Cohen & Co Inc. [COHN] Filings

10-Q 1 cohn20240630_10q.htm FORM 10-Q cohn20240630_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ 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: 001-32026

COHEN & COMPANY INC.

(Exact name of registrant as specified in its charter)

Maryland	16-1685692
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Cira Centre 2929 Arch Street, Suite 1703 Philadelphia, Pennsylvania	19104
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 701-9555

Not applicable

(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(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		COHN		The NYSE American Stock Exchange

As of August 1, 2024, there were 1,950,152 shares of common stock ($0.01 par value per share) of Cohen & Company Inc. ("Common Stock") outstanding.

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 by Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

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Cohen & Company Inc.

FORM 10-Q

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2024


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	5

	Consolidated Balance Sheets—June 30, 2024 and December 31, 2023	5

	Consolidated Statements of Operations and Comprehensive Income (Loss)—Three and Six Months Ended June 30, 2024 and 2023	6

	Consolidated Statements of Changes in Equity—Three and Six Months Ended June 30, 2024 and 2023	7

	Consolidated Statements of Cash Flows—Six Months Ended June 30, 2024 and 2023	9

	Notes to Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	58

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	92

Item 4.	Controls and Procedures	93

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	94

Item 1A.	Risk Factors	94

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95

Item 3.	Defaults Upon Senior Securities	95

Item 4.	Mine Safety Disclosures	95

Item 5.	Other Information	95

Item 6.	Exhibits	96

Signatures		97

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Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue,” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, level of activity, performance, or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about the following subjects:

	●	integration of operations;
	●	business strategies;
	●	growth opportunities;
	●	competitive position;
	●	market outlook;
	●	expected financial position;
	●	expected results of operations;
	●	future cash flows;
	●	financing plans;
	●	plans and objectives of management;
	●	tax treatment of the business combinations;
	●	our investments in both SPACs and SPAC sponsor entities, including through our SPAC Series Funds;
	●	our role as asset manager and sponsor in our SPAC franchise;
	●	fair value of assets; and
	●	any other statements regarding future growth, future cash needs, future operations, business plans, future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties, and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You should consider the areas of risk and uncertainty described above and discussed under “Item 1A — Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Actual results may differ materially because of various factors, some of which are outside our control, including the following:

	●	a decline in general economic conditions or the global financial markets;
	●	continuation of the COVID-19 pandemic or future outbreaks of COVID-19, the timing and effectiveness of vaccine distribution, and uncertainty surrounding the length and severity of future impacts on the global economy and on our business, liquidity, results of operations and financial condition;
	●	economic uncertainty and capital markets disruption, which have been significantly impacted by geopolitical instability;
	●	losses and reduced transaction volumes as a result of increasing interest rates and inflation;
	●	risks and liabilities due to our investments in the equity interests of SPACs and SPAC sponsor entities including the risk of increased regulation applicable to SPACs, risks regarding litigation in connection with the SPACs in which we invest and those we sponsor, uncertainty of whether the SPACs in which we invest and those we sponsor will consummate a business combination, significant competition for business opportunities in the SPAC industry, write-downs or write-offs with respect to the securities that we hold subsequent to the consummation of an initial business combination by the SPACs in which we invest and those we sponsor, and the target of a SPAC being an early-stage and financially unstable company;
	●	losses caused by financial or other problems experienced by third parties;
	●	losses due to unidentified or unanticipated risks;
	●	losses (whether realized or unrealized) on our principal investments;
	●	a lack of liquidity, i.e., ready access to funds for use in our businesses, or the availability of financing at prohibitive rates;
	●	the ability to attract and retain personnel;
	●	the ability to meet regulatory capital requirements administered by federal agencies;
	●	the ability to pay dividends;
	●	an inability to generate incremental income from acquired, newly established, or expanded businesses;
	●	unanticipated market closures due to inclement weather or other disasters;
	●	the volume of trading in securities including collateralized securities transactions;
	●	the liquidity in capital markets;
	●	the creditworthiness of our correspondents, trading counterparties, and banking and margin customers;
	●	changing interest rates and their impacts on U.S. residential mortgage volumes;
	●	competitive conditions in each of our business segments;
	●	the availability of borrowings under credit lines, credit agreements, warehouse agreements, and our credit facilities;
	●	the potential misconduct or errors by our employees or by entities with which we conduct business; and
	●	the potential for litigation and other regulatory liability.

