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Delaware | 98-0080034 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Date: July 27, 2018 By: /s/ Jeffrey J. Alfano --------------------------------- Jeffrey J. Alfano Chief Financial Officer (Duly Authorized Officer) |
Summary Operating Results (Unaudited) | |||||||||||||||||||||||
('000s, except Per Share Amounts) | |||||||||||||||||||||||
For the 3-Months Ended | For the 6-Months Ended | ||||||||||||||||||||||
6/30/2018 | 6/30/2017 | % Change | 6/30/2018 | 6/30/2017 | % Change | ||||||||||||||||||
Revenue | $ | 242,556 | $ | 215,884 | 12.4 | $ | 477,086 | $ | 429,145 | 11.2 | |||||||||||||
Expenses | 230,055 | 217,521 | 5.8 | 454,960 | 437,807 | 3.9 | |||||||||||||||||
Income (Loss) Before Income Taxes from Continuing Operations | 12,501 | (1,637 | ) | * | 22,126 | (8,662 | ) | * | |||||||||||||||
Income Taxes | 3,662 | (274 | ) | * | 6,578 | (1,961 | ) | * | |||||||||||||||
Net Income (Loss) from Continuing Operations | 8,839 | (1,363 | ) | * | 15,548 | (6,701 | ) | * | |||||||||||||||
Net Income from Discontinued Operations | — | 53 | (100.0 | ) | — | 640 | (100.0 | ) | |||||||||||||||
Net Income (Loss) | 8,839 | (1,310 | ) | * | 15,548 | (6,061 | ) | * | |||||||||||||||
Less Net Income (Loss) Attributable to Non-Controlling Interest, Net of Tax | (16 | ) | 9 | * | (12 | ) | 105 | * | |||||||||||||||
Net Income (Loss) Attributable to Oppenheimer Holdings Inc. | $ | 8,855 | $ | (1,319 | ) | * | $ | 15,560 | $ | (6,166 | ) | * | |||||||||||
Basic Net Income (Loss) Per Share (1) | |||||||||||||||||||||||
Continuing Operations | $ | 0.67 | $ | (0.10 | ) | * | $ | 1.17 | $ | (0.50 | ) | * | |||||||||||
Discontinued Operations | — | — | — | — | 0.04 | (100.0 | ) | ||||||||||||||||
Net Income (Loss) Per Share | $ | 0.67 | $ | (0.10 | ) | * | $ | 1.17 | $ | (0.46 | ) | * | |||||||||||
Diluted Net Income (Loss) Per Share (1) | |||||||||||||||||||||||
Continuing Operations | $ | 0.63 | $ | (0.10 | ) | * | $ | 1.11 | $ | (0.50 | ) | * | |||||||||||
Discontinued Operations | — | — | — | — | 0.04 | (100.0 | ) | ||||||||||||||||
Net Income (Loss) Per Share | $ | 0.63 | $ | (0.10 | ) | * | $ | 1.11 | $ | (0.46 | ) | * | |||||||||||
Weighted Average Number of Common Shares Outstanding | |||||||||||||||||||||||
Basic | 13,249 | 13,261 | (0.1 | ) | 13,244 | 13,330 | (0.6 | ) | |||||||||||||||
Diluted | 14,051 | 13,261 | 6.0 | 14,006 | 13,330 | 5.1 | |||||||||||||||||
As of | As of | ||||||||||||||||||||||
6/30/2018 | 6/30/2017 | % Change | 6/30/2018 | 12/31/2017 | % Change | ||||||||||||||||||
Book Value Per Share (1) | $ | 40.61 | $ | 37.73 | 7.6 | $ | 40.61 | $ | 39.55 | 2.7 | |||||||||||||
Tangible Book Value Per Share (1)(2) | $ | 27.78 | $ | 24.91 | 11.5 | $ | 27.78 | $ | 26.74 | 3.9 | |||||||||||||
(1) | Attributable to Oppenheimer Holdings Inc. | ||||||||||||||||||||||
(2) | Represents book value less goodwill and intangible assets divided by number of shares outstanding. | ||||||||||||||||||||||
* | Percentage not meaningful. |
• | Commission revenue was $82.9 million for the second quarter of 2018, a decrease of 1.2% compared with $83.9 million for the second quarter of 2017 due to lower transaction-based revenue in both the retail and institutional equities businesses during the second quarter of 2018. |
• | Advisory fees were $77.3 million for the second quarter of 2018, an increase of 6.2% compared with $72.8 million for the second quarter of 2017 due to a higher level of client assets under management ("AUM"). |
