What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-04-25 · 127 added, 100 removed, 255 unchanged (47% of the section changed)

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("Oppenheimer") and Oppenheimer Asset Management Inc.

As of March 31, 2025, we provided our services from 89 offices in 25 states located throughout the United States and offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St.

As of June 30, 2025, 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 March 31, 2025, client assets under management ("AUM") totaled $48.9 billion.

At June 30, 2025, client assets under management ("AUM") totaled $52.8 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 Firm.

Client assets under administration ("CAUA") as of March 31, 2025 totaled $129.9 billion.

Client assets under administration ("CAUA") as of June 30, 2025 totaled $138.4 billion.

CAUA includes AUM and the other assets held for which the Firm provides services.

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Through OPY Credit Corp., we conduct our secondary trading activities related to the purchase and sale of loans and trade claims, primarily on a riskless principal basis.

At March 31, 2025, the Company employed 3,012 employees (2,974 full-time and 38 part-time), of whom 933 were financial advisors.

At June 30, 2025, the Company employed 3,071 employees (2,943 full-time, 69 part-time, and 59 summer interns), of whom 927 were financial advisors.

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 strategic partnerships.

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We continuously invest in and improve our technology platform to support client service and to remain competitive, while simultaneously managing expenses.

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 branch offices in attractive locations, and to continue to grow and develop the existing trading, investment banking, investment advisory and other divisions.

The Company's long-term growth plan is to continue to expand existing offices by hiring experienced professionals, qualified trainees as well as to expand through the purchase of operating branch offices from other broker-dealers or the opening of new branch offices in attractive locations, and to continue to grow and develop the existing trading, investment banking, investment advisory and other divisions.

We recognize employee work habits have changed in a post-pandemic world.

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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.

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 acquire a controlling financial interest in 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 or offer products and services aligned with the Company's long-term business objectives.

Short-term Interest Rate Environment

After reducing the federal funds rate by 1 percentage point to a target range of 4.25% - 4.50% through a series of rate cuts in the latter half of 2024, the Federal Reserve (the “FED”) held rates steady at their first two meetings of 2025.

The current pause is driven by the FED’s desire to wait for further clarity on the economy, as uncertainty around the economic outlook has increased in light of recent policy changes impacting trade, immigration and government spending.

Recent announcements around the imposition of universal and targeted tariffs have significantly impacted investor sentiment leading to major declines in market averages.

Such disruption often leads to FED intervention.

The FED’s forecast continues to pencil in two rate cuts for 2025, though this is subject to change.

Potential decreases to the federal funds rate may impact our interest-based revenues.

After reducing the federal funds rate in 2024, the Federal Reserve (the “FED”) remained in a holding pattern during the first half of 2025 and issued guidance around continuing to be "data-dependent" with respect to future rate changes.

Proposed tariffs on trading partners and the passage of a tax and spending bill (the One Big Beautiful Bill Act) assured many of increasing inflation in future periods as well as leading to a slowing economy with rising levels of unemployment.

The FED’s interest rate forecast released after its June 2025 meeting remains unchanged, with a narrow consensus of two rate cuts penciled in for 2025, though this is subject to change.

Potential changes to the federal funds rate may impact our interest-based revenues.

While decreases in interest rates will lower fees the Company earns from FDIC-insured deposits of clients through a program offered by the Company, such decreases may be offset to a degree if the cash sweep balances increase as clients find fewer higher-yielding alternatives to deploy these balances.

Future rate decreases will also reduce the rates the Company charges on customer margin loans and earns on other interest-sensitive assets, which will have a negative impact on our earnings.

Israel-Hamas War and Conflict with Hezbollah and Iran

Gaza War and the Ongoing Conflict with Iran

On October 7, 2023, Hamas initiated an unprovoked invasion of Israel from the Gaza Strip, resulting in thousands of casualties.

Israel formally declared war on Hamas in response to the attack and initiated several military operations in an effort to clear militants from the area.

The war has now finished its second year and has seen a significant escalation in a longstanding conflict between Israel and Hezbollah, the Lebanese-based militant group.

The conflict was further intensified in 2024 by the direct entry of Iran, which launched a missile attack on Israel.

The expiration of a cease-fire and the resumption of hostilities is likely to increase the calls for peace and may interfere with Israel’s relations with the rest of the world.

Given the continued unrest, there remains a risk that these conflicts could expand into a wider regional war which could have an adverse impact on the worldwide economy, financial markets and thus on our business.

