exposing the Company to the credit risk of these counterparties. As of June 30, 2020, the Company had $27.5 million of uncollateralized credit exposure with these counterparties (notional contract amount of $171.9 million), including $23.2 million of uncollateralized credit exposure with one counterparty. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
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 consolidated 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, and therefore are generally 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. Short-term municipal securities – Short-term municipal securities include 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. Mortgage-backed securities – 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. Derivative contracts – Derivative contracts include interest rate swaps, interest rate locks, U.S. treasury bond futures and options, and equity option contracts. These instruments derive their value from underlying assets, reference rates, indices or a combination of these factors. The Company's equity option derivative contracts are valued based on quoted prices from the exchange for identical assets or liabilities as of the period-end date. To the extent these contracts are actively traded and valuation adjustments are not applied, they are categorized as Level I. The majority of the Company's interest rate derivative contracts, including both interest rate swaps and interest rate locks, are valued using market standard pricing models based on the net present value of estimated future cash flows. The valuation models used do not involve material subjectivity as the methodologies do not entail significant judgment and the pricing inputs are market observable, including contractual terms, yield curves and measures of volatility. These instruments are classified as Level II within the fair value hierarchy. Certain interest rate locks transact in less active markets and were valued using valuation models that included the previously mentioned observable inputs and certain unobservable inputs that required significant judgment, such as the premium over the MMD curve. These instruments are classified as Level III. Investments The Company's investments valued at fair value include equity investments in private companies and partnerships. Investments in 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 $1.8 million and $2.1 million, included within investments on the consolidated statements of financial condition, were accounted for at fair value and were classified as Level III assets at June 30, 2020 and December 31, 2019, 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 gains of $0.2 million and losses of $0.3 million for the six months ended June 30, 2020 and 2019, 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 June 30, 2020: Valuation Weighted Technique Unobservable Input Range Average (1) Assets Financial instruments and other inventory positions owned: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in basis points ("bps") (2) 1 - 22 bps 17.8 bps Investments at fair value: Equity securities in private companies Market approach Revenue multiple (2) 3 - 6 times 4.3 times EBITDA multiple (2) 11 - 18 times 16.0 times Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in bps (3) 7 - 26 bps 12.0 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 June 30, 2020: Counterparty and Cash Collateral (Amounts in thousands) Level I Level II Level III Netting (1) Total Assets Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 39 $ 4,554 $ — $ — $ 4,593 Convertible securities — 144,732 — — 144,732 Fixed income securities — 14,706 — — 14,706 Municipal securities: Taxable securities — 12,807 — — 12,807 Tax-exempt securities — 120,496 — — 120,496 Short-term securities — 70,793 — — 70,793 Mortgage-backed securities — — 13 — 13 U.S. government agency securities — 48,833 — — 48,833 Derivative contracts — 264,000 64 (236,743) 27,321 Total financial instruments and other inventory positions owned 39 680,921 77 (236,743) 444,294 Cash equivalents 194,390 — — — 194,390 Investments at fair value 15,922 — 120,615 (2) — 136,537 Total assets $ 210,351 $ 680,921 $ 120,692 $ (236,743) $ 775,221 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 45,048 $ 806 $ — $ — $ 45,854 Fixed income securities — 15,829 — — 15,829 U.S. government agency securities — 4,025 — — 4,025 U.S. government securities 68,586 — — — 68,586 Derivative contracts 678 254,416 3,212 (251,176) 7,130 Total financial instruments and other inventory positions sold, but not yet purchased $ 114,312 $ 275,076 $ 3,212 $ (251,176) $ 141,424 (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) Includes noncontrolling interests of $67.8 million primarily attributable to unrelated third party ownership in consolidated merchant banking 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, 2019: Counterparty and Cash Collateral (Amounts in thousands) Level I Level II Level III Netting (1) Total Assets Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 469 $ 2,577 $ — $ — $ 3,046 Convertible securities — 146,406 — — 146,406 Fixed income securities — 28,176 — — 28,176 Municipal securities: Taxable securities — 22,570 — — 22,570 Tax-exempt securities — 222,192 — — 222,192 Short-term securities — 67,901 — — 67,901 Mortgage-backed securities — — 13 — 13 U.S. government agency securities — 51,773 — — 51,773 U.S. government securities 77,303 — — — 77,303 Derivative contracts — 209,119 8 (188,745) 20,382 Total financial instruments and other inventory positions owned 77,772 750,714 21 (188,745) 639,762 Cash equivalents 226,744 — — — 226,744 Investments at fair value 17,658 — 132,329 (2) — 149,987 Total assets $ 322,174 $ 750,714 $ 132,350 $ (188,745) $ 1,016,493 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 88,794 $ 5,242 $ — $ — $ 94,036 Fixed income securities — 10,311 — — 10,311 U.S. government agency securities — 9,935 — — 9,935 U.S. government securities 67,090 — — — 67,090 Derivative contracts — 198,604 1,563 (196,114) 4,053 Total financial instruments and other inventory positions sold, but not yet purchased $ 155,884 $ 224,092 $ 1,563 $ (196,114) $ 185,425 (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) Includes noncontrolling interests of $75.2 million primarily attributable to unrelated third party ownership in consolidated merchant banking funds. The Company's Level III assets were $120.7 million and $132.4 million, or 15.6 percent and 13.0 percent of financial instruments measured at fair value at June 30, 2020 and December 31, 2019, respectively. There were no significant transfers between levels for the six months ended June 30, 2020. 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 March 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2020 Purchases Sales out (losses) (losses) 2020 2020 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 13 $ — $ — $ — $ — $ — $ 13 $ — Derivative contracts 1,975 455 (60) — (395) (1,911) 64 (379) Total financial instruments and other inventory positions owned 1,988 455 (60) — (395) (1,911) 77 (379) Investments at fair value 120,730 — — — (5,276) 5,161 120,615 5,161 Total assets $ 122,718 $ 455 $ (60) $ — $ (5,671) $ 3,250 $ 120,692 $ 4,782 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 5,557 $ (9,606) $ 20 $ — $ 9,586 $ (2,345) $ 3,212 $ 2,658 Total financial instruments and other inventory positions sold, but not yet purchased $ 5,557 $ (9,606) $ 20 $ — $ 9,586 $ (2,345) $ 3,212 $ 2,658 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at March 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2019 Purchases Sales out (losses) (losses) 2019 2019 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 14 $ — $ (4) $ — $ 4 $ (1) $ 13 $ (1) Total financial instruments and other inventory positions owned 14 — (4) — 4 (1) 13 (1) Investments at fair value 107,878 8,000 — (783) — 17,461 132,556 16,940 Total assets $ 107,892 $ 8,000 $ (4) $ (783) $ 4 $ 17,460 $ 132,569 $ 16,939 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,222 $ (3,220) $ — $ — $ 3,220 $ 196 $ 4,418 $ 3,060 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,222 $ (3,220) $ — $ — $ 3,220 $ 196 $ 4,418 $ 3,060 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2019 Purchases Sales out (losses) (losses) 2020 2020 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 13 $ — $ — $ — $ — $ — $ 13 $ — Derivative contracts 8 750 (60) — (690) 56 64 64 Total financial instruments and other inventory positions owned 21 750 (60) — (690) 56 77 64 Investments at fair value 132,329 283 (165) (130) (5,503) (6,199) 120,615 (6,424) Total assets $ 132,350 $ 1,033 $ (225) $ (130) $ (6,193) $ (6,143) $ 120,692 $ (6,360) Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,563 $ (12,747) $ 371 $ — $ 12,376 $ 1,649 $ 3,212 $ 3,201 Total financial instruments and other inventory positions sold, but not yet purchased $ 1,563 $ (12,747) $ 371 $ — $ 12,376 $ 1,649 $ 3,212 $ 3,201 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2018 Purchases Sales out (losses) (losses) 2019 2019 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 15 $ — $ (6) $ — $ (23) $ 27 $ 13 $ (1) Derivative contracts 229 — (336) — 336 (229) — — Total financial instruments and other inventory positions owned 244 — (342) — 313 (202) 13 (1) Investments at fair value 107,792 8,000 — (783) — 17,547 132,556 17,027 Total assets $ 108,036 $ 8,000 $ (342) $ (783) $ 313 $ 17,345 $ 132,569 $ 17,026 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,202 $ (8,822) $ — $ — $ 8,822 $ 216 $ 4,418 $ 4,418 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,202 $ (8,822) $ — $ — $ 8,822 $ 216 $ 4,418 $ 4,418 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- and long-term financings approximate fair value due to either their liquid or short-term nature. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2020 | |
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 and limited liability companies. These entities were established for the purpose of investing in securities of public or private companies, or municipal debt obligations, 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 June 30, 2020 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 June 30, 2020. 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 (Amounts in thousands) Management Funds Assets Investments $ 118,385 Other assets 686 Total assets $ 119,071 Liabilities Other liabilities and accrued expenses $ 2,998 Total liabilities $ 2,998 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 18 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 $1.5 billion and $0.3 billion at June 30, 2020 and December 31, 2019, respectively. The Company's exposure to loss from these VIEs is $5.9 million, which is the carrying value of its capital contributions recorded in investments on the consolidated statements of financial condition at June 30, 2020. The Company had no liabilities related to these VIEs at June 30, 2020 and December 31, 2019. Furthermore, the Company has not provided financial or other support to these VIEs that it was not previously contractually required to provide as of June 30, 2020. |
Receivables from and Payables t
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | 6 Months Ended |
Jun. 30, 2020 | |
Brokers and Dealers [Abstract] | |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | Receivables from and Payables to Brokers, Dealers and Clearing Organizations June 30, December 31, (Amounts in thousands) 2020 2019 Receivable from clearing organizations $ 152,641 $ 260,436 Receivable from brokers and dealers 37,402 19,161 Other 3,260 3,511 Total receivables from brokers, dealers and clearing organizations $ 193,303 $ 283,108 June 30, December 31, (Amounts in thousands) 2020 2019 Payable to brokers and dealers $ 30,578 $ 7,514 Payable to clearing organizations 4,327 — Total payables to brokers, dealers and clearing organizations $ 34,905 $ 7,514 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, All Other Investments [Abstract] | |
Investments | Investments The Company's investments include investments in private companies and partnerships. June 30, December 31, (Amounts in thousands) 2020 2019 Investments at fair value $ 136,537 $ 149,987 Investments at cost 1,611 1,084 Investments accounted for under the equity method 5,928 7,070 Total investments 144,076 158,141 Less investments attributable to noncontrolling interests (1) (67,756) (75,245) $ 76,320 $ 82,896 (1) Noncontrolling interests are primarily attributable to unrelated third party ownership in consolidated merchant banking funds. At June 30, 2020, investments carried on a cost basis had an estimated fair market value of $1.6 million. Because valuation estimates were based upon management's judgment, investments carried at cost would be categorized as Level III assets in the fair value hierarchy, if they were carried at fair value. Investments accounted for under the equity method include general and limited partnership interests. The carrying value of these investments is based on the investment vehicle's net asset value. The net assets of investment partnerships consist of investments in both marketable and non-marketable securities. The underlying investments held by such partnerships are valued based on the estimated fair value determined by management in the Company's capacity as general partner or investor and, in the case of investments in unaffiliated investment partnerships, are based on financial statements prepared by the unaffiliated general partners. |
