Broadpoint.Gleacher Announces 2009 Annual Financial Results, with Record Net Revenues of $341.8 Million, Pre-Tax Profit of $61.5 Million, Net Income of $55.4 Million and Diluted EPS of $0.53

Broadpoint Gleacher Securities Group, Inc. (NASDAQ: BPSG) reported today financial results for the fourth quarter and for the full year ended December 31, 2009. Broadpoint.Gleacher will hold a conference call this morning, January 28, 2010, at 10:00 A.M. (EST) (see Conference Call Information below) to discuss these results.

Highlights of the full year and the fourth quarter include:

• Net revenues of $341.8 million for the year ended December 31, 2009 increased 155 percent compared to $134.3 million for 2008. Pre-tax profit of $61.5 million for the year ended December 31, 2009 compared to a pre-tax loss of $14.8 million for 2008. Pre-tax margin was 18.0 percent for 2009. Revenue per employee for 2009 was $1.159 million.
• Net revenues of $81.2 million for the fourth quarter of 2009 increased 61 percent compared to $50.6 million for the fourth quarter of 2008. Pre-tax profit of $14.1 million for the fourth quarter of 2009 increased 666 percent compared to $1.8 million in the fourth quarter of 2008. Pre-tax margin was 17.4 percent for the fourth quarter of 2009 compared to 3.6 percent in the fourth quarter of 2008.
• Net profit was $55.4 million for 2009, or $0.53 diluted earnings per share, and net profit for the quarter ended December 31, 2009 was $10.3 million, or $0.08 diluted earnings per share.

• For the year ended December 31, 2009, Investment Banking revenues of $46.2 million increased 176 percent compared to $16.7 million for 2008. Fourth quarter Investment Banking revenues were $15.5 million, an increase of 470 percent compared to $2.7 million in the prior year quarter.
• The Company received Financial Services Authority approval to acquire ISM Capital, a London-based capital markets advisory firm. The acquisition is expected to close in the first quarter of 2010.
• Staffing was strengthened with the Company increasing total head count 44 percent year over year, with client-facing employees representing 71 percent of the employee base. During the fourth quarter, head count increased by 16 people with key hires in Asset Based Investment Banking, CLO Sales and Trading, and Finance.

Lee Fensterstock, Chief Executive Officer, said, “We are very pleased with the progress across all of our businesses during 2009, building upon the platform we established in 2008. We have much work to do however to continue to build-out our firm and diversify our earnings stream. While the fourth quarter reflected a slowdown in fixed income, we fared somewhat better than many of our competitors, and we continued our progress in growing investment banking.”

Eric Gleacher, Chairman, said, “Our progress in developing our investment banking business over the past seven months since Gleacher Partners became a part of Broadpoint has gone well. Our restructuring business continues producing strong results and our M&A and capital markets backlogs have grown meaningfully. Our goal is that our results in 2010 will reveal a balanced set of completed transactions in all three areas, demonstrating solid progress and growth in investment banking."

Highlights by business segment for the fourth quarter ended December 31, 2009 and December 31, 2008

(In thousands)

		Three Months Ended
Net Revenues by Business Segment (including net interest income)		December 31, 2009			December 31, 2008
Broadpoint Descap			34,583			15,891
Debt Capital Markets			24,067			26,237
Equity Capital Markets			5,641			6,230
Investment Banking			12,692			2,419
Other		$	4,233		$	(218	)
Net revenues (including net interest income)		$	81,216		$	50,559
Pre-tax profit*		$	14,127		$	1,844
*Includes stock-based compensation of:		$	5,090		$	1,929

Overview of Financial Results for the Quarters Ended December 31, 2009 and December 31, 2008

