NEW YORK, July 30, 2020 /PRNewswire/ - Oppenheimer Holdings
Inc. (NYSE: OPY) (the "Company" or "Firm") today reported net
income of $17.6 million or
$1.40 basic earnings per share for
the second quarter of 2020 compared with net income of $12.4 million or $0.95 basic earnings per share for the second
quarter of 2019. Revenue for the second quarter of 2020 was
$264.7 million compared to revenue of
$250.9 million for the second quarter
of 2019.
Albert G. Lowenthal,
Chairman and CEO commented, "I am extremely proud of how our
employees have risen to the challenges of the current
environment. While navigating new working arrangements,
whether remotely or in a less populated office environment, the
Firm's associates were able to work productively and contribute to
what turned out to be a very solid quarter, both in terms of
revenue and profit, given the headwinds created by a very low
interest rate environment. Continued volatility in the equity
markets and huge demand for capital raising led to stronger than
expected operating results for the period.
Investment banking led the way with a significant increase in
the number of equity underwriting transactions in May and June. We
also saw substantially increased activity in fixed income, both
taxable and municipal finance, including higher public finance
issuances. This helped offset lower M&A activity during
the quarter. The broader equities markets saw the largest
quarterly increase in two decades contributing to higher retail and
institutional commission revenue as investors reacted to very high
levels of volatility. The recovery in asset values also
contributed to record assets under management at June 30, 2020, which will drive advisory fee
revenue for the third quarter of 2020. A continuation of market
volatility and robust capital markets activity would drive positive
operating results for the last half of the year".
Summary Operating
Results (Unaudited)
|
|
('000s, except per
share amounts or otherwise indicated)
|
Firm
|
2Q-20
|
2Q-19
|
Revenue
|
$
|
264,730
|
$
|
250,935
|
Compensation
expense
|
$
|
179,594
|
$
|
155,783
|
Non-compensation
expense
|
$
|
61,872
|
$
|
77,761
|
Pre-Tax
Income
|
$
|
23,264
|
$
|
17,391
|
Income
Taxes
|
$
|
5,615
|
$
|
5,016
|
Net Income
|
$
|
17,649
|
$
|
12,375
|
Earnings per share
(basic)
|
$
|
1.40
|
$
|
0.95
|
Earnings per share
(diluted)
|
$
|
1.34
|
$
|
0.89
|
Book Value Per
Share
|
$
|
47.92
|
$
|
43.84
|
Tangible Book Value
Per Share (1)
|
$
|
34.37
|
$
|
30.62
|
|
|
|
Private
Client
|
|
|
Revenue
|
$
|
141,825
|
$
|
161,928
|
Pre-Tax
Income
|
$
|
24,349
|
$
|
43,416
|
Assets Under
Administration (billions)
|
$
|
89.7
|
$
|
87.3
|
|
|
|
Asset
Management
|
|
|
Revenue
|
$
|
17,515
|
$
|
18,622
|
Pre-Tax
Income
|
$
|
3,983
|
$
|
5,318
|
Assets Under
Management (billions)
|
$
|
32.7
|
$
|
30.2
|
|
|
|
Capital
Markets
|
|
|
Revenue
|
$
|
105,270
|
$
|
71,819
|
Pre-Tax Income
(Loss)
|
$
|
22,322
|
$
|
(1,801)
|
|
|
|
(1) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding
|
Highlights
- The Firm's operating results demonstrated the resiliency of the
franchise
- Our balance sheet, capital levels, and liquidity remain strong
during these unprecedented times
- Revenue increased 5.5% during the period driven by robust
underwriting revenue, increased institutional equities and fixed
income sales and trading activity, and higher retail investor
participation
- Compensation expense increased 15.3% due to higher production,
incentive, and deferred compensation costs resulting from higher
incentive compensation tied to commissionable revenue and asset
values underlying deferred compensation programs
- Compensation expense as a percentage of revenue was higher at
67.8% during the current period versus 62.1% last year due to
substantially lower bank deposit sweep income which has no
associated compensation costs
- Book value and tangible book value per share reached record
levels at June 30, 2020
- Private Client pre-tax profit margin was 17.2% reflecting
strong underlying business fundamentals
- Assets under management were at a record level of $32.7 billion at June 30,
2020
- Investment banking had its best quarter since the fourth
quarter of 2010 with revenue of $46.2
million
Private Client
Private Client reported revenue for the current quarter of
$141.8 million, 12.4% lower compared
with a year ago. Pre-tax income of $24.3 million in the current quarter resulted in
a pre-tax profit margin of 17.2%.
