Cohen & Co Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of the consolidated financial condition and results of operations of Cohen & Company Inc. and its consolidated subsidiaries (collectively, “we,” “us,” “our,” or the “Company”) should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2024.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including fair value of financial instruments. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

All amounts in this disclosure are in thousands (except share, unit, per share, and per unit data) except where otherwise noted.

Overview

We are a financial services company specializing in an expanding range of capital markets and asset management services. We are organized into three business segments: Capital Markets, Asset Management, and Principal Investing.

• Capital Markets: Our Capital Markets business segment consists primarily of fixed income sales, trading, gestation repo financing, new issue placements in corporate and securitized products, underwriting, and advisory services. Our fixed income sales and trading group provides trade execution to corporate investors, institutional investors, mortgage originators, and other smaller broker-dealers. We specialize in a variety of products, including but not limited to: corporate bonds, ABS, MBS, RMBS, CBOs, CMOs, municipal securities, TBAs and other forward agency MBS contracts, SBA loans, U.S. government bonds, U.S. government agency securities, brokered deposits and CDs for small banks, and hybrid capital of financial institutions including whole loans and other structured financial instruments. In addition to these fixed income activities, we have a SPAC equity trading group. We carry out our capital markets activities primarily through our subsidiaries: Cohen Securities in the United States and CCFESA in Europe. A division of Cohen Securities, Cohen & Company Capital Markets ("CCM") is our full-service boutique investment bank that provides innovative strategic and financial advice in M&A, capital markets, and SPAC advisory services. Our Capital Markets business segment also includes unrealized and realized gains and losses on our other investments, at fair value and other investments sold, not yet purchased, at fair value that were acquired as part of our CCM business.
• Asset Management: Our Asset Management business segment manages assets within CDOs, managed accounts, joint ventures, and investment funds (collectively, “Investment Vehicles”).
• Principal Investing: Our Principal Investing business segment is comprised of investments that we hold related to our SPAC franchise and other investments we have made for the purpose of earning an investment return rather than investments to support our trading and CCM activities. These investments are a component of our other investments, at fair value, other investments sold, not yet purchased, and investments in equity method affiliates in our consolidated balance sheets.

We generate our revenue by business segment primarily through the following activities.

Capital Markets:

• Our trading activities, which include execution and brokerage services, riskless trading activities as well as gains and losses (unrealized and realized) and income and expense earned on securities and derivatives classified as trading;
• Revenue earned on our gestation repo program;
• New issue and advisory revenue comprised primarily of (a) revenue from advisory services, (b) underwriting, and (c) revenue associated with origination, arranging, or placing newly created financial instruments; and
• Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value and other investments sold, not yet purchased, which were acquired in connection with our CCM business.

Asset Management:

• Asset management fees for our on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities issued in the Investment Vehicle; and
• Incentive management fees earned based on the performance of Investment Vehicles.

Principal Investing:

• Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value and other investments sold, not yet purchased, which were not acquired as part of our CCM business; and
• Income and loss earned on equity method investments.

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Business Environment

Our business in general and our Capital Markets and Principal Investing business segments in particular do not produce predictable earnings. Our results can vary dramatically from year to year and quarter to quarter. Our business is materially affected by economic conditions in the financial markets, political conditions, broad trends in business and finance, the housing and mortgage markets, changes in volume and price levels of securities transactions, and changes in interest rates, including overnight funding rates, all of which can affect our profitability and are unpredictable and beyond our control. These factors may affect the financial decisions made by investors and companies, including their level of participation in the financial markets and their willingness to participate in corporate transactions. Severe market fluctuations or weak economic conditions could reduce our trading volume and revenues, negatively affect our ability to generate new issue and advisory revenue, and adversely affect our profitability.

As a general rule, our trading business benefits from increased market volatility. Increased volatility usually results in increased activity from our clients and counterparties. However, periods of extreme volatility may at times result in clients reducing their trading volumes, which would negatively impact our results. Also, periods of extreme volatility may result in large fluctuations in securities valuations and we may incur losses on our holdings. Also, our mortgage group’s business benefits when mortgage volumes increase, and may suffer when mortgage volumes decrease. Among other things, mortgage volumes are significantly impacted by changes in interest rates. In addition, as a smaller firm, we are exposed to intense competition. Although we provide financing to our customers, larger firms have a much greater capability to provide their clients with financing, giving them a competitive advantage. We are much more reliant upon our employees’ relationships, networks, and abilities to identify and capitalize on market opportunities. Therefore, our business may be significantly impacted by the addition or loss of key personnel.

We try to address these challenges by (i) focusing our business on clients and asset classes that are underserved by the large firms, (ii) continuing to monitor our fixed costs to enhance operating leverage and limit our losses during periods of low volumes, and (iii) attempting to hire and retain entrepreneurial and effective traders, investment bankers, and salespeople. Our business environment is rapidly changing. New risks and uncertainties emerge continuously and it is not possible for us to predict all the risks we will face. This may negatively impact our operating performance.

A portion of our revenue is generated from net trading activity. We engage in proprietary trading for our own account, provide securities financing for our customers, and execute “riskless” trades with a customer order in hand resulting in limited market risk to us. The inventory of securities held for our own account, as well as held to facilitate customer trades, and our market making activities are sensitive to market movements.

A portion of our revenue is generated from new issue and advisory engagements. The fees charged and volume of these engagements are sensitive to the overall business environment. We provide origination services in Europe through our subsidiary CCFESA, and new issue and advisory services in the U.S. through our subsidiary Cohen Securities. A division of Cohen Securities, CCM is our full-service boutique investment bank that provides innovative strategic and financial advice in M&A, capital markets, and SPAC advisory services. In some cases, CCM will receive financial instruments in lieu of cash for its advisory transactions. In these cases, we record revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any change in the fair value of these instruments subsequent to recording the new issue revenue will be recorded as principal transactions gain or loss in our consolidated statement of operations. Currently, our primary source of new issue and advisory revenue is from investment banking and advisory services through CCM, as well as from originating assets for our U.S. and European insurance asset management business including our U.S. Insurance JV and our CREO JV.

A portion of our revenue is generated from management fees. Our ability to charge management fees and the amount of those fees is dependent upon the underlying investment performance and stability of the Investment Vehicles. If these types of investments do not provide attractive returns to investors, the demand for such instruments will likely fall, thereby reducing our opportunity to earn new management fees or maintain existing management fees.

A portion of our revenues is generated from our principal investing activities. Therefore, our revenues are impacted by the overall market supply and demand of these investments as well as the individual performance of each investment. Our principal investments are included within other investments, at fair value; other investments sold, not yet purchased; and investments in equity method affiliates in our consolidated balance sheets. More recently, a significant component of our principal investment revenue has come from SPAC related equity investments, primarily in entities that have been the result of sponsored SPAC business combinations, share forward arrangements ("SFAs"), CCM engagements, or related party sponsored SPAC business combinations. Access to these investments is reliant on a robust SPAC market. Performance of the resulting principal investments can be materially impacted by overall performance of the equity markets. See notes 7 and 8 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

The SPAC Market

In 2018, we began sponsoring a series of SPACs. In addition, we invest in other SPACs at various stages of their business life cycle. These SPAC activities have become a significant portion of our Principal Investing business segment.

In August 2018, we invested in and became the general partner of a newly formed investment fund (the “SPAC Fund”), which was created for the purpose of investing in the equity interests of SPACs and SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties. Effective April 1, 2023, all of the investors in the SPAC Fund, other than Vellar GP, redeemed all of their interests in the SPAC Fund. In February 2025, we sold our interest in Vellar GP.

As a complement to the SPAC Fund, we established and became manager of two newly formed umbrella limited liability companies (the “SPAC Series Funds”) that issued a separate series of interest for each investment portfolio, which typically consisted of investments in the sponsor entities of individual SPACs. Generally, when a SPAC acquires or merges with a privately held target company, the target company winds up owning a majority of the resulting outstanding equity of the SPAC so the transaction is accounted for as a reverse merger. Private companies utilize reverse mergers with SPACs as a method of going public as an alternative to a traditional IPO. All of our business activity related to SPACs is highly sensitive to the volume of activity in the SPAC market. Volumes could be negatively impacted if target companies no longer see SPACs as an attractive alternative thereby reducing the number of suitable potential business combination targets. Also, investor demand for SPACs would be negatively impacted if the stock of SPACs that successfully complete a business combination underperform the market. If volume of SPAC activity declines, our results of operations will likely be significantly negatively impacted.

Our CCM business is also heavily concentrated in the SPAC market with many clients being SPACs or former SPACs. In addition to earning new issue and advisory revenue in these engagements, we sometimes receive financial instruments as part of our compensation, and this increases our investment in SPACs and former SPACs.

Equity prices of SPACs and post business combination SPACs are volatile. We are exposed to public equity prices of SPACs and post business combination SPACs both through our other investments, at fair value and investments in equity method affiliates. As a result, we may record significant principal transaction losses and equity method losses from time to time.

Margin Pressures in Fixed Income Brokerage Business

Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity. Overall market conditions are a product of many factors beyond our control and can be unpredictable. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors including the volatility of the equity and fixed income markets, the level and shape of the various yield curves, and the volume and value of trading in securities.

Margins and volumes in certain products and markets within the fixed income brokerage business continue to decrease materially as competition has increased and general market activity has declined. Further, we continue to expect that competition will increase over time, resulting in continued margin pressure.

Our response to this margin compression has included: (i) building a diversified fixed income trading platform, (ii) acquiring or building out new product lines and expanding existing product lines, (iii) building a hedging execution and funding operation to service mortgage originators, (iv) building out CCM, (v) adding a SPAC equity trading team, and (vi) monitoring our fixed costs. Our cost management initiatives are ongoing. However, there can be no certainty that these efforts will be sufficient. If insufficient, we will likely see a decline in profitability.

U.S. Housing Market

In recent years, our mortgage group has grown in significance to our Capital Markets segment and our company overall. The mortgage group primarily earns revenue by providing hedging execution, securities financing, and trade execution services to mortgage originators and other investors in mortgage-backed securities. Therefore, this group’s revenue is highly dependent on the volume of mortgage originations in the U.S. Origination activity is highly sensitive to interest rates, the U.S. job market, housing starts, sale activity of existing housing stock, as well as the general health of the U.S. economy. In addition, any new regulation that impacts U.S. government agency mortgage-backed security issuance activity, residential mortgage underwriting standards, or otherwise impacts mortgage originators will impact our business. We have no control over these external factors and there is no effective way for us to hedge against these risks. Our mortgage group’s volumes and profitability will be highly impacted by these external factors.

