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Table of Contents


 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

 
 
FORM 10-Q
 
  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
 
 
Commission File Number 1-12043
 
 
OPPENHEIMER HOLDINGS INC.
(Exact name of registrant as specified in its charter)

 
 
Delaware
98-0080034
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

85 Broad Street
New York, NY 10004
(Address of principal executive offices) (Zip Code)

(212668-8000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

 
 


Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock
OPY
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated Filer
 
 
 
 
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
Emerging growth company
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  
The number of shares of the Company's Class A non-voting common stock and Class B voting common stock (being the only classes of common stock of the Company) outstanding on July 30, 2020 was 12,465,084 and 99,665 shares, respectively.
 



Table of Contents

OPPENHEIMER HOLDINGS INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q

 
 
 
 
 
 
Page No.
PART I
 
Item 1.
 
 
3
 
4
 
5
 
6
 
7
 
8
Item 2.
46
Item 3.
58
Item 4.
58
PART II
 
Item 1.
59
Item 1A.
61
Item 2.
61
Item 6.
62
 
63



Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(Expressed in thousands, except number of shares and per share amounts)
June 30, 2020
 
December 31, 2019
ASSETS
 
 
 
Cash and cash equivalents
$
51,237

 
$
79,550

Deposits with clearing organizations
90,536

 
48,415

Receivable from brokers, dealers and clearing organizations
315,947

 
163,293

Receivable from customers, net of allowance for credit losses of $493 ($451 in 2019)
860,140

 
796,934

Income tax receivable
1,789

 
5,170

Securities owned, including amounts pledged of $357,323 ($357,120 in 2019), at fair value
502,029

 
799,719

Notes receivable, net of accumulated amortization and allowance for uncollectibles of$34,022 and $3,903 respectively ($38,355 and $3,673, respectively, in 2019)
44,114

 
43,670

Furniture, equipment and leasehold improvements, net of accumulated depreciation of $98,885 ($94,773 in 2019)
30,418

 
31,377

Right-of-use lease assets, net of accumulated amortization of $37,597 ($25,186 in 2019)
160,358

 
160,297

Goodwill
137,889

 
137,889

Intangible assets
32,100

 
32,100

Other assets
137,760

 
166,341

Total assets
$
2,364,317

 
$
2,464,755

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Liabilities
 
 
 
Drafts payable
$
37,374

 
$

Bank call loans
13,000

 

Payable to brokers, dealers and clearing organizations
216,111

 
520,975

Payable to customers
416,914

 
334,735

Securities sold under agreements to repurchase
154,155

 
287,265

Securities sold but not yet purchased, at fair value
356,589

 
100,571

Accrued compensation
146,988

 
207,358

Accounts payable and other liabilities
43,219

 
44,725

Lease liabilities
202,028

 
203,140

Senior secured notes, net of debt issuance costs of $384 ($485 in 2019)
148,190

 
149,515

Deferred tax liabilities, net of deferred tax assets of $38,404 ($43,630 in 2019)
28,612

 
23,749

Total liabilities
1,763,180

 
1,872,033

Commitments and contingencies (note 13)

 

Stockholders' equity
 
 
 
Share capital
 
 
 
Class A non-voting common stock, par value $0.001 per share, 50,000,000 shares authorized, 12,445,479 and 12,698,703 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
40,784

 
46,424

Class B voting common stock, par value $0.001 per share, 99,665 shares authorized, issued and outstanding as of June 30, 2020 and December 31, 2019
133

 
133

 
40,917

 
46,557

Contributed capital
39,140

 
47,406

Retained earnings
519,376

 
496,998

Accumulated other comprehensive income
1,704

 
1,761

Total stockholders' equity
601,137

 
592,722

Total liabilities and stockholders' equity
$
2,364,317

 
$
2,464,755

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

3



OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended June 30,
(Expressed in thousands, except number of shares and per share amounts)
2020
 
2019
 
2020
 
2019
REVENUE
 
 
 
 
 
 
 
Commissions
$
101,636

 
$
80,896

 
$
204,885

 
$
160,305

Advisory fees
75,981

 
80,707

 
162,145

 
154,354

Investment banking
46,186

 
32,006

 
71,914

 
60,049

Bank deposit sweep income
7,122

 
31,830

 
25,948

 
65,798

Interest
6,220

 
13,550

 
17,110

 
26,277

Principal transactions, net
12,064

 
3,045

 
11,196

 
14,483

Other
15,521

 
8,901

 
6,302

 
21,439

Total revenue
264,730

 
250,935

 
499,500

 
502,705

EXPENSES
 
 
 
 
 
 
 
Compensation and related expenses
179,594

 
155,783

 
337,270

 
316,138

Communications and technology
21,324

 
20,499

 
41,215

 
40,585

Occupancy and equipment costs
15,334

 
15,573

 
31,412

 
30,846

Clearing and exchange fees
6,191

 
5,678

 
11,850

 
11,010

Interest
2,890

 
13,192

 
9,440

 
26,178

Other
16,133

 
22,819

 
34,826

 
44,505

Total expenses
241,466

 
233,544

 
466,013

 
469,262

Pre-tax income
23,264

 
17,391

 
33,487

 
33,443

Income taxes
5,615

 
5,016

 
8,020

 
9,874

Net income
$
17,649

 
$
12,375

 
$
25,467

 
$
23,569

 
 
 
 
 
 
 
 
