NEW YORK, April 30, 2021 /PRNewswire/ - Oppenheimer
Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported
net income of $38.7 million or
$3.07 basic earnings per share for
the first quarter of 2021, an increase of approximately 400%,
compared with net income of $7.8
million or $0.61 basic
earnings per share for the first quarter of 2020. Revenue for the
first quarter of 2021 was $373.3
million, an increase of 59%, compared to revenue of
$234.8 million for the first quarter
of 2020.
Albert G. Lowenthal,
Chairman and CEO commented, "The Firm produced its best first
quarter in its history following its best year in its history in
2020. Our performance reflected strong contributions across
all of our businesses led by our Investment Banking Division.
Our operating results were powered by a rapidly improving economy
and optimism around the end of the pandemic as the availability of
vaccines becomes more widespread. With continued stimulus
spending, potential additional "infrastructure" spending, and a
very accommodative Federal Reserve, investors moved equity markets
to new highs with active engagement by investors of all
types.
The outstanding results were driven by very robust equity
underwriting activity in the healthcare and technology sectors
which included our expanded activity assisting companies going
public through special purpose acquisition companies (SPACs).
Our M&A advisory business also picked up considerably with
large completed transactions in healthcare, technology, and
consumer products. Institutional equities sales and trading
activity continued to be strong as volatility and activity remained
elevated during the period. Our employees in Capital Markets
produced exceptional results this quarter.
Equity markets were up 5.8% during the period, contributing
to record assets under management at March
31, 2021, which will drive our advisory fee revenue for
April 2021. Our Wealth Management business performed
extremely well with solid transaction-based revenue as well as
record fee-based revenue based on asset values at year end.
Wealth Management's results were tempered by continued low
short-term interest rates which substantially impacted the
contribution from client margin borrowing and from deposits in
FDIC-insured bank deposit accounts. The operating results
were offset by increased compensation costs of $11.6 million during the quarter driven by
increases in the fair value of a share-based compensation plan
linked to the Company's stock price which ended the period at
$40.05. All in all, we are
extremely pleased with the performance of the business and the
resilience of our employees as we continue to deal with the ongoing
challenges associated with the pandemic. We are optimistic
about the business going forward given the continued strength in
the equity markets amid the backdrop of an improving U.S.
economy."
Summary
Operating Results (Unaudited)
|
('000s, except per
share amounts or otherwise indicated)
|
Firm
|
1Q-21
|
1Q-20
|
Revenue
|
$
|
373,282
|
$
|
234,770
|
Compensation
Expense
|
$
|
255,601
|
$
|
157,676
|
Non-compensation
Expense
|
$
|
65,554
|
$
|
66,871
|
Pre-Tax
Income
|
$
|
52,127
|
$
|
10,223
|
Income
Taxes
|
$
|
13,469
|
$
|
2,405
|
Net Income
|
$
|
38,658
|
$
|
7,818
|
Earnings Per Share
(Basic)
|
$
|
3.07
|
$
|
0.61
|
Earnings Per Share
(Diluted)
|
$
|
2.91
|
$
|
0.58
|
Book Value Per
Share
|
$
|
56.74
|
$
|
46.16
|
Tangible Book Value
Per Share (1)
|
$
|
43.34
|
$
|
32.79
|
Private
Client
|
|
|
Revenue
|
$
|
164,023
|
$
|
141,418
|
Pre-Tax
Income
|
$
|
24,263
|
$
|
33,369
|
Assets Under
Administration (billions)
|
$
|
111.4
|
$
|
79.1
|
Asset
Management
|
|
|
Revenue
|
$
|
24,230
|
$
|
19,276
|
Pre-Tax
Income
|
$
|
7,553
|
$
|
4,305
|
Assets Under
Management (billions)
|
$
|
40.2
|
$
|
28.0
|
Capital
Markets
|
|
|
Revenue
|
$
|
183,599
|
$
|
75,542
|
Pre-Tax Income
(Loss)
|
$
|
49,991
|
$
|
(143)
|
|
|
|
(1) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding.
|
Highlights
- Record first quarter gross revenue, net income, and earnings
per share due to a surge in equity underwriting and M&A
advisory fees
- Record revenue and earnings in Capital Markets segment for the
first quarter driven by record investment banking results
- Capital Markets pre-tax profit margin was 27.2% driven by the
strength in investment banking and sales and trading
- Client assets under administration and under management were
both at record levels at March 31,
2021
- Shareholders' Equity reached a record $719.7 million as of March
31, 2021
- Book value and tangible book value per share reached record
levels at March 31, 2021
Private Client
Private Client reported revenue for the current quarter of
$164.0 million, 16.0% higher compared
with a year ago due to higher advisory fees and increases in the
cash surrender value of company-owned life insurance policies
partially offset by a decrease in bank deposit sweep income from
lower interest rates. Pre-tax income of $24.3 million in the current quarter resulted in
a pre-tax profit margin of 14.8% pressured by increased
compensation costs from share-based compensation, which was tied to
the Company's stock price, and lower short-term interest rates.
