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Full year earnings per diluted share increase 93 percent to $2.60
Return on tangible shareholders' equity(1) improves to 12.9 percent
Company announces a share repurchase program

MINNEAPOLIS, Jan. 26 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income of $11.8 million, or $0.61 per diluted share, for the quarter ended Dec. 31, 2004, up from a net loss of $3.3 million, or ($0.17) per diluted share, for the quarter ended Dec. 31, 2003. Net income also totaled $11.8 million, or $0.61 per diluted share in the third quarter of 2004. Net revenues for the fourth quarter were $194.6 million, down 3.6 percent from the fourth quarter of 2003 and up 4.5 percent over the third quarter of 2004.

For the full year, net income improved to $50.3 million, compared to $26.0 million in the prior year. Earnings per diluted share rose 92.6 percent to $2.60 compared to the prior year. Net revenues increased to $797.5 million for the full year, up $10.8 million or 1.4 percent over 2003. Return on tangible shareholders' equity(1) improved to 12.9 percent compared to 8.0 percent for the prior year.

"We reported respectable performance for our first year as a new public company," said chairman and chief executive officer Andrew S. Duff. "We stemmed the negative trend in private client revenues and substantially increased our equity underwriting and merger and acquisition revenues. We also made solid progress on margin improvement and significantly enhanced our return on tangible shareholders' equity."

The company also announced today that its board of directors has authorized the repurchase of up to 1.3 million shares of the company's outstanding common stock for a maximum aggregate purchase price of $65.0 million. The principal purpose of the share repurchase program is to manage the company's equity capital relative to the growth of its business and to offset the dilutive effect of employee equity-based compensation. The repurchase program will be conducted under a 10b5-1 plan and will commence early in 2005, ending Dec. 31, 2005. As of Dec. 31, 2004, Piper Jaffray Companies had 19.9 million common shares outstanding.

Results of Operations

Net Revenues

Fourth quarter net revenues declined $7.2 million, or 3.6 percent, from the prior year period, primarily due to lower equity institutional sales and trading activity. Compared to the third quarter of 2004, net revenues rose 4.5 percent driven by increased private client activity, improved fixed-income institutional sales and trading activity and stronger equity underwriting revenue. Offsetting these increases were softer public finance and merger and acquisition revenues.

For the year, net revenues were $797.5 million, an increase of $10.8 million, or 1.4 percent. Substantially stronger equity underwriting and mergers and acquisitions revenues more than offset weaker fixed income institutional sales and trading performance.

Non-Interest Expenses

For the quarter, non-interest expenses were $176.4 million, down 14.9 percent from the fourth quarter of 2003. Compensation expense was $116.8 million, essentially flat with the prior year. Non-compensation expenses were $59.6 million, a decrease of $30.6 million, or 33.9 percent. The decrease from the prior year in non-compensation expenses was due largely to three items:

Compared to the third quarter of 2004, non-interest expenses increased 5.2 percent, primarily due to higher litigation-related expenses.

For the year, non-interest expenses were $717.9 million, down $28.0 million or 3.8 percent. Compensation expense was $488.4 million, up 1.2 percent compared to last year. Non-compensation expenses were $229.5 million, down 12.9 percent from the prior year. This decline was due to several factors: