Oppenheimer Holdings Inc. - Third Quarter 2009 Earnings and Dividend
Announcement
NYSE - OPY
NEW YORK,
Expressed in thousands of
dollars, except share and Three Months ended Nine Months ended
per share amounts September 30, September 30,
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(unaudited) 2009 2008 2009 2008
Revenue $262,067 $222,187 $718,056 $710,303
Expenses $248,017 $225,898 $693,852 $738,617
Profit (loss) before taxes $14,050 $(3,711) $24,204 $(28,314)
Net profit (loss) $7,908 $(2,477) $13,024 $(16,945)
Basic earnings (loss)
per share $0.60 $(0.18) $1.00 $(1.26)
Diluted earnings (loss)
per share $0.59 $(0.18) $0.97 $(1.26)
Book value per share $33.68 $32.87
Business Review
Oppenheimer Holdings Inc. reported a net profit of
The net profit for the nine months ended
The U.S economy began to emerge from recession during the third quarter of 2009. While employment continued to deteriorate (albeit at lower rates of decline) other indicators showed improvement including: increased manufacturing activity, higher commodity prices and higher end sales to consumers and businesses and the fact that housing prices appear to be stabilizing. These factors are likely to lead to a sustainable recovery. The markets continued to respond to these improved conditions with equities showing gains of over 50% since the
These improving market conditions as well as greater investor confidence have led to overall revenue improvements for the company in each successive quarter of 2009. Revenue from commissions and principal transactions in the three and nine months ended
Highlights of the company's results for the three and nine months ended
Revenue and Expense
Revenue - Third Quarter 2009
----------------------------
- Commission revenue was $146.4 million in the third quarter of 2009
compared to $133.5 million in the third quarter of 2008, representing
an increase of 10%.
- Principal transaction revenue was significantly higher in the third
quarter of 2009 at $29.8 million compared to a loss of $862 thousand
in the third quarter of 2008 due to strength in fixed income trading
of $26.2 million in the third quarter 2009 (versus $4.4 million in
the third quarter of 2008) as well as losses sustained in the
convertible bond arbitrage business in the third quarter of 2008.
- Interest revenue of $9.1 million in the third quarter of 2009
represented a decline of 43% from $16.1 million in the third quarter
of 2008 due to declining interest rates as well as a decrease in
average margin debit balances of 28% and average stock borrow
balances of 33% over the same periods.
- Investment banking revenue increased 55% to $25.1 million in the
third quarter of 2009 versus $16.2 million in the third quarter of
2008 due to the market's renewed appetite for equity issuances.
- Advisory fees were $38.7 million in the third quarter 2009 compared
to $51.1 million in the third quarter 2008 as a result of a decrease
in assets under management of 17% during the period as well as a
decrease of $6.2 million in fees derived from money market funds.
- Other revenue increased 109% to $13.0 million from the third quarter
2008 as a result of increases to the value of company owned life
insurance of $5.1 million and increased fees of $3.6 million related
to the Company's mortgage brokerage business, partially offset by a
decrease of $2.5 million in fees derived from FDIC insured bank
deposits.
Revenue - Year-to-Date 2009
---------------------------
- Commission revenue was $412.9 million in the nine months ended
September 30, 2009 compared to $391.3 million in the same period in
2008, representing an increase of 6%.
- Principal transaction revenue was significantly higher in the nine
months ended September 30, 2009 at $84.7 million compared to $28.2 in
the same period in 2008.
- Interest revenue declined 51% from $51.2 million in the nine months
ended September 30, 2008 to $25.3 million in the nine months ended
September 30, 2009 due to declining interest rates as well as
decreases in average margin debit balances of 36% and average stock
borrow balances of 46% over the same periods.
- Investment banking revenue decreased 19% to $55.6 million in the nine
months ended September 30, 2009 versus $68.7 million in the same
period in 2008 due to lower M&A and equity capital markets activity.
- Advisory fees were $109.9 million in the in the nine months ended
September 30, 2009 compared to $157.6 million in the same period in
2008 as a result of a decrease in assets under management during the
period of 26% as well as a decrease of $14.8 million in fees derived
from money market funds.
- Other revenue increased 125% to $29.5 million for the nine months
ended September 30, 2009 from the same period in 2008 as a result of
increases to the value of company owned life insurance of $9.1
million and increased fees of $5.0 million related to the Company's
mortgage brokerage business, partially offset by a decrease of $1.2
million in fees derived from FDIC insured client deposits.
Expenses - Third Quarter 2009
-----------------------------
- Compensation and related expenses increased 24% in the third quarter
of 2009 to $175.5 million from $141.3 million during the third
quarter 2008 as production and incentive-related compensation
increased $29.9 million, deferred compensation costs increased $6.6
million, and share-based compensation, directly related to an
increased share price during the quarter, increased $1.9 million.
These increases were partially offset by a decrease of $8.6 million
for expenses related to deferred compensation obligations to former
CIBC employees.