Interest Rates and Inflation

For most of the periods presented herein, interest rates were elevated versus historical lows, which negatively impacted our business in several ways:

1. Rising rates reduce the fair value of the fixed income securities that we hold on our balance sheet.

2. Rising rates create instability in the equity markets, which has reduced equity financing and business combination volumes and negatively impacted CCM.

3. Rising rates reduce the volumes of new issue fixed income instruments, which has negatively impacted our CREO JV.

4. Rising rates significantly reduce mortgage activity. Our mortgage group's profitability is mainly impacted by the volume of mortgage activity in the U.S. (both mortgages for new home purchases as well as refinancing). Furthermore, our mortgage group engages in repo lending to mortgage originators. Reduced mortgage volumes impose financial pressures on mortgage originators and may increase the risk that originators default on their repo obligations to us. See note 10 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

5. Rising rates may ultimately push the U.S. into recession, which may further reduce overall transaction volumes in the financial markets negatively impacting our business generally.

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Recent Events

Columbus Circle Capital Corp I

On May 19, 2025, Columbus Circle Capital Corp I (NASDAQ: BRR) (the "Columbus Circle SPAC"), a blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses (each a “Business Combination”), completed the sale of 25,000,000 units (the “Units”) in its initial public offering (the “IPO”), which included 3,000,000 units issued pursuant to the underwriters’ partial exercise of their over-allotment option.

The Operating LLC owns a portion of, and is the managing member and a member of, Columbus Circle 1 Sponsor Corp LLC, the sponsor of the Columbus Circle SPAC (the “Columbus Circle Sponsor”). CCM, a division of our broker-dealer subsidiary, Cohen Securities, acted as the lead underwriter in the IPO.

Each Unit consists of one Class A ordinary share of the Columbus Circle SPAC, par value $0.0001 per share (“Class A Ordinary Shares”), and one-half of one warrant (each, a “Warrant”), where each whole Warrant entitles the holder to purchase one Class A Ordinary Share for $11.50 per share. The Units were sold in the IPO at an offering price of $10.00 per Unit, for gross proceeds of $250,000 (before underwriting discounts and commissions and offering expenses).

If the Columbus Circle SPAC fails to consummate a Business Combination within the first 24 months following the IPO, its corporate existence will cease except for the purposes of winding up its affairs and liquidating its assets, unless the Columbus Circle SPAC’s shareholders approve an amendment to the Columbus Circle SPAC’s amended and restated memorandum and articles of association to extend the amount of time the Columbus Circle SPAC will have to consummate a Business Combination.

The Columbus Circle Sponsor purchased an aggregate of 265,000 of the Columbus Circle SPAC’s placement units (“Placement Units”) in a private placement that occurred simultaneously with the IPO (the “Private Placement”) for an aggregate of $2,650 or $10.00 per Placement Unit. Additionally, Cohen Securities used its underwriting fee of $3,920 to purchase 392,000 Placement Units in the Private Placement for an aggregate of $3,920. Each Placement Unit consists of one Class A Ordinary Share and one-half of one warrant (a “Placement Warrant”). The Placement Units are identical to the Units sold in the IPO except that Placement Units (including the securities comprising such units and the Class A Ordinary Shares issuable upon exercise of the Placement Warrants) (i) may not, subject to certain limited exceptions, be transferred, assigned, or sold by the holders until 30 days after the completion of the Columbus Circle SPAC’s Business Combination, (ii) will be entitled to certain registration rights, and (iii) with respect to the Placement Warrants held by Cohen Securities and/or its designees, will not be exercisable more than five years from the commencement of sales in the IPO in accordance with FINRA rules. Subject to certain limited exceptions, the Placement Units (including the underlying Placement Warrants and Class A Ordinary Shares and the Class A Ordinary Shares issuable upon exercise of the Placement Warrants) will not be transferable, assignable, or salable until 30 days after the completion of the Columbus Circle SPAC’s Business Combination.

The $2,650 invested by the Columbus Circle Sponsor in consideration for the above-described 265,000 Placement Units of the Columbus Circle SPAC was raised from third party investors. As the managing member of the Columbus Circle Sponsor, the Operating LLC consolidates the Columbus Circle Sponsor and treats the Columbus Circle Sponsor’s investment (as well as Cohen Securities' investment) in the Columbus Circle SPAC as an equity method investment. The $2,650 raised from third party investors is treated by the Operating LLC as non-controlling interest.

A total of $250,000 of the net proceeds from the Private Placement and the IPO were placed in a trust account. Except for the withdrawal of interest to pay taxes (or dissolution expenses if a Business Combination is not consummated), none of the funds held in the trust account will be released until the earliest of (i) the completion of the Columbus Circle SPAC’s Business Combination, (ii) the redemption of the Columbus Circle SPAC’s public Class A Ordinary Shares if the Columbus Circle SPAC is unable to complete its Business Combination within 24 months from the completion of the IPO, and (iii) the redemption of the Columbus Circle SPAC’s public Class A Ordinary Shares properly submitted in connection with a shareholder vote to amend the Columbus Circle SPAC Articles to (A) modify the substance or timing of the Columbus Circle SPAC’s obligation to allow redemption in connection with its Business Combination or to redeem 100% of the Columbus Circle SPAC’s public shares if the Columbus Circle SPAC has not consummated a Business Combination within 24 months from the completion of the IPO, or (B) with respect to any other material provisions relating to the rights of holders of Class A Ordinary Shares or pre-Business Combination activity. If the Columbus Circle SPAC does not complete a Business Combination, the Placement Units will expire worthless.

The Columbus Circle Sponsor holds an aggregate of 8,333,333 founder shares in the Columbus Circle SPAC. Subject to certain limited exceptions, the founder shares will not be transferable or salable until the earlier to occur of: (i) six months after the completion of the IPO, and (ii) the date on which the Columbus Circle SPAC completes a liquidation, merger, share exchange, or other similar transaction after its Business Combination that results in all of the Columbus Circle SPAC’s shareholders having the right to exchange their Class A Ordinary Shares underlying the founder shares for cash, securities, or other property.

Certain non-controlling interests in the Columbus Circle Sponsor, including executives and key employees of the Operating LLC, purchased membership interests in the Columbus Circle Sponsor, either directly or indirectly, and have an interest in the Columbus Circle SPAC’s founder shares through such membership interests in the Columbus Circle Sponsor. The number of the Columbus Circle SPAC’s founders shares in which such non-controlling interests in the Columbus Circle Sponsor, including such executives and key employees of the Operating LLC, have an interest in through the Columbus Circle Sponsor will not be finally and definitively determined until consummation of a Business Combination. The number of the Columbus Circle SPAC’s founder shares currently allocated to the Operating LLC is 2,151,666, but such number of founder shares will not be finally and definitively determined until the consummation of a Business Combination.

In connection with the IPO, the Columbus Circle Sponsor has agreed to indemnify the Columbus Circle SPAC for all claims by third parties for services rendered or products sold to the Columbus Circle SPAC, or a prospective target business with which the Columbus Circle SPAC has entered into a written letter of intent, confidentiality, or other similar agreement or business combination agreement (except for the Columbus Circle SPAC’s independent registered public accounting firm), to the extent such claims reduce the amount of funds in the Columbus Circle SPAC’s trust account to below the lesser of (i) $10.00 per share of Class A Ordinary Shares, and (ii) the actual amount per share of Class A Ordinary Shares held in the Columbus Circle SPAC’s trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the Columbus Circle SPAC’s trust assets, in each case net of taxes, provided that such liability will not apply to any claims (A) by a third party or prospective target business that executed a waiver of any and all rights to the monies held in the Columbus Circle SPAC’s trust account or (B) under the Columbus Circle SPAC’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933.

The Columbus Circle Sponsor loaned to the Columbus Circle SPAC approximately $350 to cover IPO expenses, which was repaid in full at the closing of the IPO. The Columbus Circle Sponsor and its affiliates, including the Operating LLC, may commit to loan the Columbus Circle SPAC up to an additional $1,500 to cover operating and acquisition related expenses following the IPO. These loans will bear no interest and, if the Columbus Circle SPAC consummates a Business Combination in the required time frame, the loans are to be repaid from the funds held in the Columbus Circle SPAC’s trust account. If the Columbus Circle SPAC does not consummate a Business Combination in the required time frame, no funds from the Columbus Circle SPAC’s trust account can be used to repay the loans.

In connection with the closing of the IPO, the Operating LLC and the Columbus Circle SPAC entered into an Administrative Services Agreement, dated May 15, 2025, pursuant to which the Operating LLC and the Columbus Circle SPAC agreed that, commencing on the date that the Columbus Circle SPAC’s securities were first listed on the Nasdaq Global Market through the earlier of the Columbus Circle SPAC’s consummation of a Business Combination and its liquidation, the Columbus Circle SPAC will pay the Operating LLC $10 per month for certain office space, administrative, and shared personnel support services.

On June 23, 2025, the Columbus Circle SPAC entered into a definitive business combination agreement with ProCap BTC, LLC, a Delaware limited liability company (“ProCap BTC”), ProCap Financial, Inc., a Delaware corporation (“ProCap Financial”), Crius SPAC Merger Sub, Inc., a Delaware corporation (“SPAC Merger Sub”), Crius Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), and Inflection Points Inc, d/b/a Professional Capital Management, a Delaware corporation (the "Business Combination Agreement").

Pursuant to the transactions contemplated by the Business Combination Agreement (the “Business Combination”), the Columbus Circle SPAC and ProCap BTC will merge into SPAC Merger Sub and Company Merger Sub, respectively, and become wholly-owned subsidiaries of ProCap Financial, and ProCap Financial will become a publicly traded company. Proceeds from the proposed Business Combination, if any, after satisfaction of redemption payments to the Columbus Circle SPAC’s public shareholders and transaction expenses, are expected to be used by ProCap Financial to purchase bitcoin, in connection with ProCap Financial’s business plans and strategies.

