NEW YORK, July 26, 2013 /CNW/ - Oppenheimer Holdings Inc. (NYSE: OPY)
today reported net income of $2.8 million or $0.21 per share for the
second quarter of 2013 compared with net income of $2.4 million or
$0.18 per share for the second quarter of 2012, an increase of 17.6%.
Revenue for the second quarter of 2013 was $243.8 million compared with
$233.1 million in the second quarter of 2012, an increase of 4.6%.
|
Summary Operating Results (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the 3-Months Ended
|
|
For the 6-Months Ended
|
|
('000s, except EPS)
|
6/30/13
|
6/30/12
|
% Δ
|
|
6/30/13
|
6/30/12
|
% Δ
|
|
Revenue
|
$
|
243,830
|
$
|
233,145
|
4.6
|
|
$
|
482,976
|
$
|
471,359
|
2.5
|
|
Net Income (Loss)(1)
|
$
|
2,848
|
$
|
2,422
|
17.6
|
|
$
|
6,511
|
$
|
(2,235)
|
*
|
|
Earnings (Loss) Per Share(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.21
|
$
|
0.18
|
16.7
|
|
$
|
0.48
|
$
|
(0.16)
|
*
|
|
|
Diluted
|
$
|
0.20
|
$
|
0.17
|
17.6
|
|
$
|
0.46
|
$
|
(0.16)
|
*
|
|
Weighted Average # of Common Shares Outstanding
|
|
|
Basic
|
|
13,607
|
|
13,589
|
0.1
|
|
|
13,608
|
|
13,593
|
0.1
|
|
|
Diluted
|
|
14,068
|
|
14,010
|
0.4
|
|
|
14,069
|
|
13,593
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Attributable to Oppenheimer Holdings Inc.
* Not comparable
The U.S. equity markets showed significant strength during the first
half of the year with the S&P increasing 13.8%. Volatility in the
equity markets increased during the quarter and was exacerbated by the
Federal Reserve Board's announcement that the economy was improving and
that it had begun considering the circumstances under which it would
slow the pace of the central bank's bond purchasing program. With this
announcement, bond yields rose significantly, negatively impacting both
the debt and the equity markets in the latter part of the second
quarter. Part of what drove the Federal Reserve's announcement was the
improvement in the economy as economic indicators improved across the
board led by the housing market and a modest increase in employment.
Albert G. Lowenthal, Chairman and CEO, said "We are gratified to see
improving results during the most recent period compared to last year.
Higher equity valuations and client investment flows helped our
fee-based programs produce record revenue in the second quarter of
2013. Our fixed income revenue and profits remained quite good despite
increased volatility at the end of the quarter. Revenue from other
areas including institutional equities and investment banking continue
to be quite restrained reflecting low levels of activity from our
clients. We expect that an improving economy and higher consumer
confidence will be reflected in higher levels of activity over the
balance of the year. Reported earnings continue to be negatively
impacted by elevated legal costs offsetting our improved results from
current operations.
While the announcement by the Federal Reserve that they may reduce bond
buying over coming months created a significant move higher in longer
term interest rates, the equity markets have shown a marked move higher
over the first half of July reflecting investor perception that such
restraint by the Federal Reserve reflects better fundamentals for the
economy and the possibility of higher equity valuations. We remain
optimistic about the business environment and believe that we are
extremely well positioned to participate in the upside of a sustained
economic recovery."
Financial Highlights
-
Commission revenue was $124.4 million for the second quarter of 2013, an
increase of 10.7% compared with the second quarter of 2012.
-
Principal transactions revenue decreased 44.0% to $7.5 million during
the second quarter of 2013 compared with the second quarter of 2012 due
to a $3 million reduction in the valuation adjustment related to
auction rate securities recorded in the second quarter of 2012 as well
as a reduction of trading profits associated with municipal and agency
securities in the second quarter of 2013.
