Cohen & Co Inc. Debt Disclosure
20. DEBT
| DETAIL OF DEBT |
| (Dollars in Thousands) |
| Description | December 31, 2025 | December 31, 2024 | Interest Rate Terms | Interest (2) | Maturity | ||||||||||
| Non-convertible debt: | |||||||||||||||
| 12.00% senior note (the "2024 Note") | $ | 2,573 | $ | 5,146 | Fixed | August 2026 | |||||||||
| 12.00% senior note (the "2020 Note") | 4,500 | 4,500 | Fixed | January 2026 | |||||||||||
| Junior subordinated notes (1): | |||||||||||||||
| Alesco Capital Trust I | 28,125 | 28,125 | Variable | July 2037 | |||||||||||
| Sunset Financial Statutory Trust I | 20,000 | 20,000 | Variable | March 2035 | |||||||||||
| Less unamortized discount | (22,303 | ) | (22,867 | ) | |||||||||||
| 25,822 | 25,258 | ||||||||||||||
| Byline Credit Facility | - | - | Variable | N/A | June 2026 | ||||||||||
| Total | $ | 32,895 | $ | 34,904 | |||||||||||
| (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 However, the Company owns the common stock of the trusts in a total par amount of 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 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 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, 2025 on a combined basis was 19.07% 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. |
2024 Note
On September 1, 2024, pursuant to the Redemption Agreement, the Operating LLC issued to JKD Investor the 2024 Note, which evidenced the Operating LLC’s obligation to repay to the JKD Investor the original principal amount of $5,146. Pursuant to the 2024 Note, the unpaid principal amount and all accrued but unpaid interest thereunder will be due and payable as follows: (i) $2,573 of the principal amount would be due and payable on August 31, 2025, and (ii) $2,573 would be due and payable on August 31, 2026. The 2024 Note could, with at least 31 days’ prior written notice from the Operating LLC to the holder thereof, be prepaid in whole or in part at any time following January 31, 2025, without the prior written consent of the holder and without penalty or premium. The Company prepaid the $2,573 of the principal amount otherwise due under the 2024 Note on August 31, 2025 on June 30, 2025.
The 2024 Note accrues interest on the unpaid principal amount from September 1, 2024 until maturity at a rate equal to 12% per year. Interest on the 2024 Note is payable in cash quarterly on each January 1, April 1, July 1, and October 1, commencing on October 1, 2024. Under the 2024 Note, upon the occurrence or existence of any “Event of Default” thereunder, the outstanding principal amount is (or in certain instances, at the option of the holder thereof, may be) immediately accelerated. Further, upon the occurrence of any “Event of Default” under the 2024 Note and for so long as such Event of Default continues, all principal, interest and other amounts payable under the 2024 Note will bear interest at a rate equal to 13% per year.
The 2024 Note and the payment of all principal, interest and any other amounts payable thereunder are senior obligations of the Operating LLC and will be senior to any Indebtedness (as defined in the 2024 Note) of the Operating LLC outstanding as of and issued following September 1, 2024. Pursuant to the 2024 Note, following September 1, 2024, the Operating LLC may not incur any Indebtedness that is a senior obligation to the 2024 Note. See notes 4.
2020 Note
On January 31, 2020, the Operating LLC entered into the Original Purchase Agreement with the JKD Investor and RNCS. The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company’s board of directors, 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. On February 3, 2020, pursuant to the Original Purchase Agreement, the Operating LLC used the proceeds received from the issuance of the senior promissory notes to the JKD Investor and RNCS to repay in full all amounts outstanding under the senior promissory note, dated September 25, 2019, issued by the Company to Pensco Trust Company, Custodian fbo Edward E. Cohen IRA in the principal amount of $4,386 (the “Cohen IRA Note”). The Cohen IRA Note was fully paid and extinguished on February 3, 2020. Subsequent to this repayment, $2,400 of the 2019 Senior Notes remained outstanding.
On January 31, 2022, the Operating LLC and JKD Investor entered into 2022 Purchase Agreement, 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 the Amended and Restated Note in the aggregate principal amount of $4,500, which Amended and Restated Note amended and restated the JKD Note in its entirety. The Company used these proceeds to retire $2,250 of existing 2020 Senior Notes held by RNCS.
