OPPENHEIMER HOLDINGS INC 10-Q

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BACKGROUND The condensed consolidated financial statements include the accounts of Oppenheimer Holdings Inc. and its consolidated subsidiaries (together, the "Company", "Firm", "Parent", "we", "our" or "us"). The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto which appear elsewhere in this quarterly report. 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 March 31, 2026, we provided our services from 88 offices in 25 states located throughout the United States and offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey and Geneva, Switzerland. The Company provides investment advisory services through OAM and Oppenheimer Investment Management LLC ("OIM") and Oppenheimer's financial advisor directed programs. At March 31, 2026, client assets under management ("AUM") totaled $54.1 billion. AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs as well as the net asset value of private placements of alternative investments offered by and held by clients of the Company. Client assets under administration ("AUA") as of March 31, 2026 totaled $139.8 billion. AUA includes AUM and the other assets held for which the Company provides services. We also provide trust services and products through Oppenheimer Trust Company of Delaware. 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 March 31, 2026, the Company employed 2,958 employees (2,920 full-time and 38 part-time), of whom 932 were financial advisors. Freedom Investments Inc. ("Freedom"), which formerly offered discount brokerage services on a limited basis, ceased operations in late 2025. Freedom's de-registration as an SEC-registered broker-dealer became effective on January 30, 2026. Freedom had been winding down its business for a number of years and the closing of Freedom did not have a material impact on the Company’s financial position or results of operations. 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. In addition, we are committed to training younger employees throughout the organization and provide various training programs. We find that we have overwhelming demand for entrance into each of these programs. We continuously invest in and improve our technology platform to support client service and to remain competitive, while continuously managing expenses. 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 our 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 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. 35 Table of Contents 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 lowering rates by a total of 75 basis points through three consecutive cuts in the fourth quarter of 2025, the Federal Reserve held the federal funds rate steady during its first quarter 2026 meetings, with officials indicating that any additional reductions would require clearer progress on inflation amid heightened uncertainty caused by the war in the Middle East. The current federal funds target range remains 3.50% to 3.75%. The Federal Reserve’s median projection continues to signal one 25 basis point rate cut for the remainder of 2026, though this outlook remains subject to change. 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 and Iran Regional Conflict Ongoing conflict in the Middle East continues to create geopolitical and economic uncertainty with potential implications for the global economy as well as global markets and our business operations. The conflict that began on October 7, 2023, when Hamas launched an attack on Israel, prompted Israeli military operations in Gaza. Although Israel and Hamas reached a tentative ceasefire and hostage-release agreement in October 2025, the situation remains unstable, with persistent humanitarian and security concerns. In early 2026, the regional security environment deteriorated further as hostilities expanded to include direct conflict between Israel and the United States on the one hand, and Iran, and between Israel and Lebanon. U.S. and Israeli forces began strikes on Iran on February 28, 2026, targeting military infrastructure and key leadership, including a strike that killed Iran’s supreme leader. These actions triggered widespread retaliation, including the closure of the Strait of Hormuz, which significantly disrupted global oil and gas supply. While tensions have begun to ease following the recently announced ceasefire, such ceasefire remains fragile. A renewed conflict could lead to broader regional instability affecting global trade routes, commodity prices and financial markets. We continue to monitor developments closely and assess any potential impacts on client investments as well as our employees, operations and our activities across the Company. U.S. Engagement 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 underway in Manhattan federal court. The U.S. has since asserted temporary oversight of Venezuela’s oil industry as part of a broader transition effort, contributing to elevated uncertainty in global energy markets. In conjunction with these actions, the U.S. Coast Guard and military forces have boarded and taken possession of multiple vessels carrying sanctioned oil. While the Company does not have significant direct exposure to Venezuelan assets or counterparties, the heightened geopolitical uncertainty and the potential for increased volatility in global energy prices 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. A by-product of the U.S. activity in Venezuela has effectively created an embargo on oil shipments to Cuba, further de-stabilizing that country. 