COHEN & CO INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-K)

March 09, 2023 at 12:24 pm

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

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





Overview

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

• Capital Markets: Our Capital Markets business segment consists primarily of

fixed income sales, trading, gestation repo financing, new issue placements in

corporate and securitized products, and advisory services. Our fixed income

sales and trading group provides trade execution to corporate investors,

institutional investors, mortgage originators, and other smaller

broker-dealers. We specialize in a variety of products, including but not

limited to: corporate bonds, ABS, MBS, RMBS, CDOs, CLOs, CBOs, CMOs, municipal

securities, TBAs and other forward agency MBS contracts, U.S. government

bonds, U.S. government agency securities, brokered deposits and CDs for small

banks, and hybrid capital of financial institutions including TruPS, whole

loans, and other structured financial instruments. We also offer execution and

brokerage services for equity products. 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 which focuses on M&A, capital

markets, and SPAC advisory.

• 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, 2022, we had approximately

$2.1 billion in assets under management ("AUM") of which 49.8% 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, 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.

• 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 or other Capital Markets business segment

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.

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





Capital Markets:

• Our trading activities, which include execution and brokerage services,

securities lending activities, riskless trading activities, as well as gains

and losses (unrealized and realized) and income and expense earned on

securities classified as trading;

• Net interest income on our matched book repo financing activities; and

• New issue and advisory revenue comprised of (a) new issue revenue associated


    with originating, arranging, or placing newly created financial
    instruments and (b) revenue from advisory services.




Asset Management:

• Asset management fees for our on-going asset management services provided to

certain Investment Vehicles, which may include fees both senior and

subordinate to the securities issued by the Investment Vehicle; and

• Incentive management fees earned based on the performance of the certain


     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; and
  • Income and loss earned on equity method investments.




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Business Environment



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



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



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



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



A portion of our revenue is generated from new issue and advisory engagements.
The fees charged and volume of these engagements are sensitive to the overall
business environment. We provide origination services in Europe through our
subsidiary CCFESA, and new issue and advisory services in the U.S. through our
subsidiary JVB. A division of JVB, CCM is our full-service boutique investment
bank which focuses on M&A, capital markets, and SPAC advisory. Currently, our
primary source of new issue and advisory revenue is from originating assets for
our U.S. and European insurance asset management business including our U.S.
Insurance JV and our CREO JV, as well and from investment banking and advisory
services through CCM.



A portion of our revenue is generated from management fees. Our ability to
charge management fees and the amount of those fees is dependent upon the
underlying investment performance and stability of the Investment Vehicles. If
these types of investments do not provide attractive returns to investors, the
demand for such instruments will likely fall, thereby reducing our opportunity
to earn new management fees or maintain existing management fees. 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 from CDOs has
declined from its historical highs as the assets of the CDOs decline due to
maturities, repayments, auction call redemptions, 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.



A portion of our revenues is generated from our principal investing activities.
Therefore, our revenues are impacted by the overall market supply of and demand
for these investments as well as the individual performance of each investment.
Our principal investments are included within other investments, at fair value,
other investments sold, not yet purchased, and investments in equity method
affiliates in our consolidated balance sheets.  More recently, a significant
component of our principal investment revenue and income from equity method
affiliates 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 or third party sponsored SPAC
business combinations.  Access to these investments is reliant on a robust SPAC
market.  Performance of the resulting principal investments can be materially
impacted by overall performance of the equity markets.  See note 8 to our
consolidated financial statements included in this Annual Report on Form 10-K.



The SPAC Market



Beginning 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.  Beginning in 2019, these SPAC
activities have become a significant portion of our Principal Investing business
segment. In August 2018, we invested in and became the general partner of a
newly formed investment fund (the "SPAC Fund"), which was created for the
purpose of investing in the equity interests of SPACs and SPAC sponsor entities
including SPACs sponsored by us, our affiliates, and third parties. 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
consists of investments in the sponsor entities of individual SPACs.  Generally,
when a SPAC acquires or merges with a privately held target company, the target
company winds up owning a majority of the resulting outstanding equity of the
SPAC so the transaction is accounted for as a reverse merger.  Private
companies utilize reverse mergers with SPACs as a method of going public as an
alternative to a traditional IPO.  All of our business activity related to SPACs
is highly sensitive to the volume of activity in the SPAC market.  Volumes could
be negatively impacted if target companies no longer see SPACs as an attractive
alternative thereby reducing the number of suitable potential business
combination targets.  Also, investor demand for SPACs would be negatively
impacted if the stocks of SPACs that successfully complete a business
combination underperform the market.  If volumes of SPAC activity decline, our
results of operations will likely be significantly negatively impacted.



Equity prices of post business combination SPACs declined significantly during
2022. We are exposed to public equity prices of SPACs and post business
combination SPACs both through our other investments, at fair value and
investments in equity method affiliates. As a result, we recorded significant
principal transaction losses and equity method losses during the year ended
December 31, 2022. Continued declines in the equity prices of these companies
will result in further losses for us.

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Margin Pressures in Fixed Income Brokerage Business





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



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



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



U.S. Housing Market



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

Rising Interest Rates and Inflation




During 2022, the U.S. Federal Reserve began a process of raising the federal
funds rate and quantitative tightening to address rising inflation. These
actions have the effect of increasing interest rates which negatively impacts
our business in several ways:

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


     balance sheet.
2.   Rising rates have created instability in the equity markets which has

reduced equity financing and business combination volumes and negatively

impacted CCM. 3. Rising rates have reduced the volumes of new issue fixed income instruments

which has negatively impacted our CREO JV. 4. Rising rates significantly reduce mortgage activity. Our mortgage group's


     profitability is mainly impacted by the volume of mortgage activity in the
     U.S. (both
     mortgages for new home purchases as well as refinancing). Furthermore, our

mortgage group engages in repo lending to mortgage originators. Reduced

mortgage

volumes impose financial pressures on mortgage originators and may increase

the risk that originators default on their repo obligations to us. See Note

11 to our

consolidated financial statements included in Item 1 of this Annual Report

on Form 10-K. 5. Rising rates may ultimately push the U.S. into recession, which may further


     reduce overall transaction volumes in the financial markets negatively
     impacting our
     business generally.




COVID-19



In March 2020, the World Health Organization declared the outbreak of a novel
coronavirus (COVID-19) as a pandemic.  The spread of COVID-19 has caused
significant volatility in domestic and international markets. There is on-going
uncertainty around the breadth and duration of business disruptions related to
COVID-19, as well as its impact on the U.S. and international economies.



In 2021, medical professionals developed COVID-19 vaccines and governments began
to distribute them globally, which is expected to reduce virus spread and
further aid economic recovery.  Despite broad improvements in the global fight
against the COVID-19 virus, we will likely be impacted by the pandemic in other
ways which we cannot reliably determine. We will continue to monitor market
conditions and respond accordingly.  In April 2020, we applied for and received
a $2,166 loan under the Paycheck Protection Program ("PPP") of the Coronavirus
Aid, Relief, and Economic Security ("CARES") Act.  On June 21, 2021, we received
notification that the U.S. Small Business Administration, as administrator of
the PPP, had approved our PPP loan forgiveness application for $2,127 and all
accrued interest on the PPP loan, leaving us with a remaining PPP loan balance
of $39. The PPP loan forgiveness was recorded to other non-operating income on
the consolidated statements of operations and comprehensive income.  We
repaid the remaining balance plus accrued interest on June 25, 2021, at which
point the PPP loan balance was reduced to zero.



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Recent Events and Transactions

Conversion of the 2017 Convertible Note



On March 10, 2017, the Operating LLC issued to DGC Family Fintech Trust (the
"DGC Trust"), a trust established by Daniel G. Cohen, a convertible senior
secured promissory note in the aggregate principal amount of $15,000 (the "2017
Convertible Note").  On March 20, 2022, the DGC Trust elected to convert the
2017 Convertible Note into an aggregate of 10,344,827 units of membership
interests in the Operating LLC at the conversion rate specified in the 2017
Convertible Note agreement of $1.45 per unit. As a result of such conversion,
the 2017 Convertible Note was cancelled in its entirety.  These units of
membership interests have the same conversion and redemption rights as the
existing convertible non-controlling interest units of membership interest.

See

note 20.



Pursuant to the DGC Trust's governing documents, Daniel G. Cohen has the ability
to acquire at any time any of the DGC Trust's assets, including the units of
membership interests, by substituting other property of an equivalent value
without the approval or consent of any person, including any trustee or
beneficiary of the DGC Trust. See Notes 21 and 31.

The 2020 Senior Notes




On January 31, 2022, the Operating LLC and JKD Investor entered into a Note
Purchase Agreement.  On January 31, 2020, the Operating LLC entered into a Note
Purchase Agreement (the "Original Purchase Agreement") with JKD Capital Partners
I LTD, a New York corporation ("JKD Investor"), and RN Capital Solutions LLC, a
Delaware limited liability company ("RNCS").  The JKD Investor is owned by Jack
DiMaio, Jr., the vice chairman of the Company's board of directors and the
Operating LLC's board of managers, and his spouse.  The note purchased by the
JKD Investor is herein referred to as the "JKD Note."



 Pursuant to the Original Purchase Agreement, JKD Investor and RNCS each
purchased a senior promissory note in the principal amount of $2,250 (for an
aggregate investment of $4,500). The senior promissory notes bore interest at a
fixed rate of 12% per annum and matured on January 31, 2022, pursuant to which,
among other things, on such date, (i) JKD Investor paid to the Operating LLC an
additional $2,250 and (ii) in consideration for such funds, the Operating LLC
issued to JKD Investor an Amended and Restated Senior Promissory Note in the
aggregate principal amount of $4,500 (the "Amended and Restated Note"), which
Amended and Restated Note amended and restated the JKD Note in its entirety.
The 2022 Purchase Agreement contains customary representations and warranties on
the part of each of JKD Investor and the Operating LLC. We used these proceeds
to retire $2,250 of existing 2020 Senior Notes held by RNCS.  See note 20 and
31.

Commercial Real Estate Opportunities ("CREO") JV





On September 3, 2021, we committed to invest up to $15,000 of equity in a newly
formed joint venture (the "CREO JV") with an outside investor who committed to
invest approximately $435,000 of equity in the CREO JV.  We are required to
invest 7.5% of the total equity of the CREO JV with an absolute limit of
$15,000. The CREO JV is managed by us.



The CREO JV was formed for the purposes of investing in primarily multi-family
commercial real estate mortgage-backed loans and below-investment-grade rated
tranches in CRE CLOs collateralized by mostly transitional commercial real
estate mortgage-backed loans. "CRE CLO" means any pooling of commercial real
estate mortgage-backed loans into a collateralized loan obligation.



The commercial real estate loans that will be funded by the CREO JV may be
originated by us and we may earn origination fees in connection with such
transactions. In addition, we may earn structuring fees in connection with
structuring and consummating a CRE CLO consisting of a pooling of commercial
real estate loans. We will also earn management fees as manager of any CRE CLOs
based on the value of the assets consolidated into a CRE CLO (calculated in
accordance with the terms of such CRE CLO), payable from the proceeds generated
by and in accordance with the distribution waterfall of such CRE CLO.



We elected the fair value option in accordance with the provisions of ASC 820 to
account for our equity method investment in the CREO JV. The investment is
included in other investments, at fair value, on the consolidated balance sheet
and gains and losses (both realized and unrealized) are recognized in
the consolidated statement of operations as a component of principal
transactions and other income. Because the CREO JV has the attributes of
investment companies as described in ASC 946-15-2, we estimate the fair value of
our investment using the net asset value ("NAV") per share (or its
equivalent) as of the reporting date in accordance with the "practical
expedient" provisions related to investments in certain entities that calculate
net asset value per share (or its equivalent) included in ASC 820 for all
entities. As of December 31, 2022, our investment balance in the CREO JV was
$6,568.

Wind Down of the Company's GCF Repo Business





During 2017-2021, we carried out a matched book GCF repo business as a
full-netting member of the FICC Government Services Division.  In October 2021,
primarily due to reduced spreads in the repo market for GCF collateral, we
decided to wind down this business.  As of December 31, 2021, the wind down was
completed and the GCF reverse repurchase agreements and repurchase agreements
balances were reduced to zero. See note 11.



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INSU Acquisition Corp III ("Insurance SPAC III")

The Operating LLC was the manager of Insurance Acquisition Sponsor III, LLC
("IAS III") and Dioptra Advisors III, LLC (together with IAS III, the "Insurance
SPAC III Sponsor Entities"). The Insurance SPAC III Sponsor Entities
were sponsors of INSU Acquisition Corp. III ("Insurance SPAC III"). On December
22, 2020, Insurance SPAC III completed the sale of 25,000,000 units (the
"Insurance SPAC III Units") in its initial public offering ("IPO"). Each
Insurance SPAC III Unit consisted of one share of Insurance SPAC III's class A
common stock, par value $0.0001 per share ("Insurance SPAC III Common Stock"),
and one-third of one Insurance SPAC III warrant (each, an "Insurance SPAC III
Warrant"), where each whole Insurance SPAC III Warrant entitled the holder to
purchase one share of Insurance SPAC III Common Stock for $11.50 per share. The
Insurance SPAC III Units were sold in the IPO at an offering price of $10.00 per
unit. If Insurance SPAC III failed to consummate a business combination within
the first 24 months following the IPO, its corporate existence would cease
except for the purpose of winding up its affairs and liquidating its assets.



The Operating LLC loaned to Insurance SPAC III approximately $71 to cover IPO
expenses, which was repaid in full at the closing of the IPO. IAS III and its
affiliates, including the Operating LLC, committed to loan Insurance SPAC III up
to an additional $1,500 to cover operating and acquisition related expenses
following the IPO, of which $960 was borrowed by Insurance SPAC III. See notes
31 and 32.  The loans bore no interest, and if the Insurance SPAC III
consummated a business combination in the required time period, the loans
were to be repaid from the funds held in Insurance SPAC III's trust account. If
Insurance SPAC III did not consummate a business combination in the required
time frame, no funds from Insurance SPAC III's trust account could be used to
repay the loans.



On November 18, 2022, Insurance SPAC III announced it would not consummate an
initial business combination within the time period required and that it
intended to dissolve and liquidate, effective as of the close of business on
December 22, 2022, and redeem all of the Insurance SPAC III Common Stock and
each Insurance SPAC Warrant that were included in its IPO, at a per-share
redemption price of approximately $10.09. As of the close of business on
December 22, 2022, the Insurance SPAC III Common Stock and each Insurance SPAC
Warrant were deemed cancelled and represented only the right to receive the
redemption amount.



