What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-06 compared with 2025-03-12 · 434 added, 464 removed, 942 unchanged (49% of the section changed)

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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.

Our Capital Markets business segment consists primarily of sales, trading, underwriting, gestation repo financing, new issue placements in corporate and securitized products, and advisory services.

Our 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.

corporate bonds and loans, SPAC equity, preferred equity, asset backed securities (“ABS”), mortgage backed securities (“MBS”), residential mortgage backed securities (“RMBS”) , collateralized bond obligations (“CBOs”), co llateralized mortgage obligations (“CMOs”), municipal securities, to-be-announced securities (“TBAs”) and other forward agency MBS contracts, Small Business Administration (“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.

We carry out our capital markets activities primarily through our subsidiaries:

JVB in the United States and CCFESA in Europe.

A division of JVB, 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.

government agency securities, brokered deposits and certificates of deposit (“CDs”) for small banks, and hybrid capital of financial institutions including whole loans and other structured financial instruments.

We operate our capital markets activities primarily through our subsidiaries:

Cohen Securities in the United States and CCFESA in Europ e.

CCM, our boutique investment bank, is a division of Cohen Securities.

Our Capital Markets business segment also includes unrealized and realized gains and losses on its 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”).

A CDO is a form of secured borrowing.

The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds.

The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets.

In the event of default, the lenders will have recourse only to the assets securing the loan.

Our Asset Management business segment includes our fee-based asset management operations, which include on-going base and incentive management fees.

As of December 31, 2024, we had approximately $2,325 in assets under management (“AUM”) of which 42% was in CDOs.

A significant portion of our asset management revenue is earned from the management of CDOs.

We have not completed a new securitization since 2008.

As a result, our asset management revenue has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, liquidations, and defaults.

Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.

The remaining portion of our AUM is from a diversified mix of other Investment Vehicles that were more recently formed.

Our Asset Management business segment manages assets within investment funds, managed accounts, joint ventures, and collateralized debt obligations ("CDOs") (collectively referred to as “Investment Vehicles”).

Our Asset Management business segment includes our fee-based asset management operations, which include ongoing base and incentive management fees.

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 sheet.

Our Principal Investing business segment is comprised of investments that we have made for the purpose of earning an investment return rather than investments made to support our trading and other Capital Markets business segment activities.

These investments are included in 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 classified as trading;

Revenue earned on our gestation repo financing program;

New issue and advisory revenue comprised of (a) origination fees for newly created financial instruments originated by us, (b) revenue from advisory services, (c) underwriting;

and (d) revenue associated with originating, arranging, or placing newly created financial instruments;

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.

Investment banking and new issue revenue comprised of (a) origination fees for newly created financial instruments originated by us, (b) revenue from advisory services, (c) underwriting, (d) new issue revenue associated with arranging and placing the issuance of newly created financial instruments, and (e) any investment returns on financial instruments that we have acquired or received as consideration for services provided by CCM.

Trading activities of the Company, 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 investments-trading;

Revenue earned on the Company’s gestation repo financing program.

Asset Management

Incentive management fees earned based on the performance of Investment Vehicles.

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 in the Investment Vehicle, and incentive management fees earned based on the performance of the various 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 the CCM business;

Income and loss earned on equity method investments.

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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.

Severe market fluctuations or weak economic conditions could reduce our trading volume and revenues, negatively affect our ability to generate investment banking and new issue revenue, and adversely affect our profitability.

As a general rule, our trading business benefits from increased market volatility.

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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.

New risks and uncertainties may negatively impact our operating performance.

A portion of our revenue is generated from net trading activity.

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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.

A portion of our revenue is generated from investment banking and new issue 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 JVB.

A division of JVB, 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.

We provide origination services in Europe through our subsidiary CCFESA, and investment banking and new issue services in the U.S.

through our subsidiary Cohen Securities.

A division of Cohen Securities, CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions.

In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements.

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 originating assets for our U.S.

Any change in the fair value of these instruments subsequent to recording the investment banking and new issue revenue will be recorded as an adjustment to investment banking and new issue revenue in our consolidated statement of operations.

Currently, our primary source of investment banking and new issue revenue is from investment banking and advisory services through CCM, as well as originating assets for our U.S.

and European insurance asset management business including our U.S.

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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.

As of December 31, 2024, 42% of our existing AUM were in CDOs.

The creation of CDOs has depended upon a vibrant securitization market.

