What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-03-01 · 251 added, 221 removed, 1443 unchanged (25% of the section changed)

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Management's Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm

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The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets and provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company;

and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.

generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.

The Company's internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report included herein, which expresses an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2021.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 1, 2021, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 28, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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/s/ Deloitte & Touche LLP

March 1, 2021

February 28, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report, dated February 28, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair Value – Auction Rate Securities – Refer to Note 6 to the Financial Statements

Critical Audit Matter Description

The Company’s auction rate securities (“ARS”) owned, which are $31 million at December 31, 2020, have, for the most part, been subject to issuer tender offers.

As a result, the Company has valued the ARS at the tender offer price and categorized them in Level 3 of the fair value hierarchy due to the illiquid nature of the securities.

The fair value of ARS is particularly sensitive to movements in interest rates.

However, an increase or decrease in short-term interest rates may or may not result in a higher or lower tender offer in the future or the tender offer price may not provide a reasonable estimate of the fair value of the securities.

In such cases, other valuation techniques might be necessary.

We identified the valuation of ARS as a critical audit matter because of the judgments by management to determine the fair value of the ARS, using a valuation methodology which relied upon unobservable inputs, mainly consisting of aged tender offers.

The evaluation of the Company’s valuation methodology used to estimate the fair value of ARS required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists who possess quantitative analysis and modeling expertise, to audit and evaluate the appropriateness of these fair values.

The Company earns advisory fees in connection with advisory and asset management services it provides to various types of funds and investment vehicles through its subsidiaries.

Advisory fees earned on asset-based programs are generally based on the customer’s account value at the valuation date per the respective asset management agreements.

Fees are calculated based on underlying information, such as asset balances and rates, sourced from multiple internal and external systems.

For the year ended December 31, 2021, total advisory fee revenue was $341M, of which a significant portion represents fees earned on assets held in the Company’s asset-based programs.

Given the Company's use of multiple systems and databases in recording advisory fees on asset-based programs, auditing the balance was complex and challenging due to the extent of audit effort required to evaluate the completeness and accuracy of underlying information and required the involvement of information technology (IT) professionals with specialized skills and expertise.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s valuation methodology used to estimate the fair value of ARS included the following, among others:

• We tested the effectiveness of controls over the Company’s valuation methodology, including those over the determination of the fair value, such as controls related to management’s selection of inputs and review of the valuation.

• For ARS held at December 31, 2020, we evaluated the relevancy of the tender offers used in the Company’s valuation by agreeing the security details (including CUSIP) to the ARS held by the Company as of December 31, 2020.

We also evaluated evidence of the Company’s acceptance of the most recent tender offer and the price at which it was tendered.

• Further, we evaluated the reasonableness of the Company’s valuation by:

◦ For a sample of ARS held at December 31, 2020, developing with the assistance of our fair value specialists

independent fair value estimates and comparing our estimates to those determined by the Company.

◦ Evaluating whether market and economic events or circumstances, such as the interest rate environment and

aging of the tender offer, relating to the ARS occurred since the tender offer which would impact the

Company’s fair value estimate as of December 31, 2020.

Our audit procedures related to the Company’s systems to process advisory revenue earned on asset-based programs included the following, among others:

• With the assistance of our IT specialists, we:

identified the significant systems used in the calculation of advisory fees and, using a risk-based approach, tested the relevant general IT controls over each of these systems.

Additionally, for

the relevant service organizations, we obtained the service auditor's reports and evaluated IT-related controls, related exceptions and complementary user entity controls specified in the reports.

• We tested the effectiveness of controls over the Company’s revenue balance, including automated business controls and system interface controls, as well as the controls designed to ensure the accuracy and completeness of advisory fee revenue.

• With the assistance of our data specialists, we created data visualizations to evaluate recorded advisory fee revenue and evaluate trends in the transactional revenue data.

• For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to source documents and testing the mathematical accuracy of the recorded advisory fee revenue.

• For a sample of accounts, we tested the accuracy and completeness of assets under management by obtaining independent pricing support and reconciling total positions to third-party statements.

/s/ Deloitte & Touche LLP

March 1, 2021

February 28, 2022

We have served as the Company's auditor since 2013.

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Deposits with clearing organizations 66,968 83,343

Restricted cash 127,765 —

Receivable from brokers, dealers and clearing organizations 169,902 203,494

Receivable from customers, net of allowance for credit losses of $ 3,326 ($ 410 in 2020)

Income tax receivable — 5,170

1,221,450 1,110,835

Securities purchased under agreements to resell 935 —

Securities owned, including amounts pledged of $ 266,428 ($ 440,531 in 2020), at fair value

634,504 610,517

Notes receivable, net 53,983 46,161

Furniture, equipment and leasehold improvements, net of accumulated depreciation of $ 92,785 ($ 90,958 in 2020)

28,036 27,762

Right-of-use lease assets, net of accumulated amortization of $ 76,462 ($ 50,336 in 2020)

150,121 153,502

Intangible assets 32,100 32,100

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Senior secured notes, net of debt issuance costs of $ 926 ($ 1,154 in 2020)

124,074 123,846

Deferred tax liabilities, net of deferred tax assets of $ 54,957 ($ 44,104 in 2020)

44,016 44,909

Total liabilities 2,090,220 2,028,235

Commitments and contingencies (note 17)

Redeemable noncontrolling interests 127,765 $ —

Stockholders' equity

Share capital

Class A non-voting common stock, par value $0.001 per share, 50,000,000 shares authorized, 12,381,778 and 12,698,703 shares issued and outstanding as of December 31, 2020 and 2019, respectively 39,200 46,424

Class A non-voting common stock, par value $ 0.001 per share, 50,000,000 shares

authorized, 12,447,036 and 12,381,778 shares issued and outstanding as of December 31, 2021 and 2020, respectively

36,309 39,200

Class B voting common stock, par value $ 0.001 per share, 99,665 shares authorized, issued and outstanding

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Accumulated other comprehensive income 4,225 3,448

Total Oppenheimer Holdings Inc.

stockholders' equity 823,196 685,668

Non-controlling interest $ 2,069 $ —

Total Stockholders' Equity $ 825,265 $ 685,668

Total liabilities and stockholders' equity $ 2,713,903 $ 2,464,755

Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity $ 3,043,250 $ 2,713,903

The accompanying notes are an integral part of these consolidated financial statements.

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Diluted 11.70 $ 9.30 $ 3.82

Dividends paid per share $ 1.48 $ 0.46 $ 0.44

Weighted average shares

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OPPENHEIMER HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

FOR THE THREE YEARS ENDED DECEMBER 31,

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Vested employee share plan awards ( 9,739 ) ( 13,608 ) ( 2,498 )

Change in redemption value of redeemable noncontrolling interests ( 653 ) — —

Balance at end of year 41,603 41,481 47,406

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Dividends paid ( 19,444 ) ( 18,578 ) ( 5,944 )

Cumulative-effect adjustment from adoption of new accounting update of employee share-based accounting — — ( 314 )

Balance at end of year 740,926 601,406 496,998

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Non-controlling interest

Balance at beginning of year — — 361

Net loss attributable to non-controlling interest, net of tax — — ( 16 )

Dividends paid to non-controlling interest — — ( 345 )

