"Cohen & Company" Q2 2026 Earnings Call - SPAC Momentum and Trading Gains Drive Record Quarterly Profitability
Summary
Cohen & Company delivered a sharp earnings beat in the second quarter of 2026, with net income tripling to $3.6 million and adjusted pre-tax income jumping to $10.1 million. The results read like a disciplined SPAC playbook: investment banking revenue swelled to $54 million, fueled by a steady stream of de-SPAC closings, new issuances, and mark-to-market appreciation on warrants and units taken as deal consideration. Trading desks added another layer of resilience, pushing net trading revenue to $13.9 million as mortgage and structured notes activity picked up. The pipeline remains active, with Columbus Circle Capital II locking in an Elroy Air merger and a second vehicle, Columbus Circle Capital III, successfully raising $230 million in an IPO just outside the reporting window.
Under the hood, the firm’s cost structure tracked revenue closely, with compensation and benefits rising to $48.2 million on variable incentive pay. A $3 million hit to equity method affiliates from forfeited placement units in the Elroy Air deal tempers the headline numbers, but management’s positioning is clear. They are leaning into the SPAC ecosystem with disciplined capital allocation, a $4.1 billion repo book providing steady liquidity, and a $0.25 quarterly dividend signaling confidence in cash flow sustainability. The macro backdrop shows no sudden headwinds, just the familiar cyclical rhythm of deal flow that Cohen & Company has spent years mastering.
Key Takeaways
- Q2 2026 net income reached $3.6 million, or $0.94 fully diluted EPS, more than doubling the prior quarter and beating the prior year.
- Adjusted pre-tax income surged to $10.1 million, up 152 percent sequentially and 84 percent year-over-year, reflecting strong operational leverage.
- Investment banking and new issue revenue climbed to $54 million, driven by SPAC IPOs, de-SPAC transactions, and mark-to-market gains on financial instruments received as deal consideration.
- Net trading revenue rose to $13.9 million, supported by higher activity in the mortgage group and SPAC equity and structured notes desks.
- The firm executed two major SPAC milestones, with Columbus Circle Capital II signing a definitive de-SPAC with Elroy Air and Columbus Circle Capital III closing a $230 million IPO.
- A $3 million loss from equity method affiliates stemmed from forfeiting 360,000 placement units in the Elroy Air transaction, partially offset by a $2.1 million credit in non-controlling interests.
- Compensation and benefits expense increased to $48.2 million, tracking revenue growth through variable incentive compensation and a headcount rise to 129 employees.
- The balance sheet remains robust with $109.3 million in total equities, $28.8 million in corporate indebtedness, and a $4.1 billion repurchase agreement book.
- Fully diluted shares outstanding stand at 7.4 million, combining 3.2 million common shares and 42.2 million convertible membership units on a ten-to-one basis.
- The board declared a $0.25 per share quarterly dividend payable in September, while reserving the right to adjust future payouts based on capital requirements and earnings.
- Management described the macro environment as consistent with historical deal flow patterns, noting steady pipeline growth and cyclical SPAC activity without major timing disruptions.
Full Transcript
Operator: Ladies and gentlemen, welcome to Cohen & Company’s second quarter 2026 earnings call. My name is Sherry, and I will be your operator for today. Before we begin, Cohen & Company would like to remind everyone that some of the statements the company makes during this call may contain forward-looking statements under applicable 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 & Company advises you to read the cautionary note regarding forward-looking statements in its earnings release and in its most recent annual report on Form 10-K filed with the SEC.
Earlier today, Cohen & Company issued a press release announcing the second quarter 2026 financial results. Today’s discussion is complementary to that press release, which is available on the company’s website at 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 for questions. I would now like to turn the call over to Mr. Lester Brafman. He is Executive Officer of Cohen & Company. Please proceed, sir.
Lester Brafman, Executive Officer, Cohen & Company: Thank you everyone for joining us for our second quarter 2026 earnings call. With me on the call is Joe Poole, our CFO. We are pleased to deliver another solid quarter driven by continued strong performance in our full service boutique investment bank, Cohen & Company Capital Markets, and its expertise in SPAC and De-SPAC transactions. Recently, we achieved important milestones across our sponsor SPACs with Columbus Circle Capital II signing a definitive business combination agreement with Elroy Air Inc. on June 26, and Columbus Circle Capital III completing its $230 million IPO on July 9th. We are encouraged by the momentum we have underway as we look for opportunities to increase our revenue and profitability. We remain confident in our future earnings potential and are committed to creating long-term sustained value for our stockholders, including through our quarterly dividend.
