Cohen & Co (AMEX:COHN) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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The full earnings call is available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=JX1ChhZs

Summary

Cohen & Co reported first quarter 2026 net income of $1.5 million or $0.42 per diluted share, a decrease from the previous quarter but an increase from the same quarter last year.

Investment banking revenue was $45.7 million, primarily from SPAC-related transactions, while net trading revenue increased to $13.2 million, driven by Mortgage and Preferred Equity Trading groups.

The company's gestation repo business reached a $3.9 billion book size, and its SPAC, Columbus Circle Capital Corp. 2, completed a $230 million IPO.

Adjusted pre-tax income decreased to $4 million from $18.3 million in the prior quarter, reflecting enterprise earnings and non-controlling interests.

The company declared a quarterly dividend of $0.25 per share and repaid $4.5 million of senior promissory notes, while total enterprise equity decreased to $97.8 million.

Management expressed confidence in future earnings potential and committed to enhancing long-term value for shareholders through strategic initiatives.

Full Transcript

OPERATOR

It's. Good morning ladies and gentlemen and welcome to Cohen and Company's first quarter 2026 earnings call. My name is Carrie and I'll be your operator for today. Before we begin, Cohen and Company would like to remind everyone that some of the statements the Company makes during the call may contain forward looking statements under applicable securities laws. These statements may involve risks and uncertainties that could cause the Company's actual results to differ materially from the results discussed in such forward looking statements. The forward looking statements made during this call are made only as of the date of this call and the Company undertakes no obligation to update such statements to reflect subsequent events or circumstances. Cohen & Co Advises you to read the cautionary note regarding forward looking statements in its earnings release and in its most recent annual report on Form 10K filed with the SEC. Earlier today, Cohen and Company issued a press release announcing first quarter 2026 financial results. Today's discussion is complementary to that press release which is available on the company's websiteat cohenandcompany.com this conference call is being recorded and a replay of it will be available for three days beginning shortly after the conclusion of this call. The Company's remarks also include certain non GAAP financial measures that management believes are meaningful when evaluating the Company's performance. A reconciliation of these non GAAP financial measures to the comparable GAAP measures is provided in the Company's earnings release. After the prepared remarks, the call will be opened up for questions. I would now like to turn the call over to Mr. Lester Brafman, Chief Executive Officer of Cohen and Company. Please go ahead sir.

Lester Brafman (Chief Executive Officer)

Thank you Carrie and thank you everyone for joining us for our first quarter 2026 earnings call. With me on the call is Joe Pooler, our CFO. We are pleased to deliver another strong quarter driven by the ongoing expansion of our client franchise. In particular our full service boutique investment bank Cohen & Company Capital markets continue to generate positive results with a focus on frontier technologies including digital assets, energy transition and natural resources. Also during the quarter our Gestation Repo business continued to grow reaching a book size of $3.9 billion and our sponsor SPAC Columbus Circle Capital Corp. II completed its $230 million IPO. We are encouraged by the momentum we have built as we look for opportunities to further grow our top line revenue and profitability. We remain confident in our future earnings potential and committed to enhancing long term sustained value for our stockholders to the return of capital including our quarterly dividend. Now I will turn the call over to Joe to walk through this quarter's financial highlights in more detail.

Joe Pooler (Chief Financial Officer)