Since 2008, volumes within the securitization market have dropped significantly and have not fully recovered since that time.

We have not completed a new securitization since 2008.

The remaining portion of our AUM is from a diversified mix of other Investment Vehicles most of which were more recently formed.

A significant portion of our asset management revenue is earned from the management of CDOs.

As a result, our asset management revenue has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, liquidations, and defaults.

A portion of our revenues is generated from our principal investing activities.

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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.

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 or related party sponsored SPAC business combinations.

Access to these investments is reliant on a robust SPAC market.

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In 2018, we began sponsoring a series of SPACs.

Each sponsored SPAC either completed or was seeking to complete a business combination with a company involved in the insurance market.

In addition, we invest in other SPACs at various stages of their business life cycle.

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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 the Vellar GP, redeemed all of their interests in the SPAC Fund.

See recent events below for additional information regarding the consolidation of the SPAC Fund.

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 issue a separate series of interest for each investment portfolio, which typically consist of investments in the sponsor entities of individual SPACs.

Effective April 1, 2023, all of the investors in the SPAC Fund, other than the general partner of the SPAC Fund ("Vellar GP"), redeemed all of their interests in the SPAC Fund.

In 2025, we sold our remaining 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.

We are not issuing any new SPAC Series Funds, and this business is winding down.

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.

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If volumes of SPAC activity decline, our results of operations will likely be significantly negatively impacted.

Equity prices of SPACs and post-business combination SPACs declined significantly during 2023 and 2024.

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 well as our other investments sold, not yet purchased.

As a result, we recorded significant principal transaction losses and equity method losses during the years ended December 31, 2023 and 2024 in certain SPAC related investments.

We are exposed to public equity prices of SPACs and post-business combination SPACs through our other investments, at fair value, investments in equity method affiliates, and other investments sold, not yet purchased.

As a result, we recorded significant principal transaction losses and equity method losses in certain SPAC related investments.

Continued declines in the equity prices of these companies will result in further losses for us.

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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, and (v) monitoring our fixed costs.

(i) building a diversified 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, and (v) monitoring our fixed costs.

Our cost management initiatives are ongoing.

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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.

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Our mortgage group’s volumes and profitability will be highly impacted by these external factors.

Rising Interest Rates and Inflation

During 2022 and 2023, the U.S.

Federal Reserve began a process of raising the federal funds rate and quantitative tightening to address rising inflation.

Recently, the U.S.

Federal Reserve reduced interest rates for the first time in several years.

It is unclear as to whether or how quickly interest rates will continue to decline, if at all.

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

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

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

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

Rising rates significantly reduced 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 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.

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.

Volatile Interest Rates, Dollar Weakness, and Inflation

macroeconomic environment during the period was characterized by persistent interest rate volatility, continued inflationary pressure, and periods of U.S.

dollar weakness.

These conditions influenced investor sentiment, trading volumes, and pricing dynamics across fixed income markets, which in turn affected our operating results.

Interest rate volatility remained elevated as market participants reacted to changes in monetary policy expectations, shifts in economic growth indicators, and evolving inflation data.

Heightened rate movements contributed to fluctuating levels of liquidity and spread dispersion across the fixed income securities in which we transact.

While volatility can create trading opportunities for our business, it can also reduce market depth and widen bid‑ask spreads, which may increase transaction costs and adversely impact our ability to efficiently manage positions.

Our performance is significantly influenced by the pace of U.S.

mortgage activity.

Mortgage origination volumes, refinancing activity, and overall housing market conditions all affect the supply, prepayment behavior, and relative value of mortgage‑related securities.

Periods of rising interest rates or increased rate uncertainty tend to slow mortgage activity, which can reduce trading flows and dampen client demand for certain mortgage‑backed products.

Conversely, periods of declining rates or stabilizing rate expectations generally support higher mortgage activity and improved trading conditions in these markets.

Although the U.S.

dollar experienced periods of weakness against major currencies during the year, we have limited direct exposure to foreign currency fluctuations.

As a result, dollar movements had a minimal impact on our financial results.

However, broad macroeconomic trends associated with currency movements—such as changes in global capital flows or investor risk appetite—can indirectly affect liquidity and pricing in U.S.

fixed income markets.

Inflation remained above historical norms for much of the period, influencing Federal Reserve policy actions and contributing to the overall rate environment.