Now I will turn the call over to Joe to walk through the quarter’s financial highlights in more detail.
Joe Poole, Chief Financial Officer, Cohen & Company: Thank you, Lester. I’ll start with a discussion of our operating results for the quarter. Our net income attributable to Cohen & Company Inc. shareholders was $3.6 million for the quarter, or $0.94 per fully diluted share, compared to net income of $1.5 million for the prior quarter, or $0.42 per fully diluted share, and net income of $1.4 million for the prior year quarter, or $0.81 per fully diluted share. Our fully diluted earnings per share calculation reflects all convertible membership units in our primary operating subsidiary, Cohen & Company, LLC, as if they are converted to shares, 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 $10.1 million for the quarter, compared to $4 million for the prior quarter and $5.5 million for the prior year quarter. As a reminder, adjusted pre-tax income 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 most of his interest in the enterprise through the primary operating subsidiary, Cohen & Company, LLC, which is a consolidated subsidiary of Cohen & Company Inc. Investment banking and new issue revenue was $54 million in the second quarter, compared to $45.7 million in the prior quarter and $44.1 million in the year-ago quarter.
In the current quarter, most of our investment banking and new issue revenue came from our CCM business and was primarily driven by SPAC M&A and SPAC IPO transactions, as well as gains on financial instruments that we have received as consideration for investment banking and new issue services provided by CCM. Net trading revenue came in at $13.9 million in the second quarter, up $700,000 from the prior quarter and up $3.1 million from the second quarter of 2025. The increase from the prior quarter reflected higher trading revenue from our mortgage group and the SPAC equity and structured notes trading desks. The increase from the prior year quarter reflected higher trading revenue from our mortgage group and the CMO trading desk. The gestation repo book of business was $4.1 billion at June 30, 2026.
Asset management revenue totaled $1.8 million in the quarter, down $600,000 from the prior quarter and down $300,000 from the prior year quarter. Second quarter principal transactions and other revenue was negative $300,000, compared to negative $3.4 million in the prior quarter and positive $2.8 million in the prior year quarter. Compensation and benefits expense for the second quarter was $48.2 million, up $6.9 million from the prior quarter and up $3.9 million from the prior year quarter. The change from both periods was primarily the result of fluctuations in revenue and the related variable incentive compensation. The number of company employees was 129 at the end of the quarter, compared to 128 at the end of March of 2026, and 118 at the end of June of 2025.
Net interest expense for the quarter was $1.3 million, including $1.2 million on our trust preferred securities debt, $76,000 on our senior promissory notes, and $45,000 bank credit facility. Loss from equity method affiliates totaled $3 million, compared to $500,000 for the prior quarter and $1.4 million for the prior year quarter. The loss in the current quarter was primarily driven by our investment in Columbus Circle Capital Corp. II SPAC. We had a related offsetting credit recorded in the net income attributable to the non-convertible, non-controlling interest line item of $2.1 million. Our net loss related to the Columbus Circle Capital Corp. II SPAC was $900,000 for the quarter and primarily related to us forfeiting our placement units that we received. As Lester mentioned, on June 26th, the Columbus Circle Capital Corp. II SPAC did sign a business combination agreement with Elroy Air.
For this transaction, we partnered with Inflection Point Asset Management, which has significant experience negotiating and consummating de-SPAC transactions and made the introduction to Elroy Air. As a result, Columbus Circle Capital Corp. II will be renamed Inflection Point Acquisition Corp. VII. The number of the SPAC’s founder shares currently allocated to us is 667,000. Again, this number of founder shares will not be finalized and saleable until the business combination closes, which we anticipate will be in the fourth quarter of 2026. As noted, as part of the agreement, upon closing the business combination, CCM, our investment bank, will forfeit its 360,000 placement units in that SPAC. Additionally, our sponsored SPAC, Columbus Circle Capital Corp. III, completed its $230 million IPO on July 10th, just after the end of the quarter. The number of the SPAC’s founder shares currently allocated to us is 2.28 million.
