OPPENHEIMER HOLDINGS INC 10-K

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this section is to discuss and analyze our consolidated financial condition, liquidity and capital resources and results of operations for the years ended December 31, 2025 and 2024. For a discussion of our results of operations and liquidity and capital resources for the year ended December 31, 2023, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. This analysis should be read in conjunction with the consolidated financial statements and related footnote disclosures contained in this report. BACKGROUND The consolidated financial statements include the accounts of Oppenheimer Holdings Inc. ("Parent") and its consolidated subsidiaries (together, the "Company", "we", "our" or "us"). The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto which appear elsewhere in this annual report. Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that is engaged in a broad range of activities in the securities industry, including retail securities brokerage, institutional sales and trading, market-making, research, investment banking (both corporate and public finance), investment advisory and asset management services and trust services. Its principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and Oppenheimer Asset Management Inc. ("OAM"). As of December 31, 2025, we provided our services from 88 offices in 25 states located throughout the United States, 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 December 31, 2025, client assets under management ("AUM") totaled $55.2 billion. AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs and as well as the net asset value of private placement of alternative investments offered by and held by clients of the Firm. Client assets under administration ("CAUA") as of December 31, 2025 totaled $143.3 billion. CAUA includes AUM and the other assets for which the Firm provides services. We also provide trust services and products through Oppenheimer Trust Company of Delaware Inc.. Through OPY Credit Corp., we conduct secondary trading activities related to the purchase and sale of loans and trade claims, primarily on a riskless principal basis. At December 31, 2025, the Company employed 2,947 employees (2,906 full-time and 41 part-time), of whom 924 were financial advisors. Outlook We are focused on growing our wealth management business through strategic additions of experienced financial advisors in our existing branch system and employment of experienced money management personnel in our asset management business as well as deploying our capital for expansion through targeted acquisitions. We are increasingly creating and investing in private market opportunities on our own behalf and on behalf of qualified clients. We are also focused on opportunities in our capital market businesses, including integrating new technology platforms to expand the suite of services offered to our clients and onboarding experienced personnel and/or small units that will improve our ability to attract institutional clients in both equities and fixed income without significantly raising our risk profile. In investment banking, we are committed to growing our footprint by adding experienced bankers within our existing industry practices as well as new industry practices where we believe we can be successful. We continuously invest in and improve our technology platform to support client service and to remain competitive, while continuously 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 businesses. We recognize employee work habits have changed in a post-pandemic world. As a result, we are continuously reviewing our physical footprint on lease renewals, and in many cases reducing office size and configuration. We are committed to continuing to improve our capabilities to ensure compliance with industry regulations, support client service and expand our wealth management and capital markets capabilities. We recognize the importance of compliance with applicable regulatory requirements and are committed to performing rigorous and ongoing 39 Table of Contents assessments of our compliance and risk management effort, and investing in people and programs, while providing a platform with first class investment programs and services. The Company also reviews its full service business model to determine the opportunities available to build or acquire closely related businesses in areas where others have shown some success. Equally important is the search for viable acquisition candidates. Our long-term intention is to pursue growth by acquisition where we can find a comfortable match in terms of corporate goals and personnel at a price that would provide our stockholders with incremental value. We review potential acquisition opportunities from time to time with the aim of fulfilling the Company's strategic goals, while evaluating and managing our existing businesses. In addition, the Company may from time to time make an acquisition of 100% of a business or make minority private investments out of excess capital in allied or unrelated businesses with the goal of either syndicating the investment to eligible clients or retaining ownership because we believe them to be an attractive investment. Impact of Change in Short-term Interest Rates After holding rates steady for the first nine months of the year, the Federal Reserve voted in favor of three consecutive 25 basis point rate cuts at its meetings in September, October and December of 2025. The current target range of 3.50% to 3.75% underscores the Federal Reserve’s emphasis on supporting economic growth and stabilizing the labor market amid somewhat moderating inflationary pressures. However, dissenting votes at recent meetings suggest that future interest rate policy decisions may be more divided, potentially leading to increased uncertainty around the pace and direction of rate changes. Further changes to the federal