• | Investment banking revenue increased 81.4% to $27.9 million for the second quarter of 2018 compared with $15.4 million for the second quarter of 2017 due to higher equity underwriting fees as well as higher merger and acquisition advisory fees during the second quarter of 2018. |
• | Bank deposit sweep income was $28.9 million for the second quarter of 2018, an increase of 62.8% compared with $17.7 million for the second quarter of 2017 due to higher short-term interest rates during the second quarter of 2018. |
• | Interest revenue was $13.1 million for the second quarter of 2018, an increase of 1.8% compared with $12.8 million for the second quarter of 2017 due primarily to an increase in interest revenue on margin extended to customers offset by a decrease in interest earned on U.S. Government and Agency securities during the second quarter of 2018. |
• | Principal transactions revenue increased 20.7% to $6.4 million for the second quarter of 2018 compared with $5.3 million for the second quarter of 2017 due to higher levels of volatility in fixed income markets driving somewhat higher trading income. The Company continues to maintain a low level of risk-based assets moderating the impact of period-to-period price volatility. |
Business Segment Results (Unaudited) | |||||||||||||||||||||||
('000s) | |||||||||||||||||||||||
For the 3-Months Ended | For the 6-Months Ended | ||||||||||||||||||||||
6/30/2018 | 6/30/2017 | % Change | 6/30/2018 | 6/30/2017 | % Change | ||||||||||||||||||
Revenue | |||||||||||||||||||||||
Private Client | $ | 156,553 | $ | 140,252 | 11.6 | $ | 310,647 | $ | 277,641 | 11.9 | |||||||||||||
Asset Management | 17,706 | 19,304 | (8.3 | ) | 35,350 | 37,970 | (6.9 | ) | |||||||||||||||
Capital Markets | 68,206 | 53,707 | 27.0 | 129,735 | 109,610 | 18.4 | |||||||||||||||||
Corporate/Other | 91 | 2,621 | (96.5 | ) | 1,354 | 3,924 | (65.5 | ) | |||||||||||||||
$ | 242,556 | $ | 215,884 | 12.4 | $ | 477,086 | $ | 429,145 | 11.2 | ||||||||||||||
Income (Loss) Before Income Taxes from Continuing Operations | |||||||||||||||||||||||
Private Client | $ | 33,513 | $ | 28,051 | 19.5 | $ | 73,675 | $ | 56,813 | 29.7 | |||||||||||||
Asset Management | 3,958 | 4,081 | (3.0 | ) | 7,676 | 7,792 | (1.5 | ) | |||||||||||||||
Capital Markets | (199 | ) | (10,982 | ) | (98.2 | ) | (6,256 | ) | (23,596 | ) | (73.5 | ) | |||||||||||
Corporate/Other | (24,771 | ) | (22,787 | ) | 8.7 | (52,969 | ) | (49,671 | ) | 6.6 | |||||||||||||
$ | 12,501 | $ | (1,637 | ) | * | $ | 22,126 | $ | (8,662 | ) | * | ||||||||||||
* | Percentage not meaningful. |
• | Client assets under administration were $85.8 billion at June 30, 2018 compared with $86.9 billion at December 31, 2017, a decrease of 1.3%. |
• | Financial adviser headcount was 1,083 at the end of the second quarter of 2018 (1,082 at the end of the first quarter of 2018), down from 1,132 at the end of the second quarter of 2017. The decline in financial adviser headcount since the second quarter of 2017 has resulted from the Company's attention to adviser productivity. The decline in headcount also has been impacted by retirements and normal attrition. |
• | Retail commissions were $49.5 million for the second quarter of 2018, a decrease of 2.4% from the second quarter of 2017 due to reduced transaction volumes from retail investors during the second quarter of 2018. |
• | Advisory fee revenue on traditional and alternative managed products was $59.8 million for the second quarter of 2018, an increase of 11.2% from the second quarter of 2017 (see Asset Management below for further information). The increase in advisory fees was due to the increase in the value of AUM. |
