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| 8-K/A - 8-K/A - OPPENHEIMER HOLDINGS INC | form8k-a8x10x2016.htm |
OPPENHEIMER HOLDINGS INC.
INVESTOR PRESENTATION
2Q-16
Presented by:
Robert Lowenthal
Senior Managing Director, Chairman of Management Committee
Jeffrey Alfano
Executive Vice President & Chief Financial Officer
SAFE HARBOR STATEMENT
2
This presentation and other written or oral statements made from time to time by representatives of Oppenheimer Holdings Inc. (the
“company”) may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may relate to such matters as
anticipated financial performance, future revenues or earnings, business prospects, new products or services, anticipated market
performance and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. The company cautions that a variety of factors could cause the company’s actual results to differ materially from the
anticipated results or other expectations expressed in the company’s forwarding-looking statements. These risks and uncertainties
include, but are not limited to, those risk factors discussed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2015 (the “2015 Annual Report”). In addition, important factors that could cause actual results to
differ materially from those in the forward-looking statements include those factors discussed in Part II, “Item 7. Management’s
Discussion & Analysis of Financial Condition and Results of Operations – Factors Affecting ‘Forward-Looking Statements’” of our
2015 Annual Report. Any forward-looking statements herein are qualified in their entirety by reference to all such factors discussed in
the 2015 Annual Report and the company’s other SEC filings. There can be no assurance that the company has correctly or completely
identified and assessed all of the factors affecting the company’s business. The company does not undertake any obligation to publicly
update or revise any forward-looking statements.
OVERVIEW
3
Oppenheimer is a leading investment bank and full-service
investment firm that provides financial services and advice to high
net worth investors, individuals, businesses and institutions.
Private client services and asset management
solutions tailored to individuals’ unique
financial objectives
Investment banking services and capital
markets products for institutions and
corporations
Wealth Management Capital Markets
$78.7B Client Assets
Under Administration
~1,200 Financial Advisers
94 offices in 24 states;
5 foreign jurisdictions
$24.3B Client Assets
Under Management
+150 Institutional
Sales Professionals
31 senior research analysts
covering
~500 equity securities
Note: Data as of June 30, 2016
Quick Facts
Cultural Values Business Principles Talent & Leadership Technology Investments
4
OUR CULTURAL VALUES
Our core values and our culture are the most important and enduring strength of
this firm. As we stay true to our principles, always doing what is right and best
for our clients, then in the best and worst of times, we can feel justly proud of our
efforts. As we make the changes necessary to evolve and to adapt, we face the
future from a position of strength
Our reputation is based on integrity and trust. We
always:
– Take responsibility for our actions and decisions
– Follow the spirit as well as the letter of the law
– Keep customer information secure
– Maintain an open dialogue with clients
– Respect our competitors
Cultural Values Business Principles Talent & Leadership Technology Investments
5
OUR BUSINESS PRINCIPLES
We are deeply committed to our clients and offer the same level of
service to investors of all sizes.Client Focus
Recommendations for each client are tailored and based on a
deep-seeded knowledge of individual goals.Tailored Advice
Our track record demonstrates a commitment to results driven
investments and leadership in the financial marketplace.Trust
Proven Expertise We have earned a role as a trusted adviser for our clients by consistently providing expertise, insight, and results.
