NEW YORK, Feb. 1, 2018 /CNW/ - Oppenheimer Holdings
Inc. (NYSE: OPY) today reported net income of $21.2 million or $1.61 basic net income per share for the fourth
quarter of 2017 compared with a net loss of $1.8 million or $0.13 basic net loss per share for the fourth
quarter of 2016. Net income for the fourth quarter of 2017
was positively impacted by a net discrete after-tax benefit of
$9.0 million, or $0.69 basic net income per share, related to the
enactment of the Tax Cuts and Jobs Act ("TCJA") on December 22, 2017 as described
below(^). Income before income taxes from
continuing operations was $16.6
million for the fourth quarter of 2017 compared with a loss
before income taxes from continuing operations of $7.5 million for the fourth quarter of
2016. Net income from discontinued operations was
$29,000 for the fourth quarter of
2017 compared with net income from discontinued operations of
$759,000 for the fourth quarter of
2016. Revenue from continuing operations for the fourth
quarter of 2017 was $265.0 million
compared with revenue from continuing operations of $218.9 million for the fourth quarter of 2016, an
increase of 21.0%. Revenue from discontinued operations for
the fourth quarter of 2017 was $279,000 compared with revenue from discontinued
operations of $1.9 million for the
fourth quarter of 2016.
For the year ended December 31,
2017, the Company reported net income of $22.8 million or $1.72 basic net income per share compared with a
net loss of $1.2 million or
$0.09 basic net loss per share for
the year ended December 31,
2016. Income before income taxes from continuing operations
for the year ended December 31, 2017
was $19.7 million compared with a
loss before income taxes from continuing operations of $21.9 million for the year ended December 31, 2016. Net income from
discontinued operations was $1.1
million for the year ended December
31, 2017 compared with net income from discontinued
operations of $10.1 million for the
year ended December 31, 2016.
Revenue from continuing operations for the year ended December 31, 2017 was $920.3 million, an increase of 7.3% compared with
revenue from continuing operations of $857.8
million for the year ended December
31, 2016. Revenue from discontinued operations for the
year ended December 31, 2017 was
$2.2 million compared with revenue
from discontinued operations of $25.3
million for the year ended December
31, 2016.
|
Summary Operating
Results (Unaudited)
|
('000s, except Per
Share Amounts)
|
|
|
For the 3-Months
Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
2017
|
|
2016
|
|
% Change
|
Revenue
|
$
|
264,973
|
|
$
|
218,945
|
|
21.0
|
|
$
|
920,338
|
|
$
|
857,779
|
|
7.3
|
Expenses
|
248,403
|
|
226,441
|
|
9.7
|
|
900,602
|
|
879,671
|
|
2.4
|
Income (Loss) Before
Income Taxes
|
16,570
|
|
(7,496)
|
|
*
|
|
19,736
|
|
(21,892)
|
|
*
|
Income
Taxes
|
(4,598)
|
|
(5,072)
|
|
(9.3)
|
|
(2,134)
|
|
(12,262)
|
|
(82.6)
|
Net Income (Loss)
from Continuing Operations
|
21,168
|
|
(2,424)
|
|
*
|
|
21,870
|
|
(9,630)
|
|
*
|
Net Income from
Discontinued Operations
|
29
|
|
759
|
|
(96.2)
|
|
1,130
|
|
10,121
|
|
(88.8)
|
Net Income
(Loss)
|
21,197
|
|
(1,665)
|
|
*
|
|
23,000
|
|
491
|
|
*
|
Less Net Income
Attributable to Non-Controlling Interest
|
4
|
|
125
|
|
(96.8)
|
|
184
|
|
1,652
|
|
(88.9)
|
Net Income (Loss)
Attributable to Oppenheimer Holdings Inc.