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Our Internet website is www.cohenandcompany.com and we make available on our website our filings with the Securities and Exchange Commission (“SEC”), including annual reports, quarterly reports, current reports and any amendments to those filings. The reference to our website address does not constitute incorporation by reference of the information contained therein into this Form 10-Q. We also use our website to disseminate other material information to our investors (on the home page and in the “Investor Relations” section). Among other things, we post on our website our press releases and information about any public conference calls that we may conduct (including the scheduled dates, times, and the methods by which investors and others can listen to any of those calls), and we make available for replay webcasts of those calls and other presentations for a limited time.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances, or assumptions underlying such statements, or otherwise.

Certain Terms Used in this Quarterly Report on Form 10-Q

In this Quarterly Report on Form 10-Q, unless otherwise noted or as the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to Cohen & Company Inc. (formerly Institutional Financial Markets, Inc.), a Maryland corporation, and its subsidiaries on a consolidated basis; and “Cohen & Company, LLC” (formerly IFMI, LLC) or the “Operating LLC” refer to the main operating subsidiary of the Company.

“JVB Holdings” refers to JVB Financial Holdings, L.P., a wholly owned subsidiary of the Operating LLC; “JVB” refers to J.V.B. Financial Group, LLC, a wholly owned broker-dealer subsidiary of JVB Holdings; "CCFESA" refers to Cohen & Company Financial (Europe) S.A., a majority owned subsidiary regulated by the Autorite de Controle Prudentiel et de Resolution ("ACPR") in France; "CCM" refers to Cohen & Company Capital Markets, a division of JVB, and is the Company's full-service boutique investment bank, which focuses on M&A, underwriting, capital markets and SPAC advisory services.

“Securities Act” refers to the Securities Act of 1933, as amended; and “Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

COHEN & COMPANY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	June 30, 2024
	(unaudited)			December 31, 2023
Assets
Cash and cash equivalents	$	9,575		$	10,650
Receivables from brokers, dealers, and clearing agencies		60,317			66,801
Due from related parties		994			772
Other receivables		7,851			5,373
Investments-trading		122,979			181,328
Other investments, at fair value		40,331			72,217
Receivables under resale agreements		541,955			408,408
Investments in equity method affiliates		29,178			14,241
Deferred income taxes		1,630			1,580
Goodwill		109			109
Right-of-use asset - operating leases		6,596			7,541
Other assets		4,498			3,741
Total assets	$	826,013		$	772,761

Liabilities
Payables to brokers, dealers, and clearing agencies	$	67,080		$	111,085
Accounts payable and other liabilities		7,283			8,115
Accrued compensation		14,236			17,268
Lease liability - operating leases		7,196			8,216
Trading securities sold, not yet purchased		47,719			65,751
Other investments sold, not yet purchased, at fair value		7,590			24,742
Securities sold under agreements to repurchase		541,734			408,203
Redeemable financial instruments		7,868			7,868
Debt		29,689			29,716
Total liabilities		730,395			680,964

Commitments and contingencies (See note 21)

Stockholders' Equity:
Voting Non-Convertible Preferred Stock, $0.001 par value per share, 50,000,000 shares authorized, 27,413,098 shares issued and outstanding		27			27
Common Stock, $0.01 par value per share, 100,000,000 shares authorized, 1,950,152 and 1,893,747 shares issued and outstanding, respectively, including 319,251 and 367,491 unvested or restricted share awards, respectively		19			19
Additional paid-in capital		75,993			74,594
Accumulated other comprehensive loss		(977	)		(944	)
Accumulated deficit		(33,397	)		(32,014	)
Total stockholders' equity		41,665			41,682
Non-controlling interest		53,953			50,115
Total equity		95,618			91,797
Total liabilities and equity	$	826,013		$	772,761

(

See accompanying notes to unaudited consolidated financial statements.

