Oppenheimer Holdings Inc.

07/31/2026 | Press release | Distributed by Public on 07/31/2026 06:14

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKGROUND
The condensed consolidated financial statements include the accounts of Oppenheimer Holdings Inc. and its consolidated subsidiaries (together, the "Company", "Firm", "Parent", "we", "our" or "us"). The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q.
Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full-service broker-dealer that is engaged in a broad range of activities in the securities industry, including retail securities brokerage, institutional sales and trading, market-making, research, investment banking (both corporate and public finance), investment advisory and asset management services and trust services. Its principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and Oppenheimer Asset Management Inc. ("OAM"). As of June 30, 2026, we provided our services from 88 offices in 25 states located throughout the United States and offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey and Geneva, Switzerland. The Company provides investment advisory services through OAM and Oppenheimer Investment Management LLC ("OIM") and Oppenheimer's financial advisor directed programs. At June 30, 2026, client assets under management ("AUM") totaled $59.4 billion. AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs as well as the net asset value of private placements of alternative investments offered by and held by clients of the Company. Client assets under administration ("AUA") as of June 30, 2026 totaled $154.7 billion. AUA includes AUM and the other assets held for which the Company provides services. At June 30, 2026, the Company employed 3,062 employees, of whom 934 were financial advisors.
Outlook
We are focused on growing our wealth management business through strategic additions of experienced financial advisors in our existing branch system and employment of experienced money management personnel in our asset management business as well as deploying our capital for expansion through targeted acquisitions or new branch openings. We are increasingly creating and investing in private market opportunities on our own behalf and on behalf of qualified clients as we believe this provides access to the fastest growth areas in the U.S. economy. We are also focused on opportunities in our capital market businesses, including integrating new technology platforms to expand the suite of services offered to our clients and onboarding experienced personnel and/or small units that will improve our ability to attract institutional clients in both equities and fixed income without significantly raising our risk profile. In investment banking, we are committed to growing our footprint by adding experienced bankers in the U.S. and U.K. within our existing industry practices as well as new industry practices where we believe we can be successful. In addition, we are committed to training younger employees throughout the organization and provide various training programs. We find that we have overwhelming demand for entrance into each of these programs.
We continuously invest in and improve our technology platform to support client service and to remain competitive, while continuously managing expenses. We are also evaluating and selectively integrating artificial intelligence ("A.I.") solutions across our platform, with the goal of improving client service, increasing employee productivity and supporting our shared services, including our technology, risk management, accounting and compliance functions. Our approach is focused on leveraging these emerging technologies in a measured manner that aligns with our business model and regulatory obligations, while limiting the cyber risk that comes with these emerging technologies. We also continue to evaluate evolving market structure developments, including extended trading hours and changing client expectations, and plan to invest in our platform and capabilities accordingly.
The Company's long-term growth plan is to continue to expand existing offices by hiring experienced professionals as well as expand through the purchase of operating branch offices from other broker-dealers or the opening of new offices in attractive locations, including selectively in international markets, and to continue to grow and develop our existing wealth management, trading, investment banking, investment advisory and other businesses. We recognize employee work habits have changed in a post-pandemic world. As a result, we are continuously reviewing our physical footprint on lease renewals, and in many cases reducing office size and configuration. We are likely to relocate our corporate headquarters into a smaller footprint upon the expiration of our current lease in 2028. We are committed to continuing to improve our capabilities to ensure compliance with industry regulations, support client service and expand our wealth management and capital markets capabilities. We recognize the importance of compliance with applicable regulatory requirements and are committed to performing rigorous and ongoing
assessments of our compliance and risk management effort, and investing in people and programs, while providing a platform with first class investment programs and services.
The Company also reviews its full-service business model to determine the opportunities available to build or acquire closely related businesses in areas where others have shown some success. Equally important is the search for viable acquisition candidates. Our long-term intention is to pursue growth by acquisition where we can find a comfortable match in terms of corporate goals and personnel at a price that would provide our stockholders with incremental value. We review potential acquisition opportunities from time to time with the aim of fulfilling the Company's strategic goals, while evaluating and managing our existing businesses. In addition, the Company may from time to time make an acquisition of 100% of a business or make minority private investments out of excess capital in allied or unrelated businesses with the goal of either syndicating the investment to eligible clients or retaining ownership because we believe them to be an attractive investment.
The Interest Rate Environment and the U.S. Economy
After lowering rates by a total of 75 basis points through three consecutive cuts in the fourth quarter of 2025, the Federal Reserve held the federal funds rate at 3.50% to 3.75% through its meetings in 2026 to date, including its most recent decision in June. In its most recent communications, Federal Reserve officials indicated that future policy adjustments will depend on incoming data, the evolving economic outlook and the balance of risks, including progress on inflation. While prior guidance suggested the potential for modest rate reductions, the timing and extent of any future changes remain uncertain and data-dependent including the possibility of interest rate increases due to rising inflation risks driven by increased oil prices and the significant investments being made into A.I. infrastructure.
Further changes to the federal funds rate may continue to impact our interest-based revenues. Lower rates reduce fees earned from FDIC-insured client deposits through our sweep program, though this impact may be partially offset if the cash sweep balances rise as clients encounter fewer attractive alternatives to deploy these balances. Rate reductions also decrease the interest we charge on customer margin loans and earn on other interest-sensitive assets, negatively affecting earnings. These impacts may be partially offset by increased activity in other parts of our business, as has been the case historically. Additionally, lower rates may also reduce the Company's short-term borrowing costs, which helps reduce interest-related expenses. We would generally expect that a return to higher rates would positively impact our interest revenues and profits.