|
$
|
21,193
|
|
$
|
(1,790)
|
|
*
|
|
$
|
22,816
|
|
$
|
(1,161)
|
|
*
|
|
|
|
|
|
|
|
|
|
Basic Net Income
(Loss) Per Share (1)
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
|
1.61
|
|
$
|
(0.18)
|
|
*
|
|
$
|
1.65
|
|
$
|
(0.72)
|
|
*
|
|
Discontinued
Operations
|
—
|
|
0.05
|
|
(100.0)
|
|
0.07
|
|
0.63
|
|
(88.9)
|
|
Net Income (Loss) Per
Share
|
$
|
1.61
|
|
$
|
(0.13)
|
|
*
|
|
$
|
1.72
|
|
$
|
(0.09)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
(Loss) Per Share (1)
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
|
1.54
|
|
$
|
(0.18)
|
|
*
|
|
$
|
1.60
|
|
$
|
(0.72)
|
|
*
|
|
Discontinued
Operations
|
—
|
|
0.05
|
|
(100.0)
|
|
0.07
|
|
0.63
|
|
(88.9)
|
|
Net Income (Loss) Per
Share
|
$
|
1.54
|
|
$
|
(0.13)
|
|
*
|
|
$
|
1.67
|
|
$
|
(0.09)
|
|
*
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares Outstanding
|
|
|
|
|
|
|
|
Basic
|
13,116
|
|
13,361
|
|
(1.8)
|
|
13,246
|
|
13,369
|
|
(0.9)
|
|
Diluted
|
13,747
|
|
13,361
|
|
2.9
|
|
13,673
|
|
13,369
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
|
|
|
Book Value Per Share
(1)
|
$
|
39.55
|
|
$
|
38.22
|
|
3.5
|
|
|
|
|
Tangible Book Value
Per Share (1)(2)
|
$
|
26.74
|
|
$
|
25.53
|
|
4.7
|
|
|
|
|
(1)
|
Attributable to
Oppenheimer Holdings Inc.
|
(2)
|
Represents book value
less goodwill and intangible assets divided by number of shares
outstanding.
|
*
|
Percentage not
meaningful.
|
The U.S. equities markets continued to surge during the fourth
quarter of 2017 driven by optimism around the passage of corporate
tax reform, strong corporate earnings, and improving economic
indicators both in the U.S. and globally. The S&P 500
increased 6.1% for the fourth quarter of 2017 and was up 19.4% for
the full year 2017. Low volatility and decreased transaction
volumes in the equities markets persisted during the period. The
Federal Reserve raised short-term interest rates by 25 basis points
in December 2017, the fifth 25 basis
point increase since the Fed began raising rates in December
2015. The increase in short-term interest rates has led to a
flattening of the yield curve as long-term rates have remained
historically low reflecting low inflation expectations and
heightened demand from overseas investors taking advantage of the
relatively higher U.S. interest rates. The 10-Year Treasury
Yield ended the quarter at 2.41%.
Albert G. Lowenthal, Chairman and
CEO commented, "We are encouraged by operating results for the
period which continued to be positively impacted by higher equities
markets and higher interest rates. Our fee-based business
within Asset Management continued to perform well driven by higher
equity prices and the continued adoption of fee-based strategies by
our wealth management clients. Assets under management rose
to new highs during the quarter. The performance for the year
of the hedge funds that we sponsor led to a significant increase in
incentive fees from alternative investments which are measured and
earned at the end of each year.
Spreads continue to widen on our interest rate sensitive assets
which will likely further benefit from the December 2017 rate hike by the Federal
Reserve. Trading activity and transaction revenues continued
to be negatively impacted by low volatility and changing investor
behavior leading to lower retail and institutional commission
revenues for the fourth quarter of 2017 and full year 2017.
We are optimistic about the investment banking pipeline as we begin
2018 and continue to see the benefits of the changes made to our
investment banking business.
The enactment of corporate tax reform had a significant positive
effect on the fourth quarter of 2017 with the one-time gains
associated with the re-measurement of our deferred taxes. The
Company is also positioned to benefit from corporate tax reform
through a lower effective tax rate on the business going
forward. The positive performance of our stock price during
the period led to a significant increase in compensation costs from
the Oppenheimer Stock Appreciation Rights Plan ("OARs Plan").
The environment continues to look bright for the economy and for
our business as we move into 2018."
Notable Items for the Fourth Quarter of 2017
- The Company recorded an after-tax benefit of $9.0 million, or $0.69 basic net income per share, during the
fourth quarter of 2017 primarily related to re-measuring deferred
tax assets and deferred tax liabilities as a result of the
enactment of the TCJA on December 22,
2017(^).
- Incentive fees earned during the fourth quarter of 2017 totaled
$27.3 million as a result of the
return on assets under management on alternative investments
exceeding certain benchmark returns over a 12-month period.