Earnings per share

 
 
 
 
 
 
Basic
$
1.40

 
$
0.95

 
$
1.99

 
$
1.81

Diluted
$
1.34

 
$
0.89

 
$
1.92

 
$
1.70

 
 
 
 
 
 
 
 
Weighted average shares
 
 
 
 
 
 
 
Basic
12,640,463

 
12,976,235

 
12,768,096

 
12,998,168

Diluted
13,124,655

 
13,861,753

 
13,269,494

 
13,857,616


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

4


OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended June 30,
(Expressed in thousands)
2020
 
2019
 
2020
 
2019
Net income
$
17,649

 
$
12,375

 
$
25,467

 
$
23,569

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Currency translation adjustment
480

 
361

 
(57
)
 
924

Comprehensive income
$
18,129

 
$
12,736

 
$
25,410

 
$
24,493

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

5


OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended June 30,
(Expressed in thousands, except per share amounts)
2020
 
2019
 
2020
 
2019
Share capital
 
 
 
 
 
 
 
Balance at beginning of period
$
44,306

 
$
52,519

 
$
46,557

 
$
53,392

Issuance of Class A non-voting common stock
443

 

 
6,626

 
1,162

Repurchase of Class A non-voting common stock for cancellation
(3,832
)
 
(4,317
)
 
(12,266
)
 
(6,352
)
Balance at end of period
40,917

 
48,202

 
40,917

 
48,202

Contributed capital
 
 
 
 
 
 
 
Balance at beginning of period
37,945

 
41,489

 
47,406

 
41,776

Share-based expense
1,757

 
2,137

 
3,819

 
4,026

Vested employee share plan awards
(562
)
 

 
(12,085
)
 
(2,176
)
Balance at end of period
39,140

 
43,626

 
39,140

 
43,626

Retained earnings
 
 
 
 
 
 
 
Balance at beginning of period
503,255

 
459,751

 
496,998

 
449,989

Net income
17,649

 
12,375

 
25,467

 
23,569

Dividends paid
(1,528
)
 
(1,433
)
 
(3,089
)
 
(2,865
)
Balance at end of period
519,376

 
470,693

 
519,376

 
470,693

Accumulated other comprehensive income
 
 
 
 
 
 
 
Balance at beginning of period
1,224

 
728

 
1,761

 
165

Currency translation adjustment
480

 
361

 
(57
)
 
924

Balance at end of period
1,704

 
1,089

 
1,704

 
1,089

Total stockholders' equity
$
601,137

 
$
563,610

 
$
601,137

 
$
563,610

 
 
 
 
 
 
 
 
Dividends paid per share
$
0.12

 
$
0.11

 
$
0.24

 
$
0.22

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

6


OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
(Expressed in thousands)
2020
 
2019
Cash flows from operating activities
 
 
 
Net income
$
25,467

 
$
23,569

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Non-cash items included in net income:
 
 
 
Depreciation and amortization of furniture, equipment and leasehold improvements
4,120

 
3,602

Deferred income taxes
4,853

 
1,081

Amortization of notes receivable
5,797

 
6,469

Amortization of debt issuance costs
97

 
129

Write-off of debt issuance costs
4

 

Provision for credit losses
(42
)
 
34

Share-based compensation
2,395

 
6,384

Amortization of right-of-use lease assets
12,411

 
12,892

     Gain on repurchase of senior secured notes
(86
)
 

Decrease (increase) in operating assets:
 
 
 
Deposits with clearing organizations
(42,121
)
 
2,187

Receivable from brokers, dealers and clearing organizations
(152,654
)
 
(1,438
)
Receivable from customers
(63,164
)
 
(86,838
)
Income tax receivable
3,381

 
1,014

Securities purchased under agreements to resell

 
251

Securities owned
297,690

 
(157,786
)
Notes receivable
(6,241
)
 
(5,824
)
Other assets
28,524

 
(19,359
)
Increase (decrease) in operating liabilities:
 
 
 
Drafts payable
37,374

 
1,108

Payable to brokers, dealers and clearing organizations
(304,864
)
 
129,512

Payable to customers
82,179

 
(10,862
)
Income taxes payable

 
849

Securities sold under agreements to repurchase
(133,110
)
 
37,619

Securities sold but not yet purchased
256,018

 
70,533

Accrued compensation
(58,946
)
 
(38,827
)
Accounts payable and other liabilities
(14,995
)
 
(14,290
)
Cash used in operating activities
(15,913
)
 
(37,991
)
Cash flows from investing activities
 
 
 
Purchase of furniture, equipment and leasehold improvements
(3,161
)
 
(6,941
)
Proceeds from the settlement of Company-owned life insurance

 
695

Cash used in investing activities
(3,161
)
 
(6,246
)
Cash flows from financing activities
 
 
 
Cash dividends paid on Class A non-voting and Class B voting common stock
(3,089
)
 
(2,865
)
Repurchase of Class A non-voting common stock for cancellation
(12,266
)
 
(6,352
)
Payments for employee taxes withheld related to vested share-based awards
(5,458
)
 
(1,014
)
Repurchase of senior secured notes
(1,426
)
 

Increase in bank call loans, net
13,000

 
35,100

Cash used in (provided by) financing activities
(9,239
)
 
24,869

Net decrease in cash and cash equivalents
(28,313
)
 
