opy-20231027

As filed with the Securities and Exchange Commission on October 27, 2023

___________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 27, 2023

OPPENHEIMER HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Commission File Number 1-12043


Delaware						98-0080034
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

85 Broad Street

New York, New York 10004

(Address of principal executive offices) (Zip Code)

(212) 668-8000

(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.):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CRF 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A non-voting common stock	OPY	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

SECTION 2 – FINANCIAL INFORMATION

ITEM 2.02. Results of Operations and Financial Condition.

(a)On October 27, 2023, Oppenheimer Holdings Inc. (the “Company”) issued a press release announcing its third quarter 2023 earnings. A copy of the October 27, 2023 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.

(d)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 October 27, 2023

SIGNATURES

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.


Date: October 27, 2023 By: /s/ Brad M. Watkins --------------------------------- Brad M. Watkins Chief Financial Officer (Duly Authorized Officer)

EXHIBIT INDEX


Exhibit Number			Description
99.1			Oppenheimer Holdings Inc.'s Press Release dated October 2 7 , 2023

Exhibit 99.1

Oppenheimer Holdings Inc. Reports Third Quarter 2023 Earnings

New York, October 27, 2023 – Oppenheimer Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported net income of $13.9 million or $1.32 basic earnings per share for the third quarter of 2023, an increase of approximately 206.7%, compared with net income of $4.5 million or $0.40 basic earnings per share for the third quarter of 2022. Revenue for the third quarter of 2023 was $312.7 million, an increase of 6.3%, compared to revenue of $294.1 million for the third quarter of 2022.

Albert G. Lowenthal, Chairman and CEO commented, "The profitable results for the quarter reflect improved performance across many of our businesses, owing to higher interest rates and increased market volumes emanating from a still resilient economy. The rate of inflation continued to stabilize, while the labor market remained strong despite higher interest rates and labor unrest. The U.S. economy can perhaps yet achieve a “soft landing”. The stronger economy, however, has led to a market expectation that the Federal Reserve will maintain "higher for longer" interest rates well into 2024 which, in conjunction with continued fighting in Ukraine and the new eruption of unparalleled violence in Israel and Gaza, has resulted in a pullback in most major equity indices.

Our Wealth Management business continued to benefit from recent macroeconomic conditions, with the elevated interest rate environment driving large increases in bank deposit sweep income and margin interest revenue compared to the prior year period. Higher valuations in client portfolios and the addition of new client assets also resulted in meaningful improvements in advisory fees, though these were offset to some extent by the stock market retreat during the quarter and lower transaction-based fees due to subdued client activity. Our Capital Markets business also generated strong results, with higher fixed income sales and trading and somewhat higher equities underwriting revenues offsetting lower M&A advisory fees.

We finished the quarter with a strong balance sheet and ample capital levels that will permit us to continue seeking investment opportunities across our businesses. During the quarter, the Company completed its previously disclosed “Dutch auction” tender offer in which we repurchased 437,183 shares of our Class A non-voting common stock at a price of $40.00 per share. During the quarter, the Company also purchased 168,904 shares (2%) of our Class A non-voting common stock at an average price of $38.30 per share in the open market under our share repurchase program. This resulted in 10,289,233 shares of Class A non-voting common stock remaining outstanding, resulting in book value and tangible book value per share at record levels as of September 30, 2023."


Summary Operating Results (Unaudited)
('000s, except per share amounts or otherwise indicated)
Firm	3Q-23		3Q-22
Revenue	$	312,667	$	294,111
Compensation Expense	$	195,684	$	179,134
Non-compensation Expense	$	95,396	$	107,739
Pre-Tax Income	$	21,587	$	7,238
Income Taxes Provision	$	7,808	$	2,573
Net Income (1)	$	13,861	$	4,520
Earnings Per Share (Basic) (1)	$	1.32	$	0.40
Earnings Per Share (Diluted) (1)	$	1.21	$	0.37
Book Value Per Share	$	75.01	$	70.23
Tangible Book Value Per Share (2)	$	58.65	$	54.74

Private Client
Revenue	$	193,254	$	178,614
Pre-Tax Income	$	65,249	$	29,973
Assets Under Administration (billions)	$	110.7	$	100.3

Asset Management
Revenue	$	20,830	$	24,870
Pre-Tax Income	$	4,951	$	8,322
Assets Under Management (billions)	$	40.4	$	35.3

Capital Markets
Revenue	$	94,576	$	90,947
Pre-Tax Income (Loss)	$	(15,254)	$	2,401

(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 2023 was primarily driven by a rise in interest sensitive income, including margin interest and bank deposit sweep income, as well as higher fixed income sales and trading and equities underwriting revenues

•Assets under administration and under management were both at higher levels at September 30, 2023 when compared with the same period last year, benefiting from market appreciation and positive net asset flows

•Non-compensation expenses decreased from the prior year quarter largely due to lower legal costs partially offset by higher interest expense

