Good morning and welcome to the Piper Jaffray Companies Conference Call to discuss the Financial Results for the Fourth Quarter and Full-Year of 2015. During the question-and-answer session, securities industry professionals may ask questions to management. The company has asked that I remind you that statements on this call that are not historical or current facts, including statements about beliefs and expectations are forward-looking statements that involve inherent risk and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's earnings release and reports on file with the SEC, which are available on the company's website at www.PiperJaffray.com and on the SEC website at www.SEC.gov. This call will also include statements regarding certain non-GAAP financial measures. Please refer to your company's earnings release issued today for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measure. The earnings release is available on the Investor Relations page of the company's website or at the SEC website. As a reminder, this call is being recorded. And now, I'd like to turn the call over to Mr. Andrew Duff. Mr. Duff, you may begin your call.

Good morning and thank you for joining us to review our fourth quarter and full year results. The strength of our 2015 operating results is a testament to significant strategic progress across much of our business. We produced record revenues for the quarter and the year lead by the strength of our investment banking franchises. Within investment banking, advisory achieved record levels for the second year lead by our healthcare group, which continue to be an industry leader. Revenue for our public finance group also hit a new record, while our fixed income business generated impressive performance on the strength of our longstanding leadership in municipals together with solid risk management. I think it’s helpful provide some additional context to the strategic progress, which drive our strong results. As we emerged from the second wave of the financial crisis in 2011, we embarked on a strategy with the dual goals of producing consistent growth and earnings and generating a return on equity that would ultimately exceed our cost of capital. Our tactical approach to realize these strategic goals included several components. First, we increased operating leverage in our business model by sculpting the cost structure around areas where we heard the most competitive. Second, we invested to remix the business to higher margin, less capital intensive activates, notably advisory asset management and public finance. Third, we know that the impact of external market conditions with market leadership and their diverse range of businesses. Finally, we have aggressively returned capital to our shareholders. Our progress in each of these areas has put us on a trajectory to generate on ROE in excess of our cost of capital over the next several years. Since embarking on this strategy, we have increased revenue by 50%, operating earnings by 150%, and tripled our ROE.…

Thank you, Andrew. I will being by discussing our quarterly results followed by comments on the years overall. My remarks will be based on the non-GAAP financial measures we referred to at the start of the call. For the fourth quarter on an adjusted basis, we recorded net income of $21 million, or $1.40 per diluted common share. We produced an operating margin of 17%, up 100 basis points compared to the year-ago period and up significantly compared to the third quarter of 2015. Our third quarter results included a $9.8 million legal settlement charge. Improvement in the operating margin was attributable to increased operating leverage driven by higher revenues partially offset by an elevated comp ratio, as we invested in our expansion into the financial sector. Adjusted net revenues of $195 million in the fourth quarter were up 32% compared to both the fourth quarter of 2014 and the third quarter of 2015. Record advisory services revenues in the current quarter driven by robust activity by our healthcare team contributed to the strong results. The fixed income institutional brokerage business also contributed to these results. Market leadership in municipal coupled with favorable market condition drove both higher customer activity and trading gains. In addition, fixed income performance benefited from the initial impact of the addition of the GKST team early in the quarter. Moving to our adjusted full year-results, revenues of $663 million were up 5% compared to 2014 and net income was $66 million with earnings per diluted common share of $4.22. EPS was down slightly versus 2014 given the impact of the previously mentioned legal settlement in the third quarter and our expansion into the financial sector. Excluding the legal settlement, the adjusted EPS for 2015 would have been $4.61, up 4% compared to 2014. I would…