funds rate may continue to impact our interest-based revenues. Lower rates reduce fees earned from FDIC-insured client deposits through our sweep program, though this impact may be partially offset if the cash sweep balances rise as clients encounter fewer attractive alternatives to deploy these balances. Rate reductions also decrease the interest we charge on customer margin loans and earn on other interest-sensitive assets, negatively affecting earnings. The Company may enjoy an offset to such reduced interest revenues by increased activities in other parts of its business as has traditionally been the case. Additionally, lower rates may also reduce the Company's short-term borrowing costs, which helps reduce interest-related expenses. Gaza War 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, including hostilities against Hezbollah, Syria and Iran. In October 2025, Israel and Hamas announced a tentative ceasefire and hostage release agreement, under which Hamas committed to release remaining hostages and Israel agreed to halt military operations. The ceasefire remains fragile, with reports of violations and humanitarian challenges raising concerns about its durability. If unrest persists or escalates, there remains a risk that the conflict could broaden into a wider regional war, potentially disrupting global trade, financial markets and thus on our business. We continue to monitor for any adverse impacts of this conflict on our business operations and financial performance in Israel or elsewhere. Recent Developments in Venezuela On January 3, 2026, the United States conducted a military operation in Venezuela that resulted in the capture of President Nicolás Maduro and his wife, who were subsequently transported to New York to face narco‑terrorism and related charges, with legal proceedings beginning in Manhattan federal court. The administration has also signaled temporary U.S. oversight of Venezuela’s oil industry and transition. In addition, the U.S. Coast Guard in conjunction with the U.S. military has boarded and taken possession of five vessels carrying sanctioned oil. While the Company has no direct exposure to Venezuelan assets or counterparties, the heightened geopolitical uncertainty and potential volatility in global energy and emerging markets could influence overall market conditions. Such developments may affect investor sentiment and trading activity, which in turn could negatively impact performance across our businesses. 40 Table of Contents Recent Changes in U.S. Trade Policies In 2025, the United States significantly increased tariffs across a broad range of imports from almost every major trading partner. Although some tariffs were temporarily paused during negotiations with China, the EU, and other partners, it is possible that failed negotiations or expiration of tariff pauses could prompt retaliatory levies from impacted countries. These trade actions 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 to date, 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, as well as expected lower interest rates and constantly changing U.S. policy, have substantially and adversely impacted the value of the U.S. dollar in comparison with other major currencies. On February 20, 2026, the U.S. Supreme Court issued a 6–3 decision striking down the administration’s sweeping global tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), holding that the statute does not provide the President authority to unilaterally impose broad‑based tariffs. The ruling invalidates the 10% baseline tariff applied to nearly all U.S. trading partners as well as higher duties on selected countries. Following the decision, President Trump has stated that he intends to pursue new tariff measures under alternative legal authorities, signaling that additional trade actions may follow despite the Court’s ruling. Although the Supreme Court did not address whether previously collected tariffs must be refunded, external estimates indicate that IEEPA‑based tariffs generated more than $175 billion in revenue, creating uncertainty regarding potential reimbursement obligations. 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 operating results for the fourth quarter and full year 2025 were much improved. We achieved record full year and quarterly earnings per share with increased revenues driven by broad-based strength across our core businesses. Both of our operating segments benefited from a generally favorable macroeconomic environment, including a sustained rise in equity markets, which drove all major U.S. indices to a third straight year of double-digit gains. Markets continued to rally with support from an accommodative Federal Reserve and strong corporate earnings, helping offset concerns about trade tensions and a softening labor market. Interest in, and announced investments in artificial intelligence platforms provided significant additional strength to equity markets. The favorable market conditions benefited our Wealth Management business, as rising asset values underpinned increased client trading activity and lifted assets under management to record levels, resulting in higher related fees compared with the prior-year period. Alternative Investments also benefited from certain sponsored hedge funds surpassing prior high-water marks, which generated meaningful incentive fees in the fourth quarter of 2025. These increases were somewhat offset by lower fees earned on our FDIC sweep product due to reduced average sweep balances. Our Capital Markets business also performed well and continued to build on the strength and momentum that we saw in the third quarter. Investment Banking, in particular, experienced a continued wave of deal activity. Underwriting and advisory transaction volumes remained strong, reflecting the benefits of prior investments we made in building our banking franchise. We are very pleased with our 2025 financial performance which was achieved through the commitment of our employees and their continued focus on client outcomes. Revenues and earnings per share reached a new record, our balance sheet remains conservatively positioned, and our stockholders’ equity and book value per share metrics reached fresh highs. Our solid operating results and capital position allowed us to return additional value to shareholders in the form of a $1.00 per share special dividend in early January 2026. Looking ahead, our Firm remains well-positioned to navigate evolving market and economic conditions and capitalize on opportunities across our businesses. As we enter 2026, we believe that the momentum is likely to continue providing strong underpinnings to the equity markets and to results within our investment banking franchise. 