(19,368
)
Cash and cash equivalents, beginning of period
79,550

 
90,675

Cash and cash equivalents, end of period
$
51,237

 
$
71,307

 
 
 
 
Schedule of non-cash financing activities
 
 
 
Employee share plan issuance
$
10,582

 
$
1,706

 
 
 
 
Supplemental disclosure of cash flow information
 
 
 
Cash paid during the period for interest
$
14,727

 
$
25,830

Cash paid during the period for income taxes, net
$
1,049

 
$
7,326

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

7


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


1.    Organization
Oppenheimer Holdings Inc. ("OPY" or the "Parent") is incorporated under the laws of the State of Delaware. The condensed consolidated financial statements include the accounts of OPY and its consolidated subsidiaries (together, the "Company", "we", "our" or "us"). The Company engages in a broad range of activities in the financial services 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.
The Company has 93 retail branch offices in the United States and has institutional businesses located in London, Tel Aviv, and Hong Kong. The principal subsidiaries of OPY are Oppenheimer & Co. Inc. ("Oppenheimer"), a registered broker-dealer in securities and investment adviser under the Investment Advisers Act of 1940; Oppenheimer Asset Management Inc. ("OAM") and its wholly-owned subsidiary, Oppenheimer Investment Management LLC, both registered investment advisers under the Investment Advisers Act of 1940; Oppenheimer Trust Company of Delaware ("Oppenheimer Trust"), a limited purpose trust company that provides fiduciary services such as trust and estate administration and investment management; OPY Credit Corp., which offers syndication as well as trading of issued corporate loans; Oppenheimer Europe Ltd., based in the United Kingdom, with offices in the Isle of Jersey, Germany and Switzerland, which provides institutional equities and fixed income brokerage and corporate finance and is regulated by the Financial Conduct Authority; and Oppenheimer Investments Asia Limited, based in Hong Kong, China, which provides fixed income and equities brokerage services to institutional investors and is regulated by the Securities and Futures Commission.
Oppenheimer owns Freedom Investments, Inc. ("Freedom"), a registered broker dealer in securities, which provides discount brokerage services, and Oppenheimer Israel (OPCO) Ltd., which is engaged in offering investment services in the State of Israel. Oppenheimer holds a trading permit on the New York Stock Exchange and is a member of several other regional exchanges in the United States.
2.    Summary of significant accounting policies and estimates
Basis of Presentation
The accompanying condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (the "Form 10-K"). The accompanying condensed consolidated balance sheet data was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and the accompanying disclosures. Although these estimates are based on management's knowledge of current events and actions that the Company may undertake in the future, actual results may differ materially from the estimates. The condensed consolidated results of operations for the six-month period ended June 30, 2020 are not necessarily indicative of the results to be expected for any future interim or annual period.

On January 30, 2020, the spread of the novel coronavirus ("COVID-19") was declared a Public Health Emergency of International Concern by the World Health Organization ("WHO"). Subsequently, on March 11, 2020, the WHO characterized the COVID-19 outbreak as a pandemic (the "COVID-19 Pandemic"). The United States now has the world’s most reported COVID-19 cases, and all 50 states and the District of Columbia have reported cases of infected individuals. The COVID-19 Pandemic coupled with the current market volatility has created an economic environment which may have significant accounting and financial reporting implications.





8


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


The disruption of businesses around the globe due to COVID-19 may be a "trigger event" for companies to reassess valuation and accounting estimates and assumptions such as, impairment of goodwill, valuation allowances of deferred tax assets, fair value of investments and collectability of receivables. We have reviewed the assumptions on which we value our goodwill, as well as valuation allowances on certain assets and the collectability of our receivables as of June 30, 2020 none of which resulted in any impairment or write off.

On March 27, 2020, Congress approved and the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is a tax-and-spending package intended to provide economic relief to address the impact of the COVID-19 Pandemic. The Company evaluated several significant business tax provisions, such as net operating losses and employee retention credits and determined that there was no significant impact on the Company.

3.    Financial Instruments - Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which replaces the incurred loss methodology with a current expected loss ("CECL") methodology. The Company elected the modified retrospective method which did not result in a cumulative-effect adjustment at the date of adoption.

The Company utilizes the practical expedient for securities borrowed and reverse repurchase agreements as these assets are secured by collateral when the amount of collateral is continually adjusted for fair value changes. No material historical losses have been reported on these assets. See footnote 8 for details.

As of June 30, 2020, the Company has $44.1 million of notes receivable. Notes receivable represents recruiting and retention payments generally in the form of upfront loans to financial advisers and key revenue producers as part of the Company's overall growth strategy. These notes generally amortize over a service period of 3 to 10 years from the initial date of the note or based on productivity levels of employees. All such notes are contingent on the employees' continued employment with the Company. The unforgiven portion of the notes becomes due on demand in the event the employee departs during the service period. At this point any uncollected portion of the notes gets reclassified into a defaulted notes category.

The allowance for uncollectibles is a valuation account that is deducted from the amortized cost basis of the defaulted notes balance to present the net amount expected to be collected. Balances are charged-off against the allowance when management deems the amount to be uncollectible.

The Company reserves 100% of the uncollected balance of defaulted notes which are five years and older and applies an expected loss rate to the remaining balance. The expected loss rate is based on historical collection rates of defaulted notes. The expected loss rate is adjusted for changes in environmental and market conditions such as changes in unemployment rates, changes in interest rates and other relevant factors. For the three and six months ended June 30, 2020 no adjustments were made to the expected loss rate for these factors. The Company will continuously monitor the effect of these factors on the expected loss rate and adjust it as necessary.

