NEW YORK, July 30 /CNW/ -- NYSE - OPY NEW YORK, July 30 /CNW/ -
Expressed in thousands of Three Months ended Six Months ended
dollars, except per share June 30, June 30, amounts 2010 2009 2010
2009
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(unaudited) Revenue $256,996 $250,724 $503,171 $455,989 Expenses
$240,850 $237,748 $471,165 $445,835 Profit before taxes $16,146
$12,976 $32,006 $10,154 Net profit attributable to Oppenheimer
Holdings Inc. $9,202 $7,130 $18,370 $5,116 Basic earnings (loss)
per share $0.69 $0.55 $1.38 $0.39 Diluted earnings (loss) per share
$0.66 $0.54 $1.32 $0.38 Book value per share at June 30 $35.34
$33.12 - - Business Review Oppenheimer Holdings Inc. reported a net
profit of $9.2 million or $0.69 per share for the second quarter of
2010 compared to a net profit of $7.1 million or $0.55 per share in
the second quarter of 2009. Revenue for the second quarter of 2010
was $257.0 million, compared to revenue of $250.7 million in the
second quarter of 2009, an increase of 2.5%. Client assets
entrusted to the Company and under management totaled approximately
$66.9 billion while client assets under fee-based programs offered
by the asset management groups totaled approximately $14.7 billion
at June 30, 2010 ($55.3 billion and $13.6 billion, respectively, at
June 30, 2009). Net profit for the six months ended June 30, 2010
was $18.4 million or $1.38 per share compared to $5.1 million or
$0.39 per share in the same period of 2009. Revenue for the six
months ended June 30, 2010 was $503.2 million, an increase of 10.3%
compared to $456.0 million in the same period of 2009. The U.S.
economy grew for the third consecutive quarter, albeit at a slower
rate than previous quarters. Labor markets are slowly improving
and, while U.S. consumer confidence has declined in recent weeks,
spending continues to increase. Credit charge-offs seem to have
topped out for this cycle, but the recovery has slowed as a result
of concerns over availability of credit, continuing sluggishness in
the housing recovery, and concerns surrounding the impact on the
credit markets of the European debt crisis. Although European
policymakers have announced stress tests for European banks and aid
to some European sovereign credits, markets continue to see
significant risks to global recovery. The effects of these concerns
have resulted in the lowest interest rates for U.S government debt
in a generation and a weak stock market as investors seek safety in
an uncertain environment. Overall, the Company's revenue improved
in the second quarter of 2010 compared to the second quarter of
2009, boosted by stronger investment banking revenue, higher asset
management advisory fees as well as higher interest income.
Commission income and principal transactions revenue declined in
the second quarter of 2010 compared to the same period in 2009 as
the stock market stalled in early May and declined thereafter due
to a decline in consumer confidence and other factors. Net interest
revenue for the Company, as well as fees derived from money market
funds and FDIC-insured deposits of clients, continue to be
significantly and adversely affected by the low interest rate
environment. In commenting on the Company's results, Albert
Lowenthal, Chairman remarked, "We are pleased with Oppenheimer's
sustained return to profitability and growth. The Company continues
to pursue opportunities for prudently expanding its business.
