NEW YORK, NY, July 29, 2011 /CNW/ -- NYSE - OPY NEW YORK, NY,
July 29, 2011 /CNW/ - Expressed in thousands of dollars, except per
share Three Months ended Six Months ended amounts June 30, June 30,
2011 2010 2011 2010 (unaudited) Revenue $244,518 $256,996 $497,935
$503,171 Expenses $242,814 $240,850 $486,402 $471,165 Profit before
income taxes $1,704 $16,146 $11,533 $32,006 Net profit (loss)
attributable to Oppenheimer Holdings Inc. $(309) $9,202 $4,777
$18,370 Basic earnings (loss) per share ($0.02) $0.69 $0.35 $1.38
Diluted earnings (loss) per share ($0.02) $0.66 $0.34 $1.32 Book
value per share at June 30 $36.30 $35.34 - - Business Review
Oppenheimer Holdings Inc. reported a net loss of $309,000 or
($0.02) per share for the second quarter of 2011 compared to a net
profit of $9.2 million or $0.69 per share in the second quarter of
2010. Revenue for the second quarter of 2011 was $244.5 million
compared to revenue of $257.0 million in the second quarter of
2010, a decrease of 4.9%. Client assets entrusted to the Company
and under management totaled approximately $73.9 billion while
client assets under fee-based programs offered by the asset
management groups totaled approximately $19.7 billion at June 30,
2011 ($66.9 billion and $14.7 billion, respectively, at June 30,
2010). Second quarter results were negatively impacted by costs of
$4.6 million associated with refinancing our long-term debt as well
as significant continuing costs associated with auction rate
securities matters. Net profit for the six months ended June 30,
2011 was $4.8 million or $0.35 per share compared to $18.4 million
or $1.38 per share in the same period of 2010. Revenue for the six
months ended June 30, 2011 was $497.9 million, a decrease of 1.0%
compared to $503.2 million in the same period of 2010.
Repercussions from the tsunami in Japan, volatile commodity prices,
and uncertainty around sovereign debt quality both in Europe and
the U.S. has led to a slowing of economic growth amid protracted
high levels of unemployment. Amid these conditions, the U.S. equity
and debt markets were volatile but with extremely low volume levels
and low levels of investor participation. While corporate earnings
are likely to continue to show improvement over the near term, the
confidence of consumers remains low and the protracted decline in
housing prices continues to restrict job growth and consumer
spending. The lack of agreement on the U.S debt ceiling adds a
significant element of uncertainty as do the long- term budget
issues facing the U.S. These issues, coupled with the threat of a
downgrading in the U.S credit rating, create a lack of confidence
that will be a drag on the economy and the willingness of
businesses to create new jobs. Oppenheimer's results were
significantly affected by the conditions described above as well as
by matters more closely tied to the Company. The Company's
institutional business, both equity and fixed income, was adversely
affected by low volume levels, volatility and client reluctance to
try to decipher the markets' future direction amid the volatility
of price action during the second quarter of 2011. Investment
banking income declined for the period mostly due to the comparison
to 2010 when that quarter's income was favorably impacted by a
large fee earned on a single transaction. Fee based programs within
our asset management business continued to show favorable
comparisons as the equity markets were near their highs at the time
these fee amounts were determined. The effective tax rate for the
three-month period ended June 30, 2011 was negatively impacted by
remeasurements of deferred tax assets arising from net operating
losses related to the Company's Israeli subsidiary, resulting in
tax expense of $466,000, and from state net operating losses and
gross timing differences, resulting in net tax expense of $188,000.
