NEW YORK, April 26, 2019 /CNW/ - Oppenheimer Holdings Inc.
(NYSE: OPY) today reported net income of $11.2 million or $0.86 basic net income per share for the first
quarter of 2019 compared with net income of $6.7 million or $0.51 basic net income per share for the first
quarter of 2018. Income before income taxes was $16.1 million for the first quarter of 2019
compared with income before income taxes of $9.6 million for the first quarter of 2018.
Summary Operating
Results (Unaudited)
|
('000s)
|
|
For the 3-Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
|
%
Change
|
Revenue
|
$
|
251,770
|
|
$
|
234,530
|
|
7.4
|
Expenses
|
235,718
|
|
224,909
|
|
4.8
|
Income Before Income
Taxes
|
16,052
|
|
9,621
|
|
66.8
|
Income
Taxes
|
4,858
|
|
2,916
|
|
66.6
|
Net
Income
|
$
|
11,194
|
|
$
|
6,705
|
|
67.0
|
|
|
|
|
|
|
Net Income Per
Share
|
|
|
|
|
|
Basic
|
$
|
0.86
|
|
$
|
0.51
|
|
68.6
|
Diluted
|
$
|
0.81
|
|
$
|
0.48
|
|
68.8
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
%
Change
|
Book Value Per
Share
|
$
|
42.58
|
|
$
|
41.81
|
|
1.8
|
Tangible Book Value
Per Share (1)
|
$
|
29.52
|
|
$
|
28.78
|
|
2.6
|
|
|
|
|
|
|
(1) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding.
|
First Quarter 2019 Highlights
- Quarterly revenues in excess of $250
million
- Profit margin in Private Client Division of 26.2%
- Assets under management increase of 4.6% to $29.5 billion, near all-time highs
- Increase of over 77% in fees earned from M&A
activities
- Relocated our largest branch office in midtown Manhattan which will result in significant
annual savings
- Book value per share of $42.58, a
record high
During the first quarter of 2019, the major stock indexes in the
U.S. were up 13.1% rebounding from a 14% decline during the fourth
quarter of 2018. This was the best first quarter performance in the
equities markets in over a decade. The markets
benefited from the Federal Reserve's decision to adopt a more
dovish stance, indicating that they do not expect to further
increase short-term interest rates in the near term. A continued
strong economy, record low unemployment, the end of the government
shutdown, as well as optimism around trade negotiations between the
U.S. and China helped fuel the
rally in the equities markets. Consumer spending continues to be
driven by strong business and consumer confidence and is providing
the impetus for a strong economy. Concerns around an imminent
recession impacted long-term interest rates during the quarter. The
10-year Treasury yield began the quarter yielding 2.69% and fell to
as low as 2.39% before ending the quarter at 2.41% indicating a
flight to safety sentiment by investors.
Albert G. Lowenthal, Chairman and
CEO commented, "We are pleased with the performance of the business
during the first quarter of 2019. Although our results were aided
by a strong equities market, the firm's core businesses performed
well and we believe that the strong underlying economic landscape
will continue to provide support for the growth objectives of the
firm. After the sharp sell-off in the equities markets during the
fourth quarter of 2018, our asset management fees for the first
quarter, which are based on asset values at December 31, 2018, declined 5.0%. The significant
increase in equity asset values in the first quarter of 2019 will
favorably impact our asset management fees for the second quarter
of 2019. Our investment banking business performed well as a result
of increased fees from advisory assignments and despite a
significant decline in underwriting income. Our operating results
continue to benefit from the present level of short-term interest
rates as we continue to realize the effect of interest rate hikes
in 2018.
Our institutional equities commission business showed
improvement during the first quarter of 2019 as a result of an
increase in volatility which drove greater activity by
institutional counterparties. However, our retail transaction-based
business declined during the period reflecting an ongoing secular
reduction in portfolio turnover as our clients continue to move to
more passive investment strategies. We continue to be optimistic
about our investment banking business for 2019, particularly as we
foresee a strong pipeline for initial public offerings as private
equity investments enter the public markets. Finally, we are
encouraged by the decline in legal and regulatory costs as many of
the investments in our compliance efforts are realized."