The Amended and Restated Note evidences Operating LLC’s obligation to repay to JKD Investor (i) the original principal amount of $2,250 paid by JKD Investor to the Operating LLC under the Original Purchase Agreement, plus (ii) the additional $2,250 paid by JKD Investor to the Operating LLC under the 2022 Purchase Agreement. Pursuant to the Amended and Restated Note, which is substantially identical to the JKD Note, the unpaid principal amount and all accrued but unpaid interest thereunder would be due and payable in full on January 31, 2024; provided, that, at any time after January 31, 2023 and prior to January 31, 2024, the holder of the Amended and Restated Note could, with at least 31 days’ prior written notice from the holder to the Operating LLC, declare the entire unpaid principal amount outstanding and all interest accrued and unpaid on the Amended and Restated Note to be immediately due and payable.
On January 5, 2024, the Operating LLC and JKD Investor entered into an amendment to the Amended and Restated Note, pursuant to which the Amended and Restated Note was amended to (a) extend (i) the maturity date thereof from January 31, 2024 to January 31, 2026, (ii) the date following which the Amended and Restated Note may be redeemed by JKD Investor from January 31, 2023 to January 31, 2025, and (iii) the date following which the Amended and Restated Note may be prepaid by the Operating LLC from January 31, 2023 to January 31, 2025; and (b) increase the interest rate payable under the Amended and Restated Note from 10% per annum to 12% per annum effective as of January 31, 2024. See note 4.
The Amended and Restated Note and the payment of all principal, interest, and any other amounts payable thereunder are senior obligations of the Operating LLC and will be senior to any Indebtedness (as defined in the Amended and Restated Note) of the Operating LLC outstanding as of and issued following January 30, 2020 (the original issuance date of the JKD Note). Pursuant to the Amended and Restated Note, following January 31, 2022, the Operating Company may not incur indebtedness that is a senior obligation to the Amended and Restated Note.
The remaining balance of the note was repaid at maturity on January 31, 2026.
Junior Subordinated Notes
The Company assumed $49,614 aggregate principal amount of junior subordinated notes outstanding at the time of the AFN Merger. The Company recorded the debt at fair value on the acquisition date. Any difference between the fair value of the junior subordinated notes on the AFN Merger date and the principal amount of debt is amortized into earnings over the estimated remaining life of the underlying debt as an adjustment to interest expense.
The junior subordinated notes are payable to two special purpose trusts:
1. Alesco Capital Trust I: $28,995 in aggregate principal amount issued in June 2007. The notes mature on July 30, 2037 and may be called by the Company at any time. While LIBOR was still being published, the notes accrued interest payable quarterly at a floating interest rate equal to 90-day LIBOR plus 400 basis points per annum. LIBOR ceased being published effective June 30, 2023. Subsequent to LIBOR no longer being published, the notes accrue interest at the 90-day standard overnight financing rate plus a tenor spread adjustment of 0.26161% (“Term SOFR”) plus 400 basis points per annum. All principal is due at maturity. Alesco Capital Trust I simultaneously issued 870 shares of Alesco Capital Trust I’s common securities to the Company for a purchase price of $870, which constitutes all of the issued and outstanding common securities of Alesco Capital Trust I.
2. Sunset Financial Statutory Trust I (“Sunset Financial Trust”): $20,619 in aggregate principal amount issued in March 2005. The notes mature on March 30, 2035. While LIBOR was still being published, the notes accrued interest payable quarterly at a floating rate of interest of 90-day LIBOR plus 415 basis points. LIBOR ceased being published effective June 30, 2023. Subsequent to LIBOR no longer being published, the notes accrue interest at Term SOFR plus 415 basis points per annum. All principal is due at maturity. Sunset Financial Trust simultaneously issued 619 shares of Sunset Financial Trust’s common securities to the Company for a purchase price of $619, which constitutes all of the issued and outstanding common securities of Sunset Financial Trust.
Alesco Capital Trust I and Sunset Financial Trust (collectively, the “Trusts”) described above are VIEs pursuant to variable interest provisions included in FASB ASC 810 because the holders of the equity investment at risk do not have adequate decision making ability over the Trusts’ activities. The Company is not the primary beneficiary of the Trusts as it does not have the power to direct the activities of the Trusts. The Trusts are not consolidated by the Company and, therefore, the Company’s consolidated financial statements include the junior subordinated notes issued to the Trusts as a liability, and the investment in the Trusts’ common securities as an asset. The common securities were deemed to have a fair value of $0 as of the AFN Merger date. These are accounted for as cost method investments; therefore, the Company does not adjust the value at each reporting period. Any income generated on the common securities is recorded as interest income, a component of interest expense, net, in the consolidated statement of operations.