36 Table of Contents U.S. Trade Policy Developments In 2025, the United States significantly increased tariffs across a broad range of imports from almost every major trading partner. In February 2026, the U.S. Supreme Court struck down the administration’s 2025 International Emergency Economic Powers Act (“IEEPA”) based global tariffs in a 6-3 ruling, holding that the statute does not authorize the President to impose broad-based duties. The decision invalidated the 10% baseline tariff on most U.S. trading partners, as well as higher country-specific tariffs. The Supreme Court did not address whether previously collected tariffs must be refunded, creating ongoing uncertainty. Following the ruling, the administration imposed new temporary 10% global tariffs under Section 122 of the Trade Act of 1974. These actions, combined with continuing legal challenges and unresolved refund questions, contribute to elevated uncertainty in trade policy. While these developments have not materially affected the Company’s financial results to-date, sudden policy shifts — including potential retaliatory actions or new tariff announcements — may adversely impact global markets and investor sentiment, which could reduce the value of assets under management and our related advisory fees. Despite the activities described above, the U.S. economy has maintained relatively full employment and earnings from most sectors of the economy have remained strong defying predictions of a slowdown in economic activity. EXECUTIVE SUMMARY Notwithstanding the unfavorable impact of the “cash sweep” settlement on the Company’s overall results for the first quarter, the Firm's core businesses delivered solid operating results. Despite an increasingly challenging geopolitical environment, the strength of our franchise proved its ability to support clients across all business environments. The ongoing conflict with Iran disrupted global energy flows and intensified inflationary pressure on oil and gas prices, which in turn weighed negatively on the financial markets during March. As a result of the conflict, equity markets exhibited significant volatility with indices now hovering at or near their all-time highs. While the pre-tax results for our Wealth Management segment were lowered by the impact of our stock-based compensation program for financial advisors, underlying performance across the business remained solid. Commission revenues benefited from heightened market volatility, which drove elevated client trading. Although assets under management (“AUM”) eased from last quarter’s all-time highs, they remained meaningfully above prior year levels, supporting continued strength in our asset-based advisory fees. Overall segment results were negatively impacted by higher compensation expense related to liability-based stock appreciation rights benefiting advisors that rose in value in direct correlation with the significant increase in our share price throughout the quarter. Our Capital Markets business delivered a strong start to the year, driven by higher investment banking fees, when compared with the prior year period, reflecting the successful closing of advisory and underwriting mandates. Sales and trading revenue within our Equities and Fixed Income businesses were also boosted by higher volatility in both the debt and equity markets. We are pleased to have resolved the “cash sweep” litigation and to put this matter behind us. Despite the settlement's negative impact to our quarterly results, our operating businesses performed well. Our capital position remains robust, enabling us to return additional value to stockholders as highlighted by our announced 11.1% increase in the quarterly dividend to $0.20 per share. Looking ahead, we remain focused on supporting our clients across the enterprise as they continue to navigate uncertain markets. RESULTS OF OPERATIONS The Company reported a net loss of $20.6 million or $(1.93) per share (basic and diluted) for the first quarter of 2026, compared with net income of $30.7 million or $2.93 basic earnings per share for the first quarter of 2025. Revenue for the first quarter of 2026 was $445.1 million, an increase of 21.0%, compared to revenue of $367.8 million for the first quarter of 2025. First quarter 2026 results were adversely affected by a $70 million (pre-tax) legal accrual for the settlement of the “cash sweep” program litigation announced on April 24, 2026 and a $22.3 million (pre-tax) expense associated with a recurring liability-based employee compensation award program for financial advisors that is tied to our stock price, which increased by $16.90 per Class A share during the quarter (from $72.29 to $89.19). Adjusted net income (3) , a non-GAAP measure which excludes the impact of these items, was $47.5 million or $4.46 adjusted basic earnings per share for the first quarter of 2026, compared with adjusted net income of $28.6 million or $2.74 adjusted basic earnings per share for the first quarter of 2025. Management believes these non-GAAP measures provide supplemental insight into the Firm’s core operating performance. 