Financial advisor headcount declined to 1,000 at the end of the
current quarter compared to 1,029 at the end of the first quarter
of 2020, although the productivity of our financial advisors
increased reflecting higher individual production levels.
('000s, except
otherwise indicated)
|
|
1Q-21
|
1Q-20
|
|
|
|
Revenue
|
$
|
164,023
|
$
|
141,418
|
Commissions
|
$
|
57,596
|
$
|
56,931
|
Advisory
Fees
|
$
|
80,254
|
$
|
66,882
|
Bank Deposit Sweep
Income
|
$
|
4,008
|
$
|
18,826
|
Interest
|
$
|
6,476
|
$
|
7,681
|
Other
|
$
|
15,689
|
$
|
(8,902)
|
|
|
|
Total
Expenses
|
$
|
139,760
|
$
|
108,049
|
Compensation
|
$
|
111,395
|
$
|
80,173
|
Non-compensation
|
$
|
28,365
|
$
|
27,876
|
|
|
|
Assets Under
Administration (billions)
|
$
|
111.4
|
$
|
79.1
|
Cash Sweep
Balances (billions)
|
$
|
7.4
|
$
|
6.4
|
Revenue:
- Retail commissions increased 1.2% from a year ago amidst
continued elevated client participation levels
- Advisory fees increased 20.0% due to higher assets under
management at December 31, 2020
compared with December 31, 2019
- Bank deposit sweep income decreased $14.8 million or 78.7% from a year ago due to
lower short-term interest rates partially offset by higher average
cash sweep balances
- Interest revenue declined 15.7% from a year ago due to lower
short-term interest rates partially offset by higher average margin
balances
- Other revenue increased primarily due to increases in the cash
surrender value of company-owned life insurance policies during the
current period compared to decreases in the value of those policies
in the prior period
Total Expenses:
- Compensation expenses increased 38.9% from a year ago primarily
due to increased production, share-based and deferred compensation
costs
- Non-compensation expenses increased 1.8% from a year ago
primarily due to an increase in allowance for credit losses
partially offset by lower interest costs on client balances
associated with the bank deposit sweep program
Asset Management
Asset Management reported revenue for the current quarter of
$24.2 million, 25.7% higher compared
with a year ago. Pre-tax income was $7.6 million, an increase of 75.4% compared with
the prior year.
('000s, except
otherwise indicated)
|
|
1Q-21
|
1Q-20
|
|
|
|
Revenue
|
$
|
24,230
|
$
|
19,276
|
Advisory
Fees
|
$
|
24,227
|
$
|
19,270
|
Other
|
$
|
3
|
$
|
6
|
|
|
|
Total
Expenses
|
$
|
16,677
|
$
|
14,971
|
Compensation
|
$
|
7,259
|
$
|
6,351
|
Non-compensation
|
$
|
9,418
|
$
|
8,620
|
|
|
|
AUM
(billions)
|
$
|
40.2
|
$
|
28.0
|
Revenue:
- Advisory fee revenue increased 25.7% due to higher assets under
management at December 31, 2020
compared with December 31, 2019 and
positive net asset flows
Assets under Management (AUM):
- AUM hit a record level of $40.2
billion at March 31, 2021,
which is the basis for advisory fee billings for April 2021
- The increase in AUM was comprised of higher asset values of
$11.4 billion on existing client
holdings and a net contribution of assets of $0.8 billion
- The Firm changed its advisory fee billings from quarterly in
advance to monthly in advance starting on April 1, 2021
Total Expenses:
- Compensation expenses were up 14.3% from a year ago which was
primarily related to increases in incentive compensation
- Non-compensation expenses were up 9.3% when compared to the
prior period due to higher payments due to portfolio managers
Capital Markets
Capital Markets reported revenue for the current quarter of
$183.6 million, 143.0% higher when
compared with the prior year. Pre-Tax income was $50.0 million compared with a pre-tax loss of
$0.1 million a year ago.
