NYSE - OPY
NEW YORK, Oct. 29 /PRNewswire-FirstCall/ -
Expressed in thousands of dollars,
except per share amounts |
Three Months ended
September 30, |
Nine Months ended
September 30, |
|
2010 |
2009 |
2010 |
2009
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Revenue |
$235,141 |
$262,067 |
$738,312 |
$718,056 |
Expenses |
$227,655 |
$248,017 |
$698,820 |
$693,852 |
Profit before income taxes |
$7,486 |
$14,050 |
$39,492 |
$24,204 |
Net profit attributable to Oppenheimer Holdings
Inc. |
$3,421 |
$7,908 |
$21,791 |
$13,024 |
|
|
|
|
|
Basic earnings per share |
$0.26 |
$0.60 |
$1.63 |
$1.00 |
Diluted earnings per share |
$0.25 |
$0.59 |
$1.57 |
$0.97 |
Book value per share at September 30 |
$35.70 |
$33.68 |
- |
- |
Business Review
Oppenheimer Holdings Inc. reported a net profit
of $3.4 million or $0.26 per share for the third quarter of 2010
compared to a net profit of $7.9 million or $0.60 per share in the
third quarter of 2009, a decrease of 56.7% in net profit. Revenue
for the third quarter of 2010 was $235.1 million, compared to
revenue of $262.1 million in the third quarter of 2009, a decrease
of 10.3%. Client assets entrusted to the Company and under
management totaled approximately $71.5 billion while client assets
under fee-based programs offered by the asset management groups
totaled approximately $17.9 billion at September 30, 2010 ($64.0
billion and $15.4 billion, respectively, at September 30,
2009).
Net profit for the nine months ended September
30, 2010 was $21.8 million or $1.63 per share compared to $13.0
million or $1.00 per share in the same period of 2009, an increase
of 67.3% in net profit. Revenue for the nine months ended September
30, 2010 was $738.3 million, an increase of 2.8% compared to $718.1
million in the same period of 2009.
The rate of growth in the U.S economy, while
remaining positive, has slowed, reducing investor confidence.
Business investment and consumer spending, key drivers to continued
improvement, are being impacted by continued housing weakness, slow
employment growth and uncertainty over future tax rates, health
care costs and a weakening U.S. dollar.
Uncertainties driven by global economic issues,
including the European sovereign debt crisis, a weakening equities
market over the summer months, and questions about the results of
the upcoming U.S. elections, drove investors to push interest rates
on government debt to new lows and had investors seeking higher
returns in emerging market debt as well as the debt of lower-rated
corporate issuers. However, the quarter ended with the strongest
September in decades as stocks recovered, buoyed by expectations of
further Federal Reserve intervention and turnover in the
composition of the new Congress.
Overall, the Company's revenue declined in the
third quarter of 2010 compared to the third quarter of 2009 as well
as compared to each prior quarter of 2010. Commission income,
revenue from principal transactions and investment banking revenue
declined in the third quarter of 2010 compared to the same period
in 2009 reflecting reduced activity in the first two months of the
quarter. Advisory fees increased in the third quarter of 2010
compared to the same period in 2009 based on increased asset values
and a larger base of clients in fee-based programs. 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, "While we are disappointed with the
financial results of the third quarter, we are encouraged by the
continued growth in our business opportunities through continued
investment in new branch offices, in expanding our footprint
internationally and the addition of qualified professionals
throughout our business lines. Higher equity markets in September
and record holdings of client assets and assets in fee-based and
recurring revenue programs reflect the potential for future growth
in revenues and earnings.
The low interest rate environment continues to
penalize savers and benefit borrowers, as well as significantly
impacting the returns that Oppenheimer derives from short-term
lending and from its programs for client investment in short-term
investments. During the quarter, the Company completed its first
program to buy client held auction rate securities ("ARS") with
purchases totaling $25.6 million. The Company remains dedicated to
assisting its clients who remain invested in these securities."