In connection with the execution of the Business Combination Agreement, (a) certain “qualified investors” (defined to include “qualified institutional buyers,” as defined in Rule 144A of the Securities Act, and institutional “accredited investors,” as defined in Rule 506 of Regulation D) were issued non-voting preferred units of ProCap BTC (“Preferred Units”) in a private placement of such Preferred Units consummated immediately prior to the execution of the Business Combination Agreement, in an aggregate amount of approximately $516,500 (the “Preferred Equity Investment”), and (b) certain qualified investors agreed to purchase convertible notes (“Convertible Notes”) issuable upon the Closing by ProCap Financial, with an aggregate principal amount of approximately $235,000 (the “Convertible Note Financing” and, together with the Preferred Equity Investment and the Business Combination, the “Proposed Transactions”). The net proceeds from the Convertible Notes will be utilized by ProCap Financial for purposes of acquiring bitcoin, collateral under the Convertible Notes, and for working capital purposes. The proceeds from the Preferred Equity Investment will be utilized, within 15 days following the Signing Date, to purchase bitcoin assets pursuant to a custodial arrangement with Anchorage Digital Bank N.A.

CCM acted as a co-placement agent in connection with the Convertible Note Financing and the Preferred Equity Investment.

As disclosed above, the Columbus Circle Sponsor holds an aggregate of 8,333,333 founder shares in the Columbus Circle SPAC. Further, certain non-controlling interests in the Columbus Circle Sponsor, including executives and key employees of the Operating LLC, purchased membership interests in the Columbus Circle Sponsor, either directly or indirectly, and have an interest in the Columbus Circle SPAC’s founder shares through such membership interests in the Columbus Circle Sponsor. The number of the Columbus Circle SPAC’s founders shares in which such non-controlling interests in the Columbus Circle Sponsor, including such executives and key employees of the Operating LLC, have an interest in through the Columbus Circle Sponsor will not be finally and definitively determined unless and until consummation of the Business Combination (the “Business Combination Closing”). The number of the Columbus Circle SPAC’s founder shares currently allocated to the Operating LLC is approximately 2,151,666, but such number of founder shares will also not be finally and definitively determined unless and until the Closing occurs. If the Business Combination Closing occurs, each founder share held by the Columbus Circle Sponsor, including those allocated to the Operating LLC, will be converted into one share of common stock in ProCap Financial.

Sale of Management Contracts

On March 13, 2025, we entered into a Master Transaction Agreement (the “MTA”) with an affiliate of Hildene Capital Management, LLC (“Hildene”), an SEC-registered investment adviser based in Stamford, Connecticut. Hildene has been investing in CDOs backed by trust preferred securities ("TruPS") since the 2007-2008 financial crisis and has extensive experience with monitoring banks and insurance companies.

Pursuant to the MTA, we agreed to sell, assign, transfer, and convey to Hildene all of our rights and obligations in and under the Collateral Management Agreements and Collateral Administration Agreements (each a “CDO Agreement” and together, the “CDO Agreements”) for (i) Alesco Preferred Funding III, Ltd., (ii) Alesco Preferred Funding IV, Ltd., (iii) Alesco Preferred Funding V, Ltd., (iv) Alesco Preferred Funding VI, Ltd., and (v) Alesco Preferred Funding VIII, Ltd. (each an “Issuer,” and, collectively, the “Issuers”) and all books and records with respect to each Issuer (collectively with the CDO Agreements, the “Assigned Assets”).

The MTA contemplated multiple closings following the date of the MTA (each an “MTA Closing”), with each MTA Closing to occur following the satisfaction of the conditions to MTA Closing for the assignment of each CDO Agreement pursuant to the MTA. The most significant condition outside of our and Hildene's control was consent of the preferred security holders of each CDO.

During the nine months ended September 30, 2025, we received all required consents with respect to the MTA Closing, and all of the MTA Closings were consummated. No further MTA Closings will occur. We recorded a gain of $2,734, which represented the sale price of $3,500 less offsets of $766, which represented management fees received by us subsequent to March 1, 2025.

Vellar Opportunities GP, LLC

On February 25, 2025, the Operating LLC entered into (i) a Limited Liability Company Interest Purchase Agreement (the “Vellar Purchase Agreement”) with Jason Capone and Solomon Cohen, the son of our executive chairman, Daniel G. Cohen; and (ii) a Transition Services Agreement (the “Vellar Transition Services Agreement” and, together with the Vellar Purchase Agreement, the “Vellar Agreements”) with Vellar Opportunities GP LLC, a Delaware limited liability company (“Vellar GP”).

Prior to entering into the Vellar Agreements, the Operating LLC was the managing member and owner of 33.4% of Vellar GP.

Pursuant to the Vellar Purchase Agreement, the Operating LLC sold all of its 33.4% interest in Vellar GP to Solomon Cohen and Jason Capone for an aggregate of $10. As of February 25, 2025 and as a result of the consummation of the transactions contemplated by the Vellar Purchase Agreement, we no longer had any investment in Vellar GP. Pursuant to the Vellar Purchase Agreement, the Operating LLC resigned as the managing member of Vellar GP, effective February 25, 2025. In the first quarter of 2025, we recorded a loss on sale of $836, which is included as component of principal transactions and other income in our consolidated statement of operations.

Pursuant to the Vellar Transition Services Agreement, in exchange for the Operating LLC’s agreement to provide certain transitional services to Vellar GP, Vellar GP agreed to (i) pay to the Operating LLC certain defined revenue share amounts up to an aggregate of $4,234 and (ii) decrease the amount that the Operating LLC had previously agreed to pay to Vellar GP in connection with the funding of certain Vellar GP litigation expenses from $2,121 to $1,084.

Redemption of Redeemable Financial Instrument and Issuance of the 2024 Note

On October 3, 2016, the Operating LLC entered into an Investment Agreement (the “JKD Investment Agreement”) with JKD Capital Partners I LTD ("JKD Investor"), pursuant to which JKD Investor agreed to invest into the Operating LLC up to $12,000, of which $6,000 was invested into the Operating LLC on October 3, 2016, an additional $1,000 was invested into the Operating LLC on January 25, 2017, and an additional $1,268 was invested into the Operating LLC on January 9, 2019. The JKD Investor is owned by Jack J. DiMaio, the vice chairman of the board of directors, and his spouse.

Effective September 1, 2024, we entered into a redemption agreement with the JKD Investor (the “Redemption Agreement”), pursuant to which the Operating LLC redeemed the JKD Investment Agreement in its entirety. As of September 1, 2024, the investment balance of the JKD Investment Agreement was $7,719. Pursuant to the Redemption Agreement, we (i) paid $2,573 of the investment balance in cash and (ii) issued a senior promissory note (the “2024 Note”) in the aggregate principal amount of $5,146, representing the remaining balance payable under the JKD Investment Agreement. The 2024 Note bears interest at 12% and its principal was to be repaid as follows: (i) $2,573 of the principal amount was to be due and payable on August 31, 2025, and (ii) $2,573 will be due and payable on August 31, 2026. The 2024 Note may, with at least 31 days’ prior written notice to the holder of the 2024 Note, be prepaid in whole or in part at any time without penalty or premium. We prepaid the $2,573 of the principal amount that was otherwise due under the 2024 Note on August 31, 2025 on June 30, 2025. See note 15.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

The following table sets forth information regarding our consolidated results of operations for the nine months ended September 30, 2025 and 2024.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Revenues

Revenues increased by $111,767, or 183%, to $172,824 for the nine months ended September 30, 2025, as compared to $61,057 for the nine months ended September 30, 2024. Each line item is discussed below in more detail.

Net Trading

Net trading revenue increased by $6,066 to $33,528 for the nine months ended September 30, 2025, as compared to $27,462 for the nine months ended September 30, 2024. The following table shows the detail by trading group.

NET TRADING

Our net trading revenue includes unrealized gains on our trading investments as of the applicable measurement date that may never be realized due to changes in market or other conditions not under our control. This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized may not be indicative of future results. Furthermore, from time to time, some of the assets included in the investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 7, 8, and 9 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold. We consider our gestation repo business to be subject to significant concentration risk. See note 10 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. All net trading revenue is included in our Capital Markets segment. See note 21 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Asset Management

Our AUM equals the sum of the NAV or gross assets of the Investment Vehicles we manage based on whichever measurement serves as the basis for the calculation of our management fees.

Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to the definitions of AUM that may be used in our management agreements.

(1) Other Investment Vehicles include any Investment Vehicle that is not a Company-sponsored CDO.

(2) In some cases, accounts we manage may employ leverage. Further, in some cases, our fees are based on gross assets and in other cases, our fees are based on net assets. Finally, in the case of the SPAC Series Funds there are no management fees earned. AUM included herein is calculated using either gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees. In the case where no management fees are earned, the net assets are included.

Asset management fees decreased by $806 to $6,136 for the nine months ended September 30, 2025, as compared to $6,942 for the nine months ended September 30, 2024, as discussed in more detail below. The following table provides a more detailed comparison of the two periods.

ASSET MANAGEMENT

Asset management fees from CDOs declined primarily due to the sale of the Alesco III, Alesco IV, Alesco V, Alesco VI, and Alesco VIII CDO Agreements, which closed during the 2025 period. During the nine months ended September 30, 2025 and 2024, we earned a total of $737 and $990 in revenue from these contracts, respectively. As a result of the sale, asset management revenue from CDOs will decline in future quarters. See note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Asset management fees from other decreased primarily due to the recognition in 2024 of deferred performance fees related to a certain PriDe Fund.

New Issue and Advisory

New issue and advisory revenue increased by $245,311 to $298,658 for the nine months ended September 30, 2025, as compared to $53,347 for the nine months ended September 30, 2024. Nearly all of the new issue and advisory revenue recognized in both periods resulted from CCM's activities.

Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition. In addition, we often incur certain costs related to new issue engagements. These costs are included as a component of either subscriptions, clearing and execution, or professional fees and other. All new issue revenue is included in our Capital Markets segment. See note 21 to our consolidated financial statements included in Item 1 of our Quarterly Report on Form 10-Q.

CCM, a division of Cohen Securities, is our full-service boutique investment bank, which focuses on M&A, underwriting, capital markets, and SPAC advisory services. In addition, we sometimes generate new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and our European PriDe Funds.