(In thousands except per share amounts) (Unaudited Condensed Consolidated Statements of Operations)
		Three Months Ended December 31,
		2009			2008
Revenues:
Principal transactions		$	46,337		$	37,933
Commissions			4,580			4,547
Investment banking			15,497			2,720
Investment gains (losses)			2,018			(705	)
Interest income			14,855			8,159
Fees and other			1,589			2,118
Total revenues			84,876			54,772
Interest expense			3,660			4,213
Net revenues			81,216			50,559
Expenses (excluding interest):
Compensation and benefits*			53,705			40,125
Clearing, settlement and brokerage			1,332			918
Communications and data processing			2,831			1,966
Occupancy and depreciation			2,326			1,395
Selling			1,958			655
Other			4,937			3,656
Total expenses (excluding interest)			67,089			48,715
Profit before income taxes			14,127			1,844
Income tax expense			3,875			19
Profit from continuing operations			10,252			1,825
Loss from discontinued operations, net of taxes			-			(11	)
Net profit		$	10,252		$	1,814
Per share data:
Basic earnings:
Continuing operations		$	0.09		$	0.02
Discontinued operations			-			-
Net profit		$	0.09		$	0.02
Diluted earnings:
Continuing operations		$	0.08		$	0.02
Discontinued operations			-			-
Net profit		$	0.08		$	0.02
Weighted average common and common equivalent shares outstanding:
Basic			118,346			74,034
Diluted			126,171			81,509
*Compensation and benefits detail:
Salary, bonus and benefits		$	45,663		$	34,340
Earnout associated with BNY transaction			2,952			3,856
Employee stock-based compensation			5,090			1,929
Total		$	53,705		$	40,125

Discussion of operating results for the fourth quarter of 2009 compared to the fourth quarter of 2008

Net revenues for the fourth quarter of 2009 were $81.2 million, an increase of $30.7 million, or 61 percent, from $50.6 million in the fourth quarter of 2008. Pre-tax profit from continuing operations in the fourth quarter was $14.1 million compared to $1.8 million in the prior year quarter.

Revenues from principal transactions and commissions were $50.9 million in the fourth quarter of 2009, an increase of $8.4 million, or 20 percent, compared to the fourth quarter of 2008, due to increased revenues in the Broadpoint Descap division of $12.9 million, which was partially offset by a decrease in the Debt Capital Markets division of $4.4 million. Investment Banking revenues increased $12.8 million over the fourth quarter of 2008 to $15.5 million, primarily due to an increase in advisory fees. Investment gains of $2.0 million increased $2.7 million over the fourth quarter of 2008 due to an increase in the value of the Company’s investment in the FATV fund. Net interest income increased by $7.2 million over the fourth quarter of 2008 to $11.2 million in the fourth quarter of 2009, primarily due to coupon interest generated on higher inventory levels at Broadpoint Descap. Fees and other revenues of $1.6 million decreased by $0.5 million compared to the fourth quarter of 2008, primarily due to a decrease in payments received for equity research.

Non-interest expenses for the fourth quarter of 2009 of $67.1 million increased $18.4 million, or 38 percent, compared to $48.7 million in the fourth quarter of 2008. In the fourth quarter of 2009, compensation and benefits expense was $53.7 million, an increase of 34 percent over the prior year quarter, primarily due to an increase in net revenues of 61 percent. Clearing, settlement and brokerage costs were $1.3 million, an increase of 45 percent compared to the prior year quarter due to increased activity in the Broadpoint Descap division. Communications and data processing expense of $2.8 million increased by $0.9 million compared to the fourth quarter of 2008 due to increased business activity in the Broadpoint Descap division. Occupancy and depreciation expense increased $0.9 million, or 67 percent, over the fourth quarter of 2008 to $2.3 million due to the leasing of additional office space. Selling expense increased $1.3 million, or 199 percent, over the fourth quarter of 2008 to $2.0 million due to an increase in sales activity. Other expenses increased $1.3 million, or 35 percent, over the fourth quarter of 2008 to $4.9 million in the fourth quarter of 2009, primarily due to amortization of intangibles related to the Gleacher acquisition and the implementation of a new SIPC assessment fee.