In order to provide for the disbursement of funds from the trust account,
Insurance SPAC III instructed the trustee of the trust account to take all
necessary actions to liquidate the securities held in the trust account. The
proceeds of the trust account were held in a non-interest bearing account while
awaiting disbursement to the holders of the Public Shares. Record holders will
receive their  pro rata portion of the proceeds of the trust account, less
$100 of interest to pay dissolution expenses and net of taxes payable. Insurance
SPAC III Sponsor Entities agreed to waive their redemption rights with respect
to their outstanding shares of Class B common stock issued prior to the
Insurance SPAC III IPO. There will be no redemption rights or liquidating
distributions with respect to each Insurance SPAC III Warrant, which will expire
worthless.



As a result of the liquidation of Insurance SPAC III, we recorded an equity
method loss of $5,896 for the year ended December 31, 2022, which included a
write-off of the amounts advanced to Insurance SPAC III from the Operating LLC
as well as amounts invested.  Of this loss,$4,808 was allocated to the
non-convertible non-controlling interests. Therefore, the net impact to the
Operating LLC was $1,088.

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Consolidated Results of Operations

The following section provides a comparative discussion of our consolidated results of operations for the specified periods. The period-to-period comparisons of financial results are not necessarily indicative of future results.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2022 and 2021.

COHEN & COMPANY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
       (Dollars in Thousands)




                                             Year Ended December 31,            Favorable / (Unfavorable)
                                               2022             2021            $ Change            % Change
Revenues
Net trading                                $     40,009       $  69,385     $        (29,376 )             (42 )%
Asset management                                  9,004          10,923               (1,919 )             (18 )%
New issue and advisory                           24,721          28,736               (4,015 )             (14 )%

Principal transactions and other income (29,347 ) 37,324


         (66,671 )            (179 )%
Total revenues                                   44,387         146,368             (101,981 )             (70 )%

Operating expenses
Compensation and benefits                        50,290          85,048               34,758                41 %
Business development, occupancy,
equipment                                         5,076           3,365               (1,711 )             (51 )%
Subscriptions, clearing, and execution            8,274          10,307                2,033                20 %
Professional fee and other operating              8,153           7,684                 (469 )              (6 )%
Depreciation and amortization                       557             371                 (186 )             (50 )%
Total operating expenses                         72,350         106,775               34,425                32 %

Operating income / (loss)                       (27,963 )        39,593              (67,556 )            (171 )%

Non-operating income / (expense)



Interest expense, net                            (4,982 )        (7,233 )              2,251                31 %
Income / (loss) from equity method
affiliates                                      (20,931 )        36,010              (56,941 )            (158 )%
Other non operating income                            -           2,127               (2,127 )            (100 )%
Income / (loss) before income taxes             (53,876 )        70,497             (124,373 )            (176 )%
Income tax expense / (benefit)                    4,794          (3,541 )             (8,335 )            (235 )%
Net income / (loss)                             (58,670 )        74,038             (132,708 )            (179 )%
Less: Net income (loss) attributable to
the non-convertible non-controlling
interest                                        (23,203 )        35,574               58,777               165 %
Enterprise net income (loss)                    (35,467 )        38,464              (73,931 )            (192 )%
Less: Net income (loss) attributable to
the convertible non-controlling interest        (22,078 )        26,656               48,734               183 %
Net income / (loss) attributable to
Cohen & Company Inc.                       $    (13,389 )     $  11,808     $        (25,197 )            (213 )%




Revenues



Revenues decreased by $101,981, or 70%, to $44,387 for the year ended December
31, 2022, as compared to $146,368 for the year ended December 31, 2021. As
discussed in more detail below, the change was comprised of (i) a decrease of
$29,376 in net trading revenue; (ii) a decrease of $1,919 in asset management
revenue; (iii) a decrease of $4,015 in new issue and advisory revenue; and (iv)
a decrease of $66,671 in principal transactions and other income.



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Net Trading

Net trading revenue decreased by $29,376, or 42%, to $40,009 for the year ended December 31, 2022, as compared to $69,385 for the year ended December 31, 2021. The following table shows the detail by trading group.







     NET TRADING
(Dollars in Thousands)




                                   Year Ended December 31,
                               2022         2021        Change
Mortgage                     $  1,143     $  6,885     $  (5,742 )
Matched book repo              30,595       46,139       (15,544 )
High yield corporate            4,694       10,390        (5,696 )
Investment grade corporate      1,197          593           604
Wholesale and other             2,380        5,378        (2,998 )
Total                        $ 40,009     $ 69,385     $ (29,376 )




Our net trading revenue includes unrealized gains on our trading investments, as
of the applicable measurement date that may never be realized due to changes in
market or other conditions not in our control. This may adversely affect the
ultimate value realized from these investments. In addition, our net trading
revenue also includes realized gains on certain proprietary trading positions.
Our ability to derive trading gains from such trading positions is subject to
overall market conditions. Due to volatility and uncertainty in the capital
markets, the net trading revenue recognized during the year may not be
indicative of future results. Furthermore, from time to time, some of the assets
included in the Investments-trading line of our consolidated balance sheets
represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets
are carried at fair value based on estimates derived using internal valuation
models and other estimates. See notes 9 and 10 to our consolidated financial
statements included in this Annual Report on Form 10-K. 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. See note 11 to our consolidated financial
statements included in this Annual Report on Form 10-K.



The Company recorded a gross loss of $5,454 in connection with the FGMC reverse
repo.  Of the $5,454 loss, $5,244 was recorded as a reduction in net trading
revenue and $210 was recorded in professional fees and other operating expense.
Of the $5,244 recorded in net trading revenue, $4,330 is included in the
mortgage group and $914 is included in the matched book repo group in the table
above.  See note 11 to our consolidated financial statements included in Item 1
of this Annual Report on Form 10-K.



Asset Management



Assets Under Management



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

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







ASSETS UNDER MANAGEMENT
(Dollars in Thousands)




                                            As of December 31,
                                   2022            2021            2020

Company sponsored CDOs $ 1,053,430 $ 1,239,988 $ 2,057,178 Other Investment Vehicles (1) 1,062,897 1,118,162 712,028 Assets under management (2) $ 2,116,327 $ 2,358,150 $ 2,769,206

(1) Other Investment Vehicles include any Investment Vehicle that is not a

Company sponsored CDO. (2) In some cases, accounts we manage may employ leverage. In some cases, our

fees are based on gross assets and in some cases on net assets. Finally, in

the case of the SPAC Series Funds there are no management fees earned. AUM

included herein is calculated using either gross or net assets of each

managed account or CDO based on whichever serves as the basis for our

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


    assets are included.




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Asset management fees decreased by $1,919, or 18%, to $9,004 for the year ended
December 31, 2022, as compared to $10,923 for the year ended December 31, 2021,
as discussed in more detail below.



   ASSET MANAGEMENT
(Dollars in Thousands)




             Year Ended December 31,
         2022         2021        Change
CDOs    $ 3,454     $  2,484     $    970
Other     5,550        8,439       (2,889 )
Total   $ 9,004     $ 10,923     $ (1,919 )






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, 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.



Asset management fees from CDOs increased because the Alesco 1 securitization
completed a successful auction during 2022.  As a result, we received payment of
deferred subordinated management fees of $1,600.  Otherwise, asset management
fees from CDOs declined by $630 during 2022 mainly due to a decline in AUM due
to liquidations of collateral, our removal as manager of one CDO, and principal
paydowns of collateral.

Asset management fees from other investment vehicles decreased primarily due to a reduction of incentive fees earned on the SPAC Fund.

New Issue and Advisory Revenue





New issue and advisory revenue decreased by $4,015, or 14%, to $24,721 for the
year ended December 31, 2022, as compared to $28,736 for the year ended December
31, 2021.





                                           Year Ended December 31,
                                        2022         2021        Change

Cohen & Company Capital Markets $ 16,880 $ 22,676 $ (5,796 ) Commercial Real Estate Originations 1,897 1,428 469 U.S. Insurance Originations

              4,753        1,940        2,813
European Insurance Originations          1,191        2,692       (1,501 )
Total                                 $ 24,721     $ 28,736     $ (4,015 )




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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 and will generally be
recognized in the same period that the related revenue is recognized.



CCM is our full-service boutique investment banking platform which focuses on
M&A, capital markets, and SPAC advisory.  In addition, we generate new issue
revenue by originating new assets for the U.S. Insurance JV, CREO JV, and for
our PriDe funds in Europe.

Principal Transactions and Other Income

Principal transactions and other income decreased by $66,671 to ($29,347) for the year ended December 31, 2022, as compared to $37,324 for the year ended December 31, 2021.

PRINCIPAL TRANSACTIONS & OTHER INCOME


       (Dollars in Thousands)




                                                      Year Ended December 31,
                                                  2022          2021        Change
SFT                                             $  (5,539 )   $ (5,258 )   $    (281 )
LMND                                               (2,805 )     43,655       (46,460 )
IMXI                                                    -          318          (318 )
WEJO                                               (1,794 )     (3,160 )       1,366
REE                                                (4,755 )     (2,939 )      (1,816 )
ML                                                   (238 )       (988 )         750
BKSY                                                  (78 )       (914 )         836
FOXO                                               (1,044 )          -        (1,044 )
HLGN                                              (14,754 )          -       (14,754 )
RBT                                                (1,576 )          -        (1,576 )
Other SPAC equity                                  (2,232 )      3,094        (5,326 )
Stoa USA Inc. / FlipOs                              4,196        1,805         2,391
U.S. Insurance JV                                      11          142          (131 )
SPAC Fund                                             (43 )        474          (517 )
Other principal investments                            20          (45 )


Total principal transactions                      (30,631 )     36,184       (66,815 )

IIFC revenue share                                    673          634            39
All other income / (loss)                             611          506           105
Other income                                        1,284        1,140           144

Total principal transactions and other income $ (29,347 ) $ 37,324 $ (66,671 )






Principal Transactions



For all investments discussed below, see note 9 to our consolidated financial
statements included in this Annual Report on Form 10-K for information about how
we determine the value of these instruments. For several of the investments
described below, we also had an investment in the same company which was
accounted for under the equity method during the periods presented.  See
discussion of equity method income / (loss) below.



SFT is a publicly traded company.  In the periods presented, the shares of
SFT we held were comprised of both unrestricted and restricted shares and were
carried at fair value.  For a portion of the period we have held these shares,
they were held in majority owned consolidated subsidiaries (the "Insurance SPAC
Sponsor Entities").  Accordingly, there were significant non-controlling
interest and equity compensation expense associated with these. See discussion
of non-convertible non-controlling interest and equity compensation expense
below.  As of December 31, 2022, the total carrying value of our investment in
SFT was $231.



LMND is a publicly traded company.  In the periods presented, the shares of LMND
we held were comprised of both unrestricted and restricted shares and were
carried at fair value.  For a portion of the period we have held these shares,
they were held in majority owned consolidated subsidiaries (the "Insurance SPAC
II Sponsor Entities").  Accordingly, there were significant non-controlling
interest and equity compensation expense associated with these. See discussion
of non-convertible non-controlling interest and equity below.  As of December
31, 2022, the total carrying value of our investment in LMND was $561.



IMXI represents equity positions of International Money Express, Inc. (NASDAQ:
IMXI), a publicly traded company that resulted from the merger of Intermex
Holdings, LLC and FinTech Acquisition Corp. II.  These shares were carried at
fair value.  As of December 31, 2022, we hold no remaining investment in IMXI.



WEJO represents equity positions of Wejo Group, Ltd. (NASDAQ: WEJO), a publicly
traded company that closed its business combination with Virtuoso Acquisition
Corp.  As of December 31, 2022, we had a total investment in WEJO carried at
fair value of $175, which was included as a component of other investment's at
fair value.



REE represents equity positions of REE Automotive Ltd. (NASDAQ: REE), a publicly
traded company that closed its business combination with 10X Capital Venture
Acquisition Corp.  As of December 31, 2022, we had a total investment in REE
carried at fair value of $292, which was included as a component of other
investments, at fair value.



ML represents equity positions of MoneyLion, Inc. (NYSE: ML), a publicly traded
company that closed its business combination with Fusion Acquisition Corp. As of
December 31, 2022, we had a total investment in ML carried at fair value of $25,
which was included as a component of other investments, at fair value.

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BKSY represents equity positions of BlackSky Technology Inc. (NYSE: BKSY), a
publicly traded company that closed its business combination with Osprey
Technologies Acquisition Corp. As of December 31, 2022, we had a
total investment in BKSY carried at fair value of $28, which was included as a
component of other investments, at fair value.



FOXO represents equity positions of  FOXO Technologies Inc. (NASDAQ: FOXO), a
publicly traded company that closed its business combination with Delwinds
Insurance Acquisition Corp.  As of December 31, 2022, we had a total investment
in FOXO carried at fair value of $109, which was included as a component of
other investments, at fair value.

HLGN represents equity positions of Heliogen, Inc. (NYSE: HLGN), a publicly traded company that closed its business combination with Athena Technology Acquisition Corp. As of December 31, 2022, we had a total investment in HLGN carried at fair value of $353, which was included as a component of other investments, at fair value.





RBT represents equity positions of Rubicon Technologies, Inc. (NYSE: RBT), a
public company that closed its business combination with Founder SPAC.  As of
December 31, 2022, we had a total investment in RBT carried at fair value of
$4,424, which was included as a component of other investments, at fair value.

Other SPAC equity represents equity investments in publicly traded SPACs or their successor public companies carried at fair value.

Stoa USA Inc. / FlipOs is a private company in which we own common equity.  We
carry our investment at fair value.  As of December 31, 2022, we had a total
investment in Stoa USA Inc. / FlipOs carried at fair value of $6,693, which was
included as a component of other investments, at fair value. See note 31 to our
consolidated financial statements included in Item 1 of this Annual Report on
Form 10-K.



The U.S. Insurance JV invests in insurance company debt. We carry our investment
in the U.S. Insurance JV at its reported NAV. As of December 31, 2022, we had a
total investment in the U.S. Insurance JV carried at fair value of $3,459, which
was included as a component of other investments, at fair value.



The SPAC Fund invests in the equity of SPACs.  We carry our investment in the
SPAC Fund at its reported NAV. As of December 31, 2022, we had a total
investment in SPAC Fund carried at fair value of $527, which was included as a
component of other investments, at fair value.

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





Other Income



Other income / (loss) is comprised of an ongoing revenue share arrangement as
well as other miscellaneous operating income items. The revenue share
arrangement noted in the table above entitles us to a percentage of revenue
earned by IIFC. The IIFC revenue share arrangement expires at the earlier of (i)
the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in
revenue share payments. To date, we have earned $4,513. Also, in any particular
year, the revenue share earned by us cannot exceed $2,000.



