Oppenheimer Holdings Inc. - Fourth Quarter 2009 Earnings and Dividend Announcement

NYSE - OPY 


NEW YORK, Jan. 29  /PRNewswire-FirstCall/ -- 

  Expressed in thousands
  of dollars, except share
  and per share amounts
                                   Three Months ended           Year ended
                                          December 31,         December 31,
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------
  (unaudited)                           2009      2008      2009      2008

  Revenue                           $273,377  $209,767  $991,433  $920,070
  Expenses                          $262,768  $217,496  $956,620  $956,113
  Profit (loss) before taxes         $10,609   $(7,729)  $34,813  $(36,043)
  Net profit (loss)                   $6,463   $(3,824)  $19,487  $(20,770)

  Basic earnings (loss) per share      $0.49    $(0.29)    $1.49    $(1.57)
  Diluted earnings (loss) per share    $0.48    $(0.29)    $1.45    $(1.57)
  Book value per share                $34.15    $32.75

                             Business Review



Oppenheimer Holdings Inc. reported a net profit of $6.5 million or $0.49 per share for the fourth quarter of 2009, compared to a net loss of $3.8 million or $0.29 per share in the fourth quarter of 2008. Revenue for the fourth quarter of 2009 was $273.4 million, compared to revenue of $209.8 million in the fourth quarter of 2008, an increase of 30%.

The net profit for the year ended December 31, 2009 was $19.5 million or $1.49 per share compared to a net loss of $20.8 million or $1.57 per share for the year ended December 31, 2008. Revenue for the year ended December 31, 2009 was $991.4 million, compared to revenue of $920.1 million for the same period in 2008, an increase of 8%.

At year-end, the U.S. economy has emerged from the longest contraction since the Great Depression. Unemployment continues at very high levels and uncertainty continues to plague the economy as we await the reversal of stimulative policies from the Federal Reserve and a determination of national policies for major segments of the economy including healthcare and the financial system. Other economic indicators are showing improvement including: increased manufacturing activity, higher commodity prices and higher end sales to consumers and businesses. The real estate markets are sending mixed signals with significant deterioration in commercial real estate prices but improvements in the housing market across most of the country.

Improving market conditions since March 2009, buoyed by low interest rates and discretionary funds for investment, have led to overall revenue improvements for the Company in each successive quarter of 2009. Revenue from commissions and principal transactions in the three and twelve months ended December 31, 2009 surpassed levels achieved in comparable periods in 2008 as a result of the effects of rising equity prices and the credit markets recovery from distressed levels. The strength in revenue from principal transactions was largely due to the Company's significant progress in building its fixed income division as well as strong debt markets throughout the year. Revenue for the Company from investment banking activities remains disappointing as many mid-sized and smaller companies continue to face restricted access to the capital markets, although there were significant signs of improvement in that sector in the fourth quarter of 2009. Net interest revenue for the Company, as well as fees derived from money market funds and FDIC insured deposits of clients, continue to be significantly and adversely affected by the low interest rate policies that have been designed to stimulate the economy. Asset management advisory fees increased in the fourth quarter of 2009 due to incentive fees earned on certain managed funds compared to the prior year.

While most expense categories showed significant decreases compared to the prior year, the Company's compensation levels as a percentage of revenue remained at high levels as a result of: 1) increased stock-based and deferred compensation which reflected the significant improvement in the Company's stock price as well as increases in the value of assets directly tied to deferred compensation plans (totaling $33.7 million), 2) the remaining costs of compensation associated with the CIBC Capital Markets acquisition ($25.7 million), and 3) short term guaranteed compensation to new employees (while down substantially from the prior year) as the Company significantly expanded its professional work force across all areas of its business during 2009.

In commenting on the Company's results, Albert Lowenthal, Chairman remarked," Oppenheimer made considerable progress in 2009. We were able to bring costs, excluding compensation, to normalized levels. We are pleased with our ability to expand our business opportunities including the addition of branch offices in the U.S., significant increases to our professional workforces internationally and increased Capital Markets capabilities in fixed income as a result of dislocations in this business. We look forward to reaping the benefits of these strategic initiatives."