- The Company recorded compensation and related expenses of
$7.6 million related to its OARs Plan
due to the price of its Class A Stock increasing from $17.35 at the end of the third quarter of 2017 to
$26.80 at the end of the fourth
quarter of 2017.
Financial Highlights
- Commission revenue was $88.4
million for the fourth quarter of 2017, a decrease of 2.7%
compared with $90.9 million for the
fourth quarter of 2016 due to reduced transaction volumes from
retail and institutional investors as well as lower financial
adviser headcount during the fourth quarter of 2017. For the year
ended December 31, 2017, commission
revenue was $336.6 million compared
with $377.3 million for the year
ended December 31, 2016, a decrease
of 10.8% due to reduced transaction volumes from retail and
institutional investors as well as lower financial adviser
headcount during the 2017 year.
- Advisory fees were $104.2 million
for the fourth quarter of 2017, an increase of 49.9% compared with
$69.5 million for the fourth quarter
of 2016 due to increases in advisory fees on traditional managed
products and incentive fees on alternative managed products. For
the year ended December 31, 2017,
advisory fees were $320.7 million
compared with $269.1 million for the
year ended December 31, 2016, an
increase of 19.2% due to increases in advisory fees on traditional
managed products and incentive fees on alternative managed
products.
- Investment banking revenue decreased 29.2% to $20.9 million for the fourth quarter of 2017
compared with $29.5 million for the
fourth quarter of 2016 due to lower fees from mergers and
acquisition activity and debt capital market transactions partially
offset by higher fees from equities underwriting transactions
during the fourth quarter of 2017. For the year ended December 31, 2017, investment banking revenue was
$78.2 million compared with
$81.0 million for the year ended
December 31, 2016, a decrease of 3.5%
due to lower fees from mergers and acquisition activity and debt
capital market transactions partially offset by higher fees from
equities underwriting transactions during the 2017 year.
- Principal transactions revenue increased 447.1% to $7.5 million during the fourth quarter of 2017
compared with $1.4 million for the
fourth quarter of 2016 due to higher trading profits in fixed
income trading during the fourth quarter of 2017. For the year
ended December 31, 2017, principal
transactions revenue was $23.3
million compared with $20.5
million for the year ended December
31, 2016, an increase of 13.6% due primarily to increases in
the valuation of firm investments during the 2017 year.
|
Business Segment
Results (Unaudited)
|
('000s)
|
|
|
For the 3-Months
Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
2017
|
|
2016
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Client
(1)
|
$
|
167,684
|
|
$
|
127,455
|
|
31.6
|
|
$
|
592,753
|
|
$
|
504,192
|
|
17.6
|
|
Asset Management
(1)
|
32,649
|
|
23,874
|
|
36.8
|
|
89,896
|
|
92,852
|
|
(3.2)
|
|
Capital
Markets
|
63,214
|
|
67,641
|
|
(6.5)
|
|
231,632
|
|
254,933
|
|
(9.1)
|
|
Corporate/Other
|
1,426
|
|
(25)
|
|
*
|
|
6,057
|
|
5,802
|
|
4.4
|
|
|
264,973
|
|
218,945
|
|
21.0
|
|
920,338
|
|
857,779
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes from Continuing Operations
|
|
|
|
|
|
|
|
|
|
Private Client
(1)
|
35,077
|
|
15,273
|
|
129.7
|
|
128,840
|
|
66,072
|
|
95.0
|
|
Asset Management
(1)
|
15,555
|
|
9,561
|
|
62.7
|
|
26,685
|
|
31,412
|
|
(15.0)
|
|
Capital
Markets
|
(14,743)
|
|
(13,857)
|
|
6.4
|
|
(39,978)
|
|
(17,713)
|
|
125.7
|
|
Corporate/Other
|
(19,319)
|
|
(18,473)
|
|
4.6
|
|
(95,811)
|
|
(101,663)
|
|
(5.8)
|
|
|
$
|
16,570
|
|
$
|
(7,496)
|
|
*
|
|
$
|
19,736
|
|
$
|
(21,892)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Effective January 1,
2017, the allocation of advisory fees between Private Client and
Asset Management changed from 77.5% and 22.5% to 90.0% and
10.0%.
|
*
|
Percentage not
meaningful.
|
FOURTH QUARTER 2017 RESULTS
Private Client
Private Client reported revenue of $167.7
million for the fourth quarter of 2017, 31.6% higher than
the fourth quarter of 2016 due to higher management and incentive
fees, fees earned on the FDIC-insured bank deposit program, and
margin interest as well as the increase in the cash surrender value
of Company-owned life insurance partially offset by lower
commissions during the fourth quarter of 2017. Income before
income taxes was $35.1 million for
the fourth quarter of 2017, an increase of 129.7% compared with the
fourth quarter of 2016 due to the foregoing as well as lower legal
and regulatory costs partially offset by increases in share-based
(see discussion on OARs Plan above) and deferred compensation
expenses during the fourth quarter of 2017.
