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MINNEAPOLIS, Jul 21, 2010 (BUSINESS WIRE) --

Piper Jaffray Companies (NYSE: PJC) today announced net income of $7.4 million, or $0.36 per diluted common share, for the second quarter ended June 30, 2010, compared to net income of $11.6 million, or $0.59 per diluted common share, for the second quarter of 2009 and net income of $0.5 million, or $0.03 per diluted common share, for the first quarter of 2010. Second quarter 2010 net revenues were $127.7 million, compared to $132.3 million in the year-ago period, and $109.6 million for the first quarter of 2010.

For the six months ending June 30, 2010, net income was $7.9 million, or $0.39 per diluted common share, compared to $8.9 million and $0.45 per diluted common share in 2009. Net revenues were $237.2 million for the six months, up 10 percent compared to the prior year.

"We had mixed performance for the quarter. We generated solid investment banking results attributable to equity financing and advisory fee revenues. These results were partially offset, however, by significantly lower fixed income revenues driven by very challenging trading conditions in the second quarter." said Andrew S. Duff, chairman and chief executive officer. "Our backlogs continue to be healthy across equity, public finance, and M&A. We need constructive capital markets to realize the revenue potential in these backlogs."

Consolidated Expenses
For the second quarter, compensation and benefits expenses were $77.7 million, down 2 percent compared to the year-ago period. Compensation and benefits expenses were up 19 percent compared to the first quarter of 2010, driven by higher revenues, profitability, and the addition of Advisory Research. For the second quarter, compensation as a percentage of net revenues was 60.9 percent, compared to 60.0 percent in the year-ago period and 59.4 percent in the first quarter of 2010.

Non-compensation expenses were $38.1 million, up 11 percent compared to the second quarter of 2009 and up 8 percent compared to the first quarter of 2010. The increases compared to both periods primarily resulted from a full quarter of expenses related to Advisory Research, including intangible amortization, costs associated with headcount reductions at FAMCO, and an increase in travel and entertainment expenses.

Business Segment Results
Beginning with the second quarter of 2010, financial results are also provided for two business segments: Capital Markets and Asset Management. Consolidated net revenues and expenses are fully allocated to these two segments.

Capital Markets
Capital Markets generated pre-tax operating income of $8.9 million, compared to $19.8 million in the second quarter of 2009, and $7.4 million in the first quarter of 2010. Net revenues were $112.0 million, compared to $128.9 million in the year-ago period and $100.4 million in the first quarter of 2010.

The following is a recap of completed deal information for the second quarter of 2010:

Asset Management
For the quarter ended June 30, 2010, asset management generated pre-tax operating income of $3.0 million, compared to a loss of $1.4 million in the second quarter of 2009, and operating income of $1.7 million in the first quarter of 2010. Net revenues were $15.7 million, compared to $3.4 million in the year-ago period and $9.2 million in the first quarter of 2010. The increased revenues were primarily attributable to a full quarter of results for Advisory Research.

Other Matters
In the second quarter of 2010, $30.0 million, or 893,050 shares, of the company's common stock was repurchased pursuant to a share repurchase authorization. The average price per share repurchased was $33.57. The remainder of the share repurchase authorization expired as of June 30, 2010.

Additional Shareholder Information

As of June 30, 2010 As of Mar. 31, 2010 As of June 30, 2009
Number of employees: 1,083 1,092 1,001

Asset Management
AUM:

$11.8 billion $12.8 billion $5.9 billion
Shareholders' equity: $817.0 million $838.4 million $778.1 million

Annualized Qtrly.
Return on Avg.
Adjusted
Shareholders' Equity1

4.0%

0.3%

7.0%

Book value per share: $53.71 $52.25 $48.30

Tangible book value
per share2:

