NEW YORK, Oct. 25, 2019 /PRNewswire/ - Oppenheimer Holdings
Inc. (NYSE: OPY) (the "Company") today reported net income of
$3.9 million or $0.31 basic net income per share for the third
quarter of 2019 compared with net income of $5.1 million or $0.38 basic net income per share for the third
quarter of 2018. Income before income taxes was $6.5 million for the third quarter of 2019
compared with income before income taxes of $7.2 million for the third quarter of 2018.
Summary Operating
Results (Unaudited)
|
('000s, except per
share amounts)
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
9/30/2019
|
|
|
9/30/2018
|
|
|
%
Change
|
|
9/30/2019
|
|
|
9/30/2018
|
|
|
%
Change
|
Revenue
|
$
|
234,793
|
|
|
$
|
237,814
|
|
|
(1.3)
|
|
$
|
737,498
|
|
|
$
|
714,900
|
|
|
3.2
|
Expenses
|
228,297
|
|
|
230,660
|
|
|
(1.0)
|
|
697,559
|
|
|
685,608
|
|
|
1.7
|
Income Before Income
Taxes
|
6,496
|
|
|
7,154
|
|
|
(9.2)
|
|
39,939
|
|
|
29,292
|
|
|
36.3
|
Income
Taxes
|
2,547
|
|
|
2,083
|
|
|
22.3
|
|
12,421
|
|
|
8,661
|
|
|
43.4
|
Net
Income
|
$
|
3,949
|
|
|
$
|
5,071
|
|
|
(22.1)
|
|
$
|
27,518
|
|
|
$
|
20,631
|
|
|
33.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.31
|
|
|
$
|
0.38
|
|
|
(18.4)
|
|
$
|
2.13
|
|
|
$
|
1.56
|
|
|
36.5
|
Diluted
|
$
|
0.29
|
|
|
$
|
0.36
|
|
|
(19.4)
|
|
$
|
1.99
|
|
|
$
|
1.47
|
|
|
35.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
As
of
|
|
9/30/2019
|
|
9/30/2018
|
|
%
Change
|
|
9/30/2019
|
|
12/31/2018
|
|
%
Change
|
Book Value Per
Share
|
$
|
44.27
|
|
|
$
|
40.94
|
|
|
8.1
|
|
$
|
44.27
|
|
|
$
|
41.81
|
|
|
5.9
|
Tangible Book Value
Per Share (1)
|
$
|
30.99
|
|
|
$
|
28.13
|
|
|
10.2
|
|
$
|
30.99
|
|
|
$
|
28.78
|
|
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding.
|
|
|
|
|
|
|
Third Quarter 2019 Highlights
- Profit margin in Private Client Division of 23.2%
- Assets under management increased 2.0% to $30.2 billion at September
30, 2019, a record high, when compared to $29.6 billion at September
30, 2018
- Auction rate securities ("ARS") tender offer resulted in an
additional $20 million in liquidity
during the third quarter of 2019
- The Company redeemed $50 million
(25%) of its 6.75% Senior Secured Notes due 2022 ("Notes") on
August 25, 2019 plus accrued and
unpaid interest and incurred $1.9
million in costs associated with paying the associated Call
Premium ($1.7 million) and the
write-off of debt issuance costs ($0.2
million) during the third quarter of 2019
- Legal and regulatory costs declined by approximately 73.0% in
the third quarter of 2019 compared with the third quarter of
2018
- Book value per share was $44.27
and tangible book value per share was $30.99 at September 30,
2019, both at record highs
- The Company purchased 76,657 shares of OPY Class A non-voting
common stock under its share purchase program during the third
quarter of 2019 for $2.0 million at
an average share price of $26.71
- The Company recorded compensation and related expenses of
$3.4 million related to its OARs plan
due to the price of its Class A Stock increasing from $27.22 at the end of the second quarter of 2019
to $30.06 at the end of the third
quarter of 2019.
During the third quarter of 2019, the major stock indices in the
U.S. increased 1.2% extending gains for the year-to-date period
ending September 30, 2019 to 18.7%.
Volatility returned to the equity markets during the third quarter
due to the trade war between the U.S. and China, concerns around the strength of the
economy, and potential impeachment proceedings. The markets set new
highs in July only to retreat in August amidst increased trade
tensions between the U.S. and China. Markets rallied in September around
easing trade tensions and the expectations of the Federal Reserve
loosening monetary policy. On September 18,
2019, the Fed cut the target range for its benchmark
interest rate by 0.25%, the second such decrease during the third
quarter of 2019. The 10-year Treasury yield declined 32.5 basis
points to end the third quarter of 2019 at 1.68%.
