Oppenheimer Holdings Inc. Reports First Quarter 2014 Earnings and Announces Quarterly Dividend

 Oppenheimer Holdings Inc. Reports First Quarter 2014 Earnings and Announces
                              Quarterly Dividend

PR Newswire

NEW YORK, May 1, 2014

NEW YORK, May 1, 2014 /PRNewswire/ - Oppenheimer Holdings Inc. (NYSE: OPY)
today reported net income of $3.2 million or $0.24 per share for the first
quarter of 2014 compared with net income of $3.7 million or $0.27 per share
for the first quarter of 2013, a decrease in net income of 12.0%. Revenue for
the first quarter of 2014 was $255.2 million compared with $239.1 million in
the first quarter of 2013, an increase of 6.7%.

              Summary Operating Results (Unaudited)
('000s, except Earnings Per Share and Book Value Per Share)      
                                      For the 3-Months Ended
                                   3/31/14      3/31/13     % Δ
Revenue                            $ 255,168  $ 239,146    6.7
Net Income^(1)                        $ 3,224     $ 3,663 (12.0)
Earnings Per Share^(1)                                    
Basic                                $ 0.24      $ 0.27 (11.1)
Diluted                              $ 0.23      $ 0.26 (11.5)
Weighted Average # of Common Shares Outstanding                  
Basic                                 13,537       13,608  (0.5)
Diluted                               14,115       14,029    0.6
                                                         
                                                         
                                                           As of:
                                   3/31/14         3/31/13  % Δ
Book Value Per Share                $ 38.56     $ 37.07    4.0
Tangible Book Value Per Share       $ 26.10     $ 24.61    6.1

(1) Attributable to Oppenheimer Holdings Inc.

After a minor  setback in the  early part  of the quarter,  the U.S.  equities 
markets rebounded with  the S&P 500  returning 1.3% for  the first quarter  of 
2014. Concerns  in the  quarter were  due in  part to  the Federal  Reserve's 
tapering program, the slowdown in China's economy, and volatility in  emerging 
markets. That coupled with geo-political tensions around Russia's  annexation 
of Crimea, continuing upheaval in the Middle East as well as the reduction  in 
the rate of  growth of  the U.S.  economy due  to the  extreme winter  weather 
across much of the U.S. provided the impetus for increases in bond prices  and 
volatility in the equity markets during the first quarter.

Albert G. Lowenthal, Chairman  and CEO, "While we  are generally pleased  with 
our operating  results for  the first  quarter, we  continue to  operate in  a 
difficult  regulatory  environment.  Recent   developments  in  two   related 
regulatory matters based  on activities  thatoccurred a number  of years  ago 
have caused the Company to set aside reserves that negatively impacted results
for the first quarter. We hope to  putthese matters behind us over the  next 
few quarters so  that we  can more  fully realize  the progress  we have  made 
inour operating units.

During the quarter, we began to see some of the investments we made last  year 
in the investment banking business starting to pay off. As a result, our  fee 
income from participation in mergers  and acquisitions activity increased  and 
we continued  to benefit  from the  strong demand  for equity  issuances.  In 
addition to  the record  revenue during  the first  quarter in  our  fee-based 
business, the Company  continues to see  improvement in its  transaction-based 
business. The first  quarter marked  a strong  finish in  the equity  markets 
which resulted in favorable valuations  of our assets under management,  which 
will ultimately lead in the second quarter to the eight consecutive record for
our fee-based business. The combination of a favorable operating  environment 
and lower financing costs due to the early redemption and retirement of 25% of
our high coupon long-term senior debt on April 15^th should help our  business 
over the remainder of the year."

Financial Highlights

  *Commission revenue was $122.1 million for the first quarter of 2014, an
    increase of 2.1% compared with the first quarter of 2013.
  *Principal transactions revenue decreased 43.9% to $8.8 million during the
    first quarter of 2014 compared with the first quarter of 2013 due to
    decreases in both equities and fixed income trading profits during the
    period.
  *Investment banking revenue was up 81.7% to $33.5 million for the first
    quarter of 2014 compared with $18.4 million for the first quarter of 2013
    due to increased fees from equity underwritings and from mergers and
    acquisition activity during the 2014 quarter.
  *Advisory fees were $68.2 million during the first quarter of 2014, an
    increase of 20.2% compared with the first quarter of 2013 due to increased
    management fees earned on managed products.

           Business Segment Results (Unaudited)
                                For the 3-Months Ended
('000s)                        3/31/14    3/31/13    % Δ
Revenue                                                
Private Client             $ 147,820 $ 143,369    3.1
Asset Management                24,610     20,956   17.4
Capital Markets                 77,881     65,131   19.6
Commercial Mortgage Banking      4,872      8,066 (39.6)
Corporate/Other                   (15)      1,624    *
                                255,168    239,146    6.7
Income (Loss) Before Income Taxes                       
Private Client                 10,308     17,327 (40.5)
Asset Management                 7,683      6,543   17.4
Capital Markets                 11,184      3,533  216.6
Commercial Mortgage Banking      1,849      2,878 (35.8)
Corporate/Other               (25,915)   (23,568) (10.0)
                               $ 5,109   $ 6,713 (23.9)

* Not comparable

Private Client

Private Client reported  revenue of $147.8  million for the  first quarter  of 
2014, 3.1%  higher than  the  first quarter  of 2013  due  to an  increase  in 
fee-based business during  the first  quarter of 2014.  Income before  income 
taxes was $10.3 million, a decrease  of 40.5% compared with the first  quarter 
of 2013 primarily due  to increases in legal  and regulatory costs during  the 
first quarter of 2014.

  *Client assets under administration were $87.2 billion at March 31, 2014
    compared to $84.9 billion at March 31, 2013, an increase of 2.7% and a
    record for the Company.
  *Financial Advisor headcount was 1,390 at the end of the first quarter of
    2014, down from 1,405 at the end of the first quarter of 2013.
  *Retail commissions were $79.3 million for the first quarter of 2014, a
    decrease of 3.4% from the prior year quarter.
  *Advisory fee revenue on traditional and alternative managed products was
    $45.2 million for the first quarter of 2014, an increase of 22.0% over the
    prior year quarter (see Asset Management below for further information).
  *Money market fees were reduced by waivers in the amount of $7.9 million
    during the first quarter of 2014 versus waivers of $7.2 million during the
    first quarter of 2013.

Asset Management

Asset Management reported revenue  of $24.6 million for  the first quarter  of 
2014, 17.4% higher than the first quarter of 2013. Income before income taxes
was $7.7 million,  an increase  of 17.4% compared  with the  first quarter  of 
2013, as a result of increased fees earned on managed products.

  *Advisory fee revenue on traditional and alternative managed products was
    $23.0 million for the first quarter of 2014, an increase of 16.9% 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 $25.3 billion at December 31, 2013 ($20.9 billion at December 31,
    2012) and are allocated to the Private Client and Asset Management
    Divisions.
  *AUM increased 14.3% to $25.6 billion at March 31, 2014, a record for the
    Company, compared to $22.4 billion at March 31, 2013, which is the basis
    for advisory fee billings for the second quarter of 2014. The increase in
    AUM was comprised of asset appreciation of $0.8 billion and net new assets
    of $2.4 billion.

Capital Markets

Capital Markets reported  revenue of $77.9  million for the  first quarter  of 
2014, 19.6% higher than the first quarter  of 2013 due to increased fees  from 
equity underwritings and from mergers and acquisition activity. Income before
income taxes was $11.2 million for the  first quarter of 2014, an increase  of 
216.6% compared with income before income taxes of $3.5 million for the  first 
quarter of 2013.

  *Institutional equities commissions were $29.1 million for the first
    quarter of 2014, an increase of 15.5% compared with the prior year period.
  *Advisory fees from investment banking activities increased 133.5% to $13.5
    million in the first quarter of 2014 compared with the prior year period.
  *Equity underwriting fees increased 63.0% or $5.4 million to $14.0 million
    for the first quarter of 2014 compared with the prior year period.
  *Revenue from Taxable Fixed Income decreased 17.0% to $17.3 million for the
    first quarter of 2014 compared with the prior year period.
  *Public Finance and Municipal Trading revenue was down 9.7% to $5.0 million
    for the first quarter of 2014 compared with the prior year period.

Commercial Mortgage Banking

Commercial Mortgage Banking  reported revenue  of $4.9 million  for the  first 
quarter of 2014, 39.6% lower than the first quarter of 2013, due to a decrease
in the  dollar volume  of loans  originated during  the 2014  period.  Income 
before income taxes was  $1.8 million, a decrease  of 35.8% compared with  the 
first quarter of 2013.

  *Loan origination fees for the first quarter of 2014 were $683,000, a
    decrease of 57.3% compared with the prior year period, as the Company
    originated 5 commercial loans (20 in the first quarter of 2013) with an
    aggregate principal loan balance of $62.4 million ($151 million in the
    first quarter of 2013).
  *Net servicing revenue for the first quarter of 2014 was $1.3 million
    compared with $1.2 million for the comparable period in 2013.
  *Principal loan balances related to servicing activities totaled $3.9
    billion at March 31, 2014, up 11.4% from March 31, 2013.

Compensation and Benefit Expenses

Compensation  and  benefits  (including  salaries,  production  and  incentive 
compensation,  share-based  compensation,  deferred  compensation,  and  other 
benefit-related items)  totaled $172.0  million during  the first  quarter  of 
2014, an increase  of 8.0% over  the first  quarter of 2013.  An increase  in 
production-related and  incentive  compensation  contributed to  much  of  the 
increase based on  increased revenue during  the period. This  was offset  by 
decreases  in  expenses  associated  with  deferred  compensation  during  the 
period. Compensation as a  percentage of revenue was  67.4% during the  first 
quarter of  2014 compared  to 66.6%  during the  first quarter  of 2013.  The 
increase in compensation as a  percentage of revenue was largely  attributable 
to the  increased  share-based  compensation  costs  resulting  from  employee 
compensation plans  where the  value is  associated with  the Company's  stock 
price.

Non-Compensation Expenses

Non-compensation expenses were $78.1 million during the first quarter of 2014,
an increase of 6.7% compared to $73.2 million during the same period last year
due to increases in legal and regulatory costs which were partially offset  by 
decreases in occupancy and equipment and interest costs during the period. The
increase in  legal  and  regulatory  costs largely  reflects  an  increase  in 
reserves of  $7.7  million  during  the  first  quarter  of  2014  related  to 
regulatory matters.

Provision for Income Taxes

The effective income tax rate for the first quarter of 2014 was 33.1% compared
with 42.0% for the prior year first quarter due to income tax benefits related
to the revaluation of deferred tax  liabilities recorded in the first  quarter 
of 2014. Such changes were,  in large part, due to  the enactment of the  New 
York State corporate tax reform and to smaller losses incurred by the  foreign 
subsidiaries in the first quarter of 2014 compared to the corresponding  prior 
year period whose tax effect is accrued at lower statutory rates.

Balance Sheet and Liquidity

  *At March 31, 2014, total equity was $530.6 million  compared with $527.9
    million  at December 31, 2013.
  *At March 31, 2014, book value per share was $38.56 (compared with $38.77
    at December 31, 2013) and tangible book value per share was $26.10
    (compared with $26.19 at December 31, 2013).
  *The Company's level 3 assets, primarily auction rate securities, were
    $96.8 million at December 31, 2013 (compared with $93.7 million at
    December 31, 2013).
  *On April 15, 2014, the Company early retired a total of $50 million (25%)
    of its 8.75% Senior Secured Notes due 2018 (the "Notes"). The Company
    redeemed $45 million aggregate principal amount of the outstanding Notes
    at a redemption price equal to 106.563% of the principal amount of the
    Notes, plus accrued and unpaid interest. In addition, the Company retired
    the $5 million aggregate principal amount of the Notes that it held. Upon
    completion of the redemption and retirement on April 15, 2014, $150
    million aggregate principal amount of the Notes remains outstanding. The
    retirement of the Notes will reduce the Company's interest costs by $3.9
    million annually.

Dividend Announcement

The Company today announced  a quarterly dividend in  the amount of $0.11  per 
share payable on May  27, 2014 to  holders of Class A  non-voting and Class  B 
voting common stock of record on May 15, 2014.

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 banking.  With roots  tracing back  to 1881,  the firm  is 
headquartered in  New York  and has  96 offices  in 25  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 Part 1A - Risk  Factors 
in the Company's Annual Report  on Form 10-K for  the year ended December  31, 
2013.

                          Oppenheimer Holdings Inc.
                  Consolidated Income Statements (unaudited)
('000s, except EPS)                                                        
                                                      For the 3-Months Ended
                                                     3/31/14  3/31/13   % Δ
REVENUE                                                                    
Commissions                                         $122,138 $119,580    2.1
Advisory fees                                         68,205   56,720   20.2
Investment banking                                    33,524   18,448   81.7
Interest                                              12,390   12,371    0.2
Principal transactions, net                            8,817   15,717 (43.9)
Other                                                10,094   16,310 (38.1)
                                                      255,168  239,146    6.7
                                                                          
EXPENSES                                                                   
Compensation and related expenses                    171,950  159,209    8.0
Occupancy and equipment costs                         15,397   17,565 (12.3)
Communications and technology                         16,734   15,864    5.5
Interest                                               5,164    6,862 (24.7)
Clearing and exchange fees                             5,892    6,042  (2.5)
Other                                                 34,922   26,891   29.9
                                                      250,059  232,433    7.6
                                                                          
Income before income taxes                               5,109    6,713 (23.9)
Income tax provision                                     1,689    2,820 (40.1)
Net income for the period                                3,420    3,893 (12.1)
Less net income attributable to non-controlling            196      230 (14.8)
interest, net of tax
Net income attributable to Oppenheimer Holdings Inc.    $3,224   $3,663 (12.0)
                                                                          
Earnings per share attributable to Oppenheimer Holdings Inc.               
Basic                                                  $0.24    $0.27 (11.1)
Diluted                                                $0.23    $0.26 (11.5)
                                                                          
Weighted Average Number of Common Shares Outstanding                         
Basic                                                 13,537   13,608  (0.5)
Diluted                                               14,115   14,029    0.6



SOURCE Oppenheimer Holdings Inc.
 
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