Elevated inflation increased uncertainty around the trajectory of short‑ and long‑term interest rates, reinforcing the volatility observed across fixed income markets.

These conditions required ongoing adjustments to our risk management strategies, including reassessment of interest rate hedges, duration exposure, and balance sheet positioning.

Overall, the combination of volatile interest rates, dollar weakness, and persistent inflation shaped the trading environment for our business.

While these factors created both challenges and opportunities, we continued to monitor macroeconomic developments closely and adapt our trading, risk management, and liquidity strategies in response to evolving market conditions.

Recent Events and Transactions

Redemption of Redeemable Financial Instrument and Issuance of the 2024 Note

Effective September 1, 2024, we entered into the Redemption Agreement, which terminated the JKD Investment Agreement in its entirety.

As of September 1, 2024, the investment balance under 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 is to be repaid as follows:

(i) $2,573 of the principal amount will 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 not be prepaid in whole or in part prior to January 31, 2025.

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 following January 31, 2025, without penalty or premium.

See notes 4 and 19 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information relating to the Redemption Agreement and 2024 Note.

Sale of Membership Interests in Vellar GP

On February 25, 2025, the Operating LLC entered into (i) a Limited Liability Company Interest Purchase Agreement with Jason Capone and Solomon Cohen, who is the son of our Executive Chairman, Daniel G.

Cohen (the “Vellar Purchase Agreement”);

and (ii) a Transition Services Agreement (the “Vellar Transition Services Agreement” and, together with the Vellar Purchase Agreement, the “Vellar Agreements”) with Vellar GP.

Columbus Circle SPAC

On May 19, 2025, Columbus Circle Capital Corp I (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.

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 would merge into SPAC Merger Sub and Company Merger Sub, respectively, and become wholly-owned subsidiaries of ProCap Financial, and ProCap Financial would become a publicly traded company.

Proceeds from the Business Combination, if any, after satisfaction of redemption payments to the Columbus Circle SPAC’s public shareholders and transaction expenses, were expected to be used by ProCap Financial to purchase bitcoin, in connection with ProCap Financial’s business plans and strategies.

On December 5, 2025, the transactions contemplated by the Business Combination were consummated (the “Closing”).

Upon the Closing, Columbus Circle SPAC and ProCap BTC merged into SPAC Merger Sub and Company Merger Sub, respectively, and became wholly-owned subsidiaries of ProCap Financial.

ProCap Financial became the go-forward company following the Closing.

ProCap Financials’ common stock and warrants commenced trading on the Nasdaq Global Market on December 8, 2025 under the symbols “BRR” and “BRRWW,” respectively.

From May 19, 2025 until December 5, 2025, we consolidated the sponsor of the Columbus Circle SPAC, which treated its investment in the Columbus Circle SPAC under the equity method of accounting.

The sponsor distributed all of its assets and ceased operations in December 2025.

The following table shows the impact that the consolidation of the Columbus Circle SPAC sponsor had on our statement of operations during 2025.

Principal transactions and other income

Total revenue

Operating expenses

Compensation and benefits

Total operating expenses

Operating income / (loss)

Non-operating income / (expense)

Income / (loss) from equity method affiliates

Income / (loss) before income taxes

Income tax expense / (benefit)

Net income / (loss)

Net income (loss) attributable to the non-convertible non-controlling interest

Enterprise net income (loss)

Net income (loss) attributable to the convertible non-controlling interest

Net income / (loss) attributable to Cohen & Company Inc.

The compensation incurred above represented share-based compensation recognized upon completion of the Business Combination.

See note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for the discussion of our accounting policy related to equity compensation for SPACs we sponsor.

As of December 31, 2025, we held 2,151,666 shares of BRR that were allocated to us by the sponsor of the Columbus Circle SPAC, which were carried at a value of $7,595 included as a component of other investments, at fair value in our consolidated balance sheet.

The BRR shares are subject to certain transfer restrictions, which restrictions will lapse and the BRR shares will no longer be subject to these transfer restrictions upon the earliest to occur of the following:

(i) the second anniversary of the Closing, (ii) if the closing price of ProCap Financials’ common stock equals or exceeds $10.21 per share (subject to customary adjustments) for any 20 trading days within any consecutive 30-trading day period, and (iii) if the dollar volume-weighted average price for Bitcoin (BTC) during any one hundred twenty (120)-hour period equals or exceeds $140 during any five-day period.

