NEW YORK, Oct. 25, 2024 /PRNewswire/ – Oppenheimer Holdings Inc. (NYSE: OPY) (the “Company” or “Firm”) today reported net income of $24.5 million or $2.38 basic earnings per share for the third quarter of 2024, compared with net income of $13.9 million or $1.32 basic earnings per share for the third quarter of 2023. Revenue for the third quarter of 2024 was $373.4 million, an increase of 19.4%, compared to revenue of $312.7 million for the third quarter of 2023.
Albert G. Lowenthal, Chairman and CEO commented, “The Firm delivered strong operating results for the quarter in a still-resilient economic environment. During the third quarter, all major indices reached new highs, mostly spurred by the Federal Reserve’s long-awaited decision to reduce the Federal Funds rate by one half percent with the view that lower borrowing costs will slow the uptick in unemployment without rekindling higher inflation. Based on recent economic indicators, it appears that the U.S. economy is headed for a soft landing, amidst continued growth in the economy as we move into 2025.
The continued outperformance of the equity markets aided our Wealth Management franchise by driving better than expected retail trading volumes and related commission revenues during what is typically a seasonally slower summer trading period. The markets also propelled our assets under management (“AUM”) to our third consecutive record, resulting in higher asset-based advisory fees. Additionally, higher average margin loans drove a meaningful improvement in our interest revenues from the prior year, though our interest sensitive sweep income was somewhat reduced due to lower average sweep balances.
Our investment banking revenues also rose due to an uptick in our advisory fees, particularly in our restructuring practice. Equity underwriting fees were adversely impacted by lower issuance levels as we have seen economic uncertainty restrict issuances despite the general improvement in market breadth and market averages. We believe that that Firm is well positioned to benefit as issuance volumes improve.
Our results drove yet another fresh record in our book value per share levels and provided us with the opportunity to further strengthen our balance sheet as we announced our plans to redeem all outstanding senior secured notes ($113.05 million) at their par amounts, and retired the notes on October 10, 2024. Access to capital for expansion will continue to be available as needed. ”
Summary Operating Results (Unaudited)
(‘000s, except per share amounts or otherwise indicated)
Firm
3Q-24
3Q-23
Revenue
$ 373,352
$ 312,667
Compensation Expenses
$ 237,935
$ 195,684
Non-compensation Expenses
$ 100,047
$ 95,396
Pre-Tax Income
$ 35,370
$ 21,587
Income Tax Provision
$ 10,862
$ 7,808
Net Income (1)
$ 24,508
$ 13,861
Earnings Per Share (Basic) (1)
$ 2.38
$ 1.32
Earnings Per Share (Diluted) (1)
$ 2.16
$ 1.21
Book Value Per Share
$ 81.10
$ 75.01
Tangible Book Value Per Share (2)
$ 64.03
$ 58.65
Private Client
Revenue
$ 218,787
$ 193,254
Pre-Tax Income
$ 62,894
$ 65,249
Assets Under Administration (billions)
$ 129.8
$ 110.7
Asset Management
Revenue
$ 27,262
$ 20,830
Pre-Tax Income
$ 9,121
$ 4,951
Assets Under Management (billions)
$ 49.1
$ 40.4
Capital Markets
Revenue
$ 124,030
$ 94,576
Pre-Tax Loss
$ (6,144)
$ (15,254)
(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 $218.8 million, 13.2% higher compared with a year ago mostly due to higher advisory fees driven by appreciation in AUM and an increase in commission revenue due to higher transactional volume. Pre-tax income of $62.9 million in the current quarter resulted in a pre-tax margin of 28.8%. Financial advisor headcount at the end of the current quarter was 928 compared to 946 at the end of the third quarter of 2023.