Highlights of the Company's results for the
three and nine months ended September 30, 2010 follow:
Revenue and Expenses
Revenue - Third Quarter 2010
- Commission revenue was $120.9 million in the third quarter of
2010, a decrease of 17.4% compared to $146.4 million in the third
quarter of 2009. Low market volumes during the summer months
contributed to the decline.
- Principal transactions revenue was $22.6 million in the third
quarter of 2010 compared to $29.8 million in the third quarter of
2009, a decrease of 24.0%. The decrease was primarily
attributable to lower loan trading revenue ($456,000 in the third
quarter of 2010 compared to $4.8 million in the third quarter of
2009) and tighter spreads in the bond markets compared to the same
period in the prior year.
- Interest revenue was $11.2 million in the third quarter of
2010, an increase of 22.7% compared to $9.1 million in the third
quarter of 2009. Interest earned on reverse repurchase agreements
held by the government trading desk which began operations in June
2009 was $1.9 million higher in the third quarter of 2010 compared
to the same period in 2009. This revenue is largely offset by an
increase in interest expense from the Company's matched book repo
business.
- Investment banking revenue was $21.8 million in the third
quarter of 2010, a decrease of 13.2% compared to $25.1 million in
the third quarter of 2009 primarily due to a reduction in syndicate
fees on equity issuances of approximately $5.6 million in the third
quarter of 2010 compared to the same period in 2009. Market
conditions in the third quarter of 2010 significantly reduced
corporate issuances during the period.
- Advisory fees were $43.4 million in the third quarter of 2010,
an increase of 12.1% compared to $38.7 million in the third quarter
of 2009. Asset management fees increased by $7.3 million in the
third quarter of 2010 compared to the same period in 2009 as a
result of an increase in the value of assets under management as
well as an increase in the number of client accounts in the third
quarter of 2010 compared to the same period in 2009. Asset
management fees are calculated based on client assets under
management at the end of the prior quarter which totaled $14.7
billion at June 30, 2010 ($13.6 billion at June 30, 2009). This
increase was offset by a decrease of $950,000 in fees from money
market funds as a result of waivers of $5.4 million on fees that
otherwise would have been due from money market funds ($4.8 million
in the third quarter of 2009).
- Other revenue was $15.2 million in the third quarter of 2010,
an increase of 17.1% compared to $13.0 million in the third quarter
of 2009 primarily as a result of a $3.7 million increase in fees
generated from Oppenheimer Multifamily Housing & Healthcare
Finance, Inc. ("OMHHF") (formerly called Evanston Financial
Corporation) in the third quarter of 2010 compared to the same
period in 2009.
Revenue - Year-to-date 2010
- Commission revenue was $398.7 million in the nine months ended
September 30, 2010, a decrease of 3.4% compared to $412.9 million
in the same period of 2009.
- Principal transactions revenue was $59.6 million in the nine
months ended September 30, 2010 compared to $84.7 million in the
same period of 2009, a decrease of 29.6%. The decrease stems from
lower income from firm investments (income of $70,000 for the nine
months ended September 30, 2010 compared to income of $8.2 million
for the same period of 2009) and lower loan trading revenue ($5.1
million in the nine months ended September 30, 2010 compared to
$14.0 million in the same period of 2009). These declines were
partially offset by an increase in U.S. government trading income
of $2.8 million in the nine months ended September 30, 2010
compared to the same period of 2009 due the government trading desk
beginning operations in June 2009.
- Interest revenue was $32.0 million in the nine months ended
September 30, 2010, an increase of 26.3% compared to $25.3 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 $83.3 million in the nine months
ended September 30, 2010, an increase of 49.8% compared to $55.6
million in the same period of 2009 with increased revenue from
equity issuances of $8.4 million and fee income associated with
private placements of $10.9 million.
