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NEW YORK, Jan. 27, 2023 /PRNewswire/ - Oppenheimer Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported net income of $22.4 million or $2.04 basic earnings per share for the fourth quarter of 2022 compared with net income of $62.9 million or $4.99 basic earnings per share for the fourth quarter of 2021. Revenue for the fourth quarter of 2022 was $313.6 million compared to revenue of $365.1 million for the fourth quarter of 2021, a decrease of 14.1%.
For the year ended December 31, 2022, the Company reported net income of $32.4 million or $2.77 basic earnings per share compared with net income of $159.0 million or $12.57 basic earnings per share for the year ended December 31, 2021. Revenue for the year ended December 31, 2022 was $1.1 billion compared to revenue of $1.4 billion for the year ended December 31, 2021, a decrease of 20.3%.
Summary Operating Results (Unaudited) | ||||
('000s, except per share amounts or otherwise indicated) | ||||
4Q-22 | 4Q-21 | FY-22 | FY-21 | |
Revenue | $ 313,580 | $ 365,118 | $ 1,110,941 | $ 1,394,035 |
Compensation Expense | $ 197,683 | $ 193,787 | $ 740,827 | $ 886,840 |
Non-compensation Expense | $ 85,625 | $ 79,379 | $ 324,560 | $ 282,554 |
Pre-Tax Income | $ 30,272 | $ 91,952 | $ 45,554 | $ 224,641 |
Income Taxes Provision | $ 7,885 | $ 29,055 | $ 13,444 | $ 65,677 |
Net Income (1) | $ 22,413 | $ 62,897 | $ 32,351 | $ 158,964 |
Earnings Per Share (Basic) (1) | $ 2.04 | $ 4.99 | $ 2.77 | $ 12.57 |
Earnings Per Share (Diluted) (1) | $ 1.87 | $ 4.61 | $ 2.57 | $ 11.70 |
Book Value Per Share | $ 72.41 | $ 65.66 | $ 72.41 | $ 65.66 |
Tangible Book Value Per Share (2) | $ 56.91 | $ 52.11 | $ 56.91 | $ 52.11 |
(1) Attributable to Oppenheimer Holdings Inc. | ||||
(2) Represents book value less goodwill and intangible assets divided by number of shares outstanding. |
Highlights
Albert G. Lowenthal, Chairman and CEO commented, "The results for the full year 2022 are significantly reduced from the prior year's record levels, largely reflecting the impact of challenging macroeconomic conditions as well as an adverse arbitration decision in 2022. Concerns around whether inflation, rising interest rates and other geopolitical tensions could induce a recession weighed negatively on market sentiment during the year. This resulted in significant declines in transaction volumes and in the valuations of the equity and fixed income markets, which drove a meaningful reduction in both our transaction based revenues and advisory fee revenues. The volatile markets also led to a cooling of equity IPOs, secondary offerings and M&A transaction activity, which negatively impacted our capital markets income.
Nevertheless, in spite of these headwinds, we were able to deliver profitable results for the year owing to the diversity and countercyclical nature of our revenue streams. In particular, bank deposit sweep income and interest income on margin loans increased significantly throughout the year, as both received a benefit from the short-term interest rate increases enacted by the Federal Reserve. Importantly, while we experienced higher legal expenses during the year, we remain focused on managing our controllable costs and maintaining discipline on our overall expense levels.
The Company continues to maintain a strong balance sheet with a significant excess in regulatory capital. During the year, the Company took advantage of the lower level of its share price to purchase 1,684,287 shares (15%) of its Class A non-voting common stock at an average price of $36.00 per share in the open market under its share repurchase program. This resulted in 10,868,556 Class A non-voting common shares remaining outstanding at December 31, 2022. We remain confident in the strength of our brand, the resiliency of our businesses and our ability to continue to provide essential investment services to our clients."
