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Item 2. Management’s Discussion and Analysis

2020-11-02 compared with 2020-08-04 · 205 added, 210 removed, 425 unchanged (49% of the section changed)

9 unchanged sentences

"Risk Factors" of our Form 10-Q for the first quarter of 2020.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated by reference in this report, including those statements herein with respect to the negative effect that the COVID-19 pandemic has had on our business and is expected to continue to have on our business, which we expect to be significant.

At this time, it is uncertain how long our business will be negatively impacted by COVID-19 and the associated economic and market downturn.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated by reference in this report, including those statements herein with respect to the adverse impact that the COVID-19 pandemic has had, and may continue to have, on our business.

In addition, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise except as required by law.

14 unchanged sentences

Commissions and Related Fees also include subscription fees for the sales of research.

Cash received before the subscription period ends is initially recorded as deferred revenue (a contract liability) and recognized as revenue over the remaining subscription period.

received before the subscription period ends is initially recorded as deferred revenue (a contract liability) and recognized as revenue over the remaining subscription period.

Revenue trends in our advisory business generally are correlated to the volume of merger and acquisition ("M&A") activity and/or restructuring activity, which tends to be counter-cyclical to M&A.

20 unchanged sentences

Other Revenue also includes interest income and income (losses) earned on investment securities, including our investment funds and futures contracts which are used as an economic hedge against our deferred cash compensation program, certificates of deposit, cash and cash equivalents and on our debt security investment in G5, as well as adjustments to amounts due pursuant to our tax receivable agreement, subsequent to its initial establishment, related to changes in enacted tax rates, and gains (losses) resulting from foreign currency fluctuations, principal trading and realized and unrealized gains and losses on interests in private equity funds which we do not manage.

In 2020, Other Revenue also includes a gain on the sale of the ECB Trust Business.

Interest Expense also includes interest expense associated with our Notes Payable and lines of credit.

8 unchanged sentences

These awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each year;

accordingly, the expense is generally amortized over the stated vesting period, subject to retirement eligibility.

accordingly, the expense is generally

amortized over the stated vesting period, subject to retirement eligibility.

With respect to annual awards, our retirement eligibility criteria generally stipulates that if an employee has at least five years of continuous service, is at least 55 years of age and has a combined age and years of service of at least 65 years, the employee is eligible for retirement.

Beginning in 2019, we implemented

additional retirement eligibility qualifying criteria, for awards issued in 2019 and after, that stipulates if an employee has at least 10 years of continuous service and is at least 60 years of age, the employee is also eligible for retirement.

Beginning in 2019, we implemented additional retirement eligibility qualifying criteria, for awards issued in 2019 and after, that stipulates if an employee has at least 10 years of continuous service and is at least 60 years of age, the employee is also eligible for retirement.

Retirement eligibility allows for continued vesting of awards after employees depart from the Company, provided they give the minimum advance notice, which is generally six months to one year.

18 unchanged sentences

Includes expenses in 2019 related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York.

Acquisition and Transition Costs – Includes costs incurred in connection with acquisitions, divestitures and other ongoing business development initiatives, primarily comprised of professional fees for legal and other services.

Intangible Asset and Other Amortization – Includes amortization of intangible assets and other purchase accounting-related amortization associated with certain acquisitions.

3 unchanged sentences

We account for income taxes in accordance with ASC 740 , which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities.

Excess tax benefits and deficiencies associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below

the original grant price are recognized in our Provision for Income Taxes.

Excess tax benefits and deficiencies associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price are recognized in our Provision for Income Taxes.

In addition, net deferred tax assets are impacted by changes to statutory tax rates in the period of enactment.

8 unchanged sentences

Results of Operations

The following is a discussion of our results of operations for the three and six months ended June 30, 2020 and 2019 .

The following is a discussion of our results of operations for the three and nine months ended September 30, 2020 and 2019 .

For a more detailed discussion of the factors that affected the revenue and operating expenses of our Investment Banking and Investment Management business segments in these periods, as well as the impact of the COVID-19 pandemic, see the discussion in "Business Segments" and "Liquidity and Capital Resources" below.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(dollars in thousands, except per share data)

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Common Shareholders

As of June 30, 2020 and 2019 , we employed approximately 1,775 and 1,800 people, respectively, worldwide.

Three Months Ended June 30, 2020 versus June 30, 2019

As of September 30, 2020 and 2019 , we employed approximately 1,900 people worldwide.

Three Months Ended September 30, 2020 versus September 30, 2019

Net Income Attributable to Evercore Inc.

was $56.4 million for the three months ended June 30, 2020 , a decrease of $25.3 million, or 31% , compared to $81.7 million for the three months ended June 30, 2019 .

was $42.6 million for the three months ended September 30, 2020 , a decrease of $0.7 million , or 2% , compared to $43.3 million for the three months ended September 30, 2019 .

The changes in our operating results during these periods are described below.

Net Revenues were $507.1 million for the three months ended June 30, 2020 , a decrease of $24.0 million , or 5% , versus Net Revenues of $531.0 million for the three months ended June 30, 2019 .

Advisory Fees decreased $107.1 million , or 24% , Underwriting Fees increased $76.7 million , or 453% , and Commissions and Related Fees increased $5.5 million , or 11% , compared to the three months ended June 30, 2019 .

Asset Management and Administration Fees increased 4% compared to the three months ended June 30, 2019 .

Other Revenue, Including Interest and Investments, increased 12% compared to the three months ended June 30, 2019 , which was primarily attributable to gains on the investment funds portfolio, which is used as an economic hedge

against our deferred cash compensation program.

Net Revenues were $402.5 million for the three months ended September 30, 2020 , an increase of $0.3 million versus Net Revenues of $402.2 million for the three months ended September 30, 2019 .

Advisory Fees decreased $50.2 million , or 16% , Underwriting Fees increased $48.9 million , or 278% , and Commissions and Related Fees decreased $3.0 million , or 6% , compared to the three months ended September 30, 2019 .

Asset Management and Administration Fees increased $1.4 million , or 11% , compared to the three months ended September 30, 2019 .

Other Revenue, Including Interest and Investments, increased 26% compared to the three months ended September 30, 2019 , which was primarily attributable to gains on the investment funds

portfolio, which is used as an economic hedge against our deferred cash compensation program.

For further information see Notes 7 and 16 to our unaudited condensed consolidated financial statements .

Interest Expense increased 28% compared to the three months ended June 30, 2019 , which was primarily attributable to interest expense on the 2019 Private Placement Notes which were issued in August 2019.

Total Operating Expenses were $411.2 million for the three months ended June 30, 2020 , compared to $397.3 million for the three months ended June 30, 2019 , an increase of $13.9 million , or 3% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $334.0 million for the three months ended June 30, 2020 , an increase of $23.4 million , or 8% , versus expense of $310.6 million for the three months ended June 30, 2019 .

The increase in the amount of compensation recognized in the three months ended June 30, 2020 is driven by higher levels of incentive compensation, higher base salaries, primarily due to promotions, and increased expense due to the amortization of unvested deferred compensation awards.

Non-compensation expenses as a component of Operating Expenses were $77.2 million for the three months ended June 30, 2020 , a decrease of $9.5 million, or 11% , versus $86.7 million for the three months ended June 30, 2019 .

Non-compensation operating expenses decreased compared to the three months ended June 30, 2019 , primarily driven by decreased travel and related expenses, partially offset by increased bad debt expense.

Total Other Expenses of $9.2 million for the three months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, of $8.6 million related to separation and transition benefits and related costs (see below for further information) and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, intangible asset and other amortization of $0.5 million and Acquisition and Transition Costs of $0.1 million.

Total Other Expenses of $6.9 million for the three months ended June 30, 2019 included compensation costs of $3.7 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $2.2 million and Special Charges of $1.0 million , primarily related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York.

Total Operating Expenses were $330.8 million for the three months ended September 30, 2020 , compared to $323.7 million for the three months ended September 30, 2019 , an increase of $7.1 million , or 2% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $259.8 million for the three months ended September 30, 2020 , an increase of $22.6 million, or 10% , versus $237.2 million for the three months ended September 30, 2019 .

The increase in the amount of compensation recognized in the three months ended September 30, 2020 is primarily driven by higher levels of incentive compensation recognized this year, higher amortization of unvested share-based and deferred cash awards and higher base salaries, primarily due to promotions.