- Client assets under administration were $86.9 billion at December
31, 2017 compared with $77.2
billion at December 31, 2016,
an increase of 12.6%.
- Financial adviser headcount was 1,107 at the end of the fourth
quarter of 2017, down from 1,158 at the end of the fourth quarter
of 2016. The decline in financial adviser headcount since the
fourth quarter of 2016 has resulted from the Company's attention to
adviser productivity leading to attrition of less productive
financial advisers. The decline in headcount also has been impacted
by retirements and normal attrition.
- Retail commissions were $52.6
million for the fourth quarter of 2017, a decrease of 3.8%
from the fourth quarter of 2016.
- Advisory fee revenue on traditional and alternative managed
products was $71.8 million for the
fourth quarter of 2017, an increase of 54.1% from the fourth
quarter of 2016. (see Asset Management below for further
information). The increase in advisory fees was due to the increase
in the value of client assets under management ("AUM"), a change in
the allocation of advisory fees between the Private Client and
Asset Management segments, effective January
1, 2017, which resulted in an increase of $5.9 million in revenue, and an increase in
incentive fees generated from hedge funds.
-
- Incentive fees from the participation in hedge funds were
$17.7 million for the fourth quarter
of 2017 compared with $708,000 for
the fourth quarter of 2016. Incentive fees allocated to this
business segment are computed at the fiscal year-end of the
underlying fund when the measurement period ends and generally are
earned in the fourth quarter of the Company's fiscal year.
- Fees earned on client cash deposits in the FDIC-insured bank
deposits program were $23.8 million
for the fourth quarter of 2017 versus $10.8
million for the fourth quarter of 2016. The increase was due
primarily to higher short-term interest rates during the fourth
quarter of 2017.
Asset Management
Asset Management reported revenue of $32.6 million for the fourth quarter of 2017,
36.8% higher than the fourth quarter of 2016 due to higher
management and incentive fees partially offset by the change in the
allocation of advisory fees between the Private Client and Asset
Management segments which became effective January 1, 2017. Income before income taxes
was $15.6 million for the fourth
quarter of 2017, an increase of 62.7% compared with the fourth
quarter of 2016.
- Advisory fee revenue on traditional and alternative managed
products was $32.3 million for the
fourth quarter of 2017, an increase of 40.4% from the fourth
quarter of 2016. The increase in advisory fees was due to the
increase in the value of AUM offset by the change in the allocation
of advisory fees between the Private Client and Asset Management
segments, effective January 1, 2017,
which resulted in a decrease of $5.9
million in revenue, and an increase in incentive fees
generated from hedge funds.
-
- Advisory fees are calculated based on the value of AUM at the
end of the prior quarter which totaled $27.2
billion at September 30, 2017
($24.6 billion at September 30, 2016) and are allocated between the
Private Client and Asset Management business segments.
- Incentive fees from the participation in hedge funds were
$9.6 million for the fourth quarter
of 2017 compared with $25,000 for the
fourth quarter of 2016. Incentive fees allocated to this business
segment are computed at the fiscal year-end of the underlying fund
when the measurement period ends and generally are earned in the
fourth quarter of the Company's fiscal year.
- AUM increased 14.1% to $28.3
billion at December 31, 2017
compared with $24.8 billion at
December 31, 2016, which is the basis
for advisory fee billings for the first quarter of 2018. The
increase in AUM was comprised of asset appreciation of $2.5 billion and net contribution of assets of
$1.0 billion.
Capital Markets
Capital Markets reported revenue of $63.2
million for the fourth quarter of 2017, 6.5% lower than the
fourth quarter of 2016 due to lower fees from mergers and
acquisition activity and debt capital market transactions partially
offset by higher fees from equities underwriting transactions
during the fourth quarter of 2017. Loss before income taxes
was $14.7 million for the fourth
quarter of 2017, an increase of 6.4% compared with a loss before
income taxes of $13.9 million for the
fourth quarter of 2016.