•The Company completed its “Dutch Auction” tender offer, resulting in the repurchase of 437,183 shares of the Company's Class A non-voting common stock. The Company also repurchased 168,904 shares of Class A Stock during the third quarter of 2023 under its previously announced share repurchase program, or approximately 2% of shares outstanding at year-end 2022

•Book value and tangible book value per share reached new record highs as a result of positive earnings and share re-purchases

Private Client

Private Client reported revenue for the current quarter of $193.3 million, 8.2% higher when compared with the prior year period. Pre-tax income was $65.2 million, compared with pre-tax income of $30.0 million in the prior year period. Financial advisor headcount at the end of the current quarter was 946 compared to 985 at the end of the third quarter of 2022.

Revenue:

•Retail commissions were reduced compared with the prior year quarter due to continued subdued retail trading activity

•Advisory fees increased 6.0% from a year ago primarily 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 increased $6.5 million or 18.3% from a year ago due to higher short-term interest rates partially offset by lower cash sweep balances

•Interest revenue increased 46.8% from a year ago due to higher short-term interest rates

•Other revenue decreased from a year ago primarily due to lower Company-owned life insurance death benefit proceeds

Total Expenses:

•Compensation expenses increased 5.5% from a year ago primarily due to higher production-related expenses and deferred compensation costs, partially offset by lower share-based compensation expenses

•Non-compensation expenses decreased 41.7% from a year ago primarily due to lower legal costs


('000s, except otherwise indicated)
	3Q-23			3Q-22

Revenue	$	193,254		$	178,614
Commissions	$	44,385		$	46,893
Advisory Fees	$	82,774		$	78,055
Bank Deposit Sweep Income	$	42,304		$	35,769
Interest	$	21,248		$	14,471
Other	$	2,543		$	3,426

Total Expenses	$	128,005		$	148,641
Compensation	$	92,383		$	87,555
Non-compensation	$	35,622		$	61,086

Pre-Tax Income	$	65,249		$	29,973

Compensation Ratio	47.8		%	49.0		%
Non-compensation Ratio	18.4		%	34.2		%
Pre-Tax Margin	33.8		%	16.8		%

Assets Under Administration (billions)	$	110.7		$	100.3
Cash Sweep Balances (billions)	$	3.5		$	6.5

Asset Management

Asset Management reported revenue for the current quarter of $20.8 million, 16.2% lower when compared with the prior year period. Pre-tax income was $5.0 million, a decrease of $3.4 million compared with the prior year period.

Revenue:

•Advisory fees increased 1.6% from a year ago due to an increase in management fees resulting from the higher net value of billable AUM during the quarter

•Other revenue decreased $4.4 million from a year ago due to a decrease in fair value of the positions held in private equity funds

Assets under Management (AUM):

▪AUM increased to $40.4 billion at September 30, 2023, which is the basis for advisory fee billings for October 2023

▪The increase in AUM was comprised of higher asset values of $4.4 billion on existing client holdings and a net contribution of $0.7 billion in new assets

Total Expenses:

•Compensation expenses were down 16.7% from a year ago which was due to decreases in incentive compensation

•Non-compensation expenses were up 4.6% when compared to the prior year period mostly due to higher external portfolio management costs which are directly related to the increase in billable AUM


('000s, except otherwise indicated)
	3Q-23			3Q-22

Revenue	$	20,830		$	24,870
Advisory Fees	$	25,188		$	24,787
Other	$	(4,358)		$	83

Total Expenses	$	15,879		$	16,548
Compensation	$	5,585		$	6,702
Non-compensation	$	10,294		$	9,846

Pre-Tax Income	$	4,951		$	8,322

Compensation Ratio	26.8		%	26.9		%
Non-compensation Ratio	49.4		%	39.6		%
Pre-Tax Margin	23.8		%	33.5		%

AUM (billions)	$	40.4		$	35.3

Capital Markets

Capital Markets reported revenue for the current quarter of $94.6 million, 4.0% higher when compared with the prior year period. Pre-tax loss was $15.3 million, compared with pre-tax income of $2.4 million in the prior year period.

Revenue:

Investment Banking

•Advisory fees earned from investment banking activities decreased 38.5% compared with a year ago due to fewer M&A transactions

•Equities underwriting fees increased 201.2% when compared with a year ago due to higher new issuance volumes and deal sizes

•Fixed income underwriting fees were relatively flat with the prior year

Sales and Trading

•Equities sales and trading revenue decreased 11.2% compared with a year ago due to reduced volumes as a result of lower market volatility

•Fixed income sales and trading revenue increased by 48.9% compared with a year ago primarily due to an increase in trading income attributable to higher volatility and higher volumes

Total Expenses:

•Compensation expenses increased 20.7% compared with a year ago primarily due to costs associated with opportunistic hiring and increased incentive compensation