$28.67 $28.38 $37.51

1Adjusted shareholders' equity equals total shareholders' equity, including goodwill associated with acquisitions, less goodwill resulting from the 1998 acquisition of our predecessor company, Piper Jaffray Companies Inc., by U.S. Bancorp. Annualized return on average adjusted shareholders' equity is computed by dividing annualized net income by average monthly adjusted shareholders' equity. Management believes that annualized return on adjusted shareholders' equity is a meaningful measure of performance because it reflects equity deployed in our businesses after our spin off from U.S. Bancorp on December 31, 2003. The following table sets forth a reconciliation of shareholders' equity to adjusted shareholders' equity. Shareholders' equity is the most directly comparable GAAP financial measure to adjusted shareholders' equity.

Average for the
Three Months Ended Three Months Ended Three Months Ended
(Dollars in thousands) June 30, 2010 Mar. 31, 2010 June 30, 2009
Shareholders' equity $ 836,210 $ 800,059 $ 769,825

Deduct: goodwill attributable to PJC Inc. acquisition by USB

105,522 105,522 105,522
Adjusted shareholders' equity $ 730,688 $ 694,537 $ 664,303

2Tangible shareholders' equity equals total shareholders' equity less all goodwill and identifiable intangible assets. Tangible book value per share is computed by dividing tangible shareholders' equity by common shares outstanding. Management believes that tangible book value per share is a more meaningful measure of our book value per share. Shareholders' equity is the most directly comparable GAAP financial measure to tangible shareholders' equity. The following is a reconciliation of shareholders' equity to tangible shareholders' equity:

As of

As of

As of

June 30, 2010

Mar. 31, 2010

June 30, 2009

Shareholders' equity $ 817,025 $ 838,423 $ 778,109
Deduct: goodwill and identifiable intangible assets 380,880 383,084 173,731
Tangible shareholders' equity $ 436,145 $ 455,339 $ 604,378

Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman, chief financial officer, will host a conference call to discuss second quarter results on Wednesday, July 21, at 9 a.m. ET (8 a.m. CT). The call can be accessed via live audio webcast available through the firm's Web site at www.piperjaffray.com or by dialing (800) 768-8804, or (212) 231-2903 internationally, and referencing reservation #21475255. Callers should dial in at least 15 minutes early to receive instructions. A replay of the conference call will be available beginning at approximately 11 a.m. ET July 21 at the same Web address or by calling (800) 633-8284 and referencing reservation #21475255.

About Piper Jaffray
Piper Jaffray Companies (NYSE: PJC) is a leading, international investment bank and institutional securities firm, serving the needs of corporations, private equity groups, public entities, nonprofit clients and institutional investors. Founded in 1895, Piper Jaffray provides a broad set of products and services, including equity and debt capital markets products; public finance services; financial advisory services; equity and fixed-income institutional brokerage; equity research and fixed income analytics; and asset management services. Piper Jaffray headquarters are located in Minneapolis, Minnesota, with offices across the U.S. and in London and Hong Kong. Piper Jaffray & Co. is the firm's principal operating subsidiary. (www.piperjaffray.com)

Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the contents of this press release contain forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are subject to significant risks and uncertainties that are difficult to predict. These forward-looking statements cover, among other things, statements made about general economic and market conditions (including continued market volatility), anticipated financial results (including expectations regarding revenue and expense levels, operating margin, the compensation ratio, return on shareholders' equity, and non-compensation expenses), the environment and prospects for capital markets transactions and institutional brokerage activity (including fixed income sales and trading activity and the municipal sector within fixed income), our current deal pipelines, expected hiring activity, liquidity and capital resources, share repurchase plans or other similar matters. These statements involve inherent risks and uncertainties, both known and unknown, and important factors could cause actual results to differ materially from those anticipated or discussed in the forward-looking statements, including (1) market and economic conditions or developments may be unfavorable, including in specific sectors in which we operate, and these conditions or developments (including market fluctuations or volatility) may adversely affect the environment for capital markets transactions and activity and our business, revenue levels and profitability, (2) the volume of anticipated investment banking transactions as reflected in our deal pipelines (and the net revenues we earn from such transactions) may differ from expected results if any transactions are delayed or not completed at all or if the terms of any transactions are modified, (3) we may not be able to compete successfully with other companies in the financial services industry, (4) our hiring of additional senior talent may not yield the benefits we anticipate or yield them within expected timeframes, (5) our ability to manage expenses, including our quarterly run rate for non-compensation expenses, may be limited by the fixed nature of certain expenses as well as the impact from unanticipated expenses, (6) an inability to access capital readily or on terms favorable to us could impair our ability to fund operations and could jeopardize our financial condition, (7) the other factors described under "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2009, and updated in our subsequent reports filed with the SEC (available at our Web site at www.piperjaffray.com and at the SEC Web site at www.sec.gov). Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.