Middle East Regional Conflict
Ongoing conflict in the Middle East continues to create geopolitical and economic uncertainty with potential implications for the global economy as well as global markets and our business operations. The conflict that began on October 7, 2023, when Hamas launched an attack on Israel, prompted Israeli military operations in Gaza. Although Israel and Hamas reached a tentative ceasefire and hostage-release agreement in October 2025, the situation remains unstable, with persistent humanitarian and security concerns subject to change.
In early 2026, the regional security environment deteriorated significantly as hostilities escalated between the United States and Iran. The United States has conducted sustained military strikes against Iranian targets over recent weeks, and has reimposed a naval blockade against Iran, while Iran and its regional proxies have engaged in retaliatory actions. These hostilities have disrupted transit through the Strait of Hormuz and materially impacted global energy supply chains, contributing to a sharp increase in oil prices and elevated volatility across commodity and financial markets. While diplomatic efforts continue, conditions remain highly uncertain, and there can be no assurance that the conflict will not escalate further.. Any prolonged or expanded conflict could contribute to broader regional instability, further disrupt global trade routes and energy flows, intensify inflationary pressures, and adversely affect commodity prices, financial markets and investor sentiment. We continue to monitor developments closely and assess any potential impacts on client investments as well as our employees, operations and activities across the Company.
EXECUTIVE SUMMARY
Favorable market conditions during the second quarter of 2026 helped drive the strong operating performance of our core businesses, although reported results were significantly and negatively impacted by the higher compensation expense related to stock appreciation rights for financial advisors. Equity markets registered their best quarterly performance in six years, supported by strong corporate earnings, sustained momentum in A.I. and improving sentiment around potential de-escalation in the Middle East. While renewed concerns around interest rates and A.I. valuations emerged toward quarter-end, markets largely absorbed these pressures and remained resilient. Overall, our business performed solidly during the second quarter and first half of the year. For the six months ended June 30, 2026, we reported adjusted net income (3) (non-GAAP) of $93.2 million, or $8.73 adjusted basic earnings per share (non-GAAP), reflecting the continued momentum across our Wealth Management and Capital Markets businesses.
In Wealth Management, we delivered strong operating results, driven by higher commission revenue from increased retail trading levels and increased advisory fees reflecting record assets under management ("AUM") largely driven by market appreciation. Reported pre-tax results, however, were partially offset by lower sweep revenue. In Capital Markets, we saw strong performance driven by increased investment banking activity-which included a balance of both advisory and underwriting transactions-along with higher sales and trading revenue in both Equities and Fixed Income amid elevated market volatility.
We ended the quarter with a strong balance sheet and ample capital, positioning us to continue investing in our platform and capabilities. We are focused on attracting and retaining high-quality talent to support our growth initiatives and remain confident in the strength and resiliency of our businesses as we continue to deliver value to our clients and shareholders.
RESULTS OF OPERATIONS
The Company reported net income of $27.4 million or $2.55 basic earnings per share for the second quarter of 2026, compared with net income of $21.7 million or $2.06 basic earnings per share for the second quarter of 2025. Revenue for the second quarter of 2026 was $454.9 million, an increase of 21.9%, compared with revenue of $373.2 million for the second quarter of 2025. Year to date revenue totaled $900.0 million, compared with $741.0 million for the same period in 2025. Net income for the six months ended June 30, 2026 was $6.8 million or $0.63 basic earnings per share, compared with net income of $52.3 million or $4.99 basic earnings per share for the same period in 2025.
Second quarter 2026 results were impacted by a $24.9 million pre-tax expense associated with an employee compensation program for financial advisors that is directly tied to the OPY stock price, which increased by $16.35 per share of Class A Stock during the quarter (from $89.19 to $105.54). The Company changed the program formula beginning in 2026 to reduce the number of grants awarded, although it will take several years for the impact of the revised program formula to be fully reflected. Adjusted net income (3), a non-GAAP measure which excludes the impact of this item, was $45.7 million or $4.27 adjusted basic earnings per share for the second quarter of 2026, compared with $27.8 million or $2.64 adjusted basic earnings per share for the second quarter of 2025. For the six months ended June 30, 2026, adjusted net income (3), which also excludes the $70 million pre-tax legal accrual related to the settlement of the Company's "cash sweep" litigation recorded in the first quarter of 2026, was $93.2 million or $8.73 adjusted basic earnings per share, compared with $56.4 million or $5.38 adjusted basic earnings per share for the same period in 2025. Management believes these non-GAAP measures provide supplemental insight into the Company's core operating performance.