Non-Compensation expenses, as a component of Operating Expenses, were $71.0 million for the three months ended September 30, 2020 , a decrease of $15.5 million, or 18% , versus $86.5 million for the three months ended September 30, 2019 .

Non-Compensation operating expenses decreased compared to the three months ended September 30, 2019 , primarily driven by decreased travel and related expenses related to prolonged travel restrictions.

Non-Compensation expenses per employee were approximately $40.4 thousand for the three months ended September 30, 2020 , versus $46.8 thousand for the three months ended September 30, 2019 .

Total Other Expenses of $8.0 million for the three months ended September 30, 2020 included Special Charges, Including Business Realignment Costs, of $7.4 million related to separation and transition benefits and related costs (see below for further information) and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, Acquisition and Transition Costs of $0.5 million and intangible asset and other amortization of $0.2 million .

Total Other Expenses of $8.1 million for the three months ended September 30, 2019 included compensation costs of $4.6 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $2.2 million , Special Charges of $1.0 million , related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York and Acquisition and Transition Costs of $0.4 million.

In the first quarter of 2020, we substantially completed a review of operations focused on markets, sectors and people which have delivered lower levels of productivity in an effort to attain greater flexibility of operations and better position ourself for future growth.

This review, which began in the fourth quarter of 2019, will generate reductions of approximately 8% of our headcount.

In conjunction with the employment reductions, we expect to incur aggregate separation and transition benefits (including costs related to the acceleration of deferred compensation) and related costs of approximately $38.0 million , $8.2 million of which has been recorded in Special Charges, Including Business Realignment Costs, in the second quarter of 2020.

In conjunction with the employment reductions, we expect to incur aggregate separation and transition benefits (including costs related to the acceleration of deferred compensation) and related costs of approximately $43.0 million , $7.3 million of which has been recorded in Special Charges, Including Business Realignment Costs, in the third quarter of 2020.

Our estimates of charges are based on a number of assumptions.

Actual results may differ materially if actual activity deviates from these assumptions.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 65.9% for the three months ended June 30, 2020 , compared to 59.2% for the three months ended June 30, 2019 .

The compensation ratio is 67.5% for the three months ended June 30, 2020 when the $8.2 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

The increase in the compensation ratio is due to the higher levels of incentive compensation, higher base salaries, primarily due to promotions, and increased expense due to the amortization of unvested deferred compensation awards.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 64.5% for the three months ended September 30, 2020 , compared to 60.1% for the three months ended September 30, 2019 .

The compensation ratio is 66.3% for the three months ended September 30, 2020 when the $7.3 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

The compensation ratio in any given period is subject to fluctuation based, in part, on the amount of revenue earned in that period.

Given the uncertainty about both revenues for the remainder of the year and market compensation for our employees, we have significantly more uncertainty about the full year compensation ratio than at this time in prior years.

Given the uncertainty about both revenues for the remainder of the year and market compensation for our employees, we have more uncertainty about the full year compensation ratio than at this time in prior years.

For further information see COVID-19 below.

Income from Equity Method Investments was $2.3 million for the three months ended June 30, 2020 , as compared to $2.5 million for the three months ended June 30, 2019 .

The decrease was primarily a result of a decrease in earnings from ABS and Luminis during the three months ended June 30, 2020 .

The provision for income taxes for the three months ended June 30, 2020 was $21.8 million , which reflected an effective tax rate of 24.5% .

The provision for income taxes for the three months ended June 30, 2019 was $32.0 million , which reflected an effective tax rate of 24.8% .

The provision for income taxes for the three months ended June 30, 2020 and 2019 reflects an additional tax expense of $0.5 million and $0.03 million, respectively, due to the impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $10.8 million for the three months ended June 30, 2020 compared to $15.5 million for the three months ended June 30, 2019 .

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to noncontrolling interest for Evercore LP during the three months ended June 30, 2020 .

Six Months Ended June 30, 2020 versus June 30, 2019

Income from Equity Method Investments was $3.1 million for the three months ended September 30, 2020 , as compared to $2.6 million for the three months ended September 30, 2019 .

The increase was primarily a result of an increase in earnings from Atalanta Sosnoff and Luminis during the three months ended September 30, 2020 .

The provision for income taxes for the three months ended September 30, 2020 was $15.7 million , which reflected an effective tax rate of 23.5% .

The provision for income taxes for the three months ended September 30, 2019 was $20.4 million , which reflected an effective tax rate of 28.0% .

The provision for income taxes for the three months ended September 30, 2020 reflects an additional tax expense of $0.2 million and for the three months ended September 30, 2019 an additional deduction of $0.05 million due to the impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $8.5 million for the three months ended September 30, 2020 compared to $9.2 million for the three months ended September 30, 2019 .

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to noncontrolling interest for Evercore LP during the three months ended September 30, 2020 .

Nine Months Ended September 30, 2020 versus September 30, 2019

Net Income Attributable to Evercore Inc.

was $87.6 million for the six months ended June 30, 2020 , a decrease of $61.4 million, or 41% , compared to $149.0 million for the six months ended June 30, 2019 .

was $130.2 million for the nine months ended September 30, 2020 , a decrease of $62.1 million , or 32% , compared to $192.3 million for the nine months ended September 30, 2019 .

The changes in our operating results during these periods are described below.

Net Revenues were $934.1 million for the six months ended June 30, 2020 , a decrease of $12.3 million , or 1% , versus Net Revenues of $946.4 million for the six months ended June 30, 2019 .

Advisory Fees decreased $74.4 million , or 10% , Underwriting Fees increased $70.9 million , or 162% , and Commissions and Related Fees increased $18.9 million , or 21% , compared to the six months ended June 30, 2019 .

Asset Management and Administration Fees increased 4% compared to the six months ended June 30, 2019 .

Other Revenue, Including Interest and Investments, decreased 98% compared to the six months ended June 30, 2019 , which was primarily attributable to losses of $6.8 million on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, for the six months ended June 30, 2020 , compared to $8.7 million of gains for the six months ended June 30, 2019, and lower performance of our legacy private equity investments.

Net Revenues were $1.34 billion for the nine months ended September 30, 2020 , a decrease of $12.0 million , or 1% , versus Net Revenues of $1.35 billion for the nine months ended September 30, 2019 .

Advisory Fees decreased $124.6 million , or 11% , Underwriting Fees increased $119.8 million , or 195% , and Commissions and Related Fees increased $15.9 million , or 12% , compared to the nine months ended September 30, 2019 .

Asset Management and Administration Fees increased $2.3 million , or 6% , compared to the nine months ended September 30, 2019 .

Other Revenue, Including Interest and Investments, decreased 64% compared to the nine months ended September 30, 2019 , which was primarily attributable to lower performance of our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, and lower performance of our legacy private equity investments.

We recorded $1.0 million of gains on the investment funds portfolio for the nine months ended September 30, 2020, compared to $9.2 million of gains for the nine months ended September 30, 2019 .

For further information see Notes 7 and 16 to our unaudited condensed consolidated financial statements .

Interest Expense increased 38% compared to the six months ended June 30, 2019 , which was primarily attributable to interest expense on the 2019 Private Placement Notes which were issued in August 2019.

Total Operating Expenses were $763.6 million for the six months ended June 30, 2020 , compared to $721.5 million for the six months ended June 30, 2019 , an increase of $42.2 million , or 6% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $603.7 million for the six months ended June 30, 2020 , an increase of $49.5 million, or 9% , versus expense of $554.2 million for the six months ended June 30, 2019 .

The increase in the amount of compensation recognized in the six months ended June 30, 2020 is driven by higher levels of incentive compensation, higher base salaries, primarily due to promotions, and increased expense due to the amortization of unvested deferred compensation awards.

Non-compensation expenses as a component of Operating Expenses were $159.9 million for the six months ended June 30, 2020 , a decrease of $7.4 million , or 4% , versus $167.3 million for the six months ended June 30, 2019 .

Non-compensation operating expenses decreased compared to the six months ended June 30, 2019 , primarily driven by decreased travel and related expenses and professional fees, partially offset by increased bad debt expense.

Total Other Expenses of $34.4 million for the six months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, of $32.2 million related to separation and transition benefits and related costs (see below for further information) and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, compensation costs of $1.1 million associated with the vesting of Class J LP Units and certain other awards, intangible asset and other amortization of $1.0 million and Acquisition and Transition Costs of $0.1 million .

Total Other Expenses of $14.3 million for the six months ended June 30, 2019 included compensation costs of $7.8 million associated with the vesting of Class J LP Units and certain other awards, intangible asset and other amortization of $4.3 million , Special Charges of $2.1 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York and Acquisition and Transition Costs of $0.1 million.

Interest Expense increased 18% compared to the nine months ended September 30, 2019 , which was primarily attributable to interest expense on the 2019 Private Placement Notes which were issued in August 2019.

Total Operating Expenses were $1.09 billion for the nine months ended September 30, 2020 , compared to $1.05 billion for the nine months ended September 30, 2019 , an increase of $49.3 million , or 5% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $863.5 million for the nine months ended September 30, 2020 , an increase of $72.2 million , or 9% , versus $791.3 million for the nine months ended September 30, 2019 .

The increase in the amount of compensation recognized in the nine months ended September 30, 2020 is primarily driven by higher levels of incentive compensation recognized this year, higher amortization of unvested share-based and deferred cash awards and higher base salaries, primarily due to promotions.

Non-Compensation expenses, as a component of Operating Expenses, were $230.9 million for the nine months ended September 30, 2020 , a decrease of $23.0 million , or 9% , versus $253.9 million for the nine months ended September 30, 2019 .

Non-Compensation operating expenses decreased compared to the nine months ended September 30, 2019 , primarily driven by decreased travel and related expenses, related to prolonged travel restrictions, and decreased professional fees, partially offset by increased bad debt expense.

Non-Compensation expenses per employee were approximately $123.3 thousand for the nine months ended September 30, 2020 , versus $140.2 thousand for the nine months ended September 30, 2019 .

Total Other Expenses of $42.4 million for the nine months ended September 30, 2020 included Special Charges, Including Business Realignment Costs, of $39.6 million related to separation and transition benefits and related costs (see below for further information) and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, intangible asset and other amortization of $1.2 million , compensation costs of $1.1 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI and Acquisition and Transition Costs of $0.6 million .

Total Other Expenses of $22.4 million for the nine months ended September 30, 2019 included compensation costs of $12.3 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $6.5 million , Special Charges of $3.1 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York and Acquisition and Transition Costs of $0.5 million.

This review, which began in the fourth quarter of 2019, will generate reductions of approximately 8% of our headcount.

In conjunction with the employment reductions, we expect to incur aggregate separation and transition benefits (including costs related to the acceleration of deferred compensation) and related costs of approximately $38.0 million , $30.3 million of which has been recorded in Special Charges, Including Business Realignment Costs, in the first six months of 2020.

In conjunction with the employment reductions, we expect to incur aggregate separation and transition benefits (including costs related to the acceleration of deferred compensation) and related costs of approximately $43.0 million , $37.6 million of which has been recorded in Special Charges, Including Business Realignment Costs, in the first nine months of 2020.

Our estimates of charges are based on a number of assumptions.

Actual results may differ materially if actual activity deviates from these assumptions.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 64.7% for the six months ended June 30, 2020 , compared to 59.4% for the six months ended June 30, 2019 .

The compensation ratio is 68.0% for the six months ended June 30, 2020 when the $30.2 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

The increase in the compensation ratio is due to higher levels of incentive compensation, higher base salaries, primarily due to promotions, and increased expense

due to the amortization of unvested deferred compensation awards, as well as lower Other Revenue earned during the six months ended June 30, 2020 resulting from lower performance on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, and legacy private equity investments.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 64.7% for the nine months ended September 30, 2020 , compared to 59.6% for the nine months ended September 30, 2019 .

The compensation ratio is 67.5% for the nine months ended September 30, 2020 when the $37.4 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

The increase in the compensation ratio is primarily driven by higher levels of incentive compensation recognized this year, higher amortization of unvested share-based and deferred cash awards and higher base salaries, primarily due to promotions, as well as lower Other Revenue earned during the nine months ended September 30, 2020 resulting from lower performance on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, and legacy private equity investments.

The compensation ratio in any given period is subject to fluctuation based, in part, on the amount of revenue earned in that period.

For further information see COVID-19 below.

Income from Equity Method Investments was $5.4 million for the six months ended June 30, 2020 , as compared to $4.7 million for the six months ended June 30, 2019 .

The increase was primarily a result of an increase in earnings from Atalanta Sosnoff, ABS and Luminis during the six months ended June 30, 2020 .

The provision for income taxes for the six months ended June 30, 2020 was $35.4 million , which reflected an effective tax rate of 25.0% .

The provision for income taxes for the six months ended June 30, 2019 was $39.9 million , which reflected an effective tax rate of 18.5% .

The provision for income taxes for the six months ended June 30, 2020 and 2019 reflects the net impact of the deduction associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price of $0.1 million and $12.1 million, respectively, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $18.5 million for the six months ended June 30, 2020 compared to $26.5 million for the six months ended June 30, 2019 .

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to noncontrolling interest for Evercore LP during the six months ended June 30, 2020.

Income from Equity Method Investments was $8.6 million for the nine months ended September 30, 2020 , as compared to $7.2 million for the nine months ended September 30, 2019 .

The increase was primarily a result of an increase in earnings from Atalanta Sosnoff and Luminis during the nine months ended September 30, 2020 .

The provision for income taxes for the nine months ended September 30, 2020 was $51.0 million , which reflected an effective tax rate of 24.5% .

The provision for income taxes for the nine months ended September 30, 2019 was $60.3 million , which reflected an effective tax rate of 20.9% .

The provision for income taxes for the nine months ended September 30, 2020 reflects an additional tax expense of $0.1 million and for the nine months ended September 30, 2019 an additional deduction of $12.2 million due to the net impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $27.0 million for the nine months ended September 30, 2020 compared to $35.7 million for the nine months ended September 30, 2019 .

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to noncontrolling interest for Evercore LP during the nine months ended September 30, 2020.

Business Segments

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The following table summarizes the operating results of the Investment Banking segment.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(dollars in thousands)

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Pre-Tax Income

Includes client related expenses of $2.9 million and $7.8 million for the three and six months ended June 30, 2020 , respectively, and $7.1 million and $14.6 million for the three and six months ended June 30, 2019, respectively .

Includes client related expenses of $6.3 million and $8.3 million for the three and six months ended June 30, 2020 , respectively, and $0.8 million and $3.3 million for the three and six months ended June 30, 2019, respectively .

Includes interest expense on the Notes Payable and lines of credit of $4.5 million and $9.4 million for the three and six months ended June 30, 2020 , respectively, and $2.3 million and $4.6 million for the three and six months ended June 30, 2019, respectively .

Includes client related expenses of $4.2 million and $12.0 million for the three and nine months ended September 30, 2020 , respectively, and $7.9 million and $22.5 million for the three and nine months ended September 30, 2019, respectively .

Includes client related expenses of $1.7 million and $10.0 million for the three and nine months ended September 30, 2020 , respectively, and $1.6 million and $4.9 million for the three and nine months ended September 30, 2019, respectively .

Includes interest expense on the Notes Payable and lines of credit of $4.2 million and $13.6 million for the three and nine months ended September 30, 2020 , respectively, and $3.8 million and $8.4 million for the three and nine months ended September 30, 2019, respectively .

Equity in Luminis is classified as Income from Equity Method Investments.

For the three months ended June 30, 2020 , the dollar value of North American announced M&A activity decreased 84% , while the dollar value of North American completed M&A activity increased 39% compared to the three months ended June 30, 2019 .

For the three months ended June 30, 2020 , the dollar value of Global announced M&A activity decreased 52% , while the dollar value of Global completed M&A activity increased 14% compared to the three months ended June 30, 2019 .

For the three months ended June 30, 2020 , the dollar value of North American and Global announced M&A activity between $1 - $5 billion decreased 69% and 65% , respectively, compared to the three months ended June 30, 2019 .

For the six months ended June 30, 2020 , the dollar value of North American announced and completed M&A activity decreased 69% and 2% , respectively, compared to the six months ended June 30, 2019 , and the dollar value of Global announced and completed M&A activity decreased 41% and 10% , respectively, compared to the six months ended June 30, 2019 .

For the six months ended June 30, 2020 , the dollar value of North American and Global announced M&A activity between $1 - $5 billion decreased 32% and 39% , respectively, compared to the six months ended June 30, 2019 :

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the three months ended September 30, 2020 , the dollar value of North American announced M&A activity increased 48% , while the dollar value of North American completed M&A activity decreased 58% compared to the three months ended September 30, 2019 .

For the three months ended September 30, 2020 , the dollar value of Global announced M&A activity increased 38% , while the dollar value of Global completed M&A activity decreased 35% compared to the three months ended September 30, 2019 .

For the three months ended September 30, 2020 , the dollar value of North American and Global announced M&A activity between $1 - $5 billion increased 24% and 9% , respectively, compared to the three months ended September 30, 2019 .

For the nine months ended September 30, 2020 , the dollar value of North American announced and completed M&A activity decreased 43% and 19% , respectively, compared to the nine months ended September 30, 2019 , and the dollar value of Global announced and completed M&A activity decreased 18% and 16% , respectively, compared to the nine months ended September 30, 2019 .

For the nine months ended September 30, 2020 , the dollar value of North American and Global announced M&A activity between $1 - $5 billion decreased 6% and 19% , respectively, compared to the nine months ended September 30, 2019 .

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Industry Statistics ($ in billions) *

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Investment Banking Fees of at Least $1 million from Advisory Client Transactions

Refinitiv July 2, 2020

Refinitiv October 5, 2020

** Includes revenue generating clients only from Advisory and Underwriting transactions

Investment Banking Results of Operations

Three Months Ended June 30, 2020 versus June 30, 2019

Net Investment Banking Revenues were $495.4 million for the three months ended June 30, 2020 , compared to $516.4 million for the three months ended June 30, 2019 , which represented a decrease of 4% .

We earned 222 fees from Advisory clients for the three months ended June 30, 2020 , compared to 225 for the three months ended June 30, 2019 , representing a 1% decrease .

We had 77 fees earned in excess of $1.0 million for the three months ended June 30, 2020 , compared to 81 for the three months ended June 30, 2019 , representing a 5% decrease .

The decrease in revenues from the three months ended June 30, 2019 primarily reflects a decrease of $107.1 million , or 24% , in Advisory Fees, reflecting a decrease in the number of advisory fees earned and a decline in revenue earned from large transactions during the three months ended June 30, 2020 .

Underwriting Fees increased $76.7 million , or 453% , compared to the three months ended June 30, 2019 , as we participated in several of the largest underwritings in our history.

We participated in 36 underwriting transactions for the three months ended June 30, 2020 (compared to 16 for the three months ended June 30, 2019 ), 21 of which were as a bookrunner (compared to 10 for the three months ended June 30, 2019 ).

Commissions and Related Fees increased $5.5 million , or 11% , compared to the three months ended June 30, 2019 , as volatility remained elevated during 2020.

Other Revenue, net, for the three months ended June 30, 2020 , increased 56% compared to the three months ended June 30, 2019 , primarily reflecting gains of $15.5 million on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, for the three months ended June 30, 2020 , compared to $2.1 million of gains for the three months ended June 30, 2019.

Three Months Ended September 30, 2020 versus September 30, 2019

Net Investment Banking Revenues were $385.5 million for the three months ended September 30, 2020 , compared to $388.0 million for the three months ended September 30, 2019 , a decrease of $2.5 million , or 1% .

We earned 206 fees from Advisory clients for the three months ended September 30, 2020 , compared to 213 for the three months ended September 30, 2019 , representing a 3% decrease .

We earned 74 fees in excess of $1.0 million for the three months ended September 30, 2020 and 2019.

The decrease in revenues from the three months ended September 30, 2019 reflects a decrease of $50.2 million , or 16% , in Advisory Fees, reflecting a decrease in the number of advisory fees earned and a decline in revenue earned from large transactions during the three months ended September 30, 2020 .

The decrease in Advisory Fees was predominantly offset by an increase in Underwriting Fees.

Underwriting Fees increased $48.9 million , or 278% , compared to the three months ended September 30, 2019 , as underwriting activity remained elevated from prior year levels.

We participated in 30 underwriting transactions for the three months ended September 30, 2020 (compared to 18 for the three months ended September 30, 2019 ), 23 of which were as a bookrunner (compared to 10 for the three months ended September 30, 2019 ).

Commissions and Related Fees decreased $3.0 million , or 6% , compared to the three months ended September 30, 2019 .

Other Revenue, net, for the three months ended September 30, 2020 , increased 64% compared to the three months ended September 30, 2019 , primarily reflecting gains of $7.8 million on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, for the three months ended September 30, 2020 , compared to $0.5 million of gains for the three months ended September 30, 2019.

For further information see Notes 7 and 16 to our unaudited condensed consolidated financial statements .

Operating Expenses were $399.5 million for the three months ended June 30, 2020 , compared to $385.4 million for the three months ended June 30, 2019 , an increase of $14.1 million , or 4% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $325.7 million for the three months ended June 30, 2020 , compared to $302.2 million for the three months ended June 30, 2019 , an increase of $23.5 million , or 8% .

Non-compensation expenses, as a component of Operating Expenses, were $73.8 million for the three months ended June 30, 2020 , compared to $83.2 million for the three months ended June 30, 2019 , a decrease of $9.4 million , or 11% .

Non-compensation operating expenses decreased from the prior year primarily driven by decreased travel and related expenses, partially offset by increased bad debt expense.

Other Expenses of $9.2 million for the three months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, of $8.6 million related to separation and transition benefits and related costs and the acceleration of depreciation

Operating Expenses were $318.7 million for the three months ended September 30, 2020 , compared to $311.7 million for the three months ended September 30, 2019 , an increase of $7.0 million , or 2% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $250.9 million for the three months ended September 30, 2020 , compared to $228.5 million for the three months ended September 30, 2019 , an increase of $22.4 million, or 10% .

Non-Compensation expenses, as a component of Operating Expenses, were $67.8 million for the three months ended September 30, 2020 , compared to $83.2 million for the three months ended September 30, 2019 , a decrease of $15.4 million , or 19%.

Non-Compensation operating expenses decreased from the prior year primarily driven by decreased travel and related expenses related to prolonged travel restrictions.

Other Expenses of $7.7 million for the three months ended September 30, 2020 included Special Charges, Including Business Realignment Costs, of $7.4 million related to separation and transition benefits and related costs and the acceleration of depreciation

expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, intangible asset and other amortization of $0.2 million and Acquisition and Transition Costs of $0.2 million .

Other Expenses of $6.9 million for the three months ended June 30, 2019 included compensation costs of $3.7 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $2.2 million and Special Charges of $1.0 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York.

Six Months Ended June 30, 2020 versus June 30, 2019

Net Investment Banking Revenues were $909.0 million for the six months ended June 30, 2020 , compared to $917.6 million for the six months ended June 30, 2019 , which represented a decrease of 1% .

We earned 358 fees from Advisory clients for the six months ended June 30, 2020 , compared to 362 for the six months ended June 30, 2019 , representing a 1% decrease .

We had 150 fees earned in excess of $1.0 million for the six months ended June 30, 2020 , compared to 149 for the six months ended June 30, 2019 , representing a 1% increase .

The decrease in Advisory Fees from the six months ended June 30, 2019 of $74.4 million , or 10% , reflects a decrease in revenue earned from large transactions during the six months ended June 30, 2020 .

Underwriting Fees increased $70.9 million , or 162% , compared to the six months ended June 30, 2019 , as we participated in several of the largest underwritings in our history.

We participated in 48 underwriting transactions for the six months ended June 30, 2020 (compared to 39 for the six months ended June 30, 2019 ), 29 of which were as a bookrunner (compared to 27 for the six months ended June 30, 2019 ).

Commissions and Related Fees increased $18.9 million , or 21% , compared to the six months ended June 30, 2019 , as volatility remained elevated during 2020.

Other Revenue, net, for the six months ended June 30, 2020 , was lower than the six months ended June 30, 2019 , primarily reflecting losses of $6.8 million on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, for the six months ended June 30, 2020 , compared to $8.7 million of gains for the six months ended June 30, 2019.

Other Expenses of $7.9 million for the three months ended September 30, 2019 included compensation costs of $4.6 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $2.2 million , Special Charges of $1.0 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York and Acquisition and Transition Costs of $0.2 million.

Nine Months Ended September 30, 2020 versus September 30, 2019

Net Investment Banking Revenues were $1.29 billion for the nine months ended September 30, 2020 , compared to $1.31 billion for the nine months ended September 30, 2019 , a decrease of $11.1 million , or 1% .

We earned 475 fees from Advisory clients for the nine months ended September 30, 2020 , compared to 489 for the nine months ended September 30, 2019 , representing a 3% decrease .

We earned 224 fees in excess of $1.0 million for the nine months ended September 30, 2020 , compared to 223 for the nine months ended September 30, 2019 .

The decrease in revenues from the nine months ended September 30, 2019 reflects a decrease of $124.6 million , or 11% in Advisory Fees, reflecting a decrease in the number of Advisory fees earned and a decline in revenue earned from large transactions during the nine months ended September 30, 2020 .

The decrease in Advisory Fees was predominantly offset by an increase in Underwriting Fees.

Underwriting Fees increased $119.8 million , or 195% , compared to the nine months ended September 30, 2019 , as we closed several of the largest deals in our history.

We participated in 78 underwriting transactions for the nine months ended September 30, 2020 (compared to 57 for the nine months ended September 30, 2019 ), 52 of which were as a bookrunner (compared to 37 for the nine months ended September 30, 2019 ).

Commissions and Related Fees increased $15.9 million , or 12% , compared to the nine months ended September 30, 2019 , as a result of elevated volatility during the first half of 2020.

Other Revenue, net, for the nine months ended September 30, 2020 , decreased versus the nine months ended September 30, 2019 , primarily reflecting lower performance of the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, and increased interest expense primarily attributable to the 2019 Private Placement Notes which were issued in August 2019.

For further information see Notes 7 and 16 to our unaudited condensed consolidated financial statements .

Operating Expenses were $739.3 million for the six months ended June 30, 2020 , compared to $697.3 million for the six months ended June 30, 2019 , an increase of $42.0 million , or 6% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $586.6 million for the six months ended June 30, 2020 , as compared to $537.2 million for the six months ended June 30, 2019 , an increase of $49.4 million , or 9% .

Non-compensation expenses, as a component of Operating Expenses, were $152.7 million for the six months ended June 30, 2020 , compared to $160.1 million for the six months ended June 30, 2019 , a decrease of $7.4 million, or 5% .

Non-compensation operating expenses decreased from the prior year primarily driven by decreased travel and related expenses and professional fees, partially offset by increased bad debt expense.

Other Expenses of $34.4 million for the six months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, of $32.2 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, compensation costs of $1.1 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $1.0 million and Acquisition and Transition Costs of $0.1 million.

Other Expenses of $14.2 million for the six months ended June 30, 2019 included compensation costs of $7.8 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $4.3 million and Special Charges of $2.1 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York.

Operating Expenses were $1.06 billion for the nine months ended September 30, 2020 , compared to $1.01 billion for the nine months ended September 30, 2019 , an increase of $48.9 million , or 5% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $837.5 million for the nine months ended September 30, 2020 , compared to $765.7 million for the nine months ended September 30, 2019 , an increase of $71.8 million , or 9% .

Non-Compensation expenses, as a component of Operating Expenses, were $220.4 million for the nine months ended September 30, 2020 , compared to $243.3 million for the nine months ended September 30, 2019 , a decrease of $22.9 million, or 9% .

Non-Compensation operating expenses decreased from the prior year primarily driven by decreased travel and related expenses, related to prolonged travel restrictions, and decreased professional fees, partially offset by increased bad debt expense.

Other Expenses of $42.1 million for the nine months ended September 30, 2020 included Special Charges, Including Business Realignment Costs, of $39.6 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, intangible asset and other amortization of $1.2 million , compensation costs of $1.1 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, and Acquisition and Transition Costs of $0.3 million .

Other Expenses of $22.1 million for the nine months ended September 30, 2019 included compensation costs of $12.3 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, intangible asset and other amortization of $6.5 million , Special Charges of $3.1 million related to the acceleration of depreciation expense for leasehold improvements in conjunction with the expansion of our headquarters in New York and Acquisition and Transition Costs of $0.2 million.

Investment Management

The following table summarizes the operating results of the Investment Management segment.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(dollars in thousands)

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Total Expenses

Operating Income (Loss)

Operating Income

Income from Equity Method Investments (1)

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In the event the private equity funds perform below certain thresholds we may be obligated to repay certain carried interest previously distributed.

As of June 30, 2020 , $0.5 million of previously distributed carried interest received from the funds was subject to repayment.

As of September 30, 2020 , $0.3 million of previously distributed carried interest received from the funds was subject to repayment.

We also hold interests in ABS and Atalanta Sosnoff that are accounted for under the equity method of accounting.

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Assets Under Management

AUM for our Investment Management businesses of $10.4 billion at June 30, 2020 decreased compared to $10.7 billion at December 31, 2019 .

AUM for our Investment Management businesses of $10.9 billion at September 30, 2020 increased compared to $10.7 billion at December 31, 2019 .

The amounts of AUM presented in the table below primarily reflect the assets which we manage.

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For both the Level I and Level II investments, we obtain both active quotes from nationally recognized exchanges and third-party pricing services to determine market or fair value quotes, respectively.

For Level III investments, pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment.

The inputs into the determination of fair

value require significant management judgment or estimation.

Wealth Management maintained 69% of Level I investments, 27% of Level II investments and 4% of Level III investments as of June 30, 2020 and December 31, 2019 .

Institutional Asset Management maintained 84% and 85% of Level I investments and 16% and 15% of Level II investments as of June 30, 2020 and December 31, 2019 , respectively.

For Level III investments, pricing inputs are unobservable for the investment

and includes situations where there is little, if any, market activity for the investment.

The inputs into the determination of fair value require significant management judgment or estimation.

Wealth Management maintained 71% and 69% of Level I investments, 25% and 27% of Level II investments and 4% of Level III investments as of September 30, 2020 and December 31, 2019 , respectively.

Institutional Asset Management maintained 85% of Level I investments and 15% of Level II investments as of September 30, 2020 and December 31, 2019 .

The fees that we receive for providing investment advisory and management services are primarily driven by the level and composition of AUM.

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The fees we earn are also impacted by our investment performance, as the appreciation or depreciation in the value of the assets that we manage directly impacts our fees.

The following table summarizes AUM activity for the six months ended June 30, 2020 :

The following table summarizes AUM activity for the nine months ended September 30, 2020 :

Management (1)

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Balance at December 31, 2019

Market Depreciation

Balance at June 30, 2020

Unconsolidated Affiliates - Balance at June 30, 2020:

Market Appreciation (Depreciation)

Balance at September 30, 2020

Unconsolidated Affiliates - Balance at September 30, 2020:

Atalanta Sosnoff

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $223.4 million and $319.8 million as of June 30, 2020 and December 31, 2019 , respectively.

The following table represents the composition of our AUM for Wealth Management and Institutional Asset Management as of June 30, 2020 :

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $223.4 million and $319.8 million as of September 30, 2020 and December 31, 2019 , respectively.

The following table represents the composition of our AUM for Wealth Management and Institutional Asset Management as of September 30, 2020 :

Wealth Management

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Investment performance in the Wealth Management businesses is measured against appropriate indices based on the AUM, most frequently the S&P 500 and a composite fixed income index principally reflecting BarCap and MSCI indices.

For the six months ended June 30, 2020 , AUM for Wealth Management was flat.

Wealth Management outperformed the S&P 500 on a 1 and 3-year basis by approximately 9% and 4%, respectively, during the period.

Wealth Management lagged the fixed

income composite on a 1 and 3 year basis by approximately 130 basis points and 50 basis points, respectively.

For the period, the S&P 500 was down approximately 3% and the fixed income composite was up 3%.

For the nine months ended September 30, 2020 , AUM for Wealth Management increased 5% , primarily reflecting a 4% increase due to market appreciation and a 1% increase due to flows.

Wealth Management outperformed the S&P 500 on a 1 and

3-year basis by approximately 10% and 5%, respectively, during the period.

Wealth Management lagged the fixed income composite on a 1 and 3 year basis by approximately 140 basis points and 60 basis points, respectively.

For the period, the S&P 500 and fixed income composite were up approximately 6% and 4%, respectively.

Our Institutional Asset Management business reflects assets managed by ECB, which primarily manages Mexican Government and corporate fixed income securities, as well as equity products.

ECB utilizes the IPC Index, which is a capitalization weighted index of leading equities traded on the Mexican Stock Exchange and the Cetes 28 Index, which is an index of Treasury Bills issued by the Mexican Government, as benchmarks in reviewing their performance and managing their investment decisions.

For the six months ended June 30, 2020 , AUM for Institutional Asset Management decreased 19% , primarily reflecting a decrease due to market depreciation.

For the nine months ended September 30, 2020 , AUM for Institutional Asset Management decreased 13% , primarily reflecting a 15% decrease due to market depreciation, partially offset by a 2% increase due to flows.

ECB's AUM market depreciation reflects market volatility, as well as the impact of the fluctuation of foreign currency.

ECB outperformed the equities index and outperformed the fixed income index on two of their three portfolios for the six months ended June 30, 2020 .

AUM from our unconsolidated affiliates decreased 4% compared to December 31, 2019 , primarily related to market depreciation and negative investment performance in the current market environment from ABS.

Three Months Ended June 30, 2020 versus June 30, 2019

Net Investment Management Revenues were $11.7 million for the three months ended June 30, 2020 , compared to $14.7 million for the three months ended June 30, 2019 , which represented a decrease of 20% .

Asset Management and Administration Fees earned from the management of client portfolios increased 4% from the three months ended June 30, 2019 , primarily driven by an increase of $0.8 million in fees from Wealth Management clients, as associated AUM increased 9% .

Fee-based revenues included $0.01 million of revenues from performance fees for the three months ended June 30, 2020 and 2019 .

Other Revenue, net, decrease d from the three months ended June 30, 2019 , primarily as a result of lower performance from our legacy private equity investments.

Income from Equity Method Investments increased from the three months ended June 30, 2019 , primarily as a result of an increase in earnings from our investment in Atalanta Sosnoff.

Operating Expenses were $11.7 million for the three months ended June 30, 2020 , compared to $11.9 million for the three months ended June 30, 2019 , a decrease of $0.2 million , or 2% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $8.3 million for the three months ended June 30, 2020 , compared to $8.4 million for the three months ended June 30, 2019 , a decrease of $0.1 million , or 1% .

Non-compensation expenses, as a component of Operating Expenses, were $3.4 million for the three months ended June 30, 2020 , compared to $3.5 million for the three months ended June 30, 2019 , a decrease of $0.1 million , or 3%.

Six Months Ended June 30, 2020 versus June 30, 2019

Net Investment Management Revenues were $25.1 million for the six months ended June 30, 2020 , compared to $28.8 million for the six months ended June 30, 2019 , which represented a decrease of 13% .

Asset Management and Administration Fees earned from the management of client portfolios increased 4% from the six months ended June 30, 2019 , primarily driven by an increase of $1.7 million in fees from Wealth Management clients, as associated AUM increased 9% .

Fee-based revenues included $0.07 million and $0.01 million of revenues from performance fees for the six months ended June 30, 2020 and 2019 , respectively.

Other Revenue, net, decrease d from the six months ended June 30, 2019 , primarily as a result of lower performance from our legacy private equity investments.

Income from Equity Method Investments increased from the six months ended June 30, 2019 , primarily as a result of an increase in earnings from our investments in Atalanta Sosnoff and ABS in 2020.

Operating Expenses were $24.4 million for the six months ended June 30, 2020 , compared to $24.2 million for the six months ended June 30, 2019 , an increase of $0.2 million, or 1% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $17.1 million for the six months ended June 30, 2020 , compared to $17.0 million for the six months ended June 30, 2019 , an increase of $0.1 million , or 1% .

Non-compensation expenses, as a component of Operating Expenses, were $7.3 million for the six months ended June 30, 2020 , compared to $7.2 million for the six months ended June 30, 2019 , an increase of $0.1 million, or 1% .

Other Expenses of $0.03 million for the six months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, related to separation and transition benefits and related costs.

Other Expenses of $0.1 million for the six months ended June 30, 2019 included Acquisition and Transition Costs.

ECB outperformed the equities index and outperformed the fixed income index on two of their three portfolios for the nine months ended September 30, 2020 .

AUM from our unconsolidated affiliates increased 3% compared to December 31, 2019 , primarily related to positive performance in Atalanta Sosnoff.

Three Months Ended September 30, 2020 versus September 30, 2019

Net Investment Management Revenues were $17.1 million for the three months ended September 30, 2020 , compared to $14.2 million for the three months ended September 30, 2019 , which represented an increase of $2.9 million, or 20% .

Asset Management and Administration Fees earned from the management of client portfolios increased 11% from the three months ended September 30, 2019 , primarily driven by an increase of $1.5 million in fees from Wealth Management clients, as associated AUM increased 10% .

Fee-based revenues included $0.01 million of revenues from performance fees for the three months ended September 30, 2020 and 2019 .

Other Revenue, net, increase d from the three months ended September 30, 2019 , primarily as a result of the gain on the sale of the ECB Trust Business, as well as higher performance from our legacy private equity investments.

Income from Equity Method Investments increased from the three months ended September 30, 2019 , primarily as a result of an increase in earnings from our investment in Atalanta Sosnoff.

Operating Expenses were $12.2 million for the three months ended September 30, 2020 , compared to $12.0 million for the three months ended September 30, 2019 , an increase of $0.1 million , or 1% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $9.0 million for the three months ended September 30, 2020 , compared to $8.6 million for the three months ended September 30, 2019 , an increase of $0.4 million, or 5%.

Non-Compensation expenses, as a component of Operating Expenses, were $3.2 million for the three months ended September 30, 2020 , compared to $3.4 million for the three months ended September 30, 2019 , a decrease of $0.2 million , or 6% .

Other Expenses of $0.3 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, included Acquisition and Transition Costs.

Nine Months Ended September 30, 2020 versus September 30, 2019

Net Investment Management Revenues were $42.1 million for the nine months ended September 30, 2020 , compared to $43.0 million for the nine months ended September 30, 2019 , which represented a decrease of $0.9 million, or 2% .

Asset Management and Administration Fees earned from the management of client portfolios increased 6% from the nine months ended September 30, 2019 , primarily driven by an increase of $3.2 million in fees from Wealth Management clients, as associated AUM increased 10% .

Fee-based revenues included $0.08 million and $0.02 million of revenues from performance fees for the nine months ended September 30, 2020 and 2019 , respectively.

Other Revenue, net, decrease d from the nine months ended September 30, 2019 , primarily as a result of lower performance from our legacy private equity investments.

Income from Equity Method Investments increased from the nine months ended September 30, 2019 , as a result of an increase in earnings from our investments in Atalanta Sosnoff and ABS in 2020.

Operating Expenses were $36.5 million for the nine months ended September 30, 2020 , compared to $36.2 million for the nine months ended September 30, 2019 , an increase of $0.3 million , or 1% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $26.0 million for the nine months ended September 30, 2020 , compared to $25.6 million for the nine months ended September 30, 2019 , an increase of $0.4 million, or 2% .

Non-Compensation expenses, as a component of Operating Expenses, were $10.5 million for the nine months ended September 30, 2020 , compared to $10.6 million for the nine months ended September 30, 2019 , a decrease of $0.1 million , or 1% .

Other Expenses of $0.3 million for the nine months ended September 30, 2020 included Acquisition and Transition Costs of $0.3 million and Special Charges, Including Business Realignment Costs of $0.03 million, related to separation and transition benefits and related costs.

Other Expenses of $0.3 million for the nine months ended September 30, 2019 included Acquisition and Transition Costs.

Our operating cash flows are primarily influenced by the timing and receipt of investment banking and investment management fees (for further information see COVID-19 below), and the payment of operating expenses, including incentive compensation to our employees and interest expense on our repurchase agreements, Notes Payable and lines of credit, and the payment of income taxes.

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A summary of our operating, investing and financing cash flows is as follows:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(dollars in thousands)

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End of Period

Six Months Ended June 30, 2020 .

Cash, Cash Equivalents and Restricted Cash were $1.0 billion at June 30, 2020 , an increase of $381.1 million versus Cash, Cash Equivalents and Restricted Cash of $643.9 million at December 31, 2019 .

Nine Months Ended September 30, 2020 .

Cash, Cash Equivalents and Restricted Cash were $1.16 billion at September 30, 2020 , an increase of $514.8 million versus Cash, Cash Equivalents and Restricted Cash of $643.9 million at December 31, 2019 .

Operating activities resulted in a net inflow of $283.2 million , primarily related to earnings, partially offset by the payment of 2019 bonus awards and deferred cash compensation.

Cash flows for the first six months of 2020 also reflect the impact of lower tax payments resulting from the deferral of required federal income tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security Act ("CARES" Act).