Other Assets
Other Assets | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets June 30, December 31, (Amounts in thousands) 2020 2019 Fee receivables $ 49,497 $ 18,574 Accrued interest receivables 1,991 2,977 Forgivable loans, net 4,575 5,227 Prepaid expenses 12,748 10,687 Income tax receivables — 2,658 Other 31,659 15,317 Total other assets $ 100,470 $ 55,440 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets (Amounts in thousands) Goodwill Balance at December 31, 2019 $ 87,649 Goodwill acquired 127,660 Balance at June 30, 2020 $ 215,309 Intangible assets Balance at December 31, 2019 $ 16,686 Intangible assets acquired 172,600 Amortization of intangible assets (21,515) Balance at June 30, 2020 $ 167,771 The addition of goodwill and intangible assets during the six months ended June 30, 2020 related to the acquisitions of Valence and Sandler O'Neill, as discussed in Note 3. Management identified $14.8 million of customer relationship intangible assets related to the acquisition of Valence which will be amortized over a weighted average life of 1.4 years. Management identified $157.8 million of intangible assets related to the acquisition of Sandler O'Neill, consisting of customer relationships of $72.4 million and the Sandler trade name of $85.4 million. The customer relationships will be amortized over a weighted average life of 2.4 years. The Sandler trade name is an indefinite-lived intangible asset and will not be subject to amortization. The following table summarizes the future aggregate amortization expense of the Company's intangible assets with determinable lives: (Amounts in thousands) Remainder of 2020 $ 23,213 2021 24,780 2022 9,344 2023 7,442 2024 6,292 Thereafter 11,300 Total $ 82,371 |
Short-Term Financing
Short-Term Financing | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Short-Term Financing | Short-Term Financing Outstanding Balance Weighted Average Interest Rate June 30, December 31, June 30, December 31, (Dollars in thousands) 2020 2019 2020 2019 Commercial paper $ 49,990 $ 49,978 1.17 % 2.69 % Revolving credit facility 50,000 — 2.91 % — % Total short-term financing $ 99,990 $ 49,978 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 the CP Series II A program, and are secured by different inventory classes. As of June 30, 2020, the weighted average maturity of outstanding CP Notes was six 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 retired the CP Series A program on January 2, 2020. The Company has an unsecured $50 million revolving credit facility with U.S. Bank N.A. The credit agreement will terminate on December 20, 2022, unless otherwise terminated, and is subject to a one-year extension exercisable at the option of the Company. This credit facility includes customary events of default and covenants that, among other things, require the Company's U.S. broker dealer subsidiary to maintain a minimum regulatory net capital of $120 million, limit the Company's leverage ratio, require maintenance of a minimum ratio of operating cash flow to fixed charges, and impose certain limitations on the Company's ability to make acquisitions and make payments on its capital stock. The Company's committed short-term bank line financing at June 30, 2020 consisted of a one-year $125 million committed revolving credit facility with U.S. Bank N.A., which was renewed in December 2019. 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 a minimum regulatory net capital of $120 million, and the unpaid principal amount of all advances under this facility will be due on December 11, 2020. The Company pays a nonrefundable commitment fee on the unused portion of the facility on a quarterly basis. At June 30, 2020, the Company had no advances against this line of credit. |
Long-Term Financing
Long-Term Financing | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Financing | Long-Term FinancingOn October 15, 2019, the Company entered into a note purchase agreement with certain entities advised by Pacific Investment Management Company ("PIMCO"), under which the Company issued unsecured fixed rate senior notes ("Notes") in the amount of $175 million. The Notes consist of two classes, Class A Notes and Class B Notes, with principal amounts of $50 million and $125 million, respectively. The Class A Notes bear interest at an annual fixed rate of 4.74 percent and mature on October 15, 2021. The Class B Notes bear interest at an annual fixed rate of 5.20 percent and mature on October 15, 2023. Interest on the Notes is payable semi-annually. The unpaid principal amounts are due in full on the respective maturity dates and may not be prepaid by the Company. On April 3, 2020, the Company entered into unsecured promissory notes as part of the acquisition of Valence totaling $20.0 million. The Valence Notes bear interest at an annual fixed rate of 5.0 percent and mature on October 15, 2021. Interest is payable quarterly in arrears. |
Legal Contingencies
Legal Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Contingencies | Legal ContingenciesThe 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, settlements, 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 June 30, 2020 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. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 were as follows: (Amounts in thousands) Remainder of 2020 $ 12,793 2021 22,995 2022 21,488 2023 17,658 2024 15,758 Thereafter 35,389 Total $ 126,081 The following table summarizes the Company's operating lease costs and sublease income from continuing operations: Three Months Ended Six Months Ended June 30, June 30, (Amounts in millions) 2020 2019 2020 2019 Operating lease cost $ 5.4 $ 2.9 $ 10.3 $ 5.7 Operating lease cost related to short-term leases 0.3 0.1 0.5 0.3 Sublease income 0.5 0.4 0.9 0.8 At June 30, 2020, the weighted-average remaining lease term for operating leases was 6.0 years and the weighted-average discount rate was 4.0%. |
Restructuring and Integration C
Restructuring and Integration Costs | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Integration Costs | Restructuring and Integration Costs The Company incurred restructuring and integration costs from continuing operations for the three and six months ended June 30, 2020, primarily in conjunction with its acquisition of Sandler O'Neill, which closed on January 3, 2020, and its acquisition of Valence, which closed on April 3, 2020. The Company incurred restructuring and integration costs from continuing operations for the three and six months ended June 30, 2019, primarily in conjunction with its acquisition of Weeden & Co., which closed on August 2, 2019. Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2020 2019 Severance, benefits and outplacement $ 2,043 $ 1,109 $ 2,921 $ 1,109 Contract termination (640) 2,798 (467) 2,798 Vacated leased office space 88 — 88 — Total restructuring costs 1,491 3,907 2,542 3,907 Integration costs 2,233 2,488 3,084 2,488 Total restructuring and integration costs $ 3,724 $ 6,395 $ 5,626 $ 6,395 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Share Repurchases Effective January 1, 2020, the Company's board of directors authorized the repurchase of up to $150.0 million in common shares through December 31, 2021. During the six months ended June 30, 2020, the Company repurchased 128,865 shares at an average price of $71.58 per share for an aggregate purchase price of $9.2 million related to this authorization. At June 30, 2020, the Company had $140.8 million remaining under this authorization. Effective September 30, 2017, the Company's board of directors authorized the repurchase of up to $150.0 million in common shares, which expired on September 30, 2019. During the six months ended June 30, 2019, the Company repurchased 501 shares at an average price of $64.80 per share related to this authorization. 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 98,136 shares and 696,411 shares, or $8.3 million and $50.2 million of the Company's common stock for these purposes during the six months ended June 30, 2020 and 2019, 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 18. During the six months ended June 30, 2020 and 2019, the Company issued 271,889 shares and 1,401,268 shares, respectively, related to these obligations. During the six months ended June 30, 2020, the Company also issued 34,205 common shares out of treasury stock for Sandler O'Neill deal consideration, as discussed in Note 3. Dividends The Company's current dividend policy includes both a quarterly and an annual special cash dividend. The annual special cash dividend is 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 six months ended June 30, 2020, the Company declared and paid quarterly cash dividends on its common stock, aggregating $0.575 per share, and an annual special cash dividend on its common stock of $0.75 per share, totaling $18.8 million. On July 31, 2020, the board of directors declared a quarterly cash dividend of $0.30 per share to be paid on September 11, 2020, to shareholders of record as of the close of business on August 28, 2020. Noncontrolling Interests The consolidated financial statements include the accounts of Piper Sandler 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 Sandler Companies. Noncontrolling interests primarily represent the minority equity holders' proportionate share of the equity in the Company's merchant banking funds. |
Compensation Plans
Compensation Plans | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Compensation Plans | Compensation Plans Stock-Based Compensation Plans The Company has three outstanding stock-based compensation plans: the Amended and Restated 2003 Annual and Long-Term Incentive Plan (the "Incentive Plan"), the 2019 Employment Inducement Award Plan (the "2019 Inducement Plan") and the 2020 Employment Inducement Award Plan (the "2020 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 June 30, 2020: Incentive Plan Restricted Stock Annual grants 462,661 Sign-on grants 131,235 593,896 2019 Inducement Plan Restricted Stock 97,752 2020 Inducement Plan Restricted Stock 1,317,750 Total restricted stock related to compensation 2,009,398 Deal Consideration (1) 2,181,733 Total restricted stock outstanding 4,191,131 Incentive Plan Restricted Stock Units Leadership grants 146,048 Incentive Plan Stock Options 81,667 (1) The Company issued restricted stock with service conditions as part of deal consideration for the acquisitions of Valence and Sandler O'Neill. See Note 3 for further discussion. 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 9.4 million shares of common stock (1.7 million shares remained available for future issuance under the Incentive Plan as of June 30, 2020). 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 year 2019 for its February 2020 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 June 30, 2020, 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 2020 50% 2019 50% 2018 44% 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 2020 1.40% 27.3% 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. 