Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 1253

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 1253
---
 Federal Reserve began a process of raising the federal funds rate and quantitative tightening to address rising inflation.  Recently, the U.S. Federal Reserve reduced interest rates for the first time in several years.  It is unclear as to whether or how quickly interest rates will continue to decline, if at all.  For most of the periods presented herein, rates were rising or elevated versus historical lows, which negatively impacted our business in the following ways:

     1.
     Rising rates reduced the fair value of the fixed income securities we hold on our balance sheet.

     2.
     Rising rates created instability in the equity markets, which has reduced equity financing and business combination volumes and negatively impacted CCM.

     3.
     Rising rates reduced the volumes of new issue fixed income instruments, which has negatively impacted our CREO JV.

     4.
     Rising rates significantly reduced mortgage activity. Our mortgage group's profitability is mainly impacted by the volume of mortgage activity in the U.S. (both mortgages for new home purchases as well as refinancing). Furthermore, our mortgage group engages in repo lending to mortgage originators. Reduced mortgage volumes impose financial pressures on mortgage originators and may increase the risk that originators default on their repo obligations to us. See note 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.

     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.

      41

Recent Events and Transactions

Redemption of Redeemable Financial Instrument and Issuance of the 2024 Note

Effective September 1, 2024, we entered into the Redemption Agreement, which terminated the JKD Investment Agreement in its entirety.  As of September 1, 2024, the investment balance under the JKD Investment Agreement was $7,719. Pursuant to the Redemption Agreement, we (i) paid $2,573 of the investment balance in cash, and (ii) issued a senior promissory note (the “2024 Note”) in the aggregate principal amount of $5,146, representing the remaining balance payable under the JKD Investment Agreement. The 2024 Note bears interest at 12% and its principal is to be repaid as follows: (i) $2,573 of the principal amount will be due and payable on August 31, 2025, and (ii) $2