Contributions during the year 11,946 — —

Net loss attributable to non-controlling interest ( 11 ) — —

Change in redemption value of redeemable noncontrolling interests ( 9,866 ) — —

Balance at end of year 2,069 — —

Total stockholders' equity $ 825,265 $ 685,668 $ 592,722

Redeemable Non Controlling Interests

Contributions during the year 117,246 — —

Change in redemption value of redeemable noncontrolling interests 10,519 — —

Balance at end of year $ 127,765 $ — $ —

Dividends paid per share $ 1.54 $ 1.48 $ 0.46

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Accounts payable and other liabilities 7,669 ( 25,645 ) ( 23,774 )

Cash (used in) provided by operating activities ( 54,059 ) 79,142 168,570

Cash provided by/(used in) operating activities 227,786 ( 54,059 ) 79,142

Cash flows from investing activities

Purchase of furniture, equipment and leasehold improvements ( 8,268 ) ( 4,528 ) ( 10,024 )

Purchase of intangible assets — — ( 400 )

Proceeds from the settlement of Company-owned life insurance 2,001 587 1,720

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Cash dividends paid on Class A non-voting and Class B voting common stock ( 19,444 ) ( 18,578 ) ( 5,944 )

Cash dividends paid to non-controlling interest — — ( 372 )

Issuance of Class A non-voting common stock 58 56 83

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Issuance of senior secured notes — 125,000 —

Payment of Company sponsored Initial Public Offering costs ( 454 ) — —

Contributions from noncontrolling interests 3,147 — —

Proceeds from Company sponsored Initial Public Offering 126,500 — —

Redemption of senior secured notes — ( 148,574 ) ( 50,000 )

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Debt redemption costs — ( 2,507 ) ( 1,688 )

Increase (decrease) in bank call loans, net 82,000 ( 15,000 ) ( 103,300 )

(Decrease)/increase in bank call loans, net ( 12,500 ) 82,000 ( 15,000 )

Cash provided by/(used in) financing activities 84,581 13,874 ( 81,963 )

Net (decrease) increase in cash and cash equivalents ( 44,126 ) ( 11,125 ) 42,521

Cash and cash equivalents, beginning of year 79,550 90,675 48,154

Cash and cash equivalents, end of year $ 35,424 $ 79,550 $ 90,675

Net increase/(decrease) in cash and cash equivalents and restricted cash 306,100 ( 44,126 ) ( 11,125 )

Cash and cash equivalents and restricted cash, beginning of year 35,424 79,550 90,675

Cash and cash equivalents and restricted cash, end of year $ 341,524 $ 35,424 $ 79,550

Reconciliation of cash and cash equivalents and restricted cash within the consolidated balance sheet:

2021 2020 2019

Cash and cash equivalents $ 213,759 $ 35,424 $ 79,550

Restricted cash 127,765 — —

Total cash and cash equivalents and restricted cash $ 341,524 $ 35,424 $ 79,550

Schedule of non-cash financing activities

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Subsequently, on March 11, 2020, the WHO characterized the COVID-19 outbreak as a pandemic (the "COVID-19 Pandemic").

COVID-19 Pandemic coupled with the current market volatility has created an economic environment which may have significant accounting and financial reporting implications.

The COVID-19 Pandemic coupled with the current market volatility has created an economic environment that may have significant accounting and financial reporting implications.

The disruption of businesses around the globe due to COVID-19 may be a "trigger event" for companies to reassess valuation and accounting estimates and assumptions such as, impairment of goodwill, valuation allowances of deferred tax assets, fair value of investments and collectability of receivables.

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Notes to Consolidated Financial Statements

Fi nancial Instruments and F ai r Value

Financial Instruments and F ai r Value

Financial Instruments

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Some financial instruments are classified within Level 3 within the fair value hierarchy as observable pricing inputs are not available due to limited market activity for the asset or liability.

Such financial instruments include certain distressed municipal securities, auction rate securities ("ARS") and investments in hedge funds and private equity funds where the Company, through its subsidiaries, is general partner.

As of December 31, 2021, the Company had $ 31.8 million of auction rate securities ("ARS") in level 3 assets.

See note 7 for further details.

Fair Value Option

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The Company reviews factors, including the rights of the equity holders at risk and obligations of equity holders to absorb losses or receive expected residual returns, to determine if the entity is a VIE.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly or indirectly by the Company.

Under US GAAP, a general partner will not consolidate a partnership or similar entity under the voting interest model.

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In many cases, the Company is permitted to sell or re-pledge securities held as collateral.

These securities may be used to collateralize repurchase agreements, to enter into securities lending agreements, to cover short positions or fulfill the obligation of securities fails to deliver.

These securities may be used to collateralize repurchase agreements, to enter into securities lending agreements, to cover short positions or to fulfill the obligation of securities fails to deliver.

The Company monitors the market value of the collateral received on a daily basis and may require clients and counterparties to deposit additional collateral or return collateral pledged, when appropriate.

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The assumptions of management in determining the estimates of reserves may be incorrect and the actual disposition of a legal or regulatory proceeding could be greater or less than the reserve amount.

In the first quarter of 2019, the Company adopted ASU 2016-02, "Leases".

The ASU requires the recognition of right-of use ("ROU") assets and lease liabilities on the consolidated balance sheet by lessees for those leases classified as operating leases under previous guidance.

ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term, excluding non-base rent components such as fixed common area maintenance costs and other fixed costs such as real estate taxes and insurance.

Right-of-use ("ROU") assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term, excluding non-base rent components such as fixed common area maintenance costs and other fixed costs such as real estate taxes and insurance.

The discount rates used in determining the present value of leases are the Company’s incremental borrowing rates, developed based upon each lease’s term.

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Due to the volatility in the financial services sector and equity markets in general, determining whether an impairment of goodwill has occurred is increasingly difficult and requires management to exercise significant judgment.

The Company's annual goodwill impairment analysis performed as of December 31, 2020 applied the same valuation methodologies with consistent inputs as that performed as of December 31, 2019, as follows:

The Company's annual goodwill impairment analysis performed as of December 31, 2021 applied the same valuation methodologies with consistent inputs as that performed as of December 31, 2020.

In estimating the fair value of the PCD reporting unit, the Company uses traditional standard valuation methods, including the market comparable approach and income approach.

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The Company defines cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business.

Receivables from / Payables to Brokers, Dealers and Clearing Organizations

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Receivables from / Payables to Brokers, Dealers and Clearing Organizations

Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced or received.

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revenue and expenses at average rates for the period;

and non-monetary assets and stockholders' equity at historical rates.

gains or losses resulting from translating foreign

currency financial statements, net of related tax effects, are reflected in accumulated other comprehensive income in the consolidated balance sheets.

The functional currency of the overseas operations is the local currency in each location except for Oppenheimer Europe Ltd.

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income taxes that would arise if such earnings were repatriated.

Oppenheimer Acquisition Corp.

On October 26, 2021, Oppenheimer Acquisition Corp.

I (“OHAA”) consummated its $ 126.5 million initial public offering (the “OHAA IPO”).

OHAA is a special purpose acquisition company, incorporated in Delaware for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”).

Oppenheimer Acquisition LLC I (the “Sponsor”), a Delaware series limited liability company and the Company’s subsidiary, is the sponsor of OHAA.

The Company and its employees control OHAA through the Sponsor’s ownership of Class A founder shares of OHAA.

As a result, both OHAA and the Sponsor are consolidated in the Company’s financial statements.

Funds totaling $ 127.8 million, including proceeds from the OHAA IPO of $ 126.5 million and $ 1.3 million investment from the Sponsor, are held in a trust account until the earlier of (i) the completion of a Business Combination or (ii) ten business days after April 29, 2023, 18 months from the closing of the OHAA IPO (“Combination Period”).