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COHEN & COMPANY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands, except share or per share information)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenues
Net trading	$	8,798		$	7,416			18,646		$	15,626
Asset management		2,078			1,605			4,795			3,630
New issue and advisory		6,500			1,395			30,888			2,295
Principal transactions and other income (loss)		(6,578	)		12,156			(24,967	)		9,845
Total revenues		10,798			22,572			29,362			31,396

Operating expenses
Compensation and benefits		10,699			10,001			25,538			20,538
Business development, occupancy, equipment		1,591			1,318			3,032			2,619
Subscriptions, clearing, and execution		2,217			2,343			4,303			4,468
Professional fee and other operating		2,533			1,762			5,982			3,962
Depreciation and amortization		125			149			249			293
Total operating expenses		17,165			15,573			39,104			31,880

Operating income (loss)		(6,367	)		6,999			(9,742	)		(484	)

Non-operating income (expense)
Interest expense, net		(1,425	)		(1,630	)		(3,091	)		(3,222	)
Income (loss) from equity method affiliates		(5,996	)		(511	)		23,049			(906	)
Income (loss) before income tax expense (benefit)		(13,788	)		4,858			10,216			(4,612	)
Income tax expense (benefit)		(205	)		5,550			293			6,134
Net income (loss)		(13,583	)		(692	)		9,923			(10,746	)
Less: Net income (loss) attributable to the non-convertible non-controlling interest of the Operating LLC		(5,206	)		6,503			11,064			6,600
Enterprise net (loss)		(8,377	)		(7,195	)		(1,141	)		(17,346	)
Less: Net (loss) attributable to the convertible non-controlling interest of Cohen & Company Inc.		(6,028	)		(594	)		(815	)		(8,108	)
Net (loss) attributable to Cohen & Company Inc.	$	(2,349	)	$	(6,601	)		(326	)	$	(9,238	)
Income (loss) per share data (see note 20)
(Loss) per common share-basic:
Basic (loss) per common share	$	(1.45	)	$	(4.34	)	$	(0.20	)	$	(6.14	)
Weighted average shares outstanding-basic		1,615,902			1,520,122			1,598,646			1,504,819
(Loss) per common share-diluted:
Diluted (loss) per common share	$	(1.47	)	$	(4.34	)	$	(0.20	)	$	(6.14	)
Weighted average shares outstanding-diluted		5,682,360			1,520,122			5,657,587			1,504,819

Comprehensive income (loss)
Net income (loss)	$	(13,583	)	$	(692	)		9,923		$	(10,746	)
Other comprehensive (loss) item:
Foreign currency translation adjustments, net of tax of $0		(15	)		10			(66	)		55
Other comprehensive (loss), net of tax of $0		(15	)		10			(66	)		55
Comprehensive income (loss)		(13,598	)		(682	)		9,857			(10,691	)
Less: comprehensive income (loss) attributable to the non-controlling interest		(11,245	)		5,916			10,202			(1,466	)
Comprehensive (loss) attributable to Cohen & Company Inc.	$	(2,353	)	$	(6,598	)		(345	)	$	(9,225	)

See accompanying notes to unaudited consolidated financial statements.

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COHEN & COMPANY INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Dollars in Thousands, except share or per share information)

(Unaudited)

	Cohen & Company Inc.
	Six Months Ended June 30, 2024
	Preferred Stock		Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Non-controlling Interest			Total Equity


December 31, 2023	$	27	$	19	$	74,594		$	(32,014	)	$	(944	)	$	41,682		$	50,115		$	91,797
Net income		-		-		-			2,023			-			2,023			21,483			23,506
Other comprehensive (loss)		-		-		-			-			(15	)		(15	)		(36	)		(51	)
Acquisition / (surrender) of additional units of consolidated subsidiary, net		-		-		447			-			(10	)		437			(437	)		-
Equity-based compensation		-		-		325			-			-			325			823			1,148
Shares withheld for employee taxes		-		-		(52	)		-			-			(52	)		(133	)		(185	)
Dividends/distributions to convertible non-controlling interest		-		-		-			(647	)		-			(647	)		(1,586	)		(2,233	)
Redemption of convertible non-controlling interest units		-		-		-			-			-			-			(659	)		(659	)
March 31, 2024	$	27	$	19	$	75,314		$	(30,638	)	$	(969	)	$	43,753		$	69,570		$	113,323
Net (loss)		-		-		-			(2,349	)		-			(2,349	)		(11,234	)		(13,583	)
Other comprehensive (loss)		-		-		-			-			(4	)		(4	)		(11	)		(15	)
Common stock issued, net		-		-		154			-			-			154			-			154
Acquisition / (surrender) of additional units of consolidated subsidiary, net		-		-		198			-			(4	)		194			(194	)		-
Equity-based compensation		-		-		329			-			-			329			827			1,156
Shares withheld for employee taxes		-		-		(2	)		-			-			(2	)		(2	)		(4	)
Dividends/distributions to convertible non-controlling interest		-		-		-			(410	)		-			(410	)		(1,436	)		(1,846	)
Non-convertible non-controlling interest distributions		-		-		-			-			-			-			(3,567	)		(3,567	)
June 30, 2024	$	27	$	19	$	75,993		$	(33,397	)	$	(977	)	$	41,665		$	53,953		$	95,618