Albert G. Lowenthal, Chairman and
CEO commented, "The operating results for the period reflect a
modest slowdown in business conditions as well as the impact of
lower interest rates on earnings. The transaction-based business
was lower again despite an up-tick in volatility. The firm did,
however, benefit from the slight increase in share prices and
increases in net client assets from the first quarter to the second
quarter of 2019, which is reflected in advisory fees earned in the
third quarter of 2019. The improvement in security valuations at
the end of the third quarter will positively impact advisory fees
for the fourth quarter, given the increase of 2.0% in assets under
management. Our investment banking business was impacted by fewer
lead-managed equity underwriting transactions which led to lower
underwriting income compared to that of the prior year period. This
was partially offset by higher M&A advisory fees during the
period. The decrease in short-term interest rates resulted in lower
cash sweep income during the third quarter of 2019. We remain
optimistic about the economic environment and the resolution of
some of the issues holding back both consumer and business
confidence."
Business Segment
Results (Unaudited)
|
('000s)
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
9/30/2019
|
|
9/30/2018
|
|
%
Change
|
|
9/30/2019
|
|
9/30/2018
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Client
|
$
|
152,054
|
|
$
|
158,083
|
|
(3.8)
|
|
$
|
477,509
|
|
$
|
468,730
|
|
1.9
|
|
Asset
Management
|
18,368
|
|
17,870
|
|
2.8
|
|
53,576
|
|
53,220
|
|
0.7
|
|
Capital
Markets
|
64,068
|
|
68,130
|
|
(6.0)
|
|
206,848
|
|
197,865
|
|
4.5
|
|
Corporate/Other
|
303
|
|
(6,269)
|
|
*
|
|
(435)
|
|
(4,915)
|
|
91.1
|
|
Total
|
$
|
234,793
|
|
$
|
237,814
|
|
(1.3)
|
|
$
|
737,498
|
|
$
|
714,900
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
|
|
|
|
|
|
|
|
|
Private
Client
|
35,251
|
|
37,608
|
|
(6.3)
|
|
121,501
|
|
111,283
|
|
9.2
|
|
Asset
Management
|
4,932
|
|
4,127
|
|
19.5
|
|
12,492
|
|
11,803
|
|
5.8
|
|
Capital
Markets
|
(6,385)
|
|
(2,076)
|
|
(207.6)
|
|
(10,833)
|
|
(8,332)
|
|
(30.0)
|
|
Corporate/Other
|
(27,302)
|
|
(32,505)
|
|
16.0
|
|
(83,221)
|
|
(85,462)
|
|
2.6
|
|
Total
|
$
|
6,496
|
|
$
|
7,154
|
|
(9.2)
|
|
$
|
39,939
|
|
$
|
29,292
|
|
36.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percentage not
meaningful
|
|
|
|
|
|
|
|
|
|
|
Private Client
Private Client reported revenue of $152.1
million for the third quarter of 2019, 3.8% lower than the
third quarter of 2018 due to lower commissions, bank deposit sweep
income, and decreases in the cash surrender value of Company-owned
life insurance partially offset by higher asset management fees
during the third quarter of 2019. Income before income taxes was
$35.3 million for the third quarter
of 2019, a decrease of 6.3% compared with the third quarter of
2018.
- Client assets under administration were $87.6 billion at September
30, 2019 compared with $80.1
billion at December 31, 2018,
an increase of 9.4%.
- Financial adviser headcount was 1,043 at the end of the third
quarter of 2019, down from 1,078 at the end of the third quarter of
2018.
- Retail commissions were $46.0
million for the third quarter of 2019, a decrease of 3.4%
from the third quarter of 2018.
- Advisory fee revenue on traditional and alternative managed
products was $62.5 million for the
third quarter of 2019, an increase of 3.3% from the third quarter
of 2018 (see Asset Management below for further information). The
increase in advisory fees was due to an increase in assets under
management ("AUM") at June 30, 2019
as a result of the increase in the equities markets and net new
assets during the second quarter of 2019.
- Bank deposit sweep income was $28.9
million for the third quarter of 2019, a decrease of 3.9%
compared with $30.1 million for the
third quarter of 2018 due to lower short-term interest rates and
lower client cash balances during the third quarter of 2019.