Business Segment
Results (Unaudited)
|
('000s)
|
|
|
For the 3-Months
Ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
Private
Client
|
$
|
163,527
|
|
$
|
154,094
|
|
6.1
|
|
Asset
Management
|
16,586
|
|
17,644
|
|
(6.0)
|
|
Capital
Markets
|
70,961
|
|
61,529
|
|
15.3
|
|
Corporate/Other
|
696
|
|
1,263
|
|
(44.9)
|
|
|
251,770
|
|
234,530
|
|
7.4
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
|
|
|
|
|
|
Private
Client
|
42,834
|
|
40,162
|
|
6.7
|
|
Asset
Management
|
2,242
|
|
3,718
|
|
(39.7)
|
|
Capital
Markets
|
(2,647)
|
|
(6,057)
|
|
56.3
|
|
Corporate/Other
|
(26,377)
|
|
(28,202)
|
|
6.5
|
|
|
$
|
16,052
|
|
$
|
9,621
|
|
66.8
|
|
|
|
|
|
|
|
Private Client
Private Client reported revenue of $163.5
million for the first quarter of 2019, 6.1% higher than the
first quarter of 2018 due to higher bank deposit sweep income and
an increase in the cash surrender value of Company-owned life
insurance partially offset by lower retail commissions and asset
management fees during the first quarter of 2019. Income
before income taxes was $42.8 million
for the first quarter of 2019, an increase of 6.7% compared with
the first quarter of 2018 due to the aforementioned items partially
offset by higher interest costs and communications and technology
costs during the first quarter of 2019.
- Client assets under administration were $87.5 billion at March 31,
2019 compared with $80.1
billion at December 31, 2018,
an increase of 9.2%.
- Financial adviser headcount was 1,062 at the end of the first
quarter of 2019, down from 1,082 at the end of the first quarter of
2018. The decline in financial adviser headcount since the first
quarter of 2018 has resulted from the Company's emphasis on adviser
productivity as well as retirements.
- Retail commissions were $47.1million for the first quarter of 2019, a
decrease of 7.9% from the first quarter of 2018.
- Advisory fee revenue on traditional and alternative managed
products was $57.0 million for the
first quarter of 2019, a decrease of 5.1% from the first quarter of
2018 (see Asset Management below for further information). The
decrease in advisory fees was due to a decrease in assets under
management ("AUM") at December 31,
2018 as a result of the sell-off in the equities markets
during the fourth quarter of 2018.
- Bank deposit sweep income was $34.0
million for the first quarter of 2019, an increase of 34.3%
compared with $25.3 million for the
first quarter of 2018 due to higher short-term interest rates
during the first quarter of 2019.
Asset Management
Asset Management reported revenue of $16.6 million for the first quarter of 2019, 6.0%
lower than the first quarter of 2018 due to lower AUM at
December 31, 2018, which is the basis
for advisory fees earned during the first quarter of 2019, as a
result of the sell-off in the equities markets during the fourth
quarter of 2018. Income before income taxes was $2.2 million for the first quarter of 2019, a
decrease of 39.7% compared with the first quarter of 2018 due to
lower AUM at December 31, 2018.
- Advisory fee revenue on traditional and alternative managed
products was $16.6 million for the
first quarter of 2019, a decrease of 4.4% from the first quarter of
2018 primarily due to lower AUM at December
31, 2018.
-
- Advisory fees are calculated based on the value of client AUM
at the end of the prior quarter which totaled $26.7 billion at December
31, 2018 ($28.3 billion at
December 31, 2017) and are allocated
between the Private Client and Asset Management business
segments.
- AUM increased 4.6% to $29.5
billion at March 31, 2019,
near all-time highs, compared with $28.2
billion at March 31, 2018,
which is the basis for advisory fee billings for the second quarter
of 2019. The increase in AUM was comprised of asset appreciation of
$0.8 billion and a positive net
contribution of assets of $0.5
billion.
Capital Markets
Capital Markets reported revenue of $71.0
million for the first quarter of 2019, 15.3% higher than the
first quarter of 2018 due to higher investment banking fees and
principal transactions revenue. Loss before income taxes was
$2.6 million for the first quarter of
2019, a decrease of 56.3% compared with loss before income taxes of
$6.1 million for the first quarter of
2018.
- Institutional equities commissions increased 1.4% to
$23.5 million for the first quarter
of 2019 compared with the first quarter of 2018 due to higher
levels of turnover in client portfolios and improved market
penetration by the Company.
- Advisory fees earned from investment banking activities
increased 77.7% to $16.7 million for
the first quarter of 2019 compared with $9.4
million for the first quarter of 2018 due to an increase in
mergers and acquisitions activity during the first quarter of
2019.
- Equities underwriting fees decreased 45.2% to $7.5 million for the first quarter of 2019
compared with the first quarter of 2018 due primarily to the U.S.
government shutdown which limited access to the equities markets
during the first quarter of 2019.
- Revenue from taxable fixed income increased to $16.5 million during the first quarter of 2019
from $12.1 million during the first
quarter of 2018 due to higher trading income in taxable fixed
income products as a result of institutional investors reacting to
greater volatility in the fixed income markets as a result of
sharply declining interest rates.
- Revenue from public finance and municipal trading increased to
$5.2 million during the first quarter
of 2019 from $2.4 million during the
first quarter of 2018 due to higher fixed income advisory fees as
well as higher municipal trading income during the first quarter of
2019.