Overview of Financial Results for the Year Ended December 31, 2009 and December 31, 2008
(In thousands except per share amounts)
(Unaudited Condensed Consolidated Statements of Operations)
			Years Ended December 31,
		2009			2008
Revenues:
Principal transactions		$	230,011		$	97,032
Commissions			19,745			6,529
Investment banking			46,156			16,696
Investment gains (losses)			5,698			(1,115	)
Interest income			49,439			21,946
Fees and other			6,368			3,925
Total revenues			357,417			145,013
Interest expense			15,572			10,712
Net revenues			341,845			134,301
Expenses (excluding interest):
Compensation and benefits*			235,798			111,678
Clearing, settlement and brokerage			4,631			2,794
Communications and data processing			10,509			9,245
Occupancy and depreciation			8,381			6,259
Selling			5,499			3,099
Restructuring			-			4,315
Other			15,482			11,717
Total expenses (excluding interest)			280,300			149,107
Profit (loss) before income taxes			61,545			(14,806	)
Income tax expense			6,220			2,424
Profit (loss) from continuing operations			55,325			(17,230	)
Profit (loss) from discontinued operations, net of taxes			28			(132	)
Net profit (loss)		$	55,353		$	(17,362	)
Per share data:
Basic earnings:
Continuing operations		$	0.57		$	(0.25	)
Discontinued operations			-			-
Net profit (loss)		$	0.57		$	(0.25	)
Diluted earnings:
Continuing operations		$	0.53		$	(0.25	)
Discontinued operations			-			-
Net profit (loss)		$	0.53		$	(0.25	)
Weighted average common and common equivalent shares outstanding:
Basic			96,834			69,296
Diluted			104,233			69,296
*Compensation and benefits detail:
Salary, bonus and benefits		$	204,630		$	95,906
Earnout associated with BNY transaction			17,194			7,380
Employee stock-based compensation			13,974			8,392
Total		$	235,798		$	111,678

Discussion of operating results for the year ended December 31, 2009 compared to the year ended December 31, 2008

For the year ended December 31, 2009 net revenues from continuing operations were $341.8 million, an increase of $207.5 million, or 155 percent, from $134.3 million for the year ended December 31, 2008. The Company reported a pre-tax profit from continuing operations of $61.5 million for the year ended December 31, 2009 compared to a pre-tax loss of $14.8 million for the year ended December 31, 2008.

Revenues from principal transactions and commissions for the year ended December 31, 2009 increased $146.2 million, or 141 percent, to $249.8 million compared to the year ended December 31, 2008 due to increased revenues in the Broadpoint Descap division of $76.4 million, the Debt Capital Markets division, which commenced operations in March 2008, of $59.3 million, and the Equities division of $10.6 million. Investment Banking revenues increased $29.5 million over the prior year to $46.2 million due to an increase in advisory fees. Investment gains of $5.7 million increased $6.8 million over the prior year due to an increase in the value of the Company’s investment in the FATV fund. Net interest income increased by $22.6 million over the prior year to $33.9 million, primarily due to coupon interest generated on higher inventory levels at Broadpoint Descap. Fees and other revenues of $6.4 million increased by $2.4 million over the prior year, primarily due to an increase in payments received for equity research in our Equity division.

Non-interest expenses for the year ended December 31, 2009 of $280.3 million increased $131.2 million, or 88 percent, compared to $149.1 million for the year ended December 31, 2008. Compensation and benefits expense was $235.8 million, an increase of 111 percent over the prior year due to an increase in net revenues of 155 percent and an increase in headcount. Clearing, settlement and brokerage costs were $4.6 million, an increase of 66 percent, compared to the prior year due to the addition of the Debt Capital Markets division and increased volumes at the Broadpoint Descap division. Communications and data processing expense of $10.5 million increased by $1.3 million over the prior year due to the addition of the Debt Capital Markets division and an increase in activity and headcount in the Broadpoint Descap division. Occupancy and depreciation expense increased $2.1 million, or 34 percent, over the prior year to $8.4 million due to the leasing of additional office space. Selling expense increased $2.4 million, or 77 percent, over the prior year to $5.5 million, primarily due to an increase in sales activity. The Company’s restructuring was completed at the end of the third quarter of 2008 and as a result no restructuring charges were incurred during 2009, compared to the $4.3 million in restructuring charges incurred in 2008. Other expenses increased $3.8 million, or 32 percent, over the prior year to $15.5 million due to costs associated with the Gleacher acquisition, the amortization of intangibles related to the Amtech and Gleacher acquisitions and the implementation of a new SIPC assessment fee.