The cash held in the trust account is recorded in “Restricted Cash” on the consolidated balance sheet.

Transaction costs, which consisted of a net underwriting fee of $ 2.5 million and $ 0.5 million of other offering costs, were charged against the gross proceeds of the OHAA IPO consistent with SEC Staff Accounting Bulletin (SAB) Topic 5.

“Redeemable noncontrolling interests” of $ 127.8 million associated with the publicly held OHAA Class A ordinary shares are recorded on the Company’s consolidated balance sheet as of December 31, 2021 at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

(“ASC”) Topic 480 “Distinguishing Liabilities from Equity”.

Changes in redemption value are recognized immediately as they occur and will adjust the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of redeemable noncontrolling interests shall be affected by charges to additional paid-in-capital and noncontrolling interests attributable to certain members of the Sponsor on a pro rata ownership.

The Public Warrants and Private Warrants exercisable for OHAA Class A ordinary shares that were issued in connection with the OHAA IPO (the “OHAA Warrants”) qualify for equity accounting treatment under FASB ASC Topic 815.

Noncontrolling Interests

Noncontrolling interests represents ownership interests in the Sponsor of OHAA which includes OHAA Class A founder and Class A ordinary shares held by management and employees of the Company as well as OHAA Class B shares held by directors and officers of OHAA and an employee of the Company.

Noncontrolling interests also includes publicly held warrants to purchase OHAA Class A ordinary shares.

For the year ended December 31, 2021, net loss attributed to noncontrolling interest was $ 8,000 , net of taxes.

The amount was deemed immaterial and it had no impact on the Company's earnings per share.

Restricted Cash

Restricted cash represents OHAA deposits held in trust as indicated above.

New Accounting Pronouncements

The Company has reviewed and evaluated the impact of the recently issued Accounting Standard Updates by Financial Accounting Standards Board ("FASB") which is not expected to have a material impact on its consolidated financial statements and disclosure.

Financial Instruments - Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments", which replaces the incurred loss methodology with a current expected credit loss ("CECL") methodology.

Measurement of Credit Losses on Financial Instruments", which replaced the incurred loss methodology with a current expected credit loss ("CECL") methodology.

The Company elected the modified retrospective method which did not result in a cumulative effect adjustment at the date of adoption.

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At this point any uncollected portion of the notes gets reclassified into a defaulted notes category.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

The allowance for uncollectibles is a valuation account that is deducted from the amortized cost basis of the defaulted notes balance to present the net amount expected to be collected.

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The expected loss rate is based on historical collection rates of defaulted notes.

The expected loss rate is adjusted for changes in environmental and market conditions such as changes in unemployment rates, changes in interest rates and other relevant factors.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

expected loss rate is adjusted for changes in environmental and market conditions such as changes in unemployment rates, changes in interest rates and other relevant factors.

For the year ended December 31, 2021 no adjustments were made to the expected loss rates.

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As of December 31, 2021, the uncollected balance of defaulted notes was $ 7.1 million and the allowance for uncollectibles was $ 4.9 million.

The allowance for uncollectibles consisted of $ 3.1 million related to defaulted notes balances (five years and older) and $ 1.1 million (under five years) using an expected loss rate of 42.0 %.

The allowance for uncollectibles consisted of $ 3.3 million related to defaulted notes balances (five years and older) and $ 1.6 million (under five years).

The following table presents the disaggregation of defaulted notes by year of origination as of December 31, 2021:

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2016 and prior

The following table presents activity in the allowance for uncollectibles of defaulted notes for the year ended December 31, 2020:

The following table presents activity in the allowance for uncollectibles of defaulted notes for the year ended December 31, 2021 and 2020:

(Expressed in thousands)

For the Year Ended

December 31, 2020 (1)

Beginning balance

$ 4,234 $ 3,673

Additions and other adjustments

Ending balance

(1) Beginning balance on January 1, 2020 upon adoption of ASU 2016-13

$ 4,923 $ 4,234

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

In the first quarter of 2019, the Company adopted ASU 2016-02, "Leases".

The ASU requires the recognition of a right-of use asset and lease liability on the consolidated balance sheet by lessees for those leases classified as operating leases under previous guidance.

The Company elected the modified retrospective method which did not result in a cumulative-effect adjustment at the date of adoption.

The Company and its subsidiaries have operating leases for office space and equipment expiring at various dates through 2034.

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Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2020, the Company had right of use operating lease assets of $ 153.5 million (net of accumulated amortization of $ 50.3 million) which are comprised of real estate leases of $ 150.9 million (net of accumulated amortization of $ 46.6 million) and equipment leases of $ 2.6 million (net of accumulated amortization of $ 3.7 million).

As of December 31, 2021, the Company had ROU operating lease assets of $ 150.1 million (net of accumulated amortization of $ 76.5 million) which are comprised of real estate leases of $ 147.7 million (net of accumulated amortization of $ 70.9 million) and equipment leases of $ 2.4 million (net of accumulated amortization of $ 5.5 million).

As of December 31, 2021, the Company had operating lease liabilities of $ 192.0 million which are comprised of real estate lease liabilities of $ 189.6 million and equipment lease liabilities of $ 2.4 million.

As of December 31, 2020, the Company had not made any cash payments for amounts included in the measurement of operating lease liabilities or right of use assets obtained in exchange for operating lease obligations.

The Company had no finance leases or embedded leases as of December 31, 2021.

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Less interest ( 54,365 )

Present value of lease liabilities $ 193,373

Present value of operating lease liabilities $ 192,019

As of December 31, 2021, the Company had $ 16.2 million of additional operating leases that have not yet commenced.

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Revenues from contracts with customers

In the first quarter of 2018, the Company adopted ASU 2014-09, "Revenue from Contracts with Customers." The Company has elected the modified retrospective method which did not result in a cumulative-effect adjustment at the date of adoption.

The implementation of this new standard had no material impact on the Company's consolidated financial statements for the years ended December 31, 2020 and 2019.

Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to customers.

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Revenue from a performance obligation satisfied over time is recognized by measuring the Company's progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service.

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Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved.

In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the Company's influence, such as market volatility or the judgment and actions of third parties.

In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of its past experiences, the time period during which uncertainties are expected

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

to be resolved and the amount of consideration that is susceptible to factors outside of the Company's influence, such as market volatility or the judgment and actions of third parties.

The Company earns revenue from contracts with customers and other sources (principal transactions, interest and other).

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Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on trade date when the performance obligation is satisfied.

Commission revenue is generally paid on settlement date, which is generally two business days after trade date for equity securities and corporate bond transactions and one day for government securities and commodities transactions.

The Company records a receivable on the trade date and receives a payment on the settlement date.

Mutual Fund Income — The Company earns mutual fund income for sales and distribution of mutual fund shares.

Many mutual fund companies pay distribution fees to intermediaries, such as broker-dealers, for selling their shares.

The fees are operational expenses of the mutual fund and are included in its expense ratio.

Mutual Fund Income — The Company earns mutual fund income for sales and distribution of mutual fund shares,which consists of a fixed fee amount and a variable amount..

The Company recognizes mutual fund income at a point in time on trade date when the performance obligation is satisfied which is when the mutual fund interest is sold to the investor.

The ongoing distribution fees for distributing investment products from mutual fund companies are generally considered variable consideration because they are based on the value of AUM and are uncertain on trade date.

The Company recognizes distribution fees over the investment period as the amounts become known and the portion recognized in the current period may relate to distribution services performed in prior periods.

