Cohen & Company Q4 2025 Earnings Call - SPAC-led investment bank fuels a 246% revenue surge, but founder-share mechanics and concentrated pipeline raise volatility questions

Robert, Conference Call Operator, Cohen & Company: Good morning, ladies and gentlemen, welcome to Cohen & Company’s fourth quarter 2025 earnings conference call. My name is Robert and I’ll be your operator today. Before we begin, Cohen & Company would like to remind everyone that some of the statements the company makes during this call may contain forward-looking statements under applicable security 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, and the company undertakes no obligation to update such statements to reflect subsequent events or circumstances. Cohen & Company advise 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 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 Cohen, C-O-H-E-N, and Company, C-O-M-P-A-N-Y 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. Thank you. You may begin.

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: Thank you, Robert, thank you everybody for joining us on for our fourth quarter 2025 earnings call. 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 billion in transactions and according to SPAC Research, ranked number 1 in SPAC IPO underwritings by left bookrunner deals and in the de-SPAC advisory, with a 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 per share was $8.33 and $4.35 respectively. Total revenue was $275.6 million, an increase of 246% from 2024, and adjusted pre-tax income of $41.4 million, representing a 15% of total revenue. We finished 2025 with $2.3 million of revenue per employee. Additionally, we announced a special dividend of $0.70 a share as well as our recurring quarterly dividend of $0.25 a share. These dividends are in addition to special dividend of $2 per share that was announced December 2025 and paid in January 2026.

As we look ahead with the 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.

Joe Pooler, Chief Financial Officer (CFO), Cohen & Company: Thank you, Lester. I will begin with a discussion of our operating results for the quarter. Our net income attributable to Cohen & Company Inc. shareholders was $8.1 million for the quarter, or $1.48 per fully diluted share, compared to net income of $4.6 million for the prior quarter, or $2.58 per fully diluted share, and net loss of $2 million 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. 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 pre-tax income was $18.3 million for the quarter, compared to adjusted pre-tax income of $16.4 million for the prior quarter and adjusted pre-tax loss of $7.7 million for the prior year quarter. As a reminder, adjusted pre-tax 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 $50.8 million in the fourth quarter and $184 million 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 million in the fourth quarter compared to $69 million from the prior quarter and $8.2 million from the year ago quarter.

$50.8 million 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 $3.6 million, and commercial real estate origination generated $300,000 for the quarter. As a reminder, we have 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 $13.8 million in the fourth quarter, up $300,000 from the prior quarter and up $4.9 million from the prior year quarter. Asset management revenue totaled $2.7 million 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 $31.5 million, 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 million 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 $16.5 million of compensation expense related to the founder shares that were allocable to employees upon the closing. There was an offsetting $8.5 million 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 held 2.543 million shares of ProCap Financial, which trades on NASDAQ under the symbol BRR. Compensation and benefits expense for the fourth quarter was $57.8 million, which was up from both prior quarters, primarily due to fluctuations in revenue and the related variable incentive compensation, including the $16.5 million of expense recorded related to the founder shares allocable to Cohen & Company employees from the sponsor of Columbus Circle Capital Corp.

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 the fourth quarter of 2025 was $1.5 million, including $1.2 million 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 $5.1 million, primarily due to $3.1 million of mark-to-market losses on one of our SPAC series fund investments, which was partially offset by a $1.5 million 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, total equity was $103.1 million compared to $90.3 million 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 $11.5 million at the end of the prior year. Thus, the total enterprise equity, excluding the non-convertible, non-controlling interest, was $102.6 million at the end of the year, a $23.8 million increase from $78.8 million at the end of the prior year. At quarter end, consolidated corporate indebtedness was carried at $33 million.

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 3rd, 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’ll turn it back over to Lester.

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: 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.

Robert, Conference Call Operator, Cohen & Company: Thank you. At this time, we’ll be conducting a question-and-answer session. If you’d like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you’d 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 star keys. One moment please while we poll for questions. Our first question comes from Michael Grondahl with Northland Securities. Your line is now live.