Any further change in value of these shares until final liquidation will be recorded as principal transactions gain or loss in our consolidated statement of operations.

The Company recorded a loss of ($452) on the shares of BRR from the date the Sponsor distributed the shares through December 31, 2025.

In addition, we served as underwriter and advisor to the Columbus Circle SPAC.

See note 31 to our consolidated financial statements included in this Annual Report on Form 10-K.

As partial consideration for these services, we received 392,000 shares of BRR and 196,000 warrants.

The shares and warrants are carried at a value of $1,521 and included as a component of other investments, at fair value in our consolidated balance sheet.

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 2007-08 financial crisis and has extensive experience with monitoring banks and insurance companies.

Pursuant to the MTA, the Company agreed to sell, assign, transfer, and convey to Hildene all of its 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 the Company's and Hildene's control was consent of the preferred security holders of each CDO.

During the year ended December 31, 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, who is 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 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, the Company no longer had any investment in Vellar GP.

Pursuant to the Vellar Purchase Agreement, the Operating LLC sold all of its 33.4% interest in Vellar GP to each of 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 expect to record a net loss of $404 related to Vellar GP which includes both the loss on sale and results of operations for the 2025 period prior to the sale.

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 pay to The Operating LLC certain defined net revenue share amounts up to an aggregate of $4,234;

and (ii) agreed to decrease the amount which 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.

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 the Company's consolidated statement of operations.

Consolidated Results of Operations

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Favorable / (Unfavorable)

Investment banking and new issue

Asset management

New issue and advisory

Principal transactions and other income

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Interest expense, net

Gain on sale of management contracts

Income / (loss) from equity method affiliates

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Net income / (loss) attributable to Cohen & Company Inc.

Revenues decreased by $3,383, or 4%, to $79,598 for the year ended December 31, 2024, as compared to $82,981 for the year ended December 31, 2023.

As discussed in more detail below, the change was comprised of (i) an increase of $5,483 in net trading revenue;

(ii) an increase of $1,672 in asset management revenue;

(iii) an increase of $35,158 in new issue and advisory revenue;

and (iv) a decrease of $45,696 in principal transactions and other income.

Revenues increased by $195,966, or 246%, to $275,564 for the year ended December 31, 2025, as compared to $79,598 for the year ended December 31, 2024.

As discussed in more detail below, the change was comprised of (i) an increase of $146,830 in investment banking and new issue revenue;

(ii) an increase of $10,938 in net trading revenue;

(iii) a decrease of $192 in asset management revenue;

and (iv) an increase of $38,390 in principal transactions and other income.

Investment Banking and New Issue

Investment banking and new issue revenue increased by $146,830, or 360%, to $187,608 for the year ended December 31, 2025, as compared to $40,778 for the year ended December 31, 2024.

Year Ended December 31, 2025

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

Year Ended December 31, 2024

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

During the year ended December 31, 2025, we began classifying principal transactions income/loss related to CCM activities from principal transaction to investment banking and new issue.

Specifically, $22,644 and $4,312 of revenue previously reported on the consolidated statement of operations in principal transaction revenue has been reclassified as investment banking and new issue revenue for the periods ending December 31, 2024, and 2023, respectively.

These reclassifications had no effect on previously reported net income.

Our revenue earned from investment banking and new issue 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 investment banking and new issue engagements.

For underwritings, any costs incurred are included as a component of subscriptions, clearing, and execution.

For advisory and other new issue some expenses may be recorded in professional fees and other.

Finally, the change in value of our financial instruments received as consideration will also impact revenue recognized and can be volatile.

All investment banking and new issue revenue is included in our Capital Markets segment.

See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions.

In addition, we generate investment banking and new issue revenue by originating new assets for the U.S.

Insurance JV, CREO JV, and our PriDe Funds in Europe.

In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements.

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.

Further, the financial instruments we receive in these cases are often (i) common stock investments that are restricted for resale for some period of time, (ii) convertible or non-convertible notes receivable 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 with low trading volumes.

As a result, it may take us a significant period of time to liquidate these financial instruments.

Net trading revenue increased by $10,938, or 30%, to $47,347 for the year ended December 31, 2025, as compared to $36,409 for the year ended December 31, 2024.

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Year Ended December 31,

Matched book repo

Gestation repo

High yield corporate

Investment grade corporate

Wholesale and other

Structured notes

Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date, which may never be realized due to changes in market or other conditions not in our control.