In some cases, CCM will receive financial instruments in lieu of cash for its advisory transactions. In these cases, we record advisory revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any change in the fair value of these instruments subsequent to recording the new issue revenue will be recorded as principal transactions gain or loss in the consolidated statement of operations. Further, it should be noted that the financial instruments we receive in these cases are often either (i) common stock investments that are restricted for resale for some period of time, (ii) convertible or non-convertible debt investments that are not publicly traded, (iii) equity investments in special purpose entities that are not publicly traded, or (iv) unrestricted common stock investments in public companies that do not have significant trading volume. Therefore, it may take us a significant period of time to liquidate these investments. We may suffer significant principal transactions loss prior to final liquidation of these financial instruments, which will impact the results of our Capital Markets segment.

The following table shows the cash and non-cash portion of new issue and advisory revenue:

When CCM receives common stock in exchange for services, the non-cash revenue recorded equals the fair value of the stock received as of the date the underlying transaction closed. CCM's clients include many newly public companies as well as early stage and high growth companies. These companies often have highly volatile stock prices. Accordingly, CCM may experience significant gains or losses subsequent to the receipt of the stock until the stock is finally liquidated. Such gains or losses are recorded as a component of principal transactions and are shown separately in the table immediately below in the section: Capital Markets principal transactions. Unless the financial instruments received have been fully liquidated, CCM may experience further gains and losses in the future related to those financial instruments. See note 7 to our consolidated financial statements included in this Quarterly Report on Form 10-Q to review the remaining carrying value of positions held as of the current reporting period date.

Principal Transactions and Other Income (Loss)

Principal transactions and other income (loss) decreased by $138,804 for the nine months ended September 30, 2025, to ($165,498) as compared to ($26,694) for the nine months ended September 30, 2024. The following table summarizes principal transactions and other income by category.

PRINCIPAL TRANSACTIONS & OTHER INCOME

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Principal Transactions

In the table above, our principal transactions are broken out into two groups:

1. Capital Markets Principal Transactions: In some cases, CCM acquires financial instruments or receives financial instruments in lieu of cash for its advisory transactions. We carry these instruments at fair value with changes in fair value included as a component of principal transactions and other income in our consolidated income statement. Gains and losses on these instruments are included in our Capital Markets segment as these instruments were acquired as part of CCM's activities. See note 21 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

2. Principal Investing Principal Transactions: In other cases, we will acquire a financial instrument for the purposes of earning an investment return. We also carry these instruments at fair value with changes in fair value included as a component of principal transactions and other income in our consolidated income statement. However, gains and losses on these instruments are included in our Principal Investing segment as these investments were acquired to earn a return. Note that a particular instrument may be included in both categories if it was acquired as part of CCM's activities and separately acquired to earn an investment return.

Interests in Public Companies

These investments represent our direct and indirect investments in certain public companies. These investments may be in the form of unrestricted common stock, restricted common stock, equity derivatives, convertible notes and non-convertible notes receivable, as well as equity interest in SPVs that have investments in these public companies. The name and stock symbol of each public company in which we have a direct or indirect investment is listed in the table above. The amounts shown represent the change in the fair value of our investments during each time period noted in the table. Many of the interests in the public companies listed above were acquired as non-cash compensation related to new issue and advisory engagements. When we received these investments, we recorded new issue and advisory revenue for the fair value of those instruments at that time.

Other Principal Investments

The CREO JV invests in primarily multi-family commercial real estate mortgage-backed loans. We carry our investment in the CREO JV at its NAV.

The U.S. Insurance JV invests in insurance company debt. We carry our investment in the U.S. Insurance JV at its NAV.

We have engaged in several SFA transactions. In a typical SFA transaction, we acquire an interest in a publicly traded company and enter into an offsetting derivative with the same company. Both the interest in the public company and the offsetting derivative are carried at fair value. The amounts shown in the table above represent the net change in fair value recorded during the periods presented. The interests we hold in SFA Counterparties are included as a component of other investments, at fair value. The derivatives are included as a component of other investments sold, not yet purchased, at fair value. Most our SFA transactions were undertaken in Vellar GP. We sold our interest in Vellar GP during the nine months ended September 30, 2025.

Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.

Other Income (Loss)

Other income / (loss) is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC. The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments. To date, we have earned $9,863 in connection with this revenue share arrangement.

Operating Expenses

Operating expenses increased by $79,885, or 126%, to $143,462 for the nine months ended September 30, 2025, as compared to $63,577 for the nine months ended September 30, 2024. Each line item is discussed in more detail below.

Compensation and Benefits

Compensation and benefits increased by $76,220, or 175%, to $119,673, for the nine months ended September 30, 2025, as compared to $43,453 for the nine months ended September 30, 2024.

COMPENSATION AND BENEFITS

Cash compensation and benefits in the table above was primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits. The increase was primarily the result of increased incentive compensation driven by increased revenues. Our total headcount was 124 at September 30, 2025 and 113 at September 30, 2024. Equity-based compensation remained relatively unchanged.

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment increased by $1,259, or 27%, to $5,858 or the nine months ended September 30, 2025, as compared to $4,599 for the nine months ended September 30, 2024. This increase was comprised of an increase in occupancy and equipment of $79, and an increase in business development of $1,180.

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution increased by $283, or 4%, to $7,277 for the nine months ended September 30, 2025, as compared to $6,994 for the nine months ended September 30, 2024. The increase was comprised of an increase in subscriptions and dues of $474, partially offset by a decrease in clearing and execution of $191.

Professional Fee and Other Operating Expenses

Professional fees and other operating expenses increased by $1,989, or 24%, to $10,127 for the nine months ended September 30, 2025, as compared to $8,138 for the nine months ended September 30, 2024. The increase was comprised of an increase in professional fees of $1,418, and an increase in other operating expense of $571.

Depreciation and Amortization

Depreciation and amortization increased by $134, or 34%, to $527 for the nine months ended September 30, 2025, as compared to $393 for the nine months ended September 30, 2024.

Non-Operating Income and Expense

Interest Expense, net

Interest expense, net decreased by $69 to $4,416 for the nine months ended September 30, 2025, as compared to $4,347 for the nine months ended September 30, 2024.

INTEREST EXPENSE

See notes 15 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Gain on Sale of Management Contracts

On March 13, 2025, we entered into an MTA with Hildene to sell our CDO collateral management contracts for (i) Alesco Preferred Funding III, Ltd., (ii) Alesco Preferred Funding IV, Ltd., (iii) Alesco Preferred Funding V, Ltd., (iv) Alesco Preferred Funding VI, Ltd., and (v) Alesco Preferred Funding VIII, Ltd. for a total of $3,500. Each CDO collateral management contract sale was contingent upon certain conditions to closing. The most significant condition outside of our and Hildene's control was consent of the preferred security holders of each CDO. The MTA called for the purchase price to be reduced, dollar for dollar, for any management fees received by us after March 1, 2025.

During the nine months ended September 30, 2025, we received all required consents, and all of the sales were closed. We recorded a gain of $2,734, which represented the sale price of $3,500 less offsets of $766, which represented management fees received by us subsequent to March 1, 2025.

Income / (Loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $34,048 to ($11,682) for the nine months ended September 30, 2025, as compared to $22,366 for the nine months ended September 30, 2024. See note 11 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

SPAC sponsor entities includes both indirect and direct investments in SPAC sponsor entities. Several of these SPAC sponsor entities are invested in SPACs that have completed their business combinations. Those SPAC sponsor entities hold restricted and unrestricted equity interests in the public post-merger entities. We account for our investments in SPAC sponsor entities under the equity method of accounting. If the SPAC sponsor entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value. The following table shows the equity method income or loss included in other SPAC sponsor entities above broken out by the ultimate public company investee. For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented. See discussion of principal transactions above.

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Income Tax Expense / (Benefit)

Income tax expense / (benefit) increased by $1,208 to $1,643 for the nine months ended September 30, 2025, as compared to $435 for the nine months ended September 30, 2024.

Our provision for income taxes fluctuates due to several factors mostly attributable to our legal structure, which are summarized as follows.

Cohen & Company Inc. is treated as a “C” corporation for United States federal income tax purposes. A U.S. C corporation is subject to a federal tax rate of 21%. Our effective tax rate is significantly different than this rate for the following reasons.

1. Cohen & Company Inc. consolidates the Operating LLC but only owns a minority economic interest in the Operating LLC. For the nine months ended September 30, 2025, Cohen & Company Inc. owned 29.5% of the economic interests of the Operating LLC (on average) and was allocated the same percentage of income/(loss) generated by the Operating LLC. To the extent Cohen & Company Inc. incurs tax obligations on this amount, the related tax expense is recognized in our consolidated financial statements. The remaining 70.5% of income/(loss) generated by the Operating LLC was allocated to the non-controlling members of the Operating LLC and is subject to taxation on such members' individual tax returns.

2. The Operating LLC itself consolidates certain pass-through entities. Therefore, the income/(loss) of these entities is included in our consolidated results, but no tax expense/(benefit) related to the unowned portions of these entities is included in our consolidated results.

3. There are state, local, and foreign taxes that the Operating LLC or its subsidiaries are subject to, which are included in our effective tax rate.

4. We also have valuation allowances applied against our NOL and NCL carryforward deferred tax assets as well as our tax over book basis in the Operating LLC. Valuation allowances are applied to deferred tax assets when management determines that the assets may not be fully realized. This determination requires significant judgement and is primarily based on management's expectations regarding the generation of future taxable income. ASC 740 indicates that all available evidence should be considered when assessing the need for and the appropriate level of a valuation allowance. All available evidence includes historical information supplemented by all currently available information about future periods.

The Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025. The only provisions of the OBBBA that directly impact us are: (i) changes in bonus depreciation and (ii) changes in the calculation of the amount of net interest expense that is deductible. In both cases, the impact to us will be immaterial. The OBBBA made significant changes to individual income taxes including the taxation of overtime and tips that may impact certain company's workforces thereby having an indirect effect on these companies. However, none of our employees receive tips and we have an immaterial number of hourly employees.

Net Income / (Loss) Attributable to the Non-Convertible Non-Controlling Interest

Net income / (loss) attributable to the non-convertible non-controlling interest for the nine months ended September 30, 2025 and 2024 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us therein for the relevant periods. These interests are not convertible into Common Stock.

SUMMARY CALCULATION OF NON-CONVERTIBLE NON-CONTROLLING INTEREST

Other SPAC Sponsor Investor represents an entity that we consolidate, but do not wholly own, that invests in other SPAC sponsor entities. We sold our interest in Vellar GP during 2025.

Net Income / (Loss) Attributable to the Convertible Non-Controlling Interest

Net income / (loss) attributable to the convertible non-controlling interest for the nine months ended September 30, 2025 and 2024 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us in the Operating LLC for the relevant periods. These interests are convertible into Common Stock. See note 21 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Nine Months Ended September 30, 2025

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Nine Months Ended September 30, 2024

(1) Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

The following table sets forth information regarding our consolidated results of operations for the three months ended September 30, 2025 and 2024.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Revenues

Revenues increased by $52,518, or 166%, to $84,213 for the three months ended September 30, 2025, as compared to $31,695 for the three months ended September 30, 2024. Each line item is discussed below in more detail.

Net Trading

Net trading revenue increased by $4,744, or 54%, to $13,560 for the three months ended September 30, 2025, as compared to $8,816 for the three months ended September 30, 2024. The following table shows the detail by trading group.

NET TRADING

Our net trading revenue includes unrealized gains on our trading investments as of the applicable measurement date that may never be realized due to changes in market or other conditions not under our control. This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized may not be indicative of future results. Furthermore, from time to time, some of the assets included in the investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 7, 8, and 9 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold. We consider our gestation repo business to be subject to significant concentration risk. See note 10 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. All net trading revenue is included in our Capital Markets segment. See note 21 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Asset Management

Our AUM equals the sum of the NAV or gross assets of the Investment Vehicles we manage based on whichever measurement serves as the basis for the calculation of our management fees.

Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to the definitions of AUM that may be used in our management agreements.

(1) Other Investment Vehicles include any Investment Vehicle that is not a Company-sponsored CDO.

(2) In some cases, accounts we manage may employ leverage. Further, in some cases, our fees are based on gross assets and in other cases, our fees are based on net assets. Finally, in the case of the SPAC Series Funds there are no management fees earned. AUM included herein is calculated using either gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees. In the case where no management fees are earned, the net assets are included.

Asset management fees decreased by $199, or 9%, to $1,948 for the three months ended September 30, 2025, as compared to $2,147 for the three months ended September 30, 2024, as discussed in more detail below. The following table provides a more detailed comparison of the two periods.

ASSET MANAGEMENT

Asset management fees from CDOs declined primarily due to the sale of the Alesco III, Alesco IV, Alesco V, Alesco VI, and Alesco VIII CDO Agreements, which closed in 2025. During the three months ended September 30, 2025 and 2024, we earned a total of $114 and $328 in revenue from these contracts. As a result of the sale, asset management revenue from CDOs will decline in future quarters. See note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Asset management fees from other increased primarily due to increases in fees earned in the PriDe Funds.

New Issue and Advisory

New issue and advisory revenue increased by $205,549 to $228,008 for the three months ended September 30, 2025, as compared to $22,459 for the three months ended September 30, 2024. Substantially all of the new issue and advisory revenue recognized in both periods resulted from CCM's activities.

Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition. In addition, we often incur certain costs related to new issue engagements. These costs are included as a component of either subscriptions, clearing and execution, or professional fees and other. All new issue revenue is included in our Capital Markets segment. See note 21 to our consolidated financial statements included in Item 1 of our Quarterly Report on Form 10-Q.

CCM, a division of Cohen Securities, is our full-service boutique investment bank, which focuses on M&A, underwriting, capital markets, and SPAC advisory services. In addition, we sometimes generate new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and our European PriDe Funds.

In some cases, CCM will receive financial instruments in lieu of cash for its advisory transactions. In these cases, we record advisory revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any change in the fair value of these instruments subsequent to recording the new issue revenue will be recorded as principal transactions gain or loss in the consolidated statement of operations. Further, it should be noted that the financial instruments we receive in these cases are often either (i) common stock investments that are restricted for resale for some period of time, (ii) convertible or non-convertible debt investments that are not publicly traded, (iii) equity investments in special purpose entities that are not publicly traded, or (iv) unrestricted common stock investments in public companies that do not have significant trading volume. Therefore, it may take us a significant period of time to liquidate these investments. We may suffer significant principal transactions loss prior to final liquidation of these financial instruments, which will impact the results of our Capital Markets segment.

The following table shows the cash and non-cash portion of new issue and advisory revenue:

When CCM receives common stock in exchange for services, the non-cash revenue recorded equals the fair value of the stock received as of the date the underlying transaction closed. CCM's clients include many newly public companies as well as early stage and high growth companies. These companies often have highly volatile stock prices. Accordingly, CCM may experience significant gains or losses subsequent to the receipt of the stock until the stock is finally liquidated. Such gains or losses are shown are recorded as a component of principal transactions and are shown separately in the table immediately below in the section: Capital Markets principal transactions. Unless the financial instruments received have been fully liquidated, CCM may experience further gains or losses in the future related to those financial instruments. See note 7 to our consolidated financial statements included in this Quarterly Report on Form 10-Q to review the remaining carrying value of positions held as of the current reporting period date.

Principal Transactions and Other Income (Loss)

Principal transactions and other income (loss) decreased by $157,576 to ($159,303) for the three months ended September 30, 2025, as compared to ($1,727) for the three months ended September 30, 2024. The following table summarizes principal transactions and other income by category.

PRINCIPAL TRANSACTIONS & OTHER INCOME

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Principal Transactions

In the table above, our principal transactions are broken out into two groups:

1. Capital Markets Principal Transactions: In some cases, CCM acquires financial instruments or receives financial instruments in lieu of cash for its advisory transactions. We carry these instruments at fair value with changes in fair value included as a component of principal transactions and other income in our consolidated income statement. Gains and losses on these instruments are included in our Capital Markets segment as these instruments were acquired as part of CCM's activities. See note 21 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

2. Principal Investing Principal Transactions: In other cases, we will acquire a financial instrument for the purposes of earning an investment return. We also carry these instruments at fair value with changes in fair value included as a component of principal transactions and other income in our consolidated income statement. However, gains and losses on these instruments are included in our Principal Investing segment as these investments were acquired to earn a return. Note that a particular instrument may be included in both categories if it was acquired as part of CCM's activities and separately acquired to earn an investment return.

Interests in Public Companies

These investments represent our direct and indirect investments in certain public companies. These investments may be in the form of unrestricted common stock, restricted common stock, equity derivatives, convertible notes and non-convertible notes receivable, as well as equity interest in SPVs that have investments in these public companies. The name and stock symbol of each public company in which we have a direct or indirect investment is listed in the table above. The amounts shown represent the change in the fair value of our investments during each time period noted in the table. Many of the interests in the public companies listed above were acquired as non-cash compensation related to new issue and advisory engagements. When we received these investments, we recorded new issue and advisory revenue for the fair value of those instruments at that time.

Other Principal Investments

The CREO JV invests in primarily multi-family commercial real estate mortgage-backed loans. We carry our investment in the CREO JV at its NAV.

The U.S. Insurance JV invests in insurance company debt. We carry our investment in the U.S. Insurance JV at its NAV.

We have engaged in several SFA transactions. In a typical SFA transaction, we acquire an interest in a publicly traded company and enter into an offsetting derivative with the same company. Both the interest in the public company and the offsetting derivative are carried at fair value. The amount shown in the table above represents the net change in fair value recorded during the periods presented. The interests we hold in SFA Counterparties are included as a component of other investments, at fair value. The derivatives are included as a component of other investments sold, not yet purchased, at fair value. Most our SFA transactions were undertaken in Vellar GP. We sold our interest in Vellar GP in 2025.

Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.

Other Income (Loss)

Other income / (loss) is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC. The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments. To date, we have earned $9,863 in connection with this revenue share arrangement.

Operating Expenses

Operating expenses increased by $37,980, or 155%, to $62,453 for the three months ended September 30, 2025, as compared to $24,473 for the three months ended September 30, 2024. Each line item is discussed in more detail below.

Compensation and Benefits

Compensation and benefits increased by $35,769, or 200%, to $53,684 for the three months ended September 30, 2025, as compared to $17,915 for the three months ended September 30, 2024.

COMPENSATION AND BENEFITS

Cash compensation and benefits in the table above was primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits. The increase was primarily the result of increased incentive compensation driven by increased revenue. Our total headcount was 124 at September 30, 2025 and 113 at September 30, 2024. Equity-based compensation remained relatively unchanged.

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment increased by $474, or 30%, to $2,041 for the three months ended September 30, 2025, as compared to $1,567 for the three months ended September 30, 2024. This increase was comprised of an increase in business development of $403 and an increase in occupancy and equipment of $71.

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution increased by $80, or 3%, to $2,771 for the three months ended September 30, 2025, as compared to $2,691 for the three months ended September 30, 2024. The increase was comprised of an increase in clearing and execution of $98; partially offset by a decrease in subscriptions of $18.

Professional Fee and Other Operating Expenses

Professional fees and other operating expenses increased by $1,618, or 75%, to $3,774 for the three months ended September 30, 2025, as compared to $2,156 for the three months ended September 30, 2024. This increase is comprised of an increase in professional fees of $1,410 and an increase in other operating expenses of $208.

Depreciation and Amortization

Depreciation and amortization increased by $39, or 27%, to $183 for the three months ended September 30, 2025, as compared to $144 for the three months ended September 30, 2024.

Non-Operating Income and Expense

Interest Expense, net

Interest expense, net increased by $216 to $1,472 for the three months ended September 30, 2025, as compared to $1,256 for the three months ended September 30, 2024.

INTEREST EXPENSE

See notes 15 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Gain on Sale of Management Contracts

On March 13, 2025, we entered into an MTA with Hildene to sell our CDO collateral management contracts for (i) Alesco Preferred Funding III, Ltd., (ii) Alesco Preferred Funding IV, Ltd., (iii) Alesco Preferred Funding V, Ltd., (iv) Alesco Preferred Funding VI, Ltd., and (v) Alesco Preferred Funding VIII, Ltd. for a total of $3,500. Each CDO collateral management contract sale was contingent upon certain conditions to closing. The most significant condition outside of our and Hildene's control was consent of the preferred security holders of each CDO. The MTA called for the purchase price to be reduced, dollar for dollar, for any management fees received by us after March 1, 2025.