The allowance is measured on a collectible (pool) basis as the Company has determined that the entire defaulted portion of notes receivable has similar risk characteristics.

As of June 30, 2020, the uncollected balance of defaulted notes was $5.3 million and the allowance for uncollectibles was $3.9 million. The allowance for uncollectibles consisted of $2.9 million related to defaulted notes balances (five years and older) and $972,000 (under five years) using an expected loss rate of 40.9%.


9


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


The following table presents the disaggregation of defaulted notes by year of origination as of June 30, 2020:
(Expressed in thousands)
 
 
As of June 30, 2020
 
 
2020
$

2019
555

2018
186

2017
762

2016
875

2015 and prior
2,931

Total
$
5,309



The following table presents activity in the allowance for uncollectibles of defaulted notes for the three and six months ended June 30, 2020:
(Expressed in thousands)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended (1)
 
June 30, 2020
 
 
 
 
Beginning balance
$
3,908

 
$
3,673

      Additions and other adjustments
(5
)
 
230

Ending balance
$
3,903


$
3,903


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

In the first quarter of 2019, the Company adopted ASU 2016-02, "Leases". The ASU requires the recognition of a right-of-use asset and lease liability on the condensed consolidated balance sheet by lessees for those leases classified as operating leases under previous guidance. The Company elected the modified retrospective method which did not result in a cumulative-effect adjustment at the date of adoption.

The Company and its subsidiaries have operating leases for office space and equipment expiring at various dates through 2034. The Company leases its corporate headquarters at 85 Broad Street, New York, New York which houses its executive management team and many administrative functions for the firm as well as its research, trading, investment banking, and asset management divisions and an office in Troy, Michigan, which among other things, houses its payroll and human resources departments. In addition, the Company has 93 retail branch offices in the United States as well as offices in London, England, St. Helier, Isle of Jersey, Geneva, Switzerland, Frankfurt, Germany, Tel Aviv, Israel and Hong Kong, China.

The majority of the leases are held by the Company's subsidiary, Viner Finance Inc., which is a consolidated subsidiary and 100% owned by the Company.

Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include an option to renew and the exercise of lease renewal options is at our sole discretion. The Company did not include the renewal options as part of the right-of-use assets and liabilities.




10


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


The depreciable life of assets and leasehold improvements is limited by the expected lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of June 30, 2020, the Company had right-of-use operating lease assets of $160.4 million (net of accumulated amortization of $37.6 million) which are comprised of real estate leases of $157.4 million (net of accumulated amortization of $34.8 million) and equipment leases of $3.0 million (net of accumulated amortization of $2.8 million). As of June 30, 2020, the Company had operating lease liabilities of $202.0 million which are comprised of real estate lease liabilities of $199.0 million and equipment lease liabilities of $3.0 million. As of June 30, 2020, the Company had not made any cash payments for amounts included in the measurement of operating lease liabilities or right-of-use assets obtained in exchange for operating lease obligations. The Company had no finance leases or embedded leases as of June 30, 2020.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. The Company used the incremental borrowing rate as of the lease commencement date for the operating leases commenced subsequent to January 1, 2019.

The following table presents the weighted average lease term and weighted average discount rate for our operating leases as of June 30, 2020 and December 31, 2019:
 
As of
 
June 30, 2020
 
December 31, 2019
 
 
 
 
Weighted average remaining lease term (in years)
8.13
 
8.31
Weighted average discount rate
7.48%
 
7.89%

The following table presents operating lease costs recognized for the three and six months ended June 30, 2020 and 2019 which are included in occupancy and equipment costs on the condensed consolidated income statements:    
(Expressed in thousands)
 
 
 
 
 
 
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended June 30,


2020
 
2019
 
2020
 
2019
Operating lease costs:
 
 
 
 
 
 
 
   Real estate leases - Right-of-use lease asset amortization
$
5,724

 
$
5,712

 
$
11,464

 
$
12,044

   Real estate leases - Interest expense
3,844

 
4,204

 
7,755

 
7,647

   Equipment leases - Right-of-use lease asset amortization
474

 
474

 
947

 
939

   Equipment leases - Interest expense
52

 
57

 
106

 
114

    









11


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


The maturities of lease liabilities as of June 30, 2020 and December 31, 2019 are as follows:    
(Expressed in thousands)
 
 
 
 
As of
 
June 30, 2020
 
December 31, 2019
2020
$
21,171

 
$
42,585

2021
39,465

 
37,531

2022
35,476

 
33,416

2023
32,691

 
31,187

2024
28,604

 
27,234

After 2025
115,290

 
108,098

Total lease payments
$
272,697

 
$
280,051

Less interest
(70,669
)
 
(76,911
)
Present value of lease liabilities
$
202,028

 
$
203,140



As of June 30, 2020, the Company had $2.2 million of additional operating leases that have not yet commenced ($11.1 million as of December 31, 2019).
5.    Revenue from contracts with customers
Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring the Company's progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services (i.e., the "transaction price"). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of its past experiences, the time period when uncertainties are expected to be resolved and the amount of consideration that is susceptible to factors outside of the Company's influence, such as market volatility or the judgment and actions of third parties.