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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 matched book repo business to be subject to significant concentration risk.

We consider our gestation repo business to be subject to significant concentration risk.

See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K.

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As of December 31,

Pride, managed accounts, and other

US Insurance JV

Company-sponsored CDOs

Other Investment Vehicles (1)

Assets under management (1)

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

The accounts we manage may employ leverage.

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In the case where no management fees are earned, the net assets are included.

Asset management fees increased by $1,672, or 23%, to $9,009 for the year ended December 31, 2024, as compared to $7,337 for the year ended December 31, 2023, as discussed in more detail below.

ASSET MANAGEMENT

(Dollars in Thousands)

Year Ended December 31,

Asset management fees from CDOs remained relatively unchanged.

Asset management fees from other increased primarily due to the recognition in 2024 of deferred performance fees related to certain PriDe Funds and the portfolio servicing fee on the notional amount of loans owned by the CREO JV.

Asset management fees decreased by $192, or 2%, to $8,817 for the year ended December 31, 2025, as compared to $9,009 for the year ended December 31, 2024.

The decrease is primarily due to the sale of our legacy Alesco CDO agreements, which closed during 2025.

During the twelve months ended December 2025 and 2024, we earned a total of $737 and $1,313 in revenue from these contracts, respectively.

This was partially offset by an increase in revenue generated by the Pride Funds due to higher AUM and deferred performance fees related to the PriDe Funds.

All asset management revenue is included in our asset management segment.

See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

New Issue and Advisory Revenue

New issue and advisory revenue increased by $35,158, or 124%, to $63,422 for the year ended December 31, 2024, as compared to $28,264 for the year ended December 31, 2023.

Year Ended December 31,

Commercial Real Estate Originations

Insurance Originations

European Insurance Originations

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 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

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 addition, we generate new issue revenue by originating new assets for the U.S.

Insurance JV, CREO JV, and our PriDe Funds in Europe.

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 our consolidated statement of operations.

Further, 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 notes receivable 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 with low trading volumes.

As a result, it may take us a significant period of time to liquidate these financial instruments.

We may suffer significant principal transactions loss prior to final liquidation of these financial instruments.

See Principal Transactions and Other Income below.

Principal Transactions and Other Income

Principal transactions and other income decreased by $45,696 to ($29,242) for the year ended December 31, 2024, as compared to $16,454 for the year ended December 31, 2023.

Principal transactions and other income increased by $38,390 to $31,792 for the year ended December 31, 2025, as compared to ($6,598) for the year ended December 31, 2024.

PRINCIPAL TRANSACTIONS & OTHER INCOME

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Interests in public companies:

Abpro Corporation (NASDQ:

Next.e.GO N.V.

Baird Medical Investment Holdings Limited (NASDQ:

Brand Engagement Network, Inc.

Captivision Inc.

CERo Therapeutics Holdings, Inc.

Crown LNG Holdings Limited (NASDAQ:

DevvStream Corp.

GCT Semiconductor Holding, Inc.

(NYSE American:

Psyence Biomedical Ltd.

Rezolve AI Limited (NASDAQ:

Rubicon Technologies (OTC:

Semilux International Ltd.

Stardust Power Inc.

Tevogen Bio Holdings, Inc.

Zapata Computing Holdings Inc.

Zoomcar Holdings, Inc.

Capital markets principal transactions

Interests in public companies:

ProCap Financial, Inc.

Brand Engagement Network, Inc.

Critical Metals Corp.

Heliogen, Inc.

Holdco Nuvo Group DG Ltd.

Payoneer Global Inc.

Rezolve AI Limited (NASDAQ:

Fold Holdings, Inc.

Marblegate Capital Corporation (OTC:MGTE)

Holdco Nuvo Group D.G Ltd.

Syntec Optics Holdings, Inc.

Payoneer Global Inc.

Rezolve AI PLC (NASDAQ:

Tevogen Bio Holdings Inc.

Zoomcar Holdings, Inc.

Stoa USA Inc./FlipOs

Investing principal transactions

Total principal transactions

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Total principal transactions and other income

Principal Transactions

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

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 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

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

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The amounts shown represent the change in the fair value of our investment 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

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Insurance JV at its reported NAV.

Stoa USA Inc.

/ FlipOS was a private company in which we owned common equity.

During 2023, Stoa USA Inc.

/ FlipOS announced it had ceased operations.

We wrote off our investment in 2023.