Mutual fund income is generally received within 90 days.

Advisory Fees

The Company earns management and performance (or incentive) fees in connection with the advisory and asset management services it provides to various types of funds and investment vehicles through its subsidiaries.

The Company earns management and performance (or incentive) fees in connection with the advisory and asset management services it provides to various types of funds, asset-based programs and investment vehicles through its subsidiaries.

Management fees are generally based on the account value at the valuation date per the respective asset management agreements and are recognized over time as the customer receives the benefits of the services evenly throughout the term of the contract.

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Underwriting revenues and related expenses are presented gross on the consolidated income statements.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Revenue from financial advisory services includes fees generated in connection with mergers, acquisitions and restructuring transactions and such revenue and fees are primarily recorded at a point in time when services for the transactions are completed and income is reasonably determinable, generally as set forth under the terms of the engagement.

Payment for advisory services is generally due upon a completion of the transaction or milestone.

Retainer fees and fees earned from certain advisory services are recognized ratably over the service period as the customer receives the benefit of the services throughout the term of the contracts, and such fees are collected based on the terms of the contracts.

Retainer fees and fees earned from certain

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

advisory services are recognized ratably over the service period as the customer receives the benefit of the services throughout the term of the contracts, and such fees are collected based on the terms of the contracts.

Bank Deposit Sweep Income

62 unchanged sentences

Investment banking fees (5)

17,765 16,119

Other 5,195 3,324

7 unchanged sentences

(4) Fees earned from FDIC-insured bank deposit program but not yet received.

(5) Underwriting revenue and advisory fee earned but not yet received.

(5) Underwriting revenue and advisory fees earned but not yet received.

(6) Retainer fees and fees earned from certain advisory transactions where the performance

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and advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable.

of December 31, 2020, these contract costs were $ 1.6 million.

of December 31, 2021, these contract costs were $ 1.5 million ($ 1.6 million as of December 31, 2020).

There were no significant charges recognized in relation to these costs for year ended December 31, 2021.

17 unchanged sentences

Total $ 422,057 $ 259,911

(1) 2019 amount was primarily related to a trade/settlement date adjustment for U.S.

Government Securities.

(1) The balance as of December 31, 2021 primarily related to a trade/settlement date adjustment for U.S.Government Securities.

Fair value measurements

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Auction Rate Securities ("ARS")

In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General's office ("NYAG") and the Massachusetts Securities Division ("MSD") and, together (the "Regulators") concluding proceedings by the Regulators concerning Oppenheimer's marketing and sale of ARS.

In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General's office ("NYAG") and the Massachusetts Securities Division ("MSD" and together with the NYAG, the "Regulators") concluding proceedings by the Regulators concerning Oppenheimer's marketing and sale of ARS.

Pursuant to the settlements with the Regulators, Oppenheimer agreed to extend offers to repurchase ARS from certain of its clients.

Over the last ten years, the Company has bought back $ 142.5 million of ARS pursuant to these settlements.

These buybacks coupled with ARS issuer redemptions and tender offers have significantly reduced the level of ARS held by Eligible Investors (as defined).

As of December 31, 2020, the Company had $ 1.3 million of ARS to purchase from Eligible Investors related to the settlements with the Regulators.

In addition to the settlements with the Regulators, Oppenheimer has also reached settlements of and received adverse awards in legal proceedings with various clients where the Company is obligated to purchase ARS.

Over the last ten years, the Company has purchased $ 106.1 million of ARS pursuant to these legal settlements and awards.

The Company has completed its ARS purchase obligations under such legal settlements and awards.

As of September 30, 2021, the Company had completed its ARS purchase obligations related to the settlements with the Regulators.

In addition to the settlements with the Regulators, Oppenheimer had also reached settlements of and received adverse awards in legal proceedings with various clients where the Company was obligated to purchase ARS.

As of December 31, 2021, the Company no longer had any obligations to purchase ARS from such legal settlements or adverse awards.

As of December 31, 2021, the Company owned $ 31.8 million of ARS.

1 unchanged sentence

settlements and awards referred to above.

The Company’s ARS owned and ARS purchase commitments referred to above have, for the most part, been subject to issuer tender offers.

The Company has valued the ARS securities owned and the ARS purchase commitments at the tender offer price and categorized them in Level 3 of the fair value hierarchy due to the illiquid nature of the securities and the period of time since the last tender offer.

The ARS purchase commitments related to the settlements with the Regulators and legal settlements and awards are considered derivative assets or liabilities.

The ARS purchase commitments represent the difference between the principal value and the fair value of the ARS the Company is committed to purchase.

The fair value of ARS and ARS purchase commitments is particularly sensitive to movements in interest rates.

The Company’s ARS owned referred to above have, for the most part, been subject to issuer tender offers.

The Company has valued the ARS securities owned at the tender offer price and categorized them in Level 3 of the fair value hierarchy due to the illiquid nature of the securities and the period of time since the last tender offer.

The fair value of ARS is particularly sensitive to movements in interest rates.

In such cases, other valuation techniques might be necessary.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

As of December 31, 2020, the Company had a valuation adjustment totaling $ 5.2 million which consists of $ 5.0 million for ARS owned (which is included as a reduction to securities owned on the consolidated balance sheet) and $ 0.2 million for ARS purchase commitments from settlements with regulators (which is included in accounts payable and other liabilities on the consolidated balance sheet).

As of December 31, 2021, the Company had a valuation adjustment totaling $ 5.2 million relating to ARS owned (which is included as a reduction to securities owned on the consolidated balance sheet).

In its role as general partner in certain hedge funds and private equity funds, the Company, through its subsidiaries, holds direct investments in such funds.

The Company uses the net asset value of the underlying fund as a basis for estimating the fair value of its investment.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

The following table provides information about the Company's investments in Company-sponsored funds as of December 31, 2021:

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and activist strategies.

(2) Includes private equity funds and private equity fund of funds with a focus on diversified portfolios,

real estate and global natural resources.

(2) Includes private equity funds and private equity fund of funds with diversified portfolios focusing on but not

limited to technology companies, venture capital and global natural resources.

The following table provides information about the Company's investments in Company-sponsored funds as of December 31, 2020:

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real estate and global natural resources.

During the year ended December 31, 2020, the Company made an investment in a financial technologies firm.

During 2020, the Company made an investment in a financial technologies firm.

The Company elected the fair value option for this investment and it is included in other assets on the consolidated balance sheet.

The Company determined the fair value of the investment based on an implied market-multiple approach and observable market data, including comparable company transactions.

The fair value of the investment was $ 4.2 million and was categorized in Level 2 of the fair value hierarchy.

As of December 31, 2021, the fair value of the investment was $ 4.9 million and was categorized in Level 2 of the fair value hierarchy.

OPPENHEIMER HOLDINGS INC.

27 unchanged sentences

Agency securities — 4 — 4

Sovereign obligations — 623 — 623

Corporate debt and other obligations — 2,515 — 2,515

2 unchanged sentences

Securities sold but not yet purchased, at fair value 60,977 10,981 — 71,958

Investments — — — —

Derivative contracts:

Futures 287 — — 287

ARS purchase commitments — — 195 195

TBAs — 81 — 81

Derivative contracts, total 287 81 — 368

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Securities owned, at fair value 485,066 94,750 30,701 610,517

Investments (1)

— 4,181 — 4,181

Derivative contracts:

TBAs — 15 — 15

Derivative contracts, total — 15 — 15

Total $ 509,057 $ 98,946 $ 30,701 $ 638,704

9 unchanged sentences

Futures 22 — — 22

TBAs — 124 — 124

ARS purchase commitments — — 195 195

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and Issuances Sales and Settlements Transfers

In / (Out) (1)

In / (Out) Ending

Auction rate securities (1)

$ 30,701 $ ( 197 ) $ 1,350 $ ( 50 ) $ — $ 31,804

ARS purchase commitments (2)

195 ( 1 ) — ( 196 ) — —

(1) Transferred to Level 3 of the fair value hierarchy due to the illiquid nature of the securities as result of

the length of time since the last tender offer.