Segment Results (Unaudited) | ||||
('000s, except per share amounts or otherwise indicated) | ||||
4Q-22 | 4Q-21 | FY-22 | FY-21 | |
Private Client | ||||
Revenue | $ 201,748 | $ 173,310 | $ 675,680 | $ 665,060 |
Pre-Tax Income | $ 49,331 | $ 17,784 | $ 142,250 | $ 101,146 |
Assets Under Administration (billions) | $ 105.0 | $ 122.1 | $ 105.0 | $ 122.1 |
Asset Management | ||||
Revenue | $ 22,940 | $ 27,930 | $ 99,242 | $ 104,598 |
Pre-Tax Income | $ 9,837 | $ 10,270 | $ 35,753 | $ 35,874 |
Asset Under Management (billions) | $ 36.8 | $ 46.2 | $ 36.8 | $ 46.2 |
Capital Markets | ||||
Revenue | $ 90,549 | $ 165,575 | $ 337,821 | $ 625,704 |
Pre-Tax Income (Loss) | $ (11,328) | $ 96,838 | $ (25,696) | $ 204,090 |
Fourth Quarter Results
Private Client
Private Client reported revenue of $201.7 million for the fourth quarter of 2022, 16.4% higher compared with a year ago. Pre-tax income was $49.3 million, an increase of 177.4% compared with a year ago. Financial advisor headcount declined to 968 at the end of the current quarter compared to 996 at the end of the fourth quarter of 2021.
('000s, except otherwise indicated) | ||
4Q-22 | 4Q-21 | |
Revenue | $ 201,748 | $ 173,310 |
Commissions | $ 46,128 | $ 55,027 |
Advisory Fees | $ 76,574 | $ 90,857 |
Bank Deposit Sweep Income | $ 49,590 | $ 3,928 |
Interest | $ 18,880 | $ 7,954 |
Other | $ 10,576 | $ 15,544 |
Total Expenses | $ 152,417 | $ 155,526 |
Compensation | $ 112,919 | $ 120,487 |
Non-compensation | $ 39,498 | $ 35,039 |
Pre-Tax Income | $ 49,331 | $ 17,784 |
Compensation Ratio | 56.0 % | 69.5 % |
Non-compensation Ratio | 19.6 % | 20.2 % |
Pre-Tax Margin | 24.5 % | 10.3 % |
Assets Under Administration (billions) | $ 105.0 | $ 122.1 |
Cash Sweep Balances (billions) | $ 5.5 | $ 7.9 |
Revenue:
Total Expenses:
Asset Management
Asset Management reported revenue of $22.9 million for the fourth quarter of 2022, 17.9% lower compared with a year ago due to lower asset values caused by the declining markets. Pre-tax income was $9.8 million, a decrease of 4.2% compared with a year ago.
('000s, except otherwise indicated) | ||
4Q-22 | 4Q-21 | |
Revenue | $ 22,940 | $ 27,930 |
Advisory Fees | $ 22,936 | $ 27,926 |
Other | $ 4 | $ 4 |
Total Expenses | $ 13,103 | $ 17,660 |
Compensation | $ 3,776 | $ 8,172 |
Non-compensation | $ 9,327 | $ 9,488 |
Pre-Tax Income | $ 9,837 | $ 10,270 |
Compensation Ratio | 16.5 % | 29.3 % |
Non-compensation Ratio | 40.7 % | 34.0 % |
Pre-Tax Margin | 42.9 % | 36.8 % |
AUM (billions) | $ 36.8 | $ 46.2 |
Revenue:
Assets under Management (AUM):
Total Expenses:
Capital Markets
Capital Markets reported revenue of $90.5 million for the fourth quarter of 2022, 45.3% lower compared with a year ago. Pre-tax loss was $11.3 million compared with pre-tax income of $96.8 million a year ago.
('000s) | ||
4Q-22 | 4Q-21 | |
Revenue | $ 90,549 | $ 165,575 |
Investment Banking | $ 32,476 | $ 112,647 |
Advisory Fees | $ 25,110 | $ 56,503 |
Equities Underwriting | $ 5,533 | $ 46,434 |
Fixed Income Underwriting | $ 1,541 | $ 9,541 |
Other | $ 292 | $ 169 |
Sales and Trading | $ 57,039 | $ 52,536 |
Equities | $ 33,082 | $ 33,728 |
Fixed Income | $ 23,957 | $ 18,808 |
Other | $ 1,034 | $ 392 |
Total Expenses | $ 101,877 | $ 68,737 |
Compensation | $ 73,163 | $ 39,568 |
Non-compensation | $ 28,714 | $ 29,169 |
Pre-Tax Income (Loss) | $ (11,328) | $ 96,838 |
Compensation Ratio | 80.8 % | 23.9 % |
Non-compensation Ratio | 31.7 % | 17.6 % |
Pre-Tax Margin | (12.5) % | 58.5 % |
Revenue:
Investment Banking
Sales and Trading
Total Expenses:
Full Year Results
Private Client
Private Client reported revenue of $675.7 million for the year ended December 31, 2022, 1.6% higher compared with the prior year. Pre-tax income was $142.3 million, an increase of 40.6% from the prior year.