Improved investment banking results offset lower returns from
trading and investment, while investor transaction activity was
significantly affected by concerns over market direction, the
impact of financial regulation on markets and liquidity, and a
preoccupation with the oil spill along the U.S. Gulf coast. We are
not satisfied with our return on capital for our shareholders in
the current environment. Continued economic expansion and an
eventual move to a higher interest rate environment should permit
higher levels of profitability. The Company remains well positioned
to attract clients and experienced professionals across its
platform in the weeks and months ahead." Highlights of the
Company's results for the three and six months ended June 30, 2010
follow: Revenue and Expenses Revenue - Second Quarter 2010
----------------------------- - Commission revenue was $139.6
million for the second quarter of 2010, a decrease of 2.2% compared
to $142.7 million in the second quarter of 2009. Weak investor
sentiment and volatile markets in the 2010 period contributed to
the decline. - Principal transactions revenue was $16.8 million in
the second quarter of 2010 compared to $30.2 million in the second
quarter of 2009, a decrease of 44.4%. The decrease stems from lower
income from firm investments (a net loss of $144,000 for the second
quarter of 2010 compared to income of $6.4 million for the second
quarter of 2009), and lower fixed income trading revenue ($17.3
million in the second quarter of 2010 compared to $23.5 million in
the second quarter of 2009). The net loss from firm investments
included realized and unrealized gains of approximately $2.2
million which arose from the conversion of the Company's Chicago
Board Options Exchange membership into 80,000 shares by way of an
IPO that closed on June 14, 2010. The Company sold 20,000 shares in
June 2010. - Interest revenue was $11.2 million in the second
quarter of 2010, an increase of 29.2% compared to $8.7 million in
the second quarter of 2009. The increase is primarily attributable
to interest earned on reverse repurchase agreements held by the
government trading desk which began operations in June 2009. -
Investment banking revenue was $36.3 million in the second quarter
of 2010, an increase of 65.8% compared to $21.9 million in the
second quarter of 2009 with increased revenue from equity issuance
of $5.2 million and fee income related to private placements of
$10.8 million, offset by a decrease of $4.3 million in advisory
services. - Advisory fees were $44.0 million in the second quarter
of 2010, an increase of 23.9% compared to $35.5 million in the
second quarter of 2009. Asset management fees increased by $14.1
million in the second quarter of 2010 compared to the same period
in 2009 as a result of an increase in the value of assets under
management of 47.8% during the period. Asset management fees are
calculated based on client assets under management at the end of
the prior quarter which totaled $17.0 billion at March 31, 2010
($11.5 billion at March 31, 2009). This increase was offset by a
decrease of $4.2 million in fees from money market funds as a
result of waivers of $5.7 million on fees that otherwise would have
been due from money market funds ($1.8 million in the second
quarter of 2009). - Other revenue was $9.1 million in the second
quarter of 2010, a decrease of 22.2% compared to $11.7 million in
the second quarter of 2009 primarily as a result of a $6.2 million
decrease in the mark-to- market value of Company-owned life
insurance policies that relate to our employee deferred
compensation programs. This decline was offset by increased fees
generated from Oppenheimer Multifamily Housing & Healthcare
Finance, Inc. ("OMHHF") (formerly called Evanston Financial
Corporation) in the amount of $3.6 million. Revenue - Year-to-date
2010 --------------------------- - Commission revenue was $277.8
million for the six months ended June 30, 2010, an increase of 4.2%
compared to $266.5 million in the same period of 2009. - Principal
transactions revenue was $37.0 million in the six months ended June
30, 2010 compared to $54.9 million in the same period of 2009, a
decrease of 32.7%. The decrease stems from lower income from firm
investments (a net loss of $413,000 for the six months ended June
30, 2010 compared to income of $5.6 million for the same period of
2009 and lower fixed income trading revenue ($36.1 million in the
six months ended June 30, 2010 compared to $46.7 million in the
same period of 2009). These declines were partially offset by an
increase in U.S. government trading income which amounted to $3.3
million in the six months ended June 30, 2010 compared to $1.6
million for the same period of 2009. - Interest revenue was $20.8
million in the six months ended June 30, 2010, an increase of 28.3%
compared to $16.2 million in the same period of 2009. The increase