41 Table of Contents RESULTS OF OPERATIONS The following table and discussion summarizes the changes in the major revenue and expense categories for the past three years: (Expressed in thousands ) For the Years Ended December 31, For the Years Ended December 31, 2025 2024 % Change 2024 2023 % Change Revenue Commissions $ 464,415 $ 409,710 13.4 $ 409,710 $ 349,248 17.3 Advisory fees 555,439 483,433 14.9 483,433 415,679 16.3 Investment banking 266,392 176,447 51.0 176,447 117,665 50.0 Bank deposit sweep income 114,811 138,770 (17.3) 138,770 172,807 (19.7) Interest 152,982 135,537 12.9 135,537 104,550 29.6 Principal transactions, net 50,214 54,684 (8.2) 54,684 65,347 (16.3) Other 33,818 33,915 (0.3) 33,915 23,529 44.1 Total revenue 1,638,071 1,432,496 14.4 1,432,496 1,248,825 14.7 Expenses Compensation and related expenses 1,016,506 936,814 8.5 936,814 782,396 19.7 Communications and technology 105,770 99,361 6.5 99,361 91,321 8.8 Occupancy and equipment costs 63,690 63,852 (0.3) 63,852 66,002 (3.3) Clearing and exchange fees 27,846 27,641 0.7 27,641 24,928 10.9 Interest 86,561 87,991 (1.6) 87,991 68,599 28.3 Other 126,507 111,080 13.9 111,080 168,809 (34.2) Total expenses 1,426,880 1,326,739 7.5 1,326,739 1,202,055 10.4 Pre-tax income 211,191 105,757 99.7 105,757 46,770 126.1 Income tax provision 63,232 34,510 83.2 34,510 16,498 109.2 Net Income $ 147,959 $ 71,247 107.7 $ 71,247 $ 30,272 135.4 Net income (loss) attributable to non-controlling interest, net of tax (444) (310) * (310) 93 * Net income attributable to Oppenheimer Holdings Inc. $ 148,403 $ 71,557 107.4 $ 71,557 $ 30,179 137.1 *Percentage not meaningful Fiscal 2025 compared to Fiscal 2024 Revenue • Commission revenue was a record high $464.4 million for the year ended December 31, 2025, an increase of 13.4% compared with $409.7 million for the year ended December 31, 2024 due to higher overall transaction volumes • Advisory fees were a record high $555.4 million for the year ended December 31, 2025, an increase of 14.9% compared with $483.4 million for the year ended December 31, 2024 due to higher management fees from advisory programs attributable to an increase in billable AUM levels and increased incentive fees from alternative investments • Investment banking revenue was $266.4 million for the year ended December 31, 2025, an increase of 51.0% compared with $176.4 million for the year ended December 31, 2024 due to greater participation in M&A transactions with higher associated fees and higher new issuance activity levels • Bank deposit sweep income for the year ended December 31, 2025 decreased $24.0 million or 17.3% from the prior year due to lower average cash sweep balances and lower short-term interest rates • Interest revenue was $153.0 million for the year ended December 31, 2025, an increase of 12.9% compared with $135.5 million for the year ended December 31, 2024 primarily due to higher interest earned on trading inventories 42 Table of Contents • Principal transactions revenue was $50.2 million for the year ended December 31, 2025, a decrease of 8.2% compared with $54.7 million for the year ended December 31, 2024 primarily due to lower realized and unrealized gains from government securities trading activities partially offset by higher corporate bond trading income • Other revenue of $33.8 million for the year ended December 31, 2025 was relatively flat compared to $33.9 million for the year ended December 31, 2024 Expenses • Compensation and related expenses totaled $1,016.5 million during the year ended December 31, 2025, an increase of 8.5% compared with the year ended December 31, 2024 primarily due to higher production-related expenses and incentive compensation accruals. Compensation and related expenses as a percentage of revenue was 62.1% for the year ended December 31, 2025 compared with 65.4% for the year ended December 31, 2024 • Non-compensation expenses were $410.4 million during the year ended December 31, 2025, an increase of 5.2% compared with $389.9 million during the year ended December 31, 2024 due to higher underwriting and technology-related expenses • The effective tax rate for the 2025 year improved to 29.9% compared with 32.6% for the prior year as the impact of certain unfavorable permanent items and nondeductible foreign losses was reduced due to higher income levels in the year ended December 31, 2025 Fiscal 2024 compared to Fiscal 2023 Revenue • Commission revenue was $409.7 million for the year ended December 31, 2024, an increase of 17.3% compared with $349.2 million for the year ended December 31, 2023 due to higher overall client activity • Advisory fees were $483.4 million for the year ended December 31, 2024, an increase of 16.3% compared with $415.7 million for the year ended December 31, 2023 due to higher management fees from advisory programs attributable to record billable AUM levels • Investment banking revenue was $176.4 million for the year ended December 31, 2024, an increase of 50.0% compared with $117.7 million for the year ended December 31, 2023 due to higher transaction and new issuance volumes • Bank deposit sweep income was $138.8 million for the year ended December 31, 2024, a decrease of 19.7% compared