Good morning. And welcome to the Piper Jaffray Companies’ Conference Call to discuss the Financial Results for the Fourth Quarter and Full Year 2016. During the question-and-answer session, the security industry professionals may ask questions of management. The Company has asked that I remind you those statements on this call that are not historical or current facts, including statements about beliefs and expectations are forward-looking statements that involve inherent risks 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 required regarding certain non-GAAP financial measures. Please refer to the Company's earnings release issued today for a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures. 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 would 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 results for the fourth quarter and the full year 2016. We finished the year on a very strong note, generating record revenues in the third quarter and then exceeding that record by almost 10% in the fourth quarter. This drove record revenues for the year which propelled us to an adjusted return on equity of over 9%. I want to thank all of our long-term partners and the many new partners who joined us in the past couple of years with their hard work and dedication which produced these results for our shareholders. In 2015, we invested for growth and in 2016 we executed for growth, expanding into Energy and Financial Institutions and adding products across many parts of the firm contributed to the growth and notable results we produced this year. The best way to discuss our performance in 2016 is in the context of our stated objective to increase shareholder value. First, we intended to increase our earnings and improve ROE. We made significant improvement in both this year as our investments continued to season. We grew adjusted earnings by 11% and made solid progress in our path to achieving an ROE that exceeds our cost of capital. An explicit element of our strategy is to remix the business towards activities that attract higher multiples in the market. For us, this translates to advisory, public finance and asset management. Over the past five or so years, we've doubled the revenue contribution from these areas to almost two thirds of our total revenue today. Most of our revenue growth has been in these activities. A diversified business mix has provided some earnings stability and we continue efforts to further diversify the business to produce strong results across various…

Thank you, Andrew. As context, my remarks will be focused solely on our adjusted non-GAAP results unless otherwise indicated. We reported record revenues of $218 million for the quarter, an increase of 9% sequentially and 12% year-over-year. Earnings growth was attributed to both higher revenues and inherent operating leverage in our model as our non comp ratio declined to 17.5% and our operating margin expanded to almost 19%. For the full year, we generated record revenues of $736 million, an increase of 11% versus the prior year. Realizing the returns on recent investment in energy and FIG was another year of market share gains and public finance drove the growth in revenue. Advisory and Public Finance have both been target for strategic investment over the past few years as we sought to weight our business next towards these areas. To give you some perspective on our progress from 2009 to 2013, our advisory revenue averaged about $75 million per year. In 2014 and 2015, we averaged just over $200 million. In 2016, our advisory revenue exceeded $300 million. In Public Finance which largely shows up as debt financing in our segment reporting, 2016 revenue of $115 million was up 26% over 2015 and up over 70% versus 2014. Our product breadth, geographic reach, sector expertise and scale distribution platform have all contributed to the success in its business. Our compensation ratio which was slightly 64% for the fourth quarter, finished the year at 64.4%. Our comp ratio which began the year around 66% in Q1 improved compared to the first half as our FIG and debt advisory teams continue to ramp their revenue. Going forward we would expect the comp ratio to trend lower but keep in mind the ratio is influenced by number of factors including revenue level, business…

Thanks Deb. The election has certainly affected the market thus far as investors assess the impact of potential or likely policies coming out of the new political landscape. Investors have demonstrated to believe the policies will be favorable for financial firms especially banks, brokerage and private client related companies. Generally, we believe that the policies if achieved should be positive for our business. Lower taxes and less onerous regulatory environment should spur economic growth and increase valuation. We feel this favors our equity capital raising and advisory activities particularly if CEO confidence remains high. We would expect faster economic growth to lead to higher interest rate and we've seen these expectations start to play out already with rates moving up after the election. Higher rate should be favorable for our fixed income brokerage business. With higher rates we could also see less of the singular chase for yield and greater dispersion returning to the market. This should provide a more favorable environment for active managers and should help both our asset management business and equity trading as fund flow back to active managers. We also believe that the outlook for public finance business is likely to be favorable in the mid to long term but could be less constructive in the short term as higher rates disintermediate some refunding activity before our greater economic growth spurs new issuance. As a summary, we believe conditions are beginning to align for more favorable market. We are still mindful of exogenous risk which could detrimental to our growth. Political uncertainty domestically and instability overseas could trigger period of market volatility which may have an adverse impact on our business at least in the short run. However, on balance we feel positive as we enter the New Year. We will now open up the call for questions.