Condensed Consolidated Statements of Financial Condition
(In thousands except per share and share amounts)
(Unaudited Consolidated Statements of Financial Condition)
		December 31,				December 31,
As of		2009				2008
Assets
Cash and cash equivalents		$	24,997			$	7,377
Cash segregated for regulatory purposes			100				470
Receivables from:
Brokers, dealers and clearing agencies			19,797				3,465
Others			16,425				4,722
Securities owned, at fair value			979,701				618,822
Investments, at fair value			19,326				15,398
Office equipment and leasehold improvements, net			3,069				1,691
Goodwill			105,694				23,283
Intangible assets			19,263				8,239
Other assets			25,132				10,804
Total Assets		$	1,213,504			$	694,271
Liabilities
Payables to:
Brokers, dealers and clearing agencies		$	690,815			$	511,827
Others			14,180				2,788
Securities sold, but not yet purchased, at fair value			72,988				15,228
Accounts payable			2,202				2,172
Accrued compensation			70,728				31,939
Accrued expenses and income taxes payable			7,989				6,178
Mandatorily redeemable preferred stock			24,419				24,187
Total Liabilities			883,321				594,319
Commitments and Contingencies
Subordinated debt			1,197				1,662
Shareholders’ Equity
Preferred stock; $1.00 par value; authorized 1,500,000 shares; issued 1,000,000 (Mandatorily Redeemable)
Common stock; $.01 par value; authorized 200,000,000 and 100,000,000 shares, respectively; issued 125,056,247 and 81,556,246 shares, respectively; and outstanding 124,506,292 and 79,829,492 shares, respectively			1,251				815
Additional paid-in capital			410,617				236,824
Deferred compensation			534				954
Accumulated deficit			(82,709	)			(138,062	)
Treasury stock, at cost (549,955 shares and 1,726,754 shares, respectively)			(707	)			(2,241	)
Total Shareholders’ Equity			328,986				98,290
Total Liabilities and Shareholders’ Equity		$	1,213,504			$	694,271

Income Tax Note

The effective tax rate for the three-months ended December 31, 2009 was 27.4 percent. The effective rate was impacted by a re-measurement of our deferred tax assets, partially offset by a change in estimate of our state tax rate and other items.

The effective tax rate for the year ended December 31, 2009 was 10.1 percent. This rate reflects a net tax benefit of $23.0 million primarily related to our release of the deferred tax valuation allowance during the year, partially offset by a re-measurement of certain deferred tax assets and provision to return adjustments. Excluding these items, the effective rate for the year would have been 47.5 percent. The effective rate for the year-ended December 31, 2009 was also impacted by a change in estimate of our state tax rate and other items.

Non-GAAP Financial Measures

Revenue per employee, stated previously in this press release, may be viewed as a non-GAAP financial measure. We calculate this number by dividing our net revenue for the year by the average number of employees during the period. Our net revenue per average number of employees during 2009 calculated using our net revenues of $341.8 million, and an average of 295 employees, was $1.159 million.

Conference Call Information

The Company will hold a conference call today, January, 28 at 10:00 A.M. (EST). This call will be webcast and can be accessed on the Investor Relations portion of the Company’s website at www.bpsg.com, as well as being distributed through Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents ( www.streetevents.com), a password protected event management site. To participate on the call, please dial 888.680.0865 for domestic calls or 617.213.4853 for international calls, participant passcode 82645480 or request the Broadpoint.Gleacher earnings call. For those who cannot listen to the live broadcast, a recording of the call will be available for seven days following the call by dialing 888.286.8010 for domestic calls or 617.801.6888 for international calls, participant passcode 57339724.

About Broadpoint.Gleacher

Broadpoint Gleacher Securities Group, Inc. (NASDAQ: BPSG) is an independent investment bank that provides corporations and institutional investors with strategic, research-based investment opportunities, capital raising, and financial advisory services, including merger and acquisition, restructuring, recapitalization and strategic alternative analysis services. The Company offers a diverse range of products through the Debt Capital Markets, Investment Banking and Broadpoint DESCAP divisions of Broadpoint Capital, Inc., its Equity Capital Markets subsidiary, Broadpoint AmTech, and FA Technology Ventures Inc., its venture capital subsidiary. For more information, please visit www.bpsg.com.

Forward Looking Statements

This press release contains "forward-looking statements." These statements are not historical facts but instead represent the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. The Company's forward-looking statements are subject to various risks and uncertainties, including the conditions of the securities markets, generally, and acceptance of the Company's services within those markets and other risks and factors identified from time to time in the Company's filings with the Securities and Exchange Commission. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in its forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update any of its forward-looking statements.