Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended September 30, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period from                .
to                .


Commission File Number: 1-9728

LOGO

EPOCH HOLDING CORPORATION(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)

20-1938886(I.R.S. Employer
Identification No.)


640 Fifth Avenue, New York, NY 10019(Address of Principal Executive Offices)

(212) 303-7200(Registrant's Telephone Number, Including Area Code)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not Check if
Smaller Reporting Company)

Smaller reporting company o


Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes o    No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).Yes o    No ý

As of November 2, 2010, there were 22,808,188 shares of the registrant's common stock, $0.01 par value per share, issued and outstanding.



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Table of Contents

LOGO

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q  FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2010  TABLE OF CONTENTS



Form 10-Q
Item No.





Page
No.PART 1. FINANCIAL INFORMATIONItem 1.

Financial Statements (Unaudited)

3Condensed Consolidated Balance SheetsSeptember 30, 2010 (Unaudited) and June 30, 2010

3Condensed Consolidated Statements of Operations (Unaudited)for the Three Months Ended September 30, 2010 and
2009

4Condensed Consolidated Statements of Changes in Stockholders' Equityfor the Three Months Ended September 30, 2010
(Unaudited) and the Year Ended June 30, 2010

5Condensed Consolidated Statements of Cash Flows (Unaudited)for the Three Months Ended September 30, 2010 and
2009

6Notes to Condensed Consolidated Financial Statements (Unaudited)

7Item 2.

Management's Discussion and Analysis of Financial Condition and Results of
Operations

16Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34Item 4.

Controls and Procedures

36PART II. OTHER INFORMATIONItem 1.

Legal Proceedings.

38Item 1A.

Risk Factors.

38Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

38Item 5.

Other Information.

38Item 6.

Exhibits.

38Signatures.

40


Items
other than those listed above have been omitted because they are not applicable.

2

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PART I. FINANCIAL INFORMATION



Item 1.    Financial Statements.



EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED BALANCE SHEETS        (in thousands, except share data)

September 30,
2010

June 30,
2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
39,259

$
36,447Accounts receivable


12,181


11,156Security deposits


463


462Prepaid and other current assets


2,077


1,872Total current assets


53,980


49,937Property and equipment, net of accumulated depreciation of $2,659 and $2,454, respectively


2,115


2,187Security deposits


483


770Deferred income taxes, net


3,920


4,110Held-to-maturity securities, at amortized cost (fair value of $2,056 and $2,046, respectively)(Note 5)


1,991


2,001Other investments, at fair value (cost of $5,892 and $3,856, respectively)(Note 6)


6,176


3,698Total assets

$
68,665

$
62,703LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities

$
899

$
929Accrued compensation and benefits


7,639


5,041Subtenant security deposit


238


238Income taxes payable





32Total current liabilities


8,776


6,240Deferred rent


818


848Total liabilities


9,594


7,088Commitments and contingencies(Note 7)Stockholders' equity:Common stock, $0.01 par value per share, 60,000,000 shares authorized; 23,290,589 issued and 22,777,575 outstanding at September 30, 2010 and 23,269,262
issued and 22,786,861 outstanding at June 30, 2010, respectively


233


233Additional paid-in capital


58,231


56,893Retained earnings


4,873


2,668Accumulated other comprehensive income/(loss), net of tax


28


(223
)Less: Treasury stock, at cost, 513,014 and 482,401 shares, respectively


(4,294
)

(3,956
)Total stockholders' equity


59,071


55,615Total liabilities and stockholders' equity

$
68,665

$
62,703


The accompanying notes are an integral part of these consolidated financial statements.

3

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        UNAUDITED        (in thousands, except per share
data)

Three Months Ended
September 30,2010

2009Operating Revenues:Investment advisory and management fees

$
14,795

$
11,141Performance fees


180


276Total operating revenues


14,975


11,417Operating Expenses:Employee related costs (excluding share-based compensation)


5,469


4,516Share-based compensation


1,279


971Occupancy and technology


835


1,083Professional fees and services


815


693General and administrative


777


592Total operating expenses


9,175


7,855Operating Income


5,800


3,562Other income


158


308Income Before Income Taxes


5,958


3,870Provision for income taxes


2,612


1,573Net Income

$
3,346

$
2,297Earnings Per Share:(Note 8)Basic

$
0.15

$
0.10Diluted

$
0.15

$
0.10Weighted-Average Shares Outstanding:Basic


22,786


22,196Diluted


22,959


22,319Cash dividends declared and paid per share

$
0.05

$
0.03


The
accompanying notes are an integral part of these consolidated financial statements.

4

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY        FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2010 AND  THE YEAR ENDED JUNE 30, 2010        (dollars and shares in thousands)

Common Stock





Accumulated
Other
Comprehensive
Income/(Loss)

Treasury StockAdditional
Paid-in
Capital

Retained
Earnings

Total
Stockholders'
EquityShares

Amount

Shares

AmountBalances at June 30, 2009


22,198

$
225

$
50,848

$
1,256

$
(307
)

304

$
(2,232
)
$
49,790Net income











11,645











11,645Net unrealized gains on available-for-sale securities, net of tax














199








199Reclassification of net realized gains included in net income, net of tax














(115
)







(115
)Comprehensive income























11,729Issuance and forfeitures of restricted share awards


702


7


821














828Amortization of share-based compensation








4,309














4,309Cash dividends











(10,233
)










(10,233
)Income tax benefit from dividends paid on unvested shares








174














174Exercise of stock options


65


1


277














278Net sales/purchases of shares for employee withholding


31





25








(31
)

207


232Repurchase of common shares


(209
)













209


(1,931
)

(1,931
)Excess income tax benefit from vesting of restricted shares








439














439Balances at June 30, 2010


22,787


233


56,893


2,668


(223
)

482


(3,956
)

55,615Net income











3,346











3,346Net unrealized gains on available-for-sale securities, net of tax














248








248Reclassification of net realized loss included in net income, net of tax














3








3Comprehensive income























3,597Issuance and forfeitures of restricted share awards


21





(10
)













(10
)Amortization of share-based compensation








1,289














1,289Cash dividends











(1,141
)










(1,141
)Income tax benefit from dividends paid on unvested shares








25














25Net sales/purchases of shares for employee withholding


(31
)




3








31


(338
)

(335
)Excess income tax benefit from vesting of restricted shares








31














31Balances at September 30, 2010 (Unaudited)


22,777

$
233

$
58,231

$
4,873

$
28


513

$
(4,294
)
$
59,071


The accompanying notes are an integral part of these consolidated financial statements.

5

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        UNAUDITED        (in thousands)

Three Months Ended
September 30,2010

2009Cash flows from operating activities:Net income

$
3,346

$
2,297Adjustments to reconcile net income to net cash provided by operating activities:Benefit from deferred income taxes


(135
)

(125
)Share-based compensation


1,279


971Depreciation and amortization


205


211Net realized loss/(gain) on investments


6


(56
)Equity in net income from limited liability company


(31
)

(49
)Amortization of bond premiums


10


3Excess income tax benefit from vesting of restricted shares


(31
)

(432
)Income tax benefit from payment of dividends on unvested shares


(25
)

(13
)(Increase)/decrease in operating assets:Accounts receivable


(1,025
)

(1,484
)Prepaid and other current assets


(70
)

138Increase/(decrease) in operating liabilities:Accounts payable and accrued liabilities


(30
)

550Accrued compensation and benefits


2,598


1,968Income taxes payable


24


670Deferred rent


(30
)

(22
)Net cash provided by operating activities


6,091


4,627Cash flows from investing activities:Investments in Company-sponsored products and other investments, net


(2,012
)

(10
)Security deposits, net


286


(181
)Capital expenditures


(133
)

(75
)Purchases of held-to-maturity securities





(2,434
)Net cash used in investing activities


(1,859
)

(2,700
)Cash flows from financing activities:Cash dividends


(1,141
)

(667
)Repurchase of common shares, net


(338
)

(746
)Excess income tax benefit from vesting of restricted shares


31


432Income tax benefit from payment of dividends on unvested shares


25


13Net gain on sale of shares for employee withholding


3


2Net cash used in financing activities


(1,420
)

(966
)Net increase in cash and cash equivalents during period


2,812


961Cash and cash equivalents at beginning of period


36,447


37,055Cash and cash equivalents at end of period

$
39,259

$
38,016Supplemental disclosure of cash flow information:Cash paid for income taxes

$
2,875

$
658Supplemental disclosures of non-cash investing activities:Net change in unrealized gains/(losses) on available-for-sale securities, net of tax

$
251

$
206


The accompanying notes are an integral part of these consolidated financial statements.

