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NEW YORK, April 28, 2023 /PRNewswire/ - Oppenheimer Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported net income of $14.6 million or $1.32 basic earnings per share for the first quarter of 2023, an increase of approximately 57.3%, compared with net income of $9.3 million or $0.75 basic earnings per share for the first quarter of 2022. Revenue for the first quarter of 2023 was $321.7 million, an increase of 20.9%, compared to revenue of $266.0 million for the first quarter of 2022.
Albert G. Lowenthal, Chairman and CEO commented, "The profitable results for the quarter reflect our ability to continue supporting and advising our clients and prudently managing our business in all types of markets. Due to a combination of macroeconomic factors and turmoil within the regional banking industry, the equity and fixed income markets were volatile during the first quarter of the year. Convinced that Federal Reserve ("FED") tightening would soon end, the equity markets rallied to start the year. However, unexpected bank failures created large uninsured bank deposit withdrawals at certain regional banks that led to the fear of a broader bank contagion. Early action by the regulators to provide liquidity to banks seems to have dramatically slowed the move of funds into money market funds and short-term government securities. While the Company did not have any direct exposures to the failed institutions, the events caused a reaction in equity and fixed income markets, impacted portfolio turnover and our transaction-based revenues. Rising interest rates and fear of a recession significantly limited issuers' access to capital, resulting in markedly lower investment banking revenues associated with new equity issuances and secondary offerings. Strong M&A advisory fees and trading revenues offset some of the weakness seen in the IPO market.
Our Wealth Management business continues to perform well, as its revenue mix has benefited from the rising interest rate environment. Income from our FDIC-insured bank deposit program and interest income on margin loans approached record quarterly levels as a result of the FED's 50 basis point rate increase during the quarter. These revenue increases were partially offset by lower valuations in client portfolios, which drove decreased fee income.
Despite the volatility and market stress seen in the first quarter, the Company continues to maintain a strong balance sheet with capital near its historic highs and ample levels of liquidity. During the first quarter, the Company took advantage of the lower level of its share price to purchase 95,055 shares (approximately 1%) of its Class A non-voting common stock at an average price of $38.79 per share in the open market under its share repurchase program. This resulted in 10,975,723 shares of Class A non-voting common stock remaining outstanding at March 31, 2023. We remain confident in the resiliency of our platform and our ability to provide essential investment services to our clients."
Summary Operating Results (Unaudited) | ||
('000s, except per share amounts or otherwise indicated) | ||
Firm | 1Q-23 | 1Q-22 |
Revenue | $ 321,679 | $ 266,028 |
Compensation Expense | $ 206,292 | $ 186,031 |
Non-compensation Expense | $ 96,338 | $ 65,784 |
Pre-Tax Income | $ 19,049 | $ 14,213 |
Income Taxes | $ 4,585 | $ 4,435 |
Net Income (1) | $ 14,617 | $ 9,292 |
Earnings Per Share (Basic) (1) | $ 1.32 | $ 0.75 |
Earnings Per Share (Diluted) (1) | $ 1.22 | $ 0.69 |
Book Value Per Share | $ 72.27 | $ 66.45 |
Tangible Book Value Per Share (2) | $ 56.92 | $ 52.58 |
Private Client | ||
Revenue | $ 203,421 | $ 150,847 |
Pre-Tax Income | $ 54,456 | $ 24,146 |
Assets Under Administration (billions) | $ 108.9 | $ 117.2 |
Asset Management | ||
Revenue | $ 23,959 | $ 27,117 |
Pre-Tax Income | $ 6,481 | $ 9,474 |
Assets Under Management (billions) | $ 39.3 | $ 42.7 |
Capital Markets | ||
Revenue | $ 90,282 | $ 85,051 |
Pre-Tax Income (Loss) | $ (15,477) | $ 1,166 |
(1) Attributable to Oppenheimer Holdings Inc. | ||
(2) Represents book value less goodwill and intangible assets divided by number of shares outstanding. |
Highlights
Private Client
Private Client reported revenue for the current quarter of $203.4 million, 34.9% higher compared with a year ago mostly due to an increase in bank deposit sweep income and margin interest income driven by higher short-term interest rates. Pre-tax income of $54.5 million in the current quarter resulted in a pre-tax profit margin of 26.8%. Financial advisor headcount at the end of the current quarter was 959 compared to 993 at the end of the first quarter of 2022.
('000s, except otherwise indicated) | ||
1Q-23 | 1Q-22 | |
Revenue | $ 203,421 | $ 150,847 |
Commissions | $ 46,636 | $ 51,677 |
Advisory Fees | $ 76,583 | $ 88,527 |
Bank Deposit Sweep Income | $ 48,909 | $ 4,354 |
Interest | $ 20,579 | $ 8,147 |
Other | $ 10,714 | $ (1,858) |
Total Expenses | $ 148,965 | $ 126,701 |
Compensation | $ 95,074 | $ 99,855 |
Non-compensation | $ 53,891 | $ 26,846 |
Pre-Tax Income | $ 54,456 | $ 24,146 |
Compensation Ratio | 46.7 % | 66.2 % |
Non-compensation Ratio | 26.5 % | 17.8 % |
Pre-Tax Margin | 26.8 % | 16.0 % |
Assets Under Administration (billions) | $ 108.9 | $ 117.2 |
Cash Sweep Balances (billions) | $ 4.4 | $ 8.1 |
Revenue:
Total Expenses:
Asset Management
Asset Management reported revenue for the current quarter of $24.0 million, 11.6% lower compared with a year ago. Pre-tax income was $6.5 million, a decrease of 31.6% compared with the prior year period.