- Institutional equities commissions decreased 0.4% to
$25.6 million for the fourth quarter
of 2017 compared with the fourth quarter of 2016 due to lower
volatility and trading volumes in the equity markets.
- Advisory fees earned from investment banking activities
decreased 36.8% to $9.8 million for
the fourth quarter of 2017 compared with the fourth quarter of 2016
due to a decrease in mergers and acquisitions activity during the
fourth quarter of 2017.
- Equities underwriting fees increased 236.8% to $6.4 million for the fourth quarter of 2017
compared with the fourth quarter of 2016 due to higher capital
raising activity during the fourth quarter of 2017.
- Revenue from Taxable Fixed Income decreased 36.6% to
$12.8 million for the fourth quarter
of 2017 compared with the fourth quarter of 2016 due to low
volatility and client activity leading to a reduction in commission
and debt capital markets revenues during the fourth quarter of
2017.
- Public Finance and Municipal Trading revenue increased 130.0%
to $6.9 million for the fourth
quarter of 2017 compared with the fourth quarter of 2016 due to
higher municipal commissions and trading profits in municipal bonds
during the fourth quarter of 2017.
Compensation and Related Expenses
Compensation and related expenses (including salaries,
production and incentive compensation, share-based compensation,
deferred compensation, and other benefit-related items) totaled
$173.5 million during the fourth
quarter of 2017, an increase of 14.0% compared with the fourth
quarter of 2016. The increase was due to higher production,
incentive, share-based, and deferred compensation expenses
partially offset by lower healthcare costs during the fourth
quarter of 2017. As indicated above, compensation and related
expenses of $7.6 million were
recorded during the fourth quarter of 2017 related to the Company's
OARs Plan due to the price of its Class A Stock increasing from
$17.35 at the end of the third
quarter of 2017 to $26.80 at the end
of the fourth quarter of 2017. Compensation and related
expenses as a percentage of revenue was 65.5% during the fourth
quarter of 2017 compared with 69.5% during the fourth quarter of
2016.
Non-Compensation Expenses
Non-compensation expenses were $74.9
million during the fourth quarter of 2017, a decrease of
0.9% compared with $74.3 million
during the fourth quarter of 2016 due primarily to lower legal and
regulatory costs partially offset by higher interest costs during
the fourth quarter of 2017.
Provision for Income Taxes
The effective income tax rate from continuing operations for the
fourth quarter of 2017 was 27.7% (benefit) compared with 67.7%
(benefit) for the fourth quarter of 2016. The effective
income tax rate for the fourth quarter of 2017 was positively
impacted by the estimated impact of the TCJA which resulted in a
net discrete after-tax benefit of $9.0
million(^). The net discrete after-tax
benefit was comprised of a benefit of $29.0
million related to the re-measurement of deferred tax
liabilities offset by a detriment of $19.6
million related to the re-measurement of deferred tax assets
as well as a detriment of $0.4
million related to miscellaneous non-deductible items.
The effective income tax rate for the fourth quarter of 2016 was
positively impacted by income tax provision to tax return true-ups
and higher nontaxable benefits received with respect to
Company-owned life insurance.
FULL-YEAR 2017 RESULTS
Private Client
Private Client reported revenue of $592.8
million for the year ended December
31, 2017, 17.6% higher than the year ended December 31, 2016 due to higher management and
incentive fees, fees earned on the FDIC-insured bank deposit
program, and margin interest as well as the increase in the cash
surrender value of Company-owned life insurance partially offset by
lower commissions during the year ended December 31, 2017. Income before income
taxes was $128.8 million for the year
ended December 31, 2017, an increase
of 95.0% compared with the year ended December 31, 2016 due to the foregoing partially
offset by increases in share-based (see discussion on OARs Plan
above) and deferred compensation expenses during the year ended
December 31, 2017.
- Retail commissions were $203.2
million for the year ended December
31, 2017, a decrease of 8.0% from the year ended
December 31, 2016.
