Oppenheimer Holdings Inc. - Fourth Quarter 2009 Earnings and Dividend
Announcement
NYSE - OPY
NEW YORK,
Expressed in thousands
of dollars, except share
and per share amounts
Three Months ended Year ended
December 31, December 31,
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(unaudited) 2009 2008 2009 2008
Revenue $273,377 $209,767 $991,433 $920,070
Expenses $262,768 $217,496 $956,620 $956,113
Profit (loss) before taxes $10,609 $(7,729) $34,813 $(36,043)
Net profit (loss) $6,463 $(3,824) $19,487 $(20,770)
Basic earnings (loss) per share $0.49 $(0.29) $1.49 $(1.57)
Diluted earnings (loss) per share $0.48 $(0.29) $1.45 $(1.57)
Book value per share $34.15 $32.75
Business Review
Oppenheimer Holdings Inc. reported a net profit of
The net profit for the year ended
At year-end, the U.S. economy has emerged from the longest contraction since the Great Depression. Unemployment continues at very high levels and uncertainty continues to plague the economy as we await the reversal of stimulative policies from the Federal Reserve and a determination of national policies for major segments of the economy including healthcare and the financial system. Other economic indicators are showing improvement including: increased manufacturing activity, higher commodity prices and higher end sales to consumers and businesses. The real estate markets are sending mixed signals with significant deterioration in commercial real estate prices but improvements in the housing market across most of the country.
Improving market conditions since
While most expense categories showed significant decreases compared to the prior year, the Company's compensation levels as a percentage of revenue remained at high levels as a result of: 1) increased stock-based and deferred compensation which reflected the significant improvement in the Company's stock price as well as increases in the value of assets directly tied to deferred compensation plans (totaling
In commenting on the Company's results,
Highlights of the Company's results for the three and twelve months ended
Revenue and Expenses
Revenue -Fourth Quarter 2009
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- Commission revenue was $142.7 million in the fourth quarter of 2009
which was flat compared to $141.3 million in the fourth quarter of
2008.
- Principal transactions revenue was significantly higher in the fourth
quarter of 2009 at $22.4 million compared to a loss of $7.6 million
in the fourth quarter of 2008 due to profits in fixed income trading
of $20.7 million in the fourth quarter 2009 (versus $3.7 million in
the fourth quarter of 2008) and gains of $1.5 million in the value of
firm investments in the fourth quarter of 2009 (versus a loss of $9.1
million in the fourth quarter of 2008).
- Interest revenue was $10.6 million in the fourth quarter of 2009
which was flat compared to $10.6 million in the fourth quarter of
2008.
- Investment banking revenue increased 139% to $35.4 million in the
fourth quarter of 2009, compared to $14.8 million in the fourth
quarter of 2008 with equity issuances accounting for $17.8 million of
the variance.
- Advisory fees were $50.8 million in the fourth quarter of 2009
compared to $41.3 million in the fourth quarter of 2008, an increase
of 23% as a result of an increase in assets under management of 4.2%
during the period and incentive fees earned from general partnership
interests in alternative investments of $10.7 million ($nil in fourth
quarter of 2008), net of a decrease of $6.3 million in fees derived
from money market funds.
- Other revenue increased 24% to $11.6 million in the fourth quarter of
2009 compared to the fourth quarter of 2008 as a result of a legal
settlement award of $2 million.
Revenue - Year-to-Date 2009
---------------------------
- Commission revenue was $555.6 million in the year ended December 31,
2009 compared to $532.7 million in the same period in 2008,
representing an increase of 4%, reflecting improved market conditions
in 2009 compared to 2008.
- Principal transactions revenue was significantly higher in the year
ended December 31, 2009 at $107.1 million compared to $20.7 million
in the same period in 2008 due to significant improvement in fixed
income trading in 2009 representing a $61.8 million increase when
compared to 2008 as well as gains of $9.8 million in the value of
firm investments in 2009 (versus a loss of $17.8 million in 2008).
- Interest revenue declined 42% to $36.0 million in the year ended
December 31, 2009 from $61.8 million in the same period in 2008 due
to decreases in interest earned on customer margin debits of $19.1
million and on securities borrowed positions of $6.2 million.
- Investment banking revenue increased 9% to $91.0 million in the year
ended December 31, 2009 compared to $83.5 million in the same period
in 2008 as fees earned on equity underwriting participations
increased $23.0 million offset by a decrease of $11.4 million in
corporate finance advisory fees.
- Advisory fees were $160.7 million in the in the year ended December
31, 2009, a decrease of 19% compared to $199.0 million in the same
period in 2008 as a result of a decrease in average assets under
management during the period of 10.7%. It also includes a decrease of
$21.1 million in fees derived from money market funds. The Company
earned incentive fees from general partnership interests in
alternative investments of $10.7 million in 2009 ($nil in 2008).
- Other revenue increased 83% to $41.1 million for the year ended
December 31, 2009 from $22.4 million in the same period in 2008
primarily as a result of increases to the value of Company owned life
insurance of $14.3 million, increased fees of $5.0 million related to
the Company's mortgage brokerage business, and a legal settlement
award of $2 million, partially offset by a decrease of $3.9 million
in fees derived from FDIC insured client deposits.
Expenses - Fourth Quarter 2009
------------------------------
- Compensation and related expenses increased 31% in the fourth quarter
of 2009 to $188.3 million from $144.0 million during the fourth
quarter 2008 as production and incentive-related compensation
increased $27.2 million, deferred compensation costs increased $6.0
million, and share-based compensation, directly related to an
increased share price during the quarter, increased $6.6 million.
- Clearing and exchange fees decreased 6% to $7.2 million in the fourth
quarter of 2009 compared to $7.7 million in the same period of 2008.