is primarily attributable to interest earned on reverse repurchase
agreements held by the government trading desk which began
operations in June 2009. - Investment banking revenue was $61.5
million in the six months ended June 30, 2010, an increase of
101.7% compared to $30.5 million in the same period of 2009 with
increased revenue from equity issuance of $15.0 million and fee
income associated with private placements of $11.2 million. -
Advisory fees were $86.8 million in the six months ended June 30,
2010, an increase of 21.8% compared to $71.3 million in the same
period of 2009. Asset management fees increased by $25.6 million in
the six months ended June 30, 2010 compared to the same period in
2009 as a result of an increase in the value of assets under
management during the period. This increase was offset by a
decrease of $9.7 million in fees from money market funds as a
result of waivers of $11.8 million in the six months ended June 30,
2010 on fees that otherwise would have been due from money market
funds ($2.4 million during the six months ended June 30, 2009). -
Other revenue was $19.4 million in the six months ended June 30,
2010, an increase of 16.8% compared to $16.6 million in the same
period of 2009 primarily as a result of a $6.0 million increase in
fees generated from OMHHF in the six months ended June 30, 2010
compared to the same period on 2009. Expenses - Second Quarter 2010
------------------------------ - Compensation and related expenses
decreased 2.1% in the second quarter of 2010 to $164.3 million
compared to $167.9 million in the second quarter of 2009. Decreases
in share-based compensation expense and deferred compensation
expense of $3.9 million and $5.2 million, respectively, were
partially offset by increases in salary and related expenses in the
second quarter of 2010 compared to the same period in 2009. -
Clearing and exchange fees increased 16.2% to $7.8 million in the
second quarter of 2010 compared to $6.7 million in the same period
of 2009 partly due to trade execution costs related to the
government trading business. - Communications and technology
expenses increased 12.2% to $16.3 million in the second quarter of
2010 from $14.5 million in the same period of 2009 due primarily to
increases of $435,000 and $495,000, respectively, in IT-related and
telecommunications expenses in the second quarter of 2010 compared
to the same quarter of 2009. - Occupancy and equipment costs of
$18.3 million in the second quarter of 2010 were flat compared to
$18.3 million in the second quarter of 2009. - Interest expenses
increased 26.7% to $6.4 million in the second quarter of 2010 from
$5.0 million in the same period in 2009 primarily due to interest
expense incurred on positions and repurchase agreements held by the
government trading desk which began operations in June 2009. -
Other expenses increased 10.0% to $27.8 million in the second
quarter of 2010 from $25.3 million in the same period in 2009
primarily due to an increase in legal costs of approximately $2.4
million as a result of increased client litigation and arbitration
activity as well as legal costs to resolve regulatory matters.
Expenses - Year-to-date 2010 ---------------------------- -
Compensation and related expenses increased 4.5% in the six months
ended June 30, 2010 to $322.5 million compared to $308.6 million in
the same period of 2009. Decreases in share-based compensation
expense and deferred compensation expense of $7.2 million and $2.6
million, respectively, were partially offset by increases in salary
and related expenses in the six months ended June 30, 2010 compared
to the same period in 2009. - Clearing and exchange fees increased
15.3% to $14.4 million in the six months ended June 30, 2010
compared to $12.5 million in the same period of 2009 partly due to
trade execution costs related to the government trading business. -
Communications and technology expenses decreased 4.5% to $32.7
million in the six months ended June 30, 2010 from $34.3 million in
the same period of 2009 due primarily to lower market data costs in
the six months ended June 30, 2010 compared to the same period of
2009. - Occupancy and equipment costs of $36.7 million in the six
months ended June 30, 2010 were flat compared to $36.5 million in
the same period of 2009. - Interest expenses increased 10.4% to
$11.7 million in the six months ended June 30, 2010 from $10.6
million in the same period in 2009 primarily due to interest
expense incurred on positions and repurchase agreements held by the
government trading desk which began operations in June 2009. -
Other expenses increased 22.4% to $53.1 million in the six months
ended June 30, 2010 from $43.4 million in the same period in 2009
primarily due to an increase in legal costs of approximately $6.9
million as a result of increased client litigation and arbitration
activity as well as legal costs to resolve regulatory matters.