During the nine months ended September 30, 2025, we received all required consents, and all of the sales were closed. During the nine months ended September 30, 2025, we recorded a gain of $2,734, which represented the sale price of $3,500 less offsets of $766, which represented management fees received by us subsequent to March 1, 2025. Of that gain of $2,734, $837 was recorded in the three months ended June 30, 2025, as a result of the closing of the Alesco Preferred Funding V and VIII sales, and $1,897 was recorded in the three months ended September 30, 2025, as a result of the closing of the Alesco Preferring Funding III, IV, and VI sales.

Income / (Loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $11,980 to ($12,663) for the three months ended September 30, 2025, as compared to ($683) for the three months ended September 30, 2024. See note 11 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

SPAC sponsor entities includes both indirect and direct investments in SPAC sponsor entities. Several of these SPAC sponsor entities are invested in SPACs that have completed their business combinations. Those SPAC sponsor entities hold restricted and unrestricted equity interests in the public post-merger entities. We account for our investments in SPAC sponsor entities under the equity method of accounting. If the SPAC sponsor entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value. The following table shows the equity method income or loss included in other SPAC sponsor entities above broken out by the ultimate public company investee. For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented. See discussion of principal transactions above.

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Income Tax Expense / (Benefit)

Income tax expense / (benefit) increased by $591 to $733 for the three months ended September 30, 2025, as compared to $142 for the three months ended September 30, 2024.

Our provision for income taxes fluctuates due to several factors mostly attributable to our legal structure, which are summarized as follows.

Cohen & Company Inc. is treated as a “C” corporation for United States federal income tax purposes. A U.S. C corporation is subject to a federal tax rate of 21%. Our effective tax rate is significantly different than this rate for the following reasons.

1. Cohen & Company Inc. consolidates the Operating LLC but only owns a minority economic interest in the Operating LLC. For the three months ended September 30, 2025, Cohen & Company Inc. owned 29.6% of the economic interests of the Operating LLC (on average) and was allocated the same percentage of income/(loss) generated by the Operating LLC. To the extent Cohen & Company Inc. incurs tax obligations on this amount, the related tax expense is recognized in our consolidated financial statements. The remaining 70.4% of income/(loss) generated by the Operating LLC was allocated to the non-controlling members of the Operating LLC and is subject to taxation on such members' individual tax returns.

2. The Operating LLC itself consolidates certain pass-through entities. Therefore, the income/(loss) of these entities is included in our consolidated results, but no tax expense/(benefit) related to the unowned portions of these entities is included in our consolidated results.

3. There are state, local, and foreign taxes that the Operating LLC or its subsidiaries are subject to, which are included in our effective tax rate.

4. We also have valuation allowances applied against our NOL and NCL carryforward deferred tax assets as well as our tax over book basis in the Operating LLC. Valuation allowances are applied to deferred tax assets when management determines that the assets may not be fully realized. This determination requires significant judgement and is primarily based on management's expectations regarding the generation of future taxable income. ASC 740 indicates that all available evidence should be considered when assessing the need for and the appropriate level of a valuation allowance. All available evidence includes historical information supplemented by all currently available information about future periods.

The Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025. The only provisions of the OBBBA that directly impact us are: (i) changes in bonus depreciation and (ii) changes in the calculation of the amount of net interest expense that is deductible. In both cases, the impact to us will be immaterial. The OBBBA made significant changes to individual income taxes including the taxation of overtime and tips that may impact certain company's workforces thereby having an indirect effect on these companies. However, none of our employees receive tips and we have an immaterial number of hourly employees.

Net Income / (Loss) Attributable to the Non-Convertible Non-Controlling Interest

Net income / (loss) attributable to the non-convertible non-controlling interest for the three months ended September 30, 2025 and 2024 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us therein for the relevant periods. These interests are not convertible into Common Stock.

SUMMARY CALCULATION OF NON-CONVERTIBLE NON-CONTROLLING INTEREST

Other SPAC Sponsor Investor represents an entity that we consolidate, but do not wholly own, that invests in other SPAC sponsor entities. We sold our interest in Vellar GP during 2025.

Net Income / (Loss) Attributable to the Convertible Non-Controlling Interest

Net income / (loss) attributable to the convertible non-controlling interest for the three months ended September 30, 2025 and 2024 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us in the Operating LLC for the relevant periods. These interests are convertible into Common Stock. See note 21 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Three Months Ended September 30, 2025

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Three Months Ended September 30, 2024

(1) Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet potential cash requirements including ongoing commitments to repay debt borrowings, make interest payments on outstanding borrowings, fund investments, and support other general business purposes. In addition, our United States and European broker-dealer subsidiaries are subject to certain regulatory requirements to maintain minimum levels of net capital. Historically, our primary sources of funds have been our operating activities and general corporate borrowings. In addition, our trading operations have generally been financed by the use of collateralized securities financing arrangements as well as margin loans.

Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. Cohen Securities is subject to net capital restrictions imposed by the SEC and FINRA that require certain minimum levels of net capital to remain in this subsidiary. In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through a distribution or a loan. CCFESA is subject to the regulations of the ACPR, which imposes minimum capital requirements. See note 25 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

See Liquidity and Capital Resources – Contractual Obligations below.

During the third quarter of 2010, our board of directors initiated a dividend of $0.50 per quarter, which was paid regularly through December 31, 2011. Beginning in 2012, our board of directors declared a dividend of $0.20 per quarter, which was paid regularly through the first quarter of 2019. Each time a cash dividend was declared by our board of directors, a pro rata distribution was made to the other members of the Operating LLC upon payment of dividends to our stockholders.

On July 29, 2021, our board of directors reinstated our quarterly dividend declaring a cash dividend of $0.25 per share. We have paid a quarterly cash dividend of $0.25 regularly since that date. In addition to our routine quarterly distribution, on March 8, 2022, our board of directors declared a special cash dividend of $0.75 per share. On November 4, 2025, our board of directors declared a quarterly cash dividend of $0.25 per share on its Common Stock. The dividends are payable on December 3, 2025, to stockholders of record as of November 19, 2025.

We had the following financing transactions in excess of $1,000 during the nine months ended September 30, 2025, excluding dividends paid on Common Stock, the pro rata distributions made to the convertible non-controlling interest, and non-cash items:

• During the nine months ended September 30, 2025, we had cash inflows of $2,669 in cash from investments in non-convertible non-controlling interests and cash outflows of $2,573 used to repay the 2024 Note. Otherwise, we had no financing transactions in excess of $1,000 during the nine months ended September 30, 2025, excluding dividends paid on Common Stock, the pro rata distributions made to the convertible non-controlling interest, and non-cash items.
• During the nine months ended September 30, 2024, we had cash outflows of $3,671 in non-convertible non-controlling interests distributions and $2,573 in cash used to repay a redeemable financial instrument. Otherwise, we had no financing transactions in excess of $1,000 during the nine months ended September 30, 2024, excluding dividends paid on Common Stock, the pro rata distributions made to the convertible non-controlling interest, and non-cash items.

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Cash Flows

We have seven primary uses for capital:

(1) To fund the operations of our Capital Markets business segment. Our Capital Markets business segment utilizes capital (i) to fund securities inventory to facilitate client trading activities, (ii) for risk trading for our own account, (iii) to fund our collateralized securities lending activities, (iv) for temporary capital needs associated with underwriting activities, (v) to fund business expansion into existing or new product lines including additional capital dedicated to our mortgage group as well as our gestation repo business, and (vi) to fund any operating losses incurred.

(2) To fund the expansion of our Asset Management business segment. We generally grow our AUM by sponsoring new Investment Vehicles. The creation of a new Investment Vehicle often requires us to invest a certain amount of our own capital to attract outside capital to manage. Also, these new Investment Vehicles often require warehouse and other third-party financing to fund the acquisition of investments. Finally, we generally will hire employees to manage new Investment Vehicles and will operate at a loss for a startup period.

(3) To fund investments. We make principal investments (including sponsor and other investments in SPACs) to generate returns. We may need to raise additional debt or equity financing in order to ensure we have the capital necessary to take advantage of attractive investment opportunities.

(4) To fund mergers or acquisitions. We may opportunistically use capital to acquire other asset managers, individual asset management contracts, or financial services firms. To the extent our liquidity sources are insufficient to fund our future merger or acquisition activities, we may need to raise additional funding through an equity or debt offering. No assurances can be given that additional financing will be available in the future, or that if available, such financing will be on favorable terms.

(5) To fund potential dividends and distributions. We sometimes pay dividends. Each time a cash dividend was declared by our board of directors, a pro rata distribution was made to the other members of the Operating LLC upon payment of dividends to our stockholders.

(6) To fund potential repurchases of Common Stock. We have opportunistically repurchased Common Stock in private transactions.

(7) To pay off debt as it matures. We have indebtedness that must be repaid as it matures. See note 15 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

If we are unable to raise sufficient capital on economically favorable terms, we may need to reduce the amount of capital invested for the uses described above, which may adversely impact earnings and our ability to pay dividends.

As of September 30, 2025 and December 31, 2024, we maintained cash and cash equivalents of $ 54,688 and $ 19,590, respectively. We generated cash from or used cash for the activities described below.

SUMMARY CASH FLOW INFORMATION

See the statement of cash flows in our consolidated financial statements. We believe our available cash and cash equivalents, as well as our investment in our trading portfolio and related borrowing capacity, will provide sufficient liquidity to meet the cash needs of our ongoing operations in the near term.

Nine Months Ended September 30, 2025

As of September 30, 2025, our cash and cash equivalents were $ 54,688, representing an increase of $ 35,098 from December 31, 2024. The increase was attributable to cash provided by operating activities of $ 29,406, cash provided by investing activities of $ 12,829, cash used in financing activities of $ 7,716, and an increase in cash caused by the change in exchange rates of $ 579.

The cash provided by operating activities of $ 29,406 was comprised of (a) net cash inflows of $ 65,572 related to working capital fluctuations, (b) net cash outflows of $ 22,035 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, receivables under resale agreements, securities sold under agreements to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, not yet purchased, and (c) net cash outflows from other earnings items of $ 14,131 (which represents net income or loss adjusted for the following non-cash operating items: other income / (expense), non-cash revenue, realized and unrealized gains and losses and accretion of income on other investments, income/(loss) from equity method affiliates, equity based compensation, depreciation and amortization, deferred taxes, and amortization of discount on debt).