We have no remaining investment in Stoa USA Inc.

We have engaged in several SFA transactions.

We have also engaged in several transactions known as “share forward arrangements” (“SFAs”)..

In a typical SFA transaction, we acquire an interest in a publicly traded company and enter into an offsetting derivative with the same company.

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See note 8 to our consolidated financial statements included in this Annual Report on Form 10-K for more information regarding our SFAs.

The bridge loan exit fee was earned on a bridge loan made to an early stage growth company.

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

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(iii) an increase of $6,288 in subscriptions, clearing, and execution;

(iv) an increase of $5,125 in professional fee and other operating;

and (v) a decrease of $7 in depreciation and amortization.

(iv) a decrease of $330 in professional fee and other operating;

and (v) an increase of $168 in depreciation and amortization.

Compensation and Benefits

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Cash compensation and benefits

Equity-based compensation

Equity-based compensation - Columbus Circle SPAC

Equity-based compensation - Cohen & Company

Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits.

Cash compensation and benefits increased by $105,585 to $157,305 for the year ended December 31, 2025, as compared to $51,720 for the year ended December 31, 2024.

Our headcount decreased to 113 as of December 31, 2024 from 118 as of December 31, 2023.

Cash compensation increased primarily due to an increase in incentive compensation related to the increase in new issue and advisory revenue and income from equity method affiliates, as well as the year over year overall improvement in operating performance.

Equity-based compensation increased due to a higher number of restricted shares granted in 2024 as compared to 2023.

Our headcount increased to 126 as of December 31, 2025 from 113 as of December 31, 2024.

Cash compensation increased primarily due to an increase in incentive compensation related to the increase in investment banking and new issue revenue, as well as the year over year overall improvement in operating performance.

Included in the 2025 equity-based compensation was $15,761 recognized at the completion of the business combination between ProCap Financial and Columbus Circle SPAC representing founder shares in Columbus Circle SPAC allocable to our employees.

This was a one-time expense, and we should incur no further expense related to equity instruments of the Columbus Circle SPAC.

The compensation incurred above represented share-based compensation recognized upon completion of the business combination.

See note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for the discussion of our accounting policy related to equity compensation for SPACs we sponsor.

Equity-based compensation related to Cohen & Company shares was relatively unchanged.

Business Development, Occupancy, and Equipment

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This increase was comprised of an increase in business development of $1,271 and an increase in other occupancy of $9.

Increased business development expenditures were related to our increased investment banking and new issue activities.

Subscriptions, Clearing, and Execution

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The increase was comprised of an increase in subscriptions and dues of $669 and an increase in clearing and execution of $5,619.

The increase in clearing and execution was mainly due to the increase in costs incurred on the higher volume on investment banking and new issue engagements including firm underwritings.

Professional Fee and Other Operating Expenses

Professional fee and other operating expenses increased by $5,125, or 55%, to $14,421 for the year ended December 31, 2024, as compared to $9,296 for the year ended December 31, 2023.

The increase was comprised of an increase in professional fees of $1,913 and an increase in other operating expenses of $3,212.

A large portion of the increase in other operating expense was the result of bad debt expense of $2,556 recorded during 2024 related to CCM accounts receivable.

Professional fee and other operating expenses decreased by $330, or 2%, to $14,091 for the year ended December 31, 2025, as compared to $14,421 for the year ended December 31, 2024.

The decrease was the result of a decrease in other operating expense of $806, partially offset by an increase in professional fees of $476.

Depreciation and Amortization

Depreciation and amortization decreased by $7, or 1%, to $556 for the year ended December 31, 2024, as compared to $563 for the year ended December 31, 2023.

Depreciation and amortization increased by $168, or 30%, to $724 for the year ended December 31, 2025, as compared to $556 for the year ended December 31, 2024.

Non-Operating Income and Expense

Interest Expense, net

Interest expense, net decreased by $705 to $5,821 for the year ended December 31, 2024, as compared to $6,526 for the year ended December 31, 2023.

Interest expense, net increased by $55 to $5,876 for the year ended December 31, 2025, as compared to $5,821 for the year ended December 31, 2024.

INTEREST EXPENSE

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2020/2024 Notes

Byline Credit Facility

Redeemable Financial Instrument - JKD Capital Partners I LTD

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Income / (Loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates increased by $6,095 to $21,704 for the year ended December 31, 2024, as compared to $15,609 for the year ended December 31, 2023.

