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

Oppenheimer Holdings Inc. Reports First Quarter 2014 Earnings and Announces 
Quarterly Dividend 
NEW YORK, May 1, 2014 /CNW/ - 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     % ”
    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   % ”
      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 that occurred a number of years ago 
have caused the Company to set aside reserves that negatively impacted results 
for the first quarter.  We hope to put these matters behind us over the next 
few quarters so that we can more fully realize the progress we have made in 
our 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    % ”
    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 millioncompared with
            $527.9 millionat 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    % ”
    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             196      230 (14.8)
    non-controlling interest, net of tax
    Net income attributable to Oppenheimer   $3,224   $3,663 (12.0)
    Holdings Inc.
                                                                   
    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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CO: Oppenheimer Holdings Inc.
ST: New York
NI: FIN ERN DIV  
-0- May/01/2014 20:10 GMT
 
 
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