- Communications and technology expenses decreased 26% to $14.4 million
in the fourth quarter of 2009 from $19.4 million in the same period
of 2008 as a result of a reduction, or elimination, of many costs
associated with the January 2008 acquisition of a major part of CIBC
World Markets' U.S. Capital Markets Business.
- Occupancy and equipment costs increased 7% to $18.9 million in the
fourth quarter of 2009 from $17.7 million in the fourth quarter of
2008 due to escalation provisions increasing rental costs, as well as
the opening of new branch offices around the country.
- Interest expenses increased 14% to $5.6 million in the fourth quarter
of 2009 from $4.9 million in the same period in 2008 due to interest
expense incurred on positions and repurchase agreements held by the
new government trading desk.
- Other expenses increased 19% to $28.3 million in the fourth quarter
of 2009 from $23.7 million in the same period in 2008 due to
increased legal costs of approximately $4.8 million, offset by the
elimination of $1.2 million in non-recurring transitional support
costs related to the CIBC capital markets business acquired in
January 2008
Expenses - Year-to-Date 2009
----------------------------
- Compensation and related expenses were $672.3 million for the year
ended December 31, 2009 compared with $626 million for the same
period in 2008, an increase of 7%. Production and incentive-related
compensation increased $35.1 million, deferred compensation costs
increased $16.3 million, and share-based compensation, directly
related to an increased share price during the period, increased
$17.4 million. These increases were offset by a decrease of $25.7
million for expenses related to deferred compensation obligations to
former CIBC employees.
- Clearing and exchange fees decreased 14% to $26.7 million for the
year ended December 31, 2009 compared to $31.0 million in the same
period in 2008 primarily reflecting the economies of transitioning
the acquired businesses to the Company's platform.
- Communications and technology expenses decreased 17% to $62.7 million
for the year ended December 31, 2009 from $75.4 million for the same
period of 2008 as a result of a reduction, or elimination, of many
costs associated with our January 2008 acquisition.
- Occupancy and equipment costs increased 6% to $74.4 million for the
year ended December 31, 2009 from $69.9 million in the same period in
2008 due to escalation provisions increasing rental costs, as well as
the opening of new branch offices around the country.
- Interest expenses declined 46% to $21.1 million in the year ended
December 31, 2009 from $39.0 million for the same period in 2008 due
to declining interest rates resulting in lower interest incurred on
securities loaned and bank loans totaling $13.5 million.
- Other expenses decreased 13% to $99.4 million in the year ended
December 31, 2009 from $114.8 million for the same period in 2008
largely as a result of the elimination of $33.5 million in non-
recurring transitional support costs related to the CIBC capital
markets business acquired in January 2008 offset by an increase in
legal costs of approximately $14.7 million and a departure tax of
approximately $2.0 million which was paid to the government of Canada
in connection with the move of the Company's domicile to the United
States.
Shareholders' Equity and Dividend Declaration
- At December 31, 2009, shareholders' equity was $451.4 million
compared to $425.7 million at December 31, 2008.
- At December 31, 2009, book value per share was $34.15 compared to
$32.75 at December 31, 2008.
- During the fourth quarter of 2009, the Company did not make any
purchases pursuant to its stock buy-back program.
- The Company announced today a quarterly dividend in the amount of
U.S. $0.11 per share, payable on February 26, 2010 to holders of
Class A non-voting and Class B voting common stock of record on
February 12, 2010.
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OPPENHEIMER HOLDINGS INC.
SUMMARY STATEMENT OF OPERATIONS (UNAUDITED)
$ in thousands,
except share
and per
share amounts
-----------------------------------------------------------
Three Months Ended Year Ended
% %
12/31/09 12/31/08 delta 12/31/09 12/31/08 delta
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REVENUE
Commissions $142,661 $141,338 1% $555,574 $532,682 4%
Principal
transactions,
net 22,374 (7,594) n/a 107,094 20,651 419%
Interest 10,625 10,560 1% 35,960 61,793 -42%
Investment
banking 35,363 14,805 139% 90,960 83,541 9%
Advisory fees 50,762 41,319 23% 160,705 198,960 -19%
Other 11,592 9,339 24% 41,140 22,443 83%
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273,377 209,767 30% 991,433 920,070 8%
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EXPENSES
Compensation &
related
expenses 188,257 143,978 31% 672,325 626,030 7%
Clearing &
exchange fees 7,244 7,733 -6% 26,748 31,007 -14%
Communications &
technology 14,435 19,448 -26% 62,724 75,359 -17%
Occupancy &
equipment
costs 18,869 17,678 7% 74,372 69,945 6%
Interest 5,618 4,936 14% 21,050 38,998 -46%
Other 28,345 23,723 19% 99,401 114,774 -13%
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262,768 217,496 21% 956,620 956,113 0%
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Profit (loss)
before
taxes 10,609 (7,729) n/a 34,813 (36,043) n/a
Income tax
provision
(benefit) 4,146 (3,905) n/a 15,326 (15,273) n/a
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Net profit
(loss) for
the period $6,463 ($3,824) n/a $19,487 ($20,770) n/a
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Profit (loss)
per share
Basic $0.49 ($0.29) $1.49 ($1.57)
Diluted $0.48 ($0.29) $1.45 ($1.57)
Basic weighted
average
shares
outstanding 13,116,107 13,022,155 13,110,647 13,199,580
Actual
shares
outstanding 13,217,681 12,999,145 13,217,681 12,999,145
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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 3,500 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. 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 Oppenheimer's Annual Report on Form 10-K for the year ended
For further information: A.G. Lowenthal, (212) 668-8000; or E.K. Roberts, (416) 322-1515
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