6

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
    (Unaudited)

Note 1Organization

Business

Epoch Holding Corporation ("Epoch" or the "Company"), a Delaware corporation, is a holding company whose sole line of business is
investment advisory and investment management services. The operations of the Company are conducted through its wholly-owned subsidiary, Epoch Investment Partners, Inc. ("EIP"). EIP is a
registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). EIP provides investment advisory and investment management services to clients
including corporations, mutual funds, endowments, foundations and high net worth individuals. Headquartered in New York City, the Company's current investment strategies include U.S. All Cap Value,
U.S. Value, U.S. Smid (small/mid) Cap Value, U.S. Small Cap Value, U.S. Choice, Global Small Cap, Global Absolute Return, Global Choice, International Small Cap, Balanced, and Global Equity
Shareholder Yield.

Note 2Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with
accounting principles generally accepted in the United States of America ("GAAP"), and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the
United States Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed
or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. The fiscal year-end Condensed
Consolidated Balance Sheet was derived from audited financial statements and, in accordance with interim financial statement standards, does not include all disclosures required by GAAP for annual
financial statements.

These
financial statements rely, in part, on estimates. Actual results could differ from these estimates. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial position, interim results of operations and cash flows have been made. The results for the interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. The Company's unaudited condensed consolidated financial statements and the related notes should be read together with the consolidated
financial statements and the related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

All
material intercompany accounts and transactions have been eliminated in consolidation.

Prior
year amounts related to depreciation expense have been reclassified and presented as part of general and administrative expenses in the Condensed Consolidated Statements of
Operations to conform to the current year presentation. Such reclassification had no impact on net income.

There
have been no changes in significant accounting policies during the three months ended September 30, 2010. For a complete listing of the Company's significant accounting
policies, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

7

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 2Summary of Significant Accounting Policies (Continued)

Recently Issued Accounting Standards

Management has considered all new accounting guidance issued subsequent to the fiscal year ended June 30, 2010 applicable to the
Company's operations and the preparation of its condensed consolidated financial statements. Such recently issued accounting guidance has no effect on the Company's financial position or results of
operations.

Note 3Fair Value Measurements

Fair value is defined as the price in a transaction to sell an asset or paid to transfer a liability (i.e. the "exit price") in an orderly transaction between market participants
at the measurement date.

The
Company established a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of
an asset or liability as of the reported date. The three levels are defined as follows:



An
asset's or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Other Investments

Other investments primarily consist of investments in Company-sponsored investment vehicles, including mutual funds, an investment
product separate account, and a limited liability company. Other investments also include an investment in a non-affiliated investment limited partnership.

The
investments in the mutual funds and in the separate account are accounted for as available-for-sale investments and valued under the market approach through
the use of unadjusted quoted market prices available in an active market, and are classified
within Level 1 of the valuation hierarchy. The fair value of these investments at September 30, 2010 was $3.7 million.

During
the three months ended September 30, 2010, the Company invested in a non-affiliated investment limited partnership. At September 30, 2010, the Company
held less than a 2% interest in this limited partnership. This investment is accounted for as available-for-sale and is valued based upon an ownership interest in partners'
capital to which a proportionate share of net assets is attributed. The

8

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 3Fair Value Measurements (Continued)

value
of net assets is based on the underlying assets and liabilities of the limited partnership, which primarily include exchange-listed common stocks and money market funds. This investment seeks to
generate long-term capital appreciation. The Company's investment may be redeemed as of the end of the partnership's fiscal year, provided that 30 days prior written notice is given
to the general partner. Redemptions may be more frequent at the option of the general partner. There is no lock-up and there are no unfunded commitments. The investment limited partnership
is classified within Level 2 of the valuation hierarchy. The fair value of this investment at September 30, 2010 was $2.0 million.

The
following table presents, for each of the hierarchy levels previously described, the Company's assets that are measured at fair value on a recurring basis as of September 30,
2010 and June 30, 2010, respectively (in thousands):

September 30, 2010
Fair Value Measurements Using

June 30, 2010
Fair Value Measurements UsingLevel 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

TotalOther investments:Available-for-sale

$
3,676

$
2,043

$


$
5,719

$
3,272

$


$


$
3,272


There
were no transfers between Level 1, 2 and 3 categories in the fair value measurement hierarchy for the periods presented.

The
investment in the limited liability company is accounted for under the equity method, whereby the Company records its percentage of realized and unrealized earnings or losses in the
Condensed Consolidated Statement of Operations. Consequently, this investment is not recorded at fair value. The total carrying value of this investment was $0.5 million at September 30,
2010 and $0.4 million at June 30, 2010.

The
Company did not hold any financial liabilities measured at fair value at September 30, 2010 or June 30, 2010.

Note 4Accounts Receivable

The Company's accounts receivable balances do not include an allowance for doubtful accounts for the periods presented and there have been no bad debt expenses recognized during the
three months ended September 30, 2010 and 2009, respectively. Management believes these receivables are fully collectible.

Significant Customers

The Company's client base consists of a large number of geographically diverse clients across many industries. At September 30,
2010, New York Life Investment Management, through the MainStay Epoch Funds and other funds sub-advised by EIP, comprised 9% of the Company's accounts receivable balance, while CI
Investments Inc, ("CI"), a Canadian-owned investment management company, accounted for 10%. All of these balances were collected subsequent to quarter-end.

9

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 4Accounts Receivable (Continued)

For
the three months ended September 30, 2010, New York Life Investment Management accounted for approximately 19% of consolidated operating revenues, while CI accounted for
approximately 8% of consolidated operating revenues.

For
the three months ended September 30, 2009, CI accounted for approximately 11% of consolidated operating revenues, while New York Life Investment Management accounted for 7%.

Note 5Held-to-Maturity Securities

The Company's investment securities classified as held-to-maturity consist of long-term debt securities. These investments are carried at amortized
cost. Gross unrealized gains and losses, and fair value of these securities at September 30, 2010 and June 30, 2010 are as follows (in
thousands):

September 30, 2010

June 30, 2010Gross
Unrealized





Gross
UnrealizedAmortized
Cost

Aggregate
Fair
Value

Amortized
Cost

Aggregate
Fair
ValueGains

Losses

Gains

LossesHeld-to-maturity securities

$
1,991

$
65

$


$
2,056

$
2,001

$
45

$


$
2,046


The
fair value of investments in held-to-maturity securities is valued under the market approach through the use of quoted prices for similar investments in
active markets.