At this time, these conflicts have not yet had a material impact on our business operations in Israel or elsewhere.

Military operations by Israel against Hezbollah, the Houthis in Yemen, and the change of regimes in Syria provided an opportunity for Israel, in cooperation with the U.S., to decrease or eliminate the nuclear threat from Iran.

A recent ceasefire between Iran and Israel as well as a proposed ceasefire between Hamas and Israel may finally lead to reduced hostilities in the Middle East.

While the parties have agreed to a ceasefire, there remains some risk that the conflict could restart and have an adverse impact on the worldwide economy, financial markets and thus on our business.

We continue to monitor for any adverse impacts of these conflicts on our business operations and financial performance in Israel or elsewhere.

Recent Changes in U.S.

Trade Policies

In recent months, the United States has significantly increased tariffs across a broad range of imports from all of its major trading partners.

While the administration has paused certain tariffs while trade negotiations unfold, it is possible that these negotiations if unsuccessful could prompt retaliatory levies from impacted countries.

The proposed tariffs are also likely to disrupt supply lines, increase inflation and negatively impact consumer spending in the U.S.

While the recent changes to U.S.

trade policies have not had a significant impact on the Company’s financial results, adverse changes or sudden policy announcements, including retaliatory tariffs, could adversely impact the financial markets, reducing the value of our assets under management and related advisory fees.

To date, turmoil created by proposed tariffs have substantially and adversely impacted the value of the U.S.

dollar in comparison with other major currencies.

Changes or adverse developments to U.S trade policies may also depress trading volumes as well as capital market and deal making activities, reducing our related commissions and investment banking revenues.

Uncertainty over the outcome of trade negotiations may also impact activity levels in the capital markets as well as general price levels in the equity and debt markets.

EXECUTIVE SUMMARY

The Firm’s solid performance for the quarter underscores the ability of our diversified businesses to deliver profitable operating results in increasingly uncertain macroeconomic conditions.

During the quarter, all major indices receded from prior quarter highs as the financial markets digested the new administration’s swift policy changes on trade, immigration and government spending as well as initiatives on decreased regulation.

Concerns that recently enacted tariffs would likely provoke a wider trade war and spur “stagflation” – a combination of slower growth and higher inflation – produced increased volatility and lower valuations for equity securities as well as pressure on the U.S.

The likelihood of a recession has increased significantly, coupled with reduced consumer confidence and expectations for higher inflation resulting from increased import prices.

There are dimmed hopes for a resumption of active capital market activity with little probability of increased corporate issuances of common stock through IPOs or secondaries.

Should market declines persist, this will also negatively impact our assets under management ("AUM") and fees earned from that activity.

We hope that recent market turbulence will convince policy makers that recent “on-off” announcements of market-moving policy is significantly impacting likely economic outcomes and that they will significantly reduce such activity.

Notwithstanding the increasingly negative market sentiment, our Wealth Management business delivered strong results with a number of improvements over the prior year.

The volatile markets spurred robust trading by our clients, driving higher retail commissions.

Asset-based advisory fees also increased since AUM, while slightly reduced from recently established all-time highs, remained well above AUMs outstanding during the comparable period.

A decline in our interest-sensitive revenues, partially offset these improvements due to lower short term interest rates and reduced FDIC sweep balances.

Our Capital Markets revenues exceeded prior year levels despite challenging market conditions that saw lower underwriting activity amid postponed transactions by corporate clients owing to policy uncertainties and volatile markets that put a damper on deal making activities and new issuance levels.

Institutional trading volumes increased in the volatile markets seen during the latter part of the 1 st quarter, which were favorable to our sales and trading revenues.

The Firm’s improved operating results for the quarter showcase the strength of our businesses and the maturing of investments in experienced team members over the past several years.

At the outset of the quarter, recession fears mounted as announced policies on trade drove significant market volatility and triggered a large selloff in the equity markets.

As tariffs were suspended, the markets broadly rallied with both the NASDAQ and S&P 500 reaching new

record highs to close out the quarter.

Concerns remained over tariff-induced inflation, a potentially softening labor market and conflict in the Middle East.

Rising markets proved quite favorable to our Wealth Management business revenue, with the rally driving assets under management (“AUM”) to a fresh record, resulting in higher asset-based advisory fees when compared with the prior year period.

Retail trading volumes, driven by investor interest, also remained robust, boosting commission revenue.

