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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.