('000s, except
financial advisor headcount or otherwise indicated)
|
|
2Q-20
|
2Q-19
|
|
|
|
Revenue
|
$
|
141,825
|
$
|
161,928
|
Commissions
|
$
|
50,295
|
$
|
47,150
|
Advisory
fees
|
$
|
58,465
|
$
|
62,080
|
Bank deposit sweep
income
|
$
|
7,122
|
$
|
31,830
|
Interest
|
$
|
5,134
|
$
|
9,639
|
Other
|
$
|
20,809
|
$
|
11,229
|
|
|
|
Total
Expenses
|
$
|
117,476
|
$
|
118,513
|
Compensation
|
$
|
90,512
|
$
|
85,540
|
Non-compensation
|
$
|
26,964
|
$
|
32,973
|
|
|
|
Assets Under
Administration (billions)
|
$
|
89.7
|
$
|
87.3
|
Cash Sweep
Balances (billions)
|
$
|
6.3
|
$
|
5.0
|
Financial Advisor
Headcount
|
1,029
|
1,036
|
|
|
|
Revenue:
- Retail commissions increased 6.7% from a year ago as a result
of increased volatility and client participation
- Advisory fees decreased 5.8% due to lower assets under
management at March 31, 2020 compared
with March 31, 2019
- Bank deposit sweep income decreased $24.7 million or 77.6% from a year ago due to
lower short-term interest rates partially offset by higher average
cash sweep balances
- Interest revenue declined 46.7% from a year ago due to lower
short-term interest rates partially offset by higher average margin
balances
- Other revenue increased 85.3% primarily due to increases in the
cash surrender value of company-owned life insurance policies
Total Expenses:
- Compensation expenses increased 5.8% primarily due to increased
deferred compensation costs tied to the performance of the overall
equities markets
- Non-compensation expenses decreased 18.2% primarily due to
lower interest costs associated with the bank deposit sweep
program
Asset Management
Asset Management reported revenue for the current quarter of
$17.5 million, 5.9% lower compared
with a year ago. Pre-tax income was $4.0 million, a decrease of 25.1% compared with a
year ago.
('000s, except
otherwise indicated)
|
|
2Q-20
|
2Q-19
|
|
|
|
Revenue
|
$
|
17,515
|
$
|
18,622
|
Advisory
fees
|
$
|
17,507
|
$
|
18,617
|
Other
|
$
|
8
|
$
|
5
|
|
|
|
Total
Expenses
|
$
|
13,532
|
$
|
13,304
|
Compensation
|
$
|
5,676
|
$
|
5,316
|
Non-compensation
|
$
|
7,856
|
$
|
7,988
|
|
|
|
AUM
(billions)
|
$
|
32.7
|
$
|
30.2
|
Revenue:
- Advisory fee revenue decreased 6.0% due to lower assets under
management at March 31, 2020 compared
with March 31, 2019
Assets under Management (AUM):
- AUM hit a record level of $32.7
billion at June 30, 2020,
which is the basis for advisory fee billings for the third quarter
of 2020
- The increase in AUM was comprised of higher asset values of
$1.3 billion on existing client
holdings and a net contribution of assets of $1.2 billion
Total Expenses:
- Compensation expenses were up 6.8% which was primarily related
to increases in incentive compensation
- Non-compensation expenses were roughly flat when compared to
the prior period
Capital Markets
Capital Markets reported revenue for the current quarter of
$105.3 million, 46.6% higher compared
with a year ago. Pre-Tax income was $22.3
million compared with a pre-tax loss of $1.8 million a year ago.