Cash of $481.2 million was provided by investing activities primarily related to net proceeds from sales and maturities of investment securities and the maturity of certificates of deposit, partially offset by purchases of equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

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currencies to U.S.

Six Months Ended June 30, 2019.

Cash, Cash Equivalents and Restricted Cash were $384.6 million at June 30, 2019, a decrease of $415.5 million versus Cash, Cash Equivalents and Restricted Cash of $800.1 million at December 31, 2018.

Operating activities resulted in a net outflow of $135.1 million, primarily related to the payment of 2018 incentive compensation, partially offset by earnings.

Cash of $68.3 million was provided by investing activities primarily related to the maturity of certificates of

deposit, partially offset by purchases of furniture, equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $347.5 million, primarily for purchases of treasury stock and noncontrolling interests, the payment of dividends and distributions to noncontrolling interest holders.

Nine Months Ended September 30, 2019.

Cash, Cash Equivalents and Restricted Cash were $313.6 million at September 30, 2019, a decrease of $486.5 million versus Cash, Cash Equivalents and Restricted Cash of $800.1 million at December 31, 2018.

Operating activities resulted in a net inflow of $91.0 million, primarily related to earnings, partially offset by the payment of 2018 incentive compensation.

Cash of $354.0 million was used in investing activities primarily related to net purchases of investment securities and certificates of deposit and purchases of furniture, equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $218.6 million, primarily for purchases of treasury stock and noncontrolling interests, the payment of dividends and distributions to noncontrolling interest holders, partially offset by the issuance of the 2019 Private Placement Notes.

For further information see Note 12 to our unaudited condensed consolidated financial statements.

Liquidity and Capital Resources

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We regularly monitor our liquidity position, including cash, other significant working capital, current assets and liabilities, long-term liabilities, lease commitments and related fixed assets, principal investment commitments related to our Investment Management business, dividends on Class A Shares, partnership distributions and other capital transactions, as well as other matters relating to liquidity and compliance with regulatory requirements.

Our liquidity is highly dependent on our revenue stream from our operations, principally from our Investment Banking business, which is a function of closing advisory transactions and earning success fees, the timing and realization of which is irregular and dependent upon factors that are not subject to our control.

Our liquidity is highly dependent on our revenue stream from our operations, principally from our Investment Banking business, which is a function of closing transactions and earning success fees, the timing and realization of which is irregular and dependent upon factors that are not subject to our control.

Our revenue stream funds the payment of our expenses, including annual bonus payments, a portion of which are guaranteed, deferred compensation arrangements, interest expense on our repurchase agreements, Notes Payable, lines of credit and other financing arrangements and income taxes.

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These circumstances could include unfavorable market conditions or the loss of key personnel of the investee.

The worldwide COVID-19 pandemic has continued to have, and is expected to continue having, a significant negative effect on our business.

Within the current environment caused by COVID-19, we have seen a significant decline in the number of global and domestic M&A transactions, and a prolonging of transaction closings as certain of the conditions typically required for global and domestic M&A are generally not present.

Accordingly, we have pivoted our services to meet the evolving priorities and needs of our clients.

While we observed an initial decline in equity underwriting activity during the early stages of the COVID-19 pandemic, subsequently our equity underwriting activity levels have meaningfully increased.

Our restructuring, debt advisory and capital markets advisory businesses remain very active, and the volatility and increased volume in the equity markets have allowed our Equities business to maintain elevated levels of secondary revenues.

However, as we have previously indicated, given that these businesses historically have produced less revenue than our M&A advisory business, we do not expect that the increased activity will be sufficient to offset weakness in M&A activity.

Our Unaudited Condensed Consolidated Statement of Financial Condition as of June 30, 2020 included $1.0 billion of Cash and Cash Equivalents and $99.7 million of Investment Securities, which are generally comprised of highly-liquid investments.

However, at this time, it is uncertain how long our business will be negatively impacted by COVID-19 and any associated economic and market downturn.

Although we anticipate that the decline in revenue will have a significant impact on our results of operations and cash flows, it is uncertain at this time how significant that impact will be.

The degree of the impact will likely be directly correlated to the length and depth of any economic slowdown and the speed of any recovery.

Market access to working capital, access to both short-term and long-term financing and/or the ability to raise capital likely will be impacted, and may be impacted significantly, during any resulting periods of economic distress.

Our ability to fund operations, make capital investments, maintain compliance with our debt covenants and fund shareholder dividends and other capital commitments or stock repurchases may be adversely affected, depending on the length and depth of any disruption.

We continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations regularly.

This includes focusing on client billing activity, accounts receivable collections and cost management initiatives.

Management is also carefully reviewing decisions related to capital projects and returning capital to investors, such as purchasing outstanding shares and dividend recommendations to the Board of Directors.

The worldwide COVID-19 pandemic has posed, and is expected to continue posing, significant challenges for our business.

Our revenues and cash flows have been adversely impacted to date, although our broad and diverse capabilities, including underwriting, restructuring, capital markets advisory and equity commissions and related fees, have enabled us to predominantly offset weakened M&A activity and offer relevant services to our clients.

Our teams, the substantial majority of whom are working remotely, continue to work diligently, though there remains uncertainty as to how the pandemic and government response may impact the markets and our clients' needs in the future.

We continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations regularly, as well as decisions related to capital projects and returning capital to investors.

For a further discussion of risks related to our business, refer to "Risk Factors" in our 2019 Form 10-K and in Item 1A.

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This program may be suspended or discontinued at any time and does not have a specified expiration date.

During the six months ended June 30, 2020 , we repurchased 854,134 Class A Shares, at an average cost per share of $75.93 , for $64.9 million pursuant to our repurchase program.

During the nine months ended September 30, 2020 , we repurchased 854,134 Class A Shares, at an average cost per share of $75.93 , for $64.9 million pursuant to our repurchase program.

In addition, periodically, we buy shares into treasury from our employees in order to allow them to satisfy their minimum tax requirements for share deliveries under our share equity plan.

During the six months ended June 30, 2020 , we repurchased 1,016,681 Class A Shares, at an average cost per share of $76.45 , for $77.7 million primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 1,870,815 Class A Shares repurchased during the six months ended June 30, 2020 , were acquired for aggregate purchase consideration of $142.6 million, at an average cost per share of $76.22 .

During the nine months ended September 30, 2020 , we repurchased 1,032,557 Class A Shares, at an average cost per share of $76.18 , for $78.6 million primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 1,886,691 Class A Shares repurchased during the nine months ended September 30, 2020 , were acquired for aggregate purchase consideration of $143.5 million, at an average cost per share of $76.07 .

For further information see COVID-19 above.

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Interest on the 2016 Private Placement Notes is payable semi-annually and the 2016 Private Placement Notes are guaranteed by certain of our domestic subsidiaries.

We may, at our option, prepay all, or from time to time any part of, the 2016 Private Placement Notes (without regard to Series), in an amount not less than 5% of the aggregate principal amount of the 2016 Private Placement Notes then outstanding at 100% of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2016 Private Placement Notes will have the right to require us to prepay the entire unpaid principal amounts held by each holder of the 2016 Private Placement Notes plus accrued and unpaid interest to the prepayment date.

occurrence of a change of control, the holders of the 2016 Private Placement Notes will have the right to require us to prepay the entire unpaid principal amounts held by each holder of the 2016 Private Placement Notes plus accrued and unpaid interest to the prepayment date.

The 2016 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio, a minimum tangible net worth and a minimum interest coverage ratio, and customary events of default.

As of June 30, 2020 , we were in compliance with all of these covenants.

As of September 30, 2020 , we were in compliance with all of these covenants.

On August 1, 2019, we issued $175.0 million and £25.0 million of senior unsecured notes through private placement.

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The 2019 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default.

As of June 30, 2020 , we were in compliance with all of these covenants.

As of September 30, 2020 , we were in compliance with all of these covenants.

Lines of Credit

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In addition, the agreement contains certain reporting covenants, as well as certain debt covenants that prohibit East and us from incurring other indebtedness, subject to specified exceptions.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2020 .

We and our consolidated subsidiaries were in compliance with these covenants as of September 30, 2020 .

Drawings under this facility bear interest at the prime rate.

On March 11, 2019, East drew down $30.0 million on this facility, which was repaid on May 3, 2019.

On June 21, 2019, East amended this facility with PNC such that, among other things, the interest rate provisions were modified to LIBOR plus 125 basis points and the maturity date was extended to October 31, 2020.