Compensation and Related Expenses
Compensation and related expenses totaled $160.4 million during the first quarter of 2019,
an increase of 4.7% compared with the first quarter of 2018. The
increase was due to higher salaries, share-based, and deferred
compensation expenses partially offset by lower production-related
compensation costs during the first quarter of 2019. Compensation
and related expenses as a percentage of revenue was 63.7% during
the first quarter of 2019 compared with 65.3% during the first
quarter of 2018.
Non-Compensation Expenses
Non-compensation expenses were $75.4
million during the first quarter of 2019, an increase of
5.0% compared with $71.8 million
during the first quarter of 2018 due primarily to higher interest
costs and communication and technology costs partially offset by
lower legal and regulatory costs during the first quarter of
2019.
Provision for Income Taxes
The effective income tax rate from continuing operations for the
first quarter of 2019 was 30.3% unchanged compared with 30.3% for
the first quarter of 2018. The effective rate reflects the
Company's estimate of the annual effective tax rate adjusted for
certain discrete items.
Balance Sheet and Liquidity
- At March 31, 2019, total equity
was $554.5 million compared with
$545.3 million at December 31, 2018.
- At March 31, 2019, book value per
share was $42.58 (compared with
$41.81 at December 31, 2018) and tangible book value per
share was $29.52 (compared with
$28.78 at December 31, 2018).
- The Company's level 3 assets, primarily auction rate
securities, were $21.8 million at
March 31, 2019 (unchanged compared
with $21.8 million at December 31, 2018).
Dividend Announcement
The Company today announced a quarterly dividend in the amount
of $0.11 per share payable on
May 24, 2019 to holders of Class A
non-voting and Class B voting common stock of record on
May 10, 2019.
Company Information
Oppenheimer Holdings Inc., through its operating subsidiaries,
is a leading middle market investment bank and full service
broker-dealer that provides a wide range of financial services
including retail securities brokerage, institutional sales and
trading, investment banking (both corporate and public finance),
research, market-making, trust, and investment management. With
roots tracing back to 1881, the firm is headquartered in
New York and has 94 retail branch
offices in the United States and
has institutional businesses located in London, Tel
Aviv, and Hong Kong.
Forward-Looking Statements
This press release includes certain "forward-looking statements"
relating to anticipated future performance. For a discussion of the
factors that could cause future performance to be different than
anticipated, reference is made to Factors Affecting
"Forward-Looking Statements" and Part 1A – Risk Factors in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2018.
|
Oppenheimer
Holdings Inc
|
|
Consolidated
Income Statement (Unaudited)
|
('000s, except
number of shares and per share amounts)
|
|
|
|
|
|
|
For the 3-Months
Ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
Commissions
|
$
|
79,409
|
|
$
|
83,407
|
|
(4.8)
|
|
Advisory
fees
|
73,647
|
|
77,548
|
|
(5.0)
|
|
Investment
banking
|
28,043
|
|
28,210
|
|
(0.6)
|
|
Bank deposit sweep
income
|
33,968
|
|
25,297
|
|
34.3
|
|
Interest
|
12,727
|
|
12,227
|
|
4.1
|
|
Principal
transactions, net
|
11,438
|
|
2,726
|
|
319.6
|
|
Other
|
12,538
|
|
5,115
|
|
145.1
|
|
Total
revenue
|
251,770
|
|
234,530
|
|
7.4
|
EXPENSES
|
|
|
|
|
|
|
Compensation and
related expenses
|
160,355
|
|
153,104
|
|
4.7
|
|
Communications and
technology
|
20,086
|
|
18,688
|
|
7.5
|
|
Occupancy and
equipment costs
|
15,273
|
|
15,428
|
|
(1.0)
|
|
Clearing and exchange
fees
|
5,332
|
|
6,096
|
|
(12.5)
|
|
Interest
|
12,986
|
|
8,963
|
|
44.9
|
|
Other
|
21,686
|
|
22,630
|
|
(4.2)
|
|
Total
expenses
|
235,718
|
|
224,909
|
|
4.8
|
Income before income
taxes
|
16,052
|
|
9,621
|
|
66.8
|
Income
taxes
|
4,858
|
|
2,916
|
|
66.6
|
Net
income
|
$
|
11,194
|
|
$
|
6,705
|
|
67.0
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
0.86
|
|
$
|
0.51
|
|
|
68.6
|
Diluted
|
$
|
0.81
|
|
$
|
0.48
|
|
|
68.8
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
Basic
|
13,020,344
|
|
13,239,628
|
|
(1.7)
|
|
Diluted
|
13,851,321
|
|
13,977,492
|
|
(0.9)
|
View original
content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-first-quarter-2019-earnings-and-announces-quarterly-dividend-300838907.html
SOURCE Oppenheimer Holdings Inc.