Asset Management
Asset Management reported revenue of $18.4 million for the third quarter of 2019, 2.8%
higher than the third quarter of 2018 due to higher AUM at
June 30, 2019, which is the basis for
advisory fees earned during the third quarter of 2019, as a result
of the increase in the equities markets and net new assets during
the second quarter of 2019. Income before income taxes was
$4.9 million for the third quarter of
2019, an increase of 19.5% compared with the third quarter of 2018
due to higher AUM at June 30,
2019.
- Advisory fee revenue on traditional and alternative managed
products was $18.4 million for the
third quarter of 2019, an increase of 4.5% from the third quarter
of 2018 primarily due to higher AUM at June
30, 2019.
-
- Advisory fees are calculated based on the value of client AUM
at the end of the prior quarter which totaled $30.2 billion at June 30,
2019 ($28.7 billion at
June 30, 2018) and are allocated
between the Private Client and Asset Management business
segments.
- AUM increased 2.0% to $30.2
billion at September 30, 2019,
a record high, compared with $29.6
billion at September 30, 2018,
which is the basis for advisory fee billings for the fourth quarter
of 2019. The increase in AUM was comprised of lower asset values of
$0.4 billion on existing client
holdings and a positive net contribution of assets of $1.0 billion.
Capital Markets
Capital Markets reported revenue of $64.1
million for the third quarter of 2019, 6.0% lower than the
third quarter of 2018 primarily due to lower equities underwriting
fees partially offset by higher trading income. Loss before income
taxes was $6.4 million for the third
quarter of 2019 compared with loss before income taxes of
$2.1 million for the third quarter of
2018.
- Institutional equities commissions decreased 0.9% to
$22.9 million for the third quarter
of 2019 compared with the third quarter of 2018.
- Advisory fees earned from investment banking activities
increased 9.4% to $10.5 million for
the third quarter of 2019 compared with $9.6
million for the third quarter of 2018 due to an increase in
mergers and acquisitions transactions during the third quarter of
2019.
- Equities underwriting fees decreased 50.0% to $7.4 million for the third quarter of 2019
compared with $14.8 million for the
third quarter of 2018 as the Company participated in fewer
lead-managed transactions during the third quarter of
2019.
- Revenue from taxable fixed income increased to $17.1 million during the third quarter of 2019
from $14.7 million during the third
quarter of 2018 due to higher commissions and trading income.
- Revenue from public finance and municipal trading was virtually
flat at $4.8 million during the third
quarter of 2019 compared with the third quarter of 2018 as higher
trading income was offset by lower commissions and syndicate income
during the third quarter of 2019.
Compensation and Related Expenses
Compensation and related expenses totaled $151.3 million during the third quarter of 2019,
a decrease of 1.0% compared with the third quarter of 2018. The
decrease was due to lower deferred, incentive, and share-based
compensation costs partially offset by higher salaries and traders'
compensation costs during the third quarter of 2019. As noted
above, the Company recorded compensation and related expenses of
$3.4 million related to its OARs plan
due to the price of its Class A Stock increasing from $27.22 at the end of the second quarter of 2019
to $30.06 at the end of the third
quarter of 2019. During the third quarter of 2018, the Company had
compensation expenses related to its OARs plan of $4.3 million. Compensation and related expenses
as a percentage of revenue was 64.4% during the third quarter of
2019 compared with 64.3% during the third quarter of 2018.
Non-Compensation Expenses
Non-compensation expenses were $77.0
million during the third quarter of 2019, a decrease of 1.0%
compared with $77.8 million during
the third quarter of 2018 due primarily to lower legal and
regulatory costs and interest costs partially offset by higher
communications and technology costs and costs associated with the
Notes redemption during the third quarter of 2019. The Company
incurred $1.9 million in costs
associated with paying the Call Premium ($1.7 million) and the write-off of debt issuance
costs ($0.2 million) related to the
redemption of $50 million (25%) of
its Notes during the third quarter of 2019.
Provision for Income Taxes
The effective income tax rate for the third quarter of 2019 was
39.2%, 10.0% higher when compared with 29.2% for the third quarter
of 2018 due to losses in foreign jurisdictions without any
associated tax benefits. The effective rate reflects the Company's
estimate of the annual effective tax rate adjusted for certain
discrete items.
Balance Sheet and Liquidity
- At September 30, 2019, total
equity was $566.6 million, a record
high, compared with $545.3
million at December 31,
2018.
- At September 30, 2019, book value
per share was $44.27 (compared with
$41.81 at December 31, 2018) and tangible book value per
share was $30.99 (compared with
$28.78 at December 31, 2018), both at record highs.