The
contractual maturities of the investment securities classified as held-to-maturity at September 30, 2010 are as follows (in
thousands):

Contractual Maturities

Amortized Cost

Aggregate Fair ValueDue after 1 year through 3 years

$
1,468

$
1,506Due after 3 years through 5 years


523


550Total

$
1,991

$
2,056


10

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 6Other Investments

The Company's Other investments at September 30, 2010 and June 30, 2010 are summarized as follows (in thousands):

September 30, 2010

June 30, 2010Gross
Unrealized





Gross
UnrealizedCost
Basis

Aggregate
Fair
Value

Cost
Basis

Aggregate
Fair
ValueGains

Losses

Gains

LossesAvailable-for-sale securities:Epoch Global All Cap separate account

$
2,301

$
386

$
(32
)
$
2,655

$
2,297

$
185

$
(105
)
$
2,377Investment in limited partnership


2,000


43





2,043











Company-sponsored mutual funds


1,134


68


(181
)

1,021


1,133


34


(272
)

895Total available-for-sale securities


5,435


497


(213
)

5,719


3,430


219


(377
)

3,272Equity method investment:Epoch Global Absolute Return Fund, LLC


457








457


426








426Total Other Investments

$
5,892

$
497

$
(213
)
$
6,176

$
3,856

$
219

$
(377
)
$
3,698


The
unrealized losses for each period presented have been unrealized for twelve months or more. Management has reviewed its investment securities for
other-than-temporary impairment in accordance with its accounting policy outlined in Note 2 of the Company's Annual Report filed on Form 10-K for the
fiscal year ended June 30, 2010. When evaluating whether an unrealized loss on an investment available-for-sale is other than temporary, Management reviews such factors
as extent and duration of the loss, deterioration in the issuer's credit quality, reduction or cessation of dividend payments, and overall financial strength of the issuer.

Based
on management's assessment, the Company does not believe that the declines are other-than-temporary for all periods presented. The gross unrealized losses
from available-for-sale securities were primarily caused by overall weakness in the financial markets and world economy. The securities are expected to recover their value over
time, and management has the intent and ability to hold these investments until such recovery occurs. Unrealized gains or losses from available-for-sale securities are recorded
in Other comprehensive income/(loss), net of tax, as a separate component of stockholders' equity until realized.

11

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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 6Other Investments (Continued)

Proceeds
as well as realized gains and losses recognized from investments classified as available-for-sale are as follows (in
thousands):

For the Three Months Ended
September 30,2010

2009Gross Realized



Gross RealizedProceeds

Gains

Losses

Proceeds

Gains

LossesInvestments:Available-for-sale securities:Epoch Global All Cap separate account

$
442

$
30

$
(36
)
$
953

$
125

$
(71
)


Realized
gains and losses from available-for-sale securities are included in Other income in the Condensed Consolidated Statements of Operations using the
specific identification method.

Note 7Commitments and Contingencies

Employment Agreements

Besides the employment contract with the Company's Chief Executive Officer dated November 28, 2007, there are no employment
contracts with any other officer or employee of the Company. There are written agreements with certain employees, which provide for sales commissions or bonuses, subject to the attainment of certain
performance criteria or continuation of employment. Such commitments under the various agreements total approximately $2.0 million at September 30, 2010. Of this amount, approximately
$0.6 million is included in accrued compensation and benefits in the Condensed Consolidated Balance Sheet at September 30, 2010. An additional $0.5 million will be accrued during
the remainder of the fiscal year ending June 30, 2011 and shortly thereafter. Approximately $0.9 million represents restricted stock awards to be issued during the remainder of the
fiscal year ending June 30, 2011 and shortly thereafter.

Strategic Relationship

On July 9, 2009, EIP entered into a strategic relationship with New York Life Investment Management, whereby the MainStay Group
of Funds adopted the Company's family of mutual funds (the "Epoch Funds"). EIP continues to be responsible for the day-to-day investment management of the funds through a
sub-advisory relationship, while MainStay Investments ("MainStay"), the retail distribution arm of New York Life Investments, is responsible for the distribution and administration of the
funds. Each former Epoch Fund is now co-branded as a "MainStay Epoch" Fund.

In
addition to an existing sub-advisory relationship between EIP and New York Life Investments for certain funds, and the adoption of the Epoch Funds indicated above, EIP and
New York Life Investments have entered into an arrangement wherein, among other things, EIP and an affiliate of New York Life Investments have established a distribution and administration
relationship with respect to certain separately managed account and unified managed account products, and for a period of

12

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 7Commitments and Contingencies (Continued)

three
years New York Life Investments agrees to pay certain additional base fees and meet minimum distribution targets.

Legal Matters

From time to time, the Company or its subsidiaries may become parties to claims, legal actions and complaints arising in the ordinary
course of business. Management is not aware of any claims which would have a material adverse effect on its condensed consolidated financial position, results of operations, or cash flows.

Note 8Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net earnings by the weighted-average number of common shares outstanding during the period.

Diluted
EPS is computed by dividing net earnings, adjusted for the effect of dilutive securities, by the weighted-average number of common and common equivalent shares outstanding during
the period. The Company uses the treasury stock method to reflect the dilutive effect of outstanding stock options.

The
Company had 572,448 and 1,577,173 issued and outstanding stock options at September 30, 2010 and 2009, respectively.

The
calculation of diluted EPS included all of the issued and outstanding stock options for the three months ended September 30, 2010. The calculation of diluted EPS excluded
960,000 issued and outstanding stock options for the three months ended September 30, 2009 as the exercise price of those options was higher than the average market price of the common stock
for the respective period. The conversion of those particular options, whose exercise price was higher than the average market price of the common stock during the period, would have an
anti-dilutive effect.

13

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 8Earnings Per Share (Continued)

The
table that follows presents the computation of basic and diluted EPS for the three months ended September 30, 2010 and 2009, respectively (in
thousands, except per share data):

Three Months Ended
September 30,2010

2009Numerator:Net income

$
3,346

$
2,297Denominator:Weighted-average common shares outstanding


22,786


22,196Net common stock equivalents assuming the exercise of in-the-money stock options


173


123Weighted-average common and common equivalent shares outstanding assuming dilution


22,959


22,319Earnings per share:Basic

$
0.15

$
0.10Diluted

$
0.15

$
0.10


Note 9Comprehensive Income

A summary of comprehensive income is as follows (in thousands):

Three Months Ended
September 30,2010

2009Net income

$
3,346

$
2,297Other comprehensive income (loss), net of tax:Net unrealized gains on available-for-sale securities


248


239Reclassification of net realized (gains) losses to net income


3


(33
)Comprehensive income

$
3,597

$
2,503


14

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

Note 10Geographic Area Information

The Company operates under one business segment, investment management. Geographical information pertaining to the Company's operating revenues is presented below. The amounts are
aggregated by the client's domicile (in thousands):

Three Months Ended
September 30,2010

2009United States

$
10,245

$
7,955Canada


1,758


1,751Asia/Australia


1,501


504Europe


1,471


1,207Total

$
14,975

$
11,417


*****

15

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Table of Contents

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the
three months ended September 30, 2010 and 2009. Such information should be read in conjunction with our unaudited condensed consolidated financial statements together with the notes to the
unaudited condensed consolidated financial statements. When we use the terms the "Company," "Firm," "management," "we," "us," and "our," we mean Epoch Holding Corporation, a Delaware corporation, and
its consolidated subsidiaries.

Forward-Looking Statements

Certain information included, or incorporated by reference in this Quarterly Report on
Form 10-Q and other materials filed or to be filed by Epoch Holding Corporation ("Epoch" or the "Company") with the United States Securities and Exchange Commission ("SEC") contain
statements that may be considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words
such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," and the negative of these terms and other comparable terminology.
These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about the Company, may include projections of the Company's future financial performance
based on the Company's anticipated growth strategies and trends in the Company's business. These statements are only predictions based on the Company's current expectations and projections about
future events. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks and uncertainties outlined in "Factors Which May Affect Future
Results."

These risks and uncertainties are not exhaustive. Other sections of this Quarterly Report on Form 10-Q may include additional factors which
could adversely impact the Company's business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risks and uncertainties emerge from
time to time, and it is not possible for the Company's management to predict all risks and uncertainties, nor can the Company's management assess the impact of all factors on the Company's 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.

Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of
activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should
not rely upon forward-looking statements as predictions of future events. The Company is under no duty to update any of these forward-looking statements after the date of this Quarterly Report on
Form 10-Q, nor to conform the Company's prior statements to actual results or revised expectations, and the Company does not intend to do so.