(Expressed in thousands, except Per Share Amounts or otherwise indicated)
2Q-2026 2Q-2025 Change % Change
Revenue $ 454,876 $ 373,178 $ 81,698 21.9
Compensation expenses $ 307,141 $ 239,074 $ 68,067 28.5
Non-compensation expenses $ 108,290 $ 101,894 $ 6,396 6.3
Pre-tax income $ 39,445 $ 32,210 $ 7,235 22.5
Income tax provision $ 12,094 $ 10,536 $ 1,558 14.8
Net income (1)
$ 27,351 $ 21,674 $ 5,677 26.2
Adjusted net income (non-GAAP) (1) (3)
$ 45,713 $ 27,781 $ 17,932 64.5
Earnings per share (basic) (1)
$ 2.55 $ 2.06 $ 0.49 23.8
Earnings per share (diluted) (1)
$ 2.38 $ 1.91 $ 0.47 24.6
Adjusted earnings per share (basic) (non-GAAP) (1) (3)
$ 4.27 $ 2.64 $ 1.63 61.7
Adjusted earnings per share (diluted) (non-GAAP) (1) (3)
$ 3.98 $ 2.45 $ 1.53 62.4
Book value per share $ 91.84 $ 85.27 $ 6.57 7.7
Tangible book value per share (1)
$ 75.19 $ 68.25 $ 6.94 10.2
Class A shares outstanding 10,608,340 10,418,259 190,081 1.8
AUA ($ billions) $ 154.7 $ 138.4 $ 16.3 11.8
AUM ($ billions) $ 59.4 $ 52.8 $ 6.6 12.5
(1) Attributable to Oppenheimer Holdings Inc.
(2) Represents book value less goodwill and intangible assets divided by number of shares outstanding
(3) Represents a non-GAAP measure; refer to the schedule on page 47/48 for additional explanation of non-GAAP financial measures and a reconciliation of adjusted net income and earnings per share to U.S. GAAP.
Highlights
•Revenue increased in the second quarter of 2026 primarily due to stronger investment banking performance, driven by advisory fees, along with increased transaction-based commissions and advisory fees attributable to growth in billable assets under management ("AUM")
•Rising equities markets drove AUM and assets under administration ("AUA") to record levels at June 30, 2026
•Compensation expenses increased compared with the prior year quarter primarily due to higher stock appreciation rights expense resulting from a rise in the Company's share price as well as higher production-related costs and incentive compensation accruals
•Non-compensation expenses increased modestly when compared with the prior year quarter, driven primarily by increases in legal fees and technology-related expenses
BUSINESS SEGMENTS
The table below presents information about the reported revenue and pre-tax income (loss) of the Company's reportable business segments for the three and six months ended June 30, 2026 and 2025:
(Expressed in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026 2025 % Change 2026 2025 % Change
Revenue
Wealth Management $ 272,671 $ 246,421 10.7 $ 526,351 $ 488,407 7.8
Capital Markets 179,163 122,981 45.7 368,285 246,242 49.6
Corporate/Other 3,042 3,776 (19.4) 5,335 6,354 (16.0)
Total $ 454,876 $ 373,178 21.9 $ 899,971 $ 741,003 21.5
Pre-tax income (loss)
Wealth Management $ 55,654 $ 62,834 (11.4) $ 55,654 $ 130,698 (57.4)
Capital Markets 22,542 (3,864) * 22,542 (8,961) *
Corporate/Other (38,751) (26,760) 44.8 (65,752) (48,151) 36.6
Total $ 39,445 $ 32,210 22.5 $ 12,444 $ 73,586 (83.1)
* Not meaningful
Wealth Management
Wealth Management reported revenue for the current quarter of $272.7 million, 10.7% higher compared with the prior year period. Pre-tax income was $55.7 million in the current quarter, a decrease of 11.4% compared with the prior year period. Financial advisor headcount at the end of the current quarter was 934, compared with 927 at the end of the second quarter of 2025.
('000s unless otherwise indicated)
2Q-2026 2Q-2025 Change % Change
Revenue $ 272,671 $ 246,421 $ 26,250 10.7
Commissions $ 59,311 $ 54,788 $ 4,523 8.3
Advisory fee revenue $ 145,549 $ 125,610 $ 19,939 15.9
Bank deposit sweep income $ 24,955 $ 28,654 $ (3,699) (12.9)
Interest $ 21,921 $ 21,943 $ (22) (0.1)
Other $ 20,935 $ 15,426 $ 5,509 35.7
Total expenses $ 217,017 $ 183,587 $ 33,430 18.2
Compensation $ 164,514 $ 132,291 $ 32,223 24.4
Non-compensation $ 52,503 $ 51,296 $ 1,207 2.4
Pre-tax income $ 55,654 $ 62,834 $ (7,180) (11.4)
Compensation ratio 60.3 % 53.7 % 6.6 % 12.3
Non-compensation ratio 19.3 % 20.8 % (1.5) % (7.2)
Pre-tax margin 20.4 % 25.5 % (5.1) % (20.0)
AUA (billions) $ 154.7 $ 138.4 $ 16.3 11.8
AUM (billions) $ 59.4 $ 52.8 $ 6.6 12.5
Cash sweep balances (billions) $ 2.8 $ 2.8 $ - -
•Retail commissions increased 8.3% from the prior year period primarily due to elevated retail trading activity
•Advisory fees increased 15.9% due to higher AUM during the billing period
•Bank deposit sweep income decreased $3.7 million from a year ago due to lower short-term interest rates
•Other revenue increased 35.7% from a year ago due primarily to an increase 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 and greater death benefit insurance proceeds
•Compensation expenses increased 24.4% from the prior year period primarily due to higher production related costs and increased share appreciation rights expense ($24.9 million, compared with $8.3 million in the prior year period)
•Non-compensation expenses increased modestly compared to the prior year period
The following table provides a breakdown of the change in assets under management for the three months ended June 30, 2026:
(Expressed in millions)
For the Three Months Ended June 30, 2026
Fund Type Beginning Balance Contributions Redemptions/Profit Distribution Appreciation (Depreciation) Ending Balance
Traditional (1)
$ 46,535 $ 1,813 $ (2,110) $ 4,697 $ 50,935
Institutional fixed income (2)
923 4 (7) 11 931
Alternative investments:
Hedge funds (3)
4,642 84 (9) 669 5,386
Private equity funds (4)
1,798 38 (29) 118 1,925
Portfolio enhancement program (5)
241 32 (7) - 266
Other 4 - - - 4
$ 54,143 $ 1,971 $ (2,162) $ 5,495 $ 59,447
(1)Traditional investments include third party advisory programs, Oppenheimer financial advisor managed and advisory programs, and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies.