The Company earns revenue from contracts with customers and other sources (principal transactions, interest and other). The following provides detailed information on the recognition of the Company's revenue from contracts with customers:
Commissions
Commissions from Sales and Trading — The Company earns commission revenue by executing, settling and clearing transactions with clients primarily in exchange-traded and over-the-counter corporate equity and debt securities, money market instruments and exchange-traded options and futures contracts. A substantial portion of Company's revenue is derived from commissions from private clients through accounts with transaction-based pricing. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on trade date when the performance obligation is satisfied.


12


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Commission revenue is generally paid on settlement date, which is generally two business days after trade date for equity securities and corporate bond transactions and one day for government securities, options, and commodities transactions. The Company records a receivable on the trade date and receives a payment on the settlement date.

Mutual Fund Income — The Company earns mutual fund income for sales and distribution of mutual fund shares. Many mutual fund companies pay distribution fees to intermediaries, such as broker-dealers, for selling their shares. The fees are operational expenses of the mutual fund and are included in its expense ratio. The Company recognizes mutual fund income at a point in time on trade date when the performance obligation is satisfied which is when the mutual fund interest is sold to the investor. Mutual fund income is generally received within 90 days.
Advisory Fees
The Company earns management and performance (or incentive) fees in connection with the advisory and asset management services it provides to various types of funds and investment vehicles through its subsidiaries. Management fees are generally based on the account value at the valuation date per the respective asset management agreements and are recognized over time as the customer receives the benefits of the services evenly throughout the term of the contract. Performance fees are recognized when the return on client AUM exceeds a specified benchmark return or other performance targets over a 12-month measurement period. Performance fees are considered variable as they are subject to fluctuation and/or are contingent on a future event over the measurement period and are not subject to adjustment once the measurement period ends. Such fees are computed as of the funds' year-end when the measurement period ends and generally are recorded as earned in the fourth quarter of the Company's fiscal year. Both management and performance fees are generally received within 90 days.
Investment Banking
The Company earns underwriting revenues by providing capital raising solutions for corporate clients through initial public offerings, follow-on offerings, equity-linked offerings, private investments in public entities, and private placements. Underwriting revenues are recognized at a point in time on trade date, as the client obtains the control and benefit of the capital markets offering at that point. These fees are generally received within 90 days after the transactions are completed. Transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction, are deferred and recognized in the same period as the related investment banking transaction revenue. Underwriting revenues and related expenses are presented gross on the condensed consolidated income statements.
Revenue from financial advisory services includes fees generated in connection with mergers, acquisitions and restructuring transactions and such revenue and fees are primarily recorded at a point in time when services for the transactions are completed and income is reasonably determinable, generally as set forth under the terms of the engagement. Payment for advisory services is generally due upon completion of the transaction or milestone. Retainer fees and fees earned from certain advisory services are recognized ratably over the service period as the customers receive the benefit of the services throughout the term of the contracts, and such fees are collected based on the terms of the contracts.

Bank Deposit Sweep Income
Bank deposit sweep income consists of revenue earned from the FDIC-insured bank deposit program. Under this program, client funds are swept into deposit accounts at participating banks and are eligible for FDIC deposit insurance up to FDIC standard maximum deposit insurance amounts. Fees are earned over time and are generally received within 30 days.


13


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Disaggregation of Revenue
The following presents the Company's revenue from contracts with customers disaggregated by major business activity and other sources of revenue for the three months and six months ended June 30, 2020 and 2019:
(Expressed in thousands)
For the Three Months Ended June 30, 2020
 
Reportable Segments
 
Private Client
 
Asset Management
 
Capital Markets
 
Corporate/Other
 
Total
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
Commissions from sales and trading
$
41,805

 
$

 
$
51,337

 
$

 
$
93,142

Mutual fund income
8,490

 

 
2

 
3

 
8,495

Advisory fees
58,465

 
17,507

 

 
10

 
75,982

Investment banking - capital markets
3,470

 

 
35,472

 

 
38,942

Investment banking - advisory

 

 
7,244

 

 
7,244

Bank deposit sweep income
7,122

 

 

 

 
7,122

Other
3,132

 

 
646

 
4

 
3,782

Total revenue from contracts with customers
122,484

 
17,507

 
94,701

 
17

 
234,709

Other sources of revenue:
 
 
 
 
 
 
 
 
 
Interest
5,134

 
5

 
1,027

 
54

 
6,220

Principal transactions, net
2,656

 

 
9,512

 
(104
)
 
12,064

Other
11,551

 
3

 
30

 
153

 
11,737

Total other sources of revenue
19,341

 
8

 
10,569

 
103

 
30,021

Total revenue
$
141,825

 
$
17,515

 
$
105,270

 
$
120

 
$
264,730

(Expressed in thousands)
For the Three Months Ended June 30, 2019
 
Reportable Segments
 
Private Client
 
Asset Management
 
Capital Markets
 
Corporate/Other
 
Total
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
Commissions from sales and trading
$
37,026

 
$

 
$
33,736

 
$
4

 
$
70,766

Mutual fund income
10,124

 
1

 
1

 
4

 
10,130

Advisory fees
62,080

 
18,617

 
2

 
8

 
80,707

Investment banking - capital markets
4,262

 

 
14,699

 

 
18,961

Investment banking - advisory

 

 
13,045

 

 
13,045

Bank deposit sweep income
31,830

 

 

 

 
31,830

Other
3,526

 