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Operating Expenses



Operating expenses decreased by $34,425, or 32%, to $72,350 for the year ended
December 31, 2022, as compared to $106,775 for the year ended December 31, 2021.
As discussed in more detail below, the change was comprised of (i) a decrease of
$34,758 in compensation and benefits; (ii) an increase of $1,711 in business
development, occupancy, and equipment; (iii) a decrease of $2,033 in
subscriptions, clearing, and execution; (iv) an increase of $469 in professional
fee and other operating; and (v) an increase of $186 in depreciation and
amortization.



Compensation and Benefits



Compensation and benefits decreased by $34,758, or 41%, to $50,290 for the year
ended December 31, 2022, as compared to $85,048 for the year ended December 31,
2021.





COMPENSATION AND BENEFITS
 (Dollars in Thousands)




                                       Year Ended December 31,
                                   2022         2021        Change
Cash compensation and benefits   $ 45,900     $ 69,330     $ (23,430 )
Equity-based compensation           4,390       15,718       (11,328 )
Total                            $ 50,290     $ 85,048     $ (34,758 )




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 decreased by $23,430 to $45,900 for
the year ended December 31, 2022, as compared to $69,330 for the year ended
December 31, 2021. Our headcount increased to 121 as of December 31, 2022 from
118 as of December 31, 2021.  Cash compensation decreased primarily due to a
decrease in incentive compensation related to the decrease in overall revenue
and income from equity method affiliates.



Equity-based compensation decreased by $11,328 to $4,390 for the year ended
December 31, 2022, as compared to $15,718 for the year ended December 31, 2021.
Of the $15,718 of equity compensation recognized in 2021, $13,068 was due to
equity compensation related to the issuance of membership units of the Insurance
SPAC II Sponsor Entities to employees of the Company.  The expense was
recognized upon the completion of the merger between Insurance SPAC II and
MetroMile on February 9, 2021.  No further equity-based compensation expense
will be recognized related to membership units of the Insurance SPAC II Sponsor
Entities in the future.



The Insurance SPAC III Sponsor Entities had issued membership units to employees
of the Company.  Insurance SPAC III was liquidated in 2022 and therefore these
units became worthless.  No equity compensation expense was recognized on these
units in 2021 or 2022, and no compensation expense will be recognized in the
future.



The remaining equity-based compensation recognized during 2022 and
2021 relates to restricted grants of the Company's Common Stock and Operating
LLC units.  This amount increased by $1,740 to $4,390 for the year ended
December 31, 2022, as compared to $2,650 for the year ended December 31, 2021.
This increase was due to increased share grants during 2022 as compared to
2021.

Business Development, Occupancy, and Equipment





Business development, occupancy, and equipment increased by $1,711, or 51%, to
$5,076 for the year ended December 31, 2022, as compared to $3,365 for the year
ended December 31, 2021. This increase was comprised of an increase in business
development expense of $752 and an increase in occupancy and equipment of $959.
Business development increased due to increased travel in 2022 due to a general
reduction in pandemic restrictions.  The increase in occupancy and equipment
expense was mainly due to additional rent in our California office.



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Subscriptions, Clearing, and Execution





Subscriptions, clearing, and execution decreased by $2,033, or 20%, to $8,274
for the year ended December 31, 2022, as compared to $10,307 for the year ended
December 31, 2021.    This decrease was comprised of a decrease in clearing and
execution costs of $2,342 partially offset by an increase in subscriptions and
dues of $309.  The increase in subscriptions and dues was due to normal
fluctuations in number of subscriptions.  The decrease in clearing and execution
was due to decreased trading volumes.

Professional Fee and Other Operating Expenses





Professional fee and other operating expenses increased by $469, or 6%, to
$8,153 for the year ended December 31, 2022, as compared to $7,684 for the year
ended December 31, 2021. This increase was comprised of an increase in
professional fees of $673; partially offset by a decrease in other operating
expense of $204.  The increase in professional fees was mainly the result of
increased consultant usage.  The decrease in other operating expense was mainly
the result of a reduction in other (non income based) taxes.

Depreciation and Amortization





Depreciation and amortization increased by $186, or 50%, to $557 for the year
ended December 31, 2022, as compared to $371 for the year ended December 31,
2021.

Non-Operating Income and Expense





Interest Expense, net

Interest expense, net decreased by $2,251 to $4,982 for the year ended December 31, 2022, as compared to $7,233 for the year ended December 31, 2021.









   INTEREST EXPENSE
(Dollars in Thousands)




                                                         Year Ended December 31,
                                                  2022            2021           Change
Junior subordinated notes                      $     3,442     $     2,601     $       841
2020 Senior Notes                                      458             540             (82 )
2013 Convertible Notes / 2019 Senior Notes               -             211            (211 )
2017 Convertible Note                                  327           1,534          (1,207 )
Line of Credit (Byline)                                247             435            (188 )
Redeemable Financial Instrument - DGC Trust
/ CBF                                                    -             197            (197 )
Redeemable Financial Instrument - JKD
Capital Partners I LTD                                 508           1,715          (1,207 )
                                               $     4,982     $     7,233     $    (2,251 )

See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

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Income / (loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $56,941 to ($20,931) for the year ended December 31, 2022 from $36,010 for the year ended December 31, 2021. See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.





                                   Year Ended December 31,
                               2022          2021        Change
Insurance SPACs              $  (5,898 )   $ (1,306 )   $  (4,592 )

SPAC Sponsor Entities (14,963 ) 37,453 (52,416 ) Dutch Real Estate Entities (70 ) (137 ) 67

$ (20,931 )   $ 36,010     $ (56,941 )




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



              Year Ended December 31,
          2022          2021        Change
HLGN    $ (10,558 )   $ 28,443     $ (39,001 )
WEJO       (2,214 )      1,962        (4,176 )
DRTS          378            -           378
REE             -        2,489        (2,489 )
PAYO            -        2,993        (2,993 )
PWP           (74 )      1,293        (1,367 )
ACHR         (217 )        728          (945 )
FOXO        1,017            -         1,017
Other      (3,295 )       (455 )      (2,840 )
        $ (14,963 )   $ 37,453     $ (52,416 )

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of HLGN was $0.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of WEJO was $0.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of DRTS was $379.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of REE was $0.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of PAYO was $0.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of PWP was $121.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of ACHR was $0.

As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of FOXO was $0.





The remaining other investments in SPAC Sponsor Entities represent direct and
indirect investments in sponsor entities who have not yet completed a business
combination.  See note 12 to our consolidated financial statements included in
Item 1 of this Quarterly Report on Form 10-K.



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Other Non-Operating (Income) / Loss

We recorded other non-operating income of $2,127 for the year ended December 31, 2021 as the result of the forgiveness of our PPP loan. See note 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

Income Tax Expense / (Benefit)





We have significant carryforward tax assets.  As of December 31, 2022, the
Company had a federal net operating loss ("NOL") of approximately $96,002, which
will be available to offset future taxable income, subject to limitations
described below. If not used, this NOL will begin to expire in 2028. The Company
also had net capital losses ("NCLs") in excess of capital gains of $70,457 as of
December 31, 2022, which can be carried forward to offset future capital gains.
If not used, this carryforward will begin to expire in 2023.  ASC 746 requires
that we record a valuation allowance against these assets so that the net asset
recognized is, in management's judgment, more likely than not to be realized.



The income tax expense / (benefit) was $4,794 for the year ended December 31,
2022, as compared to ($3,541) for the year ended December 31, 2021.  See note
23 to our consolidated financial statements included in our Annual Report on
Form 10-K.



The tax expense recognized in 2022 was comprised of a deferred tax expense of
$4,579 and current tax expense of $215. The current tax expense incurred was the
result of foreign, state, and local income tax. The deferred tax expense was a
U.S. federal, state, and local tax benefit, which was the result of the
increase in the valuation allowance applied against the Company's NOL and NCL
tax assets.



The tax benefit recognized in 2021 was comprised of a deferred tax benefit of
$4,117, partially offset by current tax expense of $576. The current tax expense
incurred was the result of foreign, state, and local income tax. The deferred
tax benefit was a U.S. federal, state, and local tax benefit, which was the
result of the reduction in the valuation allowance applied against the Company's
net operating loss carryforward ("NOL") and net capital loss carryforward
("NCL") tax assets.



Each reporting period, management determines the expected amount of taxable
income it will generate in each jurisdiction where the Company has NOLs.
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 in.  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 benefit in 2021 because
expectations of future income increased and the Company reduced the valuation
allowance it had applied against carryforward assets.  The Company recorded
deferred tax expense in 2022 because of expectations of future income decreased
and the Company increased the valuation allowance it had applied against
carryforward assets.  Because of 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.  These future
adjustments may likewise result in material amounts of deferred tax benefit or
expense going forward.

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

Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2022 and 2021 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods. These interests are not convertible into Common Stock.







                                            Year Ended December 31,
                                        2022          2021        Change

Insurance SPAC Sponsor Entities $ - $ 3,560 $ (3,560 ) Insurance SPAC II Sponsor Entities

            -       17,644       (17,644 )
Insurance SPAC III Sponsor Entities      (4,808 )       (615 )      (4,193 )
Other                                   (18,395 )     14,985       (33,380 )
                                      $ (23,203 )   $ 35,574     $ (58,777 )

Insurance SPAC Sponsor Entities, Insurance SPAC II Sponsor Entities, and Insurance SPAC III Sponsor Entities are the Sponsor Entities formed by us for our sponsored SPACs. Other is mainly comprised of an entity which we consolidate but do not wholly own that invests in other SPAC Sponsor Entities.

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





Net income / (loss) attributable to the convertible non-controlling interest for
the years ended December 31, 2022 and 2021 was comprised of the non-controlling
interest related to member interests in the Operating LLC other than interests
held by us for the relevant periods.

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST


           For the Year Ended December 31, 2022




                                                              Other                                  Cohen &
                                      Wholly Owned         Consolidated       Total Operating        Company
                                      Subsidiaries         Subsidiaries

LLC Consolidated Inc. Consolidated Net income / (loss) before tax $ (20,287 ) $ (33,589 )

$ (53,876 ) $ - $ (53,876 ) Income tax expense / (benefit)

                  (381 )                182                 (199 )         4,993              4,794
Net income / (loss) after tax                (19,906 )            (33,771 )            (53,677 )        (4,993 )          (58,670 )
Other consolidated subsidiary
non-controlling interest                                          (23,203 )            (23,203 )
Net income / (loss) attributable
to the Operating LLC                         (19,906 )            (10,568 )            (30,474 )
Average effective Operating LLC
non-controlling interest % (1)                                                           72.45 %
Operating LLC non-controlling
interest

$ (22,078 )

Summary


Other consolidated subsidiary
non-controlling interest                                                      $        (23,203 )
Operating LLC non-controlling
interest                                                                               (22,078 )
                                                                              $        (45,281 )






        SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST
                   For the Year Ended December 31, 2021




                                                                Other
                                       Wholly Owned         Consolidated         Total Operating        Cohen &
                                       Subsidiaries         Subsidiaries

LLC Consolidated Company Inc. Consolidated Net income / (loss) before tax $ 1,529 $ 68,968

$ 70,497 $ - $ 70,497 Income tax expense / (benefit)

                 (2,829 )                                    (2,829 )           (712 )           (3,541 )
Net income / (loss) after tax                   4,358                68,968                73,326              712             74,038
Other consolidated subsidiary
non-controlling interest                            -                35,574                35,574
Net income / (loss) attributable
to the Operating LLC                            4,358                33,394                37,752
Average effective Operating LLC
non-controlling interest % (1)                                                              70.61 %
Operating LLC non-controlling
interest

$ 26,656

Summary


Other consolidated subsidiary
non-controlling interest                                                        $          35,574
Operating LLC non-controlling
interest                                                                                   26,656
                                                                                $          62,230

(1) Non-controlling interest is recorded on a quarterly basis. Because earnings

are recognized unevenly throughout the year and the non-controlling interest

percentage may change during the period, the average effective

non-controlling interest percentage may not equal the percentage at the end

of any period or the simple average of the beginning and ending percentages.

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Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2021 and 2020.

COHEN & COMPANY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
       (Dollars in Thousands)




                                             Year Ended December 31,           Favorable / (Unfavorable)
                                               2021             2020           $ Change            % Change
Revenues
Net trading                                $     69,385       $  73,611     $        (4,226 )             (6 )%
Asset management                                 10,923           8,759               2,164               25 %
New issue and advisory                           28,736           2,234              26,502             1186 %

Principal transactions and other income 37,324 45,506


         (8,182 )            (18 )%
Total revenues                                  146,368         130,110              16,258               12 %

Operating expenses
Compensation and benefits                        85,048          59,902             (25,146 )            (42 )%
Business development, occupancy,
equipment                                         3,365           2,708                (657 )            (24 )%
Subscriptions, clearing, and execution           10,307           9,887                (420 )             (4 )%
Professional fee and other operating              7,684           7,068                (616 )             (9 )%
Depreciation and amortization                       371             334                 (37 )            (11 )%
Impairment of goodwill                                -           7,883               7,883               NM
Total operating expenses                        106,775          87,782             (18,993 )            (22 )%

Operating income / (loss)                        39,593          42,328              (2,735 )             (6 )%

Non-operating income / (expense)



Interest expense, net                            (7,233 )        (9,589 )             2,356               25 %
Income / (loss) from equity method
affiliates                                       36,010          (2,955 )            38,965             1319 %
Other non-operating income                        2,127               -               2,127               NM
Income / (loss) before income taxes              70,497          29,784              40,713              137 %
Income tax expense / (benefit)                   (3,541 )        (8,669 )            (5,128 )            (59 )%
Net income / (loss)                              74,038          38,453              35,585               93 %
Less: Net income (loss) attributable to
the non-convertible non-controlling
interest                                         35,574          10,048             (25,526 )           (254 )%
Enterprise net income (loss)                     38,464          28,405              10,059               35 %
Less: Net income (loss) attributable to
the convertible non-controlling interest         26,656          14,200             (12,456 )            (88 )%
Net income / (loss) attributable to
Cohen & Company Inc.                       $     11,808       $  14,205     $        (2,397 )            (17 )%




Revenues



Revenues increased by $16,258, or 12%, to $146,368 for the year ended December
31, 2021, as compared to $130,110 for the year ended December 31, 2020. As
discussed in more detail below, the change was comprised of (i) a decrease of
$4,226 in net trading revenue; (ii) an increase of $2,164 in asset management
revenue; (iii) an increase of $26,502 in new issue and advisory revenue; and
(iv) a decrease of $8,182 in principal transactions and other income.