(1) Represents auction rate securities that failed in the auction rate market.

(2) Represents the difference in principal and fair value for auction rate securities purchase commitments

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(3) Included in principal transactions in the consolidated income statement.

(4) Unrealized gains are attributable to assets or liabilities that are still held at the reporting date.

(4) Unrealized lossess are attributable to assets or liabilities that are still held at the reporting date.

(Expressed in thousands)

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Balance Total Realized

and Unrealized

and Unrealized Losses (3)(4)

and Issuances Sales and Settlements Transfers

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Auction rate securities $ — $ ( 165 ) $ 1,300 $ — $ 29,566 $ 30,701

Investments 101 5 — — ( 106 ) —

(1) Transferred to Level 2 of the fair value hierarchy as a result of recent tender offer activities.

(2) Included in principal transactions in the consolidated income statement, except for gains from

investments which are included in other income in the consolidated income statement.

(3) Unrealized gains are attributable to assets or liabilities that are still held at the reporting date.

ARS purchase commitments (2)

— ( 137 ) — — 332 195

(1) Transferred to Level 3 of the fair value hierarchy due to the illiquid nature of the securities as result of

the length of time since the last tender offer.

(2) Represents the difference in principal and fair value for auction rate securities purchase commitments

outstanding at the end of the period.

(3) Included in principal transactions in the consolidated income statement.

(4) Unrealized losses are attributable to assets or liabilities that are still held at the reporting date.

OPPENHEIMER HOLDINGS INC.

9 unchanged sentences

Cash $ 213,759 $ 213,759 $ — $ — $ 213,759

Restricted cash 127,765 127,765 — — 127,765

Deposits with clearing organization 37,885 37,885 — — 37,885

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Receivable from customers 1,221,450 — 1,221,450 — 1,221,450

Securities purchased under agreements to resell 935 — 935 — 935

Notes receivable, net 53,983 — 53,983 — 53,983

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Carrying Value Level 1 Level 2 Level 3 Total

Bank call loans 82,000 — 82,000 — 82,000

Payables to brokers, dealers and clearing organizations:

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Other contracts TBAs $ 14,300 $ 92

$ 14,300 $ 92

Derivatives not designated as hedging instruments (1)

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Other contracts TBAs 14,300 81

ARS purchase commitments 1,313 195

$ 3,534,300 $ 368

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Derivatives not designated as hedging instruments (1)

Other contracts TBAs $ 7,970 $ 15

Derivatives not designated as hedging instruments (1)

Commodity contracts

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TBAs Principal transactions revenue 157

Purchase commitments Principal transactions revenue ( 987 )

ARS purchase commitments Principal transactions revenue ( 1 )

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As of December 31, 2021, the Company had approximately $ 1.8 billion of customer securities under customer margin loans that are available to be pledged, of which the Company has re-pledged approximate ly $ 205.2 milli on under securities loan agreements.

As of December 31, 2020, the Company had pledge d $ 377.9 milli on of customer securities directly with the Options Clearing Corporation to secure obligations and margin requirements under option contracts written by customers.

As of December 31, 2021, the Company had pledg ed $ 358.1 milli on of customer securities directly with the Options Clearing Corporation to secure obligations and margin requirements under option contracts written by customers.

As of December 31, 2021, the Company had no outstanding letters of credit.

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Total $ 551,016 $ ( 29,471 ) $ 521,545 $ ( 513,589 ) $ — $ 7,956

(2) Included in payable to brokers, dealers and clearing organizations on the consolidated balance she et.

(2) Included in payable to brokers, dealers and clearing organizations on the consolidated balance sheet.

As of December 31, 2020

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Under many agreements, the Company is permitted to sell or re-pledge the securities received (e.g., use the securities to enter into securities lending transactions, or deliver to counterparties to cover short positions).

As of December 31, 2020, the fair value of securities received as collateral under securities borrowed transactions and reverse repurchase agreements was $ 108.0 million ($ 96.3 million as of December 31, 2019) and $88.3 mi llion ($ 55.8 million as of December 31, 2019), respectively, of which the Company has sold and re-pledged approximately $36.2 million ($ 19.3 million as of December 31, 2019) under securities loaned transactions and $88.3 million under repurchase agreements ($ 55.8 million as of December 31, 2019).

As of December 31, 2021, the fair value of securities received as collateral under securities borrowed transactions and reverse repurchase agreements was $ 96.4 million ($ 108.0 million as of December 31, 2020) and $ 307.3 million ($ 88.3 million as of December 31, 2020), respectively, of which the Company has sold and re-pledged approximately $ 29.4 million ($ 36.2 million as of December 31, 2020) under securities loaned transactions and $ 307.3 million under repurchase agreements ($ 88.3 million as of December 31, 2020).

The Company pledges certain of its securities owned for securities lending and repurchase agreements and to collateralize bank call l oan transactions.

The carrying value of pledged securities owned that can be sold or re-pledged by the counterparty was $ 440.5 million , as presented on the face of the consolidated balance sheet as of December 31, 2020 ($ 357.1 million as of December 31, 2019).

The carrying value of pledged securities owned that can be sold or re-pledged by the counterparty was $ 266.4 million, a s presented on the face of the consolidated balance sheet as of December 31, 2021 ($ 440.5 million as of December 31, 2020).

The Company manages credit exposure arising from repurchase and reverse repurchase agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Company, in the event of a customer default, the right to liquidate securities and the right to offset a counterparty's rights and obligations.

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The Company seeks to mitigate these risks by actively monitoring exposures and obtaining collateral as deemed appropriate.

Included in receivable from brokers, dealers and clearing organizations as of December 31, 2020 are receivables from three major U.S.

Included in receivable from brokers, dealers and clearing organizations as of December 31, 2021 are receivables f rom four major U.S.

broker-dealers totaling approximately $ 72.9 million.

18 unchanged sentences

The Company's policy is to consolidate all subsidiaries in which it has a controlling financial interest, as well as any VIEs where the Company is deemed to be the primary beneficiary, when it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE.

The Company serves as general partner of hedge funds and private equity funds that were established for the purpose of providing investment alternatives to both its institutional and qualified retail clients.

The Company holds variable interests in these funds as a result of its right to receive management and incentive fees.

The Company's investment in and additional capital commitments to these hedge funds and private equity funds are also considered variable interests.

The Company serves as general partner of hedge funds and private equity funds that were established for the purpose of providing alternative investments to both its institutional and qualified retail clients.

The Company's investment in and additional capital commitments to these hedge funds and private equity funds are considered variable interests.

The Company's additional capital commitments are subject to call at a later date and are limited to the amount committed.

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In each instance, the Company has determined that it is not the primary beneficiary and therefore need not consolidate the hedge funds or private equity funds.

The subsidiaries' general and limited partnership interests, additional capital commitments, and management fees receivable represent its maximum exposure to loss.