2016 Leadership Grant Restricted stock units granted in 2016 contain market condition criteria 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 vested and converted to shares was based on the Company's stock performance achieving specified targets during the performance period. All units vested in full. Compensation expense was recognized over the 36-month performance period which ended in May 2019. Up to 50 percent of the award was 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 was 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 10 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 Inducement plan awards are amortized as compensation expense on a straight-line basis over each respective vesting period. Employees forfeit unvested shares upon termination of employment and a reversal of compensation expense is recorded. The Company established the 2016 Employment Inducement Award Plan (the "2016 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 2016 Inducement Plan on May 16, 2016. All outstanding shares cliff vested on May 16, 2019 and the 2016 Inducement Plan was terminated in July 2019. The Company established the 2019 Inducement Plan in conjunction with its acquisition of Weeden & Co. On August 2, 2019, the Company granted $7.3 million (97,752 shares) in restricted stock. These restricted shares are subject to graded vesting, generally beginning on the third anniversary of the grant date through August 2, 2023. The Company established the 2020 Inducement Plan in conjunction with its acquisition of Sandler O'Neill. On January 3, 2020, the Company granted $96.9 million (1,217,423 shares) in restricted stock. These restricted shares have both cliff and graded vesting terms with vesting periods of 18 months, three years or five years (with a weighted average service period of 3.7 years). On April 3, 2020, the Company granted $5.5 million (114,000 shares) in restricted stock under the 2020 Inducement Plan in conjunction with its acquisition of Valence. These restricted shares are subject to graded vesting, generally beginning on the third anniversary of the grant date through April 3, 2025. Stock-Based Compensation Activity The following table summarizes the Company's stock-based compensation activity within continuing operations: Three Months Ended Six Months Ended June 30, June 30, (Amounts in millions) 2020 2019 2020 2019 Stock-based compensation expense $ 27.9 $ 5.8 $ 49.5 $ 10.1 Forfeitures 1.1 0.3 1.2 1.2 Tax benefit related to stock-based compensation expense 3.9 1.1 6.3 1.5 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, 2019 694,225 $ 78.52 Granted 3,779,652 73.58 Vested (246,734) 80.96 Canceled (36,012) 80.84 June 30, 2020 4,191,131 $ 73.90 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, 2019 114,315 $ 85.09 Granted 56,066 86.01 Vested (18,255) 84.10 Canceled (6,078) 84.10 June 30, 2020 146,048 $ 85.60 As of June 30, 2020, there was $233.1 million of total unrecognized compensation cost related to restricted stock and restricted stock units expected to be recognized over a weighted average period of 3.3 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, 2019 81,667 $ 99.00 8.1 $ — Granted — — Exercised — — Canceled — — Expired — — June 30, 2020 81,667 $ 99.00 7.6 $ — As of June 30, 2020, there was $1.1 million of unrecognized compensation cost related to stock options expected to be recognized over a weighted average period of 2.6 years. There were no exercisable options as of June 30, 2020. Deferred Compensation Plans The Company maintains various deferred compensation arrangements for employees. The 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 $15.5 million and $16.7 million as of June 30, 2020 and December 31, 2019, respectively, and are included in investments on the consolidated statements of financial condition. A corresponding deferred compensation liability is included in accrued compensation on the consolidated statements of financial condition. The compensation deferred by the employees was expensed in the period earned. 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. The Company entered into acquisition-related compensation arrangements with certain employees for retention and incentive purposes in conjunction with its acquisition of Simmons. 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. The Company accrued $40.1 million related to this performance award plan, which was paid in August 2019. Amounts payable related to this performance award plan were recorded as compensation expense from continuing operations on the consolidated statements of operations over the requisite performance period of three years. The Company recorded $1.0 million and $0.4 million as compensation expense from continuing operations for the three and six months ended June 30, 2019, respectively. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share ("EPS") The computation of EPS is as follows: Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands, except per share data) 2020 2019 2020 2019 Net income/(loss) from continuing operations applicable to Piper Sandler Companies $ 1,454 $ 12,555 $ (13,273) $ 32,116 Net loss from discontinued operations — (2,166) — (2,305) Net income/(loss) applicable to Piper Sandler Companies 1,454 10,389 (13,273) 29,811 Earnings allocated to participating securities — (238) (1) — (1,924) (1) Net income/(loss) applicable to Piper Sandler Companies' common shareholders $ 1,454 $ 10,151 (2) $ (13,273) $ 27,887 (2) Shares for basic and diluted calculations: Average shares used in basic computation 13,794 13,588 13,795 13,397 Restricted stock units 97 189 102 197 Non-participating restricted shares 585 247 547 184 Average shares used in diluted computation 14,476 14,024 14,444 (3) 13,778 Earnings/(loss) per basic common share: Income/(loss) from continuing operations $ 0.11 $ 0.90 $ (0.96) $ 2.24 Loss from discontinued operations — (0.15) — (0.16) Earnings/(loss) per basic common share $ 0.11 $ 0.75 $ (0.96) $ 2.08 Earnings/(loss) per diluted common share: Income/(loss) from continuing operations $ 0.10 $ 0.87 $ (0.96) $ 2.18 Loss from discontinued operations — (0.15) — (0.16) Earnings/(loss) per diluted common share $ 0.10 $ 0.72 $ (0.96) (3) $ 2.02 (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 403,103 and 764,963 for the three and six months ended June 30, 2019, respectively. (2) Net income/(loss) applicable to Piper Sandler 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 Sandler 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. The average shares used in the diluted computation excluded anti-dilutive stock options and non-participating restricted shares of 2.9 million for the three and six months ended June 30, 2020. The anti-dilutive effects from stock options, restricted stock units and non-participating restricted shares were immaterial for the six months ended June 30, 2019. |
Revenues and Business Informati
Revenues and Business Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Revenues and Business Information | Revenues and Business Information The Company's activities as an investment bank and institutional securities firm constitute a single business segment. The substantial majority of the Company's net revenues and long-lived assets are located in the U.S. Reportable financial results from continuing operations are as follows: Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2020 2019 Investment banking Advisory services $ 85,569 $ 75,238 $ 196,795 $ 190,117 Corporate financing 83,448 25,718 108,624 39,234 Municipal financing 30,810 17,783 53,406 30,449 Total investment banking 199,827 118,739 358,825 259,800 Institutional brokerage Equity brokerage 40,644 15,468 88,497 31,374 Fixed income services 48,695 16,736 89,985 35,795 Total institutional brokerage 89,339 32,204 178,482 67,169 Interest income 3,065 6,863 9,130 14,430 Investment income/(loss) 3,733 17,605 (10,093) 19,197 Total revenues 295,964 175,411 536,344 360,596 Interest expense 3,526 2,993 7,738 5,636 Net revenues 292,438 172,418 528,606 354,960 Non-interest expenses (1) 285,041 151,493 555,238 310,898 Pre-tax income/(loss) $ 7,397 $ 20,925 $ (26,632) $ 44,062 Pre-tax margin 2.5 % 12.1 % (5.0) % 12.4 % |
Net Capital Requirements and Ot
Net Capital Requirements and Other Regulatory Matters | 6 Months Ended |
Jun. 30, 2020 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Net Capital Requirements and Other Regulatory Matters | Net Capital Requirements and Other Regulatory Matters Piper Sandler 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 Sandler's primary SRO. Piper Sandler is subject to the uniform net capital rule of the SEC and the net capital rule of FINRA. Piper Sandler 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 Sandler are subject to certain approvals, notifications and other provisions of SEC and FINRA rules. At June 30, 2020, net capital calculated under the SEC rule was $153.4 million, and exceeded the minimum net capital required under the SEC rule by $152.4 million. The Company's committed short-term credit facility, revolving credit facility and its Notes with PIMCO include covenants requiring Piper Sandler to maintain minimum net capital of $120 million. CP Notes issued under CP Series II A include a covenant that requires Piper Sandler to maintain excess net capital of $100 million. The Company's fully disclosed clearing agreement with Pershing also includes a covenant requiring Piper Sandler to maintain excess net capital of $120 million. Piper Sandler 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 June 30, 2020, Piper Sandler Ltd. was in compliance with the capital requirements of the Prudential Regulation Authority and the Financial Conduct Authority. Piper Sandler 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 June 30, 2020, Piper Sandler Hong Kong Limited was in compliance with the liquid capital requirements of the Hong Kong Securities and Futures Commission. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax expense from continuing operations of $4.7 million and an income tax benefit from continuing operations of $0.2 million for the three months ended June 30, 2020 and 2019, respectively. Income tax benefit from continuing operations for the three months ended June 30, 2019 included a tax benefit of $3.5 million related to stock-based compensation awards vesting at values greater than the grant price. The Company recorded an income tax benefit from continuing operations of $7.1 million and income tax expense from continuing operations of $4.0 million for the six months ended June 30, 2020 and 2019, respectively. Income tax expense/(benefit) from continuing operations included a tax benefit of $0.2 million and $5.1 million for the six months ended June 30, 2020 and 2019, respectively, related to stock-based compensation awards vesting at values greater than the grant price. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Estimated fair values of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition: (Amounts in thousands) Assets Cash and cash equivalents $ 8,181 Fixed assets 256 Goodwill 33,300 Intangible assets 14,800 Right-of-use lease asset 3,279 Other assets 4,190 Total assets acquired 64,006 Liabilities Accrued lease liability 3,279 Other liabilities and accrued expenses 10,393 Total liabilities assumed 13,672 Net assets acquired $ 50,334 The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition, including measurement period adjustments: (Amounts in thousands) Assets Cash and cash equivalents $ 27,420 Receivables from brokers, dealers and clearing organizations 192,675 Fixed assets 6,789 Goodwill 94,360 Intangible assets 157,800 Investments 685 Right-of-use lease asset 39,607 Other assets 9,628 Total assets acquired 528,964 Liabilities Accrued compensation 71,398 Accrued lease liability 39,613 Other liabilities and accrued expenses 16,441 Due to Sandler O'Neill (1) 40,673 Total liabilities assumed 168,125 Net assets acquired $ 360,839 (1) Represents the amount of excess tangible book value received by the Company on the date of acquisition. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition, including measurement period adjustments: (Amounts in thousands) Assets Cash and cash equivalents $ 4,351 Receivables from brokers, dealers and clearing organizations 1,623 Fixed assets 289 Goodwill 5,794 Intangible assets 16,700 Right-of-use lease asset 6,811 Other assets 10,888 Total assets acquired 46,456 Liabilities Accrued compensation 2,156 Accrued lease liability 6,811 Other liabilities and accrued expenses 13,464 Total liabilities assumed 22,431 Net assets acquired $ 24,025 |
Unaudited pro forma information | Six Months Ended Three Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2019 Net revenues $ 542,934 $ 579,414 $ 287,888 Net income/(loss) from continuing operations applicable to Piper Sandler Companies (14,966) 11,028 3,734 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of components of discontinued operations | ARI's results have been presented as discontinued operations for all prior periods presented. The components of discontinued operations were as follows: Three Months Ended Six Months Ended (Amounts in thousands) June 30, 2019 June 30, 2019 Net revenues $ 9,317 $ 18,607 Operating expenses 7,382 15,521 Intangible asset amortization (1) 4,106 5,465 Restructuring costs 696 696 Total non-interest expenses 12,184 21,682 Loss from discontinued operations before income tax benefit (2,867) (3,075) Income tax benefit (701) (770) Loss from discontinued operations, net of tax $ (2,166) $ (2,305) (1) Includes $2.9 million of intangible asset impairment related to the ARI trade name for the three and six months ended June 30, 2019. |
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) | 6 Months Ended |
Jun. 30, 2020 | |