Highlights of the Company's results for the three and twelve months ended December 31, 2009 follow:

                           Revenue and Expenses

  Revenue -Fourth Quarter 2009
  ----------------------------

  -   Commission revenue was $142.7 million in the fourth quarter of 2009
      which was flat compared to $141.3 million in the fourth quarter of
      2008.
  -   Principal transactions revenue was significantly higher in the fourth
      quarter of 2009 at $22.4 million compared to a loss of $7.6 million
      in the fourth quarter of 2008 due to profits in fixed income trading
      of $20.7 million in the fourth quarter 2009 (versus $3.7 million in
      the fourth quarter of 2008) and gains of $1.5 million in the value of
      firm investments in the fourth quarter of 2009 (versus a loss of $9.1
      million in the fourth quarter of 2008).
  -   Interest revenue was $10.6 million in the fourth quarter of 2009
      which was flat compared to $10.6 million in the fourth quarter of
      2008.
  -   Investment banking revenue increased 139% to $35.4 million in the
      fourth quarter of 2009, compared to $14.8 million in the fourth
      quarter of 2008 with equity issuances accounting for $17.8 million of
      the variance.
  -   Advisory fees were $50.8 million in the fourth quarter of 2009
      compared to $41.3 million in the fourth quarter of 2008, an increase
      of 23% as a result of an increase in assets under management of 4.2%
      during the period and incentive fees earned from general partnership
      interests in alternative investments of $10.7 million ($nil in fourth
      quarter of 2008), net of a decrease of $6.3 million in fees derived
      from money market funds.
  -   Other revenue increased 24% to $11.6 million in the fourth quarter of
      2009 compared to the fourth quarter of 2008 as a result of a legal
      settlement award of $2 million.

  Revenue - Year-to-Date 2009
  ---------------------------

  -   Commission revenue was $555.6 million in the year ended December 31,
      2009 compared to $532.7 million in the same period in 2008,
      representing an increase of 4%, reflecting improved market conditions
      in 2009 compared to 2008.
  -   Principal transactions revenue was significantly higher in the year
      ended December 31, 2009 at $107.1 million compared to $20.7 million
      in the same period in 2008 due to significant improvement in fixed
      income trading in 2009 representing a $61.8 million increase when
      compared to 2008 as well as gains of $9.8 million in the value of
      firm investments in 2009 (versus a loss of $17.8 million in 2008).
  -   Interest revenue declined 42% to $36.0 million in the year ended
      December 31, 2009 from $61.8 million in the same period in 2008 due
      to decreases in interest earned on customer margin debits of $19.1
      million and on securities borrowed positions of $6.2 million.
  -   Investment banking revenue increased 9% to $91.0 million in the year
      ended December 31, 2009 compared to $83.5 million in the same period
      in 2008 as fees earned on equity underwriting participations
      increased $23.0 million offset by a decrease of $11.4 million in
      corporate finance advisory fees.
  -   Advisory fees were $160.7 million in the in the year ended December
      31, 2009, a decrease of 19% compared to $199.0 million in the same
      period in 2008 as a result of a decrease in average assets under
      management during the period of 10.7%. It also includes a decrease of
      $21.1 million in fees derived from money market funds. The Company
      earned incentive fees from general partnership interests in
      alternative investments of $10.7 million in 2009 ($nil in 2008).
  -   Other revenue increased 83% to $41.1 million for the year ended
      December 31, 2009 from $22.4 million in the same period in 2008
      primarily as a result of increases to the value of Company owned life
      insurance of $14.3 million, increased fees of $5.0 million related to
      the Company's mortgage brokerage business, and a legal settlement
      award of $2 million, partially offset by a decrease of $3.9 million
      in fees derived from FDIC insured client deposits.