(2)Institutional fixed income provides solutions to institutional investors including: Taft-Hartley Funds, Public Pension Funds, Corporate Pension Funds, and Foundations and Endowments.
(3)Hedge funds represent investments in strategies including long/short equity, global macro, event driven, merger arbitrage, multi-strategy and credit. They may be single manager or fund of funds.
(4)Private equity funds include portfolios focused on technology, infrastructure, real estate, natural resources and specific co-investment opportunities.
(5)The portfolio enhancement program sells uncovered, out-of-money puts and calls on the S&P 500 Index. The program is market neutral and uncorrelated to the index. Valuation is based on collateral requirements for a series of contracts representing the investment strategy.
Capital Markets
Capital Markets reported revenue for the current quarter of $179.2 million, 45.7% higher when compared with the prior year period. Pre-tax income was $22.5 million compared with a pre-tax loss of $3.9 million in the prior year period.
('000s) 2Q-2026 2Q-2025 Change % Change
Revenue $ 179,163 $ 122,981 $ 56,182 45.7
Investment Banking $ 81,549 $ 43,394 $ 38,155 87.9
Advisory fees $ 58,136 $ 22,487 $ 35,649 158.5
Equities underwriting $ 17,849 $ 12,225 $ 5,624 46.0
Fixed income underwriting $ 4,794 $ 6,062 $ (1,268) (20.9)
Other $ 770 $ 2,620 $ (1,850) (70.6)
Sales and Trading $ 96,600 $ 78,904 $ 17,696 22.4
Equities $ 55,067 $ 39,953 $ 15,114 37.8
Fixed income $ 41,533 $ 38,951 $ 2,582 6.6
Other $ 1,014 $ 683 $ 331 48.5
Total expenses $ 156,621 $ 126,845 $ 29,776 23.5
Compensation $ 109,872 $ 80,610 $ 29,262 36.3
Non-compensation $ 46,749 $ 46,235 $ 514 1.1
Pre-tax income (loss) $ 22,542 $ (3,864) $ 26,406 *
Compensation ratio 61.3 % 65.5 % (4.2) % (6.4)
Non-compensation ratio 26.1 % 37.6 % (11.5) % (30.6)
Pre-tax margin 12.6 % (3.1) % 15.7 % (506.5)
* Not meaningful
•Advisory fees earned from investment banking activities increased 158.5% compared with the prior year period primarily reflecting the successful closing of transactions in the financial institutions sector that carried larger associated fees as well as an increase in overall transaction closings
•Equities underwriting fees increased 46.0% when compared with the prior year period due to higher underwriting volumes, led by strong activity in the healthcare sector
•Fixed income underwriting fees decreased 20.9% from the prior year period, primarily driven by lower sovereign issuance volumes
•Equities sales and trading revenue increased 37.8% compared with the prior year period mostly due to higher trading volumes and growth in options-related commission revenue
•Fixed income sales and trading revenue increased modestly compared with the prior year period primarily due to higher levels of market volatility
•Compensation expenses increased 36.3% compared with the prior year period largely due to higher incentive compensation accruals
•Non-compensation expenses were flat compared with the prior year period
Explanation of Non-GAAP Financial Measures
The Company included certain non-GAAP financial measures within Management's Discussion and Analysis to supplement the U.S. Generally Accepted Accounting Principles ("GAAP") financial information. Adjusted results begin with information prepared in accordance with U.S. GAAP, and such results are adjusted to exclude, or include, certain items. Specifically, we included non-GAAP measures that adjust the Company's net income and earnings per share to exclude compensation expense related to the recurring, mark-to-market re-measurement of liability-based stock appreciation rights from net income and earnings per share because the period-to-period variability in this expense is largely driven by factors outside the Company's direct control, including changes in the fair value of and underlying volatility levels in Oppenheimer Holdings Inc.'s Class A common stock (OPY) price.
The non-GAAP measures presented also exclude the expense associated with the settlement of the class action "cash sweep" litigation in the first quarter of 2026 because management does not view this as ordinary-course litigation for the Company given the nature of the claims and the manner in which the action was brought.
The Company believes that these non-GAAP financial measures provide additional useful information for investors because they permit investors to view the Company's financial performance measures on a basis consistent with how management views the operating performance of the Company. These non-GAAP financial measures, when presented in conjunction with comparable U.S. GAAP measures, are also useful to investors when comparing the Company's results across different financial reporting periods on a consistent basis. However, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, or superior to, the analysis of the Company's results as reported under U.S. GAAP. Other companies may calculate similarly titled non-GAAP measures differently, which may limit their usefulness for comparative purposes. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP measures included in this Quarterly Report on Form 10-Q.
The following tables reconcile our non-GAAP financial measures to their respective U.S. GAAP measures.