© 2010 Piper Jaffray & Co., 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020

Piper Jaffray Companies
Preliminary Unaudited Results of Operations
Three Months Ended Percent Inc/(Dec) Six Months Ended
Jun. 30, Mar. 31, Jun. 30, 2Q '10 2Q '10 Jun. 30, Jun. 30, Percent
(Amounts in thousands, except per share data) 2010 2010 2009 vs. 1Q '10 vs. 2Q '09 2010 2009 Inc/(Dec)

Revenues:

Investment banking $ 71,745 $ 43,748 $ 62,150 64.0 % 15.4 % $ 115,493 $ 86,500 33.5 %
Institutional brokerage 32,084 49,095 60,852 (34.6 ) (47.3 ) 81,179 115,879 (29.9 )
Interest 12,648 11,120 8,973 13.7 41.0 23,768 16,261 46.2
Asset management 15,873 9,154 3,240 73.4 389.9 25,027 6,249 300.5
Other income/(loss) 3,495 2,927 (950 ) 19.4 N/M 6,422 (4,549 ) N/M
Total revenues 135,845 116,044 134,265 17.1 1.2 251,889 220,340 14.3
Interest expense 8,192 6,458 1,975 26.9 314.8 14,650 4,168 251.5
Net revenues 127,653 109,586 132,290 16.5 (3.5 ) 237,239 216,172 9.7

Non-interest expenses:

Compensation and benefits 77,678 65,096 79,377 19.3 (2.1 ) 142,774 129,701 10.1
Occupancy and equipment 8,056 7,669 7,680 5.0 4.9 15,725 14,198 10.8
Communications 6,199 6,489 5,430 (4.5 ) 14.2 12,688 11,529 10.1
Floor brokerage and clearance 3,307 2,617 3,232 26.4 2.3 5,924 6,114 (3.1 )
Marketing and business development 6,095 5,322 3,419 14.5 78.3 11,417 7,864 45.2
Outside services 7,735 8,004 7,415 (3.4 ) 4.3 15,739 14,934 5.4
Restructuring-related expenses - - 3,572 N/M (100.0 ) - 3,572 (100.0 )
Other operating expenses 6,747 5,234 3,747 28.9 80.1 11,981 6,298 90.2
Total non-interest expenses 115,817 100,431 113,872 15.3 1.7 216,248 194,210 11.3

Income before income tax expense

11,836 9,155 18,418 29.3 (35.7 ) 20,991 21,962 (4.4 )
Income tax expense 4,458 8,645 6,842 (48.4 ) % (34.8 ) 13,103 13,111 (0.1 )
Net income 7,378 510 11,576 N/M (36.3 ) 7,888 8,851 (10.9 )