  Expenses - Fourth Quarter 2009
  ------------------------------

  -   Compensation and related expenses increased 31% in the fourth quarter
      of 2009 to $188.3 million from $144.0 million during the fourth
      quarter 2008 as production and incentive-related compensation
      increased $27.2 million, deferred compensation costs increased $6.0
      million, and share-based compensation, directly related to an
      increased share price during the quarter, increased $6.6 million.
  -   Clearing and exchange fees decreased 6% to $7.2 million in the fourth
      quarter of 2009 compared to $7.7 million in the same period of 2008.
  -   Communications and technology expenses decreased 26% to $14.4 million
      in the fourth quarter of 2009 from $19.4 million in the same period
      of 2008 as a result of a reduction, or elimination, of many costs
      associated with the January 2008 acquisition of a major part of CIBC
      World Markets' U.S. Capital Markets Business.
  -   Occupancy and equipment costs increased 7% to $18.9 million in the
      fourth quarter of 2009 from $17.7 million in the fourth quarter of
      2008 due to escalation provisions increasing rental costs, as well as
      the opening of new branch offices around the country.
  -   Interest expenses increased 14% to $5.6 million in the fourth quarter
      of 2009 from $4.9 million in the same period in 2008 due to interest
      expense incurred on positions and repurchase agreements held by the
      new government trading desk.
  -   Other expenses increased 19% to $28.3 million in the fourth quarter
      of 2009 from $23.7 million in the same period in 2008 due to
      increased legal costs of approximately $4.8 million, offset by the
      elimination of $1.2 million in non-recurring transitional support
      costs related to the CIBC capital markets business acquired in
      January 2008

  Expenses - Year-to-Date 2009
  ----------------------------

  -   Compensation and related expenses were $672.3 million for the year
      ended December 31, 2009 compared with $626 million for the same
      period in 2008, an increase of 7%. Production and incentive-related
      compensation increased $35.1 million, deferred compensation costs
      increased $16.3 million, and share-based compensation, directly
      related to an increased share price during the period, increased
      $17.4 million. These increases were offset by a decrease of $25.7
      million for expenses related to deferred compensation obligations to
      former CIBC employees.
  -   Clearing and exchange fees decreased 14% to $26.7 million for the
      year ended December 31, 2009 compared to $31.0 million in the same
      period in 2008 primarily reflecting the economies of transitioning
      the acquired businesses to the Company's platform.
  -   Communications and technology expenses decreased 17% to $62.7 million
      for the year ended December 31, 2009 from $75.4 million for the same
      period of 2008 as a result of a reduction, or elimination, of many
      costs associated with our January 2008 acquisition.
  -   Occupancy and equipment costs increased 6% to $74.4 million for the
      year ended December 31, 2009 from $69.9 million in the same period in
      2008 due to escalation provisions increasing rental costs, as well as
      the opening of new branch offices around the country.
  -   Interest expenses declined 46% to $21.1 million in the year ended
      December 31, 2009 from $39.0 million for the same period in 2008 due
      to declining interest rates resulting in lower interest incurred on
      securities loaned and bank loans totaling $13.5 million.
  -   Other expenses decreased 13% to $99.4 million in the year ended
      December 31, 2009 from $114.8 million for the same period in 2008
      largely as a result of the elimination of $33.5 million in non-
      recurring transitional support costs related to the CIBC capital
      markets business acquired in January 2008 offset by an increase in
      legal costs of approximately $14.7 million and a departure tax of
      approximately $2.0 million which was paid to the government of Canada
      in connection with the move of the Company's domicile to the United
      States.

              Shareholders' Equity and Dividend Declaration

  -   At December 31, 2009, shareholders' equity was $451.4 million
      compared to $425.7 million at December 31, 2008.
  -   At December 31, 2009, book value per share was $34.15 compared to
      $32.75 at December 31, 2008.
  -   During the fourth quarter of 2009, the Company did not make any
      purchases pursuant to its stock buy-back program.
  -   The Company announced today a quarterly dividend in the amount of
      U.S. $0.11 per share, payable on February 26, 2010 to holders of
      Class A non-voting and Class B voting common stock of record on
      February 12, 2010.