As we contemplate the outlook for 2016, while the markets have presented us with a challenging start to the year, a number of factors should position us to build on our strong performance over the last year. These include the investments we made last year and earlier highlighted by our three announced acquisitions in 2015 and the diversity of our franchise. Our overall momentum and advisory which we expect to continue into 2016 provides a solid foundation for investment banking. Simmons which we expect to close in Q1 and the continued seasoning of our FIG hires should have a favorable impact on our investment banking group. Our demonstrative strength in equity capital raising and our expanded set of products including debt advisory, restructuring capabilities provide Simmons with more avenues to generate revenue despite difficult market conditions. We are spending considerable efforts to realize these opportunities. In the fixed income area, we intend to maintain and improve on our market share gains in public finance. This will complement the improved productivity in our fixed income sales group attributable to GKST addition which increases our operating leverage and should help us achieve our goal of higher returns on capital used in this business. Based on our progress and strong results, we have emerged as one of the leading franchises serving the middle market clients. Our primary focus in 2016 is to execute on 2015’s major initiatives to ensure we reap the benefits of these investments. We believe however that we are well positioned to attract opportunities that may arise in challenging markets. We intend to maintain our discipline assessing all opportunities through filters of our strategic objectives. This concludes our formal remarks. Operator, we will now open the line for questions.

[Operator Instructions] Your first question comes from the line of Mike Adams.

Good morning. Congrats on a very strong finish to the year.

Thanks, Mike. Good morning.

Andrew, so a question on the outlook, you talked about advisory, expecting some of the momentum there to continue into 2016. I guess I'm just kind of curious in light of the market correction that we have seen, and some uncertainty in the outlook, should we expect that to be a bit back half weighted, or do you think in the first half of the year it could be pretty good for you?

We expect the momentum in the business to carry to the start of the year and in fact we have couple of meaningful announced transactions already.

Okay.

So we expect a strong performance in advisory throughout the year.

Okay. Got you. And then in terms of the invested firm capital, you mentioned some negative marks again, around the MLP strategy in 4Q. So I mean could you update us on those investments. Have you been able to de-risk or unwind any of those positions? Where do they sit today?

Yes. So we have maintained the position that we had originally invested into the MLP strategy typically and we had done that based on the strength of the team overall, and their long track record, and our long-term outlook now. So the losses that we have taken thus far have all been unrealized and we have maintained that position.

Okay. And then touching on the sales and trading business specifically fixed income, just given the strength that you guys saw in 4Q, a few moving pieces in there, but like how much of the pickup was attributable to the GKST addition, versus some of the customer flow and trading gains that you referenced?

Yes. So there are as you’ve mentioned multiple components of the growth this quarter and I really see there are three things going on there and all of them especially the GKST addition and the trading games had the most significant impact. Let me just walk through those few components. So GKST acquisition closed in early October so we did get the benefit for pretty much the full quarter of the increased sales force and they definitely had a meaningful impact on the quarter-over-quarter increase and we are very pleased with how quickly they have ramped. They have definitely actually slightly exceeded the targets we had set. Another advantage that we are seeing is the leverage we are getting on the enhanced trading talent, as we really merged the two sales and trading forces between Pipers and GKST. And so we are seeing increased productivity in our existing sales force on certain products, now that is less meaningful than the overall expansion from adding increase in the sales force. And then the other very meaningful piece was the ability to take advantage of favorable conditions in the municipal market with the stronger trading gains. So it's really primarily driven by the stronger trading gains and the GKST increased sales force. I think as you look at going forward, a way to think about this is the fact that we increased our sales and trading for the middle market sales force by 25% and that is a very meaningful portion of our overall fixed income revenues.

Got it. Thanks, Deb. Last one for me and I will get back in the queue here, but could you just update us on where you stand with the $60 million buy back commitment that you made in conjunction with the Simmons deal? Where does that stand now, and do you still expect to get that done ahead of the deal close?

So we have bought back 40 million of the 60 million that we are planning to issue part of the Simmons transaction. We did that at an average price of $38. $27 of that was in the fourth quarter and $12 million of that was actually in January. We will not likely get the amount, the full amount done prior to the acquisition, but our intent is to do that obviously as soon as possible and we are already two-thirds of the way there.