East amended this facility on October 30, 2020 such that, among other things, the interest rate provisions were modified to LIBOR plus 150 basis points and the maturity date was extended to October 31, 2022.

On July 26, 2019, East entered into an additional loan agreement with PNC for a revolving credit facility in an aggregate principal amount of up to $20.0 million , to be used for working capital and other corporate activities.

The facility is unsecured and matures on October 31, 2020, subject to an extension agreed to between East and PNC.

The facility is unsecured.

In addition, the agreement contains certain reporting requirements and debt covenants consistent with the Existing PNC Facility.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2020 .

Drawings under this facility bear interest at LIBOR plus 150 basis points.

We and our consolidated subsidiaries were in compliance with these covenants as of September 30, 2020 .

On October 30, 2020, East amended this facility such that, among other things, the revolving credit facility has increased to an aggregate principal amount of $30.0 million.

Drawings under this facility will bear interest at LIBOR plus 180 basis points and the maturity date was extended to October 31, 2022.

East is only permitted to borrow under this facility if there is no undrawn availability under the Existing PNC Facility and must repay indebtedness under this facility prior to repaying indebtedness under the Existing PNC Facility.

There have been no drawings under this facility as of June 30, 2020 .

There have been no drawings under this facility as of September 30, 2020 .

ECB maintains a line of credit with BBVA Bancomer to fund its trading activities on an intra-day and overnight basis.

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We record as assets on our Unaudited Condensed Consolidated Statements of Financial Condition , Financial Instruments Owned and Pledged as Collateral at Fair Value (where we have acquired the securities deliverable to clients under these repurchase arrangements by purchasing securities in the open market) and Securities Purchased Under Agreements to Resell (where we have acquired the securities deliverable to clients under these repurchase agreements by entering into reverse repurchase agreements with unrelated third parties).

These Mexican government securities included in Financial Instruments Owned and Pledged as Collateral at Fair Value on the Unaudited Condensed Consolidated Statements of Financial Condition have an estimated average time to maturity of approximately four months , as of June 30, 2020 , and are pledged as collateral against repurchase agreements, which are collateralized financing agreements.

These Mexican government securities included in Financial Instruments Owned and Pledged as Collateral at Fair Value on the Unaudited Condensed Consolidated Statements of Financial Condition have an estimated average time to maturity of approximately 1.2 years , as of September 30, 2020 , and are pledged as collateral against repurchase agreements, which are collateralized financing agreements.

Generally, collateral is posted equal to the contract value at inception and is subject to market changes.

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We periodically assess the collectability or credit quality related to securities purchased under agreements to resell.

As of June 30, 2020 and December 31, 2019 , a summary of ECB's assets, liabilities and risk measures related to its collateralized financing activities is as follows:

June 30, 2020

As of September 30, 2020 and December 31, 2019 , a summary of ECB's assets, liabilities and risk measures related to its collateralized financing activities is as follows:

September 30, 2020

December 31, 2019

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Under the terms of the agreement, we committed to extend the lease term for our current space and add space on up to seven additional floors, three of which commenced as of the lease’s effective date.

We anticipate we will take possession of the remainder of these floors over the next four years.

We anticipate we will take possession of the remainder of these floors over the next three years.

On December 6, 2019, the lease was modified to add an additional floor and to extend the lease term for all current and prospective space to end on December 31, 2035.

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For further information see Note 10 to our unaudited condensed consolidated financial statements .

We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition ) relating to future capital contributions to private equity funds of $13.7 million and $13.8 million as of June 30, 2020 and December 31, 2019 , respectively.

We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition ) relating to future capital contributions to private equity funds of $12.0 million and $13.8 million as of September 30, 2020 and December 31, 2019 , respectively.

We expect to fund these commitments with cash flows from operations.

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We hold equity securities and invest in exchange-traded funds and mutual funds, principally as an economic hedge against our deferred compensation program.

As of June 30, 2020 , the fair value of our investments with these products, based on closing prices, was $94.5 million.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $9.4 million, $18.9 million and $28.3 million, respectively, for the three months ended June 30, 2020 .

As of September 30, 2020 , the fair value of our investments with these products, based on closing prices, was $96.1 million.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $9.6 million, $19.2 million and $28.8 million, respectively, for the three months ended September 30, 2020 .

In February 2020, we entered into four-month futures contracts on a stock index fund with a notional amount of $38.9 million , as an economic hedge against our deferred cash compensation program.

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In accordance with ASC 815, these contracts were carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations .

The Company had realized gains (losses) of $5.2 million and ($4.0) million for the three and six months ended June 30, 2020 , respectively.

The Company had realized losses of ($4.0) million for the nine months ended September 30, 2020 .

In April 2019, we entered into three-month futures contracts on a stock index fund with a notional amount of $14.8 million for $0.7 million , as an economic hedge against the deferred cash compensation program.

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In accordance with ASC 815, these contracts are carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations .

The Company had net realized gains of $0.1 million for the three and six months ended June 30, 2019 .

The Company had net realized gains of $0.1 million for the nine months ended September 30, 2019 .

See "-Liquidity and Capital Resources" above for a discussion of collateralized financing transactions at ECB.

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Valuations and analysis regarding our investments in Trilantic and Glisco are performed by their respective professionals, and thus we are not involved in determining the fair value for the portfolio companies of such funds.

We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $1.5 million for the three months ended June 30, 2020 .

Exchange Rate Risk

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Historically, the value of these foreign currencies has fluctuated relative to the U.S.

For the six months ended June 30, 2020 , the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was ($9.6) million .

For the nine months ended September 30, 2020 , the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was ($2.9) million .

It is generally not our intention to hedge our foreign currency exposure in these subsidiaries, and we will reevaluate this policy from time to time.

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Receivables are reported net of any allowance for doubtful accounts.

We maintain an allowance for doubtful accounts to provide coverage for probable losses from our customer receivables and determine the adequacy of the allowance by estimating the probability of loss based on the our analysis of historical credit loss experience of our client receivables, and taking into consideration current market conditions and reasonable and supportable forecasts that affect the collectability of the reported amount.

We maintain an allowance for doubtful accounts to provide coverage for probable losses from our customer

receivables and determine the adequacy of the allowance by estimating the probability of loss based on the our analysis of historical credit loss experience of our client receivables, and taking into consideration current market conditions and reasonable and supportable forecasts that affect the collectability of the reported amount.

The Investment Banking and Investment Management receivables collection periods generally are within 90 days of invoice, with the exception of placement fees, which are generally collected within 180 days of invoice, and fees related to private funds capital raising, which are collected in a period exceeding one year.

The collection period for restructuring transaction receivables may exceed 90 days.

We recorded bad debt expense of approximately $5.3 million and $1.8 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and December 31, 2019 , total receivables recorded in Accounts Receivable amounted to $310.2 million and $296.4 million , respectively, net of an allowance for doubtful accounts, and total receivables recorded in Other Assets amounted to $61.9 million and $63.6 million, respectively.

We recorded bad debt expense of approximately $5.9 million and $2.6 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and December 31, 2019 , total receivables recorded in Accounts Receivable amounted to $282.4 million and $296.4 million , respectively, net of an allowance for doubtful accounts, and total receivables recorded in Other Assets amounted to $63.0 million and $63.6 million, respectively.

Other Current Assets and Other Assets include arrangements in which an estimate of variable consideration has been included in the transaction price and thereby recognized as revenue that precedes the contractual due date (contract assets).

As of June 30, 2020 , total contract assets recorded in Other Current Assets and Other Assets amounted to $6.8 million and $5.9 million , respectively.

As of September 30, 2020 , total contract assets recorded in Other Current Assets and Other Assets amounted to $19.3 million and $2.4 million , respectively.

As of December 31, 2019 , total contract assets recorded in Other Current Assets and Other Assets amounted to $31.5 million and $2.5 million, respectively.

With respect to our Investment Securities portfolio, which is comprised primarily of highly-rated corporate and municipal bonds, treasury bills, exchange-traded funds, mutual funds and securities investments, we manage our credit risk exposure by limiting concentration risk and maintaining investment grade credit quality.

As of June 30, 2020 , we had Investment Securities of $99.7 million , of which 5% were treasury bills and notes.

As of September 30, 2020 , we had Investment Securities of $100.8 million , of which 5% were treasury bills and notes.

Critical Accounting Policies and Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis