Cohen & Company Inc.COHNNYSE
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Operator: Good morning, ladies and gentlemen, and welcome to Cohen & Company Inc.'s fourth quarter 2025 earnings conference call. My name is Robert, and I will be your operator today. Before we begin, Cohen & Company Inc. would like to remind everyone that some of the statements the company makes during this call may contain forward-looking statements under applicable securities laws. These statements may involve risks and uncertainties that could cause the company's actual results to differ materially from the results discussed in such forward-looking statements. The forward-looking statements made during this call are made only as of the date of this call; the company undertakes no obligation to update such statements to reflect subsequent events or circumstances. Cohen & Company Inc. advises you to read the cautionary note regarding forward-looking statements in its earnings release and its most recent annual report on Form 10-K filed with the SEC. Earlier today, Cohen & Company Inc. issued a press release announcing fourth quarter and full-year 2025 financial results. Today's discussion is complementary to that press release, which is available on the company's website at cohenandcompany.com. This conference call is being recorded, and a replay of it will be available for three days beginning shortly after the conclusion of this call. The company's remarks also include certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance. A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in the company's earnings release. After the prepared remarks, the call will be opened up for questions. I would now like to turn the call over to your host, Mr. Lester Brafman, Chief Executive Officer at Cohen & Company Inc. Thank you. You may begin. Thank you, Robert, and thank you, everybody, for joining us for our fourth quarter 2025 earnings call.
Lester Brafman: With me on the call is Joe Pooler, our CFO. We are pleased with our strong fourth quarter and full-year 2025 results, which were driven by the continued expansion of our client franchise and particularly our full-service boutique investment bank, Cohen & Company Capital Markets, which continues to focus on frontier technologies including digital assets, energy transition, and natural resources. In 2025, we strengthened our leadership team with the appointment of additional managing directors to expand our presence in the energy and energy transition sectors as well as across space technology, aerospace, and communications infrastructure. During the year, CCM closed $43,000,000,000 in transactions and, according to SPAC Research, ranked number one in SPAC IPO underwritings by left book-run deals and in the de-SPAC advisory with leading share in de-SPAC PIPE transactions, reflecting the strength of our client franchise and execution capabilities. Supported by its growing team and strong pipeline of transactions, we believe that CCM is well positioned for continued success over the long term. CCM's pipeline is more robust than it was a year ago, reflecting our strong IPO presence and significant de-SPAC opportunities. Going forward, we will continue to focus on being the advisor of choice to growth in frontier technology sectors of the economy. For the full year of 2025, basic and fully diluted net income attributable to Cohen & Company Inc. per share was $8.33 and $4.35, respectively. Total revenue was $275,600,000, an increase of 246% from 2024, and adjusted pretax income of $41,400,000, representing 15% of total revenue. We finished 2025 with $2,300,000 of revenue per employee. Additionally, we announced a special dividend of $0.70 per share as well as our recurring quarterly dividend of $0.25 per share. These dividends are in addition to the special dividend of $2 per share that was announced in December 2025 and paid in January 2026. As we look ahead, with first quarter 2026 revenue trending substantially higher than first quarter 2025, we are well positioned to continue building on the significant momentum underway and remain confident in our ability to drive long-term sustainable value for our stockholders. Now, I will turn the call over to Joe to walk through this quarter's financial highlights in more detail. Thank you, Lester. I will begin with a discussion of our operating results for the quarter.
Joe Pooler: Our net income attributable to Cohen & Company Inc. shareholders was $8,100,000 for the quarter, or $1.48 per fully diluted share, compared to net income of $4,600,000 for the prior quarter, or $2.58 per fully diluted share, and a net loss of $2,000,000 for the prior-year quarter, or $1.21 per fully diluted share. Our fully diluted earnings per share calculation reflects all convertible membership units in our primary operating subsidiary, Cohen & Company LLC, as if they are converted to shares, and it also reflects an income tax expense adjustment at an estimated effective tax rate as if our ownership structure was a full C-Corp for the entire period. Our adjusted pretax income was $18,300,000 for the quarter, compared to adjusted pretax income of $16,400,000 for the prior quarter and an adjusted pretax loss of $7,700,000 for the prior-year quarter. As a reminder, adjusted pretax income and loss is a key earnings measurement for us as it incorporates enterprise earnings attributable to our convertible non-controlling interest, which is substantially held by our Founder and Chairman, Daniel Cohen. Daniel holds his interest in the enterprise through the primary operating subsidiary, Cohen & Company LLC, which is a consolidated subsidiary of Cohen & Company Inc. As noted in prior earnings calls, CCM has become an increasingly important component of our company, generating revenue of $50,800,000 in the fourth quarter and $180,184,000,000 in the full year 2025, an increase of 370% from full-year 2024. CCM revenue as a percentage of total company revenue was 67% for the full year 2025. Investment banking and new issue revenue was $55,000,000 in the fourth quarter compared to $69,000,000 for the prior quarter and $8,200,000 for the year-ago quarter. $50,800,000 of our investment banking and new issue revenue came from our CCM business and was primarily driven by SPAC M&A and SPAC IPO transactions. European insurance origination generated an additional $3,600,000, and commercial real estate origination generated $300,000 for the quarter. As a reminder, we received financial instruments as consideration for services provided by CCM instead of cash at times, which are included in other investments at fair value on our consolidated balance sheets. Beginning in the fourth quarter, and reclassified historically, any realized or unrealized gains or losses on these financial instruments after the day of the transaction closing are now being reported in our investment banking and new issue revenue line item. Net trading revenue came in at $13,800,000 in the fourth quarter, up $300,000 from the prior quarter and up $4,900,000 from the prior-year quarter. Asset management revenue totaled $2,700,000 in the quarter, up $700,000 from the prior quarter and up $600,000 from the prior-year quarter. Fourth quarter principal transactions and other revenue was positive $31,500,000, primarily due to the completion of the business combination between our sponsored SPAC, Columbus Circle Capital Corp I, and ProCap Financial. The December 5, 2025 closing of the business combination resulted in $33,000,000 of principal transactions revenue in the fourth quarter from the markup of consolidated founder and placement shares, primarily held by the consolidated sponsor of the SPAC. After the business combination closing, there was an offsetting $16,500,000 of compensation expense related to the founder shares that were allocable to employees upon the closing, and there was an offsetting $8,500,000 of non-convertible non-controlling interest expense related to founder shares allocable to third-party investors in the consolidated sponsor. At the end of the year, Cohen & Company Inc. held 2,543,000 shares of ProCap Financial, which trades on NASDAQ under the symbol BRR. Compensation and benefits expense for the fourth quarter was $57,800,000, which was up from both prior quarters primarily due to fluctuations in revenue and the related incentive compensation, including the $16,500,000 of expense recorded related to the founder shares allocable to Cohen & Company Inc. employees from the sponsor of Columbus Circle Capital Corp I. The number of company employees was 126 at the end of the year, compared to 124 at the end of September and 113 at the end of the prior year. Net interest expense for 2025 was $1,500,000, including $1,200,000 on our trust preferred securities, $200,000 on our senior promissory notes, and $45,000 on our bank credit facility. Loss from equity method affiliates totaled $5,100,000, primarily due to $3,100,000 of mark-to-market losses on one of our SPAC series fund investments, which was partially offset by a $1,500,000 credit recorded in the net income (loss) attributable to non-convertible non-controlling interest line item. In terms of our balance sheet at the end of the year, equity was $103,100,000 compared to $90,300,000 as of the end of the prior year. The non-convertible non-controlling interest component of total equity was $400,000 at the end of the year and $11,500,000 at the end of the prior year. Thus, the total enterprise equity excluding the non-convertible non-controlling interest was $102,600,000 at the end of the year, a $23,800,000 increase from $78,800,000 at the end of the prior year. At quarter end, consolidated corporate indebtedness was carried at $33,000,000. As Lester mentioned, we declared a quarterly dividend of $0.25 per share and a special dividend of $0.70 per share, both payable on April 3, 2026 to stockholders of record as of March 20, 2026. The $0.70 per share special dividend is on top of the $2 per share special dividend that was announced in December 2025 and paid in January 2026. The Board of Directors will continue to evaluate the dividend policy each quarter, and future decisions regarding dividends may be impacted by quarterly operating results and the company's capital needs. With that, I will turn it back over to Lester. Thanks, Joe. We remain confident in our ability to execute on our strategic priorities and continue driving progress as we enhance long-term value for our stockholders. Please direct any offline investor questions to Joe Pooler at (215) 701-8952 or via email to investorrelations@cohenandcompany.com. The contact information can also be found at the bottom of our earnings release. Operator, you can now open the call lines for questions. Thank you for joining us today.
Operator: We will now open for questions. At this time, we will be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the keys. Our first question comes from Mike Grondahl with Northland Securities. Your line is now live. Hey, guys, thank you and congrats on a nice year. Joe, I think in your comments, or Lester, talking about the pipeline, you said it was robust and off to kind of a good start. Could you go into just a little bit more detail there, kind of what you are seeing, and is there any sector sticking out?
Lester Brafman: Yeah. I think if we were standing on this call a year ago and looking at where our pipeline is, we are ahead of where we were last year. I think that is as much kind of context as I would like to give. And in terms of sectors, look, we dominate in the SPAC, in the de-SPAC space. That is really our strength. And so from there, as we spoke before, it really leads us into deals across all of the frontier technology space, which you are looking at whether it is digital assets, whether it is energy, energy transition, any real growth companies really fits into the SPAC product. Now, that being said, business begets business, and from what we have printed in the SPAC space, we have got some traditional M&A mandates, some capital raises, capital markets advisory work, and we are starting also to build out more industry verticals in that frontier technology space, hiring a banker focusing on space and aerospace, as well as some of the telecommunications, new telecommunications areas, and energy in the energy space as well. So when we think about industries, we think about what fits into that SPAC product.
Mike Grondahl: Got it.
Mike Grondahl: And then what would you say your top two priorities for 2026 are?
Lester Brafman: Our top two priorities in 2026 are expanding our investment bank, expanding our footprint, getting more verticals, and not being as dependent on the SPAC product. So that is one priority. And on the fixed income trading side is, again, continue to do the same thing, continue to grow our footprint there. We are looking to add probably eight people or so in that area, all synergistic with leading with the mortgage space and trading with other products around there. So when I think about how our investment bank has grown dramatically, obviously year over year, we are in the right spaces and we have spent a lot of time making sure we have really good market share, but I do not want to forget about the fixed income trading business, which revenue-wise was close to $50,000,000 this year, and we would like to get that up to $60,000,000–$65,000,000 or so. That is where we have been, and I think if we get a couple of rate cuts, we should be able to get a little wind at our back in that area as well, but again, a little bit more stable on the fixed income side and looking at more growth in the capital markets side of investment banking.
Mike Grondahl: Got it. Then maybe just lastly, I do not know if you have it handy or not, but the investment banking MD headcount at the end of 2024 and then what it was at the end of 2025? And just with your expansion plans, a rough estimate of where it could be at the end of 2026?
Lester Brafman: I do not have those numbers in front of me. I think we have promoted two MDs, and again, I do not have the exact number, but my sense is we promoted a couple of MDs last year and we have hired a couple of MDs into new areas this year so far. My guess is we probably add another two to three through promotions and hiring over the year, maybe as many as four or five. So I guess two to five would be how you bound the range, or three to five is how you bound the range there.
Joe Pooler: Yeah, and that is right. At the end of the year, the investment bank had 28 total employees, and we anticipate growth of about five, excluding interns, in 2026. But that can move around to the extent that we see an opportunity to hire an MD that makes sense.
Mike Grondahl: Perfect. Thanks, guys, and good luck in 2026.
Lester Brafman: Okay. Thanks, thanks.
Operator: There are no further questions at this point. I would like to turn the call back over to Lester Brafman for closing comments.
Lester Brafman: Thank you, Robert, and thanks, everyone, for listening today. We look forward to reconvening next quarter. You may now close the call.
Operator: This concludes today's call. You may disconnect your lines at this time, and we thank you for your participation.