Stockholders' Equity and Dividend Declaration - At June 30, 2010,
total equity was $473.5 million compared to $451.4 million at
December 31, 2009. - At June 30, 2010, book value per share was
$35.34 (compared to $33.12 at June 30, 2009) and tangible book
value per share was $22.18 (compared to $19.31 at June 30, 2009). -
The Company announced today a quarterly cash dividend in the amount
of $0.11 per share, payable on August 27, 2010 to holders of Class
A non-voting and Class B voting common stock of record on August
13, 2010. OPPENHEIMER HOLDINGS INC. SUMMARY STATEMENT OF OPERATIONS
(UNAUDITED) $ in thousands, except share and per share amounts
-------------------------------------------------------- Three
Months Ended Six Months Ended % % 06/30/10 06/30/09 Change 06/30/10
06/30/09 Change
-------------------------------------------------------- REVENUE
Commissions $139,582 $142,713 -2% $277,779 $266,509 4% Principal
transactions, net 16,778 30,201 -44% 36,957 54,942 -33% Interest
11,198 8,668 29% 20,776 16,190 28% Investment banking 36,336 21,909
66% 61,520 30,501 102% Advisory fees 43,984 35,511 24% 86,778
71,275 22% Other 9,118 11,722 -22% 19,361 16,572 17%
--------------------------- -------------------------- 256,996
250,724 2% 503,171 455,989 10% ---------------------------
-------------------------- EXPENSES Compensation & related
expenses 164,304 167,902 -2% 322,483 308,564 5% Clearing &
exchange fees 7,823 6,735 16% 14,385 12,473 15% Communications
& technology 16,300 14,530 12% 32,740 34,281 -5% Occupancy
& equipment costs 18,262 18,283 0% 36,722 36,516 1% Interest
6,389 5,043 27% 11,690 10,586 10% Other 27,772 25,255 10% 53,145
43,415 22% --------------------------- --------------------------
240,850 237,748 1% 471,165 445,835 6% ---------------------------
-------------------------- ---------------------------
-------------------------- Profit before income taxes 16,146 12,976
24% 32,006 10,154 215% Income tax provision 6,284 5,846 8% 12,780
5,038 154% --------------------------- --------------------------
--------------------------- -------------------------- Net profit
for the period 9,862 7,130 38% 19,226 5,116 276% Less net profit
attributable to non-controlling interest, net of tax 660 - n/a 856
- n/a --------------------------- -------------------------- Net
profit attributable to Oppenheimer Holdings Inc. $9,202 $7,130 29%
$18,370 $5,116 259% ---------------------------
-------------------------- ---------------------------
-------------------------- Profit per share attributable to
Oppenheimer Holdings Inc. Basic $0.69 $0.55 n/a $1.38 $0.39 Diluted
$0.66 $0.54 n/a $1.32 $0.38 Weighted avg. shares outstanding
13,349,551 13,069,014 13,323,410 13,070,547 Actual shares
outstanding 13,352,702 13,172,669 Company Information Oppenheimer,
through its principal subsidiaries, Oppenheimer & Co. Inc. (a
U.S. broker-dealer) and Oppenheimer Asset Management Inc., offers a
wide range of investment banking, securities, investment management
and wealth management services from 94 offices in 26 states and
through local broker-dealers in 4 foreign jurisdictions.
Oppenheimer employs over 3,600 people. The Company offers trust and
estate services through Oppenheimer Trust Company. OPY Credit Corp.
offers syndication as well as trading of issued corporate loans.
Oppenheimer Multifamily Housing & Healthcare Finance, Inc.
(formerly called Evanston Financial Corporation) is engaged in
mortgage brokerage and servicing. In addition, through Freedom
Investments, Inc. and the BUYandHOLD division of Freedom,
Oppenheimer offers online discount brokerage and dollar-based
investing services. 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
Oppenheimer's Annual Report on Form 10-K for the year ended
December 31, 2009. A.G. Lowenthal, 212 668-8000; or E.K. Roberts,
416 322-1515
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