Thank you Lester Beginning with a discussion of our operating results for the quarter, our net income attributable to Cohen & Co. Inc. Shareholders was 1.5 million for the quarter or $0.42 per fully diluted share compared to net income of 8.1 million for the prior quarter or $1.48 per fully diluted share and net income of 300,000 for the prior year quarter or $0.19 per fully diluted share. Our fully diluted earnings per share calculation reflects all convertible membership units in our primary operating subsidiary Cohen Co. LLC as if they are converted to shares and also reflects an income tax expense adjustment at an estimated effective tax rate as if our ownership structure was a full C Corp for the entire period presented. Our adjusted Pre tax income was 4 million for the quarter compared to adjusted pre tax income of 18.3 million for the prior quarter and adjusted pre tax income of 1.3 million for the prior year quarter. As a reminder, adjusted pre tax income and loss is a key earnings measurement for us as it incorporates enterprise earnings attributable to our convertible non controlling interest which is substantially held by our founder and Chairman Daniel Cohen. Daniel holds his interest in the enterprise through the primary operating subsidiary Cohen Co. LLC which is a consolidated subsidiary of Cohen & Co. Income. Investment banking and new issue revenue was $45.7 million in the first quarter compared to $54.7 million in the prior quarter and $20.2 million in the year ago quarter in the quarter. All our investment banking and new issue revenue came from our CCM business and was primarily driven by SPAC M&A and SPAC IPO transactions. Net trading revenue came in at $13.2 million in the first quarter, down 600,000 from the prior quarter and up 4 million from 1Q25. The increase from the prior year quarter was due primarily to higher trading revenue from our Mortgage SPAC, Equity, CMO and Preferred Equity Trading groups. Our Gestation Repo book of business was 3.9 billion at the end of the quarter. Asset management revenue totaled 2.4 million in the quarter. First quarter principal transactions and other revenue was negative 3.4 million compared to positive 31.5 million in the prior quarter and negative 2.7 million in the prior year quarter in the prior quarter. Recall the closing of the ProCap Financial, Inc. Business combination generated 33 million of principal transactions revenue including the markup of consolidated founder and placement shares held by the sponsor of the Columbus Circle I SPAC as well as 16.5 million of compensation and benefits expense related to founder shares allocable to employees and 8.5 million of non convertible non controlling interest expense related to founder shares allocable to third party investors in the consolidated sponsor. Compensation and benefits expense for the quarter was 41.3 million or 71% of revenue which was down 16.5 million from the prior quarter and up 19.6 million from the prior year quarter. The change from the prior quarter was again primarily the result of the 16.5 million of compensation and benefits expense related to the founder shares allocable to employees upon the closing of the ProCap Financial and Columbus Circle I SPAC business combination in the prior quarter. The change from the prior year quarter was primarily the result of normal fluctuations in revenue and the related variable incentive compensation expense. The number of company employees was 128 at the end of the first quarter compared to 126 at the end of the year and 117 at the end of the prior year quarter. Net interest expense for the quarter was $1.3 million, including $1.2 million on our trust preferred debt securities. During the quarter we repaid $4.5 million of our senior Promissory notes. Loss from Equity Method affiliates totaled $500,000 in the quarter compared to a loss from Equity Method affiliates of 5.1 in the prior quarter and income from Equity Method affiliates of 2.4 in the prior year quarter. As Lester mentioned, our sponsored SPAC, Columbus Circle Capital Corp. II completed its $230 million IPO on February 12th of 26. The number of the SPACS founder shares currently allocated to the company is 2.4 million, but such number of shares will not be finally and definitively determined until the consummation of a business combination. Additionally, CCM used its underwriting fee of 3.6 million from this SPAC IPO to purchase 360,000 placement units in the related private placement. In terms of our balance sheet at the end of the quarter, Total equity was 100.1 million compared to 103.1 million at the end of the year. The non convertible, non controlling interest component of Total equity was 2.4 million at the end of the quarter and 400,000 at the end of the year. Thus, the total enterprise equity excluding this non convertible, non controlling interest component was 97.8 million at the end of the quarter, a 4.9 million decrease from 102.6 at the end of the year. At quarter end, consolidated corporate indebtedness was carried at 28.6 million. We declared a quarterly dividend of $0.25 per share, payable on June 2nd to stockholders of record as of May 18th. The board of Directors will continue to evaluate the dividend policy each quarter and future decisions regarding dividends may be impacted by quarterly operating results and the company's capital needs. With that, I'll turn it back over to Lester.

OPERATOR

Thanks Joe and Operator. We'll open up to any questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys and again, that is Star one. If you would like to ask a question and we'll pause for just a moment. And it appears there are no questions. I would like to turn the floor back over to Lester Brafman for closing comments.

Lester Brafman (Chief Executive Officer)

Thank you and thank everyone. We remain confident in our ability to execute on our strategic priorities, continuing driving progress as we enhance long term value for stockholders. Please direct any offline investor questions to Joe Pooler 215-701-8952 or via email to [email protected] the contact information can also be found at the bottom of our earnings release. Thanks everyone for joining and we look forward to speaking to you next quarter.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.