- Advisory fee revenue on traditional and alternative managed
products was $232.2 million for the
year ended December 31, 2017, an
increase of 28.3% from the year ended December 31, 2016. The increase in advisory fees
was due to the increase in the value of AUM, a change in the
allocation of advisory fees between the Private Client and Asset
Management segments, effective January 1,
2017, which resulted in an increase of $22.2 million in revenue, and an increase in
incentive fees generated from hedge funds.
- Fees earned on client cash deposits in the FDIC-insured bank
deposit program were $76.7 million
for the year ended December 31, 2017
versus $36.4 million for the year
ended December 31, 2016. The increase
was due primarily to higher short-term interest rates during the
year ended December 31, 2017.
Asset Management
Asset Management reported revenue of $89.9 million for the year ended December 31, 2017, 3.2% lower than the year ended
December 31, 2016 due to the change
in the allocation of advisory fees between the Private Client and
Asset Management segments which became effective January 1, 2017 partially offset by higher
management and incentive fees. Income before income taxes was
$26.7 million for the year ended
December 31, 2017, a decrease of
15.0% compared with the year ended December
31, 2016.
- Advisory fee revenue on traditional and alternative managed
products was $88.3 million for the
year ended December 31, 2017,
relatively flat compared with the year ended December 31, 2016 due to the increase in the
value of AUM and incentive fees generated from the hedge funds
offset by the change in the allocation of advisory fees between the
Private Client and Asset Management segments, effective
January 1, 2017, which resulted in a
decrease of $22.2 million in revenue
in the Asset Management segment.
Capital Markets
Capital Markets reported revenue of $231.6 million for the year ended December 31, 2017, 9.1% lower than the year ended
December 31, 2016 due to lower
commissions, fees from mergers and acquisition activity and debt
capital market transactions partially offset by higher fees from
equities underwriting transactions during the year ended
December 31, 2017. Loss before
income taxes was $40.0 million for
the year ended December 31, 2017
compared with a loss before income taxes of $17.7 million for the year ended December 31, 2016.
- Institutional equities commissions decreased 11.3% to
$95.0 million for the year ended
December 31, 2017 compared with the
year ended December 31, 2016 due to
lower volatility and trading volumes in the equity markets.
- Advisory fees earned from investment banking activities
decreased 28.0% to $29.5 million for
the year ended December 31, 2017
compared with the year ended December 31,
2016 due to a decrease in mergers and acquisitions activity
during the year ended December 31,
2017.
- Equities underwriting fees increased 98.5% to $27.0 million for the year ended December 31, 2017 compared with the year ended
December 31, 2016 due to increased
capital raising activity during the year ended December 31, 2017.
- Revenue from Taxable Fixed Income decreased 24.9% to
$53.1 million for the year ended
December 31, 2017 compared with the
year ended December 31, 2016 due to
low volatility and client activity leading to a reduction in
commission and debt capital markets revenues.
- Public Finance and Municipal Trading revenue increased 20.3% to
$20.7 million for the year ended
December 31, 2017 compared with the
year ended December 31, 2016.
Compensation and Related Expenses
Compensation and related expenses (including salaries,
production and incentive compensation, share-based compensation,
deferred compensation, and other benefit-related items) totaled
$602.1 million during the year ended
December 31, 2017, an increase of
3.0% compared with the year ended December
31, 2016. The increase was due to higher producer,
incentive, share-based, and deferred compensation expenses
partially offset by lower salary and healthcare expenses during the
year ended December 31, 2017.
Compensation and related expenses as a percentage of revenue was
65.4% during the year ended December 31,
2017 compared with 68.2% during the year ended December 31, 2016.
Non-Compensation Expenses
Non-compensation expenses were $298.5
million during the year ended December 31, 2017, an increase of 1.2% compared
with $295.0 million during the year
ended December 31, 2016 due primarily
to higher interest costs and the charge of $6.4 million associated with the settlement with
the Israeli VAT Authority in the first quarter of 2017 partially
offset by lower legal and regulatory costs during the year ended
December 31, 2017.
Provision for Income Taxes
The effective income tax rate from continuing operations for the
year ended December 31, 2017 was
10.8% (benefit) compared with 56.0% (benefit) for the year ended
December 31, 2016. The
effective income tax rate for the year ended December 31, 2017 was positively impacted by the
estimated impact of the TCJA which resulted in a net discrete
after-tax benefit of $9.0 million as
discussed above in the Provision for Income Taxes for the fourth
quarter of 2017(^). The effective income tax rate
for the year ended December 31, 2016
was positively impacted by income tax provision to tax return
true-ups and higher nontaxable benefits received with respect to
Company-owned life insurance partially offset by the valuation
allowance established on deferred tax assets related to net
operating losses of a foreign subsidiary.