- The Company's level 3 assets were $nil at September 30, 2019 (compared with $21.8 million at December
31, 2018). The decline in level 3 assets was the result of
the Company participating in ARS tender offers in July 2019 and the resulting marking of the
remaining ARS positions held by the Company to the relevant tender
price.
Dividend Announcement
The Company announced a quarterly dividend in the amount of
$0.12 per share effective for the
third quarter of 2019 and payable on November 22, 2019 to holders of Class A
non-voting and Class B voting common stock of record on
November 8, 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 Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
9/30/2019
|
|
9/30/2018
|
|
%
Change
|
|
9/30/2019
|
|
9/30/2018
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
$
|
78,627
|
|
|
$
|
79,678
|
|
|
(1.3)
|
|
$
|
238,932
|
|
|
$
|
245,935
|
|
|
(2.8)
|
|
Advisory
fees
|
80,887
|
|
|
78,154
|
|
|
3.5
|
|
235,241
|
|
|
232,972
|
|
|
1.0
|
|
Investment
banking
|
21,798
|
|
|
28,328
|
|
|
(23.1)
|
|
81,847
|
|
|
84,442
|
|
|
(3.1)
|
|
Bank deposit sweep
income
|
28,894
|
|
|
30,053
|
|
|
(3.9)
|
|
94,692
|
|
|
84,203
|
|
|
12.5
|
|
Interest
|
12,344
|
|
|
13,403
|
|
|
(7.9)
|
|
38,621
|
|
|
38,686
|
|
|
(0.2)
|
|
Principal
transactions, net
|
7,606
|
|
|
(16)
|
|
|
*
|
|
22,089
|
|
|
9,110
|
|
|
142.5
|
|
Other
|
4,637
|
|
|
8,214
|
|
|
(43.5)
|
|
26,076
|
|
|
19,552
|
|
|
33.4
|
|
Total
revenue
|
234,793
|
|
|
237,814
|
|
|
(1.3)
|
|
737,498
|
|
|
714,900
|
|
|
3.2
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
151,284
|
|
|
152,846
|
|
|
(1.0)
|
|
467,422
|
|
|
457,821
|
|
|
2.1
|
|
Communications and
technology
|
20,872
|
|
|
18,602
|
|
|
12.2
|
|
61,457
|
|
|
55,287
|
|
|
11.2
|
|
Occupancy and
equipment costs
|
16,010
|
|
|
15,106
|
|
|
6.0
|
|
46,856
|
|
|
45,435
|
|
|
3.1
|
|
Clearing and exchange
fees
|
5,469
|
|
|
5,378
|
|
|
1.7
|
|
16,479
|
|
|
17,254
|
|
|
(4.5)
|
|
Interest
|
11,531
|
|
|
12,915
|
|
|
(10.7)
|
|
37,709
|
|
|
32,787
|
|
|
15.0
|
|
Other
|
23,131
|
|
|
25,813
|
|
|
(10.4)
|
|
67,636
|
|
|
77,024
|
|
|
(12.2)
|
|
Total
expenses
|
228,297
|
|
|
230,660
|
|
|
(1.0)
|
|
697,559
|
|
|
685,608
|
|
|
1.7
|
Income before income
taxes
|
6,496
|
|
|
7,154
|
|
|
(9.2)
|
|
39,939
|
|
|
29,292
|
|
|
36.3
|
Income
taxes
|
2,547
|
|
|
2,083
|
|
|
22.3
|
|
12,421
|
|
|
8,661
|
|
|
43.4
|
Net
income
|
$
|
3,949
|
|
|
$
|
5,071
|
|
|
(22.1)
|
|
$
|
27,518
|
|
|
$
|
20,631
|
|
|
33.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.31
|
|
|
$
|
0.38
|
|
|
(18.4)
|
|
$
|
2.13
|
|
|
$
|
1.56
|
|
|
36.5
|
Diluted
|
$
|
0.29
|
|
|
$
|
0.36
|
|
|
(19.4)
|
|
$
|
1.99
|
|
|
$
|
1.47
|
|
|
35.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
12,825,944
|
|
|
13,269,024
|
|
|
(3.3)
|
|
12,940,129
|
|
|
13,252,596
|
|
|
(2.4)
|
|
Diluted
|
13,832,994
|
|
|
14,140,263
|
|
|
(2.2)
|
|
13,846,139
|
|
|
14,043,326
|
|
|
(1.4)
|
* Percentage not meaningful
View original
content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-third-quarter-2019-earnings-and-announces-quarterly-dividend-300945374.html
SOURCE Oppenheimer Holdings Inc.