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Net Trading

Net trading revenue decreased by $4,226, or 6%, to $69,385 for the year ended December 31, 2021, as compared to $73,611 for the year ended December 31, 2020.

The following table shows the detail by trading group.







     NET TRADING
(Dollars in Thousands)




                                 For the Year Ended December 31,
                                2021             2020         Change
Mortgage                     $     6,885       $   9,641     $ (2,756 )
Matched book repo                 46,139          33,980       12,159
High yield corporate              10,390           8,342        2,048
Investment grade corporate           593           9,978       (9,385 )
Wholesale and other                5,378          11,670       (6,292 )
Total                        $    69,385       $  73,611     $ (4,226 )




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. This may adversely affect the
ultimate value realized from these investments. In addition, our net trading
revenue also includes realized gains on certain proprietary trading positions.
Our ability to derive trading gains from such trading positions is subject to
overall market conditions. Due to volatility and uncertainty in the capital
markets, the net trading revenue recognized during any year may not be
indicative of future results. Furthermore, from time to time, some of the assets
included in the Investments-trading line of our consolidated balance sheets
represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets
are carried at fair value based on estimates derived using internal valuation
models and other estimates. See notes 8 and 9 to our consolidated financial
statements included in this Annual Report on Form 10-K. The fair value estimates
determined 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. See note 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.





Asset Management





Asset management fees increased by $2,164, or 25%, to $10,923 for the year ended
December 31, 2021, as compared to $8,759 for the year ended December 31, 2020,
as discussed in more detail below.





   ASSET MANAGEMENT
(Dollars in Thousands)




             For the Year Ended December 31,
            2021              2020        Change
CDOs    $      2,484       $    3,407     $  (923 )
Other          8,439            5,352       3,087
Total   $     10,923       $    8,759     $ 2,164




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, 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.



Asset management fees from CDOs declined mainly due to a decline in AUM due to
CDO auctions, liquidations, our removal as manager of one CDO, and principal
paydowns of collateral.  Asset management fees from other investment vehicles
increased primarily due to increased incentive fees earned on the SPAC Fund as
well as increased fees on certain European separate accounts and investment
funds.



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New Issue and Advisory Revenue

New issue and advisory revenue increased by $26,502, or 1186%, to $28,736 for the year ended December 31, 2021, as compared to $2,234 for the year ended December 31, 2020.





                                           Year Ended December 31,
                                        2021        2020        Change

Cohen & Company Capital Markets $ 22,676 $ - $ 22,676 Commercial Real Estate Originations 1,428

           -        1,428
US Insurance Originations                1,940         500        1,440
Europe Insurance Originations            2,692       1,734          958
Total                                 $ 28,736     $ 2,234     $ 26,502




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 and will generally be
recognized in the same period that the related revenue is recognized.



CCM is our full-service boutique investment bank, which focuses on M&A, capital
markets, and SPAC advisory, which generates new issue placement and advisory
revenue from clients. In addition, we generate new issue revenue by originating
new assets for the U.S. Insurance JV, CREO JV, and for our PriDe funds in
Europe.



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Principal Transactions and Other Income





Principal transactions and other income decreased by $8,182 to $37,324 for the
year ended December 31, 2021, as compared to $45,506 for the year ended December
31, 2020.

PRINCIPAL TRANSACTIONS & OTHER INCOME


       (Dollars in Thousands)




                                                    For the Year Ended December 31,
                                                   2021             2020        Change
SFT                                             $    (5,258 )     $ 40,619     $ (45,877 )
LMND                                                 43,655              -        43,655
IMXI                                                    318          2,703        (2,385 )
WEJO                                                 (3,160 )            -        (3,160 )
REE                                                  (2,939 )            -        (2,939 )
ML                                                     (988 )            -          (988 )
BKSY                                                   (914 )            -          (914 )
CLO Investments                                           -           (535 )         535
Other SPAC equity                                     3,094          1,503         1,591
Stoa USA Inc. / FlipOs                                1,805              -         1,805
U.S. Insurance JV                                       142            222           (80 )
SPAC Fund                                               474            183           291
Other principal investments                             (45 )            7           (52 )
Total principal transactions                         36,184         44,702        (8,518 )
                                                                                       -
IIFC revenue share                                      634            491           143
All other income / (loss)                               506            313           193
Other income                                          1,140            804           336

Total principal transactions and other income $ 37,324 $ 45,506

   $  (8,182 )




Principal Transactions



For all investments discussed below, see note 9 to our consolidated financial
statements included in this Annual Report on Form 10-K for information about how
we determine the value of these instruments. For several of the investments
described below, we also had an investment in the same company which was
accounted for under the equity method during the periods presented.  See
discussion of equity method income / (loss) below.



SFT is a publicly traded company.  In the periods presented, the shares of
SFT we held were comprised of both unrestricted and restricted shares and were
carried at fair value.  For a portion of the period we held these shares, they
were held in majority owned consolidated subsidiaries (the Insurance SPAC
Sponsor Entities).  Accordingly, there were significant non-controlling interest
and equity compensation expense associated with these. See discussion of
non-convertible non-controlling interest and equity compensation expense below.



LMND is a publicly traded company.  In the periods presented, the shares of LMND
we held were comprised of both unrestricted and restricted shares and were
carried at fair value.  For a portion of the period we held these shares, they
were held in majority owned consolidated subsidiaries (the Insurance SPAC II
Sponsor Entities).  Accordingly, there were significant non-controlling interest
and equity compensation expense associated with these. See discussion of
non-convertible non-controlling interest and equity below.

IMXI represents equity positions of International Money Express, Inc. (NASDAQ: IMXI), a publicly traded company that resulted from the merger of Intermex Holdings, LLC and FinTech Acquisition Corp. II.





WEJO represents equity positions of Wejo Group, Ltd. (NASDAQ: WEJO), a publicly
traded company that closed its business combination with Virtuoso Acquisition
Corp.



REE represents equity positions of REE Automotive Ltd. (NASDAQ: REE), a publicly
traded company that closed its business combination with 10X Capital Venture
Acquisition Corp.

ML represents equity positions of MoneyLion, Inc. (NYSE: ML), a publicly traded company that closed its business combination with Fusion Acquisition Corp.

BKSY represents equity positions of Blacksky Technology Inc. (NYSE:BKSY), a publicly traded company that closed its business combination with Osprey Technologies Acquisition Corp.

The CLO investments represent investments in the most junior tranche of certain CLOs. These investments were carried at fair value. These investments were fully liquidated in 2020.

Other SPAC equity represents equity investments in publicly traded SPACs or their successor public companies carried at fair value.

Stoa USA Inc. / FlipOs is a private company in which we own common equity. We carry our investment at fair value.

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

The SPAC Fund invests in the equity of SPACs. We carry our investment in the SPAC Fund at its reported NAV.

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

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Other Income



Other income increased by $336 to $1,140 for the year ended December 31, 2021,
as compared to $804 for the year ended December 31, 2020. The revenue share
arrangement noted in the table above entitles us to a percentage of revenue
earned by IIFC.  The IIFC revenue share arrangement expires at the earlier of
(i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in
revenue share payments. As of December 31, 2022, we have earned $4,513. In
addition, in any particular year, the revenue share earned by us cannot exceed
$2,000.



Operating Expenses



Operating expenses increased by $18,993, or 22%, to $106,775 for the year ended
December 31, 2021, as compared to $87,782 for the year ended December 31, 2020.
As discussed in more detail below, the change was comprised of (i) an
increase of $25,146 in compensation and benefits; (ii) an increase of $657 in
business development, occupancy, and equipment; (iii) an increase of $420 in
subscriptions, clearing, and execution; (iv) an increase of $616 in professional
fee and other operating; (v) an increase of $37 in depreciation and
amortization; and (vi) a decrease of $7,883 in impairment of goodwill.



Compensation and Benefits



Compensation and benefits increased by $25,146, or 42%, to $85,048 for the year
ended December 31, 2021, as compared to $59,902 for the year ended December 31,
2020.





COMPENSATION AND BENEFITS
 (Dollars in Thousands)




                                     For the Year Ended December 31,
                                    2021             2020         Change
Cash compensation and benefits   $    69,330       $  47,349     $ 21,981
Equity-based compensation             15,718          12,553        3,165
Total                            $    85,048       $  59,902     $ 25,146




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 $21,981 to $69,330 for
the year ended December 31, 2021, as compared to $47,349 for the year ended
December 31, 2020. Our headcount increased to 118 as of December 31, 2021 from
87 as of December 31, 2020.  Cash compensation increased primarily due to an
increase in incentive compensation related to the increase in overall revenue
and the increase in income from equity method affiliates.



Equity-based compensation increased by $3,165 to $15,718 for the year ended
December 31, 2021, as compared to $12,553 for the year ended December 31, 2020.
Of the $15,718 of equity compensation recognized in 2021, $13,068 was due to
equity compensation related to the issuance of membership units of the Insurance
SPAC II Sponsor Entities to employees of the Company.  The expense was
recognized upon the completion of the merger between Insurance SPAC II and
MetroMile on February 9, 2021.  Of the $12,553 of equity compensation recognized
in 2020, $11,700 was due to equity-based compensation related to the issuance of
membership units of the Insurance SPAC Sponsor Entities to employees of the
Company.  This expense was recognized upon the completion of the merger between
the Insurance SPAC and Shift in October 2020.  No further
equity-based compensation expense will be recognized related to membership units
of the Insurance SPAC Sponsor Entities or the Insurance SPAC II Sponsor Entities
in the future.



The remaining equity-based compensation recognized during 2021 and 2020
relates to restricted grants of the Company's Common Stock and Operating LLC
units.  This amount increased by $1,797 to $2,650 for the year ended December
31, 2021 as compared to $853 for the year ended December 31, 2020.  This
increase was due to increased share grants and a higher share price impact
during 2021 as compared to 2020.

Business Development, Occupancy, and Equipment





Business development, occupancy, and equipment increased by $657, or 24%, to
$3,365 for the year ended December 31, 2021, as compared to $2,708 for the year
ended December 31, 2020.  This was comprised of an increase in business
development expense of $443 and an increase in occupancy and equipment of $214.
Business development increased due to increased travel in 2021 due to a general
reduction in pandemic restrictions.  The increase in occupancy and equipment
expense was mainly due to increased rent due to our new Menlo Park office in
California and other office lease renewals at higher rates.

Subscriptions, Clearing, and Execution





Subscriptions, clearing, and execution increased by $420, or 4%, to $10,307 for
the year ended December 31, 2021, as compared to $9,887 for the year ended
December 31, 2020. This was comprised of an increase in clearing and execution
costs of $548 partially offset by a decrease in subscriptions and dues of $128.
The decrease in subscriptions and dues was due to normal fluctuations in number
of subscriptions.  The increase in clearing and execution was due to increased
trading volumes.



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Professional Fee and Other Operating Expenses





Professional fee and other operating expenses increased by $616, or 9%, to
$7,684 for the year ended December 31, 2021, as compared to $7,068 for the year
ended December 31, 2020.  This was comprised of an increase in other operating
expense of $738; partially offset by a decrease in professional fees of $122.
The increase in other operating expense was mainly due to increase in operating
taxes (taxes not based on income and not included as part of the provision for
income taxes) in Philadelphia, Pennsylvania.  The decrease in professional fees
was mainly due to a reduction in consultant usage.

Depreciation and Amortization





Depreciation and amortization increased by $37, or 11%, to $371 for the year
ended December 31, 2021, as compared to $334 for the year ended December 31,
2020.



Impairment of Goodwill



We determined the financial market volatility, as well as the reduction in
volumes in the GCF repo and TBA businesses that resulted from COVID-19 was a
triggering event that required us to reassess the goodwill we had recorded
related to JVB under the guidance of ASC 350. We ultimately exited the GCF
business in 2021. We determined that the fair value of JVB was less than its
carrying value (including the goodwill). As a result, we recorded an impairment
of $7,883 in 2020. See note 13 to our consolidated financial statements included
in this Annual Report on Form 10-K.

Non-Operating Income and Expense





Interest Expense, net



Interest expense, net decreased by $2,356, or 25%, to $7,233 for the year ended
December 31, 2021, as compared to $9,589 for the year ended December 31, 2020.





   INTEREST EXPENSE
(Dollars in Thousands)




                                                       For the Year Ended December 31,
                                                   2021               2020           Change
Junior subordinated notes                      $      2,601       $      2,882     $      (281 )
2020 Senior Notes                                       540                496              44
2013 Convertible Notes / 2019 Senior Notes              211                336            (125 )
2017 Convertible Note                                 1,534              1,505              29
Line of Credit (Byline / FT)                            435              1,102            (667 )
Redeemable Financial Instrument - DGC Trust
/ CBF                                                   197              1,490          (1,293 )
Redeemable Financial Instrument - JKD
Capital Partners I LTD                                1,715              1,883            (168 )
Redeemable Financial Instrument - ViaNova
Capital Group, LLC                                        -               (105 )           105
                                               $      7,233       $      9,589     $    (2,356 )

See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

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Income / (loss) from Equity Method Affiliates





Income / (loss) from equity method affiliates increased by $38,965 to $36,010
for the year ended December 31, 2021, as compared to ($2,955) for the year
ended December 31, 2020. See note 12 to our consolidated financial statements
included in this Annual Report on Form 10-K.



                                  Year Ended December 31,
                               2021         2020        Change
Insurance SPACs              $ (1,306 )   $ (3,656 )   $  2,350
SPAC Sponsor Entities          37,453           63       37,390
Dutch Real Estate Entities       (137 )        638         (775 )
                             $ 36,010     $ (2,955 )   $ 38,965




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





             Year Ended December 31,
           2021        2020       Change
HLGN    $   28,443     $   -     $ 28,443
WEJO         1,962         -        1,962
REE          2,489         -        2,489
PAYO         2,993        (9 )      3,002
PWP          1,293        (7 )      1,300
ACHR           728         -          728
Other         (455 )      79         (534 )
        $   37,453     $  63     $ 37,390

Other Non-Operating (Income) / Loss

We recorded other non-operating income of $2,127 for the year ended December 31, 2021 as a result of the forgiveness of our PPP loan. See note 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

Income Tax Expense / (Benefit)

Income tax expense / (benefit) was ($3,541) for the year ended December 31, 2021, as compared to ($8,669) for the year ended December 31, 2020.





The tax benefit recognized in 2021 was comprised of a deferred tax benefit of
$4,117, partially offset by current tax expense of $576. The current tax expense
incurred was the result of foreign, state, and local income tax. The deferred
tax benefit was a U.S. federal, state, and local tax benefit, which was the
result of the reduction in the valuation allowance applied against the Company's
net operating loss carryforward ("NOL") and net capital loss carryforward
("NCL") tax assets.