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 | June 30, December 31, (Amounts in thousands) 2020 2019 Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 4,593 $ 3,046 Convertible securities 144,732 146,406 Fixed income securities 14,706 28,176 Municipal securities: Taxable securities 12,807 22,570 Tax-exempt securities 120,496 222,192 Short-term securities 70,793 67,901 Mortgage-backed securities 13 13 U.S. government agency securities 48,833 51,773 U.S. government securities — 77,303 Derivative contracts 27,321 20,382 Total financial instruments and other inventory positions owned $ 444,294 $ 639,762 Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 45,854 $ 94,036 Fixed income securities 15,829 10,311 U.S. government agency securities 4,025 9,935 U.S. government securities 68,586 67,090 Derivative contracts 7,130 4,053 Total financial instruments and other inventory positions sold, but not yet purchased $ 141,424 $ 185,425 |
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: June 30, 2020 December 31, 2019 (Amounts 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 $ 264,000 $ 253,438 $ 2,008,953 $ 209,119 $ 198,315 $ 2,197,340 Trading securities 64 4,190 126,775 8 1,852 110,875 Equity options Trading securities — 678 10,093 — — — $ 264,064 $ 258,306 $ 2,145,821 $ 209,127 $ 200,167 $ 2,308,215 (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 Six Months Ended (Amounts in thousands) June 30, June 30, Derivative Category Operations Category 2020 2019 2020 2019 Interest rate derivative contract Investment banking $ (200) $ 186 $ (932) $ (431) Interest rate derivative contract Institutional brokerage 434 (196) (1,593) (445) Equity option derivative contracts Institutional brokerage 822 — — — $ 1,056 $ (10) $ (2,525) $ (876) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020: Valuation Weighted Technique Unobservable Input Range Average (1) Assets Financial instruments and other inventory positions owned: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in basis points ("bps") (2) 1 - 22 bps 17.8 bps Investments at fair value: Equity securities in private companies Market approach Revenue multiple (2) 3 - 6 times 4.3 times EBITDA multiple (2) 11 - 18 times 16.0 times Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts: Interest rate locks Discounted cash flow Premium over the MMD curve in bps (3) 7 - 26 bps 12.0 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 June 30, 2020: Counterparty and Cash Collateral (Amounts in thousands) Level I Level II Level III Netting (1) Total Assets Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 39 $ 4,554 $ — $ — $ 4,593 Convertible securities — 144,732 — — 144,732 Fixed income securities — 14,706 — — 14,706 Municipal securities: Taxable securities — 12,807 — — 12,807 Tax-exempt securities — 120,496 — — 120,496 Short-term securities — 70,793 — — 70,793 Mortgage-backed securities — — 13 — 13 U.S. government agency securities — 48,833 — — 48,833 Derivative contracts — 264,000 64 (236,743) 27,321 Total financial instruments and other inventory positions owned 39 680,921 77 (236,743) 444,294 Cash equivalents 194,390 — — — 194,390 Investments at fair value 15,922 — 120,615 (2) — 136,537 Total assets $ 210,351 $ 680,921 $ 120,692 $ (236,743) $ 775,221 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 45,048 $ 806 $ — $ — $ 45,854 Fixed income securities — 15,829 — — 15,829 U.S. government agency securities — 4,025 — — 4,025 U.S. government securities 68,586 — — — 68,586 Derivative contracts 678 254,416 3,212 (251,176) 7,130 Total financial instruments and other inventory positions sold, but not yet purchased $ 114,312 $ 275,076 $ 3,212 $ (251,176) $ 141,424 (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) Includes noncontrolling interests of $67.8 million primarily attributable to unrelated third party ownership in consolidated merchant banking 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, 2019: Counterparty and Cash Collateral (Amounts in thousands) Level I Level II Level III Netting (1) Total Assets Financial instruments and other inventory positions owned: Corporate securities: Equity securities $ 469 $ 2,577 $ — $ — $ 3,046 Convertible securities — 146,406 — — 146,406 Fixed income securities — 28,176 — — 28,176 Municipal securities: Taxable securities — 22,570 — — 22,570 Tax-exempt securities — 222,192 — — 222,192 Short-term securities — 67,901 — — 67,901 Mortgage-backed securities — — 13 — 13 U.S. government agency securities — 51,773 — — 51,773 U.S. government securities 77,303 — — — 77,303 Derivative contracts — 209,119 8 (188,745) 20,382 Total financial instruments and other inventory positions owned 77,772 750,714 21 (188,745) 639,762 Cash equivalents 226,744 — — — 226,744 Investments at fair value 17,658 — 132,329 (2) — 149,987 Total assets $ 322,174 $ 750,714 $ 132,350 $ (188,745) $ 1,016,493 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Corporate securities: Equity securities $ 88,794 $ 5,242 $ — $ — $ 94,036 Fixed income securities — 10,311 — — 10,311 U.S. government agency securities — 9,935 — — 9,935 U.S. government securities 67,090 — — — 67,090 Derivative contracts — 198,604 1,563 (196,114) 4,053 Total financial instruments and other inventory positions sold, but not yet purchased $ 155,884 $ 224,092 $ 1,563 $ (196,114) $ 185,425 (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) Includes noncontrolling interests of $75.2 million primarily attributable to unrelated third party ownership in consolidated merchant banking 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 March 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2020 Purchases Sales out (losses) (losses) 2020 2020 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 13 $ — $ — $ — $ — $ — $ 13 $ — Derivative contracts 1,975 455 (60) — (395) (1,911) 64 (379) Total financial instruments and other inventory positions owned 1,988 455 (60) — (395) (1,911) 77 (379) Investments at fair value 120,730 — — — (5,276) 5,161 120,615 5,161 Total assets $ 122,718 $ 455 $ (60) $ — $ (5,671) $ 3,250 $ 120,692 $ 4,782 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 5,557 $ (9,606) $ 20 $ — $ 9,586 $ (2,345) $ 3,212 $ 2,658 Total financial instruments and other inventory positions sold, but not yet purchased $ 5,557 $ (9,606) $ 20 $ — $ 9,586 $ (2,345) $ 3,212 $ 2,658 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at March 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2019 Purchases Sales out (losses) (losses) 2019 2019 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 14 $ — $ (4) $ — $ 4 $ (1) $ 13 $ (1) Total financial instruments and other inventory positions owned 14 — (4) — 4 (1) 13 (1) Investments at fair value 107,878 8,000 — (783) — 17,461 132,556 16,940 Total assets $ 107,892 $ 8,000 $ (4) $ (783) $ 4 $ 17,460 $ 132,569 $ 16,939 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,222 $ (3,220) $ — $ — $ 3,220 $ 196 $ 4,418 $ 3,060 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,222 $ (3,220) $ — $ — $ 3,220 $ 196 $ 4,418 $ 3,060 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2019 Purchases Sales out (losses) (losses) 2020 2020 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 13 $ — $ — $ — $ — $ — $ 13 $ — Derivative contracts 8 750 (60) — (690) 56 64 64 Total financial instruments and other inventory positions owned 21 750 (60) — (690) 56 77 64 Investments at fair value 132,329 283 (165) (130) (5,503) (6,199) 120,615 (6,424) Total assets $ 132,350 $ 1,033 $ (225) $ (130) $ (6,193) $ (6,143) $ 120,692 $ (6,360) Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 1,563 $ (12,747) $ 371 $ — $ 12,376 $ 1,649 $ 3,212 $ 3,201 Total financial instruments and other inventory positions sold, but not yet purchased $ 1,563 $ (12,747) $ 371 $ — $ 12,376 $ 1,649 $ 3,212 $ 3,201 Unrealized gains/ (losses) for assets/ Balance at Realized Unrealized Balance at liabilities held at December 31, Transfers gains/ gains/ June 30, June 30, (Amounts in thousands) 2018 Purchases Sales out (losses) (losses) 2019 2019 Assets Financial instruments and other inventory positions owned: Mortgage-backed securities $ 15 $ — $ (6) $ — $ (23) $ 27 $ 13 $ (1) Derivative contracts 229 — (336) — 336 (229) — — Total financial instruments and other inventory positions owned 244 — (342) — 313 (202) 13 (1) Investments at fair value 107,792 8,000 — (783) — 17,547 132,556 17,027 Total assets $ 108,036 $ 8,000 $ (342) $ (783) $ 313 $ 17,345 $ 132,569 $ 17,026 Liabilities Financial instruments and other inventory positions sold, but not yet purchased: Derivative contracts $ 4,202 $ (8,822) $ — $ — $ 8,822 $ 216 $ 4,418 $ 4,418 Total financial instruments and other inventory positions sold, but not yet purchased $ 4,202 $ (8,822) $ — $ — $ 8,822 $ 216 $ 4,418 $ 4,418 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020. 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 (Amounts in thousands) Management Funds Assets Investments $ 118,385 Other assets 686 Total assets $ 119,071 Liabilities Other liabilities and accrued expenses $ 2,998 Total liabilities $ 2,998 |
Receivables from and Payables_2
Receivables from and Payables to Brokers, Dealers and Clearing Organizations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Brokers and Dealers [Abstract] | |
Schedule of Receivables from and Payables to Brokers, Dealers and Clearing Organizations | June 30, December 31, (Amounts in thousands) 2020 2019 Receivable from clearing organizations $ 152,641 $ 260,436 Receivable from brokers and dealers 37,402 19,161 Other 3,260 3,511 Total receivables from brokers, dealers and clearing organizations $ 193,303 $ 283,108 June 30, December 31, (Amounts in thousands) 2020 2019 Payable to brokers and dealers $ 30,578 $ 7,514 Payable to clearing organizations 4,327 — Total payables to brokers, dealers and clearing organizations $ 34,905 $ 7,514 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, All Other Investments [Abstract] | |
Schedule of Investments | June 30, December 31, (Amounts in thousands) 2020 2019 Investments at fair value $ 136,537 $ 149,987 Investments at cost 1,611 1,084 Investments accounted for under the equity method 5,928 7,070 Total investments 144,076 158,141 Less investments attributable to noncontrolling interests (1) (67,756) (75,245) $ 76,320 $ 82,896 (1) Noncontrolling interests are primarily attributable to unrelated third party ownership in consolidated merchant banking funds. |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | June 30, December 31, (Amounts in thousands) 2020 2019 Fee receivables $ 49,497 $ 18,574 Accrued interest receivables 1,991 2,977 Forgivable loans, net 4,575 5,227 Prepaid expenses 12,748 10,687 Income tax receivables — 2,658 Other 31,659 15,317 Total other assets $ 100,470 $ 55,440 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Value of Goodwill and Intangible Assets | (Amounts in thousands) Goodwill Balance at December 31, 2019 $ 87,649 Goodwill acquired 127,660 Balance at June 30, 2020 $ 215,309 Intangible assets Balance at December 31, 2019 $ 16,686 Intangible assets acquired 172,600 Amortization of intangible assets (21,515) Balance at June 30, 2020 $ 167,771 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table summarizes the future aggregate amortization expense of the Company's intangible assets with determinable lives: (Amounts in thousands) Remainder of 2020 $ 23,213 2021 24,780 2022 9,344 2023 7,442 2024 6,292 Thereafter 11,300 Total $ 82,371 |
Short-Term Financing (Tables)
Short-Term Financing (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Financing | Outstanding Balance Weighted Average Interest Rate June 30, December 31, June 30, December 31, (Dollars in thousands) 2020 2019 2020 2019 Commercial paper $ 49,990 $ 49,978 1.17 % 2.69 % Revolving credit facility 50,000 — 2.91 % — % Total short-term financing $ 99,990 $ 49,978 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 were as follows: (Amounts in thousands) Remainder of 2020 $ 12,793 2021 22,995 2022 21,488 2023 17,658 2024 15,758 Thereafter 35,389 Total $ 126,081 |
Schedule of Operating Lease Costs and Sublease Income from Continuing Operations | The following table summarizes the Company's operating lease costs and sublease income from continuing operations: Three Months Ended Six Months Ended June 30, June 30, (Amounts in millions) 2020 2019 2020 2019 Operating lease cost $ 5.4 $ 2.9 $ 10.3 $ 5.7 Operating lease cost related to short-term leases 0.3 0.1 0.5 0.3 Sublease income 0.5 0.4 0.9 0.8 |
Restructuring and Integration_2
Restructuring and Integration Costs (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Pre-tax Restructuring Costs | Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2020 2019 Severance, benefits and outplacement $ 2,043 $ 1,109 $ 2,921 $ 1,109 Contract termination (640) 2,798 (467) 2,798 Vacated leased office space 88 — 88 — Total restructuring costs 1,491 3,907 2,542 3,907 Integration costs 2,233 2,488 3,084 2,488 Total restructuring and integration costs $ 3,724 $ 6,395 $ 5,626 $ 6,395 |
Compensation Plans (Tables)
Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [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 June 30, 2020: Incentive Plan Restricted Stock Annual grants 462,661 Sign-on grants 131,235 593,896 2019 Inducement Plan Restricted Stock 97,752 2020 Inducement Plan Restricted Stock 1,317,750 Total restricted stock related to compensation 2,009,398 Deal Consideration (1) 2,181,733 Total restricted stock outstanding 4,191,131 Incentive Plan Restricted Stock Units Leadership grants 146,048 Incentive Plan Stock Options 81,667 (1) The Company issued restricted stock with service conditions as part of deal consideration for the acquisitions of Valence and Sandler O'Neill. See Note 3 for further discussion. |
Schedule of RSU Performance Condition Probability | As of June 30, 2020, 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 2020 50% 2019 50% 2018 44% |
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 2020 1.40% 27.3% 2019 2.50% 31.9% 2018 2.40% 34.8% 2017 1.62% 35.9% 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 activity within continuing operations: Three Months Ended Six Months Ended June 30, June 30, (Amounts in millions) 2020 2019 2020 2019 Stock-based compensation expense $ 27.9 $ 5.8 $ 49.5 $ 10.1 Forfeitures 1.1 0.3 1.2 1.2 Tax benefit related to stock-based compensation expense 3.9 1.1 6.3 1.5 |
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, 2019 694,225 $ 78.52 Granted 3,779,652 73.58 Vested (246,734) 80.96 Canceled (36,012) 80.84 June 30, 2020 4,191,131 $ 73.90 |
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, 2019 114,315 $ 85.09 Granted 56,066 86.01 Vested (18,255) 84.10 Canceled (6,078) 84.10 June 30, 2020 146,048 $ 85.60 |
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, 2019 81,667 $ 99.00 8.1 $ — Granted — — Exercised — — Canceled — — Expired — — June 30, 2020 81,667 $ 99.00 7.6 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Earnings per Share | The computation of EPS is as follows: Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands, except per share data) 2020 2019 2020 2019 Net income/(loss) from continuing operations applicable to Piper Sandler Companies $ 1,454 $ 12,555 $ (13,273) $ 32,116 Net loss from discontinued operations — (2,166) — (2,305) Net income/(loss) applicable to Piper Sandler Companies 1,454 10,389 (13,273) 29,811 Earnings allocated to participating securities — (238) (1) — (1,924) (1) Net income/(loss) applicable to Piper Sandler Companies' common shareholders $ 1,454 $ 10,151 (2) $ (13,273) $ 27,887 (2) Shares for basic and diluted calculations: Average shares used in basic computation 13,794 13,588 13,795 13,397 Restricted stock units 97 189 102 197 Non-participating restricted shares 585 247 547 184 Average shares used in diluted computation 14,476 14,024 14,444 (3) 13,778 Earnings/(loss) per basic common share: Income/(loss) from continuing operations $ 0.11 $ 0.90 $ (0.96) $ 2.24 Loss from discontinued operations — (0.15) — (0.16) Earnings/(loss) per basic common share $ 0.11 $ 0.75 $ (0.96) $ 2.08 Earnings/(loss) per diluted common share: Income/(loss) from continuing operations $ 0.10 $ 0.87 $ (0.96) $ 2.18 Loss from discontinued operations — (0.15) — (0.16) Earnings/(loss) per diluted common share $ 0.10 $ 0.72 $ (0.96) (3) $ 2.02 (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 403,103 and 764,963 for the three and six months ended June 30, 2019, respectively. (2) Net income/(loss) applicable to Piper Sandler 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 Sandler 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. |
Revenues and Business Informa_2
Revenues and Business Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Reportable Segment Financial Results | Reportable financial results from continuing operations are as follows: Three Months Ended Six Months Ended June 30, June 30, (Amounts in thousands) 2020 2019 2020 2019 Investment banking Advisory services $ 85,569 $ 75,238 $ 196,795 $ 190,117 Corporate financing 83,448 25,718 108,624 39,234 Municipal financing 30,810 17,783 53,406 30,449 Total investment banking 199,827 118,739 358,825 259,800 Institutional brokerage Equity brokerage 40,644 15,468 88,497 31,374 Fixed income services 48,695 16,736 89,985 35,795 Total institutional brokerage 89,339 32,204 178,482 67,169 Interest income 3,065 6,863 9,130 14,430 Investment income/(loss) 3,733 17,605 (10,093) 19,197 Total revenues 295,964 175,411 536,344 360,596 Interest expense 3,526 2,993 7,738 5,636 Net revenues 292,438 172,418 528,606 354,960 Non-interest expenses (1) 285,041 151,493 555,238 310,898 Pre-tax income/(loss) $ 7,397 $ 20,925 $ (26,632) $ 44,062 Pre-tax margin 2.5 % 12.1 % (5.0) % 12.4 % |
Organization and Basis of Pre_2
Organization and Basis of Presentation - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2020segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 1 |
Acquisitions - Acquisition of T
Acquisitions - Acquisition of The Valence Group (Details) - USD ($) $ in Thousands | Apr. 03, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 03, 2023 | Dec. 31, 2019 |
Business Acquisition | |||||||
Goodwill | $ 215,309 | $ 215,309 | $ 87,649 | ||||
Transaction costs | 2,233 | $ 2,488 | 3,084 | $ 2,488 | |||
The Valence Group | |||||||
Business Acquisition | |||||||
Unsecured promissory notes entered into as part of the purchase price | $ 20,000 | ||||||
Goodwill | 33,300 | ||||||
Intangible assets | 14,800 | ||||||
Transaction costs | $ 700 | $ 2,000 | |||||
The Valence Group | Customer relationships | |||||||
Business Acquisition | |||||||
Intangible assets | $ 14,800 | ||||||
The Valence Group | Restricted Stock | |||||||
Business Acquisition | |||||||
Restricted shares granted as equity consideration (in shares) | 647,268 | ||||||
Value of restricted shares granted as equity consideration | $ 31,200 | ||||||
Acquisition-related compensation arrangements | $ 5,500 | ||||||
Deal consideration vesting period | 5 years | ||||||
The Valence Group | Restricted Stock | 2020 Inducement Plan | Five Year Vesting Period | |||||||
Business Acquisition | |||||||
Award vesting period in years | 5 years | ||||||
The Valence Group | Forecast | |||||||
Business Acquisition | |||||||
Earn out performance period (in years) | three |
Acquisitions - Valence Estimate
Acquisitions - Valence Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Apr. 03, 2020 | Dec. 31, 2019 |
Assets | |||
Goodwill | $ 215,309 | $ 87,649 | |
The Valence Group | |||
Assets | |||
Cash and cash equivalents | $ 8,181 | ||
Fixed assets | 256 | ||
Goodwill | 33,300 | ||
Intangible assets | 14,800 | ||
Right-of-use lease asset | 3,279 | ||
Other assets | 4,190 | ||
Total assets acquired | 64,006 | ||
Liabilities | |||
Accrued lease liability | 3,279 | ||
Other liabilities and accrued expenses | 10,393 | ||
Total liabilities assumed | 13,672 | ||
Net Assets Acquired | |||
Net assets acquired | $ 50,334 |
Acquisitions - Acquisition of S
Acquisitions - Acquisition of SOP Holdings, LLC (Details) - USD ($) $ in Thousands | Jan. 03, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Business Acquisition | |||||
Goodwill recorded | $ 127,660 | ||||
Transaction costs | $ 2,233 | $ 2,488 | 3,084 | $ 2,488 | |
Sandler O'Neill | |||||
Business Acquisition | |||||
Purchase price | $ 485,000 | ||||
Amount of tangible book value the Company was entitled to receive | 100,000 | ||||
Acquisition-related compensation arrangements | 113,900 | ||||
Goodwill recorded | 94,400 | ||||
Goodwill, amount expected to be deductible for income tax purposes | 93,400 | ||||
Intangible assets | 157,800 | ||||
Transaction costs | $ 200 | $ 1,100 | |||
Sandler O'Neill | Trade name | |||||
Business Acquisition | |||||
Intangible assets | 85,400 | ||||
Sandler O'Neill | Customer relationships | |||||
Business Acquisition | |||||
Intangible assets | $ 72,400 | ||||
Sandler O'Neill | Restricted Stock | |||||
Business Acquisition | |||||
Restricted shares granted as equity consideration (in shares) | 1,568,670 | ||||
Value of restricted shares granted as equity consideration | $ 124,900 | ||||
Deal consideration vesting period | 3 years | ||||
Requisite service period | 3 years | ||||
Acquisition-related compensation arrangements | $ 96,900 | ||||
Sandler O'Neill | Restricted Stock | 2020 Inducement Plan | Weighted Average | |||||
Business Acquisition | |||||
Award vesting period in years | 3 years 8 months 12 days | ||||
Sandler O'Neill | Restricted Stock | 2020 Inducement Plan | 18 Month Vesting Period | |||||
Business Acquisition | |||||
Award vesting period in years | 18 months | ||||
Sandler O'Neill | Restricted Stock | 2020 Inducement Plan | Three Year Vesting Period | |||||
Business Acquisition | |||||
Award vesting period in years | 3 years | ||||
Sandler O'Neill | Restricted Stock | 2020 Inducement Plan | Five Year Vesting Period | |||||
Business Acquisition | |||||
Award vesting period in years | 5 years | ||||
Sandler O'Neill | Restricted cash | |||||
Business Acquisition | |||||
Acquisition-related compensation arrangements | $ 17,000 |
Acquisitions - Sandler O'Neill
Acquisitions - Sandler O'Neill Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jan. 03, 2020 | Dec. 31, 2019 |
Assets | |||
Goodwill | $ 215,309 | $ 87,649 | |
Sandler O'Neill | |||
Assets | |||
Cash and cash equivalents | $ 27,420 | ||
Receivables from brokers, dealers and clearing organizations | 192,675 | ||
Fixed assets | 6,789 | ||
Goodwill | 94,360 | ||
Intangible assets | 157,800 | ||
Investments | 685 | ||
Right-of-use lease asset | 39,607 | ||
Other assets | 9,628 | ||
Total assets acquired | 528,964 | ||
Liabilities | |||
Accrued compensation | 71,398 | ||
Accrued lease liability | 39,613 | ||
Other liabilities and accrued expenses | 16,441 | ||
Due to Sandler O'Neill | 40,673 | ||
Total liabilities assumed | 168,125 | ||
Net Assets Acquired | |||
Net assets acquired | $ 360,839 |
Acquisitions - Acquisition of W
Acquisitions - Acquisition of Weeden & Co. (Details) - USD ($) $ in Thousands | Aug. 02, 2019 | Jun. 30, 2020 | Jun. 30, 2020 |
Business Combination, Description [Abstract] | |||
Goodwill recorded | $ 127,660 | ||
Weeden & Co. | |||
Business Combination, Description [Abstract] | |||
Economic value | $ 42,000 | ||
Fair value of net assets acquired | 24,025 | ||
Restricted cash portion of purchase price | 10,100 | ||
Goodwill recorded | 5,800 | ||
Weeden & Co. | Customer relationships | |||
Business Combination, Description [Abstract] | |||
Intangible assets acquired | 12,000 | ||
Weeden & Co. | Internally developed software | |||
Business Combination, Description [Abstract] | |||
Intangible assets acquired | 4,700 | ||
Weeden & Co. | Net revenue target | |||
Business Combination, Description [Abstract] | |||
Additional cash consideration, maximum amount | 31,500 | ||
Amount accrued related to earnout | $ 20,700 | 20,700 | |
Non-interest expense recorded related to earnout | $ 2,200 | $ 19,800 | |
Weeden & Co. | Restricted Stock | |||
Business Combination, Description [Abstract] | |||
Acquisition-related compensation arrangements | $ 7,300 | ||
Requisite service period | 4 years |
Acquisitions - Weeden & Co. Est
Acquisitions - Weeden & Co. Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Aug. 02, 2019 |
Assets | |||
Goodwill | $ 215,309 | $ 87,649 | |
Weeden & Co. | |||
Assets | |||
Cash and cash equivalents | $ 4,351 | ||
Receivables from brokers, dealers and clearing organizations | 1,623 | ||
Fixed assets | 289 | ||
Goodwill | 5,794 | ||
Intangible assets | 16,700 | ||
Right-of-use lease asset | 6,811 | ||
Other assets | 10,888 | ||
Total assets acquired | 46,456 | ||
Liabilities | |||
Accrued compensation | 2,156 | ||
Accrued lease liability | 6,811 | ||
Other liabilities and accrued expenses | 13,464 | ||
Total liabilities assumed | 22,431 | ||
Net Assets Acquired | |||
Net assets acquired | $ 24,025 |
Acquisitions - Pro Forma Financ
Acquisitions - Pro Forma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||
Net revenues | $ 287,888 | $ 542,934 | $ 579,414 |
Net income/(loss) from continuing operations applicable to Piper Sandler Companies | $ 3,734 | $ (14,966) | $ 11,028 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - Advisory Research (ARI) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 48 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2019 | Sep. 20, 2020 | Dec. 31, 2023 | Sep. 27, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Cash proceeds | $ 52,900 | ||||||
Components of discontinued operations | |||||||
Net revenues | $ 9,317 | $ 18,607 | |||||
Operating expenses | 7,382 | 15,521 | |||||
Intangible asset amortization and impairment | 4,106 | 5,465 | |||||
Restructuring costs | 696 | 696 | |||||
Total non-interest expenses | 12,184 | 21,682 | |||||