('000s) | ||
FY-22 | FY-21 | |
Revenue | $ 675,680 | $ 665,060 |
Commissions | $ 190,614 | $ 217,724 |
Advisory Fees | $ 326,240 | $ 346,559 |
Bank Deposit Sweep Income | $ 104,558 | $ 15,557 |
Interest | $ 51,866 | $ 29,290 |
Other | $ 2,402 | $ 55,930 |
Total Expenses | $ 533,430 | $ 563,914 |
Compensation | $ 377,671 | $ 446,968 |
Non-compensation | $ 155,759 | $ 116,946 |
Pre-Tax Income | $ 142,250 | $ 101,146 |
Compensation Ratio | 55.9 % | 67.2 % |
Non-compensation Ratio | 23.1 % | 17.6 % |
Pre-Tax Margin | 21.1 % | 15.2 % |
Assets Under Administration (billions) | $ 105.0 | $ 122.1 |
Cash Sweep Balances (billions) | $ 5.5 | $ 7.9 |
Revenue:
Total Expenses:
Asset Management
Asset Management reported revenue of $99.2 million for the year ended December 31, 2022, 5.1% lower compared with the prior year. Pre-tax income was $35.8 million, a decrease of 0.3% compared with the prior year.
('000s) | ||
FY-22 | FY-21 | |
Revenue | $ 99,242 | $ 104,598 |
Advisory Fees | $ 99,224 | $ 104,584 |
Other | $ 18 | $ 14 |
Total Expenses | $ 63,489 | $ 68,724 |
Compensation | $ 24,261 | $ 27,811 |
Non-compensation | $ 39,228 | $ 40,913 |
Pre-Tax Income | $ 35,753 | $ 35,874 |
Compensation Ratio | 24.4 % | 26.6 % |
Non-compensation Ratio | 39.5 % | 39.1 % |
Pre-Tax Margin | 36.0 % | 34.3 % |
AUM (billions) | $ 36.8 | $ 46.2 |
Revenue:
Assets under Management (AUM):
Total Expenses:
Capital Markets
Capital Markets reported revenue of $337.8 million for the year ended December 31, 2022, 46.0% lower compared with the prior year. Pre-tax loss was $25.7 million compared with pre-tax income of $204.1 million for the prior year.
('000s) | ||
FY-22 | FY-21 | |
Revenue | $ 337,821 | $ 625,704 |
Investment Banking | $ 117,101 | $ 410,539 |
Advisory Fees | $ 84,569 | $ 194,753 |
Equities Underwriting | $ 24,583 | $ 186,736 |
Fixed Income Underwriting | $ 8,898 | $ 27,004 |
Other | $ (949) | $ 2,046 |
Sales and Trading | $ 217,712 | $ 213,491 |
Equities | $ 141,013 | $ 138,363 |
Fixed Income | $ 76,699 | $ 75,128 |
Other | $ 3,008 | $ 1,674 |
Total Expenses | $ 363,517 | $ 421,614 |
Compensation | $ 260,974 | $ 318,850 |
Non-compensation | $ 102,543 | $ 102,764 |
Pre-Tax Income (Loss) | $ (25,696) | $ 204,090 |
Compensation Ratio | 77.3 % | 51.0 % |
Non-compensation Ratio | 30.4 % | 16.4 % |
Pre-Tax Margin | (7.6) % | 32.6 % |
Revenue:
Investment Banking
Sales and Trading
Total Expenses:
Other Matters
(In millions, except percentages, number of shares and per share amounts) | ||
FY-22 | FY-21 | |
Capital | ||
Stockholders' Equity (1) | $ 794.2 | $ 823.8 |
Regulatory Net Capital (2) | $ 432.5 | $ 422.8 |
Regulatory Excess Net Capital (2) | $ 408.3 | $ 388.0 |
Common Stock Repurchases | ||
Repurchases | $ 60.6 | $ 7.7 |
Number of Shares | 1,684,287 | 177,192 |
Average Price Per Share | $ 36.00 | $ 43.67 |
Period End Shares | 10,968,221 | 12,546,701 |
Effective Tax Rate | 29.5 % | 29.2 % |
(1) Attributable to Oppenheimer Holdings Inc. | ||