with $172.8 million for the year ended December 31, 2023 due to lower cash sweep balances and lower short-term interest rates • Interest revenue was $135.5 million for the year ended December 31, 2024, an increase of 29.6% compared with $104.6 million for the year ended December 31, 2023 primarily due to higher average margin loan balances and security inventories • Principal transactions revenue was $54.7 million for the year ended December 31, 2024, a decrease of 16.3% compared with $65.3 million for the year ended December 31, 2023 primarily due to lower realized and unrealized gains from government securities trading activities • Other revenue was $33.9 million for the year ended December 31, 2024, an increase of 44.1% compared to $23.5 million for the year ended December 31, 2023 primarily due to higher death benefit proceeds 43 Table of Contents Expenses • Compensation and related expenses totaled $936.8 million during the year ended December 31, 2024, an increase of 19.7% compared with the year ended December 31, 2023 primarily due to higher salary expense, production-related expenses, incentive compensation costs and elevated expenses associated with Oppenheimer stock appreciation rights (“OARs”), which were adversely impacted by the significant increase in the OPY Class A Stock price. Compensation and related expenses as a percentage of revenue was 65.4% for the year ended December 31, 2024 compared with 62.7% for the year ended December 31, 2023 • Non-compensation expenses were $389.9 million during the year ended December 31, 2024, a decrease of 7.1% compared with $419.7 million during the year ended December 31, 2023 largely due to the absence of significant legal and regulatory costs, partially offset by an increase in interest expense • The effective income tax rate for the year ended December 31, 2024 was 32.6% compared with 35.3% for the year ended December 31, 2023 primarily due to the absence of the non-deductible $13.0 million regulatory settlement, which was recorded in 2023 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 and years ended December 31, 2025 and 2024. Effective in the fourth quarter of 2024, the Company combined the former Private Client and Asset Management business segments to form the Wealth Management segment. Our Capital Markets and Corporate/Other segments were not impacted by these changes. (Expressed in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2025 2024 % Change 2025 2024 % Change Revenue Wealth Management $ 287,270 253,515 13.3 $ 1,035,403 972,052 6.5 Capital Markets 182,928 119,325 53.3 591,315 447,579 32.1 Corporate/Other 2,432 2,577 (5.6) 11,353 12,865 (11.8) Total 472,630 375,417 25.9 1,638,071 1,432,496 14.4 Pre-tax Income (Loss) Wealth Management 98,839 53,708 84.0 292,065 265,739 9.9 Capital Markets 52,839 (4,975) (1,162.1) 56,167 (39,596) (241.9) Corporate/Other (45,708) (31,666) 44.3 (137,041) (120,386) 13.8 Total $ 105,970 $ 17,067 520.9 $ 211,191 $ 105,757 99.7 44 Table of Contents Wealth Management Wealth Management reported revenue of $1,035.4 million for the year ended December 31, 2025, 6.5% higher compared with the prior year. Pre-tax income was $292.1 million, an increase of 9.9% from the prior year. (Expressed in thousands, except financial advisor headcount or otherwise indicated) For the Years Ended December 31, 2025 2024 % Change Revenue $ 1,035,403 $ 972,052 6.5 Commissions 235,321 221,558 6.2 Advisory fees 555,387 483,390 14.9 Bank deposit sweep income 114,811 138,771 (17.3) Interest 87,982 88,714 (0.8) Other 41,902 39,619 5.8 Total Expenses $ 743,338 $ 706,313 5.2 Compensation 539,694 514,227 5.0 Non-compensation 203,644 192,086 6.0 Pre-tax Income $ 292,065 $ 265,739 9.9 Compensation Ratio 52.1 % 52.9 % (1.5) Non-compensation Ratio 19.7 % 19.8 % (0.5) Pre-tax Margin 28.2 % 27.3 % 3.3 AUA (billions) $ 143.3 $ 129.5 10.7 AUM (billions) $ 55.2 $ 49.4 11.7 Cash Sweep Balances (billions) $ 3.0 $ 3.0 — Financial Advisor Headcount 924 931 (0.8) • Retail commissions increased 6.2% from the prior year, reaching a record high, driven by higher retail transaction volumes • Advisory fees increased 14.9% from the prior year, setting a new record, due to higher billable AUM and increased incentive fees from alternative investments • Bank deposit sweep income for the full year decreased $24.0 million or 17.3% from the prior year due to lower average cash sweep balances and lower short-term interest rates • Interest revenue was relatively flat with the prior year • Other revenue increased 5.8% compared with the prior year primarily due to allocated syndicate fees and changes in market value of the Firm's investments in hedge funds and private equity funds • AUM of $55.2 billion reached record levels at December 31, 2025, which is the basis for advisory fee billings for January 2026 • The $5.8 billion increase in AUM from December 31, 2024 to December 31, 2025 was largely due to higher asset values resulting from market appreciation • Compensation expenses increased 5.0% from the prior year primarily due to greater production-related expenses, partially offset by lower costs associated with share appreciation rights • Non-compensation expenses increased 6.0% from the prior year due to a number of items, including higher technology-related expenses and external portfolio manager costs that are directly related to higher AUM 45 Table of Contents The following table provides a breakdown of the change in assets under management for the year ended December 31, 2025: (Expressed in millions) For the Year Ended December 31, 2025 Beginning Balance Appreciation (Depreciation) Ending Balance Fund Type Contributions Redemptions Traditional (1) $ 43,039 $ 8,891 $ (10,577) $ 6,200 $ 47,553 Institutional Fixed Income (2) 916 71 (120) 63 930 Alternative Investments: Hedge funds (3) 4,015 153 (319) 1,061 4,910 Private Equity Funds (4) 1,185 195 (50) 286 1,616 Portfolio Enhancement Program (5) 228 30 (19) (8) 231 Other — 3 3 $ 49,383 $ 9,343 $ (11,085) $ 7,602 $ 55,243 (1) Traditional investments include third party advisory programs, Oppenheimer financial advisor managed and advisory programs, and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies (2) Institutional fixed income provides solutions to institutional investors including: Taft-Hartley Funds, Public Pension Funds, Corporate Pension Funds, and Foundations and Endowments (3) Hedge funds represent investments in strategies including long/short equity, global macro, event driven, merger arbitrage, multi-strategy and credit. They may be single manager or fund of funds (4) Private equity funds include portfolios focused on technology, infrastructure, real estate, natural resources and specific co-investment opportunities (5) The portfolio enhancement program sells uncovered, far out-of-the-money puts and calls on the S&P 500 Index. The program is market neutral and uncorrelated to the index. Valuation is based on collateral requirements for a series of contracts representing the investment strategy 46 Table of Contents Capital Markets Capital Markets reported revenue of $591.3 million for the year ended December 31, 2025, 32.1% higher compared with the prior year. Pre-tax income was $56.2 million compared with a pre-tax loss of $39.6 million for the prior year. (Expressed in thousands, except otherwise indicated ) For the Years Ended December 31, 2025 2024 % Change Revenue $ 591,315 $ 447,579 32.1 Investment Banking $ 260,446 $ 166,785 56.2 Advisory fees 113,065 107,222 5.4 Equities underwriting 121,821 46,181 163.8 Fixed income underwriting 18,946 11,844 60.0 Other 6,614 1,538 * Sales and Trading $ 328,254 $ 277,262 18.4 Equities 170,886 134,854 26.7 Fixed income 157,368 142,408 10.5 Other $ 2,615 $ 3,532 (26.0) Total Expenses $ 535,148 $ 487,175 9.8 Compensation 360,276 323,612 11.3 Non-compensation 174,872 163,563 6.9 Pre-tax Income (Loss) $ 56,167 $ (39,596) (241.9) Compensation Ratio 60.9 % 72.3 % (15.8) Non-compensation Ratio 29.6 % 36.5 % (18.9) Pre-tax Margin 9.5 % (8.8) % (208.0) * Percentage not meaningful • Advisory fees earned from investment banking activities increased 5.4% compared with the prior year due to greater participation in M&A transactions with higher associated fees • Equities underwriting fees increased 163.8% compared with the prior year due to higher new issuance activity in the financial institutions, healthcare and technology sectors during the second half of 2025 • Fixed income underwriting fees were up $5.1 million, or 60.0%, compared with the prior year due to a higher number of public finance transactions • Equities sales and trading revenue increased 26.7% compared with the prior year due to higher trading volumes, including increased options-related commissions • Fixed income sales and trading revenue increased 10.5% compared with the prior year driven by higher trading income attributable to higher volumes and interest income earned on trading inventory • Compensation expenses were higher than the prior year primarily due to higher incentive compensation and production-related expenses • Non-compensation expenses were 6.9% higher compared with the prior year mainly due to an increase in technology and underwriting expenses, partially offset by lower interest expenses 47 Table of Contents CRITICAL ACCOUNTING ESTIMATES The Company's accounting estimates are essential to understanding and interpreting the financial results reported on the consolidated financial statements. The significant accounting policies used in the preparation of the Company's consolidated financial statements are summarized in Note 2 to those statements. 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. The following is a discussion of these estimates: Fair Value Measurements Critical estimates - The accounting guidance for the fair value measurement (ASC 820) of financial assets defines fair value, establishes a framework for measuring fair value, establishes a fair value measurement hierarchy, and expands fair value measurement disclosures. Fair value, as defined by the accounting guidance, is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When market observable inputs are not available, our judgment is applied to reflect those judgments that a market participant would use in valuing the same asset or liability. Assumption and judgment - The fair value hierarchy established by ASC 820 prioritizes the inputs used in valuation techniques into the following three categories (highest to lowest priority): • Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets; • Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and • Unobservable inputs that are significant to the overall fair value measurement. The availability of observable inputs can vary for different products. We use prices and inputs that are current as of the measurement date even in periods of market disruption or illiquidity. Financial instruments are classified as Level 3 if observable pricing inputs are not available due to limited market activity for the asset or liability. The valuation of financial instruments are classified in Level 3 of the fair value hierarchy and consists of valuation techniques that incorporate one or more significant unobservable inputs, and therefore requires the greatest amount of management judgment. As of December 31, 2025, the Company had $128,000 of auction rate securities classified within Level 3 of the fair value hierarchy. The Company has valued a convertible note using a discounted cash flow model and equity security warrants using a Black-Scholes option pricing model and categorized them in Level 3 of the fair value hierarchy due to the models' use of unobservable inputs. As of December 31, 2025, the Company had $2.1 million and $1.2 million of convertible note and equity security warrants, respectively, in Level 3 assets. Additionally, the Company classified a $17 million equity security associated with a consolidated private