Net Income Attributable to Oppenheimer Holdings Inc. and Earnings Per Share U.S. GAAP Reconciliation
Reconciliation of net income attributable to Oppenheimer Holdings Inc. to adjusted net income attributable to Oppenheimer Holdings Inc., reconciliation of basic earnings per share to adjusted basic earnings per share, and reconciliation of diluted earnings per share to adjusted diluted earnings per share are as follows:
('000s, except number of shares and per share amounts) For the Three Months Ended
For the Six Months Ended
June 30, 2026
June 30, 2025
June 30, 2026
June 30, 2025
Net income attributable to Oppenheimer Holdings Inc. (U.S. GAAP) $ 27,351 $ 21,674 $ 6,773 $ 52,329
Non-GAAP adjustments:
Class action sweep litigation settlement - - 70,000 -
Liability-based stock appreciation rights expense
24,894 8,281 47,179 5,539
Tax impact of non-GAAP adjustments (1)
(6,532) (2,174) (30,748) (1,454)
Adjusted net income attributable to Oppenheimer Holdings Inc. (Non-GAAP) $ 45,713 $ 27,781 $ 93,204 $ 56,414
Basic earnings per share (U.S. GAAP) $ 2.55 $ 2.06 $ 0.63 $ 4.99
Impact of non-GAAP adjustments 1.72 0.58 8.10 0.39
Adjusted basic earnings per share (Non-GAAP) $ 4.27 $ 2.64 $ 8.73 $ 5.38
Diluted earnings per share (U.S. GAAP) $ 2.38 $ 1.91 $ 0.60 $ 4.63
Impact of non-GAAP adjustments 1.60 0.54 7.59 0.36
Adjusted diluted earnings per share (Non-GAAP) $ 3.98 $ 2.45 $ 8.19 $ 4.99
Weighted average shares outstanding
Basic (U.S. GAAP and Non-GAAP) 10,708,005 10,520,219 10,675,637 10,493,145
Diluted (U.S. GAAP) 11,483,286 11,349,049 11,380,760 11,308,979
(1) The tax impact is estimated using the statutory rates for the applicable entities
CRITICAL ACCOUNTING POLICIES
The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Reference is also made to the Company's condensed consolidated financial statements and notes thereto found in its Annual Report on Form 10-K for the year ended December 31, 2025.
The Company's accounting policies are essential to understanding and interpreting the financial results reported on the condensed consolidated financial statements. The significant accounting policies used in the preparation of the Company's condensed consolidated financial statements are summarized in Note 2 to those statements and the notes thereto found in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Certain of those policies are considered to be particularly important to the presentation of the Company's financial results because they require management to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.
During the six months ended June 30, 2026, there were no material changes to matters discussed under the heading "Critical Accounting Polices" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
New Accounting Pronouncements
The following Accounting Standards Update ("ASU") issued by the Financial Accounting Standards Board ("FASB") has not yet been adopted by the Company:
ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
The FASB issued this ASU in November of 2024 which will require public business entities to disclose specified information about certain costs and expenses, including employee compensation, depreciation and intangible asset amortization at each interim and annual reporting period. The new guidance, which becomes effective in 2027, will not have an impact on our financial position or results of operations since it only amends certain disclosures.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2026, total assets increased by 13.7% from December 31, 2025. The Company satisfies its need for financing from internally generated funds and collateralized and uncollateralized borrowings, consisting primarily of bank call loans, stock loans, and uncommitted lines of credit. We finance our trading in government securities through the use of securities sold under repurchase agreements. Oppenheimer has uncommitted arrangements with banks for borrowings on a fully collateralized basis. The amount of Oppenheimer's bank borrowings fluctuates in response to changes in the level of the Company's securities inventories and customer margin debt, changes in notes receivable from employees, investment in furniture, equipment and leasehold improvements, and changes in stock loan balances and financing through repurchase agreements. At June 30, 2026, the Company had an outstanding bank call loan balance of $349.9 million compared to $76.8 million at December 31, 2025. The Company also has some availability of uncommitted short-term bank financing on an unsecured basis.
The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes.
The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $8.5 million and $383,000, respectively, at June 30, 2026. The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts.
The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S. Treasuries and cash deposits in bank accounts. Any transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements.
The Company permanently reinvests eligible earnings of its foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if these earnings were repatriated. The unrecognized deferred tax liability associated with the outside basis difference of its foreign subsidiaries is estimated at $4.2 million for those subsidiaries. We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own business and in the businesses in Europe and Asia to support business initiatives in those regions. We will continue to review our historical treatment of these earnings to determine whether our historical practice will continue or whether a change is warranted.
Liquidity
For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash. The receivables from brokers, dealers and clearing organizations represent deposits for securities borrowed transactions, margin deposits and current transactions awaiting settlement. The receivables from customers represent margin balances and amounts due on transactions awaiting settlement. Our receivables are, for the most part, collateralized by marketable securities. Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned are mainly comprised of actively traded readily marketable securities. We issued $1.7 million in forgivable notes, net of notes forgiven or written off (which are inherently illiquid) to employees during the three months ended June 30, 2026 ($4.2 million for the three months ended June 30, 2025) as upfront or backend inducements to commence or continue employment as the case may be. The amount of funds allocated to such inducements will vary with hiring activity and retention initiatives.
We satisfy our need for liquidity from internally generated funds, collateralized and uncollateralized bank borrowings, stock loans and repurchase agreements. Bank borrowings are uncommitted in nature and, in most cases, collateralized by firm and customer securities.