 
522

 
1,537

 
5,585

Total revenue from contracts with customers
148,848

 
18,618

 
62,005

 
1,553

 
231,024

Other sources of revenue:
 
 
 
 
 
 
 
 
 
Interest
9,639

 

 
3,459

 
452

 
13,550

Principal transactions, net
538

 

 
6,312

 
(3,805
)
 
3,045

Other
2,903

 
4

 
43

 
366

 
3,316

Total other sources of revenue
13,080

 
4

 
9,814

 
(2,987
)
 
19,911

Total revenue
$
161,928

 
$
18,622

 
$
71,819

 
$
(1,434
)
 
$
250,935





14


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)
For the Six Months Ended June 30, 2020
 
Reportable Segments
 
Private Client
 
Asset Management
 
Capital Markets
 
Corporate/Other
 
Total
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
Commissions from sales and trading
$
88,910

 
$

 
$
97,624

 
$
20

 
$
186,554

Mutual fund income
18,317

 
3

 
5

 
7

 
18,332

Advisory fees
125,348

 
36,777

 
2

 
19

 
162,146

Investment banking - capital markets
7,420

 

 
47,414

 

 
54,834

Investment banking - advisory

 

 
17,080

 

 
17,080

Bank deposit sweep income
25,948

 

 

 

 
25,948

Other
6,263

 

 
1,286

 
105

 
7,654

Total revenue from contracts with customers
272,206

 
36,780

 
163,411

 
151

 
472,548

Other sources of revenue:

 

 

 

 

Interest
12,814

 
5

 
3,851

 
440

 
17,110

Principal transactions, net
(59
)
 

 
13,496

 
(2,241
)
 
11,196

Other
(1,718
)
 
6

 
54

 
304

 
(1,354
)
Total other sources of revenue
11,037

 
11

 
17,401

 
(1,497
)
 
26,952

Total revenue
$
283,243

 
$
36,791

 
$
180,812

 
$
(1,346
)
 
$
499,500


(Expressed in thousands)
For the Six Months Ended June 30, 2019
 
Reportable Segments
 
Private Client
 
Asset Management
 
Capital Markets
 
Corporate/Other
 
Total
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
Commissions from sales and trading
$
74,502

 
$

 
$
66,052

 
$
7

 
$
140,561

Mutual fund income
19,738

 
(5
)
 
2

 
9

 
19,744

Advisory fees
119,124

 
35,206

 
7

 
17

 
154,354

Investment banking - capital markets
7,011

 

 
23,292

 

 
30,303

Investment banking - advisory

 

 
29,746

 

 
29,746

Bank deposit sweep income
65,798

 

 

 

 
65,798

Other
6,805

 

 
841

 
1,793

 
9,439

Total revenue from contracts with customers
292,978

 
35,201

 
119,940

 
1,826

 
449,945

Other sources of revenue:
 
 
 
 
 
 
 
 
 
Interest
19,047

 

 
6,294

 
936

 
26,277

Principal transactions, net
2,222

 

 
16,469

 
(4,208
)
 
14,483

Other
11,208

 
7

 
77

 
708

 
12,000

Total other sources of revenue
32,477

 
7

 
22,840

 
(2,564
)
 
52,760

Total revenue
$
325,455

 
$
35,208

 
$
142,780

 
$
(738
)
 
$
502,705




15


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Contract Balances
The timing of the Company's revenue recognition may differ from the timing of payment by its customers. The Company records receivables when revenue is recognized prior to payment and it has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.
The Company had receivables related to revenue from contracts with customers of $29.9 million and $28.9 million at June 30, 2020 and December 31, 2019, respectively. The Company had no significant impairments related to these receivables during the three and six months ended June 30, 2020.
Deferred revenue relates to IRA fees received annually in advance on customers' IRA accounts managed by the Company and the retainer fees and fees earned from certain advisory transactions where the performance obligations have not yet been satisfied. Total deferred revenue was $1.9 million and $408,000 at June 30, 2020 and December 31, 2019, respectively.
The following presents the Company's contract assets and deferred revenue balances from contracts with customers, which are included in other assets and other liabilities, respectively, on the condensed consolidated balance sheet:
(Expressed in thousands)
As of
 
June 30, 2020
 
December 31, 2019
Contract assets (receivables):
 
 
 
Commission (1)
$
3,519

 
$
2,824

Mutual fund income (2)
6,168

 
6,746

Advisory fees (3)
1,129

 
1,594

Bank deposit sweep income (4)
790

 
3,454

Investment banking fees (5)
13,592

 
9,284

  Other
4,671

 
4,986

Total contract assets
$
29,869

 
$
28,888

Deferred revenue (payables):
 
 
 
Investment banking fees (6)
$
659

 
$
408

IRA fees (7)
1,270

 

Total deferred revenue
$
1,929

 
$
408


(1)
Commission recorded on trade date but not yet settled.
(2)
Mutual fund income earned but not yet received.
(3)
Management and performance fees earned but not yet received.
(4)
Fees earned from FDIC-insured bank deposit program but not yet received.
(5)
Underwriting revenue and advisory fees earned but not yet received.
(6)
Retainer fees and fees earned from certain advisory transactions where the performance
obligations have not yet been satisfied.
(7)
Fee received in advance on an annual basis.