equity fund sponsored by the Company within Level 3 of the fair value hierarchy due to use of unobservable pricing inputs. See Note 8 to the consolidated financial statements appearing in Item 8 for further information on the fair value definition, Level 1, Level 2 and Level 3 and related valuation techniques. Impact if actual results differ from assumptions – We established an independent valuation process to evaluate and approve the valuation of our financial instruments. For financial instruments that are classified in Level 3, we review the appropriateness of the unobservable inputs to ensure consistency with how a market participant would arrive at the unobservable input. Although an independent review process is in place, the fair value of the Level 3 financial instrument could be significantly different due to the sensitivity of some unobservable inputs (for example, interest rates) and any such difference could also have a material adverse effect on our consolidated financial statements. Legal and Regulatory Reserves Critical estimates – In the normal course of business, the Company has been named as defendant or co-defendant in various legal actions, including arbitrations, class actions and other litigation, creating substantial exposure and periodic expenses. The Company may also be subject to potential fines and penalties imposed by regulatory authorities. Management is required to assess the probability of loss and estimate the amount of such loss when preparing its consolidated financial statements. Assumption and judgment - The determination of the levels of these reserves requires significant judgment on the part of management. In accordance with applicable accounting guidance, we established reserves for litigation and regulatory matters where available information indicates that it is probable a liability had been incurred at the date of the consolidated financial statements and we can reasonably estimate the amount of that loss. When loss contingencies are not probable or cannot be reasonably estimated, we do not establish reserves. When determining whether to record a reserve, management considers many factors including, but not limited to, the amount of the claim; the stage and forum of the proceeding, the sophistication of the 48 Table of Contents claimant, the amount of the loss, if any, in the client's account and the possibility of wrongdoing, if any, on the part of an employee of the Company; the basis and validity of the claim; previous results in similar cases; and applicable legal precedents and case law. Each legal and regulatory proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the results of that period. See Note 17 to the consolidated financial statements appearing in Item 8 for further details. Impact if actual results differ from assumptions – Due to the inherent uncertainties of the legal and regulatory proceedings, our judgment may be materially different from the actual outcome. The assumptions we used to determine 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. Income Taxes Critical estimates – We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate. We are also subject to the tax laws of our international subsidiaries and branches. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. We record uncertain tax positions in accordance with ASC 740, "Income Taxes", on the basis of a two-step process whereby we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and, for those tax positions that meet the more-likely-than-not recognition threshold, we will recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Assumption and judgment - We recognize deferred tax assets to the extent we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and the results of recent operations. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. We estimate when certain items will affect taxable income in the various jurisdictions in the future. We are also required to evaluate and measure all uncertain tax positions taken or expected to be taken on tax returns and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities. See Note 15 to the consolidated financial statements appearing in Item 8 for further details. Impact if actual results differ from assumptions – Although we believe that our estimates and judgments are reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the relevant taxing authorities. If one or more of the taxing authorities were to successfully challenge our right to realize some or all of the tax benefit we recorded, and we were not able to realize this benefit, our effective income tax rate in a given financial statement period could be materially affected and it could also have a material adverse effect on our consolidated financial statements. New Accounting Pronouncements The following Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board ("FASB") have not yet been adopted by the Company: ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses The FASB issued this ASU in November of 2024 which will require public business entities to disclose specified information about certain costs and expenses, including employee compensation, depreciation and intangible asset amortization at each interim and annual reporting period. The new guidance, which becomes effective in 2027, will not have an impact on our financial position or results of operations since it only amends certain disclosures. LIQUIDITY AND CAPITAL RESOURCES Total assets increased by 10.0% from December 31, 2024 to December 31, 2025. The Company satisfies its need for financing from internally generated funds and collateralized and uncollateralized borrowings, consisting primarily of bank call loans, stock loans, and uncommitted lines of credit. We finance our trading in government securities through the use of securities sold under agreements to repurchase ("repurchase agreements"). Oppenheimer has uncommitted arrangements with banks for borrowings on a