Changed leadership in Private Client
Division
Added 14 new branch managers in the past
year
Recalibrated expectations of financial
advisers
Implemented New Financial Adviser
recruitment deal
Created an Associate Financial Adviser
Program
Cultural Values Business Principles Talent & Leadership Technology Investments
6
INVESTING IN TALENT & LEADERSHIP
Recruiting & Growth Key Initiatives
Internship and Training Program
Next Generation Program
“Oppenheimer University”
Professional Development
Firm-wide Communications
Cultural Values Business Principles Talent & Leadership Technology Investments
7
TECHNOLOGY INVESTMENTS
We made substantial investments in technology to satisfy
regulatory and compliance needs as well as to better service our
clients
– Invested in new platform for all investment advisory programs
– Launched new mobile application
– Implemented systems to improve surveillance capabilities
– Enhanced Know Your Client system to gather more information on our clients
– Engaged outside data experts to review and analyze big data
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Institutional
Equities
Investment
Banking
Taxable Fixed
Income
Public Finance
LET’S LOOK AT OUR RESULTS
8
Business Segment Results TTM 2Q-16
Shareholders' Equity at 6/30/16 (‘000s) $522,112
Book-value at 6/30/16 $38.45
Tangible Book-value at 6/30/16 $25.75
Market Cap at 8/4/16 (‘000s) $207,051
Share Price at 8/4/16 $15.61
TTM 2Q-16 Revenue (‘000s) $892,581
Total Revenue: $854.3M* Capital Markets Revenue
Breakdown ($264.5M)
* Does not include Commercial Mortgage Banking Segment which was discontinued in 2Q-16
(1) Wealth Management represents Private Client and Asset Management business segments
Snapshot
(1)
2011 2012 2013 2014 2015 TTM 6‐30‐16
Net Income/(Loss) $10,316 $(3,613) $25,061 $8,826 $1,962 $(2,711)
$(10,000)
$(5,000)
$‐
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
FINANCIAL RESULTS CONTINUED
9
Gross Revenue ($M)
Net Income/(Loss)
($ thousands)
$800
$850
$900
$950
$1,000
$1,050
2011 2012 2013 2014 2015 TTM 6‐30‐16
CAPITAL STRUCTURE AS OF JUNE 30, 2016
10
Conservative Risk Profile
Ratios
Equity to Assets:
Capitalization to Assets:
Debt to Equity:
Gross Leverage Ratio:
20%
26%
29%
4.9X
($ in thousands) June 30, 2016
Total Assets: $2,575,729
Stockholders’ Equity:
Long-Term Debt:
$522,112
$150,000
Total Capitalization: $672,112
Capital Structure
Straight-forward balance sheet
Level 3 assets represent 4.0% of total assets
(primarily ARS)
Regulatory Net Capital of $120.5M
Regulatory Excess Net Capital of $98.7M
Long-term Debt Financing Secured Through 2018
Securities Inventory Composition
$951.8M at June 30, 2016
Securities Trading
Primarily a client-facing business (limited
proprietary trading)
High turnover of securities inventory
2015 VaR average of $708 thousand
Gross leverage ratio consistent around 5x
0.74
-0.27
1.77
0.62
0.14
0.39
0.76
-0.27
1.85
0.65
0.14
0.39
-0.50
0.00
0.50
1.00
1.50
2.00
2011 2012 2013 2014 2015 2Q-16
EPS - diluted EPS - basic
2.0%
-0.7%
4.8%
1.7%
0.4%
-0.5%
-2.0%
0.0%
2.0%
4.0%
6.0%
2011 2012 2013 2014 2015 TTM 2Q-16
1.9%
-0.1%
4.3%
2.6%
0.7%
-0.4%
-2.0%
0.0%
2.0%
4.0%
6.0%
2011 2012 2013 2014 2015 TTM 2Q-16
$24.47 $24.34 $26.19 $26.27 $26.13 $25.75
$37.16 $36.80
$38.77 $38.71 $38.84 $38.45
$10
$15
$20
$25
$30
$35
$40
$45
2011 2012 2013 2014 2015 2Q-16
Tangible BV per share Book Value per Share
11
SELECT FINANCIAL MEASURES
Book Value
ROE
Earnings per Share ($)
Pretax Margin (%)
WE CONTINUE TO ADDRESS THE ARS MATTER
12
Company ($M)Client ($B)
ARS Holdings
Auction Rate Securities (“ARS”) failed in Feb. 2008 with over $330B outstanding in market
Oppenheimer clients held $2.8B in Feb. 2008
Settlements with New York Attorney General and Massachusetts Securities Division in Feb. 2010
ARS purchased from clients under regulatory settlements totals $116.9M through June 30, 2016
Eligible investors for future buybacks under the settlements with the regulators held approximately
$34.3M of ARS as of June 30, 2016
Commitments to purchase under legal settlements and awards as of June 30, 2016 was $26.9M
2.790
1.301
0.846
0.579
0.300 0.244 0.194 0.167 0.144
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
5.3 4.5
36.7
70.4
77.1
91.6
98.6
92 90.7
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
‐
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2009 2010 2011 2012 2013 2014 2015 6‐30‐16
13
POSITIONED WELL FOR A RISING INTEREST RATE ENVIRONMENT
Low interest rates have had significant
impact on interest and fee revenues
Firm’s interest rate sensitive products:
– Cash sweep balances
– Margin lending
– Firm investments (Auction Rate
Securities)
FDIC-insured bank deposit program
has client assets of $7.2 billion
Interest and Fee
Revenues ($M)
Cash Sweep
Balances* ($M)
*Money market funds plus FDIC-insured bank deposits
F
ed
F
un
d
s T
arget R
ate
$111.4
$89.7
$45.5
$37.7 $33.8 $35.1 $35.5 $37.3
$41.4
$52.8
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012 2013 2014 2015 TTM 6-
30-16
Margin Interest
Money Fund Sweep Program
FDIC Money Market Product
THANK YOU FOR YOUR TIME