[Operator Instructions] Your first question comes from Hugh Miller. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking my question. So I guess a couple to start on a capital market side. You gave some interesting perspective in terms of CEO confidence which is obviously strength and meaningfully post the election. I was wondering within kind of the healthcare side of your business and some of the recent comments that we heard from the President just regarding lower drug pricing, manufacturing drugs in US, have you noticed a shift in sentiment just regard to the discussions you are having with corporation, is there any change kind of coming about in terms of the outlook for that particular segment? Just with some of those new commentary.

It's really early to see any real shift. I would add though however our healthcare practice is very diversified and if there is an impact in one area, it's likely that more broadly our both are advisory capital market should be in pretty good shape.

Okay, okay. And then I guess just turning to the energy side of the business. You provided some guidance when you guys did the Simmons acquisition, looking for -- my memory says correct me something like 10% to 15% accretion in year one in that transaction as we start to head into year two of the deal this year, how are you guys thinking about the franchise, the outlook for that vertical and the potential impact on the company's business?

So I'd say couple of things. We clearly had a slow start to the beginning of last year but both the quality of the people; their relationships have truly exceeded our expectations. Q4 was their strongest performance on our platform and the first 10 months did exceed our expectation. As we turned into the New Year business is performing very well. And we expected to perform, honestly above our model. And a big part of this that I think we are particularly pleased about is the synergies being on our platform. Lot of activity on the debt capital markets and in Q4 there were seven ECM transactions both were the benefit of the combination.

Got it. And aside from just looking at the movement in commodity prices within that sector, are there any other things that you guys view as key catalysts coming up in 2017 that could meaningfully change the pace of advisory activity for that business?

Yes. There was a significant amount of capital raised last year in the US markets where we are focused. And US energy companies have gotten more efficient in the downturn making them even more attractive investment target. So we are positioned nicely to benefit from both those trends.

Okay. And just given some of the commentary you guys made about the ECM market in 2016, how challenging they were. How are you guys feeling about your pipeline for ECM activity as we head into 2017? And do you expect sentiment to kind of change or what could get sentiment changed to and CEO of greater pace of industry activity?

So it was in fact a challenging year and as the year trended towards the back half it improves substantially but it's still really -- the year ended up well below prior years maybe 30%-35%. But absent extreme volatility, the recovery should continue to perform. You got all the right ingredients and some modest but improving economic growth relatively low volatility, capital needs. It looks like a good start to 2017.

Okay. Thank you. And then just in terms of you guys made some commentary about the municipal inventory levels. And I believe that any marks there would have been run through the brokerage income for fixed income, is that correct? And what impact did it have on the quarter?

Yes. You are correct, Hugh. That is exactly where it would run and if we look at the quarter overall, obviously it was challenging especially in the municipal market. We were able to navigate through that given our sense of knowledge in that business and we still had modest training gain so we do not recognize a loss in that business. I'll say we had decent increase in customer activity in that business as well during the quarter. But you are correct. They would flow to that and they were actually modest trading gain.

Okay. All right. That's helpful. And then just given some of that volatility, how are you guys feeling about the demand for both trading in that just given some of the uncertainty about tax rate and then also just the underwriting demand from the issuance side?

So a couple of comments. Again as we said previously, increased interest rate and a positive yield curve are beneficial to our fixed income brokerage. And the client activity even post election really indicates that the case. From an underwriting, municipal underwriting as I made the comment earlier, mid long term more economic growth, lot of discussion about infrastructure should be beneficial to the business. Now there could be a gap here if in fact rates go up very quickly then you are going to disintermediate, refundings maybe faster than you get to new capital. But on balance we expected to be positive and we are very well positioned for it.

Got it. That's helpful. And then question just on the merchant banking portfolio. You noticed some of the gains that were booked there in the quarter. How should we be thinking about kind of that platform and portfolios potential to kind of sustain gain for that level? Is there anything kind of outside in the quarter?

Yes. I wouldn't say there is anything outside in the quarter. I think that is a business where looking at more an annual basis than a quarter-to-quarter. Makes lot of sense. We do mark the portfolio on a fair market value. So we look at that on quarterly basis. During this fourth quarter, we had some marks on a couple of different positions in that portfolio. So I guess in summary I would just say that we continued to be pleased with the platform. We will be actually raising second fund and really looking at that on an annual basis is probably the best way to do that.

Okay, got it. That's helpful. And then just a couple questions on the asset management side of the business. Just one on housekeeping, if you could just give us a sense of what the breakout was for AUM between the two strategies for equities and MLPs?

Yes. I can do that. So at the end of the quarter, we ended at $8.7 billion of AUM, $4.6 billion in MLP and $4.1 billion in the rest of the equity value and other product.