(‘000s, except otherwise indicated)
3Q-24
3Q-23
Revenue
$ 218,787
$ 193,254
Commissions
$ 54,872
$ 44,385
Advisory Fees
$ 94,187
$ 82,774
Bank Deposit Sweep Income
$ 34,875
$ 42,304
Interest
$ 24,331
$ 21,248
Other
$ 10,522
$ 2,543
Total Expenses
$ 155,893
$ 128,005
Compensation
$ 118,674
$ 92,383
Non-compensation
$ 37,219
$ 35,622
Pre-Tax Income
$ 62,894
$ 65,249
Compensation Ratio
54.2 %
47.8 %
Non-compensation Ratio
17.0 %
18.4 %
Pre-Tax Margin
28.8 %
33.8 %
Assets Under Administration (billions)
$ 129.8
$ 110.7
Cash Sweep Balances (billions)
$ 2.8
$ 3.5
Revenue:
Total Expenses:
Asset Management
Asset Management reported revenue for the current quarter of $27.3 million, 30.9% higher compared with a year ago. Pre-tax income was $9.1 million, an increase of 84.2% compared with the prior year period.
(‘000s, except otherwise indicated)
3Q-24
3Q-23
Revenue
$ 27,262
$ 20,830
Advisory Fees
$ 27,432
$ 25,188
Other
$ (170)
$ (4,358)
Total Expenses
$ 18,141
$ 15,879
Compensation
$ 6,596
$ 5,585
Non-compensation
$ 11,545
$ 10,294
Pre-Tax Income
$ 9,121
$ 4,951
Compensation Ratio
24.2 %
26.8 %
Non-compensation Ratio
42.3 %
49.4 %
Pre-Tax Margin
33.5 %
23.8 %
AUM (billions)
$ 49.1
$ 40.4
Revenue:
Assets under Management (AUM):
Total Expenses:
Capital Markets
Capital Markets reported revenue for the current quarter of $124.0 million, 31.1% higher when compared with the prior year period. Pre-tax loss was $6.1 million compared with a pre-tax loss of $15.3 million a year ago.
(‘000s)
3Q-24
3Q-23
Revenue
$ 124,030
$ 94,576
Investment Banking
$ 50,098
$ 36,000
Advisory Fees
$ 32,798
$ 18,001
Equities Underwriting
$ 12,588
$ 15,246
Fixed Income Underwriting
$ 4,390
$ 2,049
Other
$ 322
$ 704
Sales and Trading
$ 72,755
$ 58,102
Equities
$ 33,303
$ 30,985
Fixed Income
$ 39,452
$ 27,117
Other
$ 1,177
$ 474
Total Expenses
$ 130,174
$ 109,830
Compensation
$ 87,649
$ 72,933
Non-compensation
$ 42,525
$ 36,897
Pre-Tax Loss
$ (6,144)
$ (15,254)
Compensation Ratio
70.7 %
77.1 %
Non-compensation Ratio
34.3 %
39.0 %
Pre-Tax Margin
(5.0) %
(16.1) %
Revenue:
Investment Banking
Sales and Trading
Total Expenses:
Other Matters
(In millions, except number of shares and per share amounts)
3Q-24
3Q-23
Capital
Stockholders’ Equity (1)
$ 837.8
$ 779.3
Regulatory Net Capital (2)
$ 487.5
$ 437.1
Regulatory Excess Net Capital (2)
$ 464.6
$ 415.4
Common Stock Repurchases
Repurchases
$ 0.3
$ 6.5
Number of Shares
5,981
168,904
Average Price
$ 49.30
$ 38.30
Period End Shares
10,331,401
10,388,898
Effective Tax Rate
30.7 %
36.2 %
(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 89 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, 2023.
Oppenheimer Holdings Inc.
Consolidated Income Statements (Unaudited)
(‘000s, except number of shares and per share amounts)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2024
2023
% Change
2024
2023
% Change
REVENUE
Commissions
$ 103,079
$ 83,933
22.8
$ 295,984
$ 259,174
14.2
Advisory fees
121,631
107,969
12.7
353,675
310,214
14.0
Investment banking
52,185
37,411
39.5
131,841
95,354
38.3
Bank deposit sweep income
34,875
42,304
(17.6)
106,406
135,273
(21.3)
Interest
38,034
26,430
43.9
99,605
78,691
26.6
Principal transactions, net
14,364
16,892
(15.0)
42,672
46,635
(8.5)
Other
9,184
(2,272)
*
26,896
15,195
77.0
Total revenue
373,352
312,667
19.4
1,057,079
940,536
12.4
EXPENSES