• | Bank deposit sweep income was $28.9 million for the second quarter of 2018, an increase of 62.8% compared with $17.7 million for the second quarter of 2017 due to higher short-term interest rates during the second quarter of 2018. |
• | Advisory fee revenue on traditional and alternative managed products was $17.5 million for the second quarter of 2018, a decrease of 7.4% from the second quarter of 2017. Advisory fees are calculated based on the value of AUM at the end of the prior quarter which totaled $28.2 billion at March 31, 2018 ($25.8 billion at March 31, 2017) and are allocated to the Private Client and Asset Management business segments. |
• | AUM increased 10.0% to $28.7 billion at June 30, 2018 compared with $26.1 billion at June 30, 2017. AUM at June 30, 2018 is the basis for advisory fee billings for the third quarter of 2018. The increase in AUM was comprised of asset appreciation of $1.7 billion and net contributions of assets of $0.9 billion. |
• | Institutional equities commissions decreased 2.9% to $23.2 million for the second quarter of 2018 compared with the second quarter of 2017 reflecting lower client trading activity in the second quarter of 2018. |
• | Advisory fees from investment banking activities increased 40.4% to $8.0 million in the second quarter of 2018 compared with the second quarter of 2017 due to higher fees earned on completed merger and acquisition transactions during the second quarter of 2018. |
• | Equity underwriting fees increased 176.4% to $15.2 million for the second quarter of 2018 compared with the second quarter of 2017 due to the Company's increased focus on equity issuances as well as a robust market for equity underwritings during the second quarter of 2018. |
• | Revenue from Taxable Fixed Income increased 20.5% to $15.3 million for the second quarter of 2018 compared with the second quarter of 2017 due to higher government and corporate trading income as well as higher institutional fixed income commissions during the second quarter of 2018. |
• | Public Finance and Municipal Trading revenue increased 7.5% to $5.7 million for the second quarter of 2018 compared with the second quarter of 2017 due to higher municipal capital markets fees and commissions offset by lower municipal trading income during the second quarter of 2018. |
• | At June 30, 2018, total equity was $538.6 million compared with $523.9 million at December 31, 2017, an increase of 2.8%. |
• | At June 30, 2018, book value per share was $40.61 (compared with $39.55 at December 31, 2017) and tangible book value per share was $27.78 (compared with $26.74 at December 31, 2017). |
• | The Company's level 3 assets, primarily auction rate securities, were $72.8 million at June 30, 2018 (compared with $87.6 million at December 31, 2017). |
Oppenheimer Holdings Inc. | |||||||||||||||||||||||
Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||||
('000s, except Per Share Amounts) | |||||||||||||||||||||||
For the 3-Months Ended | For the 6-Months Ended | ||||||||||||||||||||||
6/30/2018 | 6/30/2017 (1) | % Change | 6/30/2018 | 6/30/2017 (1) | % Change | ||||||||||||||||||
REVENUE | |||||||||||||||||||||||
Commissions | $ | 82,850 | $ | 83,852 | (1.2 | ) | $ | 166,257 | $ | 170,569 | (2.5 | ) | |||||||||||
Advisory fees | 77,270 | 72,783 | 6.2 | 154,818 | 142,192 | 8.9 | |||||||||||||||||
Investment banking | 27,904 | 15,386 | 81.4 | 56,114 | 33,407 | 68.0 | |||||||||||||||||
Bank deposit sweep income | 28,853 | 17,720 | 62.8 | 54,150 | 31,846 | 70.0 | |||||||||||||||||
Interest | 13,056 | 12,829 | 1.8 | 25,283 | 23,394 | 8.1 | |||||||||||||||||
