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Siebert Financial Corp. is a holding company that conducts its retail discount brokerage and investment banking business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc. Siebert Financial Corp. has a market cap of $54.16 million; its shares were traded at around $2.44 with a P/E ratio of 81.33 and P/S ratio of 1.82. Siebert Financial Corp. had an annual average earning growth of 79.8% over the past 5 years. Highlight of Business Operations: Income from Siebert’s equity investment in Siebert Brandford Shank & Co., LLC, an entity in which Siebert holds a 49% equity interest (“SBS”), for the three months ended September 30, 2009, was $546,000 compared to income of $103,000, an increase of $443,000 or 430.1% from the same period in 2008, primarily due to SBS participating in more municipal bond offerings as senior and co-managers. SBS serves as an underwriter for municipal bond offerings. Income from our equity investment in SBS Financial Products Company, LLC, an entity in which we hold a 33% equity interest (“SBSFPC”) for the three months ended September 30, 2008, was $69,000 compared to income from our equity investment in SBSFPC of $5,000, an increase of $64,000 from the same period in 2008. This increase was due to a mark to market gain in positions. Income from equity investees is considered to be integral to our operations and material to the results of operations.
The tax benefit for the three months ended September 30, 2009 and 2008 was $840,000 and $675,000, respectively, due to our loss before benefit of $1.3 million and $1.6 million for the three months ended September 30, 2009 and 2008, respectively. The Company increased its income tax refund receivable balance based on the Company’s 2008 consolidated income tax returns which were filed in the third quarter of 2009 and recorded a benefit of approximately $330,000 relating to prior years resulting in an effective tax rate in the third quarter of 2009 of 65%. The effective tax rate for the third quarter 2008 is approximately 42%.
Interest and dividends for the nine months ended September 30, 2009 were $98,000, a decrease of $609,000 or 86.1% from the same period in 2008 primarily due to lower yields on investments in U.S. Treasury Bills and money market funds.
Income from the Siebert’s equity investment in Siebert Brandford Shank & Co., LLC, an entity in which Siebert holds a 49% equity interest (“SBS”) for the nine months ended September 30, 2009, was $3.0 million, compared to income of $1.7 million, an increase of $1.3 million or 77.4% from the same period in 2008. The increase was due to SBS participating in more municipal bond offerings as senior manager and as co-manager.. SBS serves as an underwriter for municipal bond offerings. Loss from our equity investment in SBS Financial Products Company, LLC an entity in which we hold a 33% equity interest (“SBSFPC”) for the nine months ended September 30, 2009, was $113,000 as compared to a loss from our equity investment in SBSFPC of $13,000 for the same period in 2008. This loss was due to the mark to market loss in positions. Income and loss from equity investees is considered to be integral to our operations and material to the results of operations.
The tax benefit for the nine months ended September 30, 2009 and 2008 was $618,000 and $362,000, based on our loss before income tax of $837,000 and $853,000, respectively. The Company increased its income tax refund receivable balance based on the Company’s 2008 consolidated income tax returns which were filed in the third quarter of 2009 and recorded a benefit of approximately $330,000 relating to prior years resulting in an effective tax rate for the nine months ended September 30, 2009 of 74%. The effective tax rate for the nine months ended September 30, 2008 is approximately 42%.
Siebert is subject to the net capital requirements of the SEC, the NYSE and other regulatory authorities. At September 30, 2008, Siebert’s regulatory net capital was $23.9 million, $23.7 million in excess of its minimum capital requirement of $250,000.
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