Loss from discontinued operations before income tax benefit | (2,867) | (3,075) | |||||
Income tax benefit | (701) | (770) | |||||
Loss from discontinued operations, net of tax | (2,166) | (2,305) | |||||
Trade name | |||||||
Components of discontinued operations | |||||||
Intangible asset amortization and impairment | $ 2,900 | $ 2,900 | |||||
MLP Revenue | Forecast | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Earnout performance period | 1 year | ||||||
Earnout based on equity strategies revenue | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Fair value of earnout recorded | $ 2,200 | ||||||
Final buyout amount received | $ 1,000 | ||||||
Earnout based on equity strategies revenue | Forecast | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Earnout performance period | 4 years |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Financial instruments and other inventory positions owned: | ||
Equity securities | $ 4,593 | $ 3,046 |
Convertible securities | 144,732 | 146,406 |
Fixed income securities | 14,706 | 28,176 |
Taxable securities | 12,807 | 22,570 |
Tax-exempt securities | 120,496 | 222,192 |
Short-term securities | 70,793 | 67,901 |
Mortgage-backed securities | 13 | 13 |
U.S. government agency securities | 48,833 | 51,773 |
U.S. government securities | 0 | 77,303 |
Derivative contracts | 27,321 | 20,382 |
Total financial instruments and other inventory positions owned | 444,294 | 639,762 |
Financial instruments and other inventory positions sold, but not yet purchased: | ||
Equity securities | 45,854 | 94,036 |
Fixed income securities | 15,829 | 10,311 |
U.S. government agency securities | 4,025 | 9,935 |
U.S. government securities | 68,586 | 67,090 |
Derivative contracts | 7,130 | 4,053 |
Total financial instruments and other inventory positions sold, but not yet purchased | 141,424 | 185,425 |
Financial instruments and other inventory positions owned and pledged as collateral | $ 174,866 | $ 205,674 |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Notional amount | $ 2,145,821 | $ 2,308,215 |
Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 264,064 | 209,127 |
Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 258,306 | 200,167 |
Customer matched-book | Interest rate | ||
Derivative [Line Items] | ||
Notional amount | 2,008,953 | 2,197,340 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 264,000 | 209,119 |
Customer matched-book | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 253,438 | 198,315 |
Trading securities | Interest rate | ||
Derivative [Line Items] | ||
Notional amount | 126,775 | 110,875 |
Trading securities | Interest rate | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 64 | 8 |
Trading securities | Interest rate | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | 4,190 | 1,852 |
Trading securities | Equity options | ||
Derivative [Line Items] | ||
Notional amount | 10,093 | 0 |
Trading securities | Equity options | Financial instruments and other inventory positions owned | ||
Derivative [Line Items] | ||
Derivative Assets | 0 | 0 |
Trading securities | Equity options | Financial instruments and other inventory positions sold, but not yet purchased | ||
Derivative [Line Items] | ||
Derivative Liabilities | $ 678 | $ 0 |
Financial Instruments and Oth_5
Financial Instruments and Other Inventory Positions Owned and Financial Instruments and Other Inventory Positions Sold, but Not Yet Purchased - Unrealized Gains/(Losses) on Derivative Instruments (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | $ 1,056 | $ (10) | $ (2,525) | $ (876) |
Interest rate derivative contract | Investment banking | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | (200) | 186 | (932) | (431) |
Interest rate derivative contract | Institutional brokerage | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | 434 | (196) | (1,593) | (445) |
Equity options | Institutional brokerage | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gains/(losses) on derivative instruments | $ 822 | $ 0 | $ 0 | $ 0 |
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 | Jun. 30, 2020USD ($) |
Counterparties not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 27.5 |
Notional contract amount | 171.9 |
One unnamed financial institutional not required to post collateral | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Uncollateralized credit exposure | $ 23.2 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Fair Value Option (Details) - Merchant Banking Investments - Level III - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Investments at fair value | $ 1.8 | $ 2.1 | |
Gains (losses) from changes in fair value | $ 0.2 | $ (0.3) |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Information about Significant Unobservable Inputs used in Fair Value Measurement (Details) - Level III | Jun. 30, 2020basis_points |
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 liability contracts | 7 |
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 liability contracts | 26 |
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 liability contracts | 12 |
Premium over the MMD curve | Interest rate locks | Financial instruments and other inventory positions owned | Minimum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Derivative asset contracts | 1 |
Premium over the MMD curve | Interest rate locks | Financial instruments and other inventory positions owned | Maximum | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Derivative asset contracts | 22 |
Premium over the MMD curve | Interest rate locks | Financial instruments and other inventory positions owned | Weighted Average | Discounted cash flow | |
Fair Value Inputs Assets and Liabilities Quantitative Information [Line Items] | |
Derivative asset contracts | 17.8 |
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 | 3 |
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 | 6 |
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 | 11 |
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 | 18 |
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 | 16 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Valuation of Financial Instruments by Pricing Observability Levels (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Equity securities | $ 4,593,000 | $ 3,046,000 |
Convertible securities | 144,732,000 | 146,406,000 |
Fixed income securities | 14,706,000 | 28,176,000 |
Taxable securities | 12,807,000 | 22,570,000 |
Tax-exempt securities | 120,496,000 | 222,192,000 |
Short-term securities | 70,793,000 | 67,901,000 |
Mortgage-backed securities | 13,000 | 13,000 |
U.S. government agency securities | 48,833,000 | 51,773,000 |
U.S. government securities | 0 | 77,303,000 |
Derivative contracts | 27,321,000 | 20,382,000 |
Total financial instruments and other inventory positions owned | 444,294,000 | 639,762,000 |
Liabilities | ||
Equity securities | 45,854,000 | 94,036,000 |
Fixed income securities | 15,829,000 | 10,311,000 |
U.S. government agency securities | 4,025,000 | 9,935,000 |
U.S. government securities | 68,586,000 | 67,090,000 |
Derivative contracts | 7,130,000 | 4,053,000 |
Total financial instruments and other inventory positions sold, but not yet purchased | 141,424,000 | 185,425,000 |
Securities posted as collateral | 0 | 0 |
Level III | ||
Assets | ||
Total assets | 120,700,000 | 132,400,000 |
Measured on a recurring basis | ||
Assets | ||
Equity securities | 4,593,000 | 3,046,000 |
Convertible securities | 144,732,000 | 146,406,000 |
Fixed income securities | 14,706,000 | 28,176,000 |
Taxable securities | 12,807,000 | 22,570,000 |
Tax-exempt securities | 120,496,000 | 222,192,000 |
Short-term securities | 70,793,000 | 67,901,000 |
Mortgage-backed securities | 13,000 | 13,000 |
U.S. government agency securities | 48,833,000 | 51,773,000 |
U.S. government securities | 77,303,000 | |
Derivative contracts | 27,321,000 | 20,382,000 |
Derivative contracts - counterparty and collateral netting | (236,743,000) | (188,745,000) |
Total financial instruments and other inventory positions owned | 444,294,000 | 639,762,000 |
Cash equivalents | 194,390,000 | 226,744,000 |
Investments at fair value | 136,537,000 | 149,987,000 |
Total assets | 775,221,000 | 1,016,493,000 |
Liabilities | ||
Equity securities | 45,854,000 | 94,036,000 |
Fixed income securities | 15,829,000 | 10,311,000 |
U.S. government agency securities | 4,025,000 | 9,935,000 |
U.S. government securities | 68,586,000 | 67,090,000 |
Derivative contracts | 7,130,000 | 4,053,000 |
Derivative contracts - counterparty and collateral netting | (251,176,000) | (196,114,000) |
Total financial instruments and other inventory positions sold, but not yet purchased | 141,424,000 | 185,425,000 |
Measured on a recurring basis | Level I | ||
Assets | ||
Equity securities | 39,000 | 469,000 |
U.S. government securities | 77,303,000 | |
Total financial instruments and other inventory positions owned | 39,000 | 77,772,000 |
Cash equivalents | 194,390,000 | 226,744,000 |
Investments at fair value | 15,922,000 | 17,658,000 |
Total assets | 210,351,000 | 322,174,000 |
Liabilities | ||
Equity securities | 45,048,000 | 88,794,000 |
U.S. government securities | 68,586,000 | 67,090,000 |
Derivative contracts | 678,000 | |
Total financial instruments and other inventory positions sold, but not yet purchased | 114,312,000 | 155,884,000 |
Measured on a recurring basis | Level II | ||
Assets | ||
Equity securities | 4,554,000 | 2,577,000 |
Convertible securities | 144,732,000 | 146,406,000 |
Fixed income securities | 14,706,000 | 28,176,000 |
Taxable securities | 12,807,000 | 22,570,000 |
Tax-exempt securities | 120,496,000 | 222,192,000 |
Short-term securities | 70,793,000 | 67,901,000 |
U.S. government agency securities | 48,833,000 | 51,773,000 |
Derivative contracts | 264,000,000 | 209,119,000 |
Total financial instruments and other inventory positions owned | 680,921,000 | 750,714,000 |
Total assets | 680,921,000 | 750,714,000 |
Liabilities | ||
Equity securities | 806,000 | 5,242,000 |
Fixed income securities | 15,829,000 | 10,311,000 |
U.S. government agency securities | 4,025,000 | 9,935,000 |
Derivative contracts | 254,416,000 | 198,604,000 |
Total financial instruments and other inventory positions sold, but not yet purchased | 275,076,000 | 224,092,000 |
Measured on a recurring basis | Level III | ||
Assets | ||
Mortgage-backed securities | 13,000 | 13,000 |
Derivative contracts | 64,000 | 8,000 |
Total financial instruments and other inventory positions owned | 77,000 | 21,000 |
Investments at fair value | 120,615,000 | 132,329,000 |
Total assets | 120,692,000 | 132,350,000 |
Liabilities | ||
Derivative contracts | 3,212,000 | 1,563,000 |
Total financial instruments and other inventory positions sold, but not yet purchased | 3,212,000 | 1,563,000 |
Measured on a recurring basis | Level III | Investments attributable to noncontrolling interests | ||
Assets | ||
Investments at fair value | $ 67,800,000 | $ 75,200,000 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Transfers between fair value levels | $ 0 | |
Level III | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets | $ 120,700,000 | $ 132,400,000 |
Percentage of Level III assets to financial instruments measured at fair value | 15.60% | 13.00% |
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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 122,718 | $ 107,892 | $ 132,350 | $ 108,036 |
Purchases | 455 | 8,000 | 1,033 | 8,000 |
Sales | (60) | (4) | (225) | (342) |
Transfers out | 0 | (783) | (130) | (783) |
Realized gains/(losses) | (5,671) | 4 | (6,193) | 313 |
Unrealized gains/(losses) | 3,250 | 17,460 | (6,143) | 17,345 |
Ending balance | 120,692 | 132,569 | 120,692 | 132,569 |
Unrealized gains/ (losses) for assets held at period end | 4,782 | 16,939 | (6,360) | 17,026 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 5,557 | 4,222 | 1,563 | 4,202 |
Purchases | (9,606) | (3,220) | (12,747) | (8,822) |
Sales | 20 | 0 | 371 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 9,586 | 3,220 | 12,376 | 8,822 |
Unrealized gains/(losses) | (2,345) | 196 | 1,649 | 216 |
Ending balance | 3,212 | 4,418 | 3,212 | 4,418 |
Unrealized gains/(losses) for liabilities held at period end | 2,658 | 3,060 | 3,201 | 4,418 |
Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,988 | 14 | 21 | 244 |
Purchases | 455 | 0 | 750 | |
Sales | (60) | (4) | (60) | (342) |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | (395) | 4 | (690) | 313 |
Unrealized gains/(losses) | (1,911) | (1) | 56 | (202) |
Ending balance | 77 | 13 | 77 | 13 |
Unrealized gains/ (losses) for assets held at period end | (379) | (1) | 64 | (1) |
Investments | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 120,730 | 107,878 | 132,329 | 107,792 |
Purchases | 8,000 | 283 | 8,000 | |
Sales | 0 | 0 | (165) | 0 |