Principal transactions, net | 6,400 | 5,302 | 20.7 | 9,126 | 10,675 | (14.5 | ) | ||||||||||||||||
Other | 6,223 | 8,012 | (22.3 | ) | 11,338 | 17,062 | (33.5 | ) | |||||||||||||||
Total revenue | 242,556 | 215,884 | 12.4 | 477,086 | 429,145 | 11.2 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Compensation and related expenses | 151,871 | 142,657 | 6.5 | 304,975 | 286,535 | 6.4 | |||||||||||||||||
Communications and technology | 17,997 | 18,399 | (2.2 | ) | 36,685 | 36,105 | 1.6 | ||||||||||||||||
Occupancy and equipment costs | 14,901 | 15,161 | (1.7 | ) | 30,329 | 30,433 | (0.3 | ) | |||||||||||||||
Clearing and exchange fees | 5,780 | 5,916 | (2.3 | ) | 11,876 | 11,770 | 0.9 | ||||||||||||||||
Interest | 10,909 | 6,854 | 59.2 | 19,872 | 12,210 | 62.8 | |||||||||||||||||
Other | 28,597 | 28,534 | 0.2 | 51,223 | 60,754 | (15.7 | ) | ||||||||||||||||
Total expenses | 230,055 | 217,521 | 5.8 | 454,960 | 437,807 | 3.9 | |||||||||||||||||
Income (Loss) before income taxes from continuing operations | 12,501 | (1,637 | ) | * | 22,126 | (8,662 | ) | * | |||||||||||||||
Income taxes | 3,662 | (274 | ) | * | 6,578 | (1,961 | ) | * | |||||||||||||||
Net income (loss) from continuing operations | 8,839 | (1,363 | ) | * | 15,548 | (6,701 | ) | * | |||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Income from discontinued operations | — | 89 | (100.0 | ) | — | 1,065 | (100.0 | ) | |||||||||||||||
Income taxes | — | 36 | (100.0 | ) | — | 425 | (100.0 | ) | |||||||||||||||
Net income from discontinued operations | — | 53 | (100.0 | ) | — | 640 | (100.0 | ) | |||||||||||||||
Net income (loss) | 8,839 | (1,310 | ) | * | 15,548 | (6,061 | ) | * | |||||||||||||||
Less net income (loss) attributable to non-controlling interest, net of tax | (16 | ) | 9 | * | (12 | ) | 105 | * | |||||||||||||||
Net income (loss) attributable to Oppenheimer Holdings Inc. | $ | 8,855 | $ | (1,319 | ) | * | $ | 15,560 | $ | (6,166 | ) | * | |||||||||||
Basic net income (loss) per share attributable to Oppenheimer Holdings Inc. | |||||||||||||||||||||||
Continuing operations | $ | 0.67 | $ | (0.10 | ) | * | $ | 1.17 | $ | (0.50 | ) | * | |||||||||||
Discontinued operations | — | — | — | — | 0.04 | (100.0 | ) | ||||||||||||||||
Net income (loss) per share | $ | 0.67 | $ | (0.10 | ) | * | $ | 1.17 | $ | (0.46 | ) | * | |||||||||||
Diluted net income (loss) per share attributable to Oppenheimer Holdings Inc. | |||||||||||||||||||||||
Continuing operations | $ | 0.63 | $ | (0.10 | ) | * | $ | 1.11 | $ | (0.50 | ) | * | |||||||||||
Discontinued operations | — | — | — | — | 0.04 | (100.0 | ) | ||||||||||||||||
Net income (loss) per share | $ | 0.63 | $ | (0.10 | ) | * | $ | 1.11 | $ | (0.46 | ) | * | |||||||||||
Weighted Average Number of Common Shares Outstanding | |||||||||||||||||||||||
Basic | 13,249 | 13,261 | (0.1 | ) | 13,244 | 13,330 | (0.6 | ) | |||||||||||||||
Diluted | 14,051 | 13,261 | 6.0 | 14,006 | 13,330 | 5.1 | |||||||||||||||||
(1) | Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||||||||||||||||||||
* | Percentage not meaningful. |
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Oppenheimer Holdings Inc's Definitive Proxy Statement (Form DEF 14A) filed after their 2018 10-K Annual Report includes:
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Private Client Private Client reported revenue of $158.1 million for the third quarter of 2018, 7.2% higher than the third quarter of 2017 due to increased advisory fee revenue from higher AUM, higher fees earned on client deposits in the FDIC-insured bank deposit program, and higher margin interest revenue during the third quarter of 2018.