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	Cohen & Company Inc.
	Six Months Ended June 30, 2023
	Preferred Stock		Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Non-controlling Interest			Total Equity


December 31, 2022	$	27	$	17	$	72,801		$	(25,151	)	$	(955	)	$	46,739		$	47,287		$	94,026
Net (loss)		-		-		-			(2,637	)		-			(2,637	)		(7,417	)		(10,054	)
Other comprehensive income		-		-		-			-			10			10			35			45
Acquisition / (surrender) of additional units of consolidated subsidiary, net		-		-		582			-			(12	)		570			(570	)		-
Equity-based compensation and vesting of shares		-		1		299			-			-			300			789			1,089
Shares withheld for employee taxes		-		-		(46	)		-			-			(46	)		(118	)		(164	)
Dividends/distributions to convertible non-controlling interest		-		-		-			(594	)		-			(594	)		(1,187	)		(1,781	)
Redemption of convertible non-controlling interest units		-		-		-			-			-			-			(834	)		(834	)
Non-convertible non-controlling interest investment		-		-		-			-			-			-			38			38
March 31, 2023	$	27	$	18	$	73,636		$	(28,382	)	$	(957	)	$	44,342		$	38,023		$	82,365
Net (loss)		-		-		-			(6,601	)		-			(6,601	)		5,909			(692	)
Other comprehensive income		-		-		-			-			3			3			7			10
Acquisition / (surrender) of additional units of consolidated subsidiary, net		-		-		30			-			(1	)		29			(29	)		-
Equity-based compensation and vesting of shares		-		-		304			-			-			304			804			1,108
Shares withheld for employee taxes		-		-		(3	)		-			-			(3	)		(9	)		(12	)
Dividends/distributions to convertible non-controlling interest		-		-		-			(390	)		-			(390	)		(1,079	)		(1,469	)
Non-convertible non-controlling interest investment		-		-		-			-			-			-			1			1
June 30, 2023	$	27	$	18	$	73,967		$	(35,373	)	$	(955	)	$	37,684		$	43,627		$	81,311

See accompanying notes to unaudited consolidated financial statements.

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COHEN & COMPANY INC.

Consolidated Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30,
	2024			2023
Operating activities
Net income (loss)	$	9,923		$	(10,746	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity-based compensation		2,304			2,196
Loss (gain) on other investments, at fair value		48,060			13,979
Loss (gain) on other investments, sold not yet purchased		(20,999	)		(23,051	)
Noncash advisory fees received		(11,140	)		(492	)
(Income) loss from equity method affiliates		(23,049	)		906
Depreciation and amortization		249			293
Amortization of discount on debt		(27	)		300
Deferred tax provision (benefit)		(50	)		6,603
Change in operating assets and liabilities, net:
Change in receivables from / payables to brokers, dealers, and clearing agencies		(37,521	)		93,621
Change in receivables from / payables to related parties, net		(222	)		68
(Increase) decrease in other receivables		(2,478	)		3,793
(Increase) decrease in investments-trading		58,349			19,023
(Increase) decrease in receivables under resale agreements		(133,547	)		(19,836	)
(Increase) decrease in other assets		413			117
Increase (decrease) in accounts payable and other liabilities		(1,802	)		(86,765	)
Increase (decrease) in accrued compensation		(3,032	)		(4,390	)
Increase (decrease) in trading securities sold, not yet purchased		(18,032	)		(35,840	)
Increase (decrease) in securities sold under agreements to repurchase		133,531			4,554
Net cash provided by (used in) operating activities		930			(35,667	)
Investing activities
Purchase of other investments, at fair value		(34,289	)		(58,723	)
Purchase of other investments sold, not yet purchased, at fair value		(1,267	)		(112	)
Sales and returns of principal - other investments, at fair value		41,544			57,140
Sales and returns of principal - other investments sold, not yet purchased, at fair value		214			25,885
Investment in equity method affiliate		(134	)		(1,124	)
Distribution from equity method affiliate		857			3
Purchase of furniture, equipment,