  -------------------------------------------------------------------------
                        OPPENHEIMER HOLDINGS INC.
               SUMMARY STATEMENT OF OPERATIONS (UNAUDITED)

  $ in thousands,
   except share
   and per
   share amounts

                -----------------------------------------------------------
                      Three Months Ended                  Year Ended
                                         %                             %
                  12/31/09    12/31/08 delta    12/31/09    12/31/08 delta
                -----------------------------------------------------------
  REVENUE

  Commissions     $142,661    $141,338    1%    $555,574    $532,682    4%

  Principal
   transactions,
   net              22,374      (7,594)  n/a     107,094      20,651  419%

  Interest          10,625      10,560    1%      35,960      61,793  -42%
  Investment
   banking          35,363      14,805  139%      90,960      83,541    9%

  Advisory fees     50,762      41,319   23%     160,705     198,960  -19%

  Other             11,592       9,339   24%      41,140      22,443   83%
                -----------------------------   ---------------------------
                   273,377     209,767   30%     991,433     920,070    8%
                -----------------------------   ---------------------------
  EXPENSES

  Compensation &
   related
   expenses        188,257     143,978   31%     672,325     626,030    7%

  Clearing &
   exchange fees     7,244       7,733   -6%      26,748      31,007  -14%

  Communications &
   technology       14,435      19,448  -26%      62,724      75,359  -17%

  Occupancy &
   equipment
   costs            18,869      17,678    7%      74,372      69,945    6%

  Interest           5,618       4,936   14%      21,050      38,998  -46%

  Other             28,345      23,723   19%      99,401     114,774  -13%
                -----------------------------   ---------------------------
                   262,768     217,496   21%     956,620     956,113    0%
                -----------------------------   ---------------------------

  Profit (loss)
   before
   taxes            10,609      (7,729)  n/a      34,813     (36,043)  n/a

  Income tax
   provision
   (benefit)         4,146      (3,905)  n/a      15,326     (15,273)  n/a
                -----------------------------   ---------------------------

                -----------------------------   ---------------------------
  Net profit
   (loss) for
   the period       $6,463     ($3,824)  n/a     $19,487    ($20,770)  n/a
                -----------------------------   ---------------------------
                -----------------------------   ---------------------------

  Profit (loss)
   per share
  Basic              $0.49      ($0.29)            $1.49      ($1.57)
  Diluted            $0.48      ($0.29)            $1.45      ($1.57)

  Basic weighted
   average
   shares
   outstanding  13,116,107  13,022,155        13,110,647  13,199,580
  Actual
   shares
   outstanding  13,217,681  12,999,145        13,217,681  12,999,145
  -------------------------------------------------------------------------

                           Company Information



Oppenheimer, through its principal subsidiaries, Oppenheimer & Co. Inc. (a U.S. broker-dealer) and Oppenheimer Asset Management Inc., offers a wide range of investment banking, securities, investment management and wealth management services from over 94 offices in 26 states and through local broker-dealers in 4 foreign jurisdictions. Oppenheimer employs over 3,500 people. The Company offers trust and estate services through Oppenheimer Trust Company. OPY Credit Corp. offers syndication as well as trading of issued corporate loans. Evanston Financial Corporation is engaged in mortgage brokerage and servicing. In addition, through Freedom Investments, Inc. and the BUYandHOLD division of Freedom, Oppenheimer offers online discount brokerage and dollar-based investing services.

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 Oppenheimer's Annual Report on Form 10-K for the year ended December 31, 2008. 

DATASOURCE: Oppenheimer Holdings Inc.



CONTACT:  A.G. Lowenthal, [phone]; or E.K. Roberts, (416)

322-1515

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