However, the fees we earn on our FDIC sweep program are reduced from the prior year period due to lower deposit balances as clients sought higher returns in money market funds and other investments.

The Capital Markets businesses showed a substantial increase in total revenue.

Institutional trading volumes were strong during the quarter due in part to increased volatility, which buoyed our sales and trading revenue.

Investment Banking revenue also improved on the back of more advisory assignments that closed in the quarter and robust underwriting levels as capital markets re-opened.

We are hopeful that higher deal volumes will continue in the latter half of the year as policymakers firm up key trade policy decisions and concerns around recession recede.

The Firm continues to maintain an unlevered balance sheet and ended the quarter with its capital reaching yet another all-time high.

As we move into the second half of the year, we remain optimistic about our capabilities and our ability to continue delivering high quality services to our clients.

RESULTS OF OPERATIONS

The Company reported net income of $30.7 million or $2.93 basic earnings per share for the first quarter of 2025, compared with net income of $26.1 million or $2.50 per share for the first quarter of 2024.

Revenue for the first quarter of 2025 was $367.8 million, an increase of 4.2%, compared to revenue of $353.1 million for the first quarter of 2024.

The Company reported net income of $21.7 million or $2.06 basic earnings per share for the second quarter of 2025, compared with net income of $10.3 million or $0.99 per share for the second quarter of 2024.

Revenue for the second quarter of 2025 was $373.2 million, an increase of 12.9%, compared to revenue of $330.6 million for the second quarter of 2024.

(Expressed in thousands, except Per Share Amounts or otherwise indicated)

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

• Increased revenue for the first quarter of 2025 was primarily driven by significantly higher advisory fees attributable to a rise in billable AUM and an increase in transaction-based commissions as well as sales and trading revenue

• Assets under administration and under management at March 31, 2025 modestly decreased below recently established records

• Compensation expenses increased from the prior year quarter largely as a result of inflationary pressures on wages and higher production-related expenses

• Non-compensation expenses increased from the prior year quarter primarily due to higher interest and technology related expenses and higher clearing and exchange costs attributable to higher volumes

• Increased revenue for the second quarter of 2025 was primarily driven by significantly higher investment banking revenue due to an uptick in underwriting volumes and larger advisory mandates, an increase in transaction-based commissions and greater advisory fees attributable to a rise in billable AUM

• Rising markets lifted assets under administration and under management to fresh records at June 30, 2025

• Compensation expenses increased from the prior year quarter largely as the result of higher production and salary-related expenses

• Non-compensation expenses increased from the prior year quarter primarily due to higher technology- related expenses and greater travel and other miscellaneous costs

• Total stockholders' equity, book value and tangible book value per share reached new record highs as a result of positive earnings

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 months ended March 31, 2025 and 2024:

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, 2025 and 2024:

(Expressed in thousands)

For the Three Months Ended March 31,

2025 2024 % Change

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2025 2024 % Change 2025 2024 % Change

Wealth Management $ 246,421 $ 234,526 5.1 $ 488,407 $ 472,487 3.4

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Wealth Management

Wealth Management reported revenue for the current quarter of $242.0 million, 1.7% higher compared with a year ago.

Wealth Management reported revenue for the current quarter of $246.4 million, 5.1% higher compared with the prior year period.

Pre-tax income was $62.8 million in the current quarter, a decrease of 2.2% compared with a year ago.

Financial advisor headcount at the end of the current quarter was 933, compared to 936 and 931 at the end of the first quarter of 2024 and fourth quarter of 2024, respectively.

Financial advisor headcount at the end of the current quarter was 927, compared to 934 at the end of the second quarter of 2024.

('000s unless otherwise indicated)

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Cash Sweep Balances (billions) $ 2.8 $ 2.9 $ (0.1) (3.4)

• Retail commissions increased 7.8% from a year ago primarily due to higher retail trading activity

• Retail commissions increased 3.6% from the prior year period primarily due to higher retail trading activity

• Advisory fees increased 7.2% due to higher AUM during the billing period

• Bank deposit sweep income decreased $6.2 million from a year ago due to lower cash sweep balances and lower short-term interest rates

• Interest revenue increased 6.4% from the prior year period due to higher average margin loan balances

• Other revenue decreased from a year ago primarily due to a decline 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

• Compensation expenses increased 3.5% from a year ago primarily due to higher production related expenses, partially offset by lower deferred compensation expenses and decreased costs associated with share appreciation rights