('000s)
|
|
|
|
1Q-21
|
1Q-20
|
|
|
|
Revenue
|
$
|
183,599
|
|
$
|
75,542
|
|
|
|
|
Investment
Banking
|
$
|
116,836
|
|
$
|
22,036
|
|
Advisory
Fees
|
$
|
35,922
|
|
$
|
9,836
|
|
Equities
Underwriting
|
$
|
74,582
|
|
$
|
8,315
|
|
Fixed Income
Underwriting
|
$
|
5,487
|
|
$
|
3,627
|
|
Other
|
$
|
845
|
|
$
|
258
|
|
|
|
|
Sales and
Trading
|
$
|
66,063
|
|
$
|
52,840
|
|
Equities
|
$
|
43,556
|
|
$
|
30,990
|
|
Fixed
Income
|
$
|
22,507
|
|
$
|
21,850
|
|
|
|
|
Other
|
$
|
700
|
|
$
|
666
|
|
|
|
|
Total
Expenses
|
$
|
133,608
|
|
$
|
75,685
|
|
Compensation
|
$
|
111,930
|
|
$
|
51,004
|
|
Non-compensation
|
$
|
21,678
|
|
$
|
24,681
|
|
Revenue:
Investment Banking
- Advisory fees earned from investment banking activities
increased 265.2% compared with a year ago driven by large completed
M&A transactions in healthcare, technology, and consumer
products
- Equity underwriting fees increased 797.0% compared with a year
ago due to a significant increase in equity underwriting activity
in the healthcare and technology sectors, particularly for
companies utilizing the SPAC framework to access the public
markets
- Fixed income underwriting fees were up 51.3% compared with a
year ago primarily driven by new issuance in public finance during
the period
Sales and Trading
- Equities sales and trading revenue increased 40.5% compared
with a year ago due to continued elevated volatility driving higher
volumes in the equities market
- Fixed Income sales and trading increased 3.0% compared with a
year ago driven by higher municipal underwriting fees
Total Expenses:
- Compensation expenses increased 119.5% compared with a year ago
primarily due to increased production and incentive compensation
tied to increases in revenue as well as costs associated with
additional staffing
- Non-compensation expenses were 12.2% lower than a year ago due
to decreased interest costs and reduced costs associated with
business travel and entertainment and conferences
Other Matters
(In millions,
except number of shares and per share amounts)
|
|
1Q-21
|
|
1Q-20
|
Capital
|
|
|
|
Senior Secured
Notes
|
$
|
123.9
|
|
$
|
148.1
|
|
Shareholders'
Equity
|
$
|
719.7
|
|
$
|
586.7
|
|
Regulatory Net
Capital (1)
|
$
|
314.4
|
|
$
|
250.9
|
|
Regulatory Excess Net
Capital (1)
|
$
|
290.0
|
|
$
|
224.1
|
|
|
|
|
|
Common Stock
Repurchases
|
|
|
|
Repurchases
|
$
|
—
|
|
$
|
8.4
|
|
Number of
Shares
|
—
|
|
409,504
|
|
Average
Price
|
$
|
—
|
|
$
|
20.60
|
|
|
|
|
Period End
Shares
|
12,685,708
|
12,710,405
|
Effective Tax
Rate
|
25.8
|
%
|
23.5
|
%
|
|
|
|
(1) Attributable to Oppenheimer &
Co. Inc. broker-dealer
|
- Shareholders' equity reached a record high of $719.7 million on March
31, 2021
- The Board of Directors announced a quarterly dividend in the
amount of $0.12 per share effective
for the first quarter of 2021 payable on May
28, 2021 to holders of Class A non-voting and Class B voting
common stock of record on May 14,
2021
- Level 3 assets, comprised of auction rate securities, were
$31.5 million as of March 31, 2021
- Compensation expense as a percentage of revenue was higher at
68.5% during the current period versus 67.2% last year due
primarily to higher share-based compensation expense associated
with the increase in the share price of the Company's stock during
the current quarter when compared with that of the prior
quarter
- The effective tax rate for the current period was 25.8%
compared with 23.5% for the prior period
Coronavirus ("COVID-19") Pandemic
The Company continues to monitor the effects of the pandemic
both on a national level as well as regionally and locally and is
responding accordingly. In addition, we continue to provide
frequent communications to clients, employees, and regulators. We
have adopted enhanced cleaning practices and other health protocols
in our offices, taken measures to significantly restrict
non-essential business travel and have practices in place to
mandate that employees who may have been exposed to COVID-19, or
show any relevant symptoms, self-quarantine. In early March 2020, the Company executed on its Business
Continuity Plan whereby the vast majority of our employees began to
work remotely with only "essential" employees reporting to our
offices. We accomplished this by significantly expanding the use of
technology infrastructure that facilitates remote operations. Our
ability to avoid significant business disruptions is reliant on the
continued ability to have the vast majority of employees work
remotely. To date, there have been no significant disruptions to
our business or control processes as a result of this dispersion of
employees. Recently, there has been widespread distribution and
inoculation of the U.S. population with vaccines that have been
proven to be both safe and effective. Should this program continue
at its present pace (there is no assurance that this will be the
case), it is likely that the negative impact of the pandemic on the
economy will abate by the end of the current year, with likely
improvements being seen beginning in the second quarter of 2021. We
currently anticipate that a large number of our employees will
continue to work remotely for the near term and hope to begin a
broader re-entry to our offices later in the year.