The cash provided by investing activities of $ 12,829 was comprised of (a) $44,240 of sales and returns of principal from other investments, at fair value, (b) $199 in sales and returns of principal of other investments sold, not yet purchased, (c) $1,578 of distributions received from equity method affiliates, partially offset by (d) $29,257 in cash used to purchase other investments, at fair value, (d) $433 in reduction in cash from the disposal of our interest in Vellar GP, (e) $2,675 invested in equity method affiliates, and (f) $823 in cash used to purchase furniture, equipment, and leasehold improvements.

The cash used in financing activities of $ 7,716 was comprised of (a) $2,573 of cash used to repay a portion of the 2024 Note, (b) $344 in cash used to net settle equity awards, (c) $1,695 in cash used to pay dividends, (d) $3,850 in cash used to pay distributions to the convertible non-controlling interest, (e) $954 in cash used to redeem convertible non-controlling units, (f) $969 in non-convertible non-controlling interest distributions, partially offset by (g) $2,669 in cash received as non-convertible non-controlling interest investments.

Nine Months Ended September 30, 2024

As of September 30, 2024, our cash and cash equivalents were $14,290, representing an increase of $3,640 from December 31, 2023. The increase was attributable to cash provided by operating activities of $5,042, cash provided by investing activities of $10,790, cash used in financing activities of $12,240, and an increase in cash caused by the change in exchange rates of $48.

The cash provided by operating activities of $5,042 was comprised of (a) net cash outflows of $2,882 related to working capital fluctuations; (b) net cash inflows of $2,246 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, receivables under resale agreements, securities sold under agreements to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, not yet purchased; and (c) net cash inflows from other earnings items of $5,678 (which represents net income or loss adjusted for the following non-cash operating items: other income / (expense), non-cash revenue, realized and unrealized gains and losses and accretion of income on other investments, income/(loss) from equity method affiliates, equity based compensation, depreciation and amortization, deferred taxes, and amortization of discount on debt).

The cash provided by investing activities of $10,790 was comprised of (a) $63,988 of sales and returns of principal from other investments, at fair value; (b) $214 of sales and returns of principal from other investments sold, not yet purchased, at fair value; and (c) $978 of distributions received from equity method affiliates; partially offset by (d) $52,000 in cash used to purchase other investments, at fair value; (e) $1,408 in cash used to purchase other investments sold, not yet purchased, at fair value; (f) $193 in cash used as investments in equity method affiliates; and (g) $789 in cash used to purchase furniture, equipment, and leasehold improvements.

The cash used in financing activities of $12,240 was comprised of (a) $2,573 of repayment of redeemable financial instruments; (b) $189 in cash used to settle equity awards; (c) $1,465 in dividends paid; (d) $3,837 in distributions to the convertible non-controlling interests; (e) $659 in redemption of convertible non-controlling interests; and (f) $3,671 in distributions to non-convertible non-controlling interests; partially offset by (g) $154 in proceeds from the issuance of Common Stock.

Regulatory Capital Requirements

We have two subsidiaries that are licensed securities dealers: Cohen Securities in the United States and CCFESA in France. As a U.S. broker-dealer, Cohen Securities is subject to the Uniform Net Capital Rule in Rule 15c3-1 under the Exchange Act. CCFESA is subject to the regulations of the ACPR. The amount of net assets that these subsidiaries may distribute is subject to restrictions under the applicable net capital rules. These subsidiaries have historically operated in excess of minimum net capital requirements. Our minimum capital requirements at September 30, 2025 were as follows.

MINIMUM NET CAPITAL REQUIREMENTS

We operate with more than the minimum regulatory capital requirement in our licensed broker-dealers and at September 30, 2025, total net capital, or the equivalent as defined by the relevant statutory regulations, in our licensed broker-dealers totaled $76,395. See note 18 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. In addition, our licensed broker-dealers are generally subject to capital withdrawal notification and restrictions.

Restrictions of Distributions of Capital from Cohen Securities

As of September 30, 2025, our total equity on a consolidated basis was $101,054 and the total equity of Cohen Securities was $108,331. Therefore, a deficit of $7,277 existed outside of Cohen Securities. In addition, it should be noted that our non-convertible non-controlling interest represents equity that is included in our consolidated financial statements but is not available to the Operating LLC to fund operations outside of those specific consolidated but not wholly owned subsidiaries. As of September 30, 2025, our non-convertible non-controlling interest balance was $3,912. Therefore, we have an available equity deficit outside of Cohen Securities of $11,189 as of September 30, 2025.

From time to time, we may need to take distributions of income (and potentially returns of capital) from Cohen Securities to satisfy the cash needs as a result of the losses incurred outside of Cohen Securities or to satisfy other obligations that come due outside of Cohen Securities. However, we are subject to significant limitations on our ability to make distributions from Cohen Securities. These limitations include limitations imposed by FINRA under Rule 15c3-1 under the Exchange Act (described immediately above) and limitations under our line of credit with Byline Bank (see note 15 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q). Furthermore, counterparties to Cohen Securities have their own internal counterparty credit requirements. The specific requirements are not generally shared with us. However, if we take too much in capital distributions from Cohen Securities (beyond its net income), we may not be able to trade with certain counterparties, which may cause Cohen Securities’ operations to deteriorate.

Securities Financing

We maintain repurchase agreements with various third-party institutions. There is no maximum limit as to the amount of securities that may be transferred pursuant to these agreements, and transactions are approved on a case-by-case basis. The repurchase agreements do not include substantive provisions other than those covenants and other customary provisions contained in standard master repurchase agreements. The repurchase agreements generally require us to transfer additional securities to the counterparty in the event the value of the securities then held by the counterparty in the margin account falls below specified levels and contain events of default in cases where we breach our obligations under the agreement. We receive margin calls from our repurchase agreement counterparties from time to time in the ordinary course of business. To date, we have maintained sufficient liquidity to meet margin calls, and we have always been able to satisfy a margin call, however, no assurance can be given that we will be able to satisfy requests from our counterparties to post additional collateral in the future. See note 10 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

If there were an event of default under a repurchase agreement, the counterparty would have the option to terminate all repurchase transactions existing with us and make any amount due from us to the counterparty payable immediately. Repurchase obligations are full recourse obligations to us. If we were to default under a repurchase obligation, the counterparty would have recourse to our other assets if the collateral was not sufficient to satisfy the obligation in full. Most of our repurchase agreements are entered into as part of our gestation repo business.

Our clearing brokers provide securities financing arrangements including margin arrangements and securities borrowing and lending arrangements. These arrangements generally require us to transfer additional securities or cash to the clearing broker in the event the value of the securities then held by the clearing broker in the margin account falls below specified levels and contain events of default in cases where we breach our obligations under such agreements.

An event of default under the clearing agreement would give our counterparty the option to terminate our clearing arrangement. Any amounts owed to the clearing broker would be immediately due and payable. These obligations are recourse to us. Furthermore, a termination of any of our clearing arrangements would result in a significant disruption to our business and would have a significant negative impact on our dealings and relationship with our customers.

The following table presents our period end balance, average monthly balance, and maximum balance at any month end during the nine months ended September 30, 2025 and the twelve months ended December 31, 2024 for receivables under resale agreements and securities sold under agreements to repurchase.

Fluctuations in the balance of our repurchase agreements from period to period and intra-period are dependent on business activity in those periods. The fluctuations in the balances of our receivables under resale agreements over the periods presented were impacted by our clients' desires to execute on balance sheet collateralized financing arrangements.

Average balances and period end balances will fluctuate based on market and liquidity conditions and we consider such intra-period fluctuations as typical for the repurchase market. Month-end balances may be higher or lower than average period balances.

Debt Financing

The following table summarizes our long-term indebtedness and other financing outstanding. See note 15 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q for a discussion of our outstanding debt.

DETAIL OF DEBT

(1) The junior subordinated notes listed represent debt we owe to the two trusts noted above. The total par amount owed by us to the trusts is $49,614. However, we own the common stock of the trusts in a total par amount of $1,489. We pay interest (and at maturity, principal) to the trusts on the entire $49,614 junior notes outstanding. However, we receives back from the trusts the pro rata share of interest and principal on the common stock held by us. These trusts are VIEs and we do not consolidate them even though we hold the common stock. We carry the common stock on its balance sheet at a value of $0. The junior subordinated notes are recorded at a discount to par. When factoring in the discount, the yield to maturity of the junior subordinated notes as of September 30, 2025 on a combined basis was 19.82% assuming the variable rate in effect on the last day of the reporting period remains in effect until maturity.

(2) Represents the interest rate in effect as of the last day of the reporting period.

Off-Balance Sheet Arrangements

Other than as described in note 9 (derivative financial instruments) and note 14 (variable interest entities) to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, there were no material off balance sheet arrangements as of September 30, 2025.

Contractual Obligations

The table below summarizes our significant contractual obligations as of September 30, 2025 and the future periods in which such obligations are expected to be settled in cash. Our junior subordinated notes are assumed to be repaid on their respective maturity dates. Excluded from the table below are obligations that are short-term in nature, including trading liabilities (including derivatives) and repurchase agreements. In addition, amortization of discount on debt is excluded.

CONTRACTUAL OBLIGATIONS

September 30, 2025

(1) The 2020 Note matures on January 31, 2026. The 2024 Note matures on August 31, 2026.

(2) The interest on the junior subordinated notes related to Alesco Capital Trust I is variable. The interest rate of 8.57% (based on the Term SOFR rate in effect as of September 30, 2025 plus 4.00%) was used to compute the contractual interest payment in each period noted. The interest on the junior subordinated notes related to Sunset Financial Statutory Trust I is variable. The interest rate of 8.41% (based on the Term SOFR rate in effect as of September 30, 2025 plus 4.15%) was used to compute the contractual interest payment in each period noted.

(3) Represents material operating contracts for various services.

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We believe that we will be able to continue to fund our current operations and meet our contractual obligations through a combination of existing cash resources and other sources of credit. Due to the uncertainties that exist in the economy, we cannot be certain that we will be able to replace existing financing or find sources of additional financing in the future.