The subsidiaries' general partnership and limited partnership interests and management fees receivable are included in other assets on the consolidated balance sheet.

In addition, the Company has variable interests as a sponsor of two Special Purpose Acquisition Companies ("SPAC”), that are seeking to effect a transaction which could be in the form of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

The following tables set forth the total VIE assets, the carrying value of the subsidiaries' variable interests, and the Company's maximum exposure to loss in Company-sponsored non-consolidated VIEs in which the Company holds variable interests and other non-consolidated VIEs in which the Company holds variable interests as of December 31, 2020 and 2019:

(Expressed in thousands)

As of December 31, 2020

VIE Assets (1)

Carrying Value of the

Company's Variable Interest Capital

Commitments Maximum

Non-consolidated

Hedge funds $ 643,251 $ — $ — $ — $ —

Special Purpose Acquisition Companies 1,384 — — — —

Total $ 644,635 $ — $ — $ — $ —

(1) Represents the total assets of the VIEs and does not represent the Company's interests in the VIEs.

(2) Represents the Company's interests in the VIEs and is included in other assets on the consolidated

balance sheet.

The subsidiaries' general and limited partnership interests and additional capital commitments represent its maximum exposure to loss.

The subsidiaries' general partnership and limited partnership interests is included in other assets on the consolidated balance sheet.

In addition, the Company serves as general partner of Oppenheimer Acquisition LLC I and Oppenheimer Acquisition LLC II (the "Sponsors").

They are sponsors of two Special Purpose Acquisition Companies, OHAA and Oppenheimer Acquisition Corp.

II (the "SPACs”), that are seeking to effect a transaction which could be in the form of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

The sponsors and the SPACs are consolidated VIE's as the Company is the primary beneficiary.

On October 26, 2021, OHAA consummated its $ 126.5 million IPO.

The Company and its employees control OHAA through the Sponsor’s ownership of Class A founder shares of OHAA.

As a result, both OHAA and the Sponsor are consolidated in the Company’s financial statements.

See note 2 for further details.

The following table sets forth the total assets and liabilities of VIE's consolidated on our consolidated balance sheet:

(Expressed in thousands)

As of December 31, 2019

VIE Assets (1)

Carrying Value of the

Company's Variable Interest Capital

Commitments Maximum

Non-consolidated

Hedge funds $ 390,063 $ 259 $ — $ — $ 259

(1) Represents the total assets of the VIEs and does not represent the Company's interests in the VIEs.

(2) Represents the Company's interests in the VIEs and is included in other assets on the consolidated

balance sheet .

For the Years Ended December 31,

Cash and cash equivalents $ 1,798 $ 551

Restricted Cash 127,765 —

Other Assets 722 —

Total Assets $ 130,285 $ 551

Other Liabilities 24 1

Total Liabilities $ 24 $ 1

OPPENHEIMER HOLDINGS INC.

10 unchanged sentences

Bank call loans

Bank call loans, primarily payable on demand, bear interest at various rates but not exceeding the broker call rate, which was 2.00 % at December 31, 2020 ( 3.50 % at December 31, 2019).

Bank call loans, primarily payable on demand, bear interest at various rates.

Details of the bank call loans are as follows:

10 unchanged sentences

5.50% Senior Secured Notes 10/1/2025 $ 125,000 $ 125,000

6.75% Senior Secured Notes 7/1/2022 — 150,000

Unamortized Debt Issuance Cost ( 926 ) ( 1,154 )

1 unchanged sentence

5.50% Senior Secured Notes due 2025 (the "Notes")

On September 22, 2020, in a private offering, we issued $ 125.0 million aggregate principal amount of 5.50 % Senior Secured Notes due 2025 (the "Unregistered Notes") under an Indenture at an issue price of 100% of the principal amount.

On September 22, 2020, in a private offering, the Company issued $ 125.0 million aggregate principal amount of 5.50 % Senior Secured Notes due 2025 (the "Unregistered Notes") under an Indenture at an issue price of 100 % of the principal amount.

Interest on the Unregistered Notes is payable semi-annually on April 1st and October 1st.

We used the net proceeds from the offering of the Unregistered Notes, along with cash on hand, to redeem in full our 6.75% Senior Secured Notes due July 1, 2022 (the "Old Notes") in the principal amount of $ 150.0 million (the Company held $ 1.4 million in treasury for a net outstanding amount of $ 148.6 million), and pay all related fees and expenses related thereto.

The Company used the net proceeds from the offering of the Unregistered Notes, along with cash on hand, to redeem in full our 6.75 % Senior Secured Notes due July 1, 2022 (the "Old Notes") in the principal amount of $ 150.0 million (the Company held $ 1.4 million in treasury for a net outstanding amount of $ 148.6 million), and pay all related fees and expenses in relation thereto.

On November 23, 2020, we completed an exchange offer in which we exchanged 99.8 % of the Unregistered Notes for a like principal amount of Notes with identical terms, except that such new notes have been registered under the Securities Act of 1933, as amended (the "Securities Act").

We did not receive any proceeds in the exchange offer.

The Notes will mature on

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

On November 23, 2020, we completed an exchange offer in which we exchanged 99.8% of the Unregistered Notes for a like principal amount of notes with identical terms except that such new notes have been registered under the Securities Act of 1933, as amended (the "Notes").

We did not receive any proceeds in the exchange offer.

The Notes will mature on October 1, 2025 and bear interest at a rate of 5.50 % per annum, payable semiannually on April 1st and October 1st, respectively, of each year.

October 1, 2025 and bear interest at a rate of 5.50 % per annum, payable semiannually on April 1st and October 1st, respectively, of each year.

The Parent used the net proceeds from the offering of the Notes, along with cash on hand, to redeem in full its Old Notes, in the principal amount of $ 150.0 million (the Parent held $ 1.4 million in treasury for a net outstanding amount of $ 148.6 million), and pay all related fees and expenses in relation thereto.

The cost to issue the Notes was $ 3.1 million, of which $ 1.9 million was paid to its subsidiary, (Oppenheimer & Co Inc., who served as the initial purchaser of the offering), and was eliminated in consolidation.

The remaining $ 1.2 million has been capitalized and is amortized over the term of the Notes.

The remaining $ 1.2 million was capitalized and is amortized over the term of the Notes.

The Indenture governing the Notes contains covenants which place restrictions on the incurrence of indebtedness, the payment of dividends, the repurchase of equity, the sale of assets, the issuance of guarantees, mergers and acquisitions and the granting of liens.

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The Notes are secured by a first-priority security interest in substantially all of the Parent’s and the Subsidiary Guarantors’ existing and future tangible and intangible assets, subject to certain exceptions and permitted liens.

Interest expense on the Notes for the year ended December 31, 2020 was $ 1.9 million.

Interest expense on the Notes for the year ended December 31, 2021 was $ 6.9 million ($ 1.9 million for the year ended December 31, 2020).

Interest paid on the Notes for the year ended December 31, 2021 was $ 7.0 million ($ 0 for 2020).

OPPENHEIMER HOLDINGS INC.

16 unchanged sentences

In connection with the satisfaction and discharge of the Old Notes Indenture, all of the obligations of the Parent and the Subsidiary Guarantors (other than certain customary provisions of the Old Notes Indenture, including those relating to the compensation and indemnification of the Trustee, that expressly survive pursuant to the terms of the Old Notes Indenture) were discharged and the guarantees of the Subsidiary Guarantors and the liens on the collateral securing the Old Notes were released.