• Non-compensation expenses increased 16.9% from a year ago primarily due to an increase in legal expenses and higher external portfolio management costs, which are directly related to the increase in AUM

The following table provides a breakdown of the change in assets under management for the three months ended March 31, 2025:

• Interest revenue was flat compared to the prior year period

• Other revenue increased from a year ago primarily due 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

• Compensation expenses increased 7.1% from the prior year period primarily due to higher production related expenses and higher deferred compensation costs, partially offset by lower expenses associated with share appreciation rights

• Non-compensation expenses increased 9.7% from a year ago primarily due to an increase in interest and other miscellaneous expenses

The following table provides a breakdown of the change in assets under management for the three months ended June 30, 2025:

(Expressed in millions)

For the Three Months Ended March 31, 2025

For the Three Months Ended June 30, 2025

Fund Type Beginning Balance Contributions Redemptions/Profit Distribution Appreciation (Depreciation) Ending Balance

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Pre-Tax Margin (3.1) % (23.6) % 20.5 % (86.9)

*Percentage not meaningful

• Advisory fees earned from investment banking activities decreased 18.5% compared with a year ago primarily due to fewer private placement transactions

• Equities underwriting fees were flat when compared to the prior year period

• Fixed income underwriting fees increased 116.6% compared with prior year period primarily due to higher public finance transaction revenue

• Equities sales and trading revenue increased 37.9% compared with the prior year period mostly due to higher trading volumes and greater options-related revenue

• Fixed income sales and trading revenue increased 5.2% compared with a year ago largely due to higher interest income on trading inventory

• Compensation expenses increased 7.1% compared with a year ago largely due to costs associated with opportunistic new hires and greater production related expense

• Non-compensation expenses were 10.3% higher than a year ago primarily due to an increase in communication and technology expenses and execution-related fees

• Advisory fees earned from investment banking activities increased 83.0% compared with the prior year period due to increased deal volumes and larger mandate sizes

• Equities underwriting fees increased 9.1% compared with the prior year period primarily due to higher underwriting fees associated with larger deal sizes

• Fixed income underwriting fees increased 115.3% compared with the prior year period primarily due to higher corporate and sovereign issuance activity levels

• Equities sales and trading revenue increased 20.2% compared with the prior year period mostly due to higher trading volumes and greater options-related commissions revenue

• Fixed income sales and trading revenue increased 23.6% compared with a year ago largely due to higher trading volumes and interest income on trading inventory

• Compensation expenses increased 10.0% compared with the prior year period largely due to greater production-related expenses

• Non-compensation expenses were 13.8% higher than a year ago primarily due to an increase in communication and technology expenses and travel-related costs

CRITICAL ACCOUNTING POLICIES

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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 three months ended March 31, 2025, 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, 2024.

During the six months ended June 30, 2025, 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, 2024.

New Accounting Pronouncements

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The amendments also require entities to annually disclose the amount of taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes, with separate disclosure of individual jurisdictions exceeding 5% of total income taxes paid.

The new guidance, which becomes effective in 2025, will not have an impact on our financial position or results of operations since it only amends certain disclosures.

The new guidance, which becomes effective for 2025 year-end reporting, will not have an impact on our financial position or results of operations since it only amends certain disclosures.

ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

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LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2025, total assets increased by 5.6% from December 31, 2024.

At June 30, 2025, total assets increased by 9.0% from December 31, 2024.

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.

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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 March 31, 2025, the Company had an outstanding bank call loan balance of $439.6 million compared to $252.1 million at December 31, 2024.

The Company also has some availability of short-term bank financing on an unsecured basis.

At June 30, 2025, the Company had an outstanding bank call loan balance of $323.8 million compared to $252.1 million at December 31, 2024.

The Company also has some availability of uncommitted short-term bank financing on an unsecured basis.

The Company's overseas subsidiaries, Oppenheimer Europe Ltd.

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The regulatory capital requirements for Oppenheimer Europe Ltd.

and Oppenheimer Investments Asia Limited were $6.1 million and $385,718, respectively, at March 31, 2025.

and Oppenheimer Investments Asia Limited were $6.9 million and $382,168, respectively, at June 30, 2025.

The liquid assets at Oppenheimer Europe Ltd.

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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 $3.4 million for those subsidiaries.

The unrecognized deferred tax liability associated with the outside basis difference of its permanently invested foreign subsidiary is estimated at $3.5 million.