(2) Attributable to Oppenheimer & Co. Inc. broker-dealer |
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. 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, 2021 and Factors Affecting "Forward-Looking Statements" in Part I, Item 2 in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
Oppenheimer Holdings Inc. | ||||||||||||
Consolidated Income Statements (Unaudited) | ||||||||||||
('000s, except number of shares and per share amounts) | ||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
REVENUE | ||||||||||||
Commissions | $ 88,075 | $ 101,076 | (12.9) | $ 370,382 | $ 401,607 | (7.8) | ||||||
Advisory fees | 99,517 | 118,798 | (16.2) | 425,615 | 451,197 | (5.7) | ||||||
Investment banking | 34,013 | 117,563 | (71.1) | 127,529 | 435,870 | (70.7) | ||||||
Bank deposit sweep income | 49,590 | 3,928 | 1,162.5 | 104,558 | 15,557 | 572.1 | ||||||
Interest | 22,046 | 9,567 | 130.4 | 60,713 | 36,482 | 66.4 | ||||||
Principal transactions, net | 10,907 | 4,483 | 143.3 | 21,031 | 23,984 | (12.3) | ||||||
Other | 9,432 | 9,703 | (2.8) | 1,113 | 29,338 | (96.2) | ||||||
Total revenue | 313,580 | 365,118 | (14.1) | 1,110,941 | 1,394,035 | (20.3) | ||||||
EXPENSES | ||||||||||||
Compensation and related expenses | 197,683 | 193,787 | 2.0 | 740,827 | 886,840 | (16.5) | ||||||
Communications and technology | 21,493 | 21,023 | 2.2 | 85,474 | 80,520 | 6.2 | ||||||
Occupancy and equipment costs | 15,196 | 14,698 | 3.4 | 59,897 | 60,069 | (0.3) | ||||||
Clearing and exchange fees | 6,643 | 5,639 | 17.8 | 25,566 | 22,306 | 14.6 | ||||||
Interest | 10,688 | 2,292 | 366.3 | 23,846 | 9,855 | 142.0 | ||||||
Other | 31,605 | 35,727 | (11.5) | 129,777 | 109,804 | 18.2 | ||||||
Total expenses | 283,308 | 273,166 | 3.7 | 1,065,387 | 1,169,394 | (8.9) | ||||||
Pre-tax Income | 30,272 | 91,952 | (67.1) | 45,554 | 224,641 | (79.7) | ||||||
Income taxes provision | 7,885 | 29,055 | (72.9) | 13,444 | 65,677 | (79.5) | ||||||
Net Income | $ 22,387 | $ 62,897 | (64.4) | $ 32,110 | $ 158,964 | (79.8) | ||||||
Less: Net income (loss) attributable to non-controlling interest, net of tax | (26) | — | * | (241) | — | * | ||||||
Net income attributable to Oppenheimer Holdings Inc. | $ 22,413 | $ 62,897 | (64.4) | $ 32,351 | $ 158,964 | (79.6) | ||||||
Earnings per share attributable to Oppenheimer Holdings Inc. | ||||||||||||
Basic | $ 2.04 | $ 4.99 | (59.1) | $ 2.77 | $ 12.57 | (78.0) | ||||||
Diluted | $ 1.87 | $ 4.61 | (59.4) | $ 2.57 | $ 11.70 | (78.0) | ||||||
Weighted average number of common shares outstanding | ||||||||||||
Basic | 10,967,276 | 12,609,654 | (13.0) | 11,666,194 | 12,642,306 | (7.7) | ||||||
Diluted | 11,969,012 | 13,640,402 | (12.3) | 12,607,752 | 13,582,828 | (7.2) | ||||||
Period end number of common shares outstanding | 10,968,221 | 12,546,701 | (12.6) | 10,968,221 | 12,546,701 | (12.6) |
* Percentage not meaningful
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SOURCE Oppenheimer Holdings Inc.