Interest expense on the Old Notes for the year ended December 31, 2020 was $ 7.4 million ($ 12.3 million in 2019 and $ 13.5 million in 2018).

Interest paid on the Old Notes for the year ended December 31, 2020 was $ 7.4 million ($ 12.3 million in 2019).

Interest expense on the Old Notes for the year ended December 31, 2020 was $ 7.4 million ($ 12.3 million in 2019).

Interest paid on the Old Notes for the year ended December 31, 2020 was $ 7.4 million.

OPPENHEIMER HOLDINGS INC.

26 unchanged sentences

The Company paid cash dividends of $ 1.54 per share in 2021 to holders of Class A and Class B Stock which includes a special cash dividend of $ 1.00 per share paid on December 31, 2021 in the aggregate amount of $ 12.6 million.

The Company paid cash dividends of $ 0.46 in 2019 and $ 0.44 in 2018.

In 2020, the Company paid cash dividends of $ 1.48 per share which includes a special cash dividend of $ 1.00 per share paid on December 30, 2020 in the aggregate amount of $ 12.5 million.

The Company paid cash dividends of $ 0.46 per share in 2019.

OPPENHEIMER HOLDINGS INC.

15 unchanged sentences

Diluted $ 11.70 $ 9.30 $ 3.82

(1) For the year ended December 31, 2020, the diluted net income per share computation does not include the anti-dilutive effect of 10,770 shares of Class A Stock granted under share-based compensation arrangements (7,628 and 4,050 shares for the years ended December 31, 2019 and 2018, respectively).

(1) For the year ended December 31, 2021, there was no Class A Stock granted under share-based compensation arrangements that were anti-dilutive.

For the years ended December 31, 2020 and 2019, the diluted net income per share computation did not include the anti-dilutive effect of 10,770 and 7,628 shares of Class A Stock granted under share-based compensation arrangements, respectively.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

I ncome tax expenses (benefits) shown in the consolidated income statements are reconciled to amounts of tax that would have been payable (recoverable) from the application of the federal tax rate to pre-tax profit, as follows:

Income tax expenses (benefits) shown in the consolidated income statements are reconciled to amounts of tax that would have been payable (recoverable) from the application of the federal tax rate to pre-tax profit, as follows:

(Expressed in thousands)

12 unchanged sentences

Excess tax benefits from share-based awards ( 1,542 ) ( 0.7 ) % ( 1,008 ) ( 0.6 ) % ( 234 ) ( 0.3 ) %

Non-Deductible Executive Compensation 3,956 1.8 % 2,831 1.7 % 1,072 1.4 %

Other non-deductible expenses 310 0.2 % 838 0.5 % 1,123 1.6 %

13 unchanged sentences

Total $ 65,677 $ 46,014 $ 21,959

Pre-tax income with respect to Non-U.S.

Pre-tax loss with respect to non-U.S.

operations was $ 1.2 million for the years ended December 31, 2021.

(Pre-tax income with respect to non-U.S.

operation was $ 1.5 million for the year ended December 31, 2020).

Pre-tax loss with respect to non-U.S.

operations was $ 4.9 million and $ 4.0 million for the years ended December 31, 2019 and 2018, respectively.

operations was $ 4.9 million for the year ended December 31, 2019.

OPPENHEIMER HOLDINGS INC.

1 unchanged sentence

The effective income tax rate for the year ended December 31, 2021 was 29.2 % compared with 27.2 % for the year ended December 31, 2020.

The lower effective tax rate for 2020 was primarily due to lower state and local income taxes, valuation allowance on foreign operations and other non-deductible expenses over higher pre-tax income in the current year compared to 2019.

The higher tax rate in the current year was primarily due to an increase in apportionment factors in state and local jurisdictions with higher statutory tax rates.

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when such differences are expected to reverse.

36 unchanged sentences

The Company has unrecognized tax benefits of $ 0.3 million, $ 0.2 million and $ 1.1 million as of December 31, 2021, 2020 and 2019, respectively (as shown on the table below).

Included in the balance of unrecognized tax benefits as of December 31, 2020 and 2019 were $ 167,000 and $ 853,000 of tax benefits for either year that, if recognized, would affect the effective tax rate.

Included in the balance of unrecognized tax benefits as of December 31, 2021 and 2020 were $ 271,000 and $ 167,000 , respectively, of tax benefits for either year that, if recognized, would affect the effective tax rate.

During the year ended December 31, 2021, the Company released $ 0.2 million in unrecognized tax benefits and added $ 0.3 million related to state and local tax matters.

9 unchanged sentences

In its consolidated income statements, the Company records interest and penalties accruing on unrecognized tax benefits in pre-tax income as interest expense and other expense, respectively.

For the year ended December 31, 2020, the Company released tax-related interest expense of $ 227,000 in its consolidated income statement.

For the year ended December 31, 2019, the Company recorded tax-related interest expense of $ 87,000 in its consolidated income statement.

As of December 31, 2020 and 2019, the Company had an income tax-related interest payable of $ 205,000 and $ 432,000 , respectively, on its consolidated balance sheets.

For the year ended December 31, 2021, 2020 and 2019 , the Company released tax-related interest expense of $ 164,000 , $ 227,000 and $ 87,000 , respectively, in its consolidat ed income statement.

As of December 31, 2021 and 2020, the Company had an income tax-related interest payable o f $ 41,000 and $ 205,000 , respectively, on its consolidated balance sheets.

Employee compensation plans

21 unchanged sentences

Restricted Stock Awards Weighted

Value Remaining

Value Weighted Average Remaining

Nonvested at beginning of year 1,328,877 $ 22.63 1.9 years

48 unchanged sentences

As of December 31, 2021, the aggregate intrinsic value of OARs outstanding was $ 47.4 million.

In the year ended December 31, 2020, the Company included $ 8.5 million ($ 3.7 million in 2019 and $ 650,000 in 2018) in compensation expense in its consolidated income statements relating to OARs awards.

In the year ended December 31, 2021, the Company included $ 20.6 million ($ 8.5 million in 2020 and $ 3.7 million in 2019) in compensation expense in its consolidated income statements relating to OARs awards.

The liability related to the OARs was $ 29.8 million as of December 31, 2021.

25 unchanged sentences

Notes to Consolidated Financial Statements

Commitments and c ontingencies

As of December 31, 2020, the Company had $ 40.0 million in equity commitments to provide bridge financing to a rental services company and a take-private transaction.

Additionally, the Company had capital commitments of $ 1.2 million with respect to unfunded obligation in private equity funds sponsored by the Company.

On December 15, 2021, the Company adopted the Oppenheimer & Co.

Investment Banking and Capital Markets Deferred Compensation Plan ("CMDP") for eligible employees in the Capital Markets business segment.

An employee is eligible to participate in the Plan if the employee (i) is an Investment Banking Division employee of Oppenheimer with a title of Associate or above whose previous year’s salary and bonus exceeded $ 200,000 , or (ii) is a professional working in the Oppenheimer Capital Markets Division (but not the Investment Banking Division) who is designated by the Plan Administrator (in its sole discretion) as eligible to participate in the Plan.

The CMDP has both mandatory and elective contributions.

The amount of compensation subject to mandatory deferral (“Bonus Deferral Credit”) is based on a schedule maintained by the Plan Administrator from time to time.

The Bonus Deferral Credit vests ratably over a period of three years and is distributed upon vesting.

For the elective portion, a participant is eligible if his or her base salary and bonus exceed $ 500,000 and he or she may elect to defer up to 50 % of the total of his or her base salary and bonus amounts (“Elective Deferral Credit”) for a 5 -year or 10 -year period.