Forward-looking statements include, but are not limited to, statements about the Company's:



16

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Table of Contents



Available Information

Reports the Company files electronically with the SEC via the SEC's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR")
may be accessed through the internet. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC, atwww.sec.gov.

The
Company maintains a website which contains current information on operations and other matters. The website address iswww.eipny.com.
Through the Investor Relations section of our website, and the "Financial Information" tab therein, we make available, free of charge, our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement, and any amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Also
available free of charge on our website within the Investors Relations section, and the "Corporate Governance" tab therein, is our Code of Ethics and Business Conduct and charters
for the Audit, Nominating/Corporate Governance, and the Compensation Committees of our Board of Directors.

Factors Which May Affect Future Results

There are numerous risks which may affect the results of operations of the Company. Factors which could affect the Company's success
include, but are not limited to, the ability to attract and retain clients, performance of the financial markets and invested assets managed by the Company, retention of key employees,
misappropriation of assets and information by employees, system failures, significant changes in regulations, the costs of compliance associated with existing regulations and the penalties associated
with non-compliance, and the risks associated with the loss of key members of the management team.

In
addition, the Company's ability to expand or alter its product offerings and distribution network, whether through acquisitions or internal development is critical to its
long-term success and has inherent risks. This success is dependent on the ability to identify and fund those developments or acquisitions on terms which are favorable to the Company.
There can be no assurance that any of these operating factors or acquisitions can be achieved or, if undertaken, they will be successful.

Other
risks and uncertainties that we do not presently consider to be material or of which we are not presently aware may become important factors that affect us in the future.

These
and other risks related to our Company are discussed in detail under Part I, Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 2010.

17

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Table of Contents

Critical Accounting Estimates

Our significant accounting estimates are described in Note 2 of the Notes to the Consolidated Financial Statements, as well as
Management's Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2010, and have not
changed from those described therein.

Overview

We are a global asset management firm with accomplished and experienced professionals. Our professional staff averages over
20 years of industry experience. The Company was formed by its founders with the specific goal of responding to paradigm shifts occurring within the sources of global equity investment returns
and within the structure of the investment management business as a whole.

Headquartered
in New York City, the Company had approximately $12.8 billion in assets under management ("AUM") as of September 30, 2010. We remain debt-free and
have substantial capital resources available to fund current operations and implement our long-term growth strategy.

Our
operating subsidiary, Epoch Investment Partners, Inc. ("EIP"), is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Investment
Advisers Act"). Its sole line of business is to provide investment advisory and investment management services to clients including corporations, mutual funds, endowments, foundations, and high net
worth individuals. These services are provided through both separately managed accounts and commingled vehicles, such as private investment funds and mutual funds.

Revenues
are generally derived as a percentage of AUM. Therefore, among other factors, revenues are dependent upon:



Our
most significant operating expense is employee related costs, which represents fixed salaries, variable incentive compensation, and related employee benefits. Variable incentive
compensation is primarily based upon management fee revenue, operating income, and relative risk-adjusted investment performance.

AUM Fair Value Measurement

AUM consists of actively traded securities. The fair value of these securities is determined by an independent pricing service, which
uses publicly available, unadjusted, quoted market prices for measurement. The Company substantiates the values obtained with another independent pricing service to confirm that all prices are valid.
There is no judgment involved in the calculation of AUM in a manner that would directly impact the Company's revenue recognition.

18

---



Table of Contents

Financial and Business Highlights

During the three months ended September 30, 2010, equity markets improved. Favorable market conditions affected our AUM through
market appreciation. Some highlights during the three months ended September 30, 2010 were as follows:



The
table below presents financial results that we consider key operating and financial indicators for the three months ended September 30, 2010 and 2009, respectively:

'10 vs '09
ChangeSept. 30,
2010

Sept. 30,
2009Amt

%Operating Indicators ($ in millions):AUM at end of period

$
12,765

$
9,796

$
2,969


30
%Average AUM for the period

$
12,150

$
8,818

$
3,332


38
%Net AUM flows

$
(18
)
$
812

$
(830
)

(102
)%Financial Indicators ($ in thousands):Operating Revenue

$
14,975

$
11,417

$
3,558


31
%Operating Income

$
5,800

$
3,562

$
2,238


63
%Net Income

$
3,346

$
2,297

$
1,049


46
%Earnings Per Share:Basic

$
0.15

$
0.10

$
0.05


50
%Diluted

$
0.15

$
0.10

$
0.05


50
%Operating Margin(1)


39
%

31
%

NM


NM


NMnot
meaningful (1)Defined
as operating income divided by total operating revenues.


19

---



Table of Contents




Operating
margin improved from the same period a year ago. The main driver of this was a 31% increase in revenue due to higher levels of AUM, primarily as a result of net inflows of
$1.7 billion during the past twelve months. Market appreciation also contributed to the AUM increase.

The
average assets under management for the three months ended September 30, 2010 was approximately $12.2 billion compared to approximately $8.8 billion for the
three months ended September 30, 2009, an increase of 38%. U.S. equity markets, as measured by the S&P 500, increased by approximately 10% over the twelve-month period. Global equity
markets, as measured by the MSCI World Index, increased by approximately 7% over the same period.

Operating
expenses for the three months ended September 30, 2010 increased 17% compared with the same period a year ago, as a result of business growth. Increased employee
compensation, in conjunction with increases to staff and the Company's overall performance, was a primary reason for the increase.

Business Environment

As an investment management and advisory firm, our results are impacted by the prevailing global economic climate, including such items
as corporate profitability, investor confidence, unemployment, and interest rates. These factors can directly affect investor sentiment and global equity markets.

U.S.
equity markets improved during the three months ended September 30, 2010, despite a volatile quarter. After moving higher in July on favorable corporate earnings reports,
equity markets weakened again in August amid concerns that the economic recovery was faltering, as evidenced by an unemployment rate of 9.6% and continued weakness in the housing market despite
historically low mortgage rates. In September, the equity markets rebounded strongly on better than expected economic data, particularly in the manufacturing sector, and reassurance from the Federal
Reserve that the central bank would employ their monetary policy tools, as needed, to help promote economic recovery. With the slow pace of the economic recovery continuing and both actual inflation
and inflation expectations at low levels, the Federal Reserve maintained the target funds rate near zero. Overall, the S&P 500 Index posted a gain of 11.3% during the quarter.

Other
equity markets around the world posted strong gains in the quarter as well, despite lingering concerns over European debt, the stability of the Chinese economic recovery, and fears
of a double-dip recession in the U.S. Returns to U.S. investors in overseas markets were boosted as the dollar weakened against other currencies. The MSCI World Index returned 13.8% during
the quarter.

Broad Market Indices*

Period ended
September 30, 2010Broad Market Index

Three Months

Twelve MonthsDow Jones Industrial Average(1)


10.4
%

11.1
%NASDAQ Composite(2)


12.3
%

11.6
%S&P 500(3)


11.3
%

10.2
%


*assumes
dividend re-investment(1)Dow
Jones Industrial Average is a trademark of Dow Jones & Company, which is not affiliated with Epoch.(2)NASDAQ
is a trademark of the NASDAQ Stock Market, Inc., which is not affiliated with Epoch.(3)S&P
is a trademark of Standard & Poor's, a division of the McGraw-Hill Companies, Inc., which is not affiliated with Epoch.


20

---



Table of Contents

Selected Benchmark Indices*

Period ended
September 30, 2010Benchmark Index

Three Months

Twelve MonthsRussell 1000(1)


11.6
%

10.8
%Russell 2000(1)


11.3
%

13.3
%Russell 3000(1)


11.5
%

11.0
%MSCI World (Net)(2)


13.8
%

6.8
%


*assumes
dividend re-investment(1)Russell
Indices are trademarks of Russell Investments, which is not affiliated with Epoch.(2)MSCI
World Index is a trademark of MSCI Inc., which is not affiliated with Epoch.