- Advisory fees were $130.1 million in the nine months ended
September 30, 2010, an increase of 18.4% compared to $109.9 million
in the same period of 2009. Asset management fees increased by
$32.8 million in the nine months ended September 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 $10.7 million in fees from money market
funds as a result of waivers of $17.2 million in the nine months
ended September 30, 2010 on fees that otherwise would have been due
from money market funds ($7.2 million during the nine months ended
September 30, 2009).
- Other revenue was $34.6 million in the nine months ended
September 30, 2010, an increase of 16.9% compared to $29.5 million
in the same period of 2009 primarily as a result of a $9.7 million
increase in fees generated from OMHHF in the nine months ended
September 30, 2010 compared to the same period in 2009 which was
partially offset by a decline of $3.0 million in the cash surrender
value of company-owned life insurance.
Expenses - Third Quarter 2010
- Compensation and related expenses decreased 9.1% in the third
quarter of 2010 to $159.5 million compared to $175.5 million in the
third quarter of 2009 primarily due to lower commission revenue
resulting in a corresponding decrease in brokers' commission-based
compensation.
- Clearing and exchange fees decreased 21.4% to $5.5 million in
the third quarter of 2010 compared to $7.0 million in the same
period of 2009 partly due to lower transaction volumes in the third
quarter of 2010 compared to the same period in 2009.
- Communications and technology expenses increased 13.1% to $15.8
million in the third quarter of 2010 from $14.0 million in the same
period of 2009 due primarily to an increase of $1.5 million in
IT-related expenses in the third quarter of 2010 compared to the
same quarter of 2009.
- Occupancy and equipment costs decreased 4.3% to $18.2 million
in the third quarter of 2010 compared to $19.0 million in the third
quarter of 2009 primarily due to a reduction of $842,000 in rent
expense in the third quarter of 2010 compared to the same period in
2009.
- Interest expenses increased 34.5% to $6.5 million in the third
quarter of 2010 from $4.8 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. This expense is largely offset by an
increase in interest revenue from the Company's matched book repo
business.
- Other expenses decreased 19.9% to $22.1 million in the third
quarter of 2010 from $27.6 million in the same period in 2009
primarily due to a decrease in legal reserves and legal costs of
approximately $4.4 million related primarily to the resolution of a
large client-related litigation during the three month period ended
September 30, 2010.
Expenses - Year-to-date 2010
- Compensation and related expenses decreased 0.4% in the nine
months ended September 30, 2010 to $482.0 million from $484.1
million in the same period of 2009 primarily due to lower
commission revenue resulting in a corresponding decrease in
brokers' commission-based compensation.
- Clearing and exchange fees increased 2.1% to $19.9 million in
the nine months ended September 30, 2010 compared to $19.5 million
in the same period of 2009 primarily due to trade execution costs
related to the government trading business which commenced in June
2009.
- Communications and technology expenses were relatively flat at
$48.6 million in the nine months ended September 30, 2010 compared
to $48.3 million in the same period of 2009.
- Occupancy and equipment costs of $54.9 million in the nine
months ended September 30, 2010 decreased by 1.1% compared to $55.5
million in the same period of 2009 due to a reduction in rent
expense in the nine months ended September 30, 2010 compared to the
same period in 2009.
- Interest expenses increased 18.0% to $18.2 million in the nine
months ended September 30, 2010 from $15.4 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. This expense is largely
offset by an increase in interest revenue from the Company's
matched book repo business.
- Other expenses increased 5.9% to $75.3 million in the nine
months ended September 30, 2010 from $71.1 million in the same
period in 2009 primarily due to an increase in legal costs of
approximately $2.5 million as a result of increased client
litigation and arbitration activity and external portfolio manager
fees of $2.2 million offset by the impact of a charge of $2.0
million in the 2009 period resulting from the Company changing its
jurisdiction from Canada to the U.S. which took place in May
2009.
Stockholders' Equity and Dividend
Declaration
- At September 30, 2010, total equity was $479.1 million compared
to $451.4 million at December 31, 2009.