Commenting on the quarter's results Albert Lowenthal, Chairman and
CEO, said "We are disappointed with our results for the second
quarter of 2011 as well as the first half of the year. We have
found that current market conditions, coupled with the protracted
period of low interest rates, provide little opportunity to
significantly and positively impact our results without
substantially increasing the levels of risk-taking, which has not
been the Company's model. The costs associated with dealing with
our clients' holdings of auction rate securities (ARS) continues to
be a burden on the business, although we continue to see progress
on the redemption by issuers, albeit slower than we would like. As
previously reported, we issued $200 million of high-yield debt
during the second quarter of 2011 to pay down existing debt and to
fund future growth. We believe that our timing was good, although
the costs associated with the issuance and the ongoing debt service
costs (which are fixed compared to variable) negatively impacted
the results for the period. We remain optimistic for the remainder
of the year, as we continue to expect renewed growth in the economy
and some resolution to issues facing the economy and the banking
system." Highlights of the Company's results for the three and six
months ended June 30, 2011 follow: Revenue and Expenses Revenue -
Second Quarter 2011 -- Commission revenue was $120.8 million for
the second quarter of 2011, a decrease of 13.5% compared to $139.6
million in the second quarter of 2010. Weak investor sentiment and
volatile markets in the 2011 period contributed to the decline. --
Principal transactions revenue was $13.3 million in the second
quarter of 2011 compared to $16.8 million in the second quarter of
2010, a decrease of 20.6%. The decrease stems from lower income
from firm investments (a net loss of $2.0 million for the second
quarter of 2011 compared to a net loss of $144,000 for the second
quarter of 2010) and lower fixed income trading revenue ($15.4
million in the second quarter of 2011 compared to $17.4 million in
the second quarter of 2010). -- Interest revenue was $13.6 million
in the second quarter of 2011, an increase of 21.9% compared to
$11.2 million in the second quarter of 2010. The increase is
primarily attributable to increased interest earned by the
government trading desk of $515,000 as a result of higher inventory
balances as well as an increase in margin revenue of $757,000 as a
result of higher margin debit balances. -- Investment banking
revenue was $33.7 million in the second quarter of 2011, a decrease
of 7.2% compared to $36.3 million in the second quarter of 2010
with decreased fee income related to private placements of $10.4
million, offset by an increase of $6.3 million in advisory services
and an increase of $1.5 million in fees relating to equity
issuances. -- Advisory fees were $50.1 million in the second
quarter of 2011, an increase of 13.8% compared to $44.0 million in
the second quarter of 2010. Asset management fees increased by $6.7
million in the second quarter of 2011 compared to the same period
in 2010 as a result of an increase in the value of assets under
management of 17.1% during the period. Asset management fees are
calculated based on client assets under management at the end of
the prior quarter which totaled $19.9 billion at March 31, 2011
($17.0 billion at March 31, 2010). The increase in asset management
fees was offset by a decrease in fees earned on money market
products of $581,000 as the Company continues to waive money market
fee income. The Company waived $6.3 million in money market fees
during the period ($5.7 million in the second quarter of 2010). --
Other revenue was $13.0 million in the second quarter of 2011, an
increase of 42.5% compared to $9.1 million in the second quarter of
2010 primarily as a result of a $2.5 million increase in the
mark-to-market value of Company-owned life insurance policies that
relate to our employee deferred compensation programs (which are
largely offset by an increase in employee compensation liabilities
and expense). In addition, fees generated from Oppenheimer
Multifamily Housing & Healthcare Finance, Inc. ("OMHHF")
(formerly called Evanston Financial Corporation) increased by $2.0
million in the second quarter of 2011 compared to the second
quarter of 2010. Revenue - Year-to-date 2011 -- Commission revenue
was $257.6 million for the six months ended June 30, 2011, a
decrease of 7.3% compared to $277.8 million in the same period of
2010. -- Principal transactions revenue was $24.3 million in the
six months ended June 30, 2011 compared to $37.0 million in the
same period of 2010, a decrease of 34.2%. The decrease stems from
lower income from loan trading and sales ($484,000 for the six
months ended June 30, 2011 compared to $4.7 million in the same
period of 2010) as a result of the loss of personnel and lower
fixed income trading revenue ($24.9 million in the six months ended
June 30, 2011 compared to $31.4 million in the same period of
2010). -- Interest revenue was $28.4 million in the six months
ended June 30, 2011, an increase of 36.9% compared to $20.8 million
in the same period of 2010. The increase is primarily attributable
to interest earned by the government trading desk of $4.4 million
as a result of higher inventory balances as well as an increase in
margin revenue of $1.3 million as a result of higher margin debit
balances. -- Investment banking revenue was $62.2 million in the
six months ended June 30, 2011, an increase of 1.0% compared to
$61.5 million in the same period of 2010. -- Advisory fees were
$98.5 million in the six months ended June 30, 2011, an increase of
13.5% compared to $86.8 million in the same period of 2010. Asset
management fees increased by $11.9 million in the six months ended
June 30, 2010 compared to the same period in 2010 as a result of an
increase in the value of assets under management during the period.