Michael Grondahl, Analyst, Northland Securities: Hey, guys. Thank you, and congrats on a nice year. Joe, I think in your comments or Lester, I mean, 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’re seeing, and is there any sector sticking out?

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: Yeah. I think if I was on this call a year ago and looking at where our pipeline is, we’re ahead of where we were last year. I think that’s as much kinda context as I’d like to kinda give. In terms of sectors and what was, as the sectors, look, we dominate in the SPAC and in the De-SPAC space. That’s really our strength. From there, we, as we spoke before, it really leads us into deals across all of the kind of frontier technology space which you’re looking at, whether it’s digital assets, whether it’s energy transition. Any real growth company is what really fits into the SPAC product.

Now, that being said, you know, business begets business. From what we’ve printed in the SPAC space, you know, we’ve got some traditional M&A mandates, some capital raises, capital markets advisory work. You know, and we’re starting also to build out more kind of industry verticals in that frontier technology space. You know, hiring a banker focused on space and aerospace, as well as someone to telecommunications, new telecommunications areas. That and energy in the energy space as well. I mean, when we think about kind of industries, we think about kind of what fits into that SPAC product.

Michael Grondahl, Analyst, Northland Securities: Got it. What would you say your top two priorities for 2026 are?

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: Our top two priorities on 2026 is expanding our on our investment bank, expanding our footprint, getting, you know, more verticals and not being as dependent on the SPAC product. That’s one priority. On the fixed income trading side is again, continue to grow our footprint there. You know, we’re looking to add probably eight people or so in that, in that area, all synergistic with the kind of, you know, leading with the mortgage space and trading other products around there. When I think about, you know, how, you know, our Look, our investment bank has grown dramatically, obviously year-over-year. We kind of we’re in the right spaces, and we’ve spent a lot of time kind of making sure we had really good market share.

I don’t wanna forget about, you know, the fixed income business and trading business, which, you know, we may, you know, revenue-wise was close to $50 million this year, and we’d like to get that up to $60 million, $65 million or so. That’s where we’ve been. I think if we’ve got a couple rate cuts, we should be able to get a little wind at our back in that area as well. You know, again, a little more stable on the fixed income side and looking at more growth in the Cohen Capital Markets side, investment banking.

Michael Grondahl, Analyst, Northland Securities: Got it. Then maybe just lastly, I don’t 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, you know, just with your expansion plans, a rough estimate of where it could be at the end of 2026?

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: I don’t have those numbers in front of me. I think we’ve promoted 2 MDs. Again, I don’t have the exact numbers, but my sense is we promoted a couple MDs last year, and we’ve hired a couple MDs into new areas this year, so far. My guess is we probably add another 2-3 through promotions and hiring over the year. Maybe as much, maybe as many as 4 or 5, kind of at the... I guess 2-5 are, would be the, how you bound the range, or 3-5 is how you bound the range there.

Joe Pooler, Chief Financial Officer (CFO), Cohen & Company: Yeah. Lester, at the end of the year, the investment bank had 28 total employees, we anticipate growth of about 5, excluding interns, in 2026. That can move around to the extent that we see an opportunity to hire an MD that makes sense.

Michael Grondahl, Analyst, Northland Securities: Perfect. Thanks, guys, and good luck in 2026.

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: Okay.

Joe Pooler, Chief Financial Officer (CFO), Cohen & Company: Thanks.

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: Thanks, Mike.

Robert, Conference Call Operator, Cohen & Company: As a reminder, if you’d like to ask a question, please press star 1 on your telephone keypad. One moment while we poll for questions. There are no further questions. At this point, I’d like to turn the call back over to Lester Brafman for closing comments.

Lester Brafman, Chief Executive Officer (CEO), Cohen & Company: I’m sorry. Thank you, Robert, and thanks everyone for listening today. We look forward to reconvening at our next quarter. You can now close the call.

Robert, Conference Call Operator, Cohen & Company: This concludes today’s call. You may disconnect your lines at this time. We thank you for your participation.