fully-collateralized basis. The amount of Oppenheimer's bank borrowings fluctuates in response to changes in the level of the Company's securities inventories and customer margin debt, changes in notes receivable from employees, 49 Table of Contents investment in furniture, equipment and leasehold improvements, changes in stock loan balances and financing through repurchase agreements. At December 31, 2025, the Company had a $76.8 million outstanding bank loan balance. The Company also has some availability of short-term bank financing on an unsecured basis. The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes. The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $6.9 million and $385,440, respectively, at December 31, 2025. The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts. The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S. Treasuries and cash deposits in bank accounts. Any restrictions on transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements. The Company permanently reinvests eligible earnings of its foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if these earnings were repatriated. The unrecognized deferred tax liability associated with the outside basis difference of its foreign subsidiaries is estimated at $4.0 million for those subsidiaries. We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own business and in the businesses in Europe and Asia to support business initiatives in those regions. We will continue to review our historical treatment of these earnings to determine whether our historical practice will continue or whether a change is warranted. 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 $2.7 million as of December 31, 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. Liquidity For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash. The receivables from brokers, dealers and clearing organizations represents deposits for securities borrowed transactions, margin deposits or current transactions awaiting settlement. The receivables from customers represents margin balances and amounts due on transactions awaiting settlement. Our receivables are, for the most part, collateralized by marketable securities. Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned, with the exception of the auction rate securities, a convertible note, equity security warrants and an equity security associated with a consolidated private equity fund sponsored by the Company, are mainly comprised of actively trading, readily marketable securities. We issued $14.2 million in forgivable notes (which are inherently illiquid) to employees for the year ended December 31, 2025 ($25.4 million for the year ended December 31, 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. We satisfy our need for liquidity from internally generated funds, collateralized and uncollateralized bank borrowings, stock loans and repurchase agreements. Bank borrowings are uncommitted in nature and, in most cases, collateralized by firm and customer securities. We obtain short-term borrowings primarily through bank call loans. Bank call loans are generally payable on demand and bear interest at various rates. At December 31, 2025, bank call loans were $76.8 million ($252.1 million at December 31, 2024). The average daily bank loan outstanding for the year ended December 31, 2025 was $269.6 million ($167.7 million for the year ended December 31, 2024). The largest daily bank loan outstanding for the year ended December 31, 2025 was $664.4 million ($350.7 million for the year ended December 31, 2024). At December 31, 2025, securities loan balances totaled $370.3 million ($235.5 million at December 31, 2024). The average daily securities loan balance for the year ended December 31, 2025 was $361.0 million ($305.8 million for the year ended December 31, 2024). The largest daily stock loan balance for the year ended December 31, 2025 was $502.9 million ($425.3 million for the year ended December 31, 2024). We finance our government trading operations through the use of securities purchased under agreements to resell ("reverse repurchase agreements") and repurchase agreements. Repurchase and reverse repurchase agreements, principally 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. 50 Table of Contents 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 December 31, 2025, the gross balances of reverse repurchase agreements and repurchase agreements were $175.8 million and $1,173.0 million, respectively. The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the year ended December 31, 2025 was $332.2 million and $1,092.5 million, respectively ($322.0 million and $1,179.7 million, respectively, for the year ended December 31, 2024). The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the year ended December 31, 2025 was $665.3 million and $1,405.8 million, respectively ($671.2 million and $1,118.0 million, respectively, for the year ended December 31, 2024). In connection with both its trading and brokerage activities, Oppenheimer borrows securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date and lends securities to other brokers and dealers for similar purposes. Oppenheimer earns interest on its cash collateral provided and pays interest on the cash collateral received less a rebate earned for lending securities. Liquidity Management We manage our need for liquidity on a daily basis to ensure compliance with regulatory requirements. Our liquidity needs may be affected by market conditions, increased inventory positions or trading activity, business expansion, clearinghouse margin requirements and other unanticipated occurrences. In the event that existing financial resources do not satisfy our liquidity needs, we may have to seek additional external financing. The availability of such additional external financing may depend on market factors outside our control. We have company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans. Certain