37 Table of Contents (Expressed in thousands, except per share amounts or otherwise indicated) 1Q-2026 1Q-2025 Change % Change Revenue $ 445,095 $ 367,825 $ 77,270 21.0 Compensation expenses $ 296,001 $ 227,091 $ 68,910 30.3 Non-compensation expenses $ 176,095 $ 99,358 $ 76,737 77.2 Pre-tax (loss) income $ (27,001) $ 41,376 $ (68,377) (165.3) Income tax (benefit) provision $ (6,432) $ 10,721 $ (17,153) (160.0) Net (loss) income (1) $ (20,578) $ 30,655 $ (51,233) (167.1) Adjusted net income (non-GAAP) (1) (3) $ 47,491 $ 28,627 $ 18,864 65.9 (Loss) Earnings per share (basic) (1) $ (1.93) $ 2.93 $ (4.86) (165.9) (Loss) Earnings per share (diluted) (1) $ (1.93) $ 2.72 $ (4.65) (171.0) Adjusted earnings per share (basic) (non-GAAP) (1) (3) $ 4.46 $ 2.74 $ 1.72 62.8 Adjusted earnings per share (diluted) (non-GAAP) (1) (3) $ 4.21 $ 2.54 $ 1.67 65.7 Book value per share $ 88.95 $ 82.87 $ 6.08 7.3 Tangible book value per share (2) $ 72.28 $ 65.85 $ 6.43 9.8 Class A shares outstanding 10,608,340 10,425,830 182,510 1.8 AUA ($ billions) $ 139.8 $ 129.9 $ 9.9 7.6 AUM ($ billions) $ 54.1 $ 48.9 $ 5.2 10.6 (1) Attributable to Oppenheimer Holdings Inc. (2) Represents book value less goodwill and intangible assets divided by number of shares outstanding (3) Adjusted net income and earnings per share attributable to Oppenheimer Holdings Inc. (a non-GAAP financial measure) excludes a $70 million (pre-tax) legal accrual related to the Company's settlement of the previously disclosed class action “cash sweep” litigation as well as compensation expense related to the recurring, mark-to-market remeasurement of liability-based stock appreciation rights totaling $22.3 million (pre-tax) that was recognized during the first quarter of 2026. Refer to the schedule on page 44 for additional explanation of non-GAAP financial measures and a reconciliation of adjusted net income and earnings per share to U.S. GAAP. Highlights • Higher revenue in the first quarter of 2026 was driven primarily by significantly higher investment banking fees, increased transaction-based commissions and higher advisory fees reflecting growth in billable AUM • Assets under management and administration both increased year-over-year as of March 31, 2026, primarily due to market appreciation • Compensation expenses rose from the prior year quarter due mainly to elevated costs associated with stock appreciation rights tied to the Company's share price, higher production-related costs and greater incentive compensation accruals • Non-compensation expenses significantly increased from the prior year quarter primarily due to higher legal costs associated with our settlement of the “cash sweep” class action litigation • The Board of Directors increased the quarterly dividend to be paid on May 29, 2026 by 11.1% to $0.20 per common share 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, 2026 and 2025: 38 Table of Contents (Expressed in thousands) For the Three Months Ended March 31, 2026 2025 % Change Revenue Wealth Management $ 253,680 $ 241,986 4.8 Capital Markets 189,122 123,261 53.4 Corporate/Other 2,293 2,578 (11.1) Total $ 445,095 $ 367,825 21.0 Pre-tax Income (Loss) Wealth Management $ 43,554 $ 67,864 (35.8) Capital Markets 35,441 (5,097) * Corporate/Other (105,996) (21,391) 395.5 Total $ (27,001) $ 41,376 (165.3) * Not meaningful Wealth Management Wealth Management reported revenue for the current quarter of $253.7 million, 4.8% higher compared with the prior year period. Pre-tax income was $43.6 million in the current quarter, a decrease of 35.8% compared with a year ago. Financial advisor headcount at the end of the current quarter was 932, flat when compared to 933 at the end of the first quarter of 2025. ('000s unless otherwise indicated) 1Q-2026 1Q-2025 Change % Change Revenue $ 253,680 $ 241,986 $ 11,694 4.8 Commissions $ 60,379 $ 56,911 $ 3,468 6.1 Advisory fee revenue $ 141,694 $ 128,792 $ 12,902 10.0 Bank deposit sweep income $ 26,118 $ 30,075 $ (3,957) (13.2) Interest $ 20,863 $ 21,485 $ (622) (2.9) Other $ 4,626 $ 4,723 $ (97) (2.1) Total Expenses $ 210,126 $ 174,122 $ 36,004 20.7 Compensation $ 155,800 $ 119,648 $ 36,152 30.2 Non-compensation $ 54,326 $ 54,474 $ (148) (0.3) Pre-tax Income $ 43,554 $ 67,864 $ (24,310) (35.8) Compensation Ratio 61.4 % 49.4 % 12.0 % 24.3 Non-compensation Ratio 21.4 % 22.5 % (1.1) % (4.9) Pre-tax Margin 17.2 % 28.0 % (10.8) % (38.6) AUA (billions) $ 139.8 $ 129.9 $ 9.9 7.6 AUM (billions) $ 54.1 $ 48.9 $ 5.2 10.6 Cash sweep balances (billions) $ 3.0 $ 2.9 $ 0.1 3.4 39 Table of Contents • Retail commissions increased 6.1% from the prior year period primarily due to higher retail transaction volumes • Advisory fees increased 10.0% from a year ago due to higher AUM during the billing period • Bank deposit sweep income decreased $4.0 million from a year ago due to lower short-term interest rates • Interest revenue decreased 2.9% from a year ago primarily due to lower short-term interest rates • Other revenue was relatively flat compared to the prior year period • Compensation expenses increased 30.2% from the prior year period primarily due to elevated expenses associated with stock appreciation rights ($22.3 million for the three-months-ended March 31, 2026) and higher production-related costs • Non-compensation expenses were flat year-over-year The following table provides a breakdown of the change in assets under management