Income / (loss) from equity method affiliates decreased by $38,467 to ($16,763) for the year ended December 31, 2025, as compared to $21,704 for the year ended December 31, 2024.

See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.

Year Ended December 31,

SPAC Sponsor Entities

Dutch Real Estate Entities

Columbus Circle SPAC

SPAC Sponsor Entities

SPAC sponsor entities includes both indirect and direct investments in SPAC sponsor entities.

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Year Ended December 31,

Rezolve AI Limited (NASDAQ:

Critical Metals Corp.

Zoomcar Holdings, Inc.

Syntec Optics Holdings, Inc.

Next.e.GO N.V.

African Agriculture Holdings Inc.

Brand Engagement Network, Inc.

Tevogen Bio Holdings, Inc.

Critical Metals Corp.

Next.e.GO N.V.

Fold Holdings, Inc.

Murano Global Investments Plc (NASDAQ:

Holdco Nuvo Group DG Ltd.

Holdco Nuvo Group D.G Ltd.

Rezolve AI PLC (NASDAQ:

Tevogen Bio Holdings, Inc.

Zoomcar Holdings, Inc.

See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.

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Income tax expense / (benefit) was ($632) for the year ended December 31, 2025, as compared to ($329) for the year ended December 31, 2024.

See note 23 to our consolidated financial statements included in our Annual Report on Form 10-K.

The tax benefit recognized in 2024 was comprised of a deferred tax benefit of $677 and current tax expense of $348.

The current tax expense incurred was the result of foreign, state, and local income tax.

The deferred tax benefit was due to routine timing differences between recognition of income and expense items for GAAP and tax purposes.

The tax expense recognized in 2023 was comprised of a deferred tax expense of $5,354 and current tax expense of $191.

The current tax expense incurred was the result of foreign, state, and local income tax.

The deferred tax expense was U.S.

federal, state, and local tax expense, which was the result of the increase in the valuation allowance applied against the Company's carryforward tax assets.

For the Year Ended December 31,

Current income tax expense / (benefit)

Federal income tax expense / (benefit)

Foreign income tax expense / (benefit)

State and local income tax expense / (benefit)

Deferred income tax expense / (benefit)

Federal income tax expense / (benefit)

Foreign income tax expense / (benefit)

State and local income tax expense / (benefit)

We have significant carryforward tax assets.

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Management then schedules this income against each carryforward asset and determines what portion of the asset it believes is more likely than not to be realized.

This determination is subjective and subject to many assumptions and factors including:

profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction in which the income will be generated.

This determination is subjective and subject to many assumptions and factors including profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction in which the income will be generated.

To the extent management's determination changes, an adjustment will be made to the valuation allowance resulting in deferred tax expense or benefit.

We recorded deferred tax expense in 2023 because expectations of future income decreased and the Company increased the valuation allowance it had applied against carryforward assets.

In 2025, we recorded a reduction in the valuation allowance we had applied against our NOL assets because of our improved operating performance and future prospects.

This resulted in a deferred tax benefit being recorded in 2025.

Due to the magnitude of the Company's carryforward assets as well as the volatility of the Company's operating results, significant adjustments to the valuation allowance are likely going forward.

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Year Ended December 31,

Columbus Circle SPAC

Other SPAC related

Prior to March 31, 2023, the Vellar GP was the general partner of the SPAC Fund but did not consolidate it.

Effective April 1, 2023, the Vellar GP began consolidating the SPAC Fund.

The Vellar GP primarily invests in share forward arrangements.

On February 25, 2025, the Operating LLC sold its 33.4% interest in the Vellar GP pursuant to the Vellar Purchase Agreement and will no longer consolidate Vellar GP.

On February 25, 2025, the Operating LLC sold its 33.4% interest in the Vellar GP pursuant to the Vellar Purchase Agreement, and no longer consolidates Vellar GP.

See notes 4, 10, and 21 to our consolidated financials included in this Annual Report on Form 10-K.

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Favorable / (Unfavorable)

Investment banking and new issue

Asset management

New issue and advisory

Principal transactions and other income

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Net income / (loss) attributable to Cohen & Company Inc.

Revenues increased by $38,594, or 87%, to $82,981 for the year ended December 31, 2023, as compared to $44,387 for the year ended December 31, 2022.