Okay. Got it. And just in terms of how you are seeing things with MLP given kind of that the rising oil prices, compression in some of the credit spreads in that particular area. How would you describe kind of industry demand for investing in MLPs at this point?

So what we've seen in the more near term is less institutional interest picking up but more on the retail side. The yield again is quite attractive and prospects for energy still -- we are starting to see some signs of retail interest.

Got you. And is there a difference in terms of the fees you guys may generate between the institutional investing and retail investing in MLPs?

Yes. I would say I mean a little bit it depends on the structure of the retail investing right so if it's true close end fund in that case right there is slightly lower fee. But a lot of our assets are coming through mutual fund as well. And those do have a higher fee structure and there is about $1.5 billion or so in MLP neutral fund structure.

Okay. Got it. And just couple on the capital allocation priorities. I mean obviously you guys now initiated the dividend. How should we be thinking about that dividend go forward? Is there kind of a payout ratio you are targeting? Obviously, your business can be lumpy in terms of earnings in one quarter versus another. So is there -- should we just assume static level at this point given that it's a new initiative or how do we think about that?

I would say Hugh that our objective over time is to balance investing in growth with growing the dividends over time. Now the exact pace of that is going to depend on a number of factors including what opportunities present themselves for our use of capital growth so it's difficult to be real specific about that at this point.

And maybe I just add to that Hugh, that we were certainly mindful of initiating a dividend that we are very comfortable that we pay in a quarterly basis and the objective would be to grow it over time.

Okay. And if you could just give us a sense as we end the year last year what's the level of that excess capital, you guys clearly have on the balance sheet at this point.

One of the things that you probably now we haven't disclosed necessarily exact level of excess capital because it's something that's quite dynamic for us. Where and how we use capital within the business, I'll say even if you think about the significant investment we made in Simmons which was an all cash transaction at the end of the day after we bought back. We have a decent amount of excess capital in our earnings. Obviously are increasing that and that all really gets into -- as the Andrew was mentioning the comfort we had in paying this dividend too given really the level of our earnings and more the stability of our earnings now.

Okay. That's helpful. And then just a modeling question or two. You guys did talk about given the little bit of insight to seeing the comp ratio coming down from this year but mindful of being opportunistic with investments that you could make. Is there a targeted range we should think about in terms of 2017 to the comp ratio and on the non-comp side, is there a level in 1Q or in 2017 in terms of an aggregate amount or ratio that we should be considering?

Yes. So let me start on the comp ratio, just give you a little perspective on that overall. So you saw the comp ratio decline in the second half of the year which is something that we had talked about and anticipated and just to give you some perspective, we talked about investment driving our comp ratio but another thing that we often refer to which is business mix as well. And just to give you an example of that our advisory revenues increased from 32% of revenue, if you go back to 2015 to 41% this year. And on the flip side, our asset management revenue decreased from about 11% to 7%. And that mix of business is going to have an impact on our comp ratio. So something that also is somewhat dynamic and makes it a little challenging to get real specific. Obviously, as you alluded to in our comment previously, we are -- we've been pleased with the success we've had investing through the P&L. And so we'll continue to look for that. Now our focus is on driving growth and increasing margin and the way we are going to do that is investing in the business all that said we do believe that our comp ratio should trend down modesty. I mean you saw where it was in the fourth quarter here little above 64%. And I think that's in a general range of where it expects to, again know that we'll continue to use our comp ratios the way to invest in the business.

Okay. That's helpful. I mean and then on the non-comp side any commentary there?

Yes. On the non-comp side, so as for the quarter we are at just over $38 million which is a low end of the range. And that we had guided to when Simmons had come on board. We said we would be between about $38.5 million and $40.5 million and absent any material growth initiatives, I think that's still a reasonable range. I would say that's even a reasonable range including the back office conversion cost in 2017 that were never part of that original range. I mean obviously in quarters where we have some of those cost setting it's going to put us more towards top end of that range in the bottom. I still think that $38.5 million to $40.5 million range is the right range. And from non-comp ratio, we continue to target driving that down towards the 20% in that 20% to 22% range even with the conversion expense, I think it's a range that we are really targeting and of course as you know that's large driver for the revenue comes in any particular quarter as well.

[Operator Instructions] And there are no further questions at this time. I turn the call back over to the presenters.

Thank you for joining us today. It's been a remarkable year for the firm and I want to express my gratitude to our 1,300 partners at Piper who achieved these results. I am excited about our prospects as we enter 2017 significantly stronger, larger and more diversified than a year ago. Have a good day. Thank you.

This concludes today's conference call. You may now disconnect.