Oppenheimer(OPY) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Presents Oppenheimer Holdings Inc.'s unaudited condensed consolidated financial statements for Q2 2025, covering balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets increased to $3.69 billion by June 30, 2025, from $3.38 billion at year-end 2024, with total liabilities and stockholders' equity also rising Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,687,339 | $3,382,726 | | Cash and cash equivalents | $37,618 | $33,150 | | Receivable from customers, net | $1,341,550 | $1,268,866 | | Securities owned, at fair value | $1,256,970 | $1,108,206 | | Total Liabilities | $2,790,481 | $2,532,331 | | Bank call loans | $323,800 | $252,100 | | Payable to brokers, dealers and clearing organizations | $527,179 | $253,816 | | Securities sold under agreements to repurchase | $853,123 | $931,754 | | Total Stockholders' Equity | $896,858 | $850,395 | Condensed Consolidated Income Statements Q2 2025 net income significantly increased to $21.7 million from $10.3 million in Q2 2024, driven by a 12.9% rise in total revenue and doubling diluted EPS Q2 and Six Months Income Statement Highlights (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $373,178 | $330,589 | $741,003 | $683,727 | | Commissions | $110,025 | $97,055 | $220,903 | $192,905 | | Advisory fees | $125,628 | $117,197 | $254,431 | $232,044 | | Investment banking | $43,533 | $29,119 | $91,156 | $79,656 | | Pre-tax Income | $32,210 | $15,865 | $73,586 | $53,320 | | Net Income | $21,674 | $10,266 | $52,329 | $36,010 | | Diluted EPS | $1.91 | $0.92 | $4.63 | $3.29 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $51.7 million for the six months ended June 30, 2025, resulting in a $4.5 million net increase in cash and cash equivalents Six Months Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(51,671) | $(194,314) | | Net Cash Used in Investing Activities | $(1,259) | $(1,415) | | Net Cash Provided by Financing Activities | $57,398 | $200,108 | | Net Increase in Cash and Cash Equivalents | $4,468 | $4,379 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations of accounting policies, financial instrument fair value, collateralized transactions, legal contingencies, regulatory capital, and segment reporting for Wealth Management and Capital Markets - The company's reportable segments were revised in Q4 2024, combining the former Private Client and Asset Management segments into a new Wealth Management segment. The Capital Markets and Corporate/Other segments were not impacted[173] - The company estimates a range of aggregate loss for certain legal and regulatory proceedings, in excess of amounts accrued, of up to $3 million. This estimate is based on currently available information and is subject to change[157] - As of June 30, 2025, the company's primary U.S. broker-dealer subsidiary, Oppenheimer & Co. Inc., had net capital of $408.9 million, which was $382.2 million in excess of the minimum requirement[164] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 2025 financial performance, highlighting improved operating results across Wealth Management and Capital Markets, along with business outlook, macroeconomic factors, liquidity, and regulatory developments Executive Summary and Results of Operations Q2 2025 results showed significant improvement, with net income rising to $21.7 million and revenue increasing 12.9%, driven by strong investment banking, commissions, and advisory fees Q2 2025 Financial Highlights vs. Q2 2024 | Metric | 2Q-2025 | 2Q-2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $373,178 | $330,589 | 12.9% | | Pre-tax Income | $32,210 | $15,865 | 103.0% | | Net Income | $21,674 | $10,266 | 111.1% | | Diluted EPS | $1.91 | $0.92 | 107.6% | | AUM ($ billions) | $52.8 | $47.5 | 11.2% | - Key drivers for the quarter's strong performance included higher investment banking revenue from increased underwriting and advisory mandates, a rise in transaction-based commissions, and greater advisory fees due to a rise in billable Assets Under Management (AUM)[205] Business Segments Analysis Wealth Management revenue increased 5.1% to $246.4 million, while Capital Markets revenue surged 33.5% to $123.0 million, significantly reducing its pre-tax loss Segment Revenue and Pre-Tax Income (Loss) (in thousands) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Pre-Tax Income (Loss) | Q2 2024 Pre-Tax Income (Loss) | | :--- | :--- | :--- | :--- | :--- | | Wealth Management | $246,421 | $234,526 | $62,834 | $64,231 | | Capital Markets | $122,981 | $92,141 | $(3,864) | $(21,775) | | Corporate/Other | $3,776 | $3,922 | $(26,760) | $(26,591) | - Wealth Management's advisory fees increased 7.2% due to higher AUM, but bank deposit sweep income fell 17.8% due to lower cash balances and interest rates[208][211] - Capital Markets' investment banking revenue grew 62.5%, with advisory fees up 83.0% and fixed income underwriting up 115.3% year-over-year[214] Liquidity and Capital Resources Total assets increased 9.0% by June 30, 2025, with liquidity primarily from internal funds and bank call loans, which management deems sufficient for foreseeable needs - The company's primary sources of liquidity are internally generated funds, collateralized bank call loans, stock loans, and repurchase agreements[220][227] - The average daily bank loan balance for Q2 2025 was $325.8 million, up significantly from $148.7 million in Q2 2024[228] Quantitative and Qualitative Disclosures About Market Risk The company states that there were no material changes to the information regarding market risk as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to market risk disclosures were reported for the six months ended June 30, 2025[259] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. No material changes were made to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[260] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[263] PART II OTHER INFORMATION Legal Proceedings The company is involved in various legal and regulatory proceedings, including arbitrations, an SEC settlement, and a new class-action lawsuit, with an estimated potential aggregate loss of up to $3 million - The company has settled or resolved all but one of the arbitrations related to the Horizon Private Equity fraud scheme involving a former employee[270] - An agreement in principle was reached with the SEC to settle litigation for a civil penalty of $1.2 million, subject to obtaining a waiver of certain statutory disqualifications[272] - A new class-action lawsuit was filed in June 2025 alleging unlawful enrichment from the company's Advantage Bank Deposit Sweep Program[273] Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There were no material changes to the company's risk factors during the three months ended June 30, 2025[275] Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, the company repurchased 9,855 shares of its Class A Stock at an average price of $58.89 per share under its publicly announced share repurchase program Q2 2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 9,855 | $58.89 | | May 1 - 31, 2025 | — | $— | | June 1 - 30, 2025 | — | $— | | Q2 2025 Total | 9,855 | $58.89 | Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and interactive data files (XBRL) - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32) and interactive data files (101)[280]