Oppenheimer Holdings 8-K 2015
As filed with the Securities and Exchange Commission on May 1, 2015
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
May 1, 2015
OPPENHEIMER HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Commission File Number 1-12043
85 Broad Street
New York, New York 10004
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CRF 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 – FINANCIAL INFORMATION
ITEM 2.02. Results of Operations and Financial Condition.
(a)On May 1, 2015, Oppenheimer Holdings Inc. (the “Company”) issued a press release announcing its first quarter 2015 earnings. A copy of the May 1, 2015 press release is furnished as Exhibit 99.1 to this Report and is incorporated herein by reference.
The information contained in this Item 2.02 and the related exhibit attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information or such exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in this Item 2.02 or any exhibit related to this Item 2.02 on this Form 8-K shall not be deemed an admission as to the materiality of any information in the referenced items.
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. Financial Statements and Exhibits.
The following exhibit is furnished (not filed) with this Current Report on Form 8-K:
99.1 Oppenheimer Holdings Inc.’s Press Release dated May 1, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Oppenheimer Holdings Inc.
99.1 Oppenheimer Holdings Inc.’s Press Release dated May 1, 2015
Oppenheimer Holdings Inc. Reports First Quarter 2015
Earnings and Announces Quarterly Dividend
New York, May 1, 2015 – Oppenheimer Holdings Inc. (NYSE: OPY) today reported net income of $5.7 million or $0.42 basic earnings per share for the first quarter of 2015 compared with net income of $3.2 million or $0.24 basic earnings per share for the first quarter of 2014, an increase in net income of 77.4%. Income before income tax provision was $9.9 million for the first quarter of 2015 compared with income before income tax provision of $5.1 million for the first quarter of 2014, an increase of 92.8%. Revenue for the first quarter of 2015 was $245.6 million compared with $255.2 million for the first quarter of 2014, a decrease of 3.8%.
Equity markets in the U.S. continued on an upward trend with the S&P 500 returning 0.4% for the first quarter of 2015. Strong performance came from small and mid-cap stocks while large cap stocks under-performed due to market expectations that large multinational firms will be adversely impacted by the strong U.S. dollar. Bond market volatility continued due to uncertainty around Federal Reserve action on short-term interest rates, oil prices, and foreign currency volatility. U.S. economic growth moderated somewhat during the first quarter of 2015 as labor market conditions improved early in the first quarter of 2015 but weakness in consumer spending and economic reports from Europe and China lowered expectations for economic growth in the U.S. going forward and the level of corporate investment due to weakness emanating from the energy sector.
Albert G. Lowenthal, Chairman and CEO commented, “The Company is pleased with the earnings improvement for the period which reflects continued growth in our fee-based business. However, the decline in overall revenue reflects continued investor uncertainty and an overall reduction in activity levels by our clients. Investment banking results were lower due to declines in both mergers and acquisitions activity and, to a lesser extent, equities underwriting activity. The Commercial Mortgage Banking business performed well due to higher loan modifications during the period.
The increase in earnings was the result of a significant reduction in provisions related to legal and regulatory matters compared to the same period last year. The Company will continue to invest in the people and systems necessary to oversee its business and continue its compliance initiatives as we believe that these investments will greatly reduce legal and regulatory issues and related costs going forward. We recognize the importance of this investment to the long term success of our company and believe that we have made meaningful progress in providing the framework for greater awareness throughout our firm of the regulatory environment in which we are operating and the expectations that we have for each and every employee to incorporate these mandates into their everyday activities and behavior. The trust and confidence of our clients continues to be paramount as we build our business for a successful future.”
Private Client reported revenue of $139.9 million for the first quarter of 2015, 5.3% lower than the first quarter of 2014, due to decreases in transaction-based business partially offset by increases in advisory fees earned on traditional managed products during the first quarter of 2015. Income before income tax provision was $16.8 million for the first quarter of 2015, an increase of 62.6% compared with the first quarter of 2014 due to decreases in legal and regulatory costs and share-based compensation expenses during the first quarter of 2015.
Asset Management reported revenue of $24.5 million for the first quarter of 2015, 0.6% lower than the first quarter of 2014. Income before income tax provision was $7.9 million for the first quarter of 2015, an increase of 2.6% compared with the first quarter of 2014.
Capital Markets reported revenue of $72.2 million for the first quarter of 2015, 7.3% lower than the first quarter of 2014, primarily due to lower fees from mergers and acquisitions activity during the first quarter of 2015. Income before income tax provision was $6.7 million for the first quarter of 2015, a decrease of 39.8% compared with income before income tax provision of $11.2 million for the first quarter of 2014.
Commercial Mortgage Banking
Commercial Mortgage Banking reported revenue of $8.4 million for the first quarter of 2015, 72.1% higher than the first quarter of 2014, primarily due to an increase in loan modifications of commercial mortgages during the first quarter of 2015. Income before income tax provision was $4.0 million for the first quarter of 2015, an increase of 118.3% compared with the first quarter of 2014.
Compensation and Related Expenses
Compensation and related expenses (including salaries, production and incentive compensation, share-based compensation, deferred compensation, and other benefit-related items) totaled $163.1 million during the first quarter of 2015, a decrease of 5.2% compared to the first quarter of 2014. The decrease was due to lower production and incentive compensation expenses as well as lower share-based compensation expenses during the first quarter of 2015. Compensation and related expenses as a percentage of revenue was 66.4% during the first quarter of 2015 compared to 67.4% during the first quarter of 2014.
Non-compensation expenses were $72.6 million during the first quarter of 2015, a decrease of 7.0% compared to $78.1 million during the same period in 2014 primarily due to lower legal and regulatory costs during the first quarter of 2015.
Provision for Income Taxes
The effective income tax rate for the first quarter of 2015 was 37.9% compared with 33.1% for the first quarter of 2014.
Balance Sheet and Liquidity
The Company today announced a quarterly dividend in the amount of $0.11 per share payable on May 29, 2015 to holders of Class A non-voting and Class B voting common stock of record on May 15, 2015.
Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that provides a wide range of financial services including retail securities brokerage, institutional sales and trading, investment banking (both corporate and public finance), research, market-making, trust, investment management, and commercial mortgage banking. With roots tracing back to 1881, the firm is headquartered in New York and has 93 offices in 24 states and 6 foreign jurisdictions.
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, 2014.