The tax expense recognized in 2020 was comprised of a deferred tax benefit of
$8,877, partially offset by current tax expense of $208. The current tax expense
incurred was the result of foreign, state, and local income tax. The deferred
tax expense was a U.S. federal, state, and local tax benefit, which was the
result of the increase in the valuation allowance applied against the Company's
NOL and NCL tax assets.



We have significant carryforward tax assets.  ASC 746 requires that we record a
valuation allowance against these assets so that the net asset recognized is, in
management's judgment, more likely than not to be realized.



Each reporting period, management determines the expected amount of taxable
income it will generate in each jurisdiction where the Company has NOLs.
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 the income will be
generated in.  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 benefit in 2021 because expectations of
future income increased and the Company reduced the valuation allowance it had
applied against carryforward assets.  The Company recorded deferred tax benefit
in 2020 because of expectations of future income increased and the Company
decreased the valuation allowance it had applied against carryforward assets.
Because of 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.  These future adjustments will
likewise result in material amounts of deferred tax benefit or expense going
forward.



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

Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2021 and 2020 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods. These interests are not convertible into Common Stock.









                                           Year Ended December 31,
                                        2021         2020        Change

Insurance SPAC Sponsor Entities $ 3,560 $ 9,328 $ (5,768 ) Insurance SPAC II Sponsor Entities 17,644 (262 ) 17,906 Insurance SPAC III Sponsor Entities (615 ) (16 ) (599 ) Other

                                   14,985          998       13,987
                                      $ 35,574     $ 10,048     $ 25,526




Insurance SPAC Sponsor Entities, Insurance SPAC II Sponsor Entities, and
Insurance SPAC III Sponsor Entities were the Sponsor Entities formed by us for
our sponsored SPACs.  Other is comprised of our investments in certain SPAC Pipe
Entities which themselves invest in Pipe's (Private Investment in Public Equity)
of post business combination SPACs as well as an entity which we consolidate but
do not wholly own that invests in other SPAC Sponsor Entities.

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





Net income / (loss) attributable to the convertible non-controlling interest for
the years ended December 31, 2021 and 2020 was comprised of the non-controlling
interest related to member interests in the Operating LLC other than interests
held by us for the relevant periods.

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST


           For the Year Ended December 31, 2021




                                                                Other
                                       Wholly Owned         Consolidated         Total Operating        Cohen &
                                       Subsidiaries         Subsidiaries

LLC Consolidated Company Inc. Consolidated Net income / (loss) before tax $ 1,529 $ 68,968

$ 70,497 $ - $ 70,497 Income tax expense / (benefit)

                 (2,829 )                   -                (2,829 )           (712 )           (3,541 )
Net income / (loss) after tax                   4,358                68,968                73,326              712             74,038
Other consolidated subsidiary
non-controlling interest                            -                35,574                35,574
Net income / (loss) attributable
to the Operating LLC                            4,358                33,394                37,752
Average effective Operating LLC
non-controlling interest % (1)                                                              70.61 %
Operating LLC non-controlling
interest

$ 26,656

Summary


Other consolidated subsidiary
non-controlling interest                                                        $          35,574
Operating LLC non-controlling
interest                                                                                   26,656
                                                                                $          62,230

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST


           For the Year Ended December 31, 2020




                                                               Other                                   Cohen &
                                      Wholly Owned         Consolidated         Total Operating        Company
                                      Subsidiaries         Subsidiaries

LLC Consolidated Inc. Consolidated Net income / (loss) before tax $ 4,951 $ 24,833

$ 29,784 $ - $ 29,784 Income tax expense / (benefit)

                   187                     -                   187          (8,856 )           (8,669 )
Net income / (loss) after tax                  4,764                24,833                29,597           8,856             38,453
Other consolidated subsidiary
non-controlling interest                           -                10,048                10,048
Net income / (loss) attributable
to the Operating LLC                           4,764                14,785                19,549
Average effective Operating LLC
non-controlling interest % (1)                                                             72.64 %
Operating LLC non-controlling
interest

$ 14,200

Summary


Other consolidated subsidiary
non-controlling interest                                                       $          10,048
Operating LLC non-controlling
interest                                                                                  14,200
                                                                               $          24,248

(1) Non-controlling interest is recorded on a quarterly basis. Because earnings

are recognized unevenly throughout the year and the non-controlling interest

percentage may change during the period, the average effective

non-controlling interest percentage may not equal the percentage at the end

of any period or the simple average of the beginning and ending percentages.

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Liquidity and Capital Resources





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



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



Dividends and Distributions



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



On July 29, 2021, our board of directors reinstated our quarterly dividend
declaring a cash dividend of $0.25 per share.  We have paid a quarterly cash
dividend of $0.25 regularly since that date.  In addition to our routine
quarterly distribution, on March 8, 2022, our board of directors declared a
special cash dividend of $0.75 per share.  On March 8, 2023, our board of
directors declared a quarterly dividend of $0.25 per share payable on April 5,
2023 to shareholders of record on March 22, 2023.



Repurchases of Common Stock



On December 21, 2020 and August 31, 2020, the Company entered into letter
agreements (the "December 2020 Letter Agreement" and the "August 2020 Letter
Agreement," respectively and, together, the "10b5-1 Plan").  The December 2020
Letter Agreement and the August 2020 Letter Agreement were entered into with
Piper Sandler & Co. (the "Agent"). The agreements authorized the Agent to use
reasonable efforts to purchase, on the Company's behalf, up to an aggregate
purchase price of $1,000 of Common Stock (in the case of the December 2020
letter) and $2,000 (in the case of the August 2020 letter) on any day that the
NYSE was open for business. The December 2020 Letter Agreement became effective
December 23, 2020 and was in effect until December 31, 2021 or until an
aggregate purchase price of $1,000 shares had been purchased, which occurred on
July 28, 2021.  The August 2020 Letter Agreement was in effect from August 31,
2020 until August 31, 2021 or until an aggregate purchase price of $2,000 shares
had been purchased, which occurred on November 10, 2020. Pursuant to the 10b5-1
Plan, purchases of Common Stock may be made in public and private transactions
and must comply with Rule 10b-18 under the Exchange Act.  The 10b5-1 Plan was
designed to comply with Rule 10b5-1 under the Exchange Act.



During the twelve months ended December 31, 2021, pursuant to the 10b-5-1 Plan,
the Company repurchased 49,544 shares of Common Stock in the open market for a
total purchase price of $857.  During the twelve months ended December 31, 2020,
pursuant to the 10b5-1 Plan, the Company repurchased 121,181 shares of Common
Stock in the open market for a total purchase price of $2,143.



Issuances of Common Stock



On December 1, 2020, the Company entered into an Equity Distribution Agreement
(the "Equity Agreement") with Northland Securities, Inc. (trade name Northland
Capital Markets), as sales agent (the "Sales Agent"), relating to the issuance
and sale from time to time by the Company (the "ATM Program"), through the Sales
Agent, of shares of the Company's Common Stock, having an aggregate offering
price of up to $75,000 (collectively the "Shares"). Sales of the Shares, if any,
under the Equity Agreement will be made in sales deemed to be "at-the-market
offerings" as defined in Rule 415 under the Securities Act as agreed with the
Sales Agent.



On June 7, 2021, the Company entered into a letter agreement (the "Equity
Distribution Letter Agreement") with the Sales Agent, pursuant to which the
Sales Agent agreed to use its best efforts to, commencing on June 5, 2021, sell
on the Company's behalf up to $7,966 of the Shares in the open market pursuant
to the terms and conditions of the Equity Distribution Agreement and the Equity
Distribution Letter Agreement, and the Company agreed not to take any action
that would cause the sales of the Shares under the Letter Agreement not to
comply with Rule 10b5-1 or Regulation M under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Equity Distribution Letter Agreement
was entered into in connection with the ATM Program and was designed to comply
with Rule 10b5-1 under the Exchange Act.

During 2021, we issued 300,859 shares of Common Stock for a total price of $9,076. During 2022, we did not issue shares of Common Stock. These amounts do not include shares issue for equity compensation to employees.

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During the years ended December 31, 2022, 2021, and 2020, we had the following other significant financing transactions. This excludes non-cash transactions. See notes 19 and 20 in our consolidated financial statements included in our Annual Report on Form 10-K.

During 2022:


             o We issued a new 2020 Senior Note for $2,250 and used the

proceeds to


               pay off an existing 2020 Senior Note
             o We paid dividends of $2,258 and distributions to the

convertible


               non-controlling interest of $6,485
             o We paid distributions of $2,236 to non-convertible

non-controlling


               interest.

During 2021:


             o We drew and repaid $17,500 on a revolving line of credit.
             o We repaid $2,400 of the 2019 Senior Note
             o We repaid $4,000 of redeemable financial instruments.
             o We paid dividends of $671 and distributions to the

convertible


               non-controlling interest of $1,970
             o We raised $17,095 from investments by non-convertible

non-controlling


               interest.
             o We paid distributions of $2,735 to the non-convertible
               non-controlling interest.

During 2020:


             o We drew and repaid $17,500 on a revolving line of credit.
             o We received $2,166 in proceeds on the PPP loan.
             o We raised $4,500 in proceeds from issuance of the 2020

Senior Notes.


             o We repaid $9,163 of debt which included the Legacy Texas Credit
               Facility and the 2019 Senior Notes.
             o We repaid $4,921 of redeemable financial instruments.
             o We raised $13,489 from investments by non-convertible


non-controlling
               interest.




Cash Flows

We have seven primary uses for capital:

(1) To fund the operations of our Capital Markets business segment. Our Capital

Markets business segment utilizes capital (i) to fund securities inventory

to facilitate client trading activities; (ii) for risk trading for our own

account; (iii) to fund our collateralized securities lending activities;

(iv) for temporary capital needs associated with underwriting activities;

(v) to fund business expansion into existing or new product lines including

additional capital dedicated to our mortgage group as well as our matched

book repo business; and (vi) to fund any operating losses incurred. (2) To fund the expansion of our Asset Management business segment. We

generally grow our AUM by sponsoring new Investment Vehicles. The creation

of a new Investment Vehicle often requires us to invest a certain amount of

our own capital to attract outside capital to manage. Also, these new

Investment Vehicles often require warehouse and other third-party financing

to fund the acquisition of investments. Finally, we generally will hire

employees to manage new Investment Vehicles and will operate at a loss for a

startup period. (3) To fund investments. We make principal investments (including sponsor and

other investments in SPACs) to generate returns. We may need to raise

additional debt or equity financing in order to ensure we have the capital


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

future, or that if available, such financing will be on favorable terms. (5) To fund potential dividends and distributions. We sometimes pay dividends.

Each time a cash dividend was declared by our board of directors, a pro rata

distribution was made to the other members of the Operating LLC upon payment

of dividends to our stockholders. (6) To fund potential repurchases of Common Stock. We have opportunistically

repurchased Common Stock in private transactions as well through the 10b5-1

Plan. See note 21 to our consolidated financial statements included in this

Annual Report on Form 10-K. (7) To pay off debt as it matures. We have indebtedness that must be repaid as

it matures. See note 20 to our consolidated financial statements included in


     this Annual Report on Form 10-K.




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

As of December 31, 2022 and December 31, 2021, we maintained cash and cash equivalents of $29,101 and $50,567, respectively. We generated cash from or used cash for the activities described below.







SUMMARY CASH FLOW INFORMATION
   (Dollars in Thousands)




                                              Year Ended December 31,
                                         2022          2021          2020
Cash flow from operating activities    $ (23,488 )   $  18,321     $  41,435
Cash flow from investing activities       13,798       (22,534 )     (11,948 )
Cash flow from financing activities      (11,504 )      13,161         3,789
Effect of exchange rate on cash             (272 )        (377 )

416


Net cash flow                            (21,466 )       8,571

33,692

Cash and cash equivalents, beginning 50,567 41,996 8,304 Cash and cash equivalents, ending $ 29,101 $ 50,567 $ 41,996






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



2022 Cash Flows

As of December 31, 2022, our cash and cash equivalents were $29,101, representing a decrease of $21,466 from December 31, 2021. The decrease was attributable to the cash used in operating activities of $23,488, the cash provided by investing activities of $13,798, the cash used in financing activities of $11,504, and the decrease in cash resulting from a change in exchange rates of $272.





The cash used in operating activities of $23,488 was comprised of (a) net cash
outflows of $23,461 related to working capital fluctuations; (b) net cash
inflows of $4,365 from trading activities comprised of our investments-trading,
trading securities sold, not yet purchased, securities sold under agreement to
repurchase, receivables under resale agreements, and receivables and payables
from brokers, dealers, and clearing agencies, as well as the changes in
unrealized gains and losses on the investments-trading and trading securities
sold, not yet purchased; and (c) net cash outflows from other earnings items of
$4,392 (which represents net income or loss adjusted for the following non-cash
operating items: deferred taxes, other income / (expense), non-cash advisory
revenue, realized and unrealized gains and losses on other investments, at fair
value, other investments sold, not yet purchased, income / (loss) from equity
method affiliates, equity-based compensation, depreciation, impairment of
goodwill, and amortization).



The cash provided investing activities of $13,798 was comprised of (a) $27,091
in proceeds from sales of other investments, at fair value; (b) $3,054 in
proceeds from sales of other investments sold, not yet purchased, at fair value;
and (c) $77 in proceeds from distributions from equity method affiliates;
partially offset by (d) $7,236 in cash used to purchase other investments, at
fair value; (e) $6,001 in cash used to purchase other investments sold, not yet
purchased, at fair value; (f) $2,614 of cash used to invest in equity method
affiliates; and (g) $573 in purchases of furniture, equipment, and leasehold
improvements.



The cash used in financing activities of $11,504 was comprised of (a) $2,250 of
cash used to repay debt; (b) $234 of cash used to settle equity awards; (c)
$2,558 of cash used to pay dividends on Common Stock; (d) $6,485 in cash used
for distributions to the convertible non-controlling interest; and (e) $2,236 in
cash used for distributions to the non-convertible non-controlling interests;
partially offset by (f) $2,250 in proceeds from the issuance of debt and (g) $9
in cash proceeds from investments in the non-convertible non-controlling
interests.



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2021 Cash Flows

As of December 31, 2021, our cash and cash equivalents were $50,567, representing an increase of $8,571 from December 31, 2020. The increase was attributable to the cash provided by operating activities of $18,321, the cash used in investing activities of $22,534, the cash provided by financing activities of $13,161, and the decrease in cash resulting from a change in exchange rates of $377.