('000s)
|
|
|
|
2Q-20
|
2Q-19
|
|
|
|
Revenue
|
$
|
105,270
|
$
|
71,819
|
|
|
|
Investment
Banking
|
$
|
42,716
|
$
|
27,742
|
Advisory
fees
|
$
|
7,244
|
$
|
13,045
|
Equities
underwriting
|
$
|
27,787
|
$
|
13,020
|
Fixed income
underwriting
|
$
|
7,685
|
$
|
1,677
|
|
|
|
Sales and
Trading
|
$
|
61,878
|
$
|
43,508
|
Equities
|
$
|
30,858
|
$
|
23,391
|
Fixed
Income
|
$
|
31,020
|
$
|
20,117
|
|
|
|
Other
|
$
|
676
|
$
|
569
|
|
|
|
Total
Expenses
|
$
|
82,949
|
$
|
73,620
|
Compensation
|
$
|
62,295
|
$
|
45,848
|
Non-compensation
|
$
|
20,654
|
$
|
27,772
|
Revenue:
Investment Banking
- Advisory fees earned from investment banking activities
decreased 44.5% compared with a year ago due to lower M&A
activity amidst the COVID-19 pandemic
- Equities underwriting fees more than doubled compared with a
year ago due to higher levels of capital issuances in the equity
markets
- Fixed income underwriting fees were up more than four times due
to increased fees earned in emerging markets and public finance
offerings
Sales and Trading
- Equities sales and trading increased 31.9% due to increased
equities agency and convertible bond transactions
- Fixed Income sales and trading increased 54.2% driven by
increased client activity in investment grade, emerging market,
high yield, and mortgage-backed securities
Total Expenses:
- Compensation expenses increased 35.9% primarily due to
increased incentive compensation tied to increases in revenue
- Non-compensation expenses were 25.6% lower due to decreased
interest costs and reduced costs associated with travel and
entertainment and conferences
Other Matters
(In millions,
except number of shares and per share amounts)
|
|
2Q-20
|
2Q-19
|
Capital
|
|
|
Shareholders'
equity
|
$
|
601.1
|
|
$
|
563.6
|
|
Regulatory Net
Capital (1)
|
$
|
251.3
|
|
$
|
201.7
|
|
Regulatory Excess Net
Capital (1)
|
$
|
228.3
|
|
$
|
185.0
|
|
|
|
|
Common Stock
Repurchases
|
|
|
Repurchases
|
$
|
3.8
|
|
$
|
4.3
|
|
Number of
Shares
|
191,044
|
|
167,209
|
|
Average
Price
|
$
|
20.06
|
|
$
|
25.82
|
|
|
|
|
Period End
Shares
|
12,445,479
|
|
12,756,308
|
|
Effective Tax
Rate
|
24.1
|
%
|
28.8
|
%
|
|
|
|
(1) Attributable to Oppenheimer &
Co. Inc. broker-dealer
|
- Shareholders' equity reached a record high of $601.1 million on June 30,
2020
- The Board of Directors announced a quarterly dividend in the
amount of $0.12 per share effective
for the second quarter of 2020 and payable on August 27, 2020 to holders of Class A non-voting
and Class B voting common stock of record on August 13, 2020
- The Company's broker-dealer regulatory net capital was near
all-time highs as of June 30,
2020
- Level 3 assets, primarily comprised of auction rate securities,
were $29.6 million as of June 30, 2020
- The effective tax rate for the current period was 24.1%
compared with 28.8% for the prior period. The decrease is primarily
due to the resolution of tax audits on a favorable basis during the
current period
Coronavirus Pandemic ("COVID-19")
The Company continues to monitor the effects of the pandemic
both on a national level as well as regional and local effects and
is responding accordingly. In addition, we continue to
provide frequent communications to clients, employees, and
regulators. We have adopted enhanced cleaning practices and
other health protocols in our offices, taken measures to
significantly restrict non-essential business travel and have
practices in place to mandate that employees who may have been
exposed to COVID-19, or show any relevant symptoms,
self-quarantine. In early March
2020, the Company executed on its Business Continuity Plan
whereby the vast majority of our employees began to work remotely
with only "essential" employees reporting to our offices. We
accomplished this by significantly expanding the use of technology
infrastructure that facilitates remote operations. Our
ability to avoid significant business disruptions are reliant on
the continued ability to have the vast majority of employees
working remotely. To date, there have been no significant
disruptions to our business or control processes as a result of
this dispersion of employees. Recent outbreaks in various
states indicate that COVID-19 will continue to impact the economy
and, by extension, our business, well into 2021. We currently
anticipate that a large number of our employees will continue to
work remotely for the indefinite future.