The Elective Deferral Credit is 100 % vested at all times.

The Company provides a Matching Credit of 10 % of the Elective Deferral Credit which vests on last day of the Performance Year (as defined in the CMDP) attributable to the Matching Credit.

The Elective Deferral Credit and the Matching Credit are distributed in lump sums in the year following the fifth or tenth anniversary of the last day of the Performance Year (as defined in the CMDP), depending on the participant’s election.

At December 31, 2021, the Company’s deferral related to the CMDP totaled $ 26.4 million which is comprised of Bonus Deferral Credits.

Eligibility for Elective Deferral Credits begins in 2023 for elections made by December 31, 2021.

Commitments and contingencies

The Company had capital commitments of $ 4.3 million with respect to unfunded obligation in private equity funds sponsored by the Company and $ 16.2 million of commitments related to additional operating leases that have not yet commenced.

As of December 31, 2021, the Company had no collateralized or uncollateralized letters of credit outstanding.

12 unchanged sentences

Even after lengthy review and analysis, the Company, in many legal and regulatory proceedings, may not be able to reasonably estimate possible losses or range of loss.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

For certain other legal and regulatory proceedings, the Company can estimate possible losses, or range of loss in excess of amounts accrued, but does not believe, based on current knowledge and after consultation with counsel, that such losses individually, or in the aggregate, will have a material adverse effect on the Company's consolidated financial statements as a whole.

3 unchanged sentences

The foregoing aggregate estimate is based on various factors, including the varying stages of the proceedings (including the fact that some are currently in preliminary stages), the numerous yet-unresolved issues in many of the proceedings and the attendant uncertainty of the various potential outcomes of such proceedings.

Accordingly, the Company's estimate will change from time to time, and actual losses may be materially more than the current estimate.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Accordingly, the Company's estimate will change from time to time, and actual losses may be more than the current estimate.

On August 31, 2021, a complaint in a class action entitled 6694 Dawson Blvd, LLC, Individually and on Behalf of a Class of Similarly Situated Persons v.

Oppenheimer & Co.

Inc., James Wallace Woods, Michael J.

Mooney, Britt Wright, William V.

Conn, Jr., Conn & Co.

Tax Practice, LLC, Conn & Company Consulting, LLC and Kathleen Lloyd, was filed in the U.S.

District Court for the Northern District of Georgia.

Plaintiff purports to represent a class of investors in Horizon Private Equity, III, LLC (“Horizon”).

Horizon is alleged to be a fraudulent scheme and plaintiff is seeking unspecified damages sounding in violations of the Georgia RICO statute, breach of fiduciary duty, procurement of breach of fiduciary duty, negligent misrepresentation, aiding and abetting fraud, unjust enrichment, punitive damages and attorneys’ fees.

Plaintiff does not allege Oppenheimer received any of the funds invested in Horizon, rather that Oppenheimer’s failure to properly supervise its employees allowed the alleged scheme to occur and continue.

Oppenheimer believes the claims to be without merit and intends to vigorously defend itself against the claims made in this action.

In addition to the class action described in the preceding paragraph Oppenheimer has also been named as a respondent in thirteen arbitrations, many containing multiple claimants, each filed before FINRA, relating to investments made by former Oppenheimer clients who invested in Horizon.

Claimants allege many of the causes of action alleged in the class action described in the preceding paragraph.

The arbitrations claiming specific monetary damages allege damages of approximately $ 25.0 million in the aggregate while others claim unspecified damages.

Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.

Regulatory requirements

The Company's U.S.

broker dealer subsidiaries, Oppenheimer and Freedom, are subject to the uniform net capital requirements of the SEC under Rule 15c3-1 (the "Rule") promulgated under the Securities Exchange Act of 1934.

broker dealer subsidiaries, Oppenheimer and Freedom, are subject to the uniform net capital requirements of the SEC under Rule 15c3-1 (the "Rule") promulgated under the Exchange Act.

Oppenheimer computes its net capital requirements under the alternative method provided for in the Rule which requires that Oppenheimer maintain net capital equal to two percent of aggregate customer-related debit items, as defined in SEC Rule 15c3-3.

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• Total Capital ratio 19.2 % (required 8.0 %).

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

In December 2017, Oppenheimer Europe Ltd.

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At each annual intangible assets impairment testing date, the trademarks and trade names had a fair value that was substantially in excess of their carrying value.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Segment information

9 unchanged sentences

Costs associated with these groups are separately reported in a Corporate/Other category and primarily include compensation and benefits.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

The table below presents information about the reported revenue and pre-tax income (loss) of the Company for the years ended December 31, 2021, 2020 and 2019.

21 unchanged sentences

were allocated 10.0 % to the Asset Management and 90.0 % to the Private Client segments.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Revenue, classified by the major geographic areas in which it was earned for the years ended December 31, 2021, 2020 and 2019 was as follows:

8 unchanged sentences

On January 28, 2022, the Company announced a quarterly dividend in the amount of $ 0.15 per share, payable on February 25, 2022 to holders of Class A Stock and Class B Stock of record on February 11, 2022.

OPPENHEIMER HOLDINGS INC.

Notes to Consolidated Financial Statements

Quarterly information (unaudited)

(Expressed in thousands, except per share amounts)

Fiscal Quarters

For the Year Ended December 31, 2020 Fourth Third Second First Year

Revenue $ 422,908 $ 276,259 $ 264,730 $ 234,770 $ 1,198,667

Expenses 309,113 254,541 241,466 224,547 1,029,667

Income before income taxes 113,795 21,718 23,264 10,223 169,000

Income taxes 31,915 6,079 5,615 2,405 46,014

Net income $ 81,880 $ 15,639 $ 17,649 $ 7,818 $ 122,986

Basic net income per share $ 6.56 $ 1.25 $ 1.40 $ 0.61 $ 9.73

Diluted net income per share $ 6.17 $ 1.19 $ 1.34 $ 0.58 $ 9.30

Dividends paid per share $ 1.12 $ 0.12 $ 0.12 $ 0.12 $ 1.48

Market price of Class A Stock (1)

High $ 33.21 $ 26.11 $ 24.42 $ 28.38 $ 33.21

Low $ 22.29 $ 20.33 $ 17.20 $ 14.88 $ 14.88

(1) The price quotations above were obtained from the New York Stock Exchange website.

(Expressed in thousands, except per share amounts)

Fiscal Quarters

For the Year Ended December 31, 2019 Fourth Third Second First Year

Revenue $ 295,881 $ 234,793 $ 250,935 $ 251,770 $ 1,033,379

Expenses 260,908 228,297 233,544 235,718 958,467

Income before income taxes 34,973 6,496 17,391 16,052 74,912

Income taxes 9,538 2,547 5,016 4,858 21,959

Net income $ 25,435 $ 3,949 $ 12,375 $ 11,194 $ 52,953

Basic net income per share $ 1.99 $ 0.31 $ 0.95 $ 0.86 $ 4.10

Diluted net income per share $ 1.83 $ 0.29 $ 0.89 $ 0.81 $ 3.82

Dividends paid per share $ 0.12 $ 0.12 $ 0.11 $ 0.11 $ 0.46

Market price of Class A Stock (1)

High $ 29.25 $ 31.30 $ 27.42 $ 28.73 $ 31.30

Low $ 27.09 $ 26.42 $ 24.34 $ 25.25 $ 24.34

(1) The price quotations above were obtained from the New York Stock Exchange website.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data