We obtain short-term borrowings primarily through bank call loans, securities loaned and repurchase transactions. Bank call loans are generally payable on demand, uncommitted in nature and bear interest at various rates. At June 30, 2026, the Company had $349.9 million of bank call loans ($76.8 million at December 31, 2025). The average daily bank loan balance outstanding for the three and six months ended June 30, 2026 was $174.4 million and $173.5 million, respectively ($325.8 million and $301.7 million for the three and six months ended June 30, 2025). The largest daily bank loan balance outstanding for the three and six months ended June 30, 2026 was $389.7 million and $389.7 million, respectively ($482.3 million and $491.7 million for the three and six months ended June 30, 2025).
In connection with both its trading and brokerage activities, Oppenheimer borrows securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date and lends securities to other brokers and dealers for similar purposes. Oppenheimer earns interest on its cash collateral provided and pays interest on the cash collateral received less a rebate earned for lending securities.
At June 30, 2026, securities loan balances totaled $392.4 million ($370.3 million at December 31, 2025 and $404.9 million at June 30, 2025). The average daily securities loan balances outstanding for the three and six months ended June 30, 2026 were $474.2 million and $426.9 million ($414.1 million and $386.7 million for the three and six months ended June 30, 2025, respectively). The largest daily stock loan balances for the three and six months ended June 30, 2026 were $587.9 million ($502.9 million for the three and six months ended June 30, 2025).
We finance our government trading operations through the use of securities purchased under reverse repurchase agreements and securities sold under agreements to repurchase. Repurchase and reverse repurchase agreements, primarily involving government and agency securities, are carried at amounts at which securities subsequently will be resold or reacquired as specified in the respective agreements and include accrued interest.
Repurchase and reverse repurchase agreements are presented on a net-by-counterparty basis, when the repurchase and reverse repurchase agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase and reverse repurchase agreements exist in "book entry" form and certain other requirements are met.
At June 30, 2026, the gross balances of reverse repurchase agreements and repurchase agreements were $242.2 million and $1,225.3 million, respectively. The following table presents the average daily balance and the largest outstanding balance of reverse repurchase agreements and repurchase agreements on a gross basis for the three and six months ended June 30, 2026 and June 30, 2025.
(Expressed in millions)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2026 2025 2026 2025
Average daily balance
Reverse repurchase agreements $ 302.3 $ 413.8 $ 337.1 $ 392.2
Repurchase agreements 1,198.5 1,016.0 1,194.6 1,030.1
Largest outstanding balance
Reverse repurchase agreements $ 653.6 $ 658.5 $ 734.4 $ 658.5
Repurchase agreements 1,276.8 1,262.0 1,325.4 1,262.0
Liquidity Management
We manage our need for liquidity on a daily basis to ensure compliance with regulatory requirements. Our liquidity needs may be affected by market conditions, increased inventory positions or trading activity, business expansion or contraction, clearinghouse margin requirements and other unanticipated occurrences. In the event that existing financial resources do not satisfy our liquidity needs, we may have to seek additional external financing. The availability of such additional external financing may depend on market factors outside our control.
We have company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans. A portion of the assets underlying these policies are invested in mutual funds that match those offered within the deferred compensation plans. As such, increases in deferred compensation costs recognized within Compensation and related expenses may be offset to a degree by increases in the cash surrender value of the Company-owned life insurance policies recognized within Other revenue and vice versa. Certain policies which could provide additional liquidity if needed had a cash surrender value of $115.9 million as of June 30, 2026.
We regularly review our sources of liquidity and financing and conduct internal stress analysis to determine the impact on the Company of events that could remove sources of liquidity or financing and to plan actions the Company could take in the case of such an eventuality. Our reviews have resulted in a contingency funding plan that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing.
Our primary long-term cash requirements include $171.3 million of operating lease obligations. The total cash requirement for operating lease obligations is estimated to be approximately $22.2 million for the remainder of 2026 year.
Funding Risk
(Expressed in thousands)
For the Six Months Ended June 30,
2026 2025
Cash used in operating activities (*) $ (245,007) $ (51,671)
Cash used in investing activities (432) (1,259)
Cash provided by financing activities 245,487 57,398
Net increase in cash and cash equivalents $ 48 $ 4,468
(*) Includes the $70 million payment made in June of 2026 associated with the Company's settlement of the "cash sweep" class action litigation announced on April 24, 2026
Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs for the foreseeable future. Under some circumstances, banks including those on whom we rely may back away from providing funding to the securities industry. Such a development might impact our ability to finance our day-to-day activities or increase the costs to acquire funding. We may or may not be able to pass such increased funding costs on to our clients.
During periods of high volatility, we may see increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearinghouses such as the Depository Trust Company ("DTCC"), Options Clearing Corporation ("OCC") and National Securities Clearing Corp. ("NSCC") as well as more stringent collateral arrangements with our bank lenders. The recent reduction of the settlement cycle for security transactions in the U.S. has substantially reduced settlement risks. All such requirements have been and will be met in the ordinary course with available collateral or short-term borrowings.