Net income allocated to restricted participating shares

(1,666 ) (101 ) (2,101 ) N/M (20.7 ) (1,675 ) (1,582 ) 5.9
Net income applicable to common shareholders $ 5,712 $ 409 $ 9,475 N/M (39.7 ) % $ 6,213 $ 7,269 (14.5 ) %
Earnings per common share
Basic $ 0.36 $ 0.03 $ 0.59 N/M (38.9 ) % $ 0.39 $ 0.45 (13.9 ) %
Diluted $ 0.36 $ 0.03 $ 0.59 N/M (39.0 ) % $ 0.39 $ 0.45 (14.2 ) %
Weighted average number of common shares outstanding
Basic 15,901 15,837 16,104 0.4 % (1.3 ) % 15,869 15,987 (0.7 ) %
Diluted 15,925 15,924 16,117 0.0 % (1.2 ) % 15,925 15,995 (0.4 ) %

N/M - Not meaningful

Piper Jaffray Companies
Preliminary Unaudited Segment Data
Three Months Ended Percent Inc/(Dec) Six Months Ended
Jun. 30, Mar. 31, Jun. 30, 2Q '10 2Q '10 Jun. 30, Jun. 30, Percent

(Dollars in thousands)

2010 2010 2009 vs. 1Q '10 vs. 2Q '09 2010 2009 Inc/(Dec)

Capital Markets

Investment banking
Financing
Equities $ 34,776 $ 16,988 $ 23,294 104.7 % 49.3 % $ 51,764 $ 27,357 89.2 %
Debt 14,355 15,181 20,126 (5.4 ) (28.7 ) 29,536 32,514 (9.2 )
Advisory services 23,197 11,975 19,574 93.7 18.5 35,172 28,389 23.9
Total investment banking 72,328 44,144 62,994 63.8 14.8 116,472 88,260 32.0
Institutional sales and trading
Equities 27,501 26,927 30,384 2.1 (9.5 ) 54,428 61,046 (10.8 )
Fixed income 9,733 27,376 35,166 (64.4 ) (72.3 ) 37,109 62,971 (41.1 )
Total institutional sales and trading 37,234 54,303 65,550 (31.4 ) (43.2 ) 91,537 124,017 (26.2 )
Other income/(loss) 2,423 1,985 344 22.1 604.4 4,408 (2,310 ) N/M
Net revenues 111,985 100,432 128,888 11.5 (13.1 ) 212,417 209,967 1.2
Operating expenses 103,114 93,026 109,041 10.8 (5.4 ) 196,140 185,453 5.8
Segment pre-tax operating income $ 8,871 $ 7,406 $ 19,847 19.8 % (55.3 ) % $ 16,277 $ 24,514 (33.6 ) %
Segment pre-tax operating margin 7.9 % 7.4 % 15.4 % 7.7 % 11.7 %
Asset Management
Management and performance fees $ 15,873 $ 9,154 $ 3,240 73.4 % 389.9 % $ 25,027 $ 6,249 300.5 %
Other income/(loss) (205 ) - 162 N/M N/M (205 ) (44 ) 365.9
Net revenues 15,668 9,154 3,402 71.2 360.6 24,822 6,205 300.0
Operating expenses 12,703 7,405 4,831 71.5 162.9 % 20,108 8,757 129.6 %
Segment pre-tax operating income/(loss) $ 2,965 $ 1,749 $ (1,429 ) 69.5 % N/M $ 4,714 $ (2,552 ) N/M
Segment pre-tax operating margin 18.9 % 19.1 % N/M 19.0 % N/M
Total
Net revenues $ 127,653 $ 109,586 $ 132,290 16.5 % (3.5 ) % $ 237,239 $ 216,172 9.7 %
Operating expenses 115,817 100,431 113,872 15.3 1.7 216,248 194,210 11.3
Total segment pre-tax operating income $ 11,836 $ 9,155 $ 18,418 29.3 % (35.7 ) % $ 20,991 $ 21,962 (4.4 ) %
Pre-tax operating margin 9.3 % 8.4 % 13.9 % 8.8 % 10.2 %
N/M - Not meaningful

SOURCE: Piper Jaffray Companies

Piper Jaffray Companies
Jennifer A. Olson-Goude, 612-303-6277
Investor and Media Relations