Company Impact and Outlook

The past several months have been characterized by economic uncertainty, high unemployment, and low consumer confidence levels. These
factors unfavorably impact equity markets, result in increased volatility, and affect investors' risk appetite. While equity markets and our short-term investment performance have been
impacted, we continue to outperform the equity markets and related benchmarks on a longer-term basis, results that are consistent with our investment philosophy.

Our
distribution channels have further expanded and Firm recognition continues to strengthen. AUM from non-U.S. based clients also continues to grow and currently accounts
for approximately 32% of revenue. Our operating margins are on par with leading asset management firms in the business, and we continue to operate debt-free.

Despite
an uncertain economic environment, we believe that with continued focus on generating superior risk-adjusted performance, providing a high level of client service,
and further developing our distribution capabilities, we are well positioned to further strengthen the Firm and achieve our corporate goals.

AUM and Flows

The following table sets forth the changes in our AUM for the periods presented (dollars in
millions):

Three Months
Ended
September 30,2010

2009Beginning of period AUM

$
11,344

$
7,891Client flows:Inflows/new accounts


359


983Outflows/closed accounts


(377
)

(171
)Net inflows/(outflows)


(18
)

812Market appreciation


1,439


1,093Net change


1,421


1,905End of period AUM

$
12,765

$
9,796Percent change in total AUM


12.5
%

24.1
%Organic growth percentage(1)


(0.2
)%

10.3
%


(1)Net
inflows/(outflows) divided by beginning of period AUM.


21

---



Table of Contents

The net increase in AUM during the period was fostered by market appreciation. Net outflows were primarily driven by outflows within the subadvisory channel due
to volatile market conditions.

For
the three months ended September 30, 2010 and 2009, approximately 48% and 51%, respectively, of investment advisory and management fees were earned from services to funds
under advisory and sub-advisory contracts whose fees are calculated based upon daily net asset values, and approximately 52% and 49%, respectively, of fees were earned from services
provided for separate accounts whose fees are calculated based upon asset values at the end of the period.

The
chart that follows highlights the quarterly growth in AUM and operating revenues over the past two years:

GRAPHIC

Distribution Channels

The table that follows presents the Company's AUM by distribution channel as of September 30, 2010, June 30, 2010 and
September 30, 2009, respectively (dollars in millions):

September 30, 2010

June 30, 2010

September 30, 2009Distribution Channel

Amount

% of AUM

Amount

% of AUM

Amount

% of AUMSub-advisory

$
6,943


54.4
%
$
6,183


54.5
%
$
5,034


51.4
%Institutional


5,562


43.6
%

4,915


43.3
%

4,500


45.9
%High net worth


260


2.0
%

246


2.2
%

262


2.7
%Total AUM

$
12,765


100.0
%
$
11,344


100.0
%
$
9,796


100.0
%


22

---



Table of Contents

During
the three months ended December 31, 2009, approximately $820 million of AUM previously classified as Institutional was reclassified to Sub-advisory in
conjunction with the adoption of the Epoch Funds by New York Life Investment Management.

Investment Products

The table that follows presents the Company's AUM by product as of September 30, 2010, June 30, 2010 and
September 30, 2009, respectively, as well as the three-month and one-year changes (dollars in millions):

3-Month
Change

1-Year
ChangeSeptember 30,
2010

June 30,
2010

September 30,
2009Product

Amt

%

Amt

%U.S. Value

$
3,708

$
3,403

$
2,791

$
305


9
%
$
917


33
%U.S. All Cap/Balanced


3,187


2,646


2,420


541


20
%

767


32
%Global Equity Shareholder Yield


2,203


1,959


1,762


244


12
%

441


25
%Global Absolute Return/Choice


1,592


1,462


875


130


9
%

717


82
%U.S. Smid Cap Value


958


902


900


56


6
%

58


6
%International/Int'l Small Cap


527


403


469


124


31
%

58


12
%U.S. Small Cap Value


338


362


391


(24
)

(7
)%

(53
)

(14
)%Global Small Cap


252


207


188


45


22
%

64


34
%Total AUM

$
12,765

$
11,344

$
9,796

$
1,421


13
%
$
2,969


30
%


The
charts that follow show the Company's products as a percentage of AUM as of September 30, 2010 and 2009, respectively:

GRAPHIC

GRAPHIC


23

---



Table of Contents

Domestic vs. International

The charts that follow show the Company's operating revenue by geographic region as a percentage of total operating revenue for the
three months ended September 30, 2010 and 2009, respectively.

GRAPHIC

GRAPHIC

24

---



Table of Contents

Investment Product Performance

The following table displays each product's composite returns, net of management fees, for the period ended September 30, 2010,
as measured against the respective benchmarks:

Returns*(2)Product

Inception
Date(1)

3 months

1 Year

3 Years

5 Years

Since
InceptionU.S. Value

31-Jul-01


11.5
%

9.7
%

(5.4
)%

2.7
%

4.4
%Russell 1000




11.6
%

10.8
%

(6.8
)%

0.9
%

1.8
%Russell 1000 Value




10.1
%

8.9
%

(9.4
)%

(0.5
)%

2.6
%U.S. All Cap Value

31-Jul-94


13.2
%

10.8
%

(5.3
)%

1.3
%

10.2
%Russell 3000




11.5
%

11.0
%

(6.6
)%

0.9
%

7.9
%Russell 3000 Value




10.1
%

9.2
%

(9.0
)%

(0.4
)%

8.5
%Global Equity Shareholder Yield

31-Dec-05


14.2
%

13.9
%

(4.1
)%

N/A


4.4
%MSCI World (Net)




13.8
%

6.8
%

(8.3
)%

N/A


0.7
%Global Absolute Return

31-Dec-01


8.5
%

5.7
%

(4.1
)%

3.0
%

8.9
%MSCI World (Net)




13.8
%

6.8
%

(8.3
)%

1.3
%

3.8
%U.S. Choice

30-Apr-05


11.7
%

10.7
%

(5.4
)%

1.5
%

3.7
%Russell 3000




11.5
%

11.0
%

(6.6
)%

0.9
%

2.4
%Global Choice

30-Sep-05


9.4
%

7.1
%

(5.2
)%

6.3
%

6.3
%MSCI World (Net)




13.8
%

6.8
%

(8.3
)%

1.3
%

1.3
%U.S. Smid Cap Value

31-Aug-06


14.8
%

15.1
%

(3.9
)%

N/A


1.6
%Russell 2500




12.2
%

15.9
%

(3.6
)%

N/A


1.1
%Russell 2500 Value




11.4
%

14.7
%

(4.0
)%

N/A


(0.7
)%International Small Cap

31-Jan-05


22.2
%

16.0
%

(5.7
)%

7.1
%

9.3
%MSCI World ex USA Small Cap (Net)




17.8
%

10.9
%

(6.3
)%

2.7
%

4.9
%U.S. Small Cap Value

31-Dec-02


13.3
%

12.2
%

(4.5
)%

1.3
%

7.8
%Russell 2000




11.3
%

13.3
%

(4.3
)%

1.6
%

9.0
%Russell 2000 Value




9.7
%

11.8
%

(5.0
)%

0.7
%

8.8
%Global Small Cap

31-Dec-02


17.2
%

14.5
%

(3.3
)%

5.2
%

11.6
%MSCI World Small Cap (Net)




14.6
%

13.5
%

(4.2
)%

2.7
%

12.4
%


*Index
and product returns assume dividend re-investment. Product returns are net of management fees.(1)Epoch
Investment Partners, Inc. became a registered investment adviser under the Investment Advisers Act of 1940 in June 2004. Performance from April
2001 through May 2004 is for Epoch's investment team and accounts while at Steinberg Priest & Sloane Capital Management, LLC. For the period July 1994 through March 2001,
Co-Chief Investment Officer and Chief Executive Officer William W. Priest managed the accounts while at Credit Suisse Asset Management and was the only individual responsible for selecting
the securities to buy and sell.(2)Past
performance is not indicative of future results.