The junior subordinated notes have several financial covenants. Since the AFN Merger, Cohen & Company Inc. has been in violation of one covenant of Alesco Capital Trust I. As a result of this violation, Cohen & Company Inc. is prohibited from issuing additional debt that is either subordinated to or pari passu with the Alesco Capital Trust I debt. This violation does not prohibit Cohen & Company Inc. from issuing senior debt or the Operating LLC from issuing debt of any kind. Cohen & Company Inc. is in compliance with all other covenants of the junior subordinated notes. The Company does not consider this violation to have a material adverse impact on its operations or on its ability to obtain financing in the future.
Byline Credit Facility
On October 28, 2020, the Company entered into an unsecured line of credit with Byline Bank, as lender (the "Byline Credit Facility"). From October 28, 2020 to June 18, 2024, the Company and Byline Bank entered into several amendments that changed the terms such as: (i) interest rate; (ii) total line of credit; (iii) financial covenants; and (iv) maturity dates. During that period, the Company complied with all financial covenants and all payment terms of the Byline Credit Facility and there were no defaults or events of default, thereunder during the period.
As of December 31, 2025, the Byline Credit Facility consisted of a single $15,000 unsecured line of credit under which Cohen Securities is the borrower and which is guaranteed by the Company, the Operating LLC, Cohen Securities Holdings, and Cohen Securities. Effective as of June 18, 2025, CCS and Byline Bank entered into the Third Amended and Restated Loan Agreement, pursuant to which (i) both the maturity date and the final date that loans can be made under the Byline Credit Facility were extended from June 18, 2025 to June 18, 2026 and (ii) the amount of Excess Net Capital that Cohen Securities must maintain was reduced from $40,000 to $30,000.
Loans under the Byline Credit Facility bear interest at a per annum rate equal to Term SOFR plus provided that in no event can the interest rate be less than The Company is required to pay on a quarterly basis an undrawn commitment fee at a per annum rate equal to 0.50% of the undrawn portion of Byline Bank’s $15,000 commitment under the Byline Credit Facility.
The Company is also required to pay on each anniversary, a commitment fee at a per annum rate equal to 0.50% of the $15,000 commitment under the Byline Credit Facility. Loans under the Byline Credit Facility must be used by the Company for working capital purposes and general liquidity. The Company may request a reduction in Byline Bank’s $15,000 commitment in a minimum amount of $1,000 and multiples of $500 thereafter upon not less than five days’ prior notice to Byline Bank. The Company may draw on the facility until June 18, 2026. Loans (both principal and interest) made by Byline Bank under the amended and restated agreement are scheduled to mature and become immediately due and payable in full on June 18, 2026.
The Company is subject to the following financial covenants in the Byline Credit Facility. As of December 31, 2025 and 2024, the Company was in compliance with all of the following financial covenants.
| 1. | Cohen Securities’ tangible net worth as defined must exceed |
| 2. | Cohen Securities' excess net capital as defined in Rule 15c3-1 must exceed |
| 3. | The total amount drawn on the facility must not exceed 25% of Cohen Securities' tangible net worth as defined. |
As of December 31, 2025 and 2024, no amounts were outstanding under the Byline Credit Facility, and the Company was in compliance with all financial covenants, thereunder.
Deferred Financing
The Company also incurred $100 of deferred financing costs associated with the Byline Credit Facility. These costs were initially recorded as a component of other assets and are amortized to interest expense over the life of the line of credit using the straight-line method.
The Company recognized interest expense from deferred financing costs of $48, $0, and $222 for the years ended December 31, 2025, 2024, and 2023, respectively.
Interest Expense, Net
Interest expense incurred is shown in the table below by instrument for the years ended December 31, 2025, 2024, and 2023.
| INTEREST EXPENSE |
| (Dollars in Thousands) |
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Junior subordinated notes | $ | 4,748 | $ | 4,695 | $ | 5,247 | ||||||
| 2020/2024 Notes | 1,002 | 740 | 450 | |||||||||
| Byline Credit Facility | 126 | 76 | 338 | |||||||||
| Redeemable Financial Instrument - JKD Capital I LTD | - | 310 | 491 | |||||||||
| $ | 5,876 | $ | 5,821 | $ | 6,526 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.