•Non-compensation expenses were 31.2% higher than a year ago primarily due to an increase in interest expense in financing trading inventories


('000s)
	3Q-23			3Q-22

Revenue	$	94,576		$	90,947

Investment Banking	$	36,000		$	36,951
Advisory Fees	$	18,001		$	29,270
Equities Underwriting	$	15,246		$	5,061
Fixed Income Underwriting	$	2,049		$	2,111
Other	$	704		$	509

Sales and Trading	$	58,102		$	53,093
Equities	$	30,985		$	34,877
Fixed Income	$	27,117		$	18,216

Other	$	474		$	903

Total Expenses	$	109,830		$	88,546
Compensation	$	72,933		$	60,415
Non-compensation	$	36,897		$	28,131

Pre-Tax Income (Loss)	$	(15,254)		$	2,401

Compensation Ratio	77.1		%	66.4		%
Non-compensation Ratio	39.0		%	30.9		%
Pre-Tax Margin	(16.1)		%	2.6		%

Other Matters

•The Board of Directors announced a quarterly dividend in the amount of $0.15 per share payable on November 24, 2023 to holders of Class A non-voting and Class B voting common stock of record on November 10, 2023

•Compensation expense as a percentage of revenue was higher at 62.6% during the current period versus 60.9% during the same period last year due to opportunistic hiring and the impact of inflation on salary levels during the year

•The effective tax rate for the current period was 36.2% compared with 35.5% for the prior year period and was impacted by permanent items and non-deductible losses in non-U.S. businesses


(In millions, except number of shares and per share amounts)
	3Q-23			3Q-22
Capital
Stockholders' Equity (1)	$	779.3		$	770.7
Regulatory Net Capital (2)	$	437.1		$	425.8
Regulatory Excess Net Capital (2)	$	415.4		$	399.4

Common Stock Repurchases
Share Repurchase Program
Repurchases	$	6.5		$	14.0
Number of Shares	168,904			413,052
Average Price Per Share	$	38.30		$	33.86

"Dutch Auction" Tender Offer
Repurchases	$	17.5		$	—
Number of Shares	437,183			—
Average Price Per Share	$	40.00		$	—

Period End Shares	10,388,898			10,974,655
Effective Tax Rate	36.2		%	35.5		%

(1) Attributable to Oppenheimer Holdings Inc.
(2) Attributable to Oppenheimer & Co. Inc. broker-dealer


Oppenheimer Holdings Inc.
Condensed 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,
		2023		2022		% Change	2023		2022		% Change
REVENUE
	Commissions	$	83,933	$	89,608	(6.3)	$	259,174	$	282,307	(8.2)
	Advisory fees	107,969		102,927		4.9	310,214		326,098		(4.9)
	Investment banking	37,411		38,393		(2.6)	95,354		93,516		2.0
	Bank deposit sweep income	42,304		35,769		18.3	135,273		54,968		146.1
	Interest	26,430		17,361		52.2	78,691		38,667		103.5
	Principal transactions, net	16,892		6,502		159.8	46,635		10,124		360.6
	Other	(2,272)		3,551		*	15,195		(8,319)		*
	Total revenue	312,667		294,111		6.3	940,536		797,361		18.0
EXPENSES
	Compensation and related expenses	195,684		179,134		9.2	589,200		543,144		8.5
	Communications and technology	22,590		21,500		5.1	67,813		63,981		6.0
	Occupancy and equipment costs	17,281		15,457		11.8	49,622		44,701		11.0
	Clearing and exchange fees	6,051		6,705		(9.8)	18,241		18,923		(3.6)
	Interest	19,744		7,018		181.3	50,353		13,158		282.7
	Other	29,730		57,059		(47.9)	136,369		98,172		38.9
	Total expenses	291,080		286,873		1.5	911,598		782,079		16.6

Pre-Tax Income		21,587		7,238		198.2	28,938		15,282		89.4
Income taxes provision		7,808		2,573		203.5	10,262		5,559		84.6
Net Income		$	13,779	$	4,665	195.4	$	18,676	$	9,723	92.1

Less: Net income (loss) attributable to noncontrolling interest, net of tax		(82)		145		*	(403)		(215)		87.4
Net income attributable to Oppenheimer Holdings Inc.		$	13,861	$	4,520	206.7	$	19,079	$	9,938	92.0

Earnings per share attributable to Oppenheimer Holdings Inc.
	Basic	$	1.32	$	0.40	230.0	$	1.75	$	0.84	108.3
	Diluted	$	1.21	$	0.37	227.0	$	1.62	$	0.78	107.7

Weighted average number of common shares outstanding
	Basic	10,519,431		11,270,589		(6.7)	10,874,055		11,901,727		(8.6)
	Diluted	11,440,229		12,190,425		(6.2)	11,746,337		12,809,000		(8.3)

Period end number of common shares outstanding		10,388,898		10,974,655		(5.3)	10,388,898		10,974,655		(5.3)