Piper Sandler's results sink in declining markets for deals and financings

Piper Sandler's quarterly earnings have fallen amid declining conditions for investment banking activity.

"Persistent inflation, rapid Central Bank rate increases and stress on the banking system led to a lack of confidence that continues to reduce overall market activity," Piper Sandler CEO Chad Abraham said in the company's earnings conference call Tuesday morning.

"Although volatility benefits our equity brokerage business, it adversely impacts our other businesses, which rely on constructive market conditions and a more stable outlook."

For the quarter ended March 31, the Minneapolis-based investment bank earned $25.6 million, or $1.49 a share, down 30% from $35.6 million, or $2.12 a share, in the first quarter a year ago.

Net revenue was $297.9 million, down 15% from $350.6 million in the first quarter of 2022 — and down 24% from the fourth quarter.

Despite the market turmoil, Piper Sandler continued to focus on long-term growth and expand its expertise and services by adding and promoting more managing directors.

One area of strength was the investment bank's work on restructurings, a record quarter for that business including two high-profile assignments when it advised the Federal Deposit Insurance Corp. on the sale of Silicon Valley Bridge Bank and Signature Bridge Bank.

"These advisory assignments demonstrate our market-leading restructuring capabilities and financial services expertise," Abraham told analysts.

Piper Sandler's first-quarter results were expected. The declining sales met analyst expectations, and adjusted earnings of $2.35 a share — while down 25% from the year ago quarter — beat the consensus estimate of $1.72 a share among four analysts tracked by Refinitiv.

Piper Sandler's shares closed Tuesday at $130.08, down about 1%.