The cash provided by operating activities of $18,321 was comprised of (a) net
cash outflows of $19,093 related to working capital fluctuations; (b) net cash
inflows of $24,813 from trading activities comprised of our investments-trading,
trading securities sold, not yet purchased, securities sold under agreement to
repurchase, receivables under resale agreements, and receivables and payables
from brokers, dealers, and clearing agencies, as well as the changes in
unrealized gains and losses on the investments-trading and trading securities
sold, not yet purchased; and (c) net cash inflows from other earnings items of
$12,601 (which represents net income or loss adjusted for the following non-cash
operating items: deferred taxes, other income / (expense), realized and
unrealized gains and losses on other investments at fair value, other
investments sold, not yet purchased, income / (loss) from equity method
affiliates, equity-based compensation, depreciation, impairment of goodwill, and
amortization).



The cash used in investing activities of $22,534 was comprised of (a)
$123,098 in purchases of other investments at fair value; (b) $59,098 in
purchase of other investments sold, not yet purchased; (c) $8,392 in investments
in equity method affiliates; (d) $1,028 in purchase of furniture, equipment, and
leasehold improvements; partially offset by (e) $112,013 in sales and returns of
principal of other investments, at fair value; (f) $56,820 in sales and returns
of principal of other investments sold, not yet purchased; and (g) $249 in
distributions from equity method affiliates.



The cash provided by financing activities of $13,161 was comprised of (a)
$17,500 in proceeds from draws on revolving credit facility; (b) $9,076 in
proceeds from sale of Common Stock; (c) $17,095 in proceeds from non-controlling
interest investments; partially offset by (d) $17,500 in repayments on revolving
credit facility; (e) $2,400 of repayment of debt; (f) $378 in cash used to net
settle equity awards; (g) $857 of cash used to repurchase and retire Common
Stock; (h) $2,734 in non-controlling interest distributions; (i) $1,970 in
Operating LLC non-controlling interest distributions; (j) $4,000 in repayment of
redeemable financial instrument, and (k) $671 in cash used for dividend payments
on Common Stock.





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2020 Cash Flows



As of December 31, 2020, our cash and cash equivalents were $41,996,
representing an increase of $33,692 from December 31, 2019. The increase was
attributable to the cash provided by operating activities of $41,435, the cash
used in investing activities of $11,948, the cash provided in financing
activities of $3,789, and the increase in cash resulting from a change in
exchange rates of $416.



The cash provided by operating activities of $41,435 was comprised of (a) net
cash inflows of $79,555 related to working capital fluctuations; (b) net cash
outflows of $47,557 from trading activities comprised of our
investments-trading, trading securities sold, not yet purchased, securities sold
under agreement to repurchase, receivables under resale agreements, and
receivables and payables from brokers, dealers, and clearing agencies, as well
as the changes in unrealized gains and losses on the investments-trading and
trading securities sold, not yet purchased; and (c) net cash inflows from other
earnings items of $9,437 (which represents net income or loss adjusted for the
following non-cash operating items: deferred taxes, other income / (expense),
realized and unrealized gains and losses on other investments at fair value,
other investments sold, not yet purchased, income / (loss) from equity method
affiliates, equity-based compensation, depreciation, impairment of goodwill, and
amortization).



The cash used in investing activities of $11,948 was comprised of (a) $62,282 in
purchases of other investments at fair value; (b) $12,519 in purchase of other
investments sold, not yet purchased; (c) $12,675 in investments in equity method
affiliates; (d) $217 in purchase of furniture, equipment, and leasehold
improvements; partially offset by (e) $54,748 in sales and returns of principal
of other investments, at fair value; and (f) $20,997 in sales and returns of
principal of other investments sold, not yet purchased.



The cash provided by financing activities of $3,789 was comprised of (a) $2,166
of proceeds from the PPP loan; (b) $17,500 in draws on the FT LOC; (c) $4,500 in
proceeds from issuance of non-convertible debt; (d) $13,489 in proceeds from
issuance of non-controlling interests; partially offset by (e) $17,500 in
payments on the FT LOC; (f) $9,163 in repayment of debt; (g) $24 in debt
issuance costs; (h) $4,921 of repayments of redeemable financial instruments;
(i) $54 in cash used to net settle equity awards; (j) $35 in non-controlling
interest distributions; (k) $27 in dividends paid; and (l) $2,142 used to
purchase and retire Common Stock.



    Note Regarding Collateral Deposits and Impact on Operating Cash Flow


As part of our matched book repo operations, we enter into reverse repos with
counterparties whereby we lend money and receive securities as collateral.  In
accordance with ASC 860, the collateral securities are not recorded in our
consolidated balance sheets.  However, from time to time we will hold cash
instead of securities as collateral for these transactions.  When we are
provided cash as collateral for reverse repo transactions, we will make an entry
to increase our cash and cash equivalents and to increase our other liabilities
for the amount of cash received.  There are two main reasons we may receive
collateral in the form of cash as opposed to securities.  First, when the value
of the collateral securities we have in our possession decline, we will require
the counterparty to provide us with additional collateral.  We will accept
either cash or additional liquid securities.  Often, our counterparties will
provide us with cash as they may not have liquid securities readily available.
Second, from time to time, our counterparties require a portion of the
collateral securities in our possession returned to them for operating
purposes.  In such instances, the counterparty may not have substitute liquid
securities available and will often provide us with cash as collateral instead.
It is important to note that when we receive cash as collateral, it is temporary
in nature and we have an obligation to return that cash when the counterparty
provides substitute liquid securities as collateral or otherwise satisfies their
associated reverse repo obligation.  We are generally required to return any
cash collateral the same business day that we receive substitute securities.
The amount of cash we receive as collateral for our repo operations is volatile
and therefore, both our cash and cash equivalents balance and our cash provided
by and used in operations are volatile as they are both impacted. These amounts
can be large and should be taken into account when analyzing our cash flow from
operations.

The following table shows the impact of changes in these collateral deposits had on our cash flows in each period presented:





                                                         Year Ended December 31,
                                                  2022            2021            2020
Cash collateral held from repo and or
reverse repo counterparties - End of Period    $     4,301     $    17,320     $    41,119
Less: Cash collateral held from repo and or
reverse repo counterparties - End of Period         17,320          41,119

9,524


Impact to cash flow from operations            $   (13,019 )   $   (23,799 )   $    31,595






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Regulatory Capital Requirements





We have two subsidiaries that are licensed securities dealers: JVB in the U.S.
and CCFESA in France. As a U.S. broker-dealer, JVB is subject to the Uniform Net
Capital Rule in Rule 15c3-1 under the Exchange Act. CCFESA is subject to the
regulations of the ACPR.  The amount of net assets that these subsidiaries may
distribute is subject to restrictions under these applicable net capital rules.
These subsidiaries have historically operated in excess of minimum net capital
requirements. Our minimum capital requirements at December 31, 2022 were as
follows.

MINIMUM NET CAPITAL REQUIREMENTS


     (Dollars in Thousands)




U.S.     $ 250
France     512
Total    $ 762




We operate with more than the minimum regulatory capital requirement in our
licensed broker-dealers and at December 31, 2022 total net capital, or the
equivalent as defined by the relevant statutory regulations, in our licensed
broker-dealers totaled $48,106. See note 25 to our consolidated financial
statements included in this Annual Report on Form 10-K. In addition, our
licensed broker-dealers are generally subject to capital withdrawal notification
requirements and restrictions.

Restrictions of Distributions of Capital from JVB





As of December 31, 2022, our total equity on a consolidated basis was $94,026
However, the total equity of JVB was $94,302. Therefore, negative equity exists
outside of JVB.  During certain periods of time, we have generated losses or
negative cash flow outside of JVB.  We are dependent on taking distributions of
income (and potentially returns of capital) from JVB to satisfy the cash needs
outside of JVB, such as to cover losses incurred outside of JVB, to satisfy
other obligations that come due outside of JVB, and to make investments outside
of JVB. However, we are subject to significant limitations on our ability to
make distributions from JVB. These limitations include limitations imposed by
FINRA under rule 15c3-1 (described immediately above) and limitations under our
line of credit with Byline Bank (see note 20 to our consolidated financial
statements included in this Annual Report on Form 10-K). Furthermore,
counterparties to JVB have their own internal counterparty credit
requirements. The specific requirements are not generally shared with
us. However, if we take too much in capital distributions from JVB (beyond its
net income), we may not be able to trade with certain counterparties which may
cause JVB's operations to deteriorate.



Securities Financing



We maintain repurchase agreements with various third-party financial
institutions. There is no maximum limit as to the amount of securities that may
be transferred pursuant to these agreements, and transactions are approved on a
case-by-case basis. The repurchase agreements do not include substantive
provisions other than those covenants and other customary provisions contained
in standard master repurchase agreements. The repurchase agreements generally
require us to transfer additional securities to the counterparty in the event
the value of the securities then held by the counterparty in the margin account
falls below specified levels and contain events of default were we to breach our
obligations under the agreement. We receive margin calls from our repurchase
agreement counterparties from time to time in the ordinary course of business.
To date, we have maintained sufficient liquidity to meet margin calls, and we
have never been unable to satisfy a margin call, however, no assurance can be
given that we will be able to satisfy requests from our counterparties to post
additional collateral in the future. See note 11 to our consolidated financial
statements included in this Annual Report on Form 10-K.



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



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



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



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The following table presents our period end balance, average monthly balance,
and maximum balance at any month end for receivables under resale agreements and
securities sold under agreements to repurchase.



                                                           For the Twelve      For the Twelve
                                                            Months Ended        Months Ended
                                                            December 31,        December 31,
                                                                2022                2021
Receivables under resale agreements
Period end                                                 $       437,692     $     3,175,645
Monthly average                                            $     1,628,141     $     5,750,146
Maximum month end                                          $     3,006,658     $     7,299,538
Securities sold under agreements to repurchase
Period end                                                 $       452,797     $     3,171,415
Monthly average                                            $     1,649,310     $     5,745,838
Maximum month end                                          $     3,002,514     $     7,289,275




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

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





Debt Financing



The following table summarizes our long-term indebtedness and other financing
outstanding. See note 20 to our consolidated financial statements in our Annual
Report on Form 10-K for more information.





    DETAIL OF DEBT
(Dollars in Thousands)






                               As of December 31,
                                                        Interest
                                                          Rate
Description                    2022           2021       Terms      Interest (2)        Maturity
Non-convertible debt:
10.00% senior note (the
"2020 Senior Notes")        $    4,500     $    4,500    Fixed               10.00 %  January 2024
Contingent convertible
debt:
8.00% convertible senior
note (the "2017
Convertible Note")                   -         15,000    Fixed                8.00 %   March 2023
Less unamortized debt
issuance costs                       -            (67 )
                                     -         14,933
Junior subordinated notes
(1):
Alesco Capital Trust I          28,125         28,125   Variable              8.41 %    July 2037
Sunset Financial
Statutory Trust I               20,000         20,000   Variable              8.88 %   March 2035
Less unamortized discount      (23,601 )      (24,164 )
                                24,524         23,961

Byline Bank                          -              -   Variable               N/A    December 2023
Total                       $   29,024     $   43,394




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(1) The junior subordinated notes listed represent debt the Company owes to the

two trusts noted above. The total par amount owed by the Company to the

trusts is $49,614. However, the Company owns the common stock of the trusts

in a total par amount of $1,489. The Company pays interest (and at maturity,

principal) to the trusts on the entire $49,614 junior notes outstanding.

However, the Company receives back from the trusts the pro rata share of

interest and principal on the common stock held by the Company. These trusts

are variable interest entities ("VIEs") and the Company does not consolidate

them even though the Company holds the common stock. The Company carries the

common stock on its balance sheet at a value of $0. The junior subordinated

notes are recorded at a discount to par. When factoring in the discount, the

yield to maturity of the junior subordinated notes as of December 31,

2022 on a combined basis is 19.79% assuming the variable rate in effect on

the last day of the reporting period remains in effect until maturity.

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


      period.

Redeemable Financial Instruments





As of December 31, 2022, we have the following sources of financing, which we
account for as redeemable financial instruments. See note 19 to our consolidated
financial statements included in this Annual Report on Form 10-K.





    REDEEMABLE FINANCIAL INSTRUMENTS
         (Dollars in thousands)






                 As of December 31,
                  2022          2021
JKD Investor   $    7,868      $ 7,957
               $    7,868      $ 7,957

Off-Balance Sheet Arrangements





Other than as described in note 10 (derivative financial instruments) and note
18 (variable interest entities) to our consolidated financial statements
included in this Annual Report on Form 10-K, there were no material off balance
sheet arrangements as of December 31, 2022.



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Contractual Obligations



The table below summarizes our significant contractual obligations as of
December 31, 2022 and the future periods in which such obligations are expected
to be settled in cash. Our junior subordinated notes are assumed to be repaid on
their respective maturity dates. Excluded from the table are obligations that
are short-term in nature, including trading liabilities and repurchase
agreements. In addition, amortization of discount on debt is excluded.







        CONTRACTUAL OBLIGATIONS
           December 31, 2022
        (Dollars in Thousands)






                                                              Payment Due by Period
                                                Less than 1                                         More than 5
                                    Total          Year          1 - 3 Years       3 - 5 Years         Years
Operating lease arrangements      $  11,871     $     2,643     $       3,959     $       3,022     $     2,247
Maturity of 2020 Senior Notes         4,500               -             4,500                 -               -
Interest on 2020 Senior Notes           563             450               113                 -               -
Maturities on junior
subordinated notes                   48,125               -                 -                 -          48,125
Interest on junior subordinated
notes (1)                            56,664           4,143             8,285             8,285          35,951
Redeemable Financial Instrument
- JKD Capital Partners 1 (2)          7,868           7,868                 -                 -               -
Other Operating Obligations (3)       1,151           1,069                82                 -               -
                                  $ 130,742     $    16,173     $      16,939     $      11,307     $    86,323

(1) The interest on the junior subordinated notes related to Alesco Capital

Trust I is variable. The interest rate of 8.41% (based on a 90-day LIBOR

rate in effect as of December 31, 2022 plus 4.00%) was used to compute the


      contractual interest payment in each period noted. The interest on the
      junior subordinated notes related to Sunset Financial Statutory Trust I is

variable. The interest rate of 8.88% (based on a 90-day LIBOR rate in effect

as of December 31, 2022 plus 4.15%) was used to compute the contractual

interest payment in each period noted.

(2) Represents redemption value of the redeemable financial instruments as of

the reporting period. The redeemable financial instruments do not have a

fixed maturity date. The period shown above represents the first period the

holder of these instruments has the ability to require redemption by us.