16


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


6.    Earnings per share
Basic earnings per share is computed by dividing net income over the weighted average number of shares of Class A non-voting common stock ("Class A Stock") and Class B voting common stock ("Class B Stock") outstanding. Diluted earnings per share includes the weighted average number of shares of Class A Stock and Class B Stock outstanding and options to purchase Class A Stock and unvested restricted stock awards of Class A Stock using the treasury stock method.
Earnings per share have been calculated as follows:
(Expressed in thousands, except number of shares and per share amounts)
 
 
 
 
 
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Basic weighted average number of shares outstanding
12,640,463

 
12,976,235

 
12,768,096

 
12,998,168

Net dilutive effect of share-based awards, treasury method (1)
484,192

 
885,518

 
501,398

 
859,448

Diluted weighted average number of shares outstanding
13,124,655

 
13,861,753

 
13,269,494

 
13,857,616

 
 
 
 
 
 
 
 
Net income
$
17,649

 
$
12,375

 
$
25,467

 
$
23,569

 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
       Basic
$
1.40

 
$
0.95

 
$
1.99

 
$
1.81

       Diluted
$
1.34

 
$
0.89

 
$
1.92

 
$
1.70

(1) For both the three and six months ended June 30, 2020, the diluted earnings per share computation does not
include the anti-dilutive effect of 10,770 shares of Class A Stock granted under share-based compensation
arrangements (7,628 shares for both the three and six months ended June 30, 2019).
    
7.    Receivable from and payable to brokers, dealers and clearing organizations
(Expressed in thousands)
 
 
 
 
As of
 
June 30, 2020
 
December 31, 2019
Receivable from brokers, dealers and clearing organizations consists of:
 
 
 
Securities borrowed
$
126,888

 
$
99,635

Receivable from brokers
28,119

 
19,024

Securities failed to deliver
24,717

 
7,173

Clearing organizations
31,361

 
36,269

Other
104,862

 
1,192

Total
$
315,947

 
$
163,293

Payable to brokers, dealers and clearing organizations consists of:
 
 
 
Securities loaned
$
204,339

 
$
234,343

Payable to brokers
352

 
4,548

Securities failed to receive
11,528

 
14,603

Other
(108
)
 
267,481

Total
$
216,111

 
$
520,975

 

17


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


8.    Fair value measurements
Securities owned, securities sold but not yet purchased, investments and derivative contracts are carried at fair value with changes in fair value recognized in earnings each period.
Valuation Techniques
A description of the valuation techniques applied, and inputs used in measuring the fair value of the Company's financial instruments is as follows:
U.S. Government Obligations
U.S. Treasury securities are valued using quoted market prices obtained from active market makers and inter-dealer brokers.
U.S. Agency Obligations
U.S. agency securities consist of agency issued debt securities and mortgage pass-through securities. Non-callable agency issued debt securities are generally valued using quoted market prices. Callable agency issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of mortgage pass-through securities are model driven with respect to spreads of the comparable to-be-announced ("TBA") security.
Sovereign Obligations
The fair value of sovereign obligations is determined based on quoted market prices when available or a valuation model that generally utilizes interest rate yield curves and credit spreads as inputs.
Corporate Debt and Other Obligations
The fair value of corporate bonds is estimated using recent transactions, broker quotations and bond spread information.

Mortgage and Other Asset-Backed Securities
The Company values non-agency securities collateralized by home equity and various other types of collateral based on external pricing and spread data provided by independent pricing services. When specific external pricing is not observable, the valuation is based on yields and spreads for comparable bonds.
Municipal Obligations
The fair value of municipal obligations is estimated using recently executed transactions, broker quotations, and bond spread information.
Convertible Bonds
The fair value of convertible bonds is estimated using recently executed transactions and dollar-neutral price quotations, where observable. When observable price quotations are not available, fair value is determined based on cash flow models using yield curves and bond spreads as key inputs.
Corporate Equities
Equity securities and options are generally valued based on quoted prices from the exchange or market where traded. To the extent quoted prices are not available, fair values are generally derived using bid/ask spreads.







18


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Auction Rate Securities ("ARS")
Background
In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General's office ("NYAG") and the Massachusetts Securities Division ("MSD and, together with the NYAG, the "Regulators") concluding proceedings by the Regulators concerning Oppenheimer's marketing and sale of ARS. Pursuant to the settlements with the Regulators, Oppenheimer agreed to extend offers to repurchase ARS from certain of its clients. Over the last ten years, the Company has bought back $141.4 million of ARS pursuant to these settlements. These buybacks coupled with ARS issuer redemptions and tender offers have significantly reduced the level of ARS held by Eligible Investors. As of June 30, 2020, the Company had $2.4 million of ARS remaining to purchase from Eligible Investors related to the settlements with the Regulators. In addition to the settlements with the Regulators, Oppenheimer has also reached settlements of and received adverse awards in legal proceedings with various clients where the Company is obligated to purchase ARS. Over the last ten years, the Company has purchased $106.1 million of ARS pursuant to these legal settlements and awards. The Company has completed its ARS purchase obligations under such legal settlements and awards.
As of June 30, 2020, the Company owned $29.6 million of ARS. This amount represents the unredeemed or unsold amount that the Company holds as a result of ARS buybacks pursuant to the settlements with the Regulators and the legal settlements and awards referred to above.
Valuation
The Company’s ARS owned and ARS purchase commitments referred to above have, for the most part, been subject to issuer tender offers. As a result, the Company has valued the ARS securities owned and the ARS purchase commitments at the tender offer price and categorized them in Level 3 of the fair value hierarchy due to the illiquid nature of the securities. The ARS purchase commitments related to the settlements with the Regulators are considered derivative assets or liabilities. The ARS purchase commitments represent the difference between the principal value and the fair value of the ARS the Company is committed to purchase. The fair value of ARS and ARS purchase commitments is particularly sensitive to movements in interest rates. However, an increase or decrease of short-term interest rates may or may not result in a higher or lower tender offer in the future or the tender offer price may not provide a reasonable estimate of the fair value of the securities. In such cases, other valuation techniques might be necessary.