Discontinued Operations
During 2016, the Company completed the sales of substantially
all of the assets of its Oppenheimer Multifamily Housing and
Healthcare Finance Inc. ("OMHHF") subsidiary. The following
table is a summary of revenue and expenses from discontinued
operations for the three months and year ended December 31, 2017 and 2016, respectively:
|
Discontinued
Operations (Unaudited)
|
('000s)
|
|
|
For the 3-Months
Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
|
|
|
|
Interest
|
$
|
1
|
|
$
|
22
|
|
$
|
8
|
|
$
|
943
|
|
Principal
transactions, net
|
—
|
|
(14)
|
|
—
|
|
(9,022)
|
|
Other
(1)
|
278
|
|
1,845
|
|
2,165
|
|
33,392
|
|
Total
revenue
|
279
|
|
1,853
|
|
2,173
|
|
25,313
|
Expenses
|
|
|
|
|
|
Compensation and
related expenses
|
—
|
|
86
|
|
18
|
|
4,311
|
|
Communications and
technology
|
7
|
|
20
|
|
27
|
|
221
|
|
Occupancy and
equipment costs
|
—
|
|
16
|
|
—
|
|
415
|
|
Interest
|
5
|
|
—
|
|
12
|
|
408
|
|
Other
|
30
|
|
(11)
|
|
45
|
|
2,619
|
|
Total
expenses
|
42
|
|
111
|
|
102
|
|
7,974
|
Income before income
taxes
|
237
|
|
1,742
|
|
2,071
|
|
17,339
|
Income
taxes
|
208
|
|
983
|
|
941
|
|
7,218
|
Net income from
discontinued operations
|
$
|
29
|
|
$
|
759
|
|
$
|
1,130
|
|
$
|
10,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Other revenue for the
year ended December 31, 2017 was primarily due to an earn-out from
the sale of OMHHF's pipeline of business in 2016.
|
Balance Sheet and Liquidity
- During the year ended December 31,
2017, the Company purchased and canceled 450,350 shares of
Class A nonvoting common stock for total consideration of
$7.5 million ($16.57 per share).
- At December 31, 2017, total
equity was $523.9 million compared
with $513.3 million at December 31, 2016.
- At December 31, 2017, book value
per share was $39.55 (compared with
$38.22 at December 31, 2016) and tangible book value per
share was $26.74 (compared with
$25.53 at December 31, 2016).
- The Company's level 3 assets, primarily auction rate
securities, were $112.1 million at
December 31, 2017 (compared with
$86.0 million at December 31, 2016). The increase in level 3
assets was primarily due to the purchase of auction rate securities
during the year ended December 31,
2017.
Dividend Announcement
The Company today announced a quarterly dividend in the amount
of $0.11 per share payable on
February 26, 2018 to holders of Class
A non-voting and Class B voting common stock of record on
February 12, 2018.
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 92 offices in 24
states and 5 foreign jurisdictions.
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 Exhibit 99.1 – Risk Factors in the
Company's Current Report on Form 8-K filed with the SEC on
June 7, 2017.
(^) The estimated enactment net discrete
after-tax benefit incorporates assumptions made based upon the
Company's current interpretations of the TCJA, and may change as it
receives additional clarification and implementation guidance and
as the interpretation of the TCJA evolves over time.
|
Oppenheimer
Holdings Inc.