  (3) Represents material operating contracts for various services.




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

Critical Accounting Policies and Estimates





Our accounting policies are essential to understanding and interpreting the
financial results in our consolidated financial statements. Our industry is
subject to a number of highly complex accounting rules and requirements many of
which place heavy burdens on management to make judgments relating to our
business. We encourage readers of this Form 10-K to read all of our critical
accounting policies, which are included in note 3 to our consolidated financial
statements included herein for a full understanding of these issues and how the
financial statements are impacted by these judgments. Certain of these policies
are considered to be particularly important to the presentation of our financial
results because they require us to make assumptions and estimates about future
events and apply judgments that affect the reported amounts of assets,
liabilities, revenues, expenses, and the related disclosures. We base our
assumptions, estimates, and judgments on historical experience, current trends,
and other factors that management believes to be relevant at the time our
consolidated financial statements are prepared. On a regular basis, management
reviews the accounting policies, assumptions, estimates, and judgments to ensure
that our financial statements are presented fairly and in accordance with U.S.
GAAP. However, because future events and their effects cannot be determined with
certainty, actual results could differ from our assumptions and estimates, and
such differences could be material.



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We consider the accounting policies discussed below to be the policies that are
the most impactful to our financial statements and also subject to significant
management judgment.

Valuation of Financial Instruments

How fair value determinations impact our financial statements





All of the securities we own that are classified as investments-trading,
securities sold, not yet purchased, other investments, at fair value, or other
investments sold, not yet purchased are recorded at fair value with changes in
fair value (both unrealized and realized) recorded in earnings.



Unrealized and realized gains and losses on securities classified as
investments-trading and securities sold, not yet purchased in the consolidated
balance sheets are recorded as a component of net trading revenue in the
consolidated statements of operations. Unrealized and realized gains and losses
on securities classified as other investments, at fair value, and other
investments sold, not yet purchased in the consolidated balance sheets are
recorded as a component of principal transactions and other income in the
consolidated statements of operations.

How we determine fair value for securities





We account for our investment securities at fair value under various accounting
literature, including Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 320, Investments - Debt and Equity Securities
("ASC 320"), pertaining to investments in debt and equity securities and the
fair value option of financial instruments in ASC 825, Financial Instruments
("ASC 825"). We also account for certain assets at fair value under applicable
industry guidance such as: (a) FASB ASC 946, Financial Services-Investment
Companies ("ASC 946") and (b) FASB ASC 940-320, Proprietary Trading Securities
("ASC 940-320").



The determination of fair value is based on quoted market prices of an active
exchange, independent broker market quotations, market price quotations from
third-party pricing services, or, when independent broker quotations or market
price quotations from third-party pricing services are unavailable, valuation
models prepared by management. These models include estimates and the valuations
derived from them could differ materially from amounts realizable in an open
market exchange.



We adopted the fair value measurement provisions in ASC 820, Fair Value
Measurements and Disclosures ("ASC 820"), applicable to financial assets and
financial liabilities effective January 1, 2008. ASC 820 defines fair value as
the price that would be received to sell the asset or paid to transfer the
liability between market participants at the measurement date ("exit price"). An
exit price valuation will include margins for risk even if they are not
observable. In accordance with ASC 820, we categorize our financial instruments,
based on the priority of the inputs to the valuation technique, into a
three-level valuation hierarchy. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities
(level 1 measurements) and the lowest priority to unobservable inputs (level 3
measurements). The three levels of the hierarchy under ASC 820 are described
below.

Level 1 Financial assets and liabilities whose values are based on unadjusted

quoted prices in active markets that are accessible at the measurement

date for identical, unrestricted assets or liabilities.

Level 2 Financial assets and liabilities whose values are based on one or more of


        the following: (a) quoted prices for similar assets or liabilities in
        active markets; (b) quoted prices for identical or similar assets or
        liabilities in non-active markets; (c) pricing models whose inputs are

observable for substantially the full term of the asset or liability; or

(d) pricing models whose inputs are derived principally from or

corroborated by observable market data through correlation or other means

for substantially the full term of the asset or liability.

Level 3 Financial assets and liabilities whose values are based on prices or

valuation techniques that require inputs that are both significant to the

fair value measurement and unobservable. These inputs reflect

management's own assumptions about the assumptions a market participant


        would use in pricing the asset or liability.




In certain cases, the inputs used to measure fair value may fall into different
levels of the valuation hierarchy. In such cases, the level of the valuation
hierarchy within which the fair value measurement in its entirety falls has been
determined based on the lowest level input that is significant to the fair value
measurement in its entirety. Our assessment of the significance of a particular
input to the fair value measurement in its entirety requires judgment and
considers factors specific to the asset or liability.



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Financial instruments carried at contract amounts with short-term maturities
(one year or less) are repriced frequently or bear market interest rates.
Accordingly, those contracts are carried at amounts approximating fair value.
Financial instruments carried at contract amounts on our consolidated balance
sheets include receivables from and payables to brokers, securities purchased
under agreements to resell ("reverse repurchase agreements" or "receivables
under resale agreements"), and sales of securities under agreements to
repurchase ("repurchase agreements").

How we determine fair value for investments in investment funds and similar vehicles





A portion of our other investments, at fair value represents investments in
investment funds and other non-publicly traded entities that have the attributes
of investment companies as described in ASC 946-15-2. We estimate the fair value
of these entities using the reported net asset value per share as of the
reporting date in accordance with the "practical expedient" provisions related
to investments in certain entities that calculated net asset value per share (or
its equivalent) included in ASC 820.

Derivative Financial Instruments

We do not utilize hedge accounting for our derivatives. Accordingly, all derivatives are carried at fair value with unrealized and realized gains recognized in earnings.





If the derivative is expected to be managed by employees of our Capital Markets
business segment or is a hedge for an investment classified as
investments-trading, the derivative will be carried as a component of
investments-trading if it is an asset or securities sold, not yet purchased if a
liability. If the derivative is a hedge for an investment carried as a component
of other investments, at fair value, the derivative will be recorded in other
investments, at fair value if it is an asset or other investments sold, not yet
purchase if it is a liability.



We may, from time to time, enter into derivatives to manage our risk exposures
arising from (i) fluctuations in foreign currency rates with respect to our
investments in foreign currency denominated investments; (ii) our investments in
interest sensitive investments; (iii) our investments in various equity
instruments; and (iv) our facilitation of mortgage-backed trading. Derivatives
entered into by us, from time to time, may include (i) foreign currency forward
contracts; (ii) purchase and sale agreements of TBAs and other forward agency
MBS contracts; (iii) other extended settlement trades; and (iv) equity options
such as calls and puts.



TBAs are forward contracts to purchase or sell mortgage-backed securities whose
exact collateral remain "to be announced" until just prior to the trade
settlement. In addition to TBAs, we sometimes enter into forward purchases or
sales of agency mortgage-backed securities where the underlying collateral has
been identified. These transactions are referred to as other forward agency MBS
contracts. We account for TBAs and other forward agency MBS contracts as
derivatives.



In addition to TBAs and other forward agency MBS contracts as part of our
broker-dealer operations, we may from time to time enter into other securities
or loan trades that do not settle within the normal securities settlement
period. In those cases, the purchase or sale of the security or loan is not
recorded until the settlement date. However, from the trade date until the
settlement date, our interest in the security is accounted for as a derivative
as either a forward purchase commitment or forward sale commitment.



Derivatives involve varying degrees of off-balance sheet risk, whereby changes
in the level or volatility of interest rates or market values of the underlying
financial instruments may result in changes in the value of a particular
financial instrument in excess of its carrying amount. Depending on our
investment strategy, realized and unrealized gains and losses are recognized in
principal transactions and other income or in net trading in our consolidated
statements of operations on a trade date basis.

Accounting for Income Taxes





We account for income taxes under the asset and liability method, which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements.
Under this method, deferred tax assets and liabilities are determined based on
the differences between the financial statements and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on
deferred tax assets and liabilities is recognized in income in the period that
includes the enactment date.



We record net deferred tax assets to the extent we believe these assets will
more likely than not be realized. In making such a determination, we consider
all available positive and negative evidence, including scheduled reversals of
deferred tax liabilities, projected future taxable income, tax planning
strategies, and recent financial operations. In the event we were to determine
that we would be able to realize our deferred income tax assets in the future in
excess of their net recorded amount, we would make an adjustment to the
valuation allowance, which would reduce the provision for income taxes.

Our policy is to record penalties and interest as a component of provision for income taxes in our consolidated statements of operations.

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Our voting-controlled subsidiary, the Operating LLC, is treated as a
pass-through entity for U.S. federal income tax purposes and in most of the
states in which we do business. The Operating LLC is subject to entity level
taxes in certain state and foreign jurisdictions. However, as a result of the
AFN Merger, we acquired significant deferred tax assets and liabilities and now
have significant tax attributes. Effective as of January 1, 2010, we began to be
treated as a C corporation for U.S. federal and state income tax purposes.



As shown in note 23 to the consolidated financial statements contained herein,
we currently have significant recognized as well as unrecognized deferred tax
assets. Deferred tax assets should only be recognized to the extent that we
determine we can benefit in the future from the asset.  Generally, this
determination is based on our estimates of our ability to generate future
taxable income.  This determination is complex and subject to judgment. The
determination is ongoing and subject to change. If we were to change this
determination in the future, a significant deferred tax benefit or deferred tax
expense would be recognized as a component of earnings.



Revenue Recognition



Net trading



Net trading includes: (i) all gains, losses, interest income, dividend income,
and interest expense from securities classified as investments-trading and
trading securities sold, not yet purchased; (ii) interest income and expense
from collateralized securities transactions; and (iii) commissions and riskless
trading profits. Net trading is reduced by margin interest, which is recorded on
an accrual basis.  We refer to investments included as a component of
investments - trading and trading securities sold, not yet purchased as trading
assets.



Riskless trades are transacted through our proprietary account with a customer
order in hand, resulting in little or no market risk to us. Transactions that
settle in the regular way are recognized on a trade date basis. Extended
settlement transactions are recognized on a settlement date basis (although in
cases of extended settlement trades, the unsettled trade is accounted for as a
derivative between trade and settlement date). See notes 3 and 10 to our
consolidated financial statements included in this Annual Report on Form
10-K. The investments classified as trading are carried at fair value. The
determination of fair value is based on quoted market prices of an active
exchange, independent broker market quotations, market price quotations from
third-party pricing services or, when independent broker quotations or market
price quotations from third-party pricing services are unavailable, valuation
models prepared by our management. The models include estimates, and the
valuations derived from them could differ materially from amounts realizable in
an open market exchange. See note 9 to our consolidated financial statements
included in this Annual Report on Form 10-K.



Asset management

Asset management revenue consists of management fees earned from Investment Vehicles. In the case of CDOs, the fees earned by us generally consist of senior, subordinated, and incentive fees.

The senior asset management fee is generally senior to all the securities in the CDO capital structure and is recognized on a monthly basis as services are performed. The senior asset management fee is generally paid on a quarterly basis.





The subordinated asset management fee is an additional payment for the same
services but has a lower priority in the CDO cash flows. If the CDO experiences
a certain level of asset defaults and deferrals, these fees may not be paid.
There is no recovery by the CDO of previously paid subordinated asset management
fees. It is our policy to recognize these fees on a monthly basis as services
are performed. The subordinated asset management fee is generally paid on a
quarterly basis. However, if we determine that the subordinated asset management
fee will not be paid (which generally occurs on the quarterly payment date), we
will stop recognizing additional subordinated asset management fees on that
particular CDO and will reverse any subordinated asset management fees that are
accrued and unpaid. We will begin accruing the subordinated asset management fee
again if payment resumes and, in management's estimate, continued payment is
reasonably assured. If payment were to resume but we were unsure of continued
payment, we would recognize the subordinated asset management fee as payments
were received and would not accrue such fees on a monthly basis.



The incentive management fee is an additional payment, made typically after five
to seven years of the life of a CDO, which is based on the clearance of an
accumulated cash return on investment ("Hurdle Return") received by the most
junior CDO securities holders. It is an incentive for us to perform in our role
as asset manager by minimizing defaults and maximizing recoveries. The incentive
management fee is not ultimately determined or payable until the achievement of
the Hurdle Return by the most junior CDO securities holders. We recognize
incentive fee revenue when it is probable and there is not a significant chance
of reversal in the future.



In the case of Investment Vehicles other than CDOs, generally we earn a base fee
and, in some cases, also earns an incentive fee. Base fees will generally be
recognized monthly as services are performed and will be paid monthly or
quarterly. The contractual terms of each arrangement will determine our revenue
recognition policy for incentive fees in each case. However, in all cases, we
recognize the incentive fees when they are probable and there is not a
significant chance of reversal in the future.



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New issue and advisory



New issue and advisory revenue includes: (i) origination fees for financial
instruments originated by the Company; (ii) revenue from advisory services; and
(iii) new issue revenue associated with arranging the issuance of and placing
newly created financial instruments.  New issue and advisory revenue is
recognized when the Company's performance obligations have been satisfied and
collectability is reasonably assured.

Principal transactions and other income





Principal transactions include all gains, losses, and income (interest and
dividend) from financial instruments classified as other investments, at fair
value and other investments sold, not yet purchased in the consolidated balance
sheets.  We refer to investments included as a component of other investments,
at fair value and other investments sold, not yet purchased as our principal
investing assets.



The investments classified as other investments, at fair value and other
investments sold, not yet purchased are carried at fair value. The determination
of fair value is based on quoted market prices of an active exchange,
independent broker market quotations, market price quotations or models from
third-party pricing services, or, when independent broker quotations or market
price quotations or models from third-party pricing services are unavailable,
valuation models prepared by management. These models include estimates, and the
valuations derived from them could differ materially from amounts realizable in
an open market exchange. Dividend income is recognized on the ex-dividend date.

Other income / (loss) includes foreign currency gains and losses, interest earned on cash and cash equivalents, interest earned and losses incurred on notes receivable, and other miscellaneous income including revenue from revenue sharing arrangements.





Variable Interest Entities



FASB ASC 810, Consolidation ("ASC 810") contains the guidance surrounding the
definition of VIEs, the definition of variable interests, and the consolidation
rules surrounding VIEs. In general, VIEs are entities in which equity investors
lack the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support. As a general matter, a reporting
entity must consolidate a VIE when it is deemed to be the primary
beneficiary. The primary beneficiary is the entity that has both (a) the power
to direct the matters that most significantly impact the VIE's financial
performance and (b) a significant variable interest in the VIE.

