2025 Beat Despite Rate Softness; AI-Proof Advantage

• 2025 Results: Revenue declined 3.9% YoY, but exceeded our forecast by 0.6%, driven by lower interest on unallocated client capital. EPS fell 17% YoY, but beat our forecast by 1.6%. Dividends held steady at $7.20/year (5.88% yield), in line with expectations.
• Client Assets & Services Revenue: Client assets rose 10% YoY to $13.21B, 0.3% above forecast. Core division services revenue increased 9% YoY on higher transaction volumes. We anticipate continued growth in services revenue, fueled by robust interest in alternative investments, particularly Mortgage Investment Corporations (MICs), which represent a significant portion of client assets. MICs are high-yield, and generally attractive in a low-rate setting.

• Interest Revenue: ~50% of revenue derives from interest on unallocated client capital held in cash accounts at major Canadian banks/credit unions. Following eight rate cuts totaling 275 bps since June 2024, bringing the policy rate to 2.25%, the Bank of Canada held rates steady at its December 2025 and January 2026 meetings. With declining unemployment, and moderating inflation, rates are expected to remain stable through 2026, supporting interest revenue stabilization after several quarters of decline.
• Growth Catalyst: Licensed in all provinces except Ontario, the company’s next catalyst may be federal approval, allowing it to offer services in Ontario as well.
• Valuation & Market Position: OLY trades at an EV/EBITDA of 10.2x, below the sector average of 12.6x, representing a 19% discount. Wealth management stocks are under pressure from AI-driven disruption. On average, major wealth management firms are down ~9% YTD, while OLY is up 9% YTD, reflecting its role as a custodian and administrator, rather than a wealth manager.
• OLY Advantage: We believe OLY is largely shielded from AI disruption because it provides essential regulatory and custodial services for registered accounts; a legal requirement that algorithms cannot replace, at least for now. The company also dominates this space in Canada, facing limited competition from banks and other investment platforms, which generally do not support the alternative investments that OLY facilitates.

Price and Volume (1-year)

* Olympia Financial Group has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise specified.

The leading Canadian custodian/ administrator of alternative investments

OLY’s platform supports a broad range of investments typically not offered by banks or traditional trading platforms

Primary Services

• Investment Account Services (IAS): OLY is a trustee/custodian/a dminist rator of self-directed registered investment accounts for alternative investments
• Private Health Services : Administers health spending accounts for small/mid-sized corporations 
• Currency and Global Payments: Facilitates the buying and selling of currencies for corporations and individuals
• Corporate and Shareholder Services: Offers corporate trust, and transfer agency services, such as maintenance of security holder registries, organizing annual meetings, and administering dividend reinvestments
• Raisr (Exempt Edge): Provides IT services to exempt market dealers, issuers, and investment advisors

In 2025, revenue mix remained stable: 78% from IAS (77% in 2024), 10% from private health services (unchanged), and 12% (13% in 2024) from other services

Source: Company / FRC

In 2025, client assets rose 10% YoY to $13.21B, 0.3% above our forecast

We are raising our 2026 year-end estimate by 0.2% to $13.96B

Financials (Year-End: Dec 31st)

Revenue declined 3.9% YoY, but exceeded our forecast by 0.6%, driven by lower interest on unallocated client capital

Importantly, services revenue from core divisions (IAS and Private Health Services) was up 9% YoY, driven by higher transaction volumes

*The primary source of revenue in the “Trust, Interest, & Other” category is the interest earned on placing undeployed client capital in cash accounts at major Canadian banks.

*Service revenue includes annual and transaction fees

*‘Trust, interest, and other’ primarily includes interest revenue

G&A expenses rose 1% YoY, coming in 0.3% below our forecast

Source: FRC / Company

EPS declined 17% YoY, primarily due to weaker revenue, but exceeded our forecast by 1.6%

Source: Company/FRC

Dividends held steady at $7.20/year, aligning with our estimate

The payout ratio was 87% in 2025 vs the historic average of 72%

Source: Company/FRC

Strong balance sheet

FRC Projections and Valuation 

With client assets growing ahead of expectations, we are raising our 2026 revenue and EPS forecasts accordingly

Source: FRC

As a result, our DCF valuation increased from $147 to $154/share

Source: FRC/S&P Capital IQ

With sector multiples down 3% since our November 2025 report, our comparables valuation fell from $186 to $181/share 

We are reiterating our BUY rating, and adjusting our fair value estimate from $166.83 to $167.49/share  (the average of our DCF and comparables valuations), implying a potential return of 43% (including dividends) in the next 12 months. OLY delivered resilient results with strong client asset growth and services revenue, while interest revenue may stabilize as rates level off. Trading at a 19% discount to the sector average , and with a 5.88% yield, we believe OLY offers attractive income , and potential upside from expansion in Ontario, Canada’s largest province.

Risks

We believe the company is exposed to the following key risks (not exhaustive):

• Operates in a regulated industry
• The company's target market is niche
•  Although OLY dominates the alternative investment market, there is no guarantee that banks and large investment platforms will not enter this space in the future.
• Earnings are significantly affected by fluctuations in interest rates
• Transaction revenue depends on market sentiment for alternative investments

Maintaining our risk rating of 3 (Average)

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