CYBERSECURITY
Cybersecurity presents significant challenges to the business community in general, including to the financial services industry. Increasingly, bad actors, both domestic and international, attempt to steal personal data and/or interrupt the normal functioning of businesses through accessing individuals' and companies' files and equipment connected to the internet. The arrival of A.I. has made it easier for such actors to launch and successfully effectuate their desire to impact business operations or steal monetary assets. Recent incidents have reflected the increasing sophistication of intruders and their intent to steal personally identifiable information as well as funds and securities. These intruders sometimes use instructions that are seemingly from authorized parties but, in fact are from entities intent on attempting to steal. In other instances, these intruders attempt to bypass normal safeguards and disrupt or steal significant amounts of information and then either release it to the Internet or hold it for ransom. Regulators are increasingly requiring companies to provide heightened levels of defense. The Company maintains processes and systems with an aim to preventing any such attack from disrupting its services to clients as well as to prevent any loss of client or Company funds or data concerning its clients, their financial affairs, as well as Company-privileged information.
Our management is actively involved in the oversight of our cybersecurity risk management program. We have devoted significant financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations. We have incorporated cybersecurity processes to assess, identify and manage risks from cybersecurity threats into our overall risk assessment process. The Company maintains a cybersecurity program that is designed to identify, protect from, detect, respond to, and recover from cybersecurity threats and risks, and protect the confidentiality, integrity, and availability of its information systems, including the information residing on such systems. The National Institute of Standards and Technology Cybersecurity Framework helps the Company inform its cybersecurity agenda and prioritize its cybersecurity activities. The Company takes a risk-based approach to cybersecurity, which begins with the identification and evaluation of cybersecurity risks or threats that could affect the Company's operations, finances, legal or regulatory compliance, or reputation. The Company has processes in place for assessing, identifying and managing material risks from cybersecurity threats along with risk assessment procedures designed to allow such processes to remain responsive to emerging risks. Our processes include, but are not limited to, the following:
•we engage third-party cybersecurity firms and tools to assist with network monitoring, endpoint protection, vulnerability assessments and penetration testing;
•we engage cyber security consultants and auditors to perform tabletop exercises and evaluate our cyber processes including an assessment of our incident response procedures. Identified risks are formally tracked until mitigated or eliminated;
•we perform regular scanning of our systems to identify and resolve critical vulnerabilities;
•we provide periodic training and testing, including phishing tests, to help our employees understand cybersecurity risks and their responsibility in mitigating those risks; and
•we insure against potential losses from cyber incidents by maintaining cybersecurity insurance.
We have a written incident response plan that identifies the steps to be taken in response to a cybersecurity incident that includes investigation, escalation and remediation provisions. The Incident Response Plan includes processes for reporting and escalating cybersecurity incidents to senior management, regulators and criminal enforcement to the extent warranted.
We have processes to evaluate third party service providers and vendors that have access to sensitive systems and Company and customer data, which includes the use of cybersecurity questionnaires and due diligence procedures such as assessments of that service provider's cybersecurity posture.
Management's Role
Management has implemented risk management structures, policies and procedures, and manages our risk exposure on a day-to-day basis. The Company has a dedicated cybersecurity organization within its technology department that focuses on current and emerging cybersecurity matters. The Company's cybersecurity function is led by the Company's Chief Information Officer ("CIO") and the Company's Chief Information Security Officer ("CISO"), who reports to the Company's CIO. The CIO and his direct reports, including the CISO, discuss action items related to risks at a standing monthly meeting. Risk reporting is provided at monthly meetings of the Company's cross-business Cybersecurity Committee and periodic presentations to the Company's Risk Management Committee, at which many members of the Company's senior management are present.
The CEO meets regularly with the CIO to discuss cybersecurity threats and existing and potentially new technology systems including those related to cybersecurity. The CIO and CISO have a standing monthly meeting with the CEO and General Counsel to discuss potential vulnerabilities in the cyber environment.
Board Oversight
The Board of Directors, both directly and through the Audit Committee, oversees management's responsibility of ensuring proper functioning of our cybersecurity risk management program. In particular, the Audit Committee assists the Board in its oversight of management's responsibility to assess, manage and mitigate cybersecurity risks. Recently, the Board and Audit Committee added a member with significant cybersecurity experience. The Audit Committee receives a cybersecurity update at each regular meeting of the Board covering cybersecurity risks, cybersecurity staffing and staff development including certifications and training. These updates are given either in person by the CIO and CISO or in written presentations created by them.
As of the date of this filing, the Company has not identified any cybersecurity threats that have materially affected or are reasonably anticipated to have a material effect on the Company's business strategy, results of operations or financial condition. Although the Company has not experienced cybersecurity incidents that are individually, or in the aggregate, material, the Company has experienced cyberattacks in the past, which the Company believes have thus far been mitigated by preventative, detective, and responsive measures put in place by the Company. Given the continuing reports of cyber incidents in general, we believe that the Company will most likely continue to be a target of cybersecurity attacks by bad actors.
For additional information on how risks from cybersecurity threats may adversely affect the Company, see "Item 1A. Risk Factors-Risks Related to Our Business" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
REGULATORY AND TAXATION MATTERS AND DEVELOPMENTS
See the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in Item 1 "Business - Regulation" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for additional information.
Regulatory Capital Requirements
Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements. As of June 30, 2026, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. See Note 14 to the condensed consolidated financial statements in Item 1 for further information on regulatory capital requirements.
