Oppenheimer Holdings Inc. Reports Third Quarter 2024 Earnings
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
Increased revenue for the third quarter of 2024 was primarily driven by significantly higher advisory fees attributable to a rise in billable assets under management ("AUM"), an increase in transaction-based commissions as well as improved investment banking and interest revenues
Announced plans to further strengthen balance sheet through the redemption of all outstanding Senior Secured Notes which occurred on October 10, 2024
Assets under administration and under management were both at record levels at September 30, 2024, benefiting from market appreciation
Compensation expenses increased from the prior year quarter largely as a result of higher incentive compensation, deferred compensation and production-related expenses.
Non-compensation expenses increased from the prior year quarter primarily due to higher interest and technology related expenses partially offset by lower legal costs
Total stockholder's equity, book value and tangible book value per share reached new record highs as a result of positive earnings
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:
Retail commissions increased 23.6% from a year ago primarily due to higher retail trading activity
Advisory fees increased 13.8% due to higher AUM during the billing period for the current quarter when compared to the third quarter of last year
Bank deposit sweep income decreased $7.4 million from a year ago due to lower cash sweep balances
Interest revenue increased 14.5% from the prior year period due to higher interest earned from margin loans
Other revenue increased from a year ago primarily due to increases in the cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in the fair value of the policies' underlying investments
Total Expenses:
Compensation expenses increased 28.5% from a year ago primarily due to higher production related expenses and deferred compensation costs
Non-compensation expenses increased 4.5% from a year ago primarily due to higher interest expense
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