for the three months ended March 31, 2026: (Expressed in millions) For the Three Months Ended March 31, 2026 Fund Type Beginning Balance Contributions Redemptions/Profit Distribution Appreciation (Depreciation) Ending Balance Traditional (1) $ 47,553 $ 2,153 $ (2,679) $ (493) $ 46,534 Institutional fixed income (2) 930 19 (22) (3) 924 Alternative investments: Hedge funds (3) 4,910 52 (223) (98) 4,641 Private equity funds (4) 1,616 120 (1) 64 1,799 Portfolio enhancement program (5) 231 15 (6) 0 240 Other 3 1 — — 4 $ 55,243 $ 2,360 $ (2,931) $ (530) $ 54,142 (1) Traditional investments include third party advisory programs, Oppenheimer financial advisor managed and advisory programs, and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies. (2) Institutional fixed income provides solutions to institutional investors including: Taft-Hartley Funds, Public Pension Funds, Corporate Pension Funds, and Foundations and Endowments. (3) Hedge funds represent investments in strategies including long/short equity, global macro, event driven, merger arbitrage, multi-strategy and credit. They may be single manager or fund of funds. (4) Private equity funds include portfolios focused on technology, infrastructure, real estate, natural resources and specific co-investment opportunities. (5) The portfolio enhancement program sells uncovered, out-of-money puts and calls on the S&P 500 Index. The program is market neutral and uncorrelated to the index. Valuation is based on collateral requirements for a series of contracts representing the investment strategy. 40 Table of Contents Capital Markets Capital Markets reported revenue for the current quarter of $189.1 million, 53.4% higher when compared with the prior year period. Pre-tax income was $35.4 million compared with a pre-tax loss of $5.1 million a year ago. ('000s) 1Q-2026 1Q-2025 Change % Change Revenue $ 189,122 $ 123,261 $ 65,861 53.4 Investment Banking $ 94,209 $ 44,980 $ 49,229 109.4 Advisory fees $ 62,997 $ 25,962 $ 37,035 142.7 Equities underwriting $ 27,829 $ 13,399 $ 14,430 107.7 Fixed income underwriting $ 2,692 $ 5,301 $ (2,609) (49.2) Other $ 691 $ 318 $ 373 117.3 Sales and Trading $ 94,572 $ 76,879 $ 17,693 23.0 Equities $ 45,583 $ 41,744 $ 3,839 9.2 Fixed Income $ 48,989 $ 35,135 $ 13,854 39.4 Other $ 341 $ 1,402 $ (1,061) (75.7) Total Expenses $ 153,681 $ 128,358 $ 25,323 19.7 Compensation $ 112,639 $ 87,344 $ 25,295 29.0 Non-compensation $ 41,042 $ 41,014 $ 28 0.1 Pre-tax Income (Loss) $ 35,441 $ (5,097) $ 40,538 * Compensation Ratio 59.6 % 70.9 % (11.3) % (15.9) Non-compensation Ratio 21.7 % 33.3 % (11.6) % (34.8) Pre-tax Margin 18.7 % (4.1) % 22.8 % (556.1) * Not meaningful • Advisory fees earned from investment banking activities increased 142.7% compared with the prior year period primarily due to higher placement fees in the technology sector and an increase in completed sell-side M&A transactions with larger associated fees in the financial institutions sector • Equities underwriting fees increased 107.7% when compared with the prior year period, driven by higher new issuance volumes in the financial institutions sector • Fixed income underwriting fees decreased by 49.2% from a year ago primarily due to lower public finance transaction revenue • Equities sales and trading revenue increased 9.2% compared with the prior year period mostly due to higher overall trading volumes, including greater options-related commissions • Fixed income sales and trading revenue increased 39.4% compared with a year ago largely due to higher volatility levels • Compensation expenses increased 29.0% compared with the prior year period largely due to higher incentive compensation accruals and production-related costs • Non-compensation expenses were flat year-over-year 41 Table of Contents Explanation of Non-GAAP Financial Measures The Company included certain non-GAAP financial measures within Management's Discussion and Analysis to supplement the U.S. Generally Accepted Accounting Principles ("GAAP") financial information. Adjusted results begin with information prepared in accordance with U.S. GAAP, and such results are adjusted to exclude certain items. Specifically, we included non-GAAP measures that adjust the Company’s net income and earnings per share to exclude, or include, the expense associated with the settlement of the class action “cash sweep” litigation because management does not view this as ordinary-course litigation for the Company given the nature of the claims and the manner in which the action was brought. We also included non-GAAP measures that exclude compensation expense related to the recurring, mark-to-market remeasurement of liability-based stock appreciation rights from net income and earnings per share because the period-to-period variability in this expense is largely driven by factors outside the Company’s direct control, including changes in the fair value of and underlying volatility levels in Oppenheimer Holdings Inc.’s Class A common stock price. For this reason, management expects to provide this non-GAAP measure in future reporting periods, subject to ongoing evaluation. The Company believes that these non-GAAP financial measures provide additional useful information for investors because they permit investors to view the Company's financial performance measures on a basis consistent with how management views the operating performance of the Firm. These non-GAAP financial measures, when presented in conjunction with comparable U.S. GAAP measures, are also useful to investors when comparing the Company’s results across different financial reporting periods on a consistent basis. The following tables reconcile our non-GAAP financial measures to their respective U.S. GAAP measures. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, as a substitute for, or superior to, the analysis of U.S. GAAP financial measures. Net (Loss) Income Attributable to Oppenheimer Holdings Inc. and (Loss) Earnings Per Share U.S. GAAP Reconciliation Reconciliation of net (loss) income attributable to Oppenheimer Holdings Inc. to adjusted net income attributable to Oppenheimer Holdings Inc., reconciliation of basic (loss) earnings per share to adjusted basic earnings per share, and reconciliation of diluted (loss) earnings per share to adjusted diluted earnings per share are as follows: ('000s, except per share amounts) For the Three Months For the Three Months Ended March 31, 2026 Ended March 31, 2025 Net (loss) income attributable to Oppenheimer Holdings Inc. (U.S. GAAP) $ (20,578) $ 30,655 Non-GAAP adjustments: Class action sweep litigation settlement $ 70,000 $ — Liability-based stock appreciation rights expense $ 22,285 $ (2,742) Tax impact of Non-GAAP adjustments (1) $ (24,216) $ 714 Adjusted net income attributable to Oppenheimer Holdings Inc. (Non-GAAP) $ 47,491 $ 28,627 Basic (loss) earnings per share (U.S. GAAP) $ (1.93) $ 2.93 Impact of Non-GAAP adjustments $ 6.39 $ (0.19) Adjusted basic earnings per share (Non-GAAP) $ 4.46 $ 2.74 Diluted (loss) earnings per share (U.S. GAAP) $ (1.93) $ 2.72 Impact of Non-GAAP adjustments $ 6.14 $ (0.18) Adjusted diluted earnings per share (Non-GAAP) $ 4.21 $ 2.54 Weighted average shares outstanding Basic (U.S. GAAP and Non-GAAP) 10,642,909 10,465,771 Diluted (U.S. GAAP) 10,642,909 11,277,939 Diluted (Non-GAAP) (2) 11,288,897 11,277,939 (1) The tax impact is estimated using the statutory rates for the applicable entities (2) Includes 645,988 shares which were previously anti-dilutive due to the net loss, however, the Non-GAAP adjustments result in adjusted net income and those shares are now dilutive 42 Table of Contents CRITICAL ACCOUNTING POLICIES The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Reference is also made to the Company's condensed consolidated financial statements and notes thereto found in its Annual Report on Form 10-K for the year ended December 31, 2025. The Company's accounting policies are essential to understanding and interpreting the financial results reported on the condensed consolidated financial statements. The significant accounting policies used in the preparation of the Company's condensed consolidated financial statements are summarized in Note 2 to those statements and the notes thereto found in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Certain of those policies are considered to be particularly important to the presentation of the Company's financial results because they require management to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain. During the three months ended March 31, 2026, there were no material changes to matters discussed under the heading "Critical Accounting Polices" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. New Accounting Pronouncements The following Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board ("FASB") has not yet been adopted by the Company: ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses The FASB issued this ASU in November of 2024 which will require public business entities to disclose specified information about certain costs and expenses, including employee compensation, depreciation and intangible asset amortization at each interim and annual reporting period. The new guidance, which becomes effective in 2027, will not have an impact on our financial position or results of operations since it only amends certain disclosures. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2026, total assets increased by 2.5% from December 31, 2025. The Company satisfies its need for financing from internally generated funds and collateralized and uncollateralized borrowings, consisting primarily of bank call loans, stock loans, and uncommitted lines of credit. We finance our trading in government securities through the use of securities sold under repurchase agreements. Oppenheimer has uncommitted arrangements with banks for borrowings on a fully collateralized basis. The amount of Oppenheimer's bank borrowings fluctuates in response to changes in the level of the Company's securities inventories and customer margin debt, changes in notes receivable from employees, investment in furniture, equipment and leasehold improvements, and changes in stock loan balances and financing through repurchase agreements. At March 31, 2026, the Company had an outstanding bank call loan balance of $287.9 million compared to $76.8 million at December 31, 2025. The Company also has some availability of uncommitted short-term bank financing on an unsecured basis. The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes. The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $6.9 million and $382,612, respectively, at March 31, 2026. The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts. The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S. Treasuries and cash deposits in bank accounts. Any transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements. The Company permanently reinvests eligible earnings of its foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if these earnings were repatriated. The unrecognized deferred tax liability associated with the outside basis difference of its foreign subsidiaries is estimated at $4.0 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. 