- Communications and technology expenses decreased 32% to $14.0 million
in the third quarter 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 Businesses.
- Occupancy and equipment costs increased 7% to $19.0 million in the
third quarter 2009 from $17.7 million in the third quarter 2008 due
to escalation provisions increasing rental costs in New York, as well
as the opening of new branch offices around the country.
- Interest expenses declined 53% from $10.4 million in the third
quarter 2008 to $4.8 million in the third quarter 2009 due to
declining interest rates as well as a decrease in average stock loan
balances of 32% and average bank loan balances of 59% over the same
periods.
Expenses - Year-to-Date 2009
----------------------------
- Compensation and related expenses were flat for the nine months ended
September 30, 2009 compared with the same period in 2008. Although
the aggregate amounts were unchanged year over year, production and
incentive-related compensation increased $7.9 million, deferred
compensation costs increased $10.4 million, and share-based
compensation, directly related to an increased share price during the
period, increased $10.5 million. These increases were offset by a
decrease of $31.7 million for expenses related to deferred
compensation obligations to former CIBC employees.
- Clearing and exchange fees decreased 16% for the nine months ended
September 30, 2009 compared to the same period in 2008 primarily
reflecting the economies of transitioning the acquired businesses to
the Company's platform.
- Communications and technology expenses decreased 14% to $48.3 million
for the nine months ended September 30, 2009 as a result of a
reduction, or elimination, of many costs associated with our January
2008 acquisition.
- Occupancy and equipment costs increased 6% to $55.5 million for the
nine months ended September 30, 2009 from $52.3 million in the same
period in 2008 due to escalation provisions increasing rental costs
in New York, as well as the opening of new branch offices around the
country.
- Interest expenses declined 55% from $34.1 million for the nine months
ended September 30, 2008 to $15.4 million in the nine months ended
September 30, 2009 due to declining interest rates as well as a
decrease of 55% both in average stock loan balances and in average
bank loan balances over the same periods.
- Other expenses decreased 22% from $91.1 million for the nine months
ended September 30, 2008 to $71.1 million in the nine months ended
September 30, 2009 largely as a result of the elimination of $32.3
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 $9.9 million.
Shareholders' Equity and Dividend Declaration
- At September 30, 2009, shareholders' equity was $443.1 million
compared to $425.7 million at December 31, 2008.
- At September 30, 2009, book value per share was $33.68 compared to
$32.75 at December 31, 2008 and $32.87 at September 30, 2008.
- During the third 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 November 27, 2009 to holders of
Class A non-voting and Class B voting common stock of record on
November 13, 2009.
Balance Sheet and Liquidity Matters
- On September 30, 2009, the Company paid down $4.4 million of
principal on its Senior Secured Credit Note reducing the outstanding
balance to $32.9 million.
- The Company's level 3 assets were $20.9 million at September 30, 2009
compared to $21.2 million at June 30, 2009 and $19.8 million at
December 31, 2008.
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OPPENHEIMER HOLDINGS INC.
SUMMARY STATEMENT OF OPERATIONS (UNAUDITED)
$ in thousands,
except share
and per share
amounts
----------------------------------------------------------
Three Months Ended Nine Months Ended
% %
09/30/09 09/30/08 Change 09/30/09 09/30/08 Change
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REVENUE
Commissions $146,404 $133,506 10% $412,913 $391,344 6%
Principal
transactions,
net 29,778 (862) n/a 84,720 28,245 200%
Interest 9,145 16,087 -43% 25,335 51,233 -51%
Investment
banking 25,096 16,185 55% 55,597 68,736 -19%
Advisory fees 38,668 51,057 -24% 109,943 157,641 -30%
Other 12,976 6,214 109% 29,548 13,104 125%
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262,067 222,187 18% 718,056 710,303 1%
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EXPENSES
Compensation &
related
expenses 175,504 141,343 24% 484,068 482,052 0%
Clearing &
exchange fees 7,031 7,033 0% 19,504 23,275 -16%
Communications &
technology 14,008 20,452 -32% 48,289 55,911 -14%
Occupancy &
equipment costs 18,987 17,713 7% 55,503 52,267 6%
Interest 4,846 10,392 -53% 15,432 34,062 -55%
Other 27,641 28,965 -5% 71,056 91,051 -22%
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248,017 225,898 10% 693,852 738,618 -6%
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Profit (loss)
before taxes 14,050 (3,711) n/a 24,204 (28,315) n/a
Income tax
provision
(benefit) 6,142 (1,234) n/a 11,180 (11,369) n/a
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Net profit (loss)
for the period $7,908 ($2,477) n/a $13,024 ($16,946) n/a
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Profit (loss)
per share
Basic $0.60 ($0.18) n/a $1.00 ($1.26) n/a
Diluted $0.59 ($0.18) n/a $0.97 ($1.26) n/a
Weighted avg.
shares
outstanding 13,110,471 13,476,365
Actual shares
outstanding 13,155,983 13,172,669
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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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