25

---



Table of Contents

Key Performance Indicators

The charts that follow depict the Company's quarterly performance for the past five quarters in certain key financial
measures:



GRAPHIC

GRAPHICGRAPHIC

GRAPHIC


Results of Operations

Three Months Ended September 30, 2010 and 2009

For the three months ended September 30, 2010, the Company recorded net income of $3.3 million, an increase of 46%, or
$1.0 million, from the same period a year ago. Basic earnings were $0.15 per share for three months ended September 30, 2010 compared to $0.10 per share for the three months ended
September 30, 2009.

The
primary drivers for the change in net income were as follows:



26

---



Table of Contents

Operating Revenues:

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Investment advisory and management fees

$
14,795

$
11,141

$
3,654


33
%


The
increase in revenues was attributable to the increase in AUM compared with the same period a year ago, as a result of net inflows from new and existing clients during the past twelve
months, as well as market appreciation. Nearly all of the Company's investment products realized double-digit returns during the past year, with significant growth across virtually all products.

The
Company had net AUM inflows of approximately $1.7 billion for the twelve months ended September 30, 2010. AUM at September 30, 2010 was $12.8 billion, a
30% increase from AUM of $9.8 billion at September 30, 2009.

The
average AUM for the three months ended September 30, 2010 was $12.2 billion, approximately 38% higher than the $8.8 billion for the three months ended
September 30, 2009.

For
the three months ended September 30, 2010, New York Life Investment Management, through the MainStay Epoch Funds and other funds subadvised by EIP, accounted for approximately
19% of consolidated operating revenues and CI Investments Inc. ("CI"), a Canadian-owned investment management company, accounted for approximately 8%. For the three months ended
September 30, 2009, CI accounted for approximately 11% of consolidated operating revenues, while New York Life Investment Management accounted for 7%.

Operating Expenses:

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Employee related costs (excluding share- based compensation)

$
5,469

$
4,516

$
953


21
%As of percent of total revenue


37
%

40
%


Expenses
in this category include salaries, benefits, incentive compensation, signing bonuses, commissions and severance. The increase was, in part, a result of additions to professional
staff. Average headcount increased approximately 12% during the three months ended September 30, 2010, when compared with the comparable period a year ago, as the Company made additions to its
investment, sales, and client service teams. An increase to salaries at the beginning of the calendar year, as well as increased accrued incentive compensation based on our operating results, also
contributed to the increase.

The
Company places a high emphasis on pay for performance. As such, changes in the Company's performance as well as changes in the underlying performance of our investment products have
an impact on compensation and benefits.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Share-based compensation

$
1,279

$
971

$
308


32
%As of percent of total revenue


9
%

9
%


27

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Table of Contents

The Company believes that share-based compensation promotes unity in the workplace and a common objective with shareholders. The Company generally issues share
awards to employees shortly following the calendar year, and may issue share awards at other times.

During
the three months ended September 30, 2010, the Company granted approximately 1,400 restricted share awards to employees at an average price of $12.38. Employee share-based
compensation expense for restricted shares is recognized as follows: 12.5% immediately, and the remaining 87.5% ratably over the three-year vesting period of those awards.

During
the three months ended September 30, 2009, the Company granted $0.2 million in restricted share awards to employees. A total of 21,538 shares were granted at a
weighted average price of $8.93.

During
the three months ended September 30, 2010, the Company granted $0.4 million in restricted share awards to non-employee directors. A total of 28,994
shares were granted at a weighted average price of $12.02. During the three months ended September 30, 2009, the Company granted $0.4 million in restricted share awards to
non-employee directors. A total of 39,798 shares were granted at a weighted average price of $8.85.

No
employee stock options were issued during the periods presented.

Increased
annual employee share awards stemming from higher AUM, revenue and operating income levels were a primary reason for the increase.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Occupancy and technology

$
835

$
1,083

$
(248
)

(23
)%As of percent of total revenue


6
%

9
%


Occupancy
and technology expenses consist primarily of office space rentals, market data services, and information technology costs. The prior period included a sublease termination fee
associated with the Company's early termination of a sublease.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Professional fees and services

$
815

$
693

$
122


18
%As of percent of total revenue


5
%

6
%


These
expenses include outside legal fees for general corporate legal affairs, independent accountants' fees, consulting fees, employee placement fees and other professional services.
Information technology consulting fees incurred to enhance existing systems were a primary factor for this increase.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%General and administrative

$
777

$
592

$
185


31
%As of percent of total revenue


5
%

5
%


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General
and administrative expenses consist primarily of expenses for travel and entertainment, advertising and marketing, and other office related expenses. Increased product
distribution costs and travel expenses to support and expand distribution efforts were the primary reasons for the increase.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Other income

$
158

$
308

$
(150
)

(49
)%As of percent of income before income taxes


3
%

8
%


Other
income primarily includes realized gains and losses on sales of investments, interest income, and rental income from subleased premises. The decline reflects a reduction in rental
income from the August 2010 expiration of the Company's sublease of premises to a third party. Lower interest income due to significantly lower interest rates also contributed to the decrease.

'10 vs '09
Change(Dollars in thousands)

2010

2009

$

%Provision for income taxes

$
2,612

$
1,573

$
1,039


66
%Effective income tax rate


43.8
%

40.6
%


The
Company's effective income tax rate, as well as income tax expense, was higher during the three months ended September 30, 2010 when compared with the comparable period a year
ago. This was primarily due to a higher federal statutory rate in the current period as a result of higher pre-tax income, and a partial valuation allowance release during the prior year
period against net operating loss carryforwards.

At
the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The effect of changes in enacted tax laws or rates is
recognized in the interim period in which the change occurs.

The
computation of the annual estimated effective tax rate at each interim period requires certain estimates and judgment including, but not limited to, the expected operating income for
the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the
current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or as the tax environment changes.

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Three Months Ended September 30, 2010 and Prior Quarter Ended June 30, 2010

Summary operating information for the three months ended September 30, 2010 and June 30, 2010 is presented in the table
below:

Three Months EndedSept. 30,
2010

June 30,
2010

Prior Quarter
ChangeOperating Indicators ($ in millions):AUM at end of period

$
12,765

$
11,344

$
1,421


13
%Average AUM for the period

$
12,150

$
12,184

$
(34
)

NMNet AUM flows

$
(18
)
$
96

$
(114
)

(119
)%Financial Indicators ($ in thousands):Operating Revenue

$
14,975

$
14,128

$
847


6
%Operating Income

$
5,800

$
5,173

$
627


12
%Net Income

$
3,346

$
3,317

$
29


1
%Earnings Per Share:Basic

$
0.15

$
0.15

$



0
%Diluted

$
0.15

$
0.14

$
0.01


7
%Operating Margin(1)


39
%

37
%

NM


NM


NMnot
meaningful (1)Defined
as operating income divided by total operating revenues.


The
Company's operating income increased by 12% in the current quarter ended September 30, 2010 when compared with the prior quarter ended June 30, 2010, and is reflective
of an increase in operating revenues as a result of higher AUM levels. Market appreciation during the three months ended September 30, 2010 was a key contributor to revenue growth. Partially
offsetting the increase in revenue was a 2% increase in operating expenses. Increased employee compensation, in conjunction with increases to employee headcount and the Company's overall performance,
was a primary reason for the increase. The Company's income tax expense was higher during the three months ended September 30, 2010 when compared with the prior quarter ended June 30,
2010. This was primarily due to true-ups in the quarter ended June 30, 2010 of prior year estimates to actual taxes due, and a partial valuation allowance release at June 30,
2010 against net operating loss carryforwards.

Liquidity and Capital Resources

The Company's operating cash flows are primarily influenced by the timing and receipt of investment management fees, and the payment of
operating expenses, including cash incentive compensation to employees. Investment management fees are generally collected within 90 days of quarter-end.