43 Table of Contents Liquidity For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash. The receivables from brokers, dealers and clearing organizations represent deposits for securities borrowed transactions, margin deposits and current transactions awaiting settlement. The receivables from customers represent margin balances and amounts due on transactions awaiting settlement. Our receivables are, for the most part, collateralized by marketable securities. Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned are mainly comprised of actively traded readily marketable securities. We issued $5.5 million in forgivable notes (which are inherently illiquid) to employees during the three months ended March 31, 2026 ($2.6 million for the three months ended March 31, 2025) as upfront inducements to commence or continue employment as the case may be. The amount of funds allocated to such inducements will vary with hiring activity and retention initiatives. We satisfy our need for liquidity from internally generated funds, collateralized and uncollateralized bank borrowings, stock loans and repurchase agreements. Bank borrowings are uncommitted in nature and, in most cases, collateralized by firm and customer securities. We obtain short-term borrowings primarily through bank call loans, securities loaned and repurchase transactions. Bank call loans are generally payable on demand, uncommitted in nature and bear interest at various rates. At March 31, 2026, the Company had $287.9 million of bank call loans ($76.8 million at December 31, 2025). The average daily bank loan balance outstanding for the three months ended March 31, 2026 was $172.7 million ($277.3 million for the three months ended March 31, 2025). The largest daily bank loan balance outstanding for the three months ended March 31, 2026 was $349.3 million ($491.7 million for the three months ended March 31, 2025). In connection with both its trading and brokerage activities, Oppenheimer borrows securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date and lends securities to other brokers and dealers for similar purposes. Oppenheimer earns interest on its cash collateral provided and pays interest on the cash collateral received less a rebate earned for lending securities. At March 31, 2026, securities loan balances totaled $320.2 million ($370.3 million at December 31, 2025 and $360.9 million at March 31, 2025). The average daily securities loan balance outstanding for the three months ended March 31, 2026 was $378.9 million ($359.2 million for the three months ended March 31, 2025, respectively). The largest daily stock loan balance for the three months ended March 31, 2026 was $468.7 million ($436.8 million for each of the three months ended March 31, 2025). We finance our government trading operations through the use of securities purchased under reverse repurchase agreements and securities sold under agreements to repurchase. Repurchase and reverse repurchase agreements, primarily involving government 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, 2026, the gross balances of reverse repurchase agreements and repurchase agreements were $193.9 million and $1,162.2 million, respectively. The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the three months ended March 31, 2026 was $371.9 million and $1,190.8 million, respectively ($370.5 million and $1,044 million, respectively, for the three months ended March 31, 2025). The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the three months ended March 31, 2026 was $734.4 million and $1,325.4 million, respectively ($663.5 million and $1,220 million, respectively, for the three months ended March 31, 2025). 44 Table of Contents 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. During the three-months ended March 31, 2026, the Company entered into a settlement covering the “cash sweep” program litigation resulting in a future cash obligation of $70 million. Based on current liquidity levels and available sources of liquidity, management does not expect this settlement to have a material adverse effect on the Company’s liquidity position or ability to meet its ongoing cash requirements. We have Company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans. 