-
Investment banking revenue was down 9.6% to $22.6 million for the second
quarter of 2013 compared with $25.0 million during the second quarter
of 2012.
-
Advisory fees were $60.6 million during the second quarter of 2013, an
increase of 12.8% compared with the second quarter of 2012.
|
Business Segment Results (Unaudited)
|
|
|
|
|
For the 3-Months Ended
|
|
For the 6-Months Ended
|
|
('000s)
|
6/30/13
|
6/30/12
|
% Δ
|
|
6/30/13
|
6/30/12
|
% Δ
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Client
|
$
|
143,278
|
$
|
128,469
|
11.5
|
|
$
|
286,647
|
$
|
272,732
|
5.1
|
|
|
Asset Management
|
|
22,006
|
|
19,992
|
10.1
|
|
|
42,962
|
|
39,036
|
10.1
|
|
|
Capital Markets
|
|
67,904
|
|
71,561
|
(5.1)
|
|
|
133,035
|
|
140,890
|
(5.6)
|
|
|
Commercial Mortgage Banking
|
|
9,477
|
|
10,934
|
(13.3)
|
|
|
17,543
|
|
18,988
|
(7.6)
|
|
|
Corporate/Other
|
|
1,165
|
|
2,189
|
(46.8)
|
|
|
2,789
|
|
(287)
|
*
|
|
|
|
|
243,830
|
|
233,145
|
4.6
|
|
|
482,976
|
|
471,359
|
2.5
|
|
Income (Loss) Before Income Taxes
|
|
|
Private Client
|
|
15,698
|
|
12,770
|
22.9
|
|
|
33,025
|
|
27,732
|
19.1
|
|
|
Asset Management
|
|
7,402
|
|
4,106
|
80.3
|
|
|
13,945
|
|
9,096
|
53.3
|
|
|
Capital Markets
|
|
972
|
|
2,660
|
(63.5)
|
|
|
4,505
|
|
1,005
|
348.4
|
|
|
Commercial Mortgage Banking
|
|
2,276
|
|
5,000
|
(54.5)
|
|
|
5,154
|
|
8,830
|
(41.6)
|
|
|
Corporate/Other
|
|
(20,674)
|
|
(16,697)
|
(23.8)
|
|
|
(44,242)
|
|
(45,313)
|
2.4
|
|
|
|
$
|
5,674
|
$
|
7,839
|
(27.6)
|
|
$
|
12,387
|
$
|
1,350
|
817.6
|
* Not comparable
Private Client
Private Client reported revenue of $143.3 million for the second quarter
of 2013, 11.5% higher than the second quarter of 2012. Pre-tax income
was $15.7 million, an increase of 22.9% compared with the second
quarter of 2012, driven by increases in both transactional and
fee-based business during the second quarter of 2013 compared with the
same period of 2012.
-
Client assets under administration were $80.1 billion at June 30, 2013.
-
Financial Advisor headcount was 1,402 at the end of the quarter, down
from 1,435 from the prior year period.
-
Retail commissions were $81.8 million for the quarter, an increase of
8.0% over the prior year quarter.
-
Advisory fee revenue on traditional and alternative managed products was
$38.9 million for the second quarter of 2013, an increase of 16.0% over
the prior year quarter (see Asset Management below for further
information).
-
Money market fee waivers were $7.2 million during the second quarter of
2013 versus $5.9 million during the second quarter of 2012.
Asset Management
Asset Management reported revenue of $22.0 million for the second
quarter of 2013, 10.1% higher than the second quarter of 2012. Pre-tax
income was $7.4 million, an increase of 80.3% compared with the second
quarter of 2012, as a result of increased fees earned on managed
products as well as lower legal costs.
-
Advisory fee revenue on traditional and alternative managed products was
$19.7 million for the second quarter of 2013, an increase of 10.0% over
the prior year quarter. Asset management fees are calculated based on
client assets under management ("AUM") at the end of the prior quarter
which totaled $22.4 billion at March 31, 2013 ($20.1 billion at March
31, 2012) and are allocated to the Private Client and Asset Management
Divisions.