Got it. Thank you very much and congrats again.

Thank you.

Your next question comes from the line of Hugh Miller of Macquarie.

Hi, good morning.

Good morning.

Good morning.

So I had a question on the Asset Management business. I know that you guys referenced that you enjoyed net inflows in each quarter of 2015 for the MLP product, which is certainly helpful. Is there, I understand that you guys do benefit from a portion of those assets that are closed in. Can you give us a sense of what that portion is, and as we think about kind of demand for that asset class, are there any structural issues that would kind of cause people to not withdraw money in the shorter-term, but that maybe over time you could see seasoned investments that could potentially come out of that asset class, or how should we think about that?

, :

And then from a investor perspective on the energy markets, I think I will separate it, you can talk about it in two ways. First of all our experience is, we also run some additional energy products that we are seeing a lot of what I would call fairly sophisticated large institutional investors that have either actually made some investments recently or are in dialogue with us. So, it seems like there is fairly significant growing interest in this sector and then I would move over to MLPs which is going through what is fairly a typical for them in an asset pricing. You know when you think about it, it tends to be the more stable sector within energy since its financial performances really more impacted by volume, essentially throughput, flowing through the pipeline and less impacted by energy prices one way or another. However, when there are very sharp declines in oil prices you can get to which I believe we are in the middle of sort of a broad and indiscriminant selling of the energy sector and it feels like that’s what we are going through as stabilizes if you will and you look at the MLP asset class again, you now have very attractive yields and a long term track record that’s very compelling. So, that’s kind of the summary of how we think about it.

Certainly very helpful, I do appreciate the color. A question kind of on the advisory strength that we saw in the quarter, just looking at some of the data from the services that we were able to subscribe to, it seemed like they were two large transactions that you guys participated in that we are estimating were probably somewhere close to 30% of revenue for the quarter, is that correct? I know you guys gave some outlook on transactions that are starting of strong in 1Q, but as we think about 4Q whether a handful of larger deals that kind of were exceptionally strong in the quarter?

You know your ballpark, you may be a little high, but there were several and my perspective is as our franchises really moved its position in the last couple of years, we with some regularity here now are seeing larger fees. I think that’s part of how you become a $175 million, $200 million business, which we have done for the last couple of years and enjoyed the momentum going into the New Year.

Okay. That's helpful. And then I do appreciate the outlook you gave with regard to expectations for advisory in 2016. Can you just talk to us about what you're hearing from the CEOs you guys speak with, and their kind of thoughts as we roll into 2016, given the market conditions, and are you seeing any hesitance to kind of move forward with transactions, or is it very different in healthcare relative to industrial or consumer?

We are not currently seeing an impact and see those appear to remain relatively confident. There is financing available as we know there is sort of moderate economic growth. So, those combined conditions remain favorable and I guess specifically in the healthcare sector there are a number of industry trends that suggests ongoing investments in growth and consolidation. So it nets pretty favorably and then the last thing I would say operating as we do largely in the let's broadly call it “the middle markets”, high-yield financing is really much less of a factor. These are not the super large multi-billion dollar transactions that really need a high performing high yield market, it is not really where we operate. So, the conditions remain very stable from our perspective.

Okay. Appreciate the time. Thank you so much.

Thank you.

Your next question comes from the line of Joel Jeffrey of KBW.

Hey. Good morning, guys.

Good morning.

Good morning.

I just wanted to follow-up on the advisory question. So kind of as we think about 2016 is sort of ex-Simmons that $200 million number, kind of the right way to be thinking about that business?

Yeah, I guess that would tell you we’ve been in this new range now for a couple of years, 175 million, 200 million and when we look at the backlog and the number of pitches going on, we see consistency that we’ve got, the strength of the franchise to do that.

Okay. Great. And then can you remind us again with the Simmons deal coming on at the end of this quarter, what your projections were again for pro forma tangible booked, post the deal?