Investing
cash flows are principally influenced by activities to acquire property and equipment, reinvestment of income from the Company's Other investments, and investments in
held-to-maturity securities.

Financing
cash flows are predominately influenced by the payment of common stock dividends and the repurchase of the Company's common stock. The Company has been making quarterly
dividend payments on its common stock since the quarter ended December 31, 2007 and has paid two special dividends.

The
Company has no debt and management does not foresee any reason to incur debt unless a significant business opportunity warrants such action. The Company routinely evaluates its
strategic position and maintains a disciplined acquisition and alliance effort which seeks complementary products

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or
new products which could benefit clients. While the Company plans to actively seek such opportunities, there can be no assurance that acquisitions can be identified or consummated on terms that are
attractive to the Company. Management believes that opportunities are available, but will only act on opportunities that it believes are accretive to the Company's long-term business
strategy.

Sources of Liquidity

Sources of funds for the Company's operations are derived from investment advisory and investment management fees, and interest on the
Company's cash, cash equivalents, and held-to-maturity securities. The Company's balance sheet continues to reflect significant liquidity. As of September 30, 2010, the
Company had $51.4 million in liquid assets, consisting of cash and cash equivalents of $39.2 million and accounts receivable of $12.2 million, to fund its business growth
strategy. Given the availability of these funds, the Company does not maintain or anticipate a need for an external source of liquidity.

Management
believes that the sources of liquidity described above will be sufficient to meet the Company's operating needs for the foreseeable future and will enable it to continue
implementing its growth strategy.

Uses of Liquidity

The Company remains committed to growing its business in this challenging market environment and expects that its main uses of cash
will be to pay corporate operating expenses, enhance technology infrastructure, pay quarterly dividends, and re-acquire shares of its common stock when appropriate.

Our
philosophy regarding the maintenance of a balance sheet with a large component of cash and cash equivalents reflects our views on potential future capital requirements relating to
enhancement of our investment capabilities, creation and expansion of distribution channels, potential strategic acquisitions or transactions, and possible challenges to our business. We regularly
assess our approach in view of our current and potential future needs.

Cash Flows

A summary of the Statement of Cash Flows for the three months ended September 30, 2010 and 2009, respectively, is as follows
(in thousands):

Three months ended
September 30,2010

2009Cash flows provided by/(used in):Operating activities

$
6,091

$
4,627Investing activities


(1,859
)

(2,700
)Financing activities


(1,420
)

(966
)Net increase in cash and cash equivalents


2,812


961Cash and cash equivalents at beginning of period

$
36,447

$
37,055Cash and cash equivalents at end of period


39,259


38,016Percent of total assets


57
%

63
%


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Table of Contents

A
more detailed analysis of the changes in cash flows is as follows:

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $6.1 million during the three months ended September 30, 2010. The
difference from the prior comparable period reflects the change in net income and the timing differences in the cash settlement of assets and liabilities.

Increased
accounts receivable is reflective of higher management fees earned during the three months ended September 30, 2010 as a result of the increased levels of AUM and
revenue. Accrued compensation and benefits, which increased by $2.6 million from the previous quarter, primarily represents accruals for incentive compensation.

Cash Flows from Investing Activities

Cash flows used in investing activities totaled $1.9 million for the three months ended September 30, 2010. An additional
investment of approximately $2.0 million in a non-affiliated investment limited partnership accounted for most of the cash flows used in investing activities during the period.

Cash Flows from Financing Activities

Cash flows used in financing activities primarily reflect the payment of common stock dividends as well as the repurchase of the
Company's common stock. Cash used for financing activities totaled $1.4 million for the three months ended September 30, 2010.

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Working Capital

The Company's working capital and current ratio for the three months ended September 30, 2010 and recent fiscal year ended
June 30, 2010 is set forth in the table below (in thousands):

ChangeSeptember 30,
2010

June 30,
2010$

%Current Assets

$
53,980

$
49,937

$
4,043


8
%Current Liabilities


8,776


6,240


2,536


41
%Working Capital

$
45,204

$
43,697

$
1,507


3
%Current Ratio(1)


6.2


8.0


(1.8
)

(22
)%


(1)Current
assets divided by current liabilities.


Quarterly Dividends

In January 2010, the Board of Directors increased the regular quarterly cash dividend to $0.05 per share from the previous $0.03 per
share rate. Quarterly dividends of approximately $1.1 million and $0.7 million, respectively, were paid in August 2010 and August 2009.

The
Company expects regular quarterly cash dividends going forward to be paid in February, May, August and November of each fiscal year. However, the actual declaration of future cash
dividends, and the establishment of record and payment dates, is subject to determination by the Board of Directors each quarter after its review of the Company's financial performance, as well as
general business conditions, capital requirements, and any contractual, legal and regulatory restrictions. The Company may change its dividend policy at any time.

Common Stock Repurchase Plan

We maintain a stock repurchase plan with the objective of maximizing shareholder value. Our stock repurchase plan is affected through
regular open-market purchases in accordance with applicable laws and regulations.

During
the three months ended September 30, 2010 the Company did not repurchase any of its common shares. As of September 30, 2010, a total of 317,599 shares remain
available for repurchase under the existing repurchase plan.

During
the three months ended September 30, 2009 the Company repurchased 81,900 shares at a weighted average price of $8.99. All shares repurchased are shown as Treasury stock at
cost, in the Stockholders' equity section of the Condensed Consolidated Balance Sheets.

Fair Value Measurements

The Company's Other investments, which include available-for sale securities, are measured at fair value. The gross
unrealized losses from available-for-sale securities were primarily caused by overall weakness in the global financial markets. The securities are expected to recover their
value over time. Management has the intent and ability to hold these investments until such recovery occurs.

The
Company does not hold any derivative instruments or financial liabilities. See Note 3 to the Condensed Consolidated Financial Statements for a further discussion on Fair Value Measurements.

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Table of Contents

Contractual Obligations

Our contractual obligations are summarized in our Annual Report on Form 10-K for the fiscal year ended
June 30, 2010. At September 30, 2010, there were no material changes in our contractual obligations from June 30, 2010.

Off-Balance Sheet Arrangements

As of September 30, 2010, the Company had no off-balance sheet arrangements.

New Accounting Pronouncements

Management has considered all new accounting guidance issued subsequent to the fiscal year ended June 30, 2010 applicable to the
Company's operations and the preparation of its condensed consolidated financial statements. Such recently issued accounting guidance has no effect on the Company's financial position or results of
operations.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

AUM Market Risk

The Company's predominant exposure to market risk is directly related to its role as an investment adviser for the mutual funds and
separate accounts the Company manages. Changes in value of assets managed will impact the level of management and performance fee revenues. Approximately 48% of the Company's revenue is derived from
daily net asset values, while the remaining 52% of revenue is derived from market values of AUM at the end of the quarter. Declines in equity security market prices could cause revenues to decline
because of lower investment management fees by causing:



Underperformance
of client accounts relative to competing products could exacerbate these factors. The management of market risk on behalf of our clients, and the impact on fees to the
Company, is a significant focus for us and we use a variety of risk measurement techniques to identify and manage market risk.

Other Investments Market Risk

The Company is exposed to fluctuations in the market price of its Other investments. Other investments primarily consist of investments
in Company-sponsored investment vehicles, including mutual funds, an investment product separate account, and a limited liability company. Other investments also include an investment in a
non-affiliated investment limited partnership. The Company does not hedge its market risk related to these securities and does not intend to do so in the future.