Transfers out | 0 | (783) | (130) | (783) |
Realized gains/(losses) | (5,276) | 0 | (5,503) | 0 |
Unrealized gains/(losses) | 5,161 | 17,461 | (6,199) | 17,547 |
Ending balance | 120,615 | 132,556 | 120,615 | 132,556 |
Unrealized gains/ (losses) for assets held at period end | 5,161 | 16,940 | (6,424) | 17,027 |
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 | 5,557 | 4,222 | 1,563 | 4,202 |
Purchases | (9,606) | (3,220) | (12,747) | (8,822) |
Sales | 20 | 0 | 371 | 0 |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 9,586 | 3,220 | 12,376 | 8,822 |
Unrealized gains/(losses) | (2,345) | 196 | 1,649 | 216 |
Ending balance | 3,212 | 4,418 | 3,212 | 4,418 |
Unrealized gains/(losses) for liabilities held at period end | 2,658 | 3,060 | 3,201 | 4,418 |
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 | 13 | 14 | 13 | 15 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | (4) | 0 | (6) |
Transfers out | 0 | 0 | 0 | 0 |
Realized gains/(losses) | 0 | 4 | 0 | (23) |
Unrealized gains/(losses) | 0 | (1) | 0 | 27 |
Ending balance | 13 | 13 | 13 | 13 |
Unrealized gains/ (losses) for assets held at period end | 0 | $ (1) | 0 | (1) |
Derivative contracts | Financial instruments and other inventory positions owned | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,975 | 8 | 229 | |
Purchases | 455 | 750 | 0 | |
Sales | (60) | (60) | (336) | |
Transfers out | 0 | 0 | 0 | |
Realized gains/(losses) | (395) | (690) | 336 | |
Unrealized gains/(losses) | (1,911) | 56 | (229) | |
Ending balance | 64 | 64 | ||
Unrealized gains/ (losses) for assets held at period end | $ (379) | $ 64 | $ 0 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entity, Not Primary Beneficiary, Aggregated Disclosure | ||
Variable Interest Entity [Line Items] | ||
Variable interest entities, nonconsolidated net assets | $ 1,500,000,000 | $ 300,000,000 |
Variable interest entities, exposure to loss | 5,900,000 | |
Variable interest entity, nonconsolidated liabilities | 0 | $ 0 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Available bank line financing | $ 25,000,000 |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Consolidated Variable Interest Entities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entity [Line Items] | ||
Investments | $ 144,076 | $ 158,141 |
Total other assets | 100,470 | 55,440 |
Total assets | 1,710,908 | 1,628,719 |
Other liabilities and accrued expenses | 69,480 | 46,578 |
Total liabilities | 897,196 | $ 822,191 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Investments | 118,385 | |
Total other assets | 686 | |
Total assets | 119,071 | |
Other liabilities and accrued expenses | 2,998 | |
Total liabilities | $ 2,998 |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Receivables from Brokers-Dealers and Clearing Organizations [Abstract] | ||
Receivable from clearing organizations | $ 152,641 | $ 260,436 |
Receivable from brokers and dealers | 37,402 | 19,161 |
Other | 3,260 | 3,511 |
Total receivables from brokers, dealers and clearing organizations | 193,303 | 283,108 |
Broker-Dealer, Payable to Other Broker-Dealer and Clearing Organization [Abstract] | ||
Payable to brokers and dealers | 30,578 | 7,514 |
Payable to clearing organizations | 4,327 | 0 |
Total payables to brokers, dealers and clearing organizations | $ 34,905 | $ 7,514 |
Receivables from and Payables_4
Receivables from and Payables to Brokers, Dealers and Clearing Organizations - Additional Information (Details) | Jun. 30, 2020USD ($) |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Schedule of Investments [Line Items] | ||
Investments at fair value | $ 136,537 | $ 149,987 |
Investments at cost | 1,611 | 1,084 |
Investments accounted for under the equity method | 5,928 | 7,070 |
Total investments | 144,076 | 158,141 |
Estimated fair market value of investments carried at cost | 1,600 | |
Investments attributable to noncontrolling interests | ||
Schedule of Investments [Line Items] | ||
Total investments | (67,756) | (75,245) |
Investments attributable to parent | ||
Schedule of Investments [Line Items] | ||
Total investments | $ 76,320 | $ 82,896 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fee receivables | $ 49,497 | $ 18,574 |
Accrued interest receivables | 1,991 | 2,977 |
Forgivable loans, net | 4,575 | 5,227 |
Prepaid expenses | 12,748 | 10,687 |
Income tax receivables | 0 | 2,658 |
Other | 31,659 | 15,317 |
Total other assets | $ 100,470 | $ 55,440 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Carrying Value of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 03, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 03, 2020 |
Goodwill | ||||||
Goodwill beginning balance | $ 87,649 | |||||
Goodwill acquired | 127,660 | |||||
Goodwill ending balance | $ 215,309 | 215,309 | ||||
Intangible assets | ||||||
Intangible assets beginning balance | 16,686 | |||||
Intangible assets acquired | 172,600 | |||||
Amortization of intangible assets | (11,637) | $ (753) | (21,515) | $ (1,506) | ||
Intangible assets ending balance | $ 167,771 | $ 167,771 | ||||
The Valence Group | ||||||
Intangible assets | ||||||
Intangible assets acquired | $ 14,800 | |||||
Sandler O'Neill | ||||||
Goodwill | ||||||
Goodwill acquired | $ 94,400 | |||||
Goodwill ending balance | 94,360 | |||||
Intangible assets | ||||||
Intangible assets acquired | 157,800 | |||||
Customer relationships | The Valence Group | ||||||
Intangible assets | ||||||
Intangible assets acquired | $ 14,800 | |||||
Weighted average life | 1 year 4 months 24 days | |||||
Customer relationships | Sandler O'Neill | ||||||
Intangible assets | ||||||
Intangible assets acquired | 72,400 | |||||
Weighted average life | 2 years 4 months 24 days | |||||
Trade name | Sandler O'Neill | ||||||
Intangible assets | ||||||
Intangible assets acquired | $ 85,400 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets Goodwill and Intangible Assets - Aggregate Future Intangible Asset Amortization Expense (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 23,213 |
2021 | 24,780 |
2022 | 9,344 |
2023 | 7,442 |
2024 | 6,292 |
Thereafter | 11,300 |
Total | $ 82,371 |
Short-Term Financing - Schedule
Short-Term Financing - Schedule of Short-Term Financing (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Short-term Debt [Line Items] | ||
Short-term financing | $ 99,990 | $ 49,978 |
Commercial paper | ||
Short-term Debt [Line Items] | ||
Short-term financing | $ 49,990 | $ 49,978 |
Weighted Average Interest Rate | 1.17% | 2.69% |
Revolving credit facility | ||
Short-term Debt [Line Items] | ||
Short-term financing | $ 50,000 | $ 0 |
Weighted Average Interest Rate | 2.91% | 0.00% |
Short-Term Financing - Addition
Short-Term Financing - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Short-term Debt [Line Items] | ||
Short-term financing | $ 99,990,000 | $ 49,978,000 |
Commercial paper | ||
Short-term Debt [Line Items] | ||
Short-term financing | $ 49,990,000 | 49,978,000 |
Commercial paper | Minimum | ||
Short-term Debt [Line Items] | ||
Debt term | 27 days | |
Commercial paper | Maximum | ||
Short-term Debt [Line Items] | ||
Debt term | 270 days | |
Commercial paper | CP Series II A | ||
Short-term Debt [Line Items] | ||
Excess net capital required | $ 100,000,000 | |
Commercial paper | CP Series II A | Weighted Average | ||
Short-term Debt [Line Items] | ||
Debt term | 6 days | |
Revolving credit facility | ||
Short-term Debt [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 50,000,000 | |
Minimum net capital required | 120,000,000 | |
Short-term financing | $ 50,000,000 | $ 0 |
Bank lines (secured) | ||
Short-term Debt [Line Items] | ||
Debt term | 1 year | |
Line of credit, maximum borrowing capacity | $ 125,000,000 | |
Minimum net capital required | 120,000,000 | |
Short-term financing | $ 0 |
Long-Term Financing - Additiona
Long-Term Financing - Additional Information (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-term financing | $ 195,000,000 | $ 175,000,000 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term financing | 175,000,000 | |
Senior Notes | Class A Fixed Rate Senior Notes Due October 2021 | ||
Debt Instrument [Line Items] | ||
Long-term financing | $ 50,000,000 | |
Annual fixed rate | 4.74% | |
Senior Notes | Class B Fixed Rate Senior Notes Due October 2023 | ||
Debt Instrument [Line Items] | ||
Long-term financing | $ 125,000,000 | |
Annual fixed rate | 5.20% | |
Unsecured promissory notes | The Valence Group | ||
Debt Instrument [Line Items] | ||
Long-term financing | $ 20,000,000 | |
Annual fixed rate | 5.00% |
Leases - Schedule of Aggregate
Leases - Schedule of Aggregate Minimum Lease Commitments for Operating Leases (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 12,793 |
2021 | 22,995 |
2022 | 21,488 |
2023 | 17,658 |
2024 | 15,758 |
Thereafter | 35,389 |
Total | $ 126,081 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease cost | $ 5.4 | $ 2.9 | $ 10.3 | $ 5.7 |
Operating lease cost related to short-term leases | 0.3 | 0.1 | 0.5 | 0.3 |
Sublease Income | $ 0.5 | $ 0.4 | $ 0.9 | $ 0.8 |
Weighted average remaining lease term | 6 years | 6 years | ||
Weighted Average | ||||
Lessee, Lease, Description [Line Items] | ||||
Weighted average discount rate | 4.00% | 4.00% |
Restructuring and Integration_3
Restructuring and Integration Costs - Schedule of Pre-tax Restructuring Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 1,491 | $ 3,907 | $ 2,542 | $ 3,907 |
Integration costs | 2,233 | 2,488 | 3,084 | 2,488 |
Restructuring and integration costs | 3,724 | 6,395 | 5,626 | 6,395 |
Severance, benefits and outplacement | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 2,043 | 1,109 | 2,921 | 1,109 |
Contract termination | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | (640) | 2,798 | (467) | 2,798 |
Vacated leased office space | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 88 | $ 0 | $ 88 | $ 0 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | Jul. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 01, 2020 | Sep. 30, 2017 |
Equity, Class of Treasury Stock [Line Items] | |||||||
Aggregate purchase price of share repurchases | $ 17,482,000 | $ 50,226,000 | |||||
Shares of common stock purchased from restricted stock award related to recipients' employment tax obligations (in shares) | 98,136 | 696,411 | |||||
Repurchase of common stock for employee tax withholding | $ 8,300,000 | $ 50,200,000 | |||||
Reissuance of treasury shares as a result of employee vesting (in shares) | 271,889 | 1,401,268 | |||||
Issuance of treasury shares for deal consideration (in shares) | 34,205 | ||||||
Cash dividends paid | $ 18,800,000 | ||||||
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.38 | $ 1.33 | $ 1.76 | |||
Other comprehensive income or loss attributed to noncontrolling interests | $ 0 | $ 0 | |||||
Subsequent Event | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Dividends declared per common share (in dollars per share) | $ 0.30 | ||||||
Quarterly dividend | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash dividends paid (amount per share) | $ 0.575 | ||||||
Annual special cash dividend | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash dividends paid (amount per share) | $ 0.75 | ||||||
Share repurchase program, authorized 2020 | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock, authorized amount | $ 150,000,000 | ||||||
Shares repurchased (in shares) | 128,865 | ||||||
Average price of repurchases (in shares) | $ 71.58 | ||||||
Aggregate purchase price of share repurchases | $ 9,200,000 | ||||||
Amount remaining under share repurchase authorization | $ 140,800,000 | $ 140,800,000 | |||||
Share repurchase program, authorized 2017 | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock, authorized amount | $ 150,000,000 | ||||||
Shares repurchased (in shares) | 501 | ||||||
Average price of repurchases (in shares) | $ 64.80 |
Compensation Plans - Summary of
Compensation Plans - Summary of Outstanding Equity Awards (Details) - shares | Jun. 30, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options (in shares) | 81,667 | 81,667 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 4,191,131 | 694,225 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 146,048 | 114,315 |
Total restricted stock outstanding | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 2,009,398 | |
Deal consideration | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 2,181,733 | |
Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options (in shares) | 81,667 | |
Incentive Plan | Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 146,048 | |
Incentive Plan | Total restricted stock outstanding | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 593,896 | |
Incentive Plan | Total restricted stock outstanding | Restricted Stock | Annual grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 462,661 | |
