Daniel Cohen - Chairman and CEO Joe Pooler - CFO, EVP and Treasurer Jack DiMaio - CEO, Mead Park

Good morning, ladies and gentlemen, and welcome to Institutional Financial Markets first quarter 2013 earnings conference call. My name is Paula and I will be your operator for today. At this time, all participants have been placed in a listen-only mode. Following formal remarks, the call will be open to a question-and-answer session and instructions will be provided at that time. As a reminder, this conference call is being recorded. Before we begin, IFMI would like to remind everyone that some of the statements the company makes during this call may contain forward-looking statements under the applicable securities laws. These statements may involve risks and uncertainties that could cause the company’s actual results to differ materially from the results discussed in such forward-looking statements. The forward-looking statements made during this call are made only as of the date of this call and the company undertakes no obligation to update such statements to reflect subsequent events or circumstances. IFMI advises you to read the cautionary note regarding forward-looking statements in its earnings release and in its most recent Annual Report on Form 10-K filed with the SEC. Please note also that in the company’s quarterly earnings release for the first quarter of 2013, the non-GAAP measures of performance have been reconciled to their corresponding GAAP measures of performance. I would now like to turn the call over to Mr. Daniel Cohen, Chairman and CEO of IFMI.

Great, thank you, Paula and thank you everybody for joining our call. I have with me Joe Pooler on the line, Joe and I will make a presentation about our financial results and also about our strategic transaction and I have Jack DiMaio to answer questions from participants. Now just talking about our financial results while we are not happy with our financial results, who possibly could be? I just like to point out that the first quarter results were significantly impacted by an unfavorable mark-to-market loss on our Star Asia investment but we are pleased by the fact that asset is non-cash marked we would have otherwise been modestly profitable at the adjusted operating income level. why are we pleased about that? because while trading volumes were off and investment banking revenue was off and transaction levels were off for us we see that we built very good businesses on a strong basis of expense ratios that would allow us to do better if anything had really gone right this quarter. We have a strong pipeline of transactions that we have building we have said that the company while we had two very strong quarters last quarter would continue to build somewhat in starts and fits and we are subject to some of the timing issues on our revenues but we are comfortable with our pipeline and we are comfortable with some of the businesses that we continue to build. I will just highlight our TBA business in the middle market originator space, our launch of new products for lending to people which continue to ramp up our businesses overall and transaction possibilities in Europe which I am particularly excited about and I think that the opportunities that we'll have with Mead Park as the strategic investor should be…

Thank you, Daniel. Our net trading revenue came in at $13.1 million in the current quarter down $5.1 million from fourth quarter and down $4.6 million from the first quarter of ’12. The quarter over quarter decrease occurred in our PrinceRidge in European operations while our JVB operation was up slightly. The year ago quarter decrease occurred in our PrinceRidge and JVB operations while our European operations were up slightly. Our banking business showed modest decrease in the first quarter compared to both prior and year ago quarters. In the first quarter, when we issue an advisory revenue was only $1 million, we are hopeful that the pipeline will begin to drive increases in our new issue on advisory revenue going forward. Although, as we always note that the revenue generation may be lumpy from quarter to quarter. Our asset management revenue was down 400,000 to 4.8 million in the first quarter of ’13 from fourth quarter of ’12 and was down 200,000 compared to the year ago quarter. As part of the sale of our Alesco 10-17 management contracts back in 2010, we had entered into monthly services agreement that we ran through February ’13, this was the first quarter of ’13 and the first quarter that doesn’t have a full three months of that services agreement. First quarter ’13 principal transactions and other revenue was negative 4.8 million which compared unfavorably to the fourth quarter but was comparable to the first quarter of ’12. Included in the 4.8 million negative principal transactions and other revenue was the 6 million non-cash mark to market loss on our Star Asia investment partially the result of the weakening Japanese Yen. Comp and benefit expenses for the first quarter of ’13 of 13.5 million was up 400,000 or 3% from the fourth…

Well I am very bullish about the progress that we can make with Jack's leadership as Chairman as we are going forward with his relationships and knowledge and the context all over the world having run major operating divisions for both Credit Suisse and Morgan Stanley. And having built himself an extremely successful business, it’s the President and Managing Partner of DA Capital. I think that the entire Mead Park team including Chris (inaudible) whom we have known for a long time and has created a lot of value will be another strong member of the Board of Directors. I believe with that, with the platform that we have now based upon the lower expense base that we have really developed and the revenue possibilities that may come in the future. With the revenue possibility today and a new CEO may add to the situation; I am very bullish, that's why I am putting in other decent chunk of money on the table. So on that note, let me open the line to Investor questions.

(Operator Instructions) Your first question comes from the line of (inaudible).

I would like to say we couldn't be more happy to have you guys on board; that will be Jack and Chris. Jack I don’t know you and your reputation precedes you and obviously this transaction is dilutive to us but in life nothing is ventured, nothing's gained, and I look forward to what you guys bring to the table, even a return to I guess our new diluted book would be a home run for us so anyway, I'm overjoyed about them transaction, I look forward to better times, the quarter whatever was terrible but anyone that's seen the end everyone knew this was coming that knew anything about the company so, whatever. But I do have one quick question as I know no one cares what I think, the rights proposal that obviously is going to go into effect on the 20th, what share count are you using to figure the 4.95%, I know the old one was using converted (inaudible) count and was like 605,000, is that still the case and if it isn't, what is the real number. And until then, can an entity purchase, can go over the 4.95% and not be diluted, thanks bye.

The effective date will be the 20th so between now and then there can be share accumulation and the approximate share count will be but subject to the rights plan will be what’s on the face of the queue when we file today and it'll be in and around $12 million or 12 million shares I should say.

Okay, so, just so I'm clear it' s going to be 4.95% of whatever, the 12 million something shares right, not,…

Yes.

(Operator Instructions) At this time there are no further questions I would like to turn the floor back over to Mr. Cohen for any additional or closing remarks.

Okay, well with that glowing introduction to both Jack and Mead Park, I'm going to actually turn it over to Jack for a few minutes just to make a couple of comments about Mead Park and this investment.

Yes, good morning and I'd like to thank everybody for attending, I just want to say we're extraordinarily pleased with the investment we've been given the opportunity to make in IFMI, I want to emphasize I think the value of the infrastructure that exists and the businesses that have been created quite frankly should not be undervalued. We believe that through our capital markets presence, capital gathering capabilities and opportunities we spent the better part of the last two years pursuing in the market place that we can definitively add value, restructure and make much more efficient the platform that we inherit and invest in here from Daniel and his men and his management team, I think a lot of good things have been done over the course of the last two years as the firm had reemerged from the financial crisis and I think now as Daniel pointed out the market is a little bit more ripe for opportunities and a little bit more ready for IFMI to reemerge as it relates to its presence globally. We look forward to working with the current board of directors, with the current management team, and the employees that are here, and we look forward to introducing some new people into the process so we can develop centers of excellence that can be levered off of and given the state of our capital base. Having said that, again, I'd just like to thank everybody for attending and we're pleased to be making the affiliation and the partnership and we look forward to speaking with you in current days, current quarters, thank you very much.

Great and thank you very much. And I look forward in the same way that Jack does and we thank you all for a little bit of patience in our ability to create real value for shareholders. Thank you.

Thank you. This concludes today's conference, you may now disconnect.