We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd.

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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.

While the results of Oppenheimer Israel (OPCO) Ltd.

are not material, based on its recent performance, it is possible that a valuation allowance on the deferred tax assets of $2.6 million as of June 30, 2025 may be required in a future reporting period.

Currently, based on all available evidence, a valuation allowance is not needed and we are looking to mitigate the need to record a valuation allowance in the future.

For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash.

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Securities owned are mainly comprised of actively traded readily marketable securities.

We issued $2.6 million in forgivable notes (which are inherently illiquid) to employees during the three months ended March 31, 2025 ($4.5 million for the three months ended March 31, 2024) as upfront or backend inducements to commence or continue employment as the case may be.

We issued $4.2 million in forgivable notes (which are inherently illiquid) to employees during the three months ended June 30, 2025 ($2.0 million for the three months ended June 30, 2024) 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.

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Bank call loans are generally payable on demand, uncommitted in nature and bear interest at various rates.

At March 31, 2025, the Company had $359.5 million of bank call loans ($252.1 million at December 31, 2024).

The average daily bank loan outstanding for the three months ended March 31, 2025 was $277.3 million ($57.8 million for the three months ended March 31, 2024).

The largest daily bank loans outstanding for the three months ended March 31, 2025 was $491.7 million ($164.9 million for the three months ended March 31, 2024).

At March 31, 2025, securities loan balances totaled $360.9 million ($235.5 million at December 31, 2024 and $298.0 million at March 31, 2024).

The average daily securities loan balances outstanding for the three months ended March 31, 2025 were $359.2 million ($303.4 million for the three months ended March 31, 2024).

The largest daily stock loan balance for the three months ended March 31, 2025 was $436.8 million ($335.7 million for the three months ended March 31, 2024).

We finance our government trading operations through the use of securities purchased under reverse repurchase agreements and repurchase agreements.

Except as described below, 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 March 31, 2025, the gross balances of reverse repurchase agreements and repurchase agreements were $292.9 million and $1,159.3 million, respectively.

The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the three months ended March 31, 2025 was $370.5 million and $1,044 million, respectively ($122.9 million and $809.3 million, respectively, for the three months ended March 31, 2024).

The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the three

months ended March 31, 2025 was $633.5 million and $1,220 million, respectively ($578.4 million and $1.1 billion, respectively, for the three months ended March 31, 2024).

At June 30, 2025, the Company had $323.8 million of bank call loans ($252.1 million at December 31, 2024).

The average daily bank loan balance outstanding for the three and six months ended June 30, 2025 was $325.8 million and $301.7 million, respectively ($148.7 million and $103.3 million for the three and six months ended June 30, 2024).

The largest daily bank loan balance outstanding for the three and six months ended June 30, 2025 was $482.3 million and $491.7 million, respectively ($258.7 million and $258.7 million, respectively for the three and six months ended June 30, 2024).

At June 30, 2025, securities loan balances totaled $404.9 million ($235.5 million at December 31, 2024 and $247.2 million at June 30, 2024).

The average daily securities loan balances outstanding for the three and six months ended June 30, 2025 were $414.1 million and $386.7 million, respectively ($287.6 million and $295.0 million for the three and six months ended June 30, 2024).

The largest daily stock loan balance for the three and six months ended June 30, 2025 was $502.9 million ($336.0 million for the three and six months ended June 30, 2024).

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 securities, are carried at amounts at which securities subsequently will be resold or reacquired as specified in the respective agreements and include accrued interest.

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, 2025, the gross balances of reverse repurchase agreements and repurchase agreements were $192.9 million and $1,046.0 million, respectively.

The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the three months ended June 30, 2025 was $413.8 million and $1,016.0 million, respectively ($27.5 million and $845.9 million, respectively, for the three months ended June 30, 2024).

The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the three months ended June 30, 2025 was $658.5 million and $1,262.0 million, respectively ($671.2 million and $976.8 million, respectively, for the three months ended June 30, 2024).

Liquidity Management

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We have Company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans.

Certain policies which could provide additional liquidity if needed had a cash surrender value of $97.0 million as of March 31, 2025.

A portion of the assets underling 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 $104.0 million as of June 30, 2025.

We regularly review our sources of liquidity and financing, both on a short term and long term basis, and conduct internal stress analyses 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.