Again, this number of founder shares will not be finally and definitively determined until the consummation of a business combination. Additionally, CCM used $3.6 million of its underwriting fee to purchase 360,000 Columbus Circle Capital Corp. III placement units in the related private placement. In terms of our balance sheet and capitalization at the end of the quarter, total equities was $109.3 million, compared to $103.1 million as of the end of the year. The non-convertible, non-controlling interest component of total equity was only $5,000 at the end of the quarter and $400,000 at the end of the year. The total enterprise equity, excluding the non-convertible, non-controlling interest component, was $109.3 million at the end of the quarter, a $6.6 million increase from $102.6 million at the end of the year.
At quarter end, including unvested shares and units, we had outstanding 3.2 million shares of common stock and 42.2 million convertible membership units of our primary operating subsidiary, Cohen & Company, LLC, which are convertible into shares of common stock on a 10-for-one basis, resulting in a grand total of 7.4 million fully diluted shares of common stock outstanding on an as-if converted basis, assuming all unvested units and shares vest. At the end of the quarter, consolidated corporate indebtedness was carried at $28.8 million. We declared a quarterly dividend at $0.25 per share, payable on September 2nd to stockholders of record as of August 19th. The board of directors will continue to evaluate the dividend policy each quarter, future decisions regarding dividends may be impacted by quarterly results and the company’s capital needs. With that, I’ll turn it back over to Lester.
Lester Brafman, Executive Officer, Cohen & Company: Thanks, Joe. We remain confident in our ability to execute our strategic priorities and continue driving progress as we enhance long-term value for our stockholders. Please direct any offline investor questions to Joseph Pooler at 215-701-8952 or via email to [email protected]. The contact information can also be found at the bottom of our earnings release. Operator, you can now open the call for questions.
Operator: Thank you.
Lester Brafman, Executive Officer, Cohen & Company: Thank you for joining us today.
Operator: 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. Our first question is from Mike Grondahl with Northland Securities. Please proceed.
Luke, Analyst, Northland Securities: Hey, guys. This is Luke on for Mike. Congrats on the quarter. Wanted to kind of maybe flesh out what one or two things drove the strength in the quarter. Were there any kind of significant deals that benefited this quarter or some of the strength that you saw across the business?
Lester Brafman, Executive Officer, Cohen & Company: Joe, you want to take that one?
Joe Poole, Chief Financial Officer, Cohen & Company: Yeah. Hey, Luke. Thank you for the nice words. The CCM business continues to do well. It continues to grow its pipeline. It’s adding to its pipeline regularly. I think we closed 5 SPAC IPOs, a number of De-SPACs. Some of the consideration that we received from prior deals, in terms of warrants and units that the CCM business takes as part of its upfront consideration, moved up in value because the related deals either signed business combination agreements or, in 2 cases, actually closed business combination agreements immediately subsequent to the quarter end. I think they continue doing what they do, and they’re doing it well.
Luke, Analyst, Northland Securities: Yeah. That’s helpful. From a macro perspective, are you guys seeing any sort of impacts on number of deals or on timing of deals closing?
Lester Brafman, Executive Officer, Cohen & Company: No, I think it’s fairly consistent to what we’ve seen in the past. There’ll be a flurry of activity, then the market will cool off a little bit, but it’s not a real I think our pacing is pretty similar to what it’s been before.
Luke, Analyst, Northland Securities: Okay, great. Then just kind of looking at the pipeline by major categories via SPAC, de-SPAC, capital raising, M&A, can you just talk about the pipeline going into the back half of the year here?
Lester Brafman, Executive Officer, Cohen & Company: Well, I don’t think we get publicly all that granular in terms of breaking down the various buckets, I think going forward, I would expect our pipeline kind of resembling what we’ve been doing in the past.
Luke, Analyst, Northland Securities: Okay. Got it. Fair enough. Well, thanks for taking the questions, guys, congrats on the quarter.
Lester Brafman, Executive Officer, Cohen & Company: Thank you.
Joe Poole, Chief Financial Officer, Cohen & Company: Thank you, Luke.
Operator: There are no further questions at this time. I would like to turn the conference back over to Lester for closing remarks.
Lester Brafman, Executive Officer, Cohen & Company: Thank you. Thanks everyone for listening today. We look forward to reconvening at our next quarter.
Operator: Thank you. This will conclude today’s conference. You may disconnect at this time, and thank you for your participation.
Luke, Analyst, Northland Securities: Thank you.