|
Consolidated
Income Statement (Unaudited)
|
('000s, except Per
Share Amounts)
|
|
|
|
|
|
|
|
|
|
For the 3-Months
Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
2017
|
|
2016
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
$
|
88,416
|
|
$
|
90,870
|
|
(2.7)
|
|
$
|
336,620
|
|
$
|
377,317
|
|
(10.8)
|
|
Advisory
fees
|
104,225
|
|
69,537
|
|
49.9
|
|
320,746
|
|
269,119
|
|
19.2
|
|
Investment
banking
|
20,868
|
|
29,467
|
|
(29.2)
|
|
78,215
|
|
81,011
|
|
(3.5)
|
|
Interest
|
12,152
|
|
11,309
|
|
7.5
|
|
48,498
|
|
47,649
|
|
1.8
|
|
Principal
transactions, net
|
7,463
|
|
1,364
|
|
447.1
|
|
23,273
|
|
20,481
|
|
13.6
|
|
Other
|
31,849
|
|
16,398
|
|
94.2
|
|
112,986
|
|
62,202
|
|
81.6
|
|
Total
revenue
|
264,973
|
|
218,945
|
|
21.0
|
|
920,338
|
|
857,779
|
|
7.3
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
173,513
|
|
152,186
|
|
14.0
|
|
602,138
|
|
584,710
|
|
3.0
|
|
Communications and
technology
|
18,092
|
|
17,871
|
|
1.2
|
|
71,978
|
|
70,390
|
|
2.3
|
|
Occupancy and
equipment costs
|
15,443
|
|
15,995
|
|
(3.5)
|
|
61,164
|
|
60,791
|
|
0.6
|
|
Clearing and exchange
fees
|
6,153
|
|
6,120
|
|
0.5
|
|
23,545
|
|
25,126
|
|
(6.3)
|
|
Interest
|
9,644
|
|
4,911
|
|
96.4
|
|
28,354
|
|
19,437
|
|
45.9
|
|
Other
|
25,558
|
|
29,358
|
|
(12.9)
|
|
113,423
|
|
119,217
|
|
(4.9)
|
|
Total
expenses
|
248,403
|
|
226,441
|
|
9.7
|
|
900,602
|
|
879,671
|
|
2.4
|
Income (Loss) before
income taxes
|
16,570
|
|
(7,496)
|
|
*
|
19,736
|
|
(21,892)
|
|
*
|
Income
taxes
|
(4,598)
|
|
(5,072)
|
|
(9.3)
|
|
(2,134)
|
|
(12,262)
|
|
(82.6)
|
Net income (loss)
from continuing operations
|
21,168
|
|
(2,424)
|
|
*
|
|
21,870
|
|
(9,630)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations
|
237
|
|
1,742
|
|
(86.4)
|
|
2,071
|
|
17,339
|
|
(88.1)
|
Income
taxes
|
208
|
|
983
|
|
(78.8)
|
|
941
|
|
7,218
|
|
(87.0)
|
Net income from
discontinued operations
|
29
|
|
759
|
|
(96.2)
|
|
1,130
|
|
10,121
|
|
(88.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
21,197
|
|
(1,665)
|
|
*
|
|
23,000
|
|
491
|
|
*
|
Less net income
attributable to non-controlling interest, net of tax
|
4
|
|
125
|
|
(96.8)
|
|
184
|
|
1,652
|
|
(88.9)
|
Net income (loss)
attributable to Oppenheimer Holdings Inc.
|
$
|
21,193
|
|
$
|
(1,790)
|
|
*
|
|
$
|
22,816
|
|
$
|
(1,161)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.61
|
|
$
|
(0.18)
|
|
*
|
|
$
|
1.65
|
|
$
|
(0.72)
|
|
*
|
|
Discontinued
operations
|
—
|
|
0.05
|
|
(100.0)
|
|
0.07
|
|
0.63
|
|
(88.9)
|
|
Net income (loss) per
share
|
$
|
1.61
|
|
$
|
(0.13)
|
|
*
|
|
$
|
1.72
|
|
$
|
(0.09)
|
|
*
|
Diluted net income
(loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.54
|
|
$
|
(0.18)
|
|
*
|
|
$
|
1.60
|
|
$
|
(0.72)
|
|
*
|
|
Discontinued
operations
|
—
|
|
0.05
|
|
(100.0)
|
|
0.07
|
|
0.63
|
|
(88.9)
|
|
Net income (loss) per
share
|
$
|
1.54
|
|
$
|
(0.13)
|
|
*
|
|
$
|
1.67
|
|
$
|
(0.09)
|
|
*
|
Weighted Average
Number of Common Shares Outstanding
|
|
|
|
|
|
|
Basic
|
13,116
|
|
13,361
|
|
(1.8)
|
|
13,246
|
|
13,369
|
|
(0.9)
|
|
Diluted
|
13,747
|
|
13,361
|
|
2.9
|
|
13,673
|
|
13,369
|
|
2.3
|
*
|
Percentage not
meaningful.
|
|
|
|
|
|
|
|
SOURCE Oppenheimer Holdings Inc.