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Should a disruption occur in our liquidity and financing sources, we have developed 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 are related to $171.5 million of operating lease obligations.

The total cash requirement for interest expense related to operating lease obligations is estimated to be $8.8 million for the remainder of 2025.

We have long-term cash requirements of $205.5 million for operating lease obligations.

The total cash requirement for operating lease obligations is estimated to be $21.9 million for the remainder of 2025 year.

(Expressed in thousands)

For the Three Months Ended March 31,

Cash provided by (used in) operating activities $ (91,740) $ (79,048)

For the Six Months Ended June 30,

Cash used in operating activities $ (51,671) $ (194,314)

Cash used in investing activities (1,259) (1,415)

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We may or may not be able to pass such increased funding costs on to our clients.

During periods of high volatility such as the current environment, we see increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearinghouses such as the Options Clearing Corporation (“OCC”) and National Securities Clearing Corp.

During periods of high volatility, we see increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearinghouses such as the 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.

have substantially reduced settlement risks.

has substantially reduced settlement risks.

All such requirements have been and will be met in the ordinary course with available collateral.

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These intruders sometimes use instructions that are seemingly from authorized parties but, in fact are from parties 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.

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 sophisticated defenses.

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 data concerning its clients, their financial affairs, as well as Company privileged information.

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.

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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 standard processes for reporting and escalating cybersecurity incidents to senior management.

We have processes to evaluate third party service providers and vendors that have access to sensitive systems and Company and customer data, which does include the use of cybersecurity questionnaires and due diligence procedures such as assessments of that service provider’s cybersecurity posture.

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

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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 Company’s cybersecurity function is led by the Company’s Chief Information Officer ("CIO") and the Company’s Chief Information Security Officer ("CISO"), who report 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.

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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 President and General Counsel to discuss potential vulnerabilities in the cyber environment.

The President formerly ran the Information Technology Department at the Firm and as a result has significant systems experience including experience related to cybersecurity.

The CIO and CISO have a standing monthly meeting with the President/CEO and General Counsel to discuss potential vulnerabilities in the cyber environment.

The President/CEO formerly ran the Information Technology Department at the Firm and as a result has significant systems experience including experience related to cybersecurity.

Board Oversight

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Risk Factors-Risks Related to Our Business” in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

REGULATORY MATTERS AND DEVELOPMENTS

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, 2024 for additional information.

Regulatory Capital Requirements

Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements.

As of March 31, 2025, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements.

As of June 30, 2025, 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) to 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 December 31, 2025.

Impacted entities must perform the customer and PAB reserve computations daily beginning no later than June 30, 2026.

We anticipate that the new amendments will impact our principal broker dealer and may result in an increase in required staffing levels.

The Organization for Economic Co-operation and Development (“OECD”) issued the Global Anti-Base Erosion Model Rules (“Pillar II”), which among its provisions, requires companies to pay a minimum corporate tax rate of 15% in each jurisdiction in which they do business.

While we have foreign affiliates that operate within the scope of Pillar II, we do not believe that it will have a material impact on our consolidated results of operations or effective income tax rate.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the “OBBBA”), which includes several U.S.

federal income tax provisions affecting businesses.

Among its changes, the OBBBA modifies certain Inflation Reduction Act (“IRA”) and Tax Cuts & Jobs Act (“TCJA”) provisions, including allowing companies to expense 100% of the cost of qualified property in the year it is initially placed in service.

While changes in tax law are accounted for in the period of enactment, there are varied effective dates for the OBBBA’s provisions, some of which extend into 2026.

Based on our preliminary review of the OBBBA, we do not anticipate its provisions having a material impact on our financial position or results of operations.

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 materially, adversely impacted due to anticipated increases in the Company’s income tax expense and effective tax rate.

We are unable to quantify the potential impact at this time.

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"

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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 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 and Iran and related unrest in the Middle East and Russia's invasion of Ukraine and related Western sanctions, (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, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, government spending, immigration, impact of tariffs and trade wars, bank failures, changes in or uncertainty surrounding regulation, and the potential for default by the U.S.

(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 and Iran and related unrest in the Middle East and Russia's invasion of Ukraine and related Western sanctions, (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, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, government spending, immigration, impact of tariffs 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.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three months ended March 31, 2025, there were no material changes to the information contained in Part II, Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

During the six months ended June 30, 2025, there were no material changes to the information contained in Part II, Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

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-Q

Item 2. Management’s Discussion and Analysis