- At September 30, 2010, book value per share was $35.70
(compared to $33.68 at September 30, 2009) and tangible book value
per share was $22.64 (compared to $20.16 at September 30,
2009).
- The Company announced today a quarterly cash dividend in the
amount of $0.11 per share, payable on November 26, 2010 to holders
of Class A non-voting and Class B voting common stock of record on
November 12, 2010.
OPPENHEIMER
HOLDINGS INC. |
SUMMARY
STATEMENT OF OPERATIONS (UNAUDITED) |
|
|
|
|
|
|
|
$ in thousands, except share
and per share amounts |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
09/30/10 |
09/30/09 |
% Δ |
09/30/10 |
09/30/09 |
%
Δ |
REVENUE |
|
|
|
|
|
|
Commissions |
$120,940 |
$146,404 |
-17.4% |
$398,719 |
$412,913 |
-3.4% |
Principal transactions, net |
22,645 |
29,778 |
-24.0% |
59,602 |
84,720 |
-29.6% |
Interest |
11,220 |
9,145 |
+22.7% |
31,996 |
25,335 |
+26.3% |
Investment banking |
21,791 |
25,096 |
-13.2% |
83,311 |
55,597 |
+49.8% |
Advisory fees |
43,356 |
38,668 |
+12.1% |
130,134 |
109,943 |
+18.4% |
Other |
15,189 |
12,976 |
+17.1% |
34,550 |
29,548 |
+16.9% |
|
235,141 |
262,067 |
-10.3% |
738,312 |
718,056 |
+2.8% |
EXPENSES |
|
|
|
|
|
|
Compensation & related
expenses |
159,485 |
175,504 |
-9.1% |
481,968 |
484,068 |
-0.4% |
Clearing & exchange fees |
5,525 |
7,031 |
-21.4% |
19,910 |
19,504 |
+2.1% |
Communications &
technology |
15,838 |
14, 008 |
+13.1% |
48,578 |
48,289 |
+0.6% |
Occupancy & equipment
costs |
18,162 |
18,987 |
-4.3% |
54,884 |
55,503 |
-1.1% |
Interest |
6,518 |
4,846 |
+34.5% |
18,208 |
15,432 |
+18.0% |
Other |
22,127 |
27,641 |
-19.9% |
75,272 |
71,056 |
+5.9% |
|
227,655 |
248,017 |
-8.2% |
698,820 |
693,852 |
+0.7% |
|
|
|
|
|
|
|
Profit before income taxes |
7,486 |
14,050 |
-46.7% |
39,492 |
24,204 |
+63.2% |
|
|
|
|
|
|
|
Income tax provision |
3,469 |
6,142 |
-43.5% |
16,249 |
11,180 |
+45.3% |
|
|
|
|
|
|
|
Net profit for the period |
4,017 |
7,908 |
-49.2% |
23,243 |
13,024 |
+78.5% |
Net profit attributable to
non-controlling interest, net of tax |
(596) |
- |
N/A |
(1,452) |
- |
N/A |
|
Net profit attributable to
Oppenheimer Holdings Inc. |
$3,421 |
$7,908 |
-56.7% |
$21,791 |
$13,024 |
+67.3% |
|
|
|
|
|
|
|
Profit per share attributable to
Oppenheimer Holdings Inc. |
|
|
|
|
|
|
Basic |
$0.26 |
$0.60 |
|
$1.63 |
$1.00 |
|
Diluted |
$0.25 |
$0.59 |
|
$1.57 |
$0.97 |
|
|
|
|
|
|
|
|
Weighted avg. shares
outstanding |
13,355,468 |
13,110,471 |
|
13,334,214 |
13,082,375 |
|
Actual shares outstanding |
13,359,202 |
13,155,983 |
|
13,359,202 |
13,155,983 |
|
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 3,500 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.
SOURCE Oppenheimer Holdings Inc.
Copyright . 29 PR Newswire