policies which could provide additional liquidity if needed had a cash surrender value of $109.1 million as of December 31, 2025. We regularly review our sources of liquidity and financing and conduct internal stress analysis to determine the impact on the Company of events that could remove sources of liquidity or financing and to plan actions the Company could take in the case of such an eventuality. Our reviews have resulted in a contingency funding plan that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing. Our primary long-term cash requirements include $154.9 million of operating lease obligations. The total cash requirement for operating lease obligations is estimated to be approximately $43.7 million for the 2026 year. Funding Risk (Expressed in thousands) For the Years Ended December 31, 2025 2024 Cash provided by (used in) operating activities $ 188,752 $ (108,168) Cash used in investing activities (1,388) (3,839) Cash (used in) provided by financing activities (182,109) 116,322 Net increase in cash and cash equivalents $ 5,255 $ 4,315 Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs in the foreseeable future. Under some circumstances, banks including those on whom we rely may back away from providing funding to the securities industry. Such a development might impact our ability to finance our day-to-day activities or increase the costs to acquire funding. We may or may not be able to pass such increased funding costs on to our clients. During periods of high volatility, we have seen increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearing houses such as the Depository Trust Company ("DTC"), 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 equities transactions in the U.S. has substantially reduced 51 Table of Contents settlement risks. All such requirements have been and will be met in the ordinary course with available collateral or short-term borrowings. 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” herein for additional information. Regulatory Capital Requirements Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements. As of December 31, 2025, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. See “Business – Regulatory - Regulatory Capital Requirements” in Part I, Item 1 and Note 18 of the Notes to Consolidated Financial Statements in Item 8 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 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. 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. The passage of the OBBBA did not and is not expected to have 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 adversely impacted due to anticipated increases in the Company’s income tax expense and effective tax rate. Since the impact of these changes is dependent on our compensation and personnel mix beginning in 2027, we are unable to quantify the potential impact at this time. Frequency of Reporting Requirements for Public Companies The current administration and the SEC have recently suggested that they will propose rulemaking that will shift certain SEC reporting requirements for public companies from reporting quarterly (on Form 10-Q) to semi-annually. It is the Company's present intention to continue to report results on a quarterly basis. 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. 52 Table of Contents FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS" From time to time, the Company may publish or make oral statements that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 which provides a safe harbor for forward-looking statements. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues, earnings, liabilities or expenses, business prospects, projected ventures, new products, anticipated market performance, and similar matters. The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. These risks and uncertainties, many of which are beyond the Company’s control, include, but are not limited to: (i) transaction volume in the securities markets, (ii) the volatility of the securities markets, (iii) fluctuations in interest rates, (iv) changes in regulatory requirements or taxation policy that could affect the cost and method of doing business, (v) general economic conditions, both domestic and international, including inflation, recession, stagflation, and changes in consumer confidence and spending, (vi) competition from existing financial institutions, new entrants and other participants in the securities markets and financial services industry, (vii) potential cybersecurity threats and attacks, (viii) legal developments affecting the litigation experience of the securities industry and the Company, (ix) changes in foreign, federal and state tax laws that could affect the popularity of products sold by the Company or impose taxes on securities transactions, (x) the adoption and implementation of the SEC’s “Regulation Best Interest” and other regulations adopted in recent years, (xi) war, terrorist acts and nuclear confrontation as well as political unrest, including events relating to the Israel-Hamas war, the conflict with Hezbollah and Iran and related unrest in the Middle East, Russia's invasion of Ukraine and related Western sanctions and recent U.S. military activity in Venezuela, (xii) the Company’s ability to achieve its business plan, (xiii) the effects of the economy on the Company’s ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, (xvi) the effect of technological innovation on the financial services industry and securities business including but not limed to risks associated with the use of artificial intelligence, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, government spending, inflation, immigration, impact of tariffs and trade wars, bank failures, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry and (xix) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events. There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See “Risk Factors” in Part I, Item 1A.