Yeah, so the tangible book value dilution that we anticipate, it’s little under 20%, somewhere around 18% at the time of the acquisition, assuming the buybacks have taken place.

Okay. And I think just a quick one for me. I appreciate the color you gave on the fixed income business, but is there any way to kind of I guess size the amount of the gain you had in makeup trading this quarter?

I’m sorry, didn’t hear the last part of that, from a trading perspective?

Yes. The gains you had in fixed income. Is there any way to sort of size that for the quarter?

Yes, I guess as a way that I would say it is the growth that we had increased from Q3 which was actually a slightly depressed quarter, I would say from the trends that we had been in previously. I was very much mixed between what we saw as increases in our flow business as I mentioned from the increased expansion and the leverage we are getting occupancy on the new traders and the overall trading games that we saw from really the municipal market.

And the expensive sales force.

Yes and that part of my first piece, yes.

Okay. That's very helpful. And then just lastly from me, I appreciate the commentary you gave on the outlook for the comp ratio going forward, and I apologize if I missed it, but in terms of non-comp expenses, how should we think about that for 2016?

Yes, for the non-comp, let me just talk about it pre-Simmons and then I can talk about Simmons specifically since that won’t be here for the entire year, our non-comp expenses for 2016 will be in the range of 35 million to 37 million per quarter and that really fully encompasses all the acquisitions that we closed on the GKST and the River Branch and the FGIC build. Adding on to that then, Simmons would add about 13 million to 14 million a year, which is about 3.5 per quarter, but noting that that transaction will close if sometime during the first quarter.

Great. Thanks for answering my questions.

Thank you.

[Operator Instructions] Your next question comes from the like of Mike Adams of Sandler.

Hey guys. I just wanted to hop in with a couple of follow-ups. Deb, the comp ratio guidance did I hear you correctly 63% to 64% this year?

Yes, for 2016.

Okay. I guess, my recollection is when you guys disclosed the FGIC build, that we should see some improvement in the back half of the year, as those guys start to ramp-up. So I guess the question is, is that ramp maybe happening a little bit slower than initially anticipated, or is this somehow related to like Simmons coming onboard? What's maybe keeping that elevated comp ratio in place?

Yes. So, it is not related to Simmons, it is really, let me say a couple of things, first of all the ramp that we are seeing which is easier to see earlier on this sales and trading side is happening according to targets and obviously the investment banking is a lighter ramp time that we are seeing a number of announced transactions there. So that is going to in essence come down within that range throughout the year as we see the revenues ramp. The other thing that I had mentioned in the script and in my comments that is impacting our comp ratio well is just our business mix. So, obviously asset management for example which has a lower comp ratio has very slightly smaller portion of our business overall. So there is a revenue mix component in here as well.

Great. And then one last one and I'll let you go, but coming back to the fixed income trading business again, are you deploying any more capital to that business, I know you've been maintaining a pretty neutral stance and been fairly conservative, but did you see opportunity to deploy that capital in 4Q?

Go ahead, Andrew.

You know what, the trend we are on Mike is actually to reduce the capital in the business and you can see that in our number there is that the opportunity was part of the strategic rationale for the investment in the GKST team is higher turnover and flow with clients less capital and inventories. The comment on the trading environment that Deb made is the municipal asset class performed very well in the Q4 with the tightening of the basis and we did anticipate that. So, we did well with it, but I wouldn’t call it outsized in anyway, it was just an improved environment that we fully realized, but not outsized.

So Mike to give you some perspective, our inventory overall, holistically including both that we have invested from a firm perspective and our flow is down 30% compared to the end of last year, so now as Andrew spoke to the trends go in the other way.

Intentionally.

Intentionally.

Got it. Okay. Thank you.

Thank you.

There are no further audio questions registered at this time.

Thank you very much for joining us and we look forward to updating you in April.