Amendments to SEC Rule 15c3-3
On December 20, 2024, the SEC adopted rule amendments to SEC Rule 15c3-3 (the customer protection rule) that require certain broker-dealers, including those with average total credits (amounts owed to customers) equal to or greater than $500 million, to increase the frequency with which they perform computation of the net cash they owe customers and proprietary accounts of other broker-dealers ("PAB") from weekly to daily. Impacted entities must perform the customer and PAB reserve computations daily beginning no later than June 30, 2026. The new amendments apply to Oppenheimer, our broker-dealer subsidiary. Effective June 30, 2026, Oppenheimer commenced performing the required daily computations and continues to monitor its ongoing compliance with the amended rule.
Limitations on Tax Deductions for Compensation Paid to Certain Executives and Officers
Internal Revenue Code Section 162(m) ("Section 162(m)") currently limits a public company's tax deductions for compensation above $1 million paid to "covered employees," which includes the Chief Executive Officer, Chief Financial Officer and the next three highest paid officers. Amendments to Section 162(m) included in the American Rescue Plan Act of 2021, which become effective on January 1, 2027, expand the definition of "covered employees" to include the next five highest paid employees or officers. If there are no further changes or amendments to Section 162(m), or if the definition of "covered employees" is further expanded, we expect the Company's operating results to be adversely impacted due to anticipated increases in the Company's income tax expense and effective tax rate. Since the impact of these changes is dependent on our compensation and personnel mix beginning in 2027, we are unable to quantify the potential impact at this time.
Frequency of Reporting Requirements for Public Companies
On May 5, 2026, the SEC proposed rulemaking that would permit public companies, in certain circumstances, to file semiannual reports in lieu of quarterly reports on Form 10-Q. The proposal is intended to provide issuers, including the Company, with greater flexibility in determining the frequency of interim reporting. If adopted, the proposed changes could affect the timing and content of the Company's periodic reporting obligations. The Company currently intends to continue reporting results on a quarterly basis subject to its review of the final rule and any related regulatory requirements.
Current Filer Status and Proposed SEC Amendments to Issuer Status and Disclosure Requirements
As of the June 30, 2026 measurement date for determining SEC filer status, the Company's public float exceeded the $700 million threshold for large accelerated filer classification for the first time. As a result, under currently applicable SEC rules, the Company would be deemed a large accelerated filer for purposes of its Annual Report on Form 10-K for the fiscal year ending December 31, 2026, to be filed in February 2027. Compared to accelerated filer status, large accelerated filer status is subject to more stringent reporting requirements, including a shorter deadline for the filing of the annual report on Form 10-K.
On May 19, 2026, the SEC proposed amendments to the definitions of filer status and related disclosure requirements, which, if adopted, could affect the classification of certain issuers, including the Company, as well as the timing, content and extent of their periodic reporting and proxy-related disclosures. Depending on the scope and timing of any final rules, these amendments could alter the thresholds or criteria applicable to the Company and, as a result, may change the Company's filer status and related reporting obligations that would otherwise apply under current rules. The proposed amendments could result in modifications to the Company's financial reporting requirements, internal control over financial reporting obligations and the scope and timing of proxy disclosures. As a result, such changes could impact compliance costs, resource allocation and reporting processes. As the rulemaking process remains ongoing, the ultimate impact of any final rules on the Company will
depend on the scope and timing of adoption. The Company continues to monitor developments and assess the potential implications for its reporting and compliance processes.
Other Regulatory Matters
On March 31, 2025, Oppenheimer received an administrative subpoena from the Office of Foreign Asset Control of the United States Department of the Treasury ("OFAC") requesting certain information regarding Oppenheimer's anti-money laundering policies and procedures. Oppenheimer has responded and will continue to respond to the OFAC subpoena.
FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS"
From time to time, the Company may publish or make oral statements that constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 which provides a safe harbor for forward-looking statements. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues, earnings, liabilities or expenses, business prospects, projected ventures, new products, anticipated market performance, and similar matters. The Company cautions readers 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 forward-looking statements. These risks and uncertainties, many of which are beyond the Company's control, include, but are not limited to: (i) transaction volume in the securities markets, (ii) the volatility of the securities markets, (iii) fluctuations in interest rates, (iv) changes in regulatory requirements or taxation policy that could affect the cost and method of doing business, (v) general economic conditions, both domestic and international, including inflation, recession, stagflation, and changes in consumer confidence and spending, (vi) competition from existing financial institutions, new entrants and other participants in the securities markets and financial services industry, (vii) potential cybersecurity threats and attacks, (viii) legal developments affecting the litigation experience of the securities industry and the Company, (ix) changes in foreign, federal and state tax laws that could affect the popularity of products sold by the Company or impose taxes on securities transactions, (x) the adoption and implementation of the SEC's "Regulation Best Interest" and other regulations adopted in recent years, (xi) war, terrorist acts and nuclear confrontation as well as political unrest, including events relating to the Israel-Hamas war, the conflict with Hezbollah, the war with Iran and related unrest in the Middle East (including disruption of global energy supply chains and the closure or disruption of the Strait of Hormuz or other shipping routes), Russia's invasion of Ukraine and related Western sanctions, and related uncertainty in global energy markets, and the potential for broader regional instability affecting global trade routes, commodity prices and financial markets, (xii) the Company's ability to achieve its business plan, (xiii) the effects of the economy on the Company's ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, (xvi) the effect of technological innovation on the financial services industry and securities business including but not limited to risks associated with the use of artificial intelligence, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, government spending, inflation, immigration, impact of tariffs, tariff reversals and trade wars, bank failures, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry and (xix) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events. There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
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