Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 963

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 15
Chunk 963
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   Agency Repo: Similar to the on balance sheet repo, the Company first executes a reverse repo with the borrower and a matching repo (with the same collateral and maturity date) with the lender.  However, in this case, all three parties (the borrower, the lender, and the Company) simultaneously enter into an assignment agreement.  The effect of this assignment is to remove the Company as principal to the reverse repo and repo and have the lender and borrower directly face each other in a repo trade.  The Company receives a fee for its role in arranging the financing.  These transactions are referred to by the Company as agency gestation repo trades. 
    
   Bankruptcy of Gestation Counterparty 
    
   As of  June 30, 2022, the Company had an outstanding reverse repo balance with First Guaranty Mortgage Corporation (“FGMC”) totaling $269,228.  Effective  June 30, 2022, FGMC filed for bankruptcy.   Subsequent to  June 30, 2022, the Company issued a default notice to FGMC under the reverse repo.  The Company took possession of the collateral and began liquidating it. 
    
   As of  December 31, 2024, the Company had liquidated all of the collateral residential mortgage loans. As of  December 31, 2023, the Company held $3,113 of collateral residential mortgage loans. The loans were carried at fair value and included in investments-trading in the consolidated balance sheets.
    
   During the year ended  December 31, 2022, 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 expenses in the Company's statement of operations.  The Company has filed an unsecured claim under bankruptcy proceedings related to this loss but does not expect to receive a material recovery. To the extent any recovery is received, the Company will recognize it on a cash basis as received, as a component of net trading revenue. In connection with the loss, the Company recorded a reversal of accrued incentive compensation of $1,753.  During the year ended  December 31, 2022, the net impact to earnings was $3,701. During the years