Oppenheimer Holdings Inc Reports First Quarter 2020 Earnings and Announces Quarterly Dividend.

 
FREE EXCERPT

NEW YORK: Oppenheimer Holdings Inc. (NYSE: OPY) (the "Company") today reported net income of $7.8 million or $0.61 basic net income per share for the first quarter of 2020 compared with net income of $11.2 million or $0.86 basic net income per share for the first quarter of 2019. Revenue for the first quarter of 2020 was $234.8 million compared to revenue of $251.8 million for the first quarter of 2019, a decrease of 6.8%.

Summary Operating Results (Unaudited)

('000s, except per share amounts)

For the Three Months Ended

March 31,

2020

2019

% Change

Revenue

$

234,770

$

251,770

(6.8)

Expenses

224,547

235,718

(4.7)

Income Before Income Taxes

10,223

16,052

(36.3)

Income Taxes

2,405

4,858

(50.5)

Net Income

$

7,818

$

11,194

(30.2)

Net Income Per Share

Basic

$

0.61

$

0.86

(29.1)

Diluted

$

0.58

$

0.81

(28.4)

As of

3/31/2020

12/31/2019

% Change

Book Value Per Share

$

46.16

$

46.31

(0.3)

Tangible Book Value Per Share (1)

$

32.79

$

33.03

(0.7)

(1) Represents book value less goodwill and intangible assets divided by number of shares outstanding.

The performance of the financial markets during the first quarter of 2020 was a tale of two diametrical halves split almost equally. The quarter began with financial markets weathering the threat of war in the Middle East rallying to new highs by mid-February fueled by an easy monetary policy, 50-year record low unemployment, solid corporate earnings, and strong consumer confidence. On February 19, 2020, the S&P 500 index hit an all-time high of 3386 while the CBOE Volatility Index ("VIX") stood at 14.38, well below its 20-year average of 19.7. Then, as a result of the realization of the seriousness of Coronavirus Disease 2019 (the "COVID-19 Pandemic"), the equity markets dramatically reversed course amidst extreme volatility and fell into "bear market territory" in record time. At its low point on March 23, 2020, the S&P 500 was down almost 34% from its all-time high as a reaction to COVID-19 Pandemic-related news and Federal and state government action taken to shut down the U.S. economy. The equities markets then rebounded from their lows during the last week in March in response to the Congressional passage of a $2 trillion economic rescue package and aggressive steps to further ease monetary policy by the Federal Reserve with the S&P 500 closing the quarter down 20%. During this period, the VIX rose sharply before hitting its peak of 82.69 on March 16, 2020 and ended the quarter at 53.54.

As the Federal government and many states began to pass regulatory mandates such as closures of non-essential businesses, "shelter-in place", school closures, and social distancing, economic conditions quickly worsened. The fall-out was widespread as financial market volatility increased, credit quality deteriorated, and liquidity concerns mounted.

Unemployment quickly ramped up amid broad declines in discretionary spending, increasing inventory levels and reduced manufacturing production due to decreased demand and supply constraints resulting from decreased imports of essential parts from China. During the first quarter of 2020, energy stocks extended already significant declines as oil prices collapsed due to the impact of the abrupt halt to economic activity and as the price war between OPEC and Russia fueled a global oversupply of oil. In late March, oil prices hit an 18-year intraday low by dropping below $20 per barrel before ending the quarter at $20.28.

As the economic toll of the COVID-19 Pandemic began to take hold during the second half of the quarter, the bond market saw a flight to safety as the prices of bonds with credit risks, such as low investment grade and high-yield corporate bonds as well as...

To continue reading

REQUEST YOUR TRIAL