Loss before income taxes was $2.1 million for the third quarter of 2018, compared with a loss before income taxes of $1.6 million for the third quarter of 2017 primarily due to the increases in compensation and related expenses related to guaranteed compensation arrangements with senior hires in investment banking and interest costs during the third quarter of 2018.
Business Environment The securities industry is directly affected by general economic and market conditions, including fluctuations in volume and price levels of securities and changes in interest rates, inflation, political events, investor confidence, investor participation levels, legal and regulatory, accounting, tax and compliance requirements and competition, all of which have an impact on commissions, firm trading, fees from accounts under investment management as well as fees for investment banking services, and investment and interest income as well as on liquidity.
Expenses Compensation and related expenses (including salaries, production and incentive compensation, share-based compensation, deferred compensation, and other benefit-related items) totaled $152.8 million during the three months ended September 30, 2018, an increase of 7.6% compared with the three months ended September 30, 2017.
Expenses Compensation and related expenses (including salaries, production and incentive compensation, share-based compensation, deferred compensation, and other benefit-related items) totaled $457.8 million during the nine months ended September 30, 2018, an increase of 6.8% compared with the nine months ended September 30, 2017.
The Company regularly reviews its...Read more
In order to remain within...Read more
Factors Affecting "Forward-Looking Statements" From...Read more
The increase was due to...Read more
Interest revenue was $13.4 million...Read more
At September 30, 2018, the...Read more
Also, see "Risk Factors -...Read more
Revenue from Taxable Fixed Income...Read more
Past events surrounding corporate accounting...Read more
Non-compensation expenses were $77.8 million...Read more
Investment banking revenue increased 18.3%...Read more
Investment banking revenue increased 47.2%...Read more
Advisory fee revenue on traditional...Read more
There can be no assurance...Read more
Changes in capital requirements under...Read more
As part of its ongoing...Read more
The Company may use all...Read more
In December 2017, Oppenheimer Europe...Read more
In May 2016, FinCEN's proposed...Read more
The Company's long-term growth plan...Read more
The reporting requirement includes a...Read more
Revenue from continuing operations for...Read more
The following table provides a...Read more
Principal transactions revenue was $(16,000)...Read more
Under this rule, investment advice...Read more
It must also conduct stress...Read more
In March 2018, the U.S....Read more
These rules became effective on...Read more
Brexit has created significant uncertainty...Read more
The Company is also reviewing...Read more
The British government instituted Rule...Read more
The amount of Oppenheimer's bank...Read more
The Company has continued to...Read more
On January 8, 2018, FINRA...Read more
The ultimate amount of ARS...Read more
Pursuant to the SEC Order,...Read more
Other Matters On October 26,...Read more
Higher production-related, incentive, and share-based...Read more
Additional fines, penalties and settlements...Read more
Asset Management Asset Management reported...Read more
The increase in AUM was...Read more
Bank deposit sweep income was...Read more
Bank deposit sweep income was...Read more
Bank deposit sweep income was...Read more
The effective income tax rate...Read more
The lower estimated effective tax...Read more
The Company has elected the...Read more
In June 2016, in a...Read more
On February 19, 2015, the...Read more
Financial Statements, Disclosures and Schedules
Inside this 10-Q Quarterly Report
Material Contracts, Statements, Certifications & more
Oppenheimer Holdings Inc provided additional information to their SEC Filing as exhibits
Ticker: OPY
CIK: 791963
Form Type: 10-Q Quarterly Report
Accession Number: 0000791963-18-000024
Submitted to the SEC: Fri Oct 26 2018 12:49:25 AM EST
Accepted by the SEC: Fri Oct 26 2018
Period: Sunday, September 30, 2018
Industry: Security Brokers Dealers And Flotation Companies