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 $106.1 million as of March 31, 2026. We regularly review our sources of liquidity and financing and conduct internal stress analysis to determine the impact on the Company of events that could remove sources of liquidity or financing and to plan actions the Company could take in the case of such an eventuality. Our reviews have resulted in a contingency funding plan that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing. Our primary long-term cash requirements include $179.9 million of operating lease obligations. The total cash requirement for operating lease obligations is estimated to be approximately $32.7 million for the remainder of 2026. Funding Risk (Expressed in thousands) For the Three Months Ended March 31, 2026 2025 Cash used in operating activities $ (189,982) $ (91,740) Cash provide by/(used in) investing activities 549 (359) Cash provided by financing activities 185,629 95,645 Net (decrease)/increase in cash and cash equivalents $ (3,804) $ 3,546 Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs for the foreseeable future. Under some circumstances, banks including those on whom we rely may back away from providing funding to the securities industry. Such a development might impact our ability to finance our day-to-day activities or increase the costs to acquire funding. We may or may not be able to pass such increased funding costs on to our clients. During periods of high volatility, we may see increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearinghouses such as the Depository Trust Company ("DTCC"), Options Clearing Corporation (“OCC”) and National Securities Clearing Corp. (“NSCC”) as well as more stringent collateral arrangements with our bank lenders. The recent reduction of the settlement cycle for security transactions in the U.S. has substantially reduced settlement risks. All such requirements have been and will be met in the ordinary course with available collateral or short-term borrowings. CYBERSECURITY Cybersecurity presents significant challenges to the business community in general, including to the financial services industry. Increasingly, bad actors, both domestic and international, attempt to steal personal data and/or interrupt the normal functioning of businesses through accessing individuals' and companies' files and equipment connected to the internet. The arrival of artificial intelligence (“AI”) has made it easier for such actors to launch and successfully effectuate their desire to impact 45 Table of Contents business operations or steal monetary assets. Recent incidents have reflected the increasing sophistication of intruders and their intent to steal personally identifiable information as well as funds and securities. These intruders sometimes use instructions that are seemingly from authorized parties but, in fact are from 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. 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 client or Company funds or data concerning its clients, their financial affairs, as well as Company-privileged information. Our management is actively involved in the oversight of our cybersecurity risk management program. We have devoted significant financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations. We have incorporated cybersecurity processes to assess, identify and manage risks from cybersecurity threats into our overall risk assessment process. The Company maintains a cybersecurity program that is designed to identify, protect from, detect, respond to, and recover from cybersecurity threats and risks, and protect the confidentiality, integrity, and availability of its information systems, including the information residing on such systems. The National Institute of Standards and Technology Cybersecurity Framework helps the Company inform its cybersecurity agenda and prioritize its cybersecurity activities. The Company takes a risk-based approach to cybersecurity, which begins with the identification and evaluation of cybersecurity risks or threats that could affect the Company’s operations, finances, legal or regulatory compliance, or reputation. The Company has processes in place for assessing, identifying and managing material risks from cybersecurity threats along with risk assessment procedures designed to allow such processes to remain responsive to emerging risks. Our processes include, but are not limited to, the following: • we engage third-party cybersecurity firms and tools to assist with network monitoring, endpoint protection, vulnerability assessments and penetration testing; • we engage cyber security consultants and auditors to perform tabletop exercises and evaluate our cyber processes including an assessment of our incident response procedures. Identified risks are formally tracked until mitigated or eliminated; • we perform regular scanning of our systems to identify and resolve critical vulnerabilities; • we provide periodic training and testing, including phishing tests, to help our employees understand cybersecurity risks and their responsibility in mitigating those risks; and • we insure against potential losses from cyber incidents by maintaining cybersecurity insurance. We have a written incident response plan that identifies the steps to be taken in response to a cybersecurity incident that includes investigation, escalation and remediation provisions. The Incident Response Plan includes processes for reporting and escalating cybersecurity incidents to senior management, regulators and criminal enforcement to the extent warranted. We have processes to evaluate third party service providers and vendors that have access to sensitive systems and Company and customer data, which includes the use of cybersecurity questionnaires and due diligence procedures such as assessments of that service provider’s cybersecurity posture. Management’s Role Management has implemented risk management structures, policies