Oppenheimer Holdings Inc. - Third Quarter 2007 Earnings and Dividend Announcement



    Listed NYSE - OPY

    TORONTO, Oct. 26 /CNW/ -


    
    Expressed in thousands
    of U.S. dollars, except
    share and per share          Three Months ended       Nine Months ended
    amounts                         September 30,            September 30,
    -------------------------------------------------------------------------
    (unaudited)                     2007        2006        2007        2006

    Revenue                     $215,173    $188,463    $656,039    $582,537
    Expenses                    $188,152    $175,189    $572,950    $524,057
    Profit before taxes          $27,021     $13,274     $83,089     $58,480
    Net profit                   $16,274      $7,673     $48,830     $34,027

    Basic earnings per share       $1.23       $0.60       $3.70       $2.66
    Diluted earnings per share     $1.19       $0.51       $3.61       $1.99
    Basic weighted average
     number of shares
     outstanding              13,264,228  12,784,096  13,197,999  12,810,492

    Book value per share          $31.33      $27.00

    Actual number of
     Class A non-voting and
     Class B shares
     outstanding              13,274,380  12,812,202
    

    The Company's financial results are presented using accounting principles
    generally accepted in the U.S.A.

    Oppenheimer Holdings Inc. reported net profit of $16.3 million or
$1.23 per share for the third quarter of 2007, an increase of approximately
112% when compared to net profit of $7.7 million or $0.60 per share in the
third quarter of 2006. Revenue for the third quarter of 2007 was
$215.2 million, an increase of 14% compared to revenue of $188.5 million in
the third quarter of 2006.
    Net profit for the nine months ended September 30, 2007 was $48.8 million
or $3.70 per share compared to $34.0 million or $2.66 per share in the same
period of 2006, an increase of 44% in net profit. Revenue for the nine months
ended September 30, 2007 was $656.0 million compared to $582.5 million for the
same period in 2006, an increase of 13%. Revenue and profit before taxes for
the nine months ended September 30, 2007 were up 16% and 95%, respectively,
compared to the same period in 2006 excluding (a) a non-recurring gain of
$12.4 million (most of which was generated in the first quarter of 2006)
related to the exchange of the Company's three NYSE memberships for cash and
NYSE Group common shares and (b) a non-recurring gain on the early
extinguishment of the Company's outstanding Debentures in the amount of
$3.6 million (cumulatively $0.72 per share).
    During the third quarter, equity and debt markets were extremely volatile
reflecting substantial uncertainty about the impact of defaults and
foreclosures in the sub-prime mortgage market, as well as the inability of the
credit markets to assess the creditworthiness of numerous issuers of
commercial paper and asset backed securities. This, together with high oil and
gas prices, a weak U.S. dollar and uncertainty about the chances of a
recession in the United States, caused a sell-off in the U.S. securities
markets during most of July and August. This was followed by a strong rally in
September following the Federal Reserve's announcement of a reduction in the
discount rate and later in the benchmark federal funds rate.
    For the Company, in the three and nine months ended September 30, 2007,
this volatility resulted in increased commission levels, and higher assets
under management at the beginning of the quarter resulted in improved asset
management fees. Investment banking activity showed strong results in the
three and nine months ended September 30, 2007 compared to the same periods of
2006 (although such results were lower than the first and second quarters of
2007). These results reflect the Company's increased investment in its
corporate finance effort, as well as the increased level of activity for
smaller issuers. In the three months ended September 30, 2007, interest income
was flat; in the nine months ended September 30, 2007, interest income showed
a modest increase as a result of an increase in average stock borrow balances
of approximately 13% compared to the same period of 2006 that more than offset
a small decrease in average customer debit balances. There was little change
in proprietary trading results in the three and nine months ended
September 30, 2007 compared to the same periods in 2006. As previously
reported, the Company has no exposure to the issues surrounding sub-prime
mortgages.
    Assets under management by the asset management group increased 22% to