-
AUM increased 11.9% to $22.5 billion at June 30, 2013, a record for the
Company, from $20.1 billion at June 30, 2012, which is the basis for
advisory fee billings for the third quarter of 2013. The increase in
AUM was comprised of asset appreciation of $1.4 billion and net new
assets of $1.0 billion.
Capital Markets
Capital Markets reported revenue of $67.9 million for the second quarter
of 2013, 5.1% lower than the second quarter of 2012. Pre-tax income
was $972 thousand during the second quarter of 2013 compared with $2.7
million during the second quarter of 2012, due primarily to higher
legal costs during the current period.
-
Institutional equities commissions were $26.4 million for the second
quarter of 2013, an increase of 1.1% compared with the prior year
period.
-
Advisory fees from investment banking activities decreased 34.2% to $8.0
million in the second quarter of 2013.
-
Equity underwriting fees increased $374 thousand to $9.7 million for the
second quarter of 2013.
-
Revenue from Taxable Fixed Income increased 1.2% to $21.3 million for
the second quarter of 2013.
-
Public Finance and Municipal Trading revenue was down 6.8% to $6.1
million for the second quarter of 2013.
Commercial Mortgage Banking
Commercial Mortgage Banking reported revenue of $9.5 million for the
second quarter of 2013, 13.3% lower than the second quarter of 2012 as
a result of a reduced dollar amount of originated loans and the
corresponding net revenue. Pre-tax income was $2.3 million, a decrease
of 54.5% compared with the second quarter of 2012, due to a combination
of lower origination revenue and an increase in write-offs of mortgage
servicing rights related to loan refinancings during the current
period.
-
Loan origination fees for the second quarter of 2013 were $2.1 million
as the Company originated 18 commercial loans with principal loan
balances of $165.9 million.
-
Net servicing revenue for the second quarter of 2013 was $1.2 million
compared with $1.0 million for the comparable period in 2012.
-
Principal loan balances related to servicing activities totaled $3.6
billion at June 30, 2013, up 17.7% from June 30, 2012.
-
A gain of $604 thousand was recorded during the second quarter of 2013
related to loan modifications.
Compensation and Benefit Expenses
Compensation and benefits (including salaries, production and incentive
compensation, share-based compensation, deferred compensation, and
other benefit-related items) totaled $160.0 million during the second
quarter of 2013, an increase of 6.0% over the second quarter of 2012.
Compensation as a percentage of revenue was 65.6% during the second
quarter of 2013 compared to 64.7% during the second quarter of 2012.
Higher incentive and deferred compensation and healthcare costs were
largely responsible for the increase. Deferred compensation expense
was partially offset by increases in the value of assets underlying the
deferred compensation plans.
Non-Compensation Expenses
Non-compensation expenses increased to $78.2 million during the second
quarter of 2013 from $74.4 million during the same period last year, an
increase of $3.8 million or 5.0%, primarily due to an increase in
write-offs of mortgage servicing rights related to loan refinancings
during the current period.
Provision for Income Taxes
The effective income tax rate for the second quarter of 2013 was 46.0%
compared with 57.0% for the prior year second quarter. During the
second quarter of 2012, the Company recorded adjustments of $1.3
million, net of taxes, related to prior periods to establish additional
reserves for taxes and adjust related interest.
Balance Sheet and Liquidity
-
At June 30, 2013, total equity was $511.8 million compared with $505.0 million at December 31, 2012.
-
At June 30, 2013, book value per share was $37.29 (compared with $36.80
at December 31, 2012) and tangible book value per share was $24.82
(compared with $24.34 at December 31, 2012).
-
The Company's level 3 assets were $91.4 million at June 30, 2013
(compared with $85.4 million at December 31, 2012).