and procedures, and manages our risk exposure on a day-to-day basis. The Company has a dedicated cybersecurity organization within its technology department that focuses on current and emerging cybersecurity matters. The Company’s cybersecurity function is led by the Company’s Chief Information Officer ("CIO") and the Company’s Chief Information Security Officer ("CISO"), who reports to the Company’s CIO. The CIO and his direct reports, including the CISO, discuss action items related to risks at a standing monthly meeting. Risk reporting is provided at monthly meetings of the Company's cross-business Cybersecurity Committee and periodic presentations to the Company’s Risk Management Committee, at which many members of the Company’s senior management are present. The CEO meets regularly with the CIO to discuss cybersecurity threats and existing and potentially new technology systems including those related to cybersecurity. The CIO and CISO have a standing monthly meeting with the President/CEO and General Counsel to discuss potential vulnerabilities in the cyber environment. The President/CEO formerly ran the Information Technology Department at the Company and as a result has significant systems experience including experience related to cybersecurity. 46 Table of Contents Board Oversight The Board of Directors, both directly and through the Audit Committee, oversees management’s responsibility of ensuring proper functioning of our cybersecurity risk management program. In particular, the Audit Committee assists the Board in its oversight of management’s responsibility to assess, manage and mitigate cybersecurity risks. Recently, the Audit Committee added a member with significant cybersecurity experience. The Audit Committee receives a cybersecurity update at each regular meeting of the Board covering cybersecurity risks, cybersecurity staffing and staff development including certifications and training. These updates are given either in person by the CIO and CISO or in written presentations created by them. As of the date of this filing, the Company has not identified any cybersecurity threats that have materially affected or are reasonably anticipated to have a material effect on the Company’s business strategy, results of operations or financial condition. Although the Company has not experienced cybersecurity incidents that are individually, or in the aggregate, material, the Company has experienced cyberattacks in the past, which the Company believes have thus far been mitigated by preventative, detective, and responsive measures put in place by the Company. Given the continuing reports of cyber incidents in general, we believe that the Company will most likely continue to be a target of cybersecurity attacks by bad actors. For additional information on how risks from cybersecurity threats may adversely affect the Company, see “Item 1A. Risk Factors-Risks Related to Our Business” in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. REGULATORY AND TAXATION MATTERS AND DEVELOPMENTS See the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in Item 1 “Business - Regulation” in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for additional information. Regulatory Capital Requirements Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements. As of March 31, 2026, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. See Note 14 to the condensed consolidated financial statements in Item 1 for further information on regulatory capital requirements. Amendments to SEC Rule 15c3-3 On December 20, 2024, the SEC adopted rule amendments to SEC Rule 15c3-3 (the customer protection rule) 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. The new amendments will impact Oppenheimer, our broker-dealer subsidiary. The Company is prepared for the upcoming daily reporting. 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 47 Table of Contents 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. 48 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, the war with Iran and related unrest in the Middle East (including disruption of global energy supply chains and the closure or disruption of the Strait of Hormuz), Russia's invasion of Ukraine and related Western sanctions, recent U.S. military activity in Venezuela, and related uncertainty in global energy markets, and the potential for broader regional instability affecting global trade routes, commodity prices and financial markets, (xii) the Company’s ability to achieve its business plan, (xiii) the effects of the economy on the Company’s ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, (xvi) the effect of technological innovation on the financial services industry and securities business including but not limited to risks associated with the use of artificial intelligence, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, government spending, inflation, immigration, impact of tariffs, tariff reversals and trade wars, bank failures, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry and (xix) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events. There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 49 Table of Contents Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During the three months ended March 31, 2026, 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, 2025. 50 Table of Contents