$17.4 billion at September 30, 2007 compared to $14.3 billion at September 30,
2006, reflecting organic growth and increases in market value. The Company
continues to build its base of annualized revenues through employee and client
education emphasizing the benefits of a professionally directed asset
allocation process.
    The Company's expenses for the three and nine months ended September 30,
2007 increased 7% and 9%, respectively, compared to the same periods of 2006,
primarily due to increased compensation and related costs. The increase in
compensation costs is primarily attributable to the increased levels of
business in the three and nine months ended September 30, 2007 compared to the
same periods of 2006. Another large component of the year-to-date increase in
compensation costs is attributable to share-based compensation costs. In the
nine months ended September 30, 2007, share-based compensation expenses
amounted to $7.1 million ($4.9 million in the comparable period of 2006).
Communications and data processing costs increased in the three and nine
months ended September 30, 2007 compared to the same periods in 2006,
reflecting the Company's investment in its technology platform. Despite higher
interest rates, interest expense declined in the three and nine months ended
September 30, 2007 compared to the same periods in 2006, primarily reflecting
lower levels of bank borrowing and the impact of principal payments on the
Company's senior secured credit note which totaled $40.8 million through
September 30, 2007. The decrease in the effective tax rate for the
three months ended September 30, 2007 was a result of favorable resolutions of
tax matters during the period.
    At September 30, 2007, shareholders' equity was approximately
$415 million and book value per share was $31.33 compared to shareholders'
equity of approximately $346 million and book value per share of $27.00 at
September 30, 2006. The basic weighted average number of Class A and Class B
Shares outstanding for the three months ended September 30, 2007 was
13,264,228 compared to 12,784,096 outstanding for the three months ended
September 30, 2006, an increase of 4% due to the exercise of employee stock
options, awards of Class A Shares pursuant to the Employee Share Plan and the
purchase of Class A Shares by the Company's 401(K) Plan. The actual number of
Class A and Class B Shares outstanding at September 30, 2007 was 13,274,380.
During the third quarter of 2007, the Company did not purchase any Class A
Shares pursuant to its Normal Course Issuer Bid (which commenced on August 9,
2007, and terminates on August 8, 2008). The diluted weighted average number
of Class A and Class B Shares outstanding for the three months ended
September 30, 2007 was 13,698,959 compared to 15,773,199 outstanding for the
three months ended September 30, 2006, a net decrease of 13% due to the
redemption, on July 31, 2006, of $141 million of its variable rate
exchangeable debentures (the "Debentures") and the redemption, on October 23,
2006, of the remaining $20 million of Debentures issued on January 6, 2003 as
partial payment for the acquisition of the U.S. Private Client and Asset
Management Divisions of CIBC World Markets, Inc. The Debentures were
exchangeable into 6.9 million Class A Shares of the Company. These redemptions
were funded by the issuance of a senior secured credit note in the amount of
$125 million ($83.5 million currently outstanding), increased bank call loans,
and internally available funds.

    Dividend

    The Company is announcing a quarterly dividend of U.S. $0.11 per share,
payable on November 23, 2007 to holders of Class A and Class B Shares of
record on November 9, 2007. These dividends are qualified dividends for U.S.
and Canadian tax purposes.
    The Company, through its principal subsidiaries, Oppenheimer & Co. Inc.
(a U.S. broker-dealer) and Oppenheimer Asset Management Inc., offers a full
range of services from 81 offices in 21 states and through local
broker-dealers in 2 foreign jurisdictions. The Company offers trust and estate
services through Oppenheimer Trust Company. Evanston Financial Corporation is
engaged in mortgage brokerage and servicing. In addition, through its
subsidiary, Freedom Investments, Inc. and the BUYandHOLD division of Freedom,
the Company offers online discount brokerage and dollar-based investing
services.

    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 the Company's Annual Report on Form 10-K for the year ended December 31,
2006.





For further information:

For further information: A.G. LOWENTHAL, (212) 668-8000; or E.K.
ROBERTS, (416) 322-1515


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890