We can potentially become involved with a VIE in three main ways:

Our Principal Investing Portfolio

For each investment made within the principal investing portfolio, we assess whether the investee is a VIE and if we are the primary beneficiary. If we determine the entity is a VIE and we are the primary beneficiary, we will consolidate it.

Our Asset Management Activities





For each investment management contract, we enter into, we will assess whether
the entity being managed is a VIE and if we are the primary beneficiary. If we
determine the entity is a VIE and we are the primary beneficiary, we will
consolidate it.



Our Trading Portfolio



From time to time, we may have an interest in a VIE through the investments we
make as part of our trading activities. Because of the high volume of trading
activity in which we engage, we do not perform a formal assessment of each
individual investment within our trading portfolio to determine if the investee
is a VIE and if we are the primary beneficiary. Even if we were to obtain a
variable interest in a VIE through our trading portfolio, we would not be deemed
to be the primary beneficiary for two main reasons: (a) we do not usually obtain
the power to direct activities that most significantly impact any investee's
financial performance and (b) a scope exception exists within the consolidation
guidance for cases where the reporting entity is a broker-dealer and any control
(either as the primary beneficiary of a VIE or through a controlling interest in
a voting interest entity) was deemed to be temporary. In the unlikely case that
we obtained the power to direct activities and obtained a significant variable
interest in an investee in our trading portfolio that was a VIE, any such
control would be deemed to be temporary due to the rapid turnover within the
trading portfolio.



Stock Compensation

We account for stock compensation according to FASB ASC 718, Stock Compensation ("ASC 718"). In the periods presented herein, we have had three different types of grants that fall under ASC 718.





First, we sometimes grant to employees and directors restricted common stock in
Cohen & Company Inc.  These grants vest over a period of time and only have
service based vesting criteria.  In these cases, we determine the fair value of
the grants by taking the closing stock price of Cohen & Company Inc. on the
grant date and multiplying it by the number of restricted shares granted.

recognize the expense over the service period on a straight-line basis. We assume no forfeitures up front and record forfeitures as they occur by reducing expense. The recipient is entitled to dividends that are declared and paid during the vesting period but they are paid only if (and to the extent) the restricted share grant ultimately vests.





Second, we sometimes grant to employees operating units of the Operating LLC.
These grants also vest over a period of time and only have service based vesting
criteria.  Because there is a fixed exchange ratio between units of the
Operating LLC and shares of Cohen & Company Inc., the fair value of the grant is
calculated by taking the closing stock price of Cohen & Company Inc. on the
grant date, adjusting for the exchange ratio, and then multiplying by the number
of units of the Operating LLC granted.    We recognize the expense over the
service period on a straight-line basis.  We assume no forfeitures up front and
record forfeitures as they occur by reducing expense. The recipient is entitled
to distributions that are declared and paid during the vesting period but they
are paid only if (and to the extent) the unit grant ultimately vests.



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Third, employees sometimes invest in the membership interests of consolidated
SPAC sponsor entities (the Insurance SPAC Sponsor Entities, the Insurance SPAC
II Sponsor Entities, and the Insurance SPAC III Sponsor Entities).  Because
these entities are consolidated and the employees are investing in the
consolidated company's non-controlling interest, these equity interests fall
under ASC 718.  Generally, the employee invests a de-minimus amount and receives
an allocation of the founder shares held by the sponsor entity.  The investment
does not have any explicit vesting criteria associated with it.  Generally, the
employee's investment will be worthless if the SPAC is liquidated and it will
become worth something if the SPAC completes its business combination.
Therefore, we treat these grants as having a performance condition (i.e. the
completion of the SPAC business combination).  Further, at the time of the
investments, we treat this performance condition as being non-probable.  The
effect of this is that we record no expense related to these investments until
(and only if) the business combination is completed.  Upon completion of the
business combination, we record compensation expense in an amount equal to the
fair value of the grant.  The fair value of the grant is equal to the public
trading price of the SPAC on the date of the grant adjusted for certain sale
restrictions imposed on the shares the employee receives (generally, they are
restricted for sale for some time period and subject to certain hurdle prices
before they become freely tradeable).  We use a Monte Carlo simulation model to
determine the appropriate discount to place on shares that are subject to hurdle
prices.  The compensation amount is recorded with an offsetting credit to
non-controlling interest.  From that point forward, the shares received by
the employee are treated as part of the non-controlling interest and allocated
income, expense, gains, and losses accordingly until the applicable sponsor
entity is liquidated or otherwise de-consolidated.

Investments in Special Purpose Acquisition Companies ("SPACs") Sponsor Entities





We invest in the sponsor entities of SPACs.  The sponsor entities are limited
liability companies (each an "LLC") that pool their members' interests and
invest in the private placement and founder shares (together, sponsor shares) of
a SPAC.  The SPAC will also raise funds in a public offering and seek to
complete a business combination within an agreed upon time frame.  The SPAC will
use the proceeds raised from the sponsor shares to pay transaction and operating
expenses during the period it is seeking a business combination.  The proceeds
of the public offering are placed in an interest bearing trust and can only be
used to complete the business combination and pay taxes on the interest earned.
Generally, the public investors must approve any business combination prior to
its effectiveness.  If a business combination is not completed within the agreed
upon time frame, the SPAC will liquidate and return the public
investors' investment to them.  If there are funds remaining after liquidation,
the sponsor entities may receive some portion of their investment back, but
likely they will suffer a total loss of their investment.  If the business
combination is completed, the sponsor entities private placement in the SPAC
will entitle them to a combination of unrestricted common, restricted common,
and (in some cases) warrants of the post-business combination SPAC (which is a
publicly traded company).  The following summarizes our accounting policies
related to our investments in these entities:

• The sponsor entities are LLCs that give all important decision making rights to

their respective managing member. Furthermore, the other members of the LLC

cannot replace the managing member. Accordingly, we have concluded that the

sponsor entities are VIEs and the managing member has the power to direct its

most important economic activities. In all cases where we are the managing

member of a sponsor entity, we also have had a significant economic interest in

such sponsor entity and therefore consolidate such sponsor entity. • In all cases where we have consolidated a sponsor entity, we have determined

that the sponsor entity's private placement investment in the SPAC which it

sponsors should be treated as an equity method investment during the SPAC's

pre-business combination period. Furthermore, because of the difficulty of

determining the fair value of such an investment in the SPAC's pre-business

combination period, we have chosen to not elect the fair value option. • If a SPAC completes its business combination, the sponsor entity's investment

in the SPAC will be converted to a combination of unrestricted and restricted

shares in the post-business combination SPAC. At this point (assuming we

consolidate the sponsor entity), we will account for the shares received at

fair value. We will reclassify any remaining equity method investment balance

to other investments, at fair value and record principal transactions income

for the difference. We will record non-controlling interest expense for the

SPAC shares that are distributable to the non-controlling interest holders of

the sponsor entity. The fair value of the unrestricted shares received is equal

to the public trading price of the SPAC on the date of the business

combination. The fair value of the restricted shares received is adjusted

downwards from the public trading price for certain sale restrictions imposed

(generally, they are restricted for sale for some time period and subject to

certain hurdle prices before they become freely tradeable). We use a Monte

Carlo simulation model to determine the appropriate discount to place on shares

that are subject to hurdle prices. In the case of a SPAC business combination

where we consolidate the sponsor entity, generally there is also an

equity-based compensation entry to be recorded at the date of the business

combination. See equity-based compensation section above. We will continue to

mark the sponsor entity's investment in the SPAC to market and record principal

transactions income or loss and offsetting non-controlling interest income or

expense until the sponsor entity itself distributes all of the SPAC shares it

owns to its members and liquidates. At that point, we will hold the SPAC

shares directly (rather than through a consolidated subsidiary) and will record

principal transaction income and loss until the SPAC shares themselves are

liquidated.

• We will also invest in sponsor entities that we do not consolidate because we

are not the managing member of such sponsor entity or otherwise do not have the

power to direct the sponsor entity's most important activities. In these

cases, we treat our investment in the sponsor entity as an equity method

investment. Furthermore, because of the difficulty of determining the fair

value of such an investment in the applicable SPAC's pre-business combination

period, we have chosen to not elect the fair value option. • If a SPAC completes a business combination and we have an equity method

investment in the associated sponsor entity, the sponsor entity will record

income equal to the difference between the fair value of the restricted and

unrestricted shares it will receive and the carrying value of its equity method

investment in the SPAC. We will recognize our share of this gain as income

from equity method affiliates. The sponsor entity will continue to mark its

investment in the SPAC to market after the business combination and we will

recognize our share of the change in fair value as income or loss from equity

method affiliates. Once the sponsor entity distributes our allocable share of

the SPAC shares it owns, we will reclassify our investment from investment in

equity method affiliate to other investments, at fair value as we will then

hold the SPAC shares directly (rather than through an equity method investee).

We will then record principal transactions income and loss until the SPAC

shares themselves are liquidated. • If a SPAC liquidates and we have an investment in it (either directly in the

case of consolidated sponsor entities or indirectly in the case of equity

method sponsor entities), we will write off our remaining equity method balance

and record loss on equity method investment. In the case of consolidated

sponsor entities we will also record an offsetting entry to non-controlling

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Recent Accounting Pronouncements





The following is a list of recent accounting pronouncements that, we believe,
will have a continuing impact on our financial statements going forward. For a
more complete list of recent pronouncements, see note 3 to our consolidated
financial statements included in this Annual Report on Form 10-K.



In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40):  Accounting for Convertible Instruments and Contracts
in an Entity's Own Equity.  This ASU simplifies accounting for convertible
instruments by removing major separation models currently required.  The ASU
removes certain settlement conditions that are required for equity contracts to
qualify for the derivative scope exception.  The ASU also simplifies the diluted
earnings per share (EPS) calculation in certain areas. This ASU is effective for
fiscal years beginning after December 15, 2023, including interim periods within
those fiscal years. We have determined that adoption will have an
immaterial impact it may have on our consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings ("TDRs") and Vintage Disclosures.

The


amendments in this ASU eliminate TDR recognition and measurement guidance and
instead, require that an entity evaluate (consistent with the accounting for
other loan modifications) whether the modification represents a new loan or a
continuation of an existing loan.  The amendments also enhance existing
disclosure requirements and introduce new requirements related to certain
modifications of receivables made to borrowers experiencing financial
difficulty. This ASU is effective for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. We have determined
adoption of this ASU will have no material effect on our financial statements or
disclosures.



In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic
820): Fair Value Measurement of Equity Securities Subject to Contractual Sale
Restrictions. The amendments clarify that a contractual restriction on the sale
of an equity security is not considered part of the unit of account of the
equity security and, therefore, is not considered in measuring fair value. This
ASU is effective for fiscal years beginning after December 15, 2023.  Early
adoption is permitted. We are currently evaluating the new guidance to determine
the impact it may have on our consolidated financial statements.





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Table of Contents

Market Closed - Nyse Other stock markets 16:10:00 2024-05-22 EDT			5-day change	1st Jan Change
8.86 ^USD	-6.64%		-7.13%	+33.23%

05-06	Cohen & Company Inc. Reports Earnings Results for the First Quarter Ended March 31, 2024	CI
05-06	Transcript : Cohen & Company Inc., Q1 2024 Earnings Call, May 06, 2024

Cohen & Company Inc. Reports Earnings Results for the First Quarter Ended March 31, 2024	05-06	CI
Transcript : Cohen & Company Inc., Q1 2024 Earnings Call, May 06, 2024	05-06
Earnings Flash (COHN) COHEN & COMPANY Posts Q1 Revenue $18.6M	05-06	MT
Earnings Flash (COHN) COHEN & COMPANY Posts Q1 EPS $1.37	05-06	MT
Cohen & Company Inc. Declares Quarterly Dividend, Payable on June 5, 2024	05-06	CI
Top Premarket Decliners	03-14	MT
Sector Update: Financial Stocks Mixed Late Afternoon	03-07	MT
Cohen Shares Jump After Company Reports Profit in Q4	03-07	MT
Cohen & Company Inc. Reports Earnings Results for the Full Year Ended December 31, 2023	03-06	CI
Cohen & Company Inc. Reports Earnings Results for the Fourth Quarter Ended December 31, 2023	03-06	CI
Earnings Flash (COHN) COHEN & COMPANY Posts Q4 EPS $2.97	03-06	MT
Earnings Flash (COHN) COHEN & COMPANY Posts Q4 Revenue $34.5M	03-06	MT
Cohen & Company Inc. Declares Quarterly Dividend, Payable on April 5, 2024	03-06	CI
Cohen & Company Inc. and the Trustee Enter into Supplemental Indenture No. 1 to Junior Subordinated Indenture	01-29	CI
Tranche Update on Cohen & Company Inc.'s Equity Buyback Plan announced on August 7, 2007.	11-03	CI
Earnings Flash (COHN) COHEN & COMPANY Posts Q3 Revenue $17.1M	11-02	MT
Cohen & Company Inc. Declares Quarterly Dividend, Payable on December 1, 2023	11-02	CI
Cohen & Company Inc. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	11-02	CI
AI firm Brand Engagement Network to go public via SPAC deal	23-09-07	RE
Tranche Update on Cohen & Company Inc.'s Equity Buyback Plan announced on August 7, 2007.	23-08-07	CI
Earnings Flash (COHN) COHEN & COMPANY Reports Q2 Revenue $22.6M	23-08-02	MT
Cohen & Company Inc. Reports Earnings Results for the Second Quarter and Six Months Ended June 30, 2023	23-08-02	CI
Cohen & Company Inc. Declares Quarterly Dividend, Payable on September 1, 2023	23-08-02	CI
Cohen & Company Inc.(NYSEAM:COHN) added to Russell Microcap Index	23-06-23	CI
Cohen & Company Inc.(NYSEAM:COHN) added to Russell Microcap Value Index	23-06-23	CI

	1st Jan change	Capi.
COHEN & COMPANY INC.	+33.23%	14.8M
CME GROUP INC.	+0.42%	75.74B
TRADEWEB MARKETS INC.	+21.70%	23.72B
JAPAN EXCHANGE GROUP, INC.	+25.71%	12.05B
ASX LIMITED	+0.17%	8.12B
SAUDI TADAWUL GROUP HOLDING COMPANY	+27.30%	7.74B
DUBAI FINANCIAL MARKET	-5.76%	2.9B
MULTI COMMODITY EXCHANGE OF INDIA LIMITED	+18.01%	2.35B
INDIAN ENERGY EXCHANGE LIMITED	-8.04%	1.71B
BOLSAS Y MERCADOS ARGENTINOS S.A.	+95.91%	1.41B

Cohen & Company Inc.

Equities

COHN

US19249M1027

Financial & Commodity Market Operators

COHEN & CO INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-K)

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