Dividend Announcement
-
The Company today announced a quarterly dividend in the amount of $0.11
per share, payable on August 23, 2013 to holders of Class A non-voting
and Class B voting common stock of record on August 9, 2013.
|
Oppenheimer Holdings Inc.
|
|
Quarterly Consolidated Income Statement (unaudited)
|
|
('000s, except EPS)
|
|
|
|
|
|
|
|
|
|
For the 3-Months Ended
|
|
For the 6-Months Ended
|
|
|
6/30/13
|
6/30/12
|
% Δ
|
|
6/30/13
|
6/30/12
|
% Δ
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Commissions
|
$124,440
|
$112,429
|
10.7
|
|
$244,020
|
$238,063
|
2.5
|
|
|
Principal transactions, net
|
7,532
|
13,460
|
(44.0)
|
|
23,249
|
26,015
|
(10.6)
|
|
|
Interest
|
13,106
|
14,246
|
(8.0)
|
|
25,477
|
27,639
|
(7.8)
|
|
|
Investment banking
|
22,567
|
24,971
|
(9.6)
|
|
41,015
|
45,058
|
(9.0)
|
|
|
Advisory fees
|
60,580
|
53,704
|
12.8
|
|
117,300
|
103,781
|
13.0
|
|
|
Other
|
15,605
|
14,335
|
8.9
|
|
31,915
|
30,803
|
3.6
|
|
|
|
243,830
|
233,145
|
4.6
|
|
482,976
|
471,359
|
2.5
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses
|
160,006
|
150,896
|
6.0
|
|
319,215
|
309,547
|
3.1
|
|
|
Clearing and exchange fees
|
6,293
|
5,989
|
5.1
|
|
12,335
|
12,020
|
2.6
|
|
|
Communications and technology
|
16,018
|
15,328
|
4.5
|
|
31,882
|
31,466
|
1.3
|
|
|
Occupancy and equipment costs
|
17,141
|
17,409
|
(1.5)
|
|
34,706
|
41,753
|
(16.9)
|
|
|
Interest
|
7,143
|
8,230
|
(13.2)
|
|
14,005
|
17,022
|
(17.7)
|
|
|
Other
|
31,555
|
27,454
|
14.9
|
|
58,446
|
58,201
|
0.4
|
|
|
|
238,156
|
225,306
|
5.7
|
|
470,589
|
470,009
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
5,674
|
7,839
|
(27.6)
|
|
12,387
|
1,350
|
817.6
|
|
Income tax provision
|
2,608
|
4,464
|
(41.6)
|
|
5,428
|
1,858
|
192.1
|
|
Net income (loss) for the period
|
3,066
|
3,375
|
(9.2)
|
|
6,959
|
(508)
|
*
|
Less net income attributable to non-controlling
interest, net of tax
|
218
|
953
|
(77.1)
|
|
448
|
1,727
|
(74.1)
|
Net income (loss) attributable to
Oppenheimer Holdings Inc.
|
$2,848
|
$2,422
|
17.6
|
|
$6,511
|
($2,235)
|
*
|
|
|
|
Earnings (loss) per share attributable to Oppenheimer Holdings Inc.
|
|
|
|
|
|
|
|
|
|
Basic
|
$0.21
|
$0.18
|
16.7
|
|
$0.48
|
($0.16)
|
*
|
|
|
Diluted
|
$0.20
|
$0.17
|
17.6
|
|
$0.46
|
($0.16)
|
*
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
13,607
|
13,589
|
0.1
|
|
13,608
|
13,593
|
0.1
|
|
|
Diluted
|
14,068
|
14,010
|
0.4
|
|
14,069
|
13,593
|
3.5
|
* Not comparable
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, investment management, and commercial mortgage. With roots
tracing back to 1881, the firm is headquartered in New York and has 94
offices in 26 states and 6 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 Part 1A - Risk Factors in Oppenheimer's Annual Report
on Form 10-K for the year ended December 31, 2012.
SOURCE: Oppenheimer Holdings Inc.