Incentive Plan | Total restricted stock outstanding | Restricted Stock | Sign-on grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 131,235 | |
2019 Inducement Plan | Total restricted stock outstanding | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 97,752 | |
2020 Inducement Plan | Total restricted stock outstanding | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 1,317,750 |
Compensation Plans - Schedule o
Compensation Plans - Schedule of RSU Performance Condition Probability (Details) - Restricted stock units - Average adjusted return on equity targets - Probability of achieving performance condition | 6 Months Ended |
Jun. 30, 2020 | |
2020 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 50.00% |
2019 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 50.00% |
2018 | |
Schedule of Share-based Payment Awards, Equity Instruments Other Than Options, Performance Condition [Line Items] | |
Award vesting percentage | 44.00% |
Compensation Plans - Schedule_2
Compensation Plans - Schedule of RSU Valuation Assumptions (Details) - Restricted stock units | 6 Months Ended |
Jun. 30, 2020 | |
2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free Interest Rate | 1.40% |
Expected Stock Price Volatility | 27.30% |
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 | 6 Months Ended |
Jun. 30, 2020$ / 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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 27.9 | $ 5.8 | $ 49.5 | $ 10.1 |
Forfeitures | 1.1 | 0.3 | 1.2 | 1.2 |
Tax benefit related to stock-based compensation expense | $ 3.9 | $ 1.1 | $ 6.3 | $ 1.5 |
Compensation Plans - Changes in
Compensation Plans - Changes in Unvested Restricted Stock (Details) - Restricted Stock | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance (in shares) | shares | 694,225 |
Granted (in shares) | shares | 3,779,652 |
Vested (in shares) | shares | (246,734) |
Canceled (in shares) | shares | (36,012) |
Ending Balance (in shares) | shares | 4,191,131 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance (in dollars per share) | $ / shares | $ 78.52 |
Granted (in dollars per share) | $ / shares | 73.58 |
Vested (in dollars per share) | $ / shares | 80.96 |
Canceled (in dollars per share) | $ / shares | 80.84 |
Ending Balance (in dollars per share) | $ / shares | $ 73.90 |
Compensation Plans - Changes _2
Compensation Plans - Changes in Unvested Restricted Stock Units (Details) - Restricted stock units | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Unvested Restricted Stock or Stock Units | |
Beginning Balance (in shares) | shares | 114,315 |
Granted (in shares) | shares | 56,066 |
Vested (in shares) | shares | (18,255) |
Canceled (in shares) | shares | (6,078) |
Ending Balance (in shares) | shares | 146,048 |
Weighted Average Grant Date Fair Value (in dollars per share) | |
Beginning Balance (in dollars per share) | $ / shares | $ 85.09 |
Granted (in dollars per share) | $ / shares | 86.01 |
Vested (in dollars per share) | $ / shares | 84.10 |
Canceled (in dollars per share) | $ / shares | 84.10 |
Ending Balance (in dollars per share) | $ / shares | $ 85.60 |
Compensation Plans - Changes _3
Compensation Plans - Changes in Outstanding Stock Options (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Options Outstanding | ||
Beginning Balance (in shares) | 81,667 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Cancelled (in shares) | 0 | |
Expired (in shares) | 0 | |
Ending Balance (in shares) | 81,667 | 81,667 |
Weighted Average Exercise Price (in dollars per share) | ||
Beginning Balance (in dollars per share) | $ 99 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Cancelled (in dollars per share) | 0 | |
Expired (in dollars per share) | 0 | |
Ending Balance (in dollars per share) | $ 99 | $ 99 |
Weighted Average Remaining Contractual Term (in Years) | ||
Weighted Average Remaining Contractual Term (in Years) | 7 years 7 months 6 days | 8 years 1 month 6 days |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ 0 | $ 0 |
Compensation Plans - Additional
Compensation Plans - Additional Information (Details) $ in Millions | Apr. 03, 2020USD ($)shares | Jan. 03, 2020USD ($)shares | Aug. 02, 2019USD ($)shares | May 16, 2016USD ($)shares | Jun. 30, 2020USD ($)planshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock-based compensation plans | plan | 3 | ||||
Exercisable options at period end (in shares) | 0 | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted (in shares) | 3,779,652 | ||||
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 (in shares) | 56,066 | ||||
Restricted stock and restricted stock units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to equity awards | $ | $ 233.1 | ||||
Weighted average period over which equity award expense expected to be recognized | 3 years 3 months 18 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 equity awards | $ | $ 1.1 | ||||
Weighted average period over which equity award expense expected to be recognized | 2 years 7 months 6 days | ||||
Stock options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of stock options | 10 years | ||||
Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity award grants authorized (in shares) | 9,400,000 | ||||
Shares available for future issuance (in shares) | 1,700,000 | ||||
Leadership Grants Subsequent to 2016 | Restricted stock units | 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 | Restricted stock units | 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 | Restricted stock units | 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 | Restricted stock units | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 75.00% | ||||
Total shareholder return | 2016 Leadership Grant | Restricted stock units | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 50.00% | ||||
Simmons & Company International | 2016 Inducement Plan | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of restricted stock granted | $ | $ 11.6 | ||||
Number of shares granted (in shares) | 286,776 | ||||
Weeden & Co. | 2019 Inducement Plan | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of restricted stock granted | $ | $ 7.3 | ||||
Number of shares granted (in shares) | 97,752 | ||||
Sandler O'Neill | 2020 Inducement Plan | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of restricted stock granted | $ | $ 96.9 | ||||
Number of shares granted (in shares) | 1,217,423 | ||||
Sandler O'Neill | 2020 Inducement Plan | Restricted Stock | 18 Month Vesting Period | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 18 months | ||||
Sandler O'Neill | 2020 Inducement Plan | Restricted Stock | Three Year Vesting Period | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 3 years | ||||
Sandler O'Neill | 2020 Inducement Plan | Restricted Stock | Five Year Vesting Period | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 5 years | ||||
Sandler O'Neill | 2020 Inducement Plan | Restricted Stock | Weighted Average | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 3 years 8 months 12 days | ||||
The Valence Group | 2020 Inducement Plan | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of restricted stock granted | $ | $ 5.5 | ||||
Number of shares granted (in shares) | 114,000 | ||||
The Valence Group | 2020 Inducement Plan | Restricted Stock | Five Year Vesting Period | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period in years | 5 years | ||||
Annual grants | Restricted Stock | |||||
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 | Restricted Stock | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant requisite service period | 3 years | ||||
Sign-on grants | Restricted Stock | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grant requisite service period | 5 years |
Compensation Plans - Acquisitio
Compensation Plans - Acquisition-related Compensation Arrangements (Details) - Simmons - Performance award plan - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Performance award plan accrual | $ 40.1 | |||
Contingent consideration performance period | 3 years | |||
Share based compensation expense period | $ 1 | $ 0.4 |
Compensation Plans - Deferred C
Compensation Plans - Deferred Compensation Plans (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
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 | $ 15.5 | $ 16.7 |
Plan Liabilities | $ 15.5 | $ 16.7 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net income/(loss) from continuing operations applicable to Piper Sandler Companies | $ 1,454 | $ 12,555 | $ (13,273) | $ 32,116 |
Net loss from discontinued operations | 0 | (2,166) | 0 | (2,305) |
Net income/(loss) applicable to Piper Sandler Companies | 1,454 | 10,389 | (13,273) | 29,811 |
Earnings allocated to participating securities | 0 | (238) | 0 | (1,924) |
Net income/(loss) applicable to Piper Sandler Companies' common shareholders | $ 1,454 | $ 10,151 | $ (13,273) | $ 27,887 |
Shares for basic and diluted calculations: | ||||
Average shares used in basic computation (in shares) | 13,794,000 | 13,588,000 | 13,795,000 | 13,397,000 |
Average shares used in diluted computation (in shares) | 14,476,000 | 14,024,000 | 14,444,000 | 13,778,000 |
Earnings/(loss) per basic common share: | ||||
Income/(loss) from continuing operations (in dollars per share) | $ 0.11 | $ 0.90 | $ (0.96) | $ 2.24 |
Loss from discontinued operations (in dollars per share) | 0 | (0.15) | 0 | (0.16) |
Earnings/(loss) per basic common share (in dollars per share) | 0.11 | 0.75 | (0.96) | 2.08 |
Earnings/(loss) per diluted common share: | ||||
Income/(loss) from continuing operations (in dollars per share) | 0.10 | 0.87 | (0.96) | 2.18 |
Loss from discontinued operations (in dollars per share) | 0 | (0.15) | 0 | (0.16) |
Earnings/(loss) per diluted common share (in dollars per share) | $ 0.10 | $ 0.72 | $ (0.96) | $ 2.02 |
Weighted average participating shares outstanding (in shares) | 403,103 | 764,963 | ||
Restricted stock units | ||||
Shares for basic and diluted calculations: | ||||
Dilutive impact of securities (in shares) | 97,000 | 189,000 | 102,000 | 197,000 |
Non-participating restricted shares | ||||
Shares for basic and diluted calculations: | ||||
Dilutive impact of securities (in shares) | 585,000 | 247,000 | 547,000 | 184,000 |
Stock options and restricted shares | ||||
Earnings/(loss) per diluted common share: | ||||
Shares excluded from diluted EPS (in shares) | 2,900,000 | 2,900,000 |
Revenues and Business Informa_3
Revenues and Business Information - Revenues and Business Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Investment banking | $ 199,827 | $ 118,739 | $ 358,825 | $ 259,800 |
Institutional brokerage | 89,339 | 32,204 | 178,482 | 67,169 |
Interest income | 3,065 | 6,863 | 9,130 | 14,430 |
Investment income/(loss) | 3,733 | 17,605 | (10,093) | 19,197 |
Total revenues | 295,964 | 175,411 | 536,344 | 360,596 |
Interest expense | 3,526 | 2,993 | 7,738 | 5,636 |
Net revenues | 292,438 | 172,418 | 528,606 | 354,960 |
Non-interest expenses | 285,041 | 151,493 | 555,238 | 310,898 |
Pre-tax income/(loss) | $ 7,397 | $ 20,925 | $ (26,632) | $ 44,062 |
Pre-tax margin | 2.50% | 12.10% | (5.00%) | 12.40% |
Intangible asset amortization | $ 11,637 | $ 753 | $ 21,515 | $ 1,506 |
Advisory services | ||||
Segment Reporting Information [Line Items] | ||||
Investment banking | 85,569 | 75,238 | 196,795 | 190,117 |
Corporate financing | ||||
Segment Reporting Information [Line Items] | ||||
Investment banking | 83,448 | 25,718 | 108,624 | 39,234 |
Municipal financing | ||||
Segment Reporting Information [Line Items] | ||||
Investment banking | 30,810 | 17,783 | 53,406 | 30,449 |
Equity brokerage | ||||
Segment Reporting Information [Line Items] | ||||
Institutional brokerage | 40,644 | 15,468 | 88,497 | 31,374 |
Fixed income services | ||||
Segment Reporting Information [Line Items] | ||||
Institutional brokerage | $ 48,695 | $ 16,736 | $ 89,985 | $ 35,795 |
Net Capital Requirements and _2
Net Capital Requirements and Other Regulatory Matters - Additional Information (Details) | Jun. 30, 2020USD ($) |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Minimum net capital requirement | $ 1,000,000 |
Net capital | 153,400,000 |
Excess net capital | 152,400,000 |
Pershing clearing arrangement | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Excess net capital required | 120,000,000 |
Senior Notes | |
Schedule Of Compliance With Regulatory Capital Requirements For Broker Dealer [Line Items] | |
Minimum 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 |
Revolving 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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense/(benefit) | $ 4,700 | $ (180) | $ (7,074) | $ 4,012 |
Tax benefit for stock-based compensation awards vesting during the period | $ 3,500 | 200 | $ 5,100 | |
Income tax benefits related to CARES Act provisions | $ (2,600) |