As discussed in more detail below, the change was comprised of (i) a decrease of $9,083 in net trading revenue;

(ii) a decrease of $1,667 in asset management revenue;

(iii) an increase of $3,543 in new issue and advisory revenue;

and (iv) an increase of $45,801 in principal transactions and other income.

Net trading revenue decreased by $9,083, or 23%, to $30,926 for the year ended December 31, 2023, as compared to $40,009 for the year ended December 31, 2022.

Revenues decreased by $3,383, or 4%, to $79,598 for the year ended December 31, 2024, as compared to $82,981 for the year ended December 31, 2023.

As discussed in more detail below, the change was comprised of (i) an increase of $16,826 in investment banking and new issue revenue;

(ii) an increase of $5,483 in net trading revenue;

(iii) an increase of $1,672 in asset management revenue;

and (iv) a decrease of $27,364 in principal transactions and other income.

Investment Banking and New Issue

Investment banking and new issue revenue increased by $16,826, or 70%, to $40,778 for the year ended December 31, 2024, as compared to $23,952 for the year ended December 31, 2023.

Year Ended December 31, 2024

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

Year Ended December 31, 2023

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

CCM - Underwriting

CCM - Advisory and other new issue

Other - Origination

Gains / (losses) on CCM financial instruments received as non-cash consideration

Investment banking and new issue

During the year ended December 31, 2025, we began classifying principal transactions income/loss related to CCM activities from principal transaction to investment banking and new issue.

Specifically, $22.644 and $4,312 of revenue previously reported on the consolidated statement of operations in principal transaction revenue has been reclassified as investment banking and new issue revenue for the periods ending December 31, 2024, and 2023, respectively.

These reclassifications had no effect on previously reported net income.

Our revenue earned from investment banking and new issue 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.

For underwritings, any costs incurred are included as a component of subscriptions, clearing and execution.

For advisory and other new issue some expenses may be recorded in professional fees and other.

Finally, the change in value of our financial instruments received as consideration will also impact revenue recognized and can be volatile.

All investment banking and new issue revenue is included in our Capital Markets segment.

See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions.

In addition, we generate investment banking and new issue revenue by originating new assets for the U.S.

Insurance JV, CREO JV, and our PriDe Funds in Europe.

In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements.

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 subsequent change in the fair value of these instruments will be recorded as an adjustment to our investment banking and new issue revenue in our consolidated statement of operations.

As a result, it may take us a significant period of time to liquidate these financial instruments.

Net trading revenue increased by $5,483, or 18%, to $36,409 for the year ended December 31, 2024, as compared to $30,926 for the year ended December 31, 2023.

The following table shows the detail by trading group.

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For the Year Ended December 31,

Matched book repo

Gestation repo

High yield corporate

Investment grade corporate

Wholesale and other

Structured notes

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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 matched book repo business to be subject to significant concentration risk.

We consider our gestation repo business to be subject to significant concentration risk.

See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K.

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Asset Management

Asset management fees decreased by $1,667, or 19%, to $7,337 for the year ended December 31, 2023, as compared to $9,004 for the year ended December 31, 2022, as discussed in more detail below.

ASSET MANAGEMENT

(Dollars in Thousands)

For the Year Ended December 31,

A significant portion of our asset management fees are earned from the management of CDOs.

We have not completed a new securitization since 2008.

As a result, our asset management revenue from CDOs has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, liquidations, and defaults.

Asset management fees from CDOs decreased primarily because one of the securitizations we manage completed a successful auction during 2022.

As a result, we received payment of deferred subordinated management fees of $1,600 in 2022.

Otherwise, asset management fees from CDOs declined by $216 during 2023 mainly due to a decline in AUM due to liquidations and principal paydowns of collateral.

Asset management fees from other investment vehicles remained relatively unchanged.

Asset management fees increased by $1,672, or 23%, to $9,009 for the year ended December 31, 2024, as compared to $7,337 for the year ended December 31, 2023.

The increase is primarily due to the recognition in 2024 of deferred performance fees related to certain PriDe Funds and the portfolio servicing fee on the notional amount of loans owned by the CREO JV.

All asset management revenue is included in our asset management segment.

See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

New Issue and Advisory Revenue

New issue and advisory revenue increased by $3,543, or 14%, to $28,264 for the year ended December 31, 2023, as compared to $24,721 for the year ended December 31, 2022.

Year Ended December 31,

Commercial Real Estate Originations

Insurance Originations

Europe Insurance Originations