('000s, except otherwise indicated) | ||
1Q-23 | 1Q-22 | |
Revenue | $ 23,959 | $ 27,117 |
Advisory Fees | $ 23,954 | $ 27,113 |
Other | $ 5 | $ 4 |
Total Expenses | $ 17,478 | $ 17,643 |
Compensation | $ 7,615 | $ 7,086 |
Non-compensation | $ 9,863 | $ 10,557 |
Pre-Tax Income | $ 6,481 | $ 9,474 |
Compensation Ratio | 31.8 % | 26.1 % |
Non-compensation Ratio | 41.2 % | 38.9 % |
Pre-Tax Margin | 27.1 % | 34.9 % |
AUM (billions) | $ 39.3 | $ 42.7 |
Revenue:
Assets under Management (AUM):
Total Expenses:
Capital Markets
Capital Markets reported revenue for the current quarter of $90.3 million, 6.2% higher when compared with the prior year period. Pre-tax loss was $15.5 million compared with pre-tax income of $1.2 million a year ago.
('000s) | ||
1Q-23 | 1Q-22 | |
Revenue | $ 90,282 | $ 85,051 |
Investment Banking | $ 36,281 | $ 32,975 |
Advisory Fees | $ 27,937 | $ 21,905 |
Equities Underwriting | $ 7,343 | $ 11,236 |
Fixed Income Underwriting | $ 897 | $ 1,987 |
Other | $ 104 | $ (2,153) |
Sales and Trading | $ 53,379 | $ 51,603 |
Equities | $ 31,686 | $ 35,928 |
Fixed Income | $ 21,693 | $ 15,675 |
Other | $ 622 | $ 473 |
Total Expenses | $ 105,759 | $ 83,885 |
Compensation | $ 76,796 | $ 60,223 |
Non-compensation | $ 28,963 | $ 23,662 |
Pre-Tax Income (Loss) | $ (15,477) | $ 1,166 |
Compensation Ratio | 85.1 % | 70.8 % |
Non-compensation Ratio | 32.1 % | 27.8 % |
Pre-Tax Margin | (17.1) % | 1.4 % |
Revenue:
Investment Banking
Sales and Trading
Total Expenses:
Other Matters
(In millions, except number of shares and per share amounts) | ||
1Q-23 | 1Q-22 | |
Capital | ||
Stockholders' Equity (1) | $ 800.4 | $ 814.4 |
Regulatory Net Capital (2) | $ 440.0 | $ 440.4 |
Regulatory Excess Net Capital (2) | $ 418.0 | $ 411.4 |
Common Stock Repurchases | ||
Repurchases | $ 3.7 | $ 16.2 |
Number of Shares | 95,055 | 377,313 |
Average Price | $ 38.79 | $ 42.82 |
Period End Shares | 11,075,388 | 12,255,839 |
Effective Tax Rate | 24.1 % | 31.2 % |
(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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and Annual Report on Form 10-K for the year ended December 31, 2022.
Oppenheimer Holdings Inc. | ||||||
Consolidated Income Statements (Unaudited) | ||||||
('000s, except number of shares and per share amounts) | ||||||
For the Three Months Ended March 31, | ||||||
2023 | 2022 | % Change | ||||
REVENUE | ||||||
Commissions | $ 86,697 | $ 98,321 | (11.8) | |||
Advisory fees | 100,544 | 115,766 | (13.1) | |||
Investment banking | 37,965 | 38,470 | (1.3) | |||
Bank deposit sweep income | 48,909 | 4,354 | 1,023.3 | |||
Interest | 24,941 | 9,517 | 162.1 | |||
Principal transactions, net | 13,490 | 2,364 | 470.6 | |||
Other | 9,133 | (2,764) | * | |||
Total revenue | 321,679 | 266,028 | 20.9 | |||
EXPENSES | ||||||
Compensation and related expenses | 206,292 | 186,031 | 10.9 | |||
Communications and technology | 22,440 | 21,585 | 4.0 | |||
Occupancy and equipment costs | 15,901 | 14,690 | 8.2 | |||
Clearing and exchange fees | 6,263 | 5,976 | 4.8 | |||
Interest | 13,142 | 2,512 | 423.2 | |||
Other | 38,592 | 21,021 | 83.6 | |||
Total expenses | 302,630 | 251,815 | 20.2 | |||
Pre-tax Income | 19,049 | 14,213 | 34.0 | |||
Income taxes | 4,585 | 4,435 | 3.4 | |||
Net Income | $ 14,464 | $ 9,778 | 47.9 | |||
Less: Net income (loss) attributable to non-controlling interest, net of tax | (153) | 486 | * | |||
Net income attributable to Oppenheimer Holdings Inc. | $ 14,617 | $ 9,292 | 57.3 | |||
Earnings per share attributable to Oppenheimer Holdings Inc. | ||||||
Basic | $ 1.32 | $ 0.75 | 76.0 | |||
Diluted | $ 1.22 | $ 0.69 | 76.8 | |||
Weighted average number of common shares outstanding | ||||||
Basic | 11,092,603 | 12,467,632 | (11.0) | |||
Diluted | 11,963,492 | 13,499,334 | (11.4) | |||
Period end number of common shares outstanding | 11,075,388 | 12,255,839 | (9.6) |
* Percentage not meaningful |
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SOURCE Oppenheimer Holdings Inc.