The increase in asset management fees was offset by a decrease in
fees earned on money market products of $892,000 as the Company
continues to waive money market fee income. The Company waived
$12.2 million in money market fees during the period ($11.8 million
in the second quarter of 2010). -- Other revenue was $26.9 million
in the six months ended June 30, 2011, an increase of 38.9%
compared to $19.4 million in the same period of 2010 primarily as a
result of a $2.7 million increase in the mark-to-market value of
Company-owned life insurance policies that relate to our employee
deferred compensation programs as well as a $5.5 million increase
in fees generated from OMHHF in the six months ended June 30, 2011
compared to the same period in 2010. Expenses - Second Quarter 2011
-- Compensation and related expenses decreased 2.4% in the second
quarter of 2011 to $160.4 million compared to $164.3 million in the
second quarter of 2010. Decreases in production-related
compensation expense of $2.7 million tracked the decrease in
revenue in the second quarter of 2011 compared to the second
quarter of 2010. In addition, share-based compensation expense
decreased by $3.5 million in response to the decline in the
Company's stock price in the second quarter of 2011, partially
offset by an increase in deferred compensation expense of $2.1
million compared to the second quarter of 2010. -- Clearing and
exchange fees decreased 19.5% to $6.3 million in the second quarter
of 2011 compared to $7.8 million in the same period of 2010 due to
lower trade execution costs and floor brokerage fees. --
Communications and technology expenses decreased 1.4% to $16.1
million in the second quarter of 2011 from $16.3 million in the
same period of 2010. -- Occupancy and equipment costs of $18.5
million in the second quarter of 2011 increased 1.4% compared to
$18.3 million in the second quarter of 2010 due primarily to higher
equipment rental costs in the second quarter of 2011 compared to
the second quarter of 2010. -- Interest expense increased 67.0% to
$10.7 million in the second quarter of 2010 from $6.4 million in
the same period in 2010 primarily due to increased debt service
costs of $2.2 million incurred on the $200 million senior secured
note which was issued to refinance and retire the Company's senior
secured credit note ($22.4 million) and subordinated note ($100
million) in April 2011. In addition, the loss of $1.6 million on
the Company's interest rate cap which hedged the subordinated note
was reclassified from other comprehensive income into interest
expense in the second quarter of 2011. -- Other expenses increased
11.0% to $30.8 million in the second quarter of 2011 from $27.8
million in the same period in 2010 primarily due to increased legal
costs of $1.4 million relating to client litigation and arbitration
activity and legal costs to resolve regulatory matters and
professional consulting fees of $1.0 million. Expenses -
Year-to-date 2011 -- Compensation and related expenses increased
2.6% in the six months ended June 30, 2011 to $330.9 million
compared to $322.5 million in the same period of 2010. The increase
was primarily due to increases in share-based compensation expense
and deferred compensation expense of $3.1 million and $2.8 million,
respectively, in the six months ended June 30, 2011 compared to the
same period in 2010. -- Clearing and exchange fees decreased 12.3%
to $12.6 million in the six months ended June 30, 2011 compared to
$14.4 million in the same period of 2010 due to lower trade
execution costs and floor brokerage fees. -- Communications and
technology expenses decreased 2.2% to $32.0 million in the six
months ended June 30, 2011 from $32.7 million in the same period of
2010 due to lower telecommunications costs in the six months ended
