PHILADELPHIA, PA — After a battle against high interest rates in 2023, financial services firm Cohen & Company Inc. (NYSE American: COHN) is witnessing a rebound, driven by its fourth-quarter performance.
Chief Executive Officer, Lester Brafman, outlined the firm’s Q4 and end-of-year outcomes at a recent briefing. Despite the toll that the high interest regime took on the firm’s investment banking, trading, and commercial real estate departments for most of the year, the last quarter saw a significant turnaround. Thanks to four strategic investment banking transactions and substantial earnings from investments in SPAC sponsors, the firm recorded $16 million of adjusted pre-tax income for the quarter.
The dividends didn’t stop there, though. The company’s Q4 net income reached $4.5 million, a considerable leap from the net loss of $0.4 million in the preceding quarter and the $3.0 million net loss for 2022’s Q4. This positive turnaround in Q4 has prompted Brafman to convey optimism about the company’s prospects in the new year.
A clear driver of the firm’s Q4 boom was a surge in its new issue and advisory revenue, which soared to $18.7 million, a notable rise of $11.5 million from the prior quarter and $14.5 million from the corresponding quarter last year. This revenue spike was mainly the result of the Cohen & Company Capital Markets investment banking team’s efforts, which generated $18.6 million, with the insurance origination team contribution rounding off the remaining $0.1 million.
Additionally, revenue from principal transactions and other sources rose to $6.0 million in Q4 from $0.6 million in the prior quarter and a negative $3.2 million for Q4, 2022. This improvement was primarily due to positive mark-to-market adjustments on the company’s principal investment portfolio.
Cohen & Company’s asset management revenue for Q4 rose slightly from both the prior and prior-year quarters, primarily due to augmented assets under management in the firm’s European funds and a recently secured commercial real estate servicing agreement. On the downside, compensation and benefits expenses showed an uptick of $1.1 million from the previous quarter and a $7.4 million increase from the corresponding quarter last year.
Total equity at the end of 2023 was $91.8 million, a slight drop from $94.0 million as of December 31, 2022. However, the non-convertible non-controlling interest component reduced from $17 thousand to $9.6 million in the same period.
Cohen & Company has announced a quarterly dividend payout of $0.25 per share, to be paid out on April 5, 2024, signalling its commitment to shareholder value. However, the board remains cautious and will continue to review the dividend policy each quarter based on the firm’s performance and capital requirements.
Despite the challenges posed by 2023, Cohen & Company’s recovery story in Q4 highlights the resilience inherent in its business model. As the company seeks to leverage the gains of its recent turnaround, industry watchers will be keenly observing how this financial services firm navigates the shifting economic landscape in the forthcoming year.
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