As of June 30, 2020, the Company had a valuation adjustment (unrealized loss) totaling $5.1 million which consists of $4.8 million for ARS owned (which is included as a reduction to securities owned on the condensed consolidated balance sheet) and $332,000 for ARS purchase commitments from settlements with the Regulators (which is included in accounts payable and other liabilities on the condensed consolidated balance sheet).

Investments
In its role as general partner in certain hedge funds and private equity funds, the Company, through its subsidiaries, holds direct investments in such funds. The Company uses the net asset value of the underlying fund as a basis for estimating the fair value of its investment.
The following table provides information about the Company's investments in Company-sponsored funds as of June 30, 2020:
(Expressed in thousands)
 
 
 
 
 
 
 
 
Fair Value
 
Unfunded
Commitments
 
Redemption
Frequency
 
Redemption
Notice Period
Hedge funds (1)
$
1,089

 
$

 
Quarterly - Annually
 
30 - 120 Days
Private equity funds (2)
3,627

 
1,238

 
N/A
 
N/A
 
$
4,716

 
$
1,238

 
 
 
 
(1)
Includes investments in hedge funds and hedge fund of funds that pursue long/short, event-driven, and activist strategies.
(2)
Includes private equity funds and private equity fund of funds with a focus on diversified portfolios, real estate and global natural resources.

19


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Assets and Liabilities Measured at Fair Value
The Company's assets and liabilities, recorded at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, have been categorized based upon the above fair value hierarchy as follows:

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2020:
(Expressed in thousands)
 
 
 
 
 
 
 
 
Fair Value Measurements as of June 30, 2020
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Deposits with clearing organizations
$
35,125

 
$

 
$

 
$
35,125

Securities owned:
 
 
 
 
 
 
 
U.S. Treasury securities
317,509

 

 

 
317,509

U.S. Agency securities
14,106

 
6,397

 

 
20,503

Sovereign obligations

 
4,675

 

 
4,675

Corporate debt and other obligations
2,238

 
14,587

 

 
16,825

Mortgage and other asset-backed securities

 
2,437

 

 
2,437

Municipal obligations

 
60,403

 

 
60,403

Convertible bonds

 
17,851

 

 
17,851

Corporate equities
30,734

 

 

 
30,734

Money markets
1,526

 

 

 
1,526

Auction rate securities

 

 
29,566

 
29,566

Securities owned, at fair value
366,113

 
106,350

 
29,566

 
502,029

Derivative contracts:
 
 
 
 
 
 
 
TBAs

 
32

 

 
32

Total
$
401,238

 
$
106,382

 
$
29,566

 
$
537,186

Liabilities
 
 
 
 
 
 
 
Securities sold but not yet purchased:
 
 
 
 
 
 
 
U.S. Treasury securities
$
304,632

 
$

 
$

 
$
304,632

U.S. Agency securities

 
1,361

 

 
1,361

Sovereign obligations

 
3,561

 

 
3,561

Corporate debt and other obligations
1,768

 
7,837

 

 
9,605

Convertible bonds

 
11,015

 

 
11,015

Corporate equities
26,415

 

 

 
26,415

Securities sold but not yet purchased, at fair value
332,815

 
23,774

 

 
356,589

Derivative contracts:
 
 
 
 
 
 
 
Futures
397

 

 

 
397

Foreign exchange forward contracts
17

 

 

 
17

TBAs

 
40

 

 
40

ARS purchase commitments

 

 
332

 
332

Derivative contracts, total
414

 
40

 
332

 
786

Total
$
333,229

 
$
23,814

 
$
332

 
$
357,375

 
    







20


OPPENHEIMER HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (unaudited)


Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019:
(Expressed in thousands)
 
 
 
 
 
 
 
 
Fair Value Measurements as of December 31, 2019
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Deposits with clearing organizations
$
25,118

 
$

 
$

 
$
25,118

Securities owned:
 
 
 
 
 
 
 
U.S. Treasury securities
613,030

 

 

 
613,030

U.S. Agency securities
19,917

 
15,974

 

 
35,891

Sovereign obligations

 
11,405

 

 
11,405

Corporate debt and other obligations

 
8,310

 

 
8,310

Mortgage and other asset-backed securities

 
2,697

 

 
2,697

Municipal obligations

 
40,260

 

 
40,260

Convertible bonds

 
29,816

 

 
29,816

Corporate equities
32,215

 

 

 
32,215

Money markets
781

 

 

 
781

Auction rate securities

 
25,314

 

 
25,314

Securities owned, at fair value
665,943

 
133,776

 

 
799,719

Total
$
691,061

 
$
133,776

 
$

 
$
824,837

Liabilities
 
 
 
 
 
 
 
Securities sold but not yet purchased:
 
 
 
 
 
 
 
U.S. Treasury securities
$
52,882

 
$

 
$

 
$
52,882

U.S. Agency securities