June 30, 2011 compared to the same period in 2010. -- Occupancy and
equipment costs of $37.1 million in the six months ended June 30,
2011 increased by 0.9% compared to $36.7 million in the same period
of 2010. -- Interest expense increased 57.8% to $18.4 million in
the six months ended June 30, 2011 from $11.7 million in the same
period in 2010 primarily due to increased debt service costs of
$2.1 million incurred on the $200 million senior secured note which
was issued to refinance and retire the Company's senior secured
credit note ($22.4 million) and subordinated note ($100 million) in
April 2011. In addition, the loss of $1.6 million on the Company's
interest rate cap which hedged the subordinated note was
reclassified from other comprehensive income into interest expense
in the second quarter of 2011. -- Other expenses increased 4.3% to
$55.4 million in the six months ended June 30, 2011 from $53.1
million in the same period in 2010 primarily due to increased legal
costs of $832,000 relating to client litigation and arbitration
activity and legal costs to resolve regulatory matters and
professional consulting fees of $1.4 million. Stockholders' Equity
and Dividend Declaration -- At June 30, 2011, total equity was
$500.7 million compared to $497.6 million at December 31, 2010. --
At June 30, 2011, book value per share was $36.30 (compared to
$35.34 at June 30, 2010) and tangible book value per share was
$23.85 (compared to $22.18 at June 30, 2010). -- The Company
announced today a quarterly cash dividend in the amount of $0.11
per share, payable on August 26, 2011 to holders of Class A
non-voting and Class B voting common stock of record on August 12,
2011. OPPENHEIMER HOLDINGS INC. SUMMARY STATEMENT OF OPERATIONS
(UNAUDITED) $ in thousands, except share and per share amounts
Three Months Ended Six Months Ended 06/30/11 06/30/10 % 06/30/11
06/30/10 % REVENUE Commissions $120,790 $139,582 -13% $257,645
$277,779 -7% Principal transactions, net 13,313 16,778 -21% 24,304
36,957 -34% Interest 13,649 11,198 22% 28,438 20,776 37% Investment
banking 33,717 36,336 -7% 62,158 61,520 1% Advisory fees 50,055
43,984 14% 98,504 86,778 14% Other 12,994 9,118 43% 26,886 19,361
39% 244,518 256,996 -5% 497,935 503,171 -1% EXPENSES Compensation
& related expenses 160,436 164,304 -2% 330,851 322,483 3%
Clearing & exchange fees 6,300 7,823 -19% 12,613 14,385 -12%
Communications & technology 16,069 16,300 -1% 32,008 32,740 -2%
Occupancy & equipment costs 18,524 18,262 1% 37,070 36,722 1%
Interest 10,669 6,389 67% 18,443 11,690 58% Other 30,816 27,772 11%
55,417 53,145 4% 242,814 240,850 1% 486,402 471,165 3% Profit
before income taxes 1,704 16,146 -89% 11,533 32,006 -64% Income tax
provision 1,266 6,284 -80% 5,334 12,780 -58% Net profit for the
period 438 9,862 -96% 6,199 19,226 -68% Less net profit
attributable to non-controlling interest, net of tax 747 660 13%
1,422 856 66% Net profit (loss) attributable to Oppenheimer
Holdings Inc. ($309) $9,202 N/A $4,777 $18,370 -74% Profit (loss)
per share attributable to Oppenheimer Holdings Inc. Basic ($0.02)
$0.69 $0.35 $1.38 Diluted ($0.02) $0.66 $0.34 $1.32 Weighted avg.
shares outstanding 13,658,720 13,069,014 13,605,020 13,323,410
Actual shares outstanding 13,668,625 13,172,669 13,668,625
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 over 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 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 events
or performance. For a discussion of the factors that could
cause future events or 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, 2010. To view this news release in HTML formatting,
please use the following URL:
http://www.newswire.ca/en/releases/archive/July2011/29/c8292.html p
A.G. Lowenthal 212 668-8000 or E.K. Roberts 416 322-1515 /p
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