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 93 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 including the projected
impact of COVID-19 on the Company's business, financial
performance, and operating results. The following factors,
among others, could cause actual results to vary from the
forward-looking statements: the severity and duration of the
COVID-19; COVID-19 impact on the U.S. and global economies; and
Federal, state and local governmental responses to the
pandemic. 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, 2019 and the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020.
|
Oppenheimer
Holdings Inc.
|
Consolidated
Statements of Income (Unaudited)
|
('000s, except
number of shares and per share amounts)
|
|
|
|
|
|
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
|
%
Change
|
|
2020
|
|
2019
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
|
|
Commissions
|
$
|
101,636
|
|
$
|
80,896
|
|
25.6
|
|
$
|
204,885
|
|
$
|
160,305
|
|
27.8
|
|
Advisory
fees
|
75,981
|
|
80,707
|
|
(5.9)
|
|
162,145
|
|
154,354
|
|
5.0
|
|
Investment
banking
|
46,186
|
|
32,006
|
|
44.3
|
|
71,914
|
|
60,049
|
|
19.8
|
|
Bank deposit sweep
income
|
7,122
|
|
31,830
|
|
(77.6)
|
|
25,948
|
|
65,798
|
|
(60.6)
|
|
Interest
|
6,220
|
|
13,550
|
|
(54.1)
|
|
17,110
|
|
26,277
|
|
(34.9)
|
|
Principal
transactions, net
|
12,064
|
|
3,045
|
|
296.2
|
|
11,196
|
|
14,483
|
|
(22.7)
|
|
Other
|
15,521
|
|
8,901
|
|
74.4
|
|
6,302
|
|
21,439
|
|
(70.6)
|
|
Total
revenue
|
264,730
|
|
250,935
|
|
5.5
|
|
$
|
499,500
|
|
$
|
502,705
|
|
(0.6)
|
EXPENSES
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
179,594
|
|
155,783
|
|
15.3
|
|
337,270
|
|
316,138
|
|
6.7
|
|
Communications and
technology
|
21,324
|
|
20,499
|
|
4.0
|
|
41,215
|
|
40,585
|
|
1.6
|
|
Occupancy and
equipment costs
|
15,334
|
|
15,573
|
|
(1.5)
|
|
31,412
|
|
30,846
|
|
1.8
|
|
Clearing and exchange
fees
|
6,191
|
|
5,678
|
|
9.0
|
|
11,850
|
|
11,010
|
|
7.6
|
|
Interest
|
2,890
|
|
13,192
|
|
(78.1)
|
|
9,440
|
|
26,178
|
|
(63.9)
|
|
Other
|
16,133
|
|
22,819
|
|
(29.3)
|
|
34,826
|
|
44,505
|
|
(21.7)
|
|
Total
expenses
|
241,466
|
|
233,544
|
|
3.4
|
|
466,013
|
|
469,262
|
|
(0.7)
|
Pre-Tax
Income
|
23,264
|
|
17,391
|
|
33.8
|
|
33,487
|
|
33,443
|
|
0.1
|
Income
taxes
|
5,615
|
|
5,016
|
|
11.9
|
|
8,020
|
|
9,874
|
|
(18.8)
|
Net
income
|
$
|
17,649
|
|
$
|
12,375
|
|
42.6
|
|
$
|
25,467
|
|
$
|
23,569
|
|
8.1
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Basic
|
$
|
1.40
|
|
$
|
0.95
|
|
47.4
|
|
$
|
1.99
|
|
$
|
1.81
|
|
9.9
|
Diluted
|
$
|
1.34
|
|
$
|
0.89
|
|
50.6
|
|
$
|
1.92
|
|
$
|
1.70
|
|
12.9
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
Basic
|
12,640,463
|
|
12,976,235
|
|
(2.6)
|
|
12,768,096
|
|
12,998,168
|
|
(1.8)
|
|
Diluted
|
13,124,655
|
|
13,861,753
|
|
(5.3)
|
|
13,269,494
|
|
13,857,616
|
|
(4.2)
|
View original
content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2020-earnings-301102608.html
SOURCE Oppenheimer Holdings Inc.