Recent Accounting Pronouncements

The following is a list of recent accounting pronouncements that we believe will have a continuing impact on our financial statements going forward.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The ASU revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

In May 2025, the FASB issued ASU 2025-04, Compensation— Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments in this ASU affect the timing of revenue recognition for entities that offer to pay share-based consideration (e.g., equity instruments) to a customer (or to other parties that purchase the entity’s goods or services from the customer) to incentivize the customer (or its customers) to purchase its goods and services. Specifically, the amendments clarify the requirements for share-based consideration payable to a customer that vests upon the customer purchasing a specified volume or monetary amount of goods and services from the entity. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The ASU is effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available issuance. We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this ASU require that an entity capitalize software costs when both management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The ASU clarifies derivative scope exceptions for certain contracts with underlings that are based on the operations or activities of one of the parties to the contract. The ASU also clarifies the applicability of ASC Topic 606, Revenue from Contracts with Customers, and its interaction with other ASC Topics (including ASC Topic 815 on derivatives and hedging and ASC Topic 321 on equity securities), in the accounting for share-based noncash consideration (such as warrants or shares) received from a customer for the transfer of goods or services. The ASU is effective for annual periods beginning after December 15, 2026 and interim periods within those periods. We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

Critical Accounting Policies and Estimates

Our accounting policies are essential to understanding and interpreting the financial results reported in our condensed consolidated financial statements. Our industry is subject to a number of highly complex accounting rules and requirements, many of which place heavy burdens on management to make judgments relating to our business. The significant accounting policies used in the preparation of our condensed consolidated financial statements are summarized in note 3 to our consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2024. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. During the three months ended September 30, 2025, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.

All amounts in this section are in thousands unless otherwise noted.

Market Risk

Market risk is the risk of economic loss arising from the adverse impact of market changes to the market value of our trading and investment positions. Market risk is inherent to both derivative and non-derivative financial instruments, and, accordingly, the scope of our market risk management procedures extends beyond derivatives to include all market risk sensitive financial instruments. For the purpose of analyzing the components of market risk, we have broken out our investment portfolio into three broad categories, plus debt, as described below.

Fixed Income Securities: We hold, from time to time, the following securities: U.S. Treasury securities, U.S. government agency MBS, U.S. government agency debt securities, CMOs, non-government MBS, corporate bonds, non-redeemable and redeemable preferred stock, municipal bonds, SBA loans, certificates of deposits, residential mortgage loans, whole loans, and unconsolidated investments in the middle and senior tiers of securitization entities and TruPS. We attempt to mitigate our exposure to market risk by entering into economic hedging transactions, which may include TBAs and other forward agency MBS contracts. The fixed income category can be broadly broken down into two subcategories: fixed rate and floating rate.

Floating rate securities are not in themselves particularly sensitive to interest rate risk. Because they generally accrue income at a variable rate, the movement in interest rates typically does not impact their fair value. Fluctuations in their current income due to variations in interest rates are generally not material to us. Floating rate fixed income securities are subject to other market risks such as default risk of the underlying issuer, changes in issuer’s credit spreads, prepayment rates, investor demand and supply of securities within a particular asset class or industry class of the ultimate obligor. The sensitivity to any individual market risk can be difficult to quantify.

The fair value of fixed rate securities is sensitive to changes in interest rates. However, fixed rate securities that have low credit ratings or represent junior interests in securitizations are not particularly interest rate sensitive. In general, when we acquire interest rate sensitive securities, we enter into an offsetting short position for a similar fixed rate security. Alternatively, we may enter into other interest rate hedging arrangements such as interest rate swaps or Eurodollar futures. We measure our net interest rate sensitivity by determining how the fair value of our net interest rate sensitive assets would change as a result of a 100 basis point (“bps”) adverse shift across the entire yield curve. Based on this analysis, as of September 30, 2025, we would incur a loss of $1,962 if the yield curve rises 100 bps across all maturities and a gain of $1,953 if the yield curve falls 100 bps across all maturities.

Equity Securities: We hold equity interests in both public and private entities. These investments are subject to equity price risk. Equity price risk results from changes in the level or volatility of underlying equity prices, which affect the value of equity securities or instruments that in turn derive their value from a particular stock. We also hold a significant amount of equity in public companies that recently completed a merger with a SPAC we sponsored or invested in. A significant portion of the equity we hold in these types of entities are subject to sale restrictions. We attempt to reduce the risk of loss inherent in our inventory of equity securities by closely monitoring those security positions or in some cases entering into derivatives trades to hedge this exposure. We also have had equity investments in entities where the investment is denominated in a foreign currency, or where the investment is denominated in U.S. Dollars but the investee primarily makes investments in foreign currencies. The fair values of these investments are subject to change as the spot foreign exchange rate between these currencies and the U.S. Dollar (our functional currency) fluctuates. We may, from time to time, enter into foreign exchange rate derivatives to hedge all or a portion of this risk. We measure our net equity price sensitivity and foreign currency sensitivity by determining how the net fair value of our equity price sensitive and foreign exchange sensitive assets would change as a result of a 10% adverse change in equity prices or foreign exchange rates. Based on this analysis, as of September 30, 2025, our equity price sensitivity was $4,899 and our foreign exchange currency sensitivity was $0.

Other Securities: These investments are primarily made up of residual interests in securitization entities. The fair value of these investments will fluctuate over time based on a number of factors including, but not limited to, liquidity of the investment type, the credit performance of the individual assets and issuers within the securitization entity, the asset class of the securitization entity and the relative supply of and demand for investments within that asset class, credit spreads in general, the transparency of valuation of the assets and liabilities of the securitization entity, and investors’ view of the accuracy of ratings prepared by the independent rating agencies. The sensitivity to any individual market risk cannot be quantified.

Debt: In addition to the risks noted above, we incur interest rate risk related to our debt obligations. We have debt that accrues interest at either variable rates or fixed rates. As of September 30, 2025, a 100 bps change in the appropriate variable base rate would result in a change in our annual cash paid for interest in the amount of $481. A 100 bps adverse change in the market yield to maturity would result in an increase in the fair value of the debt in the amount of $2,239 as of September 30, 2025.

Counterparty Risk and Settlement Risk

We are subject to counterparty risk primarily in two areas: (i) our collateralized securities transactions described in note 10 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q and (ii) our TBA and other forward agency MBS activities described in note 9 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. With respect to the gestation repo financing activities, our risk is that the counterparty does not fulfill its obligation to repurchase the underlying security when it is due. In this case, we would typically liquidate the underlying security, which may result in a loss if the security has declined in value in relation to the balance due from the counterparty under the reverse repurchase agreement.

With respect to our TBA and other forward agency MBS activities, our risk is that the counterparty does not settle the TBA trade on the scheduled settlement date. In this case, we would have to execute the trade, which may result in a loss based on market movement in the value of the underlying trade between its initial trade date and its settlement date (which in the case of TBAs can be as long as 90 days). If we were to incur a loss under either of these activities, we have recourse to the counterparty pursuant to the underlying agreements.

Finally, we have general settlement risk in all of our regular way fixed income and equity trading activities. If a counterparty fails to settle a trade, we may incur a loss in closing out the position and would be forced to try to recover this loss from the counterparty. If the counterparty has become insolvent or does not have sufficient liquid assets to reimburse us for the loss, we may not get reimbursed.

How we manage these risks

Market Risk

We seek to manage our market risk by utilizing our underwriting and credit analysis processes that are performed in advance of acquiring any investment. In addition, we continually monitor our investments on a daily basis. We perform an in-depth monthly analysis on all our investments and our risk committee meets on a weekly basis to review specific issues within our portfolio and to make recommendations for dealing with these issues. In addition, our broker-dealer has an assigned chief risk officer that reviews the firm’s positions and trading activities on a daily basis.

Counterparty Risk and Settlement Risk

We seek to manage our counterparty risk primarily through two processes. First, we perform a credit assessment of each counterparty to ensure the counterparty has sufficient equity, liquidity, and profitability to support the level of trading or lending we plan to do with them. Second, we may require counterparties to post cash or other liquid collateral (“margin”) to support changes in the market value of the underlying securities or trades on an ongoing basis.

In the case of collateralized securities financing transactions, we will generally lend less than the market value of the underlying security initially. The difference between the amount lent and the value of the security is referred to as the haircut. We will seek to maintain this haircut while the loan is outstanding. If the value of the security declines, we will require the counterparty to post margin to offset this decline. If the counterparty fails to post margin, we will sell the underlying security. The haircut serves as a buffer against market movements to prevent or minimize a loss.

In the case of TBA and other forward agency MBS activities, we sometimes require counterparties to post margin with us when the market value of the underlying TBA trade declines. If the counterparty fails to post margin, we will close out the underlying trade. In the case of TBA and other forward agency MBS activities, we will sometimes obtain initial margin or a cash deposit from the counterparty, which serves a purpose similar to the haircut as an additional buffer against losses. However, some of our TBA and other forward agency MBS activities are done without initial margin or cash deposits.

Risks Related to our Gestation Repo Business

We have entered into repurchase and reverse repurchase agreements as part of our gestation repo business. In general, we will lend money to a counterparty after obtaining collateral securities from that counterparty pursuant to a reverse repurchase agreement. We will borrow money from another counterparty using those same collateral securities pursuant to a repurchase agreement. We seek to earn net interest income on these matched transactions.

In our gestation repo business, we will generally ensure that the maturity dates of our reverse repurchase agreements match the maturity dates of the matched repurchase agreements. Because our maturities are matched, we can pass along any changes in funding terms imposed upon us by our repurchase agreement counterparty to our reverse repurchase agreement counterparty. Therefore, we are not exposed to a great deal of interest rate or funding risk. The main risk we are exposed to is credit risk. We manage this risk by obtaining collateral in excess of the contractual repo balance and performing credit reviews of counterparties and updating them on a routine basis.

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that material information relating to the Company (and its consolidated subsidiaries) required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, who certify our financial reports, and to other members of senior management and the Company’s board of directors. Under the supervision and with the participation of our chief executive officer and chief financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2025. Based on that evaluation, the chief executive officer and the chief financial officer concluded that our disclosure controls and procedures were effective at September 30, 2025.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth in this Quarterly Report on Form 10-Q, you should also carefully review and consider the risk factors contained in our other reports and periodic filings with the SEC, including without limitation the risk factors contained under the caption “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, that could materially and adversely affect our business, financial condition, and results of operations. The risk factors discussed in that Form 10-K do not identify all risks that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. There have been no material changes in the significant factors that may affect our business and operations as described in “Item 1A—Risk Factors” of the Annual Report on 10-K for the year ended December 31, 2024.