At
September 30, 2010 and June 30, 2010, respectively, the Company performed a sensitivity analysis to assess the potential loss in the fair value of these
market-risk sensitive securities. The

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Table of Contents

following
table represents the estimated impact on the Company's financial position assuming a hypothetical 10% decline in associated market indices (in
thousands):

Fair Value

Fair Value
Assuming 10%
Decline(2)

Decrease in
Stockholders'
Equity(1)At September 30, 2010:Available-for-sale securities:Epoch Global All Cap separate account

$
2,655

$
2,399

$
144Investment in limited partnership


2,043


2,033


6Company-sponsored mutual funds


1,021


925


54Equity method:Epoch Global Absolute Return Fund, LLC


457


413


25Total Investments

$
6,176

$
5,770

$
229At June 30, 2010:Available-for-sale securities:Epoch Global All Cap separate account

$
2,377

$
2,154

$
128Company-sponsored mutual funds


895


810


49Equity method:Epoch Global Absolute Return Fund, LLC


426


398


16Total Investments

$
3,698

$
3,362

$
193


(1)Investments
in the Company-sponsored mutual funds, the Epoch Global All-Cap separate account, and the investment limited partnership are
classified as available-for-sale securities. Unrealized gains or losses on available-for-sale securities are excluded from earnings and recorded in
other comprehensive income (loss), net of tax, as a separate component of stockholders' equity until realized. The investment in the Epoch Global Absolute Return Fund, LLC is accounted for
using the equity method, under which the Company's share of net realized and unrealized earnings or losses from the limited liability company is reflected in net income.(2)The
example shown is hypothetical and actual declines in associated market indices may be greater than or less than the 10% shown.


Interest Rate Risk

The Company's AUM is subject to interest rate risk. Changes in both domestic and global interest rates may impact the valuation of
equities, and thus the Company's AUM and operating revenues.

The
Company's investment income is also subject to interest rate risk. Investment income consists primarily of interest income and realized gains and losses on its investments. The
Company's investment income is sensitive to fluctuation in interest rates. The Company holds long-term debt securities. Since it is management's intent to hold these investments until they
mature, these investments have been accounted for as held-to-maturity securities. The Company does not hedge its market risk related to these securities and does not intend to
do so in the future. The Company believes that a hypothetical change in interest rates of 100 basis points would not have a material impact on its condensed consolidated results of operations,
financial condition or cash flows.

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The
table that follows provides information about the Company's investment securities held-to-maturity, including expected principal flows for the fiscal years
June 30, 2011 through June 30, 2016 and thereafter (in thousands):

Payments Due in
Fiscal Years Ended June 30,2011

2012

2013

2014

2015

2016 and
Thereafter

Total
Principal
Cash Flows

Fair Market
Value at
September 30,
2010Long term debt securities

$


$
350

$
1,050

$
500

$


$


$
1,900

$
2,056Weighted-average interest rate





1.67
%

2.14
%

2.66
%







2.19
%


Cash and Cash Equivalents

Cash consists of amounts held in checking and money market accounts. Cash equivalents includes highly liquid investments in money
market funds consisting of short-term securities of the U.S. government and its agencies with maturities of three months or less. Cash and cash equivalents are exposed to market risk due
to changes in interest rates, which impacts interest income. Cash equivalents are stated at cost, which approximates fair value due to their short maturity.

The
Company monitors the quality of the institution where its cash is deposited, the balance of which, at times, may be in excess of the Federal Deposit Insurance Corporation insurance
limits. Presently, the Company neither participates in hedging activities nor does it have any derivative financial instruments.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company has established and maintains disclosure controls and other procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), that are designed to provide reasonable assurance that material information relating to Epoch Holding Corporation and its
subsidiaries on a consolidated basis required to be disclosed in its reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated and communicated accurately to the Company's management, including its principal executive officer and principal
financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In designing and evaluating our disclosure
controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can only provide reasonable, not absolute assurance, that the
objectives of the disclosure controls and procedures are met.

For
the quarter ended September 30, 2010, management, with the participation of the Company's principal executive officer and principal financial and accounting officer, has
evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on such evaluation of these disclosure controls and procedures, the Company's
principal executive officer and principal financial and accounting officer have concluded that the Company's disclosure controls and procedures were effective during the period covered by this
Quarterly Report on Form 10-Q.

The
Company has also established and maintains internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of condensed consolidated financial statements for external purposes in accordance with

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Table of Contents

accounting
principles generally accepted in the United States. In the ordinary course of business, the Company routinely enhances its internal controls and procedures for financial reporting by either
upgrading its current systems or implementing new systems. During the fiscal quarter ended September 30, 2010, there was no change in the Company's internal controls over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial
reporting.

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Table of Contents

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings.

From time to time, the Company or its subsidiaries may become parties to claims, legal actions and complaints arising in the ordinary
course of business. Management is not aware of any claims which would have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

Item 1a.    Risk Factors.

See Part I. Item 2. "Management's Discussion and Analysis of Financial Condition and Results of
OperationsBusiness Environment" in this report for a discussion of the conditions in the financial markets and economic conditions affecting our business.

In
addition, for further discussion of our potential risks and uncertainties, see information under the heading "Risk Factors" in our annual report on Form 10-K for
the year ended June 30, 2010.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

(c)   Purchases of Equity Securities by the Issuer.

There were no repurchases of the Company's outstanding securities under the repurchase plan during the three months ended September 30, 2010. There are
317,599 shares remaining for repurchase under the existing repurchase plan as of September 30, 2010.

Employee Tax Withholding

To satisfy statutory employee tax withholding requirements related to the vesting of common shares, the Company purchases from
employees shares relinquished by employees to satisfy employee tax withholding obligations. The Company may subsequently resell these acquired shares in the open market or include them as part of the
shares repurchased under the stock repurchase program. At September 30, 2010, there were 30,613 shares held by the Company for resale in the open market related to employee tax withholdings.

Item 5.    Other Information.

The Company's Annual Meeting of Stockholders will be held on Thursday, December 2, 2010 at 9:00 A.M. at The Cornell
ClubNew York, 6 East 44th Street, New York, New York 10017.

Item 6.    Exhibits.

Exhibit
No.

Description3.1

Certificate of Incorporation of the Registrant, as amended.(A)3.2

Amended and Restated By-Laws of Epoch Holding Corporation (as adopted April 2, 2008).(B)4.1

Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan.(E)4.4

Stockholders Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders.(C)4.5

Registration Rights Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders.(C)10.1

Employment Agreement by and between Epoch Holding Corporation and William W. Priest, dated as of November 28, 2007 and effective as of January 1, 2008.(D)


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Table of Contents

Exhibit
No.

Description10.40

Form of Indemnification Agreement between the Registrant and each director and officer of the Registrant.(H)10.45

Office lease between Vornado 640 Fifth Avenue LLC (Landlord) and Epoch Investment Partners, Inc. (Tenant).(F)10.47

Office lease between 680 Fifth Avenue Associates, L.P. (Landlord) and J Net Enterprises, Inc. (Tenant).(G)10.48

Office sublease between J Net Enterprises, Inc. (Tenant) and The Game Show Network (Subtenant).(G)10.49

Office sublease between Centerview Partners Holdings LLC (Sublessor) and Epoch Investment Partners, Inc. (Sublessee).(H)31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.(I)31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.(I)32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(I)


(A)Incorporated
by reference to Registrant's Form 8-K dated December 7, 2004.(B)Incorporated
by reference to Registrant's Form 8-K dated April 2, 2008.(C)Incorporated
by reference to Registrant's Form 8-K dated June 3, 2004.(D)Incorporated
by reference to Registrant's Form 8-K dated December 3, 2007.(E)Incorporated
by reference to Registrant's Form S-8 dated December 29, 2008.(F)Incorporated
by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2005.(G)Incorporated
by reference to Registrant's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2006.(H)Incorporated
by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009.(I)Filed
herewith.


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Table of Contents

SIGNATURE

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

EPOCH HOLDING CORPORATION(Registrant)Date: November 4, 2010

By:

/s/ ADAM BORAK Adam Borak Chief Financial Officer
(Principal Financial and Accounting Officer)


40

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