Company Information
Oppenheimer Holdings Inc., through its operating subsidiaries,
is a leading middle market investment bank and full service
broker-dealer that is engaged in a broad range of activities in the
financial services industry, including retail securities brokerage,
institutional sales and trading, investment banking (corporate and
public finance), equity and fixed income research, market-making,
trust services, and investment advisory and asset management
services. With roots tracing back to 1881, the Company is
headquartered in New York and has
92 retail branch offices in the United
States and institutional businesses located in London, Tel
Aviv, and Hong Kong.
Forward-Looking Statements
This press release includes certain "forward-looking statements"
relating to anticipated future performance including the projected
impact of COVID-19 on the Company's business, financial
performance, and operating results. The following factors, among
others, could cause actual results to vary from the forward-looking
statements: the severity and duration of COVID-19; COVID-19's
impact on the U.S. and global economies; and Federal, state and
local governmental responses to COVID-19. 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, 2020.
Oppenheimer
Holdings Inc.
|
Consolidated
Income Statements (Unaudited)
|
('000s, except
number of shares and per share amounts)
|
|
|
|
|
|
For the Three
Months Ended
March
31,
|
|
|
2021
|
|
2020
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
Commissions
|
$
|
113,471
|
|
$
|
103,249
|
|
9.9
|
|
Advisory
fees
|
104,496
|
|
86,164
|
|
21.3
|
|
Investment
banking
|
124,501
|
|
25,728
|
|
383.9
|
|
Bank deposit sweep
income
|
4,008
|
|
18,826
|
|
(78.7)
|
|
Interest
|
8,666
|
|
10,890
|
|
(20.4)
|
|
Principal
transactions, net
|
10,865
|
|
(868)
|
|
*
|
|
Other
|
7,275
|
|
(9,219)
|
|
*
|
|
Total
revenue
|
373,282
|
|
234,770
|
|
59.0
|
EXPENSES
|
|
|
|
|
|
|
Compensation and
related expenses
|
255,601
|
|
157,676
|
|
62.1
|
|
Communications and
technology
|
20,607
|
|
19,891
|
|
3.6
|
|
Occupancy and
equipment costs
|
15,182
|
|
16,078
|
|
(5.6)
|
|
Clearing and exchange
fees
|
6,275
|
|
5,659
|
|
10.9
|
|
Interest
|
2,647
|
|
6,550
|
|
(59.6)
|
|
Other
|
20,843
|
|
18,693
|
|
11.5
|
|
Total
expenses
|
321,155
|
|
224,547
|
|
43.0
|
Pre-Tax
Income
|
52,127
|
|
10,223
|
|
409.9
|
Income
taxes
|
13,469
|
|
2,405
|
|
460.0
|
Net
income
|
$
|
38,658
|
|
$
|
7,818
|
|
394.5
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
|
$
|
3.07
|
|
$
|
0.61
|
|
403.3
|
|
Diluted
|
$
|
2.91
|
|
$
|
0.58
|
|
401.7
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
Basic
|
12,579,130
|
|
12,895,729
|
|
(2.5)
|
|
Diluted
|
13,299,243
|
